PIONEER NATURAL RESOURCES COMPANY EXECUTIVE DEFERRED COMPENSATION PLANExecutive Compensation Plan Agreement |
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EXHIBIT 10.6
PIONEER NATURAL RESOURCES COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN (Amended and Restated Effective January 1, 2009)
PIONEER NATURAL RESOURCES COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN (Amended and Restated Effective January 1, 2009)
TABLE OF CONTENTS
PIONEER NATURAL RESOURCES COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN (Amended and Restated Effective January 1, 2009)
WITNESSETH: WHEREAS, PIONEER NATURAL RESOURCES COMPANY (“ Pioneer ”) heretofore established the PIONEER NATURAL RESOURCES COMPANY DEFERRED COMPENSATION RETIREMENT PLAN (the “ Plan ”), effective August 8, 1997, for the benefit of its eligible employees and the eligible employees of its participating affiliates; WHEREAS , the Plan was renamed and amended and restated in its entirety, effective August 1, 2002, as the PIONEER NATURAL RESOURCES COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN ; WHEREAS , Pioneer intends for the Plan to conform to the requirements of Code Section 409A, and has been operating the Plan in substantial compliance with Code Section 409A since January 1, 2005; and WHEREAS , Pioneer now desires to amend and restate the Plan to document the segregation of benefits earned and vested prior to January 1, 2005, from benefits earned or vested after December 31, 2004, to make certain changes designed to comply with the requirements of Code Section 409A with respect to benefits earned or vested after December 31, 2004, and to make certain other changes. NOW , THEREFORE , pursuant to the authority reserved in the Compensation Committee pursuant to Section 12.4 of the Plan as in effect on December 31, 2004 (the “ Superseded Plan ”), the Plan is hereby amended by restatement in its entirety, generally effective as of January 1, 2009, unless specifically stated otherwise herein, to read as follows: Section 1.1 Purpose of Plan . The purpose of the Plan is to advance the interests of Pioneer and its Affiliates by attracting and retaining in its employ highly qualified individuals for the successful conduct of its business. Pioneer hopes to accomplish these objectives by helping to provide for the retirement of those employees selected to participate in the Plan. Section 1.2 ERISA Status . The Plan is intended to qualify for the exemptions under Title I of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), provided for plans that are unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. Section 1.3 Code Section 409A Compliance . The Plan is intended to comply with the requirements of Code Section 409A and shall be interpreted and administered in a manner consistent with that intention. In order to transition to the requirements of Code Section 409A, the Plan Administrator may make available to Members certain transition relief provided under Notice 2006-79 and Notice 2007-86, as described in Appendix A to this Plan. 1
Section 1.4 Grandfathered Accounts . Effective December 31, 2004, the portions of each Member’s General Account and Matching Account as of December 31, 2004 that were earned and vested as of that date were segregated into separate accounts known as the Grandfathered General Account and Grandfathered Matching Account, respectively. The Grandfathered General Account and the Grandfathered Matching Account will be adjusted for any earnings or losses on amounts credited to such accounts. The Grandfathered General Accounts and the Grandfathered Matching Accounts shall be subject to the terms and conditions of the Superseded Plan, and such accounts shall not be subject to the terms and conditions of this amended and restated Plan. ARTICLE II. DEFINITIONS AND CONSTRUCTION Section 2.1 Definitions . Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary: (a) “ Account(s) ” means a Member’s General Account, Matching Account and/or Company Account, as applicable, including the amounts credited thereto, but does not include a Member’s Grandfathered General Account or Grandfathered Matching Account. The Plan Administrator will maintain separate subaccounts within a Member’s Accounts if separate identification of amounts credited to the Accounts is warranted. (b) “ Affiliate ” means each trade or business (whether or not incorporated) which together with Pioneer would be deemed to be a “single employer” with Pioneer under Code Section 414(b) (controlled group of corporations) or Code Section 414(c) (group of trades or businesses under common control), as applicable, but in applying such Code Sections, an ownership threshold of 50% shall be used as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (i) Code Section 1563 and the regulations thereunder for determining a controlled group of corporations under Code Section 414(b), and (ii) Treasury Regulation § 1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c). (c) “ Basic Compensation ” means the sum of (i) the base salary payable by a Company to a Member for personal services rendered to a Company but excluding any amount payable pursuant to a Company’s salary continuation program, (ii) any contributions made by a Company on behalf of the Member to a qualified cash or deferred arrangement (within the meaning of Section 401(k) of the Code) maintained by the Company, (iii) any compensation reduction amounts elected by the Member for the purchase of benefits pursuant to a cafeteria plan (within the meaning of Section 125(d) of the Code) maintained by a Company, and (iv) any elective amounts that are not includible in the gross income of the Member by reason of Section 132(f)(4) of the Code. (d) “ Beneficiary ” means the beneficiary or beneficiaries designated by a Member to receive payment of the Member’s benefit in the event of the Member’s death. Each Beneficiary designation shall be made by executing a Beneficiary designation form prescribed by the Plan Administrator and filing same with the Plan Administrator. Any
