Exhibit 10.7
EQUITABLE RESOURCES, INC.
2009 SHAREHOLDER VALUE PLAN
EQUITABLE RESOURCES, INC. (the
“Company”) hereby establishes this EQUITABLE RESOURCES,
INC. 2009 SHAREHOLDER VALUE PLAN (the “Plan”) as of
this 23rd day of December, 2008, 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 this Plan 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 incentive benefits through this
Plan, in the form of awards qualifying as “Other Stock-Based
Awards” under Section 6.05 of the 1999 Plan.
NOW, THEREFORE, the Company hereby
provides for incentive benefits for certain executive employees of
the Company and adopts the terms of the Plan on the following terms
and conditions:
Section 1.
Purpose. The main
purpose of the Plan is to provide incentive opportunities to key
executives to further align their interests with those of the
Company’s shareholders 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 and other absolute and relative performance levels, and are
forfeited if defined performance levels are not achieved. 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. As a subset of the 1999 Plan, this Plan is
subject to and shall be governed by the terms and conditions of the
1999 Plan. Capitalized terms used herein and not otherwise
defined shall have the meanings given such terms in the 1999
Plan. The Share Units granted under this Plan are intended to
be “Other Stock-Based Awards” under Section 6.05
of the 1999 Plan, are not intended to meet the performance-based
compensation exemption from Section 162(m) of the Code,
and therefore are not subject to the conditions and limits of 6.04
of the 1999 Plan.
Section 2. Effective
Date . The
effective date of this Plan is January 1, 2009. The Plan
will remain in effect until the earlier of December 31, 2009
or the closing date of a Change of Control event defined in
Section 5 unless otherwise amended or terminated as provided
in Section 17 (“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 Plan, up to a
maximum of 35 employees. The CEO’s selections will
become participants in the Plan (the “Participants”)
only upon approval by
the Compensation Committee of the Board of
Directors (the “Committee”). 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 Plan, provided that the Committee must approve all new
participants to the Plan.
Section 4. Performance
Incentive Share Unit Awards. Awards under the Plan are designated in
the form of performance incentive share units (the “Share
Units”), which are awards to be settled in cash, the amount
per unit of which is determined by reference to one share of the
Company’s common stock. Upon being selected to participate in
the Plan, each Participant shall be awarded a number of Share
Units, which award shall be proposed by the CEO and approved by the
Committee. The maximum number of Share Units that may be
awarded under the Plan is 1,000,000, subject to adjustment as
provided in Section 12.
The Share Units shall be held in book entry form
by the Company until settled in cash as described herein.
Share Units do not represent actual shares of stock. A
Participant shall have no right to exchange the 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. Subject
to Section 7, the amount to be distributed to a Participant
will be based on (i) the Company’s total shareholder
return relative to the peer group’s (Attachment A) total
shareholder return for the period described in (a) below, and
(ii) the Company’s average absolute return on total
capital during the Performance Period (collectively, the
“Performance Condition”), for the Performance Period of
January 1, 2005 to the close of business at 5:00 p.m.,
Eastern Standard Time, on the Termination Date (the
“Performance Period”).
(a)
Total Shareholder
Return . For
purposes of this Plan, total shareholder return will be calculated
as follows:
Step 1
The “Beginning Point”
for the Company and each company in the peer group is defined as
one share of common stock with a value equal to the average closing
stock price as reported in the Nationally Recognized Reporting
Service for the ten (10) business day period ending on and
including February 23, 2005, for each company. All
references in this Plan to the “Nationally Recognized
Reporting Service” shall be references to either the print or
electronic version of a nationally recognized publication that
reports the daily closing stock price of New York Stock Exchange
listed companies.
Step 2
Dividends paid for each company from
the beginning of the Performance Period will be cumulatively added
to the Beginning Point as
2
additional shares of such
company’s common 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 is referred to as the
Total Shares Held at Ending Point.
Step 3
Except as provided in the following
sentence, the “Ending Point” is defined as Total Shares
Held at Ending Point for each company times the average closing
stock price as reported in Nationally Recognized Reporting Service
for the last ten (10) business days of the Performance Period
for that company. In the event of a change of control (as
then defined in the 1999 Plan) of the Company (a “Change of
Control”), the Ending Point for each company in the peer
group shall be the Total Shares Held at Ending Point for that
company times the average of the closing price of such
company’s common stock as reported in Nationally Recognized
Reporting Service 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.
If the common stock of any company
in the peer group ceases to be publicly traded during the
Performance Period, such company shall be assigned a TSR value of
negative 100% for purposes of the Plan.
(b)
Average Absolute Return on Total
Capital (“ROTC”) . For purposes of this Plan, average
absolute return on total capital will be calculated for each
completed calendar quarter within the Performance Period as
follows:
Net Income After Tax + (Interest x
(1 - Effective Tax Rate)), with such sum divided by (Debt +
Preferred Stock + Book Equity - Cash).
The annualized average of those
amounts, calculated by dividing the sum of the quarterly ROTC
values by the number of whole completed quarters in the Performance
Period and multiplying by four (4), shall equal the average
absolute return on total capital for the Performance
Period.
3
The above amounts shall be
calculated as reported on the Company’s financial
statements. The Committee may base such calculation on
unaudited financial statements provided that the methodology for
determining each financial component used in the calculation of
Average Absolute ROTC is the same as that which would be used in
the preparation of the Company’s audited financial
statements.
In the event of a Change of Control
or other Termination Date occurring after the end of a calendar
quarter, the immediately preceding calendar quarter shall be the
final quarter considered for purposes of the above
calculation.
(c)
Application of Performance
Condition . A
Participant’s Performance Adjusted Unit Value shall be
calculated by dividing (i) the product of (A) the sum of
such Participant’s Adjusted Share Units and Dividend Units
(calculated as described below and, if appropriate, modified as
described in Section 12) multiplied by (B) the payout
factor identified on the payout matrix (Attachment B) that
corresponds to (X) the Company’s relative TSR ranking on
the payout matrix for th
