Document:

Exhibit 10.1

 

EQUITABLE RESOURCES, INC.

2008 EXECUTIVE PERFORMANCE INCENTIVE PROGRAM

 

EQUITABLE RESOURCES, INC. (the “Company”) hereby establishes this
EQUITABLE RESOURCES, INC. 2008 EXECUTIVE PERFORMANCE INCENTIVE PROGRAM (the “Program”),
in accordance with the terms provided herein.

 

WHEREAS, the Company maintains certain long-term incentive award plans
including the 1999 Equitable Resources, Inc. Long-Term Incentive Plan (the
“1999 Plan”) for the benefit of its employees and executives, of which the Program
is a subset; and

 

WHEREAS, in order to further align the interests of executives with the
interests of the shareholders, the Company desires to provide additional
long-term incentive benefits through the Program, in the form of awards
qualifying as “Performance Awards” under the 1999 Plan.

 

NOW, THEREFORE, the Company hereby provides for additional incentive
benefits for certain executive employees of the Company and adopts the terms of
the Program on the following terms and conditions:

 

Section 1.  Incentive
Program Purpose. 
The main purpose of the Program is to provide additional long-term
incentive opportunities to key executives to further align their interests with
those of the Company’s shareholders and customers and with the strategic
objectives of the Company.  Awards
granted hereunder may be earned by achieving relative performance levels
against a pre-determined peer group, are forfeited if defined performance
levels are not achieved and are subject to negative adjustment if other
absolute and relative performance measures are not attained.  By placing a portion of the executive’s
compensation at risk, the Company has an opportunity to reward exceptional
performance or reduce the compensation opportunity when performance does not
meet expectations.  The Program shall be
construed consistent with the provisions of the 1999 Plan with respect to
awards to Covered Employees, as such term is defined in the 1999 Plan, and the
deductibility of such awards under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”).

 

Section 2.  Effective Date.  The effective date of this Program is July 1,
2008.  The Program will remain in effect
until the earlier of December 31, 2011 or the closing date of a Change of
Control event defined in Section 5 unless otherwise amended or terminated
as provided in Section 18 (“Termination Date”).

 

Section 3.  Eligibility.  The Chief Executive Officer of the Company
(the “CEO”) shall, in his or her sole discretion, select the employees of the
Company who shall be eligible to participate in the Program from those
individuals eligible to participate in the 1999 Plan.  The CEO’s selections will become participants
in the Program (the “Participants”) only upon approval by the Compensation
Committee of the Board of 

 

 

Directors (the “Committee”), comprised in accordance with the
requirements of the 1999 Plan, to the extent such individuals are, or are
expected to be, “covered employees” as defined in Section 162(m) of
the Code (“Covered Employees”).  In the
event that an employee is hired by the Company during the Performance Period,
as defined below, the CEO shall, in his or her sole discretion, determine
whether the employee will be eligible to participate in the Program, provided
that the Committee must approve all new participants to the Program who are
Covered Employees; provided further that, individuals who are Covered Employees
may only become eligible during the first 90 days of the Performance Period.

 

Section 4.  Performance
Incentive Share Unit Awards.  Upon being selected to participate in the
Program, each Participant shall be awarded a number of performance incentive
share units (the “Target Share Units”), which may be expressed as a dollar
amount and converted into share units using the closing price of the Company’s
stock on the date of grant.  The awards
shall be proposed by the CEO and approved by the Committee in the case of
individuals who are Covered Employees. 
For a new Participant, the Target Share Units shall be proposed by the
CEO and approved by the Committee and will be pro-rated based on the employee’s
hire date and the contemplated ending date of the Program, which is December 31,
2011.  The Target Share Units, plus
accrued dividends (“Total Target Share Units”) may be increased by as much as
three (3.0) times the number awarded based solely on the achievement of the
objective performance criteria as described in Section 5, and the
Committee shall have no discretion to increase the Total Target Share Units
that would otherwise be due upon attainment of the Performance Condition.  The maximum number of Target Share Units that
may be awarded under the Program is 150,000, subject to adjustment as provided
in the preceding sentence and in Section 13.

 

The Target Share Units shall be held in escrow by the Company subject
to satisfaction of the terms and conditions described below.  A Participant shall have no right to exchange
the Target Share Units for cash, stock or any other benefit and shall be a mere
unsecured creditor of the Company with respect to such share units and any
future rights to benefits.