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such designation may be changed at any time by the execution and filing of a new Beneficiary designation. If no Beneficiary designation is made and on file with the Plan Administrator at the time of a Member’s death or a designation is not effective for any reason as determined by the Plan Administrator, then the designated Beneficiary or Beneficiaries to receive the Member’s benefits shall be as follows: (i) if a Member leaves a surviving spouse, his or her benefits shall be paid to such surviving spouse; or (ii) if a Member leaves no surviving spouse, his or her benefits shall be paid to such Member’s estate or to his or her heirs at law if there is no administration of such Member’s estate. (e) “ Bonus Compensation ” means the sum of (i) any compensation earned by a Member under a Company’s annual cash bonus and cash incentive plans, (ii) any contributions made by a Company on behalf of the Member to a qualified cash or deferred arrangement (within the meaning of Section 401(k) of the Code) maintained by the Company, (iii) any compensation reduction amounts elected by the Member for the purchase of benefits pursuant to a cafeteria plan (within the meaning of Section 125(d) of the Code) maintained by a Company, and (iv) any elective amounts that are not includible in the gross income of the Member by reason of Section 132(f)(4) of the Code. (f) “ Change in Control ” shall have the meaning given that term in the Pioneer Natural Resources Company Long-Term Incentive Plan (the “ LTIP ”) as in effect on December 31, 2008; provided , however , that any modification to the definition of “change in control” in the LTIP adopted after December 31, 2008 shall apply for purposes of this Plan, except that any modification to such definition adopted on or after, or within 180 days prior to, a Change in Control shall not apply in determining the definition of such term under this Plan unless such amendment is favorable to the Member.
(h) “ Code Section 409A ” means Section 409A of the Code and all applicable regulations and other guidance issued under or related to Section 409A of the Code. (i) “ Company ” means Pioneer, Pioneer Natural Resources USA, Inc. and any other Affiliate of Pioneer which adopts the Plan pursuant to the provisions of Article X. (j) “ Company Account ” means a bookkeeping account established for each Member to which is credited the Company Credits and which is adjusted for such account’s allocation of net income (or net loss) as provided in Section 5.4. (k) “ Company Credit ” means a Company credit made by the Company on a Member’s behalf pursuant to Section 4.3(b). (l) “ Company Credit Agreement ”means an agreement between the Company and an Eligible Employee, in the form and subject to the conditions prescribed by the Plan Administrator, pursuant to which an Eligible Employee is granted a Company Credit, and which specifies, among other things, that (i) the Eligible Employee agrees to participate in this Plan in accordance with its provisions
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and (ii) the Plan is incorporatedby reference and the Company Credit Agreement shall be subject to the Plan in all respects.
(o) “ Eligible Employee ” means any individual employed by a Company who is (i) an officer of the Company or (ii) a member of a select group of management or highly compensated employees (A) designated by the Plan Administrator from time to time as being eligible to participate in the Plan and (B) whose annual rate of Basic Compensation is $175,000 or above and whose designated grade level is at least grade 23 in the Company’s general salary grade structure or an equivalent grade in the specialized grade structure, as determined by the Plan Administrator; provided, however , that the Basic Compensation and grade level requirements provided in clause (ii)(B) of this subsection shall not apply to Members in the Plan as of December 31, 2008. An Eligible Employee shall remain an Eligible Employee notwithstanding any reduction in his or her annual rate of Basic Compensation below the applicable minimum under clause (ii)(B) of this subsection; provided, however , that the Plan Administrator in its discretion may withdraw an individual’s designation as an Eligible Employee under clause (ii) at any time and for any reason effective with respect to any subsequent Plan Year. (p) “ General Account ” means a bookkeeping account established for each Member to which is credited his or her Member Deferrals and Make-Up Deferrals and which is adjusted for such account’s allocation of net income (or loss) as provided in Section 5.4.
(r) “ Grandfathered Matching Account ” has the meaning set out in Section 1.4. (s) “ Hypothetical Investments ” means the investment funds and other securities designated from time to time by the Plan Administrator for the deemed investment of Accounts pursuant to Section 5.3. (t) “ Make-Up Deferrals ” means deferrals of Basic Compensation made by a Service Member pursuant to Section 4.1(d). (u) “ Make-Up Matching Credits ” means matching credits made by the Company on a Service Member’s behalf pursuant to Section 4.3(a)(ii). (v) “ Matching Account ” means a bookkeeping account established for each Member to which is credited his or her Matching Credits and Make-Up Matching Credits and which is adjusted for such account’s allocation of net income (or net loss) as provided in Section 5.4.
