printer-friendly

Sample Business Contracts

Performance Unit Program - Halliburton Co.

Sponsored Links

                               HALLIBURTON COMPANY
                            PERFORMANCE UNIT PROGRAM
                              TERMS AND CONDITIONS

<PAGE>


                                TABLE OF CONTENTS

ARTICLE I..................................................................... 1
PURPOSE....................................................................... 1

ARTICLE II.................................................................... 1
DEFINITIONS................................................................... 1

         2.1      Definitions................................................. 1
         2.2      Number...................................................... 4
         2.3      Headings.................................................... 4

ARTICLE III................................................................... 4
PARTICIPATION................................................................. 4

         3.1      Participants................................................ 4
         3.2      Partial Performance Cycle Participation..................... 4
         3.3      No Right to Participate..................................... 5
         3.4      Consent to Dispute Resolution............................... 5

ARTICLE IV.................................................................... 6
ADMINISTRATION................................................................ 6

ARTICLE V..................................................................... 6
AWARD DETERMINATIONS.......................................................... 6

         5.1      Performance Measures........................................ 6
         5.2      Performance Requirements.................................... 6
         5.3      Award Determinations........................................ 7
         5.4      Incentive Opportunities .................................... 7
         5.5      Discretionary Adjustments................................... 7

ARTICLE VI.................................................................... 7
DISTRIBUTION OF AWARDS........................................................ 7

         6.1      Form and Timing of Payment.................................. 7
         6.2      Excess Remuneration......................................... 8
         6.3      Elective Deferral........................................... 8
         6.4      Tax Withholding............................................. 8

                                       ii

<PAGE>

ARTICLE VII................................................................... 8
TERMINATION OF EMPLOYMENT..................................................... 8

         7.1      Termination of Service During Performance Cycle............. 8
         7.2      Termination of Service after End of Performance
                  Cycle But Prior to the Payment Date......................... 9

ARTICLE VIII.................................................................. 9
RIGHTS OF PARTICIPANTS AND BENEFICIARIES...................................... 9

         8.1      Status as a Participant or Beneficiary...................... 9
         8.2      Employment.................................................. 9
         8.3      Nontransferability..........................................10
         8.4      Nature of Program...........................................10

ARTICLE IX....................................................................11
CORPORATE CHANGE..............................................................11

ARTICLE X.....................................................................11
AMENDMENT AND TERMINATION.....................................................11

ARTICLE XI....................................................................11
MISCELLANEOUS.................................................................11

         11.1     Governing Law...............................................11
         11.2     Successor...................................................12
         11.3     Status of Stock.............................................12
         11.4     Stockholder Approval........................................12

                                      iii
<PAGE>

                                    ARTICLE I

                                     PURPOSE
     The  purpose  of this  document  is to set  forth  the  general  terms  and
conditions   applicable  to  the   Performance   Unit  Program  (the  "Program")
established by the Halliburton Company (the "Company") Compensation Committee of
Directors pursuant to, and in implementation of, Article X of the Company's 1993
Stock and Long-Term Incentive Plan, as amended (the "1993 Plan"). The Program is
intended  to carry  out the  purposes  of the 1993  Plan and  provide a means to
reinforce  objectives for sustained long-term  performance and value creation by
awarding  selected key  executives  of the Company with  payments in cash and/or
Company stock based on the level of achievement of  pre-established  performance
goals during  individual  performance  cycles.  The Program is also  intended to
support  strategic  planning  processes,  balance short and  long-term  decision
making and help provide competitive total compensation opportunities.

                                   ARTICLE II

                                   DEFINITIONS

     2.1  Definitions.  Where  the  following  words and  phrases  appear in the
Program,  they shall have the respective  meanings set forth below, unless their
context clearly  indicates to the contrary.  Other initially  capitalized  terms
used herein but not defined shall have the meanings ascribed to them in the 1993
Plan.

          "Affiliate"  shall mean a  Subsidiary  of the Company or a division or
     designated group of the Company or a Subsidiary.

