KEY EMPLOYEE DEFERRED
COMPENSATION PLAN OF
CONOCOPHILLIPS
(Effective for benefits earned or
vested after
December 31,
2004)
2008 RESTATEMENT
The purpose of
the Key Employee Deferred Compensation Plan of ConocoPhillips (the
“Plan”) is to attract and retain key employees by
providing them with an opportunity to defer receipt of cash amounts
which otherwise would be paid to them under various compensation
programs or plans by a Participating Subsidiary. Title I of this
Plan is effective with regard to benefits earned and vested prior
to January 1, 2005, while Title II of this Plan is effective
with regard to benefits earned or vested after December 31,
2004. Earnings, gains, and losses shall be allocated to the Title
of the Plan to which the underlying obligations giving rise to them
are allocated. The Plan is sponsored and maintained by
ConocoPhillips Company.
This Title II
of the Plan is intended (1) to comply with Code section 409A,
as enacted as part of the American Jobs Creation Act of 2004, and
official guidance issued thereunder, and (2) to be “a
plan which is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees” within
the meaning of sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.
Notwithstanding any other provision of this Plan, this Plan shall
be interpreted, operated, and administered in a manner consistent
with these intentions.
|
|
(a)
|
|
“Award” shall mean the
United States cash dollar amount (i) allotted to an Employee
under the terms of an Incentive Compensation Plan or a Long Term
Incentive Plan, or (ii) required to be credited to an
Employee’s Deferred Compensation Account pursuant to the
terms of an Award or of an Incentive Compensation Plan, the Long
Term Incentive Compensation Plan, the Strategic Incentive Plan, a
Long Term Incentive Plan, or any similar plans, or any
administrative procedure adopted pursuant thereto, or
(iii) credited as a result of an Employee’s voluntary
reduction of Salary, or (iv) any other amount determined by
the Committee to be an Award under the Plan.
|
|
|
(b)
|
|
“Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time, or any
successor statute.
|
|
|
(c)
|
|
“Committee” shall mean
the Compensation Committee of the Board of Directors of
ConocoPhillips.
|
|
|
(d)
|
|
“Company” shall mean
ConocoPhillips Company, a Delaware corporation, or any successor
corporation. The Company is a subsidiary of
ConocoPhillips.
|
|
|
(e)
|
|
“ConocoPhillips” shall
mean ConocoPhillips, a Delaware corporation, or any successor
corporation. ConocoPhillips is a publicly held corporation and the
parent of the Company.
|
|
|
(f)
|
|
“Controlled Group”
shall mean ConocoPhillips and its Subsidiaries.
|
|
|
(g)
|
|
“Deferred Compensation
Account” shall mean an account established and maintained for
each Participant in which is recorded the amounts of Awards
deferred by a Participant, the deemed gains, losses, and earnings
accrued thereon, and payments made therefrom all in accordance with
the terms of the Plan.
|
- 2 -
|
|
(h)
|
|
“Election Form” shall
mean a written form, including one in electronic format, provided
by the Plan Administrator pursuant to which a Participant may elect
the time and form of payment of his or her Benefit.
|
|
|
(i)
|
|
“Employee” shall mean
any individual who is a salaried employee of the Company or of a
Participating Subsidiary who is eligible to receive an Award from
an Incentive Compensation Plan and is classified as a
ConocoPhillips salary grade 19 or above or any equivalent salary
grade at a Participating Subsidiary.
|
|
|
(j)
|
|
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from
time to time, or any successor statute.
|
|
|
(k)
|
|
“Heritage Conoco
Employee” shall mean an individual employed by Conoco Inc.,
Conoco Pipe Line Company, or Louisiana Gas Systems Inc. prior to
January 1, 2003; provided, however, that an individual who has
been terminated from employment with a member of the Controlled
Group at any time and rehired by a member of the Controlled Group
after January 1, 2003, shall not be considered a Heritage
Conoco Employee for purposes of this Plan.
|
|
|
(l)
|
|
“Incentive Compensation
Plan” shall mean the ConocoPhillips Variable Cash Incentive
Program, the Incentive Compensation Plan of Phillips Petroleum
Company, or the Annual Incentive Compensation Plan of Phillips
Petroleum Company, the Special Incentive Plan for Former Tosco
Executives, the Conoco Inc. Global Variable Compensation Plan, or a
similar plan of a Participating Subsidiary, or any similar or
successor plans, or all, as the context may require.
|
|
|
(m)
|
|
“Long-Term Incentive
Compensation Plan” shall mean the Long-Term Incentive
Compensation Plan of Phillips Petroleum Company, which was
terminated December 31, 1985.
|
- 3 -
|
|
(n)
|
|
“Long-Term Incentive
Plan” shall mean the ConocoPhillips Performance Share
Program, the ConocoPhillips Restricted Stock Program, the Phillips
Petroleum Company Long-Term Incentive Plan, or a similar or
successor plan of any of them, established under an Omnibus
Securities Plan.