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(w) Matching Credits ” means matching credits made by the Company on a Member’s behalf pursuant to Section 4.3(a)(i).
(x) “ Member ” means an Eligible Employee who has met the eligibility requirements for participation in the Plan and who has become a Member pursuant to Article III. (y) “ Member Deferral Election ” means an election by a Member authorizing the Company to reduce the Member’s Basic Compensation and/or Bonus Compensation in the elected amount as a Member Deferral or Make-Up Deferral and credit the amount of such deferral to the Member’s General Account. (z) “ Member Deferrals ” means deferrals of Basic Compensation and/or Bonus Compensation made by a Member pursuant to a Member Deferral Election. (aa) “ Payment Election ” means an election as to time of payment and form of payment for the vested amounts credited to a Member’s Accounts. (bb) “ Performance-Based Compensation ” means Bonus Compensation, the amount of which, or the entitlement to which, is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Plan Administrator in accordance with Treasury Regulation § 1.409A-1(e). Performance criteria are considered preestablished if established in writing no later than 90 days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. (cc) “ Pioneer ” means Pioneer Natural Resources Company, a Delaware corporation, and its successors.
(ee) “ Plan Administrator ” means the Compensation Committee of the Directors, which may act through its delegate, or such other committee as may be appointed by the Directors to administer the Plan.
(gg) “ Plan ” means this Pioneer Natural Resources Company Executive Deferred Compensation Plan, as amended from time to time. (hh) “ Separation from Service ” means a termination of services provided by a Member to the Company and its Affiliates, whether voluntary or involuntary, as determined by the Plan Administrator in accordance with the Company’s policies and Code Section 409A.
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(jj) “ Specified Employee ” means a Member who is a “specified employee” within the meaning of Treasury Regulation § 1.409A-1(i) as of the date of such Member’s Separation from Service with the Company, as determined by the Plan Administrator in accordance with the Company’s policies and Code Section 409A.
(ll) “ Trust Agreement ” means the agreement entered into between Pioneer and the Trustee pursuant to Section 9.2. (mm) “ Trust Fund ” means the funds and properties, if any, held pursuant to the provisions of the Trust Agreement, together with all income, profits and increments thereto.
(oo) “ Trustee ” means the trustee or trustees appointed by the Compensation Committee of the Directors who are qualified and acting under the Trust Agreement at any time. (pp) “ Unforeseeable Emergency ” means a severe financial hardship to the Member resulting from (i) an illness or accident of the Member, the Member’s spouse, the Member’s Beneficiary or the Member’s dependent (as defined in Code Section 152 without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (ii) a loss of the Member’s property due to casualty, or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Member, all as determined by the Plan Administrator based on the relevant facts and circumstances. (qq) “ USERRA ” means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended.
Section 2.2 Number and Gender . 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. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender. Section 2.3 Headings . The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, the text shall control. ARTICLE III. ELIGIBILITY AND PARTICIPATION
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(a) Participation in the Plan is limited to Eligible Employees. The Plan Administrator will notify each Eligible Employee of his or her eligibility to become a Member within a reasonable period of time prior to the date by which the Member Deferral Election is due to be filed. An Eligible Employee may become a Member by making a Member Deferral Election in accordance with Article IV. An Eligible Employee also may become a Member in the absence of a Member Deferral Election if a Company Credit under Section 4.3(b) is made to his or her Company Account. (b) A Member will cease to be an Eligible Employee as of the end of any Plan Year designated by the Plan Administrator. Any such Plan Administrator action will be communicated to the affected Member prior to the effective date of such action. Any such Member may again become an Eligible Employee in any subsequent Plan Year selected by the Plan Administrator in its sole discretion. ARTICLE IV. MEMBER ELECTIONS, MATCHING CREDITS, AND COMPANY CREDITS
(a) An Eligible Employee may make a Member Deferral Election, at the time and in the manner set out in Section 4.2, to: (i) defer a percentage or dollar amount of his or her Basic Compensation to be earned in the following Plan Year; and/or (ii) defer a percentage or dollar amount of his or her Bonus Compensation that is to begin to be earned in the following Plan Year (or in the current Plan Year in the case of a Member Deferral Election with respect to Performance-Based Compensation under Section 4.2(b)). For purposes of this Plan, any amount of Basic Compensation that is payable after the end of a Plan Year solely for services performed during the final payroll period (described in Code Section 3401(b)) containing the last day of the Plan Year, where the amount is payable pursuant to the timing arrangement under which a Company normally compensates the Member for services performed during a payroll period (described in Code Section 3401(b)), shall be treated as Basic Compensation for services performed in the subsequent Plan Year in which the Basic Compensation is actually payable. (b) The amount of Member Deferrals from Basic Compensation and/or Bonus Compensation shall be determined before contributions are made to a Pioneer Qualified Plan. Except as provided in Section 4.2(c), the maximum Member Deferral under subsection (a)(i) shall be 25% of the Member’s Basic Compensation for the Plan Year and under (a)(ii) shall be 100% of the Member’s Bonus Compensation for the Plan Year. (c) For each Plan Year, the Basic Compensation portion of the Member Deferrals shall be withheld from each regularly scheduled Basic Compensation payroll in equal amounts, as adjusted from time to time for increases and decreases in Basic Compensation. The Bonus Compensation portion of the Member Deferrals shall be withheld at the same time the Bonus Compensation otherwise would be paid to the