          "Average  Salary  "  shall  mean  the  average  base  pay  rate of all
     Participants  in a particular  Participant  Category as of January 1 of the
     first year of any Performance Cycle, including base pay a Participant could
     have  received  in  cash  in  lieu  of  (i)  contributions   made  on  such
     Participant's  behalf to a qualified plan maintained by the Company, to any
     cafeteria  plan under Section 125 of the Code  maintained by the Company or
     to a qualified  transportation  fringe benefit program under Section 132 of
     the Code and  (ii)  deferrals  of  compensation  made at the  Participant's

                                       1
<PAGE>

     election  pursuant to a plan or arrangement of the Company or an Affiliate,
     but  excluding  any  Awards  under  this  Program  and any  other  bonuses,
     incentive pay or special awards.

          "Award" shall mean the incentive compensation amount payable either in
     cash,  Common Stock or a  combination  thereof to a  Participant  under the
     Program for the Performance Cycle determined in accordance with Article V.

          "Award  Schedule"  shall mean the  schedule  that  aligns the level of
     achievement of applicable  Performance  Goals with Incentive  Opportunities
     for a particular  Performance  Cycle, such that the level of achievement of
     the pre-established  Performance Goals at the end of such Performance Cycle
     will determine the actual Award.

          "Beneficiary" shall mean the person, persons, trust or trusts entitled
     by Will or the laws of descent and  distribution  to receive  the  benefits
     specified under the Program in the event of the  Participant's  death prior
     to full payment of a Award.

          "Board of Directors" shall mean the Board of Directors of the Company.

          "Cause" shall mean (i) the  conviction of the  Participant of a felony
     under  Federal law or the law of the state in which such  action  occurred,
     (ii) dishonesty in course of fulfilling the Participant's employment duties
     or (iii) the disclosure by the  Participant to any  unauthorized  person or
     competitor of any confidential  information or confidential knowledge as to
     the business or affairs of the Company and its Affiliates.

          "CEO" shall mean the Chief Executive Officer of the Company.

          "Code" shall mean the Internal Revenue Code of 1986, as amended.

          "Committee"  shall  mean  the  Compensation  Committee  of  Directors,
     appointed  by the Board of Directors  from among its members to  administer
     the 1993 Plan in accordance with Article IV thereof.

          "Common Stock" shall mean the common stock, par value $2.50 per share,
     of the Company.

          "Company" shall mean Halliburton Company and its successors.

          "Corporate  Change"  shall have the  meaning  set forth in Article II,
     Section (h) of the 1993 Plan.

          "Dispute  Resolution  Program"  shall  mean  the  Halliburton  Dispute
     Resolution Plan.

          "ERISA"  shall mean the  Employee  Retirement  Income  Security Act of
     1974, as amended.

                                       2
<PAGE>


          "Fair  Market  Value"  shall have the meaning set forth in Article II,
     Section (j) of the 1993 Plan.

          "Incentive  Opportunity"  shall  mean,  with  respect to a  particular
     Participant  Category,  incentive  award  payment  amounts,  expressed as a
     percentage  of Average  Salary,  which  corresponds  to  various  levels of
     pre-established   Performance  Goals,  determined  pursuant  to  the  Award
     Schedule.

          "Key  Executive"  shall mean a  full-time,  active  employee who is an
     executive, including an officer, of the Company or an Affiliate (whether or
     not he or she is also a  director  thereof),  who is  compensated  for such
     employment by a regular salary and who, in the opinion of the Committee, is
     a key member of management of the Company and its  Affiliates in a position
     to contribute  materially to the Company's continued growth and development
     and to its future financial success.

          "1993  Plan"  shall  mean  the  Halliburton  Company  1993  Stock  and
     Long-Term Incentive Plan, as amended.

          "Participant"  shall  mean a Key  Executive  who  participates  in the
     Program  pursuant to the provisions of Article III hereof.  A Key Executive
     shall not be eligible  to  participate  in the Program  while on a leave of
     absence.

          "Participant   Category"   shall  mean  a  grouping  of   Participants
     determined  in  accordance  with the  applicable  provisions of Article III
     hereof.

          "Payment  Date" shall mean,  with respect to a particular  Performance
     Cycle, the last business day of February of the year next following the end
     of such Performance Cycle.

          "Performance  Cycle"  shall  mean  each  period  of three  consecutive
     calendar  years.  Performance  Cycles  shall  begin on January 1 of each of
     2001, 2002 and 2003, unless the Program is earlier terminated or suspended.
     Performance Cycles shall overlap.