|
|
|
(o)
|
|
“Omnibus Securities
Plan” shall mean the 2004 Omnibus Stock and Performance
Incentive Plan of ConocoPhillips, the 2002 Omnibus Securities Plan
of Phillips Petroleum Company, the Omnibus Securities Plan of
Phillips Petroleum Company, the 1998 Stock and Performance
Incentive Plan of ConocoPhillips, the 1998 Key Employee Stock Plan
of ConocoPhillips, or a similar or successor plan of any of
them.
|
|
|
(p)
|
|
“Participant” shall
mean a person for whom a Deferred Compensation Account is
maintained.
|
|
|
(q)
|
|
“Participating
Subsidiary” shall mean a Subsidiary that has adopted one or
more plans making participants eligible for participation in this
Plan and one or more Employees of which are Potential
Participants.
|
|
|
(r)
|
|
“Plan Administrator”
shall mean the Vice President, Human Resources of the Company, or
his or her successor.
|
|
|
(s)
|
|
“Potential Participant”
shall mean a person who has received a notice specified in
Section 2.
|
|
|
(t)
|
|
“Restricted Stock” and
“Restricted Stock Units” shall mean respectively shares
of Stock and units each of which shall represent a hypothetical
share of Stock, which have certain restrictions attached to the
ownership thereof or the delivery of shares pursuant
thereto.
|
- 4 -
|
|
(u)
|
|
“Retirement” or
“Retire” or “Retiring” shall mean
Separation from Service from the Controlled Group on or after age
55 or above and on or after the earliest early retirement date as
defined in applicable title of the ConocoPhillips Retirement Plan
or of the applicable retirement plan of a Participating
Company.
|
|
|
(v)
|
|
“Schedule A
Employee” shall mean an Employee whose name appears in
Schedule A attached to and made a part of this
Plan.
|
|
|
(w)
|
|
“Separation from
Service” shall mean the date on which the Participant
separates from service with the Controlled Group within the meaning
of Code section 409A, whether by reason of death, disability,
retirement, or otherwise. In determining Separation from Service,
with regard to a bona fide leave of absence that is due to any
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 six months, where such
impairment causes the Employee to be unable to perform the duties
of his or her position of employment or any substantially similar
position of employment, a 29-month period of absence shall be
substituted for the six-month period set forth in section
1.409A-1(h)(1)(i) of the regulations issued under section 409A of
the Code, as allowed thereunder.
|
|
|
(x)
|
|
“Settlement Date” shall
mean the date on which all acts under an Incentive Compensation
Plan or the Long-Term Incentive Compensation Plan or actions
directed by the Committee, as the case may be, have been taken
which are necessary to make an Award payable to the
Participant.
|
|
|
(y)
|
|
“Salary” shall mean the
monthly equivalent rate of pay for an Employee before adjustments
for any before-tax voluntary reductions.
|
|
|
(z)
|
|
“Stock” means shares of
common stock of ConocoPhillips, par value $.01.
|
- 5 -
|
|
(aa)
|
|
“Strategic Incentive
Plan” shall mean the Strategic Incentive Plan portion of the
1986 Stock Plan of Phillips Petroleum Company, of the 1990 Stock
Plan of Phillips Petroleum Company, of the Phillips Petroleum
Company Omnibus Securities Plan, and of any successor plans of
similar nature.
|
|
|
(bb)
|
|
“Subsidiary” shall mean
any corporation or other entity that is treated as a single
employer with ConocoPhillips under section 414(b) or (c) of
the Code. In applying section 1563(a)(1), (2), and (3) of the
Code for purposes of determining a controlled group of corporations
under section 414(b) of the Code and for purposes of determining
trades or businesses (whether or not incorporated) under common
control under regulation section 1.414(c)-2 for purposes of section
414(c) of the Code, the language “at least 80%” shall
be used without substitution as allowed under regulations pursuant
to section 409A of the Code.
|
|
|
(cc)
|
|
“Trustee” shall mean
the trustee of the grantor trust established by the Trust Agreement
between Phillips Petroleum Company (now renamed ConocoPhillips
Company) and Wachovia Bank, N.A. dated as of June 1, 1998, or
any successor trustee.
|
SECTION 2.
Notification of Potential Participants.
|
|
(a)
|
|
Incentive Compensation
Plan . With
regard to each year, at such times as the Plan Administrator may
determine, Employees who are eligible to receive an Award in the
immediately following calendar year under an Incentive Compensation
Plan will be notified and given the opportunity to make an
election, using the Election Form or in such other manner
prescribed by the Plan Administrator, to defer all or part of such
Award.
|
|
|
(b)
|
|
Salary Reduction
. With regard to each
year, at such times as the Plan Administrator may determine,
Employees on the U.S. dollar payroll will be notified and given the
opportunity to make an election, using the Election Form or in such
other manner
|
- 6 -
|
|
|
|
prescribed by the Plan
Administrator, to make a voluntary reduction of Salary for each pay
period of the following calendar year, in which case the Company
will credit a like amount as an Award hereunder, provided that the
amount of such voluntary reduction shall not be less than 1% nor
more than 50% of the Employee’s Salary per pay
period.
|
SECTION 3.