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Member, whether or not this occurs during the Plan Year itself. Member Deferrals made by a Member will be credited to his or her General Account in accordance with Section 5.1. (d) If a Member experiences periods of absence from his or her employment with the Company necessitated by reason of service in the uniformed services within the meaning of USERRA (a “ Service Member ”) and the Service Member returns to active employment with the Company while he or she has rights to reemployment under USERRA, then after his or her return to employment with the Company such Service Member will be permitted to make a Member Deferral Election in accordance with Section 4.2(c) to have a make-up deferral made to the Plan from his or her Basic Compensation in an amount up to (i) the amount the Service Member would have been permitted to defer under Section 4.1(a)(i) of the Plan during the Service Member’s periods of absence for uniformed service minus (ii) any Member Deferrals made to the Plan on behalf of the Service Member under Section 4.1(a)(i) during such periods of absence (the “ Make-Up Deferral ”). The Make-Up Deferral shall be in addition to the deferral permitted under Section 4.1(a) for the Plan Year(s) during which the Make-Up Deferral election is effective. The Service Member shall be eligible to have such Make-Up Deferrals made to the Plan for a period of time equal to the lesser of (i) 3 multiplied by his or her immediate past period of uniformed service or (ii) 5 years.
(a) In General . Member Deferral Elections shall be in writing, signed by the Eligible Employee, on a form prescribed by the Plan Administrator, pursuant to which the Eligible Employee authorizes the Company to reduce his or her Basic Compensation and/or Bonus Compensation in the elected amount and the Company, in consideration thereof, agrees to credit an equal amount to his or her General Account maintained pursuant to the Plan. Except as provided in subsections (b), (c) and (d) of this Section, the Member Deferral Election must be completed, signed and filed with the Plan Administrator during an election period established by the Plan Administrator that ends no later than December 31 st of the Plan Year preceding the Plan Year during which the Eligible Employee will begin to perform services giving rise to the Basic Compensation and/or Bonus Compensation subject to the Member Deferral Election. A Member Deferral Election under this subsection will become irrevocable and effective on the last day of the election period established by the Plan Administrator. A Member shall make a Payment Election in accordance with Section 6.1 with respect to each Member Deferral Election made under the Plan. (b) Performance-Based Compensation . In the event that the Plan Administrator determines that a Member Deferral Election may be made with respect to Bonus Compensation that is Performance-Based Compensation, an Eligible Employee may make a Member Deferral Election in a manner similar to that provided in subsection (a) of this Section with respect to such Bonus Compensation. Such a Member Deferral Election must be completed, signed and returned to the Plan Administrator during an election period established by the Plan Administrator that ends at least six months prior to
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the end of any such Plan Year (or such earlier date as the Plan Administrator may prescribe), provided that the Eligible Employee performs services continuously from the later of (i) the beginning of the Plan Year or (ii) the date the performance criteria are established, through the date the Member Deferral Election is made, and in no event may a Member Deferral Election be made after the Bonus Compensation has become readily ascertainable as determined in accordance with Treasury Regulation § 1.409A-2(a)(8). A Member Deferral Election under this subsection will become irrevocable and effective on the last day of the election period established by the Plan Administrator. (c) USERRA . Subject to the requirements of Code Section 409A, the Plan Administrator may allow an Eligible Employee to make a Member Deferral Election to have Member Deferrals and/or Make-Up Deferrals made to the Plan to the extent an initial deferral election is provided to satisfy the requirements of USERRA. A Member Deferral Election under this subsection will become irrevocable and effective on the day it is filed with the Plan Administrator. (d) Continued Effectiveness of Member Deferral Election. A Member Deferral Election shall remain in force and effect for the entire Plan Year to which such election relates. A Member Deferral Election will remain in force and effect for each subsequent Plan Year for which the Member satisfies the eligibility requirements set forth in Article III, unless and until such election is changed, r |
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