 

Section 5.  Performance
Condition of the Target Share Units.  Subject to Section 8, the total number
of Target Share Units that will be issued (“Awarded Share Units”) to a
Participant will be based on the Company’s total shareholder return relative to
the peer group’s (Attachment A) total shareholder return calculated as
described in (a) below (the “Performance Condition”), for the Performance
Period of July 1, 2008 to the Termination Date (the “Performance Period”),
and subject to the Committee’s negative discretion based upon the Company’s
revenues calculated as described in (b) below.  The Performance Condition with respect to the
Performance Period shall be established by the Committee within 90 days after
its commencement, but in no event later than the date on which 25% of the
Performance Period has elapsed, and before the outcome of the Performance
Condition is no longer substantially uncertain.

 

(a)          Total Shareholder
Return.  For purposes of this
Program, total shareholder return will be calculated as follows:

 

 

2

 

Step 1

 

A “Beginning Point” will be established for
the Company and each company in the peer group. 
This Beginning Point will be defined as one share of stock with a value
equal to the average closing stock price as reported in The Wall
Street Journal for the ten (10) business day period immediately
prior to commencement of the Performance Period ending on and including the
date of the commencement of the Performance Period, for each company.

 

Step 2

 

Dividends paid for each company from the
beginning of the Performance Period will be cumulatively added to the Beginning
Point as additional shares of such company’s stock.  The closing price on the last business day of
the month in which the record date for the dividend occurs will be used as the
basis for determining the number of shares to be added.  The resulting total number of shares accumulated
during the Performance Period will be referred to as the Total Shares Held at
Ending Point.

 

Step 3

 

Except as provided in the following sentence,
an “Ending Point” will be defined as Total Shares Held at Ending Point for each
company times the average closing stock price as reported in The Wall Street Journal for the last ten (10) business
days of the Performance Period for each company.  In the event of a change of control as then
defined in the 1999 Plan (“Change of Control”), the Ending Point will be
defined as the Total Shares Held at Ending Point times the average of the
closing price as reported in The Wall Street Journal
for the ten (10) business days preceding the closing of the Change of
Control transaction.

 

Step 4

 

Total Shareholder Return (“TSR”) will be
expressed as a percentage and is calculated by dividing the Ending Point by the
Beginning Point and then subtracting 1 from the result.  Each company including the Company will be
ranked in descending order by the TSR so calculated.

 

In accordance with rules established
within 90 days of the commencement of the Performance Period, the Committee may
determine to exclude a member of the peer group if such member ceases to exist
during the Performance Period due to a cash merger or tender offer, to the
extent such determination is consistent with Treas. Reg. §1.162-27(e)(2).

 

 

3

 

(b)         Revenues.  For purposes of this Program, revenues shall
be measured as the Sales Price multiplied by the aggregate Total Sales Volume
for the twelve (12) calendar quarters within the Performance Period beginning October 1,
2008 and ending September 30, 2011.

 

(i)                                     Sales
Price shall equal $4.82/mcf.  Total
Sales Volume for each quarter equals the sum of the production total sales
volumes (mmcfe) reported in the applicable Form 10-Q for each quarter and,
in the case of the fourth quarter of any year, the volumes calculated for the
fourth quarter by reducing the annual total sales volume reported in the Form 10-K
by the quarterly total sales volumes reported in the Form 10-Q for the
first three quarters of such year.  For
the avoidance of doubt, (a) Total Sales Volume is determined solely by the
volumes reported, regardless of any subsequently identified prior period
adjustment, (b) Total Sales Volume represents the Company’s interest in
gas and oil sales during the applicable period and (c) gathered volumes
are not included.  Total Sales Volume
shall be measured on a basis consistent with current practice on the date of
adoption of the Program.

 

(c)          Application
of Performance Condition and Negative Adjustment.  The Total Target Share Units for each
Participant will be multiplied by the payout factor (the “Payout Multiple”)
identified on the payout matrix (Attachment B) that corresponds to the
Company’s relative TSR ranking on the payout matrix for the Performance Period,
provided, however, that the Committee retains the discretion to reduce the
corresponding Payout Multiple by up to .75 if the Company does not attain the
revenue target specified on the payout matrix; provided, however, that if the
Company’s relative TSR ranking is median or above, the Payout Multiple shall
not be decreased below 1.00.  The result
of the calculation is the number of Awarded Share Units.  Pursuant to such calculation, Awarded Share
Units will equal:

 

(i)                                   100
percent of the Total Target Share Units for median relative TSR performance,

 

(ii)                                300
percent of the Total Target Share Units for TSR performance at the top 14.5% of
all performers, subject to negative adjustment attributable to the Committee’s
discretion as described herein,

 

(iii)                             0
percent of the Total Target Share Units for TSR performance at the bottom 14.5%
of all performers,

 

(iv)                            for
performance levels between those performance levels identified above, the
percent of Total Target Share Units will be determined in 

 

 

4

 

accordance with the payout matrix and subject
to negative adjustment attributable to the Committee’s discretion as described
herein.