          "Performance  Goals" shall mean, for a particular  Performance  Cycle,
     levels of achievement of applicable Performance Measures, as established by
     the Committee at the start of each Performance Cycle, used to gauge Company
     performance.  Performance  Goals  may  be  based  on  Company,  Subsidiary,
     business unit or business group  performance,  on  comparative  performance
     with other companies or on a combination thereof.

          "Performance  Measures" shall mean the objective  criteria selected by
     the Committee which are used in determining Performance Goals.  Performance
     Measures may include  financial  measures such as average return on capital
     employed,  average  annual return on investment,  earnings per share,  cash

                                       3
<PAGE>

     value added or such other  performance  criteria as may by permitted  under
     the 1993 Plan. The Committee may select one Performance Measure or multiple
     Performance Measures for a particular Performance Cycle.

          "Program" shall mean the Performance Unit Program under the 1993 Plan.
     The  duration of the  Program  shall be  coterminous  with the 1993 Plan in
     accordance with the provisions of Article III of the 1993 Plan.

          "Subsidiary"  shall have the meaning set forth in Article II,  Section
     (aa) of the 1993 Plan.

     2.2  Number.  Wherever appropriate herein, words used in the singular shall
be  considered to include  the plural and  words used in  the  plural  shall  be
considered to include the singular.
     2.3  Headings. The  headings of  Articles and Sections  herein are included
solely for  convenience, and if there is  any conflict between  headings and the
text of the Program, the text shall control.

                                   ARTICLE III

                                  PARTICIPATION

     3.1  Participants.  Participants for any  Performance Cycle shall  be those
active Key Executives who are nominated by the CEO and approved by the Committee
within the first ninety (90) days of such Performance Cycle.
     3.2  Partial Performance Cycle Participation.  If, after the beginning of a
Performance Cycle, (i) a person is  newly hired, promoted or transferred  into a
position in which he or  she is a Key Executive, or (ii) an employee who was not
previously a Participant for such Performance Cycle returns to active employment
as a Key Executive following a leave of absence, the Committee, or its delegate,
may designate in  writing such person as a Participant for the  pro rata portion
of such Performance Cycle beginning on the first day of the month following such
designation.
     If a Key Executive who  has previously been designated as a Participant for
a particular Performance Cycle takes a leave  of absence during such Performance
Cycle,  all of such Participant's rights  to an Award for such Performance Cycle
shall be prorated based upon  that portion of the Performance Cycle during which

                                       4
<PAGE>

he or she was an active  Participant, in which case the prorated  portion of the
Award shall be paid in accordance with the provisions of Section 6.1, unless the
Committee  shall determine  that such  Participant's Award for  such Performance
Cycle shall be forfeited.
     Each Participant shall be assigned to a Participant Category at the time he
or  she  becomes  a  Participant  for  a  particular  Performance  Cycle.  If  a
Participant  thereafter   incurs  an  adverse  change  in   status  during  such
Performance Cycle  due to demotion, reassignment or  transfer, the Committee may
approve  such adjustment in the Participant's Incentive  Opportunity as it deems
appropriate under the circumstances  (including, without limitation, reassigning
such  Participant to another  Participant Category or  terminating  his  or  her
participation  in the Program for  the remainder of the  Performance Cycle), any
such  adjustment  to  be  made  on  a  pro  rata  basis for the  balance of  the
Performance Cycle.
     3.3  No Right  to Participate.  No  Participant or  other  employee  of the
Company or  an Affiliate shall,  at any time, have a right to participate in the
Program  for   any  Performance   Cycle,   notwithstanding   having   previously
 participated in the Program.
     3.4  Consent   to  Dispute  Resolution.   Participation   in   the  Program
constitutes consent by the Participant to be  bound by the terms and  conditions
of the  Dispute Resolution Program which in substance requires that all disputes
arising out of  or in  any way  related to  employment with  the  Company or its
Affiliates,  including   any  disputes  concerning  the   Program,  be  resolved
exclusively through such program, which includes binding arbitration as the last
step.

