EXHIBIT 10.5
ST. MARY LAND & EXPLORATION
COMPANY
PERFORMANCE SHARE AND RESTRICTED
STOCK UNIT AWARD AGREEMENT
This Performance Share and Restricted Stock Unit
Award Agreement (the “Agreement”) is made effective as
of [Award Date] 1
(the “Award Date”), by
and between St. Mary Land & Exploration Company, a Delaware
corporation (the “Company”), and [Name of Participant]
(the “Participant”) to whom performance shares and
restricted stock units have been awarded pursuant to the
Company’s long term incentive program (“LTIP”)
under the St. Mary Land & Exploration Company Equity Incentive
Compensation Plan, as amended (the “Plan”).
Pursuant to the terms of the Plan and this
Agreement, as of the Award Date the Company has made an award (the
“Award”) to the Participant of [Amount] performance
shares (the “Performance Shares”) and [Amount]
restricted stock units (the
“Units”). Capitalized terms used but not
defined in this Agreement shall have the meanings given to them in
the Plan.
ARTICLE I
PERFORMANCE SHARES
1.1 Performance
Shares and Performance Period . The Performance
Shares represent the right to receive, upon the settlement of the
Performance Shares pursuant to Section 1.4 hereof after the
completion of the Performance Period (as defined below), a number
of shares of the Company’s common stock, $.01 par value per
share (St. Mary common stock is sometimes referred to herein as the
“Common Stock”), that will be calculated as set forth
in Section 1.2 below based on the extent to which the
Company’s Performance Criteria (as defined in Section 1.2)
have been achieved and the extent to which the Performance Shares
have vested. Any Common Stock that issues pursuant to
any provision of this Agreement may be referred to in this
Agreement as a “Share” or
“Shares.” Such actual number of Shares that
may be issued upon settlement of the Performance Shares may be from
zero (0) to two (2.0) times the number of Performance Shares
granted on the Award Date. The number of Performance
Shares granted herein may be referred to as the
“target” number of Shares. The performance
period for the Performance Shares shall be the three-year period
set forth in the Performance Share and Restricted Stock Unit Award
Notice (the “Award Notice”) attached hereto (the
“Performance Period”).
1.2 Determination
of Number of Shares Earned .
(a) Performance
Criteria . The actual number of Shares that may be
earned from the Performance Shares and issued upon settlement of
the Performance Shares after completion of the Performance Period
shall be based upon the Company’s achievement of performance
criteria (the “Performance Criteria”) established
by
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Items in
brackets are features that may vary among individual
awards.
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the
Compensation Committee of the Board of Directors of the Company
(the “Committee”) for the Performance Period in
accordance with the terms of the Plan and as set forth below and
reflected in the payout matrix (the “Payout Matrix”)
attached as Appendix A hereto and discussed further in
subsection (d) hereof. The Performance Criteria for the
calculation of the actual number of Shares to be issued upon
settlement of the Performance Shares as reflected in the Payout
Matrix are based on a combination of (i) the absolute measure of
the cumulative total shareholder return (“TSR”) and
associated Compound Annual Growth Rate (“CAGR”) of the
Company for the Performance Period, and (ii) the relative measure
of the Company’s TSR and CAGR for the Performance Period
compared with the cumulative TSR and CAGR of the Peer Companies (as
defined below) for the Performance Period as reflected in the St.
Mary Performance Share Plan Peer Group Custom Index (the
“Custom Index”) to be specifically prepared by Standard
& Poor’s, a division of The McGraw-Hill Companies, Inc.
(“S&P”), for the purpose of administering the
LTIP.
(b) Calculation of
TSR and CAGR . The TSR and CAGR of the Company and
the Peer Companies for the Performance Period shall be calculated
in accordance with the methodology utilized by S&P with respect
to the Custom Index.