Election to Defer Award or Reduce Salary.
|
|
(a)
|
|
Incentive Compensation
Plan . If a
Potential Participant elects to defer under this Plan all or any
part of the Award to which a notice received under Section 2(a)
pertains, the Potential Participant must make such election, using
the Election Form or in such other manner prescribed by the Plan
Administrator. The Potential Participant’s election shall
become irrevocable on December 31 of the year in which said
Section 2(a) notice was received (except in the case of an election
for an Award under an Incentive Compensation Plan determined by the
Plan Administrator to be “performance-based
compensation” under Code section 409A, the election shall
become irrevocable on June 30 of the year in which said
Section 2(a) notice was received), subject to the provisions
Section 5(d). If an election is not properly made and timely
received, the Potential Participant will be deemed to have elected
to receive and not to defer any such Incentive Compensation Plan
Award.
|
|
|
(b)
|
|
Salary Reduction
. If a Potential
Participant elects to voluntarily reduce Salary to which a notice
received under Section 2(b) pertains and receive an Award hereunder
in lieu thereof, the Potential Participant must make an election,
using the Election Form or in such other manner prescribed by the
Plan Administrator, which must be received on or before
December 31 (or such earlier time as may be prescribed by the
Plan Administrator) prior to the beginning of the calendar year of
the elected deferral. Such election must be in writing signed by
the Potential Participant, and must state the amount of the salary
reduction the Potential Participant elects. Such election becomes
irrevocable on December 31 prior to the beginning of the
calendar year, subject to the provisions Section 5(d). If an
election is not properly made and timely
|
- 7 -
|
|
|
|
received, the Potential Participant
will be deemed to have elected to receive and not to defer any such
Salary.
|
SECTION 4.
Deferred Compensation Accounts.
|
|
(a)
|
|
Credit for Deferral
. Amounts deferred
pursuant to Section 3(a) will be credited to a Deferred
Compensation Account for the Participant for the calendar year in
which the amounts are deferred not less than 30 days after the
Settlement Date of the Incentive Compensation Plan.
|
If an Award in
the form of Restricted Stock or Restricted Stock Units provides
that, in certain instances the Restricted Stock or Restricted Stock
Units shall be cancelled and a market value in lieu thereof be
credited to a Deferred Compensation Account for the Participant,
then the market value shall be credited to a Deferred Compensation
Account for the Participant as of the day that the Award in the
form of Restricted Stock or Restricted Stock Units is cancelled.
The market value of the underlying Restricted Stock or the shares
represented by the Restricted Stock Units awarded under a Long Term
Incentive Plan, under an Incentive Compensation Plan that began on
or after January 1, 2003, under an Omnibus Securities Plan
(with regard to awards made on or after January 1, 2003), and for
the Special Stock Awards issued on October 22, 2002, shall be
the monthly average Fair Market Value of the Stock during the
calendar month preceding the month in which the restrictions lapse
or shares are to be delivered as applicable. The monthly average
Fair Market Value of the Stock is the average of the daily Fair
Market Value of the Stock for each trading day of the month. For
Awards made prior to those times, the market value of the
underlying Restricted Stock or the shares represented by the
Restricted Stock Units, as applicable, shall be based on the higher
of (i) the average of the high and low selling prices of the
Stock on the date the restrictions lapse or the last trading day
before the day the restrictions lapse if such date is not a trading
day or (ii) the average of the high three monthly Fair Market
Values of the Stock during the twelve calendar months preceding the
month in which the restrictions lapse. The
- 8 -
|
|
|
|
monthly Fair Market Value of the
Stock is the average of the daily Fair Market Value of the Stock
for each trading day of the month. The daily Fair Market Value of
the Stock shall be deemed equal to the average of the high and low
selling prices of the Stock on the New York Stock
Exchange.
|
Amounts
deferred pursuant to other provisions of this Plan shall be
credited to a Deferred Compensation Account for the Participant for
the calendar year in which such amounts are deferred not later than
30 days after the date the Award or Salary would otherwise be
payable.
|
|
(b)
|
|
Designation of
Investments . The amount in each Deferred
Compensation Account of a Participant shall be deemed to have been
invested and reinvested from time to time, in such “eligible
securities” as the Participant shall designate. Prior to or
in the absence of a Participant’s designation, the Company
shall designate an “eligible security” in which the
Participant’s Deferred Compensation Account shall be deemed
to have been invested until designation instructions are received
from the Participant. Eligible securities are those securities
designated by the Chief Financ
|
|