                                       5
<PAGE>
                                   ARTICLE IV

                                 ADMINISTRATION

     Within the first ninety (90)  days of each Performance Cycle, the Committee
shall establish the  basis for payments under the  Program in relation  to given
Performance  Goals, as more fully described  in Article V hereof, and, following
the end of each  Performance Cycle, determine  the actual Award  payable to each
Participant.  The Committee shall have  the power and authority granted it under
Article IV  of the 1993  Plan, including, without  limitation,  the authority to
construe  and  interpret the  Program, to  prescribe,  amend and  rescind rules,
regulations and procedures relating to  its administration and to make all other
determinations necessary or  advisable for administration of the Program. To the
extent  permitted by Section  (d) of Article IV of the 1993 Plan, the  Committee
may delegate some  of its authority to the CEO.  Decisions of the  Committee, or
its  delegates, in accordance  with the authority  granted  hereby or  delegated
pursuant hereto shall be conclusive and binding. Subject only to compliance with
the express  provisions hereof, the  Committee or its delegates may act in their
sole  and absolute  discretion with  respect to  matters within  their authority
under the Program.

                                    ARTICLE V

                              AWARD DETERMINATIONS

     5.1  Performance Measures.  Within  the first  ninety  (90)  days  of  each
Performance  Cycle,  the Committee  shall  select  the  Performance  Measure  or
Measures to be  used in determining the  Performance Goals for such  Performance
Cycle. Different Performance Measures may be selected for particular Participant
Categories or for particular Participants within the Participant Categories. The
Performance  Measures may,  but  need not, differ  from one Performance Cycle to
another.
     5.2  Performance Requirements.  Within the first  ninety (90) days  of each
Performance  Cycle, the Committee  shall approve the Performance Goal respecting
each selected Performance  Measure, and shall establish an  Award Schedule which
aligns  the level of achievement  of applicable Performance Goals with Incentive

                                       6
<PAGE>

Opportunities,  such  that  the  level  of  achievement  of  the pre-established
Performance Goals at the end  of the Performance Cycle will determine the actual
Award.  Performance Goals may be measured in absolute and/or  relative terms and
may be weighted differently.
     5.3  Award Determinations.  After the end  of each Performance  Cycle,  the
Committee  shall determine the extent to  which the Performance Goals  have been
achieved  and the amount of the  Award shall be computed for each Participant in
accordance with the Award Schedule.
     5.4  Incentive  Opportunities.   The  established  Incentive  Opportunities
will  vary in relation  to the Participant  Categories. A Participant's assigned
Participant  Category for a  particular  Performance  Cycle will not  be changed
during  such Performance  Cycle except  as set forth  in the  last paragraph  of
Section 3.2.
     5.5  Discretionary  Adjustments.  Except  as  provided  below,  established
Performance Goals will not  be changed during the Performance Cycle. However, if
the  Committee, in its  sole and absolute discretion,  determines that there has
been  (i) a material change in  the Company's business, operations, corporate or
capital  structure, (ii)  a material  change in the  manner in which business is
conducted  or  (iii)  any  other  material  change or  event (including  merger,
consolidation or other reorganization of any of the comparator companies used to
determine achievement  of relative Performance  Goals) which  will impact one or
more  Performance  Goals in  a manner  the Committee  did not  intend, then  the
Committee may, reasonably contemporaneously with such change or event, make such
adjustments  to  the  relevant  Performance  Goal  or  Goals  as  it  shall deem
appropriate and equitable.

                                   ARTICLE VI

                             DISTRIBUTION OF AWARDS

     6.1  Form and  Timing of Payment.  Except as otherwise  provided below, the
amount of each Award shall be paid in cash, Common Stock (based upon Fair Market
Value), or a combination  thereof, on the Payment Date, or as soon thereafter as
practicable.  In the event of termination of a Participant's employment prior to