(c) Peer Companies
and Custom Index . The “Peer Companies”
to be reflected in the Custom Index shall consist of the
constituents of the Oil & Gas Exploration & Production GIC
Sub-Industry Group in the S&P SmallCap 600 Index and the
S&P MidCap 400 Index, excluding the Company. The
Custom Index will be equal weighted, and will be adjusted to
include the dividend payments of the constituents of the Custom
Index. The Custom Index will be rebalanced on a
quarterly basis, and will also be rebalanced whenever there are
additions and deletions to the S&P SmallCap 600 and the S&P
MidCap 400 indices. The Custom Index is the exclusive
property of S&P. The Company has contracted with
S&P to maintain and calculate the Custom
Index. S&P shall have no liability for any errors or
omissions in calculating the Custom Index.
(d) Payout
Matrix . The Payout Matrix attached as Appendix A
hereto sets forth the possible multipliers, which range from zero
percent (0%) to two hundred percent (200%), which may be applied to
the number of vested Performance Shares to determine the actual
number of Shares to be issued upon settlement of the vested
Performance Shares after the completion of the Performance
Period. The final multiplier (the “Final
Multiplier”) shall be determined by the Committee after the
completion of the Performance Period based on the two variables
that comprise the Performance Criteria, related to (i) the
Company’s TSR and CAGR for the Performance Period, and (ii)
the Peer Companies’ TSR and CAGR for the Performance Period
as reflected in the Custom Index. The number of Shares,
if any, that shall be issued to the Participant upon settlement of
the Performance Shares shall be calculated as the number of
Performance Shares that have vested in accordance with Section 1.3
or Section 1.6 hereof, multiplied by the Final Multiplier, as
determined by the Committee in accordance with the Payout
Matrix. There shall be no rounding of variables or
extrapolation of variables between data points within the Payout
Matrix, and the data point for which the associated variables equal
or exceed the target variables for such data point, but do not
result in qualification for another higher data point, shall be
utilized with respect to the Final
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Multiplier. Any fractional Shares
which would otherwise result from application of the Final
Multiplier shall be rounded up to the nearest whole share of Common
Stock.
1.3 Vesting of
Performance Shares .
(a) Vesting
. Subject to the provisions contained herein, the
Performance Shares shall vest over the Performance Period as set
forth in the vesting schedule for Performance Shares contained in
the attached Award Notice (the “PSA Vesting
Schedule”). As of the Award Date, the Participant
is an employee of the Company or a subsidiary
thereof. If the Participant ceases to be an employee of
the Company or a subsidiary thereof prior to the vesting of all of
the Performance Shares pursuant to the PSA Vesting Schedule, the
Participant shall forfeit the remaining unvested Performance Shares
under the Award, except as otherwise provided in this Section 1.3
and Section 1.6.
(b) Continued
Vesting Upon Early Retirement . The Performance
Shares shall, notwithstanding any other provisions of this Section
1.3, continue to vest according to the PSA Vesting Schedule after
the termination of the Participant’s employment with the
Company or a subsidiary thereof if (i) such termination is the
result of the Participant’s retirement from the Company or a
subsidiary thereof upon the Participant’s having both reached
the age of sixty (60) and completed twelve (12) years of service
with the Company or a subsidiary thereof, and (ii) the Participant
does not after such early retirement become employed on a full-time
basis by a competitor of the Company prior to the earlier of the
settlement of the Performance Shares or the Participant’s
reaching the age of sixty-five (65). Any such continued
vesting of the Performance Shares pursuant to this Section 1.3(b)
will not result in an acceleration of the PSA Settlement Date (as
defined in Section 1.4), since the number of Shares earned from the
Performance Shares shall be calculated after the completion of the
Performance Period.
(c) Acceleration
Upon Death, Total Disability or Normal Retirement
. The Performance Shares shall become fully vested,
notwithstanding any other provisions of this Section 1.3, upon
termination of the Participant’s employment with the Company
or a subsidiary thereof because of death, Total Disability (as
defined below), or retirement upon reaching the Company’s
normal retirement age of sixty-five (65). Any such
acceleration of the vesting of the Performance Shares pursuant to
this Section 1.3(c) will not result in an acceleration of the PSA
Settlement Date, since the number of Shares earned from the
Performance Shares shall be calculated after the completion of the
Performance Period. For purposes of this Agreement,
“Total Disability” means a medically determinable
physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not
less than 12 months, by reason of which the Participant is unable
to engage in any substantial gainful activity or is receiving
income replacement benefits for a period of not less than three
months under an accident and health plan covering employees of the
Company.
