Exhibit 10.4
MARATHON OIL
CORPORATION
2007 INCENTIVE COMPENSATION
PLAN
PERFORMANCE UNIT AWARD
AGREEMENT
2007-2009 PERFORMANCE
CYCLE
Pursuant to this Award Agreement and the
Marathon Oil Corporation 2007 Incentive Compensation Plan (the
“Plan”), MARATHON OIL CORPORATION (the
“Corporation”) hereby grants to [NAME] (the
“Participant”), an employee of the Corporation or a
Subsidiary, on May 30, 2007, [NUMBER] performance
units (“Performance Units”), conditioned upon the
Corporation’s TSR Percentile Ranking for the 2007-2009
Performance Cycle. The Performance Units are subject to the
following terms and conditions:
1.
Relationship to the Plan.
This grant of Performance Units 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 (including in
Paragraph 13 of this Award Agreement), 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.
2.
Determination of Payout Percentage. As soon as
practical following the close of the 2007-2009 Performance Cycle,
the Committee shall determine the TSR Percentile Ranking.
Thereafter, the Committee shall determine the Payout Percentage as
follows:
(a)
If the TSR Percentile Ranking is below the 25 th
percentile, the Payout Percentage shall be zero.
(b)
If the TSR Percentile Ranking is at or above the 25
th
percentile, the Payout Percentage shall be equal to or less
than the TSR Percentile Ranking multiplied by 2.
(c)
Notwithstanding anything herein to the contrary, the Committee has
sole and absolute authority and discretion to reduce the Payout
Percentage as it may deem appropriate.
3.
Vesting of Performance Units. Unless the
Participant’s right to the Performance Units is previously
forfeited or vested in accordance with Paragraphs 4, 5, 6, or 7,
following the Committee’s determinations pursuant to
Paragraph 2, the Participant shall vest in and be entitled to
receive a cash payment equal to the product of (i) the number of
Performance Units granted hereunder and (ii) the Payout
Value. Such cash payment shall be made as soon as
administratively feasible following the Committee’s
determination under Paragraph 2 and, in any event, during the
calendar year following the close of the 2007-2009 Performance
Cycle. If, in accordance with the Committee’s
determination under Paragraph 2, the Payout Value is zero, the
Participant shall immediately forfeit any and all rights to the
Performance Units. Upon the vesting and/or forfeiture of the
Performance Units pursuant to this Paragraph 3 and the making of
the related cash payment, if
1
any, the rights of the
Participant and the obligations of the Corporation under this Award
Agreement shall be satisfied in full.
4.
Termination of Employment. If Participant’s
Employment is terminated prior to the close of the 2007-2009
Performance Cycle for any reason (including non-Mandatory
Retirement) other than death or Mandatory Retirement, the
Participant’s right to the Performance Units shall be
forfeited in its entirety as of such termination, and the rights of
the Participant and the obligations of the Corporation under this
Award Agreement shall be terminated.
5.
Termination of Employment due to Death. If
Participant’s Employment is terminated by reason of death
prior to the close of the 2007-2009 Performance Cycle, the
Participant’s right to receive the Performance Units shall
vest in full as of the date of death and the Payout Percentage
shall be 100%. A cash payment equal to the vested value of
the Performance Units shall be made in accordance with Paragraph 3
on the first day of the third month following the death of the
Participant. Such vesting shall satisfy the rights of the
Participant and the obligations of the Corporation under this Award
Agreement in full.
6.
Termination of Employment due to Mandatory Retirement.
In the event of the Mandatory Retirement of the Participant
on or after July 1, 2008, the Participant’s Performance Units
may be considered for vesting following the close of the 2007-2009
Performance Cycle. At the discretion of the Committee, the
Participant may vest in and be entitled to receive a cash payment
equal to the product of (i) the percentage equal to the days of
Participant’s Employment during the 2007-2009 Performance
Cycle divided by the total days in the 2007-2009 Performance Cycle,
(ii) the number of Performance Units granted hereunder, and (iii)
the Payout Value. Such cash payment shall be made as soon as
administratively feasible following the Committee’s
determination under Paragraph 2 and, in any event, during the
calendar year following the close of the 2007-2009 Performance
Cycle. If, in accordance with the Committee’s
determination under Paragraph 2, the Payout Value is zero, the
Participant shall immediately forfeit any and all rights to the
Performance Units. Upon the vesting and/or forfeiture of the
Performance Units pursuant to this Paragraph 6 and the making of
the related cash payment, if any, the rights of the Participant and
the obligations of the Corporation under this Award Agreement shall
be satisfied in full. The death of the Participant following
Mandatory R