                                       7
<PAGE>

the Payment Date for any reason other than death (in which case payment shall be
made in accordance with the applicable provisions of Article VII), the amount of
any Award  (or prorated portion  thereof) payable  pursuant to the provisions of
Sections  7.1 or 7.2 shall  be paid in  cash on the  Payment  Date, or  as  soon
thereafter as practicable.
     6.2  Excess Remuneration. Notwithstanding the provisions of Section 6.1, to
the  extent  that   incentive  compensation  hereunder   does   not  qualify  as
performance-based  compensation  pursuant  to  Section 162(m)  of  the Code, the
Committee  may, in  its discretion,  with respect  to  a  Participant who  is  a
"covered employee" for  purposes of such  Section 162(m), determine that payment
of  that portion  of an Award  which would  otherwise  cause  such Participant's
compensation  to exceed  the limitation on the amount of compensation deductible
by the Company in any taxable  year pursuant to such Section 162(m), be deferred
until such Participant is no longer a "covered employee." In such case, interest
shall be  credited on the  portion of  the Award deferred for  the period of the
deferral  as provided  pursuant to Article IV of the Halliburton Company Benefit
Restoration Plan, as amended, or other applicable plan.
     6.3  Elective Deferral.  Nothing  herein  shall  be  deemed  to  preclude a
Participant's  election to defer  receipt of a  percentage of his  or  her Award
beyond the  time such  amount would have  been payable hereunder pursuant to the
Halliburton Elective Deferral Plan or other similar plan.
     6.4  Tax Withholding. The Company or employing entity through which payment
of an  Award is to be  made shall have the  right to  withhold from  any cash or
Common Stock remuneration hereunder payable to any Participant any tax  required
to be withheld by reason of such resulting compensation income.

                                   ARTICLE VII

                            TERMINATION OF EMPLOYMENT

     7.1  Termination  of Service  During Performance  Cycle.  In  the  event  a
Participant's  employment is  terminated prior  to the  last business  day  of a
Performance Cycle for any reason other than death, normal retirement at or after
age 65, approved early retirement or disability (as determined by the CEO or his

                                       8
<PAGE>

delegate),  all of such  Participant's rights to  an Award for  such Performance
Cycle  shall be  forfeited.  In the  case  of a  Participant's  death  during  a
Performance  Cycle, the  prorated  amount  of such  Participant's Award, if any,
applicable to such Performance Cycle shall be paid in  cash to the Participant's
estate, or if there is no administration of the  estate, to the heirs at law, on
the  Payment Date,  or as  soon thereafter  as  practicable.  In  the  case of a
Participant's disability, normal retirement at or after age 65 or approved early
retirement, the prorated amount of  such Participant's Award, if any, applicable
to such  Performance Cycle shall be  paid in accordance  with the  provisions of
Section 6.1.
     7.2  Termination of Service after End of Performance Cycle But Prior to the
Payment Date.  If a Participant's employment  is terminated after the end of the
applicable  Performance  Cycle, but  prior to the  Payment Date, for  any reason
other  than termination for  Cause, the  amount of any  Award applicable to such
Performance  Cycle shall  be paid  to the  Participant  in  accordance with  the
provisions of Section 6.1, except in the case of death, in which case the amount
of the Award shall be paid in cash to  such Participant's estate, or if there is
no administration of the estate, to the heirs at law, as soon as practicable.
     If  a  Participant's  employment  is  terminated  for  Cause,  all  of such
Participant's rights  to an Award applicable to such Performance Cycle  shall be
forfeited.

                                  ARTICLE VIII

                    RIGHTS OF PARTICIPANTS AND BENEFICIARIES

     8.1  Status  as  a  Participant  or  Beneficiary.   Neither  status   as  a
Participant  or Beneficiary shall  be construed  as a commitment  that any Award
will be paid or payable under the Program.
     8.2  Employment.  Nothing  contained in  the  Program  or  in  any document
related  to the  Program or to  any Award  shall confer upon any Participant any
right to continue as an employee or in the employ of the Company or an Affiliate
or constitute  any contract  or agreement  of  employment for a specific term or
interfere  in any way  with  the right  of the Company or an Affiliate to reduce

