PIONEER NATURAL RESOURCES COMPANY
2006 LONG TERM INCENTIVE PLAN
PERFORMANCE UNIT AWARD AGREEMENT
INSERT DATE OF GRANT
To: _______________________________
Pioneer Natural Resources Company, a Delaware
corporation (the " Company "), is pleased to
grant you an award (the " Award ") to receive an
aggregate of __________ performance units (each, a “
Performance Unit
”) in respect of the period January 1, 2008
through December 31, 2010 (the “ Performance Period ”).
This award is subject to your acceptance of and agreement to all
the applicable terms, conditions and restrictions described in this
Performance Unit Award Agreement (the “
Agreement ”) and the Pioneer Natural Resources Company 2006 Long
Term Incentive Plan (as it may be amended from time to time, the
“ Plan
”). A copy of the Plan is available upon
request. Except as provided below, to the extent that any provision
of this Agreement conflicts with the expressly applicable terms of
the Plan, you acknowledge and agree that those terms of the Plan
shall control and, if necessary, the applicable provisions of this
Agreement shall be deemed amended so as to carry out the purpose
and intent of the Plan. Terms that have their initial letters
capitalized, but that are not otherwise defined in this Agreement,
shall have the meanings given to them in the Plan in effect as of
the date of this Agreement. The Performance Units contemplated
herein are described in the Plan as Restricted Stock Units subject
to restrictions that lapse based on the achievement of performance
goals pursuant to Section 6(a)(i) of the Plan.
This Agreement sets forth the terms of the agreement
between you and the Company with respect to the Performance Units.
By accepting this Agreement, you agree to be bound by all of the
terms hereof.
1. Overview of
Performance Units .
(a)
Performance Units Generally
. Each Performance Unit represents a contractual
right to receive one share of the Company’s common stock (the
“ Common
Stock ”), subject to the
terms and conditions of this Agreement; provided that, based on the
relative achievement against each Performance Objective (as defined
below), the number of shares of Common Stock that may be
deliverable hereunder in respect of the Performance Units may range
from 0% to 250% of the number of Performance Units stated in the
preamble to this Agreement (such stated number of Performance Units
hereafter called the “ Initial
Performance Units ”). Your
right to receive Common Stock in respect of Performance Units is
generally contingent, in whole or in part, upon (
i ) the achievement of
the performance objective outlined in Section 2 below (the
“ Performance
Objective ”) and (
ii ) except as provided
in Section 4 or Section 5, your continued
employment with the Company or one of its
Subsidiaries through the end of the Performance Period.
(b)
Dividend Equivalents .
With respect to each outstanding Performance Unit, the Company
shall credit a book entry account with an amount equal to the
amount of any cash dividend paid on one share of Common Stock. The
amount credited to such book entry account shall be payable to you
at the same time or times, and subject to the same terms and
conditions as are applicable to, your Performance Units;
provided that , if more
than the Initial Performance Units shall become payable in
accordance with this Agreement, the maximum amount payable in
respect of such dividend equivalents shall be the amount credited
to your book entry account. Dividends and distributions payable on
Common Stock other than in cash will be addressed in accordance
with Section 8 hereof.
2. Total Shareholder Return Objective . The Performance Objective with respect to the Initial
Performance Units is based on Total Shareholder Return. Total
Shareholder Return shall mean, as to the Company and each of the
Peer Companies (as defined below), the annualized rate of return
shareholders receive through stock price changes and the assumed
reinvestment of dividends paid over the Performance Period.
Dividends per share paid other than in the form of cash shall have
a value equal to the amount of such dividends reported by the
issuer to its shareholders for purposes of Federal income taxation.