 

Payments under the Program are expressly contingent upon achievement of
the Performance Condition and may not exceed the value of the Participant’s
Total Target Share Units and other limits provided herein, subject to
adjustment as provided in Sections 4 and 13.

 

Section 6.  Issuance and
Distribution. 
Subject to Section 8, each Participant will be issued the number of
Awarded Share Units calculated according to Section 5(c) as of the
last day of the Performance Period. 
Except as provided in the remainder of this Section 6, such share
units will be distributed in cash, the amount of which shall be calculated
based upon each Awarded Share Unit being equal in value to a corresponding
share of Company stock as of the last day of the Performance Period.  Payment shall be made following the end of
the Performance Period, and in no event later than two and one-half months
after the end of the year in which the Performance Period ends.  Notwithstanding the second sentence of this Section 6,
the Participant may elect to receive payment in the form of Company stock in
accordance with rules established by the Committee and the Committee may
determine, in its discretion and for any reason, that Awarded Share Units will
be issued in whole or in part in the form of Company stock including without
limitation if the Participant has not satisfied any mandatory or recommended
stock ownership guidelines of the Company as then in effect.  Subject to Section 8, in the event of a
Change of Control, the value of such issued share units will be distributed in
cash on the closing of the Performance Period, which shall be calculated based
upon the average of the closing price of the Company’s stock for the ten (10) business
days preceding the Change of Control transaction as reported in The Wall Street Journal. 
The maximum amount payable to any one Participant under the Program in
any one calendar year within the Performance Period shall be the amount set
forth and as calculated in the 1999 Plan, as approved by shareholders of the
Company.  No elections shall be permitted
with respect to the timing of any payments.

 

Section 7.  Dividends.  Each Target Share Unit will be cumulatively
credited with dividends that are paid on the Company’s common stock in the form
of additional share units.  These
additional share units shall be deemed to have been purchased on the last
business day of the month in which the record date for the dividend occurs
using the closing stock price for the Company as reported in The Wall Street Journal and shall be subject to all the same
conditions and restrictions as provided in this Program, including the
Performance Condition, applicable to Target Share Units, Total Target Share
Units and Awarded Share Units.

 

Section 8.  Change of
Status; Overall Limit. 
In making decisions regarding employees’ participation in the Program
and the extent to which awards are payable in the case of an employee who
terminates employment during the Performance Period, the Committee may consider
any factors that they may consider relevant. 
The following guidelines are provided as general information about the
effect of employee status changes prior to payment.

 

 

5

 

(a)          Retirement and
Resignation.  Share units are
forfeited.

 

(b)         Death and Disability.  Participants who are employed at the
commencement of the Performance Period, but who die or become Disabled, as
defined below, before the end of the Performance Period, will be issued Awarded
Share Units for the Performance Period, contingent upon achievement of the
Performance Condition set forth in Section 5, as follows, and any
remainder shall be forfeited:

 

	
  Date of Death or Disability

  	
   

  	
  Percent Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior to July 1, 2009

  	
   

  	
  0%

  	
   

  
	
  July 1, 2009 – December 31, 2010

  	
   

  	
  50%

  	
   

  
	
  January 1, 2011 – December 31,
  2011

  	
   

  	
  75%

  	
   

  

 

“Disabled” means a Participant is “disabled” as defined in Section 409A(a)(2)(C) of
the Code.

 

(c)          Termination.  Share units are forfeited and no award shall
be paid to any employee whose services are terminated prior to the payment of
Awarded Share Units for reasons of misconduct, failure to perform, or other
cause.  If the termination is due to
reasons such as reorganization, and not due to the fault of the employee, the
employee will receive payment for Awarded Share Units following the termination
of the Performance Period, contingent upon achievement of the Performance
Condition set forth in Section 5, as follows, and any remainder shall be
forfeited:

 

	
  Termination Date

  	
   

  	
  Percent Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior to July 1, 2009

  	
   

  	
  0%

  	
   

  
	
  July 1, 2009 – December 31, 2010

  	
   

  	
  25%

  	
   

  
	
  January 1, 2011 – December 31, 2011

  	
   

  	
  50%

  	
   

  

 

 

(d)         Change of Position.  Participants whose position within the
Company changes to a non-Program eligible position during the Performance
Period as determined by the Company but who remain employed throughout the
entire Performance Period will receive payment for Awarded Share Units
following termination of the Performance Period, contingent upon achievement of
the Performance Condition set forth in Section 5, as follows, and any
remainder shall be forfeited:

 

	
  Change of Position Date

  	
   

  	
  Percent Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior to July 1, 2009

  	
   

  	
  0%

  	
   

  
	
  July 1, 2009 – December 31, 2010

  	
   

  	
  25%

  	
   

  

 

 

6

 

	
  January 1, 2011 – December 31, 2011

  	
   

  	
  50%

  	
   

  

 

In such events, any Awarded Share Units that become vested at the end
of the Performance Period shall be payable at the time specified in Section 6
except that, in the event such amounts are conditioned upon a separation from
service and not compensation the Participant could receive without separating
from service, then no such payments may be made to a Participant who is a “specified
employee” under Section 409A of the Code until the first day following the
six-month anniversary of the Participant’s separation from service.  Notwithstanding any other provisions of the
Program, Participants shall have no vested rights to any Awarded Share Units
prior to the end of the Performance Period.

 

Section 9.  Responsibilities
of the Committee. 
The Committee has responsibility for all aspects of the Program’s
administration, including:

 

·                  Determining and,
in the case of Covered Employees, certifying in writing, the extent to which
the Performance Condition has been achieved prior to any payments under the
Program,

 

·                  Ensuring that
the Program is administered in accordance with its provisions,

 

·                  Approving
Program Participants who are or are expected to be Covered Employees,

 

·                  Authorizing
Target Share Unit awards to Participants,

 

·                  Adjusting Target
Share Unit grants and issuance requirements to account for extraordinary events
consistent with the terms of the Program,

 

·                  Ruling on any
disagreement between Program Participants, Company management, Program
administrators, and any other interested parties to the Program, and

 

·                  Maintaining
final authority to amend, modify or terminate the Program at any time.

 

The interpretation and construction by the Committee of any provisions
of the Program or of any Awarded Share Units shall be final.  No member of the Committee shall be liable
for any action or determination made in good faith on the Program or any
Awarded Share Units thereunder.  The
Committee may designate another party to administer the Program, including
Company management or an outside party to the extent permitted under Code Section 162(m).  All conditions of the Target Share Units must
be approved by the Committee.  As early
as practicable prior to or during the Performance Period, the Committee shall
approve the number of Target Share Units to be awarded to each Participant.  The associated terms and conditions of the
Program will be communicated to 

 

 

7

 

Participants as close as possible to the date an award is made.  The Participants will sign and return a
participant agreement to the Committee.

 

Section 10.  Tax
Consequences to Participants.  It is intended that:  (i) until the Performance Condition is
satisfied, a Participant’s right to an award under this Program shall be
considered to be subject to a substantial risk of forfeiture in accordance with
those terms as defined or referenced in Sections 83(a), 409A and 3121(v)(2) of
the Code; (ii) the Awarded Share Units shall be subject to employment
taxes only upon the satisfaction of the Performance Condition; and (iii) until
the Awarded Share Units are actually paid to the Participant, the Participants
shall have merely an unfunded, unsecured promise to be paid the benefit, and
such unfunded promise shall not consist of a transfer of “property” within the
meaning of Code Section 83.  It is
further intended that, because a Participant cannot actually or constructively
receive the Target Share Units prior to payment, the Participant will not be in
actual or constructive receipt of the Target Share Units within the meaning of
Code Section 451 until they are actually received as Awarded Share Units.

 

Section 11.  Nonassignment.  A Participant shall not be permitted to
assign, alienate or otherwise transfer his or her Target Share Units and any
attempt to do so shall be void.

 

Section 12.  Impact on
Benefit Plans. 
Payments under the Program 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.  Nothing herein shall prevent the
Company from maintaining additional compensation plans and arrangements,
provided however that no payments shall be made under such plans and
arrangements if the effect thereof would be the payment of compensation
otherwise payable under this Program regardless of whether the Performance
Condition was attained.

 

Section 13.  Successors;
Changes in Stock. 
The obligation of the Company under the Program shall be binding upon
the successors and assigns of the Company. 
If a dividend or other distribution shall be declared upon the Company’s
common stock payable in shares of Company common stock, the Total Target Share
Units and the shares of Company Common Stock on which the Performance Condition
is based shall be adjusted by adding thereto the number of shares of Company
common stock which would have been distributable thereon if such shares and
Total Target Share Units had been actual Company shares and outstanding on the
date fixed for determining the shareholders entitled to receive such stock
dividend or distribution.  In the event
of any spin-off, split-off or split-up, or dividend in partial liquidation,
dividend in property other than cash, or extraordinary distribution to
shareholders of the Company’s common stock, the Total Target Share Units and
the shares of Company common stock on which the Performance Condition is based
shall be appropriately adjusted to prevent dilution or enlargement of the
rights of Participants which would otherwise result from any such transaction,
provided such adjustment shall be consistent with Code Section 162(m).