(d) Termination for
Cause . Notwithstanding any other provisions of this
Section 1.3, the Participant shall forfeit all Performance Shares
under this Award,
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including those
that have previously vested, upon the termination of the employment
of the Participant by the Company or a subsidiary thereof for Cause
(as defined below) prior to the completion of the Performance
Period. As used in this Agreement with respect to the Performance
Shares, the term Cause shall have the meaning defined in Section
1.6(a),and shall also include the termination of the employment of
the Participant by the Company or a subsidiary thereof due to the
Participant’s having committed (i) a wrongful taking of
money, property, goods, services, or other items of value from the
Company, whether or not such wrongful taking is prosecuted in a
civil or criminal proceeding, (ii) any act of fraud or willful
misconduct in connection with the performance of the
Participant’s duties for the Company, or (iii) a significant
violation of the Company’s written policies and procedures,
in each case which is demonstrably harmful to the
Company.
1.4 Settlement of
Performance Shares . Following the last day of the
Performance Period and prior to the PSA Settlement Date, the
Committee shall determine, and certify in writing to the extent
deemed necessary or advisable or as required to comply with Section
162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), (i) the extent to which the
Performance Criteria have been achieved over the Performance
Period, and (ii) the Final Multiplier. The Final
Multiplier shall then be applied to the number of vested
Performance Shares to determine the number of Shares (the
“Earned Shares”), if any, to be issued to the
Participant in settlement of the Performance Shares. The
determination of the Earned Shares by the Committee shall be
binding on the Participant and conclusive for all
purposes. The Earned Shares, if any, shall be issued to
the Participant in settlement of the Performance Shares on or about
the settlement date set forth in the attached Award Notice (the
“PSA Settlement Date”). Upon the settlement
of the Performance Shares, the Company shall deliver to the
Participant evidence of book-entry Shares or a certificate for the
number of Shares issued to the Participant in settlement of the
Performance Shares. The Earned Shares shall not be
subject to any holding or transfer restrictions after settlement of
the Performance Shares.
1.5 Transfer
Restrictions for Unsettled Performance Shares
. Performance Shares that have not been settled shall
not be transferable by the Participant, and the Participant shall
not be permitted to sell, transfer, pledge, assign, or otherwise
alienate or encumber such Performance Shares or the Shares issuable
in settlement thereof, other than (i) to the person or persons to
whom the Participant’s rights under such Performance Shares
pass by will or the laws of descent and distribution, (ii) to the
spouse or the descendants of the Participant or to trusts for such
persons to whom or which the Participant may transfer such
Performance Shares by gift, (iii) to the legal representative of
any of the foregoing, or (iv) pursuant to a qualified domestic
relations order as defined under Section 414(p) of the Code or
similar order or agreement relating to the provision of child
support, alimony payments, or marital property rights to a spouse,
former spouse, child, or other dependent of the
Participant. Any such transfer shall be made only in
compliance with the Securities Act of 1933 and the requirements
therefor as set forth by the Company. Any attempted
transfer in contravention of the foregoing provisions shall be null
and void and of no effect.
1.6 Change of
Control Termination .
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(a) Vesting upon
Change of Control Termination . Notwithstanding any
other provision of this Agreement, the Performance Shares shall
become fully vested upon a Change of Control
Termination. For purposes of this Agreement, a
“Change of Control Termination” occurs upon the
termination of the Participant’s employment with the Company
or a subsidiary thereof in the event that (i) a Change of Control
(as defined in the Plan) of the Company occurs, and (ii) the
Participant’s employment with the Company or a subsidiary
thereof is subsequently terminated without Cause (as defined below)
or the Participant terminates his or her employment with the
Company or a subsidiary thereof for Good Reason (as defined below),
and such termination of employment occurs (x) within 30 months of
the Change of Control and (y) with respect to Performance Shares,
pr
