MARATHON OIL CORPORATION
2003 INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE AWARD
AGREEMENT
2004-2006 PERFORMANCE CYCLE
Pursuant
to this Award Agreement and the Marathon Oil Corporation 2003
Incentive Compensation Plan (the “Plan”), MARATHON
OIL CORPORATION (the “Corporation”) hereby grants
to «Name» (the “Participant”), an
employee of the Corporation or an Affiliate, on May 26,
2004, «Number» performance shares (“Performance
Shares”), with each Performance Share representing the right
to receive a share of Common Stock, conditioned upon the
Corporation’s TSR Percentile Ranking over the course of the
2004-2006 Performance Cycle. The number of Performance Shares
awarded are subject to adjustment as provided in Section 17 of
the Plan, and the Performance Shares are subject to the following
terms and conditions:
1. Relationship to the Plan; Definitions.
This
grant of Performance Shares is subject to all of the terms,
conditions and provisions of the Plan and administrative
interpretations thereunder, if any, that have been adopted by the
Committee. Except as defined herein, capitalized terms shall have
the same meanings ascribed to them under the Plan. To the extent
that any provision of this Award Agreement conflicts with the
express terms of the Plan, the terms of the Plan shall control and,
if necessary, the applicable provisions of this Award Agreement
shall be hereby deemed amended so as to carry out the purpose and
intent of the Plan. References to the Participant also include the
heirs or other legal representatives of the Participant. For
purposes of this Award Agreement:
“2004-2006 Performance Cycle” means the period
from January 1, 2004, to December 31, 2006.
“Beginning Stock Price” means the average of the
daily closing price of the Corporation’s Common Stock for
each trading day of the calendar month preceding the commencement
of the 2004-2006 Performance Cycle.
“Cumulative Dividends” means the sum of
(i) all cash dividends and (ii) the Fair Market Value of
all Common Stock dividends as of the payment date for such Common
Stock dividends paid on a share of Common Stock during the
2004-2006 Performance Cycle.
“Employment” means employment with the
Corporation or any of its Affiliates. For purposes of this Award
Agreement, Employment shall also include any period of time during
which the Participant is on Disability status.
“End
Stock Price” means the average of the daily closing price
of the Corporation’s Common Stock for each trading day of the
calendar month ending on the
last day of the
2004-2006 Performance Cycle.
“Peer
Group” means the companies that are members of the AMEX
Oil Index as of the last business day of the 2004-2006 Performance
Cycle, or such other group of companies as selected by the
Committee in its discretion.
“Total
Shareholder Return” or “TSR” means the number
derived using the following formula:
(End Stock
Price – Beginning Stock Price) + Cumulative Dividends
Beginning
Stock Price.
“TSR
Percentile Ranking” means the relative ranking of the
Corporation’s Total Shareholder Return for the 2004-2006
Performance Cycle as compared to the Total Shareholder Return of
the Peer Group companies during the Performance Cycle, expressed as
a percentile ranking.
“Vesting
Percentage” means the percentage of Performance Shares
that will vest after the close of the 2004-2006 Performance Cycle,
as determined by the Committee.
2. Determination of Vesting Percentage. As soon as practical
following the close of the 2004-2006 Performance Cycle, the
Committee shall determine the TSR Percentile Ranking. Thereafter,
the Committee shall determine the Vesting Percentage as
follows:
(a) If
the TSR Percentile Ranking is below the 25 th percentile, the Vesting Percentage shall be
zero.
(b) If
the TSR Percentile Ranking is at or above the 25
th percentile, the Vesting Percentage shall be
equal to the TSR Percentile Ranking multiplied by 2; provided,
however, that if the Corporation’s Total Shareholder Return
is within one percent of the next highest or lowest company, the
TSR Percentile Rankings for the companies shall be
averaged
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