 

 

8

 

In the case of a Change of Control, any obligation under the Program
shall be handled in accordance with the terms of Section 6 hereof.  In any case not constituting a Change of
Control in which the Company’s common stock is changed into or becomes
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, or cash or other property,
whether through reorganization, reclassification, recapitalization, stock
split-up, combination of shares, merger or consolidation, then (i) the
value of the performance share units constituting an award shall be calculated
based on the closing price of such common stock on the closing date of the
transaction on the principal market on which such common stock is traded, (ii) there
shall be substituted for each performance share units constituting an award,
the number and kind of shares of stock or other securities (or cash or other
property) into which each outstanding share of the Company’s common stock shall
be so changed or for which each such share shall be exchangeable, and (iii) the
share of Company common stock on which the Performance Condition is based shall
be appropriately and equitably adjusted. 
In the case of any such adjustment, the Total Target Share Units shall
remain subject to the terms of the Program.

 

Section 14.  Dispute
Resolution.  The
Participant may make a claim to the Committee with regard to a payment of
benefits provided herein.  If the
Committee receives a claim in writing, the Committee must advise the
Participant of its decision on the claim in writing in a reasonable period of
time after receipt of the claim (not to exceed 120 days).  The notice shall set forth the following
information:

 

(a)          The specific basis for
its decision,

 

(b)         Specific reference to
pertinent Program provisions on which the decision is based,

 

(c)          A description of any
additional material or information necessary for the Participant to perfect a
claim and an explanation of why such material or information is necessary, and

 

(d)         An explanation of the
Program’s claim review procedure.

 

Section 15.  Applicable Law.  This Program shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania without regard to
its conflict of law provisions.

 

Section 16.  Severability.  In the event that any one or more of the
provisions of this Program shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

Section 17.  Headings.  The descriptive headings of the Sections of
this Program are inserted for convenience of reference only and shall not
constitute a part of this Program.

 

 

9

 

Section 18.  Amendment or
Termination of this Program.  This Program may be amended, suspended or
terminated by the Company at any time upon approval by the Committee and following
a determination that the Program is no longer meaningful in relation to the
Company’s strategy.  Any suspension or
termination shall automatically cause a Termination Date effective as of the
date of the Committee’s approval. 
Notwithstanding the foregoing, (i) no amendment, suspension or
termination shall adversely affect a Participant’s rights to his or her award
after the date of the award; provided, however, that to the extent an award is
determined with respect to a Termination Date, including a Termination Date
pursuant to the preceding sentence, Participants’ rights to awards are deemed
not to be adversely affected thereby, and the Company may amend this Program
from time to time without any participant’s consent to the extent deemed
necessary or appropriate, in its sole discretion, to effect compliance with Section 409A
of the Code, including regulations and interpretations thereunder, which
amendments may result in a reduction of benefits provided hereunder and/or
other unfavorable changes to participants, (ii) no amendment may alter the
time of payment as provided in Section 6 of the Program, and (iii) no
amendment may be made following a Change of Control.

 

 

10Exhibit 10.2

 

[Date]

 

 

[Name]

[Street Address]

[City, State, Zip Code]

 

 

Dear [Name]:

 

Pursuant to the terms and conditions of the Company’s 1999 Long-Term
Incentive Plan (the “Plan”) and the 2008 Executive Performance Incentive
Program (the “Program”), on August 5, 2008, the Compensation Committee of
the Board of Directors of Equitable Resources, Inc. (the “Committee”)
granted you «NumberUnits»
Target Share Units (the “Award”), the value of which is determined by
reference to the Company’s common stock. 
The terms and conditions of the Award, including, without limitation,
vesting and distribution, shall be governed by the provisions of the Program
document attached hereto as Exhibit A, provided that the Award is also
subject to the terms and limits included within the Plan, and the Committee
retains the discretion to distribute the Award in cash, Company stock or any
combination thereof.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Kimberly L. Sachse

  	
   

  
	
   

  	
  For the Compensation
  Committee

  	
   

  

 

 

The undersigned hereby acknowledges receipt
of this award granted on the date shown above, the terms of which are subject
to the terms and conditions referenced above, and receipt of a copy of the
Program document, and agrees to be bound by all the provisions hereof and
thereof.

 

 

	
  Signature:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  [Name]

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