PETROLEUM DEVELOPMENT
CORPORATION
2009 LONG-TERM INCENTIVE
PROGRAM
ARTICLE 1
INTRODUCTION
1.1 2004 Petroleum
Development Corporation Long-Term Equity Compensation Plan
. Petroleum Development Corporation, a Nevada
Corporation (hereinafter referred to as the "Company") has
established an incentive compensation plan known as the "2004
Petroleum Development Corporation Long-Term Equity Compensation
Plan" (hereinafter referred to as the "Plan"). The Plan
permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance
Shares and Performance Units (individually an "Award" and
collectively "Awards"). The Plan became effective as of
April 27, 2004. Awards may be granted under the Plan
until April 25, 2014.
1.2 Committee
Authority . The Plan is administered by the
Compensation Committee of the Board (hereinafter referred to as the
"Committee"). Under the Plan, the Committee has, among
its other powers, the authority to select Employees who shall
participate in the Plan, determine the size and types of Awards,
and determine the terms and conditions of the Awards in a manner
consistent with the Plan.
1.3 Objectives of
the Program . Pursuant to the authority granted to
the Committee under Article 9 and Article 10 of the Plan concerning
the grant of Performance Shares, the Committee established,
effective as of January 1, 2009, the Petroleum Development
Corporation 2009 Long-Term Incentive Program (hereinafter referred
to as the "Program") for the benefit of its Covered
Employees. The Program includes 2009 Performance Share
Awards and the share price thresholds for the three year, four
year, and five year performance periods ending on December 31,
2011, December 31, 2012, and December 31, 2013
respectively.
ARTICLE
2
PERFORMANCE SHARE
AWARD
2.1 Grant to
Covered Employees . Each Covered Employee listed in
the table below shall receive an Award of Performance Shares as
indicated below. Such Performance Shares shall be
subject to the terms and conditions specified in this
Program. The amount of Performance Shares awarded to the
Covered Employee shall be determined by dividing the Compensation
Target for such Covered Employee by the Estimated Risk Adjusted
Expected Value of a Performance Share.
|
Covered
Employee
|
|
Estimated Risk Adjusted Expected
Value of a Performance Share
|
|
Compensation Target
|
|
Performance
Shares Awarded
|
|
Rick
McCullough
|
|
$16.17
|
|
|
|
|
|
Eric R.
Stearns
|
|
$16.17
|
|
|
|
|
|
Bart
Brookman
|
|
$16.17
|
|
|
|
|
|
Dan
Amidon
|
|
$16.17
|
|
|
|
|
2.2 Performance
Metric . With regard to Covered Employees employed
on the last day of a Performance Period, the performance measure to
be used for purposes of the Program shall be the Share Price at the
end of a Performance Period. For this purpose, the
“Share Price” shall be the average daily closing price
of the Shares on the NASDAQ Global Select Market (or such successor
market) as reported in the Wall Street Journal during the months of
December 2011, December 2012, and December 2013, as the case may
be.
Except as provided in Section 2.3 and Section
2.6, Performance Shares awarded shall vest only if (i) the
Covered Employee is employed by the Company on the last day of a
given Performance Period, and (ii) certain minimum thresholds of
Share Price Performance, as set forth in the table below, are
attained as of the last day of the three year Performance Period,
the four year Performance Period or the five year Performance
Period, as the case may be:
|
Share Price
3 Year Period
Ending 12/31/11
|
|
Share Price
4 Year Period
Ending 12/31/12
|
|
Share Price
5 Year Period
Ending 12/31/13
|
|
Vested Percentage
|
|
$30.50
|
|
$34.00
|
|
$38.00
|
|
50%
|
|
$34.00
|
|
$39.00
|
|
$45.50
|
|
75%
|
|
$37.50
|
|
$45.00
|
|
$54.00
|
|
100%
|
There shall be no interpolation of a vested
percentage for a Share Price result between price
levels. By way of example, if the Share Price is $32.00
at the end of the three year Performance Period, the Covered
Employees shall be fifty percent (50%) vested in the Performance
Shares.
Performance Shares vested for a Performance
Period shall not be subject to divestment in the event the Share
Price subsequently decreases below the threshold for a subsequent
Performance Period or if the Covered Employee subsequently ceases
to be employed by the Company for any reason. By way of
example, if the Share Price is $34.00 at the end of the three year
Performance Period and $35.00 at the end of the four year
Performance Period, Covered Employees shall be seventy-five percent
(75%) vested in the Performance Shares as of December 31, 2011 and
shall be entitled to payment as provided in Section
2.5. No adjustment or recapture of the Performance
Shares already vested shall occur at December 31, 2012, despite the
fact that Performance Shares would otherwise be considered at a
fifty percent (50%) vested level as of December 31,
2012. Performance Shares which are not vested at
December 31, 2013 shall be forfeited.
If a minimum threshold is attained fo