                                       9
<PAGE>

such  person's compensation, to  change the  position held by  such person or to
terminate the employment of such person, with or without cause.
     8.3  Nontransferability.  No benefit  payable under,  or interest  in, this
Program  shall be  subject  in  any manner  to anticipation,  alienation,  sale,
transfer,  assignment, pledge,  encumbrance or  charge  and any  such  attempted
action  shall be  void and  no such benefit or interest shall be, in any manner,
liable  for,  or  subject  to,  debts, contracts,  liabilities or  torts of  any
Participant or Beneficiary; provided, however, that, nothing in this Section 8.3
shall  prevent  transfer  (i)  by  Will, (ii) by applicable  laws of descent and
distribution or (iii) pursuant to an order that satisfies the requirements for a
"qualified  domestic  relations  order"  as  such  term  is  defined  in section
206(d)(3)(B)  of ERISA  and  section  414(p)(1)(A)  of the Code.  Any attempt at
transfer, assignment  or other  alienation prohibited  by the preceding sentence
shall be disregarded  and all amounts  payable hereunder shall  be paid only  in
accordance with the provisions of the Program.
     8.4  Nature of Program.  No Participant, Beneficiary  or other person shall
have any right, title or  interest in any fund or in  any specific  asset of the
Company or  any Affiliate  by reason of any Award hereunder.  There shall  be no
funding of any benefits which may become payable hereunder. Nothing contained in
the  Program (or in any  document related thereto), nor the creation or adoption
of the Program, nor  any action taken pursuant to the  provisions of the Program
shall  create, or be  construed to create,  a trust of  any kind or  a fiduciary
relationship  between   the  Company  or   an  Affiliate  and  any  Participant,
Beneficiary  or other person.  To the extent that  a Participant, Beneficiary or
other  person  acquires  a right to  receive payment  with respect  to an  Award
hereunder,  such right  shall be  no greater  than the  right of  any  unsecured
general creditor  of the Company  or other employing entity, as applicable.  All
amounts payable under the Program  shall be paid from  the general assets of the
Company or  employing entity,  as applicable, and no special or separate fund or
deposit shall  be established  and no  segregation of  assets shall  be  made to
assure  payment of such amounts.  Nothing in the Program shall be deemed to give

                                       10
<PAGE>

any employee any right to participate in the Program except in accordance
herewith.

                                   ARTICLE IX

                                CORPORATE CHANGE

     In the  event of a  Corporate Change, (i)  with respect to  a Participant's
Award for the  Performance Cycle  in which  the Corporate Change  occurred, such
Participant shall be entitled to  an immediate cash payment equal to the maximum
amount  of  Award he  or she  would  have  been  entitled  to  receive  for  the
Performance Cycle, prorated to  the date of the Corporate Change (provided, that
any such immediate cash  payment applied  to a  Participant who  is  a  "covered
employee"  for purposes  of Section  162(m) of  the Code  shall be discounted to
reflect the  time value  of money); and  (ii) with respect to a Corporate Change
that  occurs after  the end  of the  Performance Cycle  but prior to the Payment
Date, a Participant shall be entitled to an immediate  cash payment equal to the
Award earned for such Performance Cycle.

                                    ARTICLE X

                            AMENDMENT AND TERMINATION

     Notwithstanding anything herein to the contrary, the  Committee may, at any
time, terminate, modify or suspend the Program; provided, however, that, without
the  prior consent of  the Participants  affected, no such  action may adversely
affect any rights or obligations with  respect to any Awards theretofore earned
but unpaid for a completed Performance Cycle, whether or not the amounts of such
Awards have been computed and whether or not such Awards are then payable.

                                   ARTICLE XI

                                  MISCELLANEOUS

     11.1 Governing Law.  The Program shall be  construed in accordance with the
laws of the State of Texas, without giving effect to the principles of conflicts
of  law thereof, except  to the extent that it  implicates matters which are the

                                       11
<PAGE>

subject of  the General Corporation  Law of the State of Delaware, which matters
shall be governed by the latter law.
     11.2 Successor.  All  obligations  and  rights  of  the  Company  under the
Program  shall be binding  upon and inure to the benefit of any successor to the
Company.
     11.3 Status of Stock.  The Company  shall not  be obligated  to  issue  any
Common  Stock pursuant  to any Award  hereunder at any time when the offering of
the shares  covered by such  Award has not been  registered under the Securities
Act  of  1933, as amended,  and such  other state  and federal  laws,  rules  or
regulations as the Company or the Committee deems applicable and, in the opinion
of  legal counsel  to the Company,  there is no  exemption from the registration
requirements of such laws, rules or regulations  available for issuance and sale
of such shares.
     11.4 Stockholder Approval.  The "material terms" of the Program (within the
meaning of Section 162(m) of the  Code) shall be  submitted for approval  by the
holders of a majority of the shares of Common Stock present, or represented, and
entitled to vote  at the first meeting of the Company's stockholders that occurs
every fifth year following the  year in which  stockholders previously  approved
such "material terms" (inclusive of approval of the 1993 Plan).

                                       12