For purposes of determining the Total Shareholder Return for the
Company and each of the Peer Companies, the change in the price of
the Company’s Common Stock and of the common stock of each
Peer Company, as the case may be, shall be based upon the average
of the closing stock prices of the Company and such Peer Company on
each trading day in the 60-day period preceding each of the start
(the “Initial Value”) and the end (the “Closing
Value”) of the Performance Period. The Initial Value of the
Common Stock to be used to determine Total Shareholder Return over
the Performance Period is $47.95 per share. Achievement with
respect to this Performance Objective shall be determined based on
the Company’s relative ranking in respect of the Performance
Period with regard to Total Shareholder Return as compared to Total
Shareholder Return of the Peer Companies, and shall be determined
in accordance with the applicable table as set forth in Appendix A
hereto. The applicable table shall be determined based on the
number of Peer Companies for the Performance Period. A company
shall be a “ Peer
Company ” if it (
i ) is one of the
companies listed on Appendix A hereto and ( ii ) has a class of common equity
securities listed to trade under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”),
during each day of the Performance Period. The number of
Performance Units, if any, determined to be earned pursuant to the
applicable table under Appendix A shall be referred to
“ Earned Performance
Units ”.
3. Conversion of Performance Units; Delivery of Performance
Units . Unless an earlier date
applies pursuant to Section 4(a), Section 5(c) or Section 6,
payment in respect of Earned Performance Units shall be made not
later than March 15 of the year following the year in which the
Performance Period ends. Unless otherwise determined by the
Committee, all payments in respect of Earned Performance Units
shall be made in freely transferable shares of Common Stock;
provided, however, that if and to the extent that the reservation
of the power to settle (as opposed to the act of settling)
Performance Units in cash instead of shares would result in an
additional financial accounting charge for the Company, the
Committee shall not have the
right to settle such Performance Units other than in
the form of Common Stock (or, if applicable, stock of a Successor
Corporation (as defined in Section 5)). Neither this Section 3 nor
any action taken pursuant to or in accordance with this Section 3
shall be construed to create a trust of any kind. Any shares of
Common Stock issued to you pursuant to this Agreement in settlement
of Earned Performance Units shall be in book entry form registered
in your name. Any fractional Earned Performance Units shall be
rounded up to the nearest whole share of Common Stock.
4. Termination of Employment.
(a)
Death or Disability .
In the event that your employment with the Company or a Subsidiary
terminates during the Performance Period due to your death or
Disability (as such term is defined in the Severance Agreement
between you and the Company or one of its subsidiaries), you shall
be deemed to have earned a number of Performance Units equal to the
product of (i) and (ii), where (i) and (ii) are:
(i)
the Initial Performance Units;
(ii) a
fraction (the “ Pro-Ration
Fraction ”), (
A ) the numerator of
which is the number of full months (counting the month in which
your termination of employment occurs as a full month) during the
Performance Period during which you were employed and (
B ) the denominator of
which is 36.
Distribution of shares of Common Stock in respect of
the Performance Units determined to be earned by reason of this
Section 4(a) shall be made not later than 75 days following your
death or Disability and shall be in full and complete satisfaction
of all of your rights (and the rights of any person who derives
his, her or its rights from you) under this Agreement.
(b)
Normal Retirement . In
the event that your employment with the Company and each of its
Subsidiaries by which you are employed terminates during the
Performance Period due to your retirement at or after having
attained age 60, you shall be deemed to have earned, as of the end
of the Performance Period, that number of Performance Units equal
to the product of ( i
) the number of Earned Performance Units that you
would have earned in accordance with Section 2 had you remained
employed through the end of the Performance Period multiplied by
( ii ) the
Pro-Ration Fraction. Any portion of the Performance Units that
cannot become earned and payable in accordance with the preceding
sentence shall terminate and automatically be cancelled as of the
date of your termination of employment. Any portion of your
Performance Units that is eligible to be earned pursuant to first
sentence of this subparagraph (b), but is not earned as of the end
of the Performance Period, shall terminate and be canceled upon the
expiration of such Performance Period.
(c)
Termination Without Cause or Termination For Good
Reason . In the event that your
employment with the Company and each of its Subsidiaries by which
you are employed is terminated during the Performance Period
( x ) by the
Company and such Subsidiaries and such termination is not a
Termination for Cause or (y) by you and such termination is a
Termination for Good Reason (as each such term is defined in
the
Severance Agreement between you and the Company or
one of its subsidiaries), then notwithstanding the terms of any
such Severance Agreement you shall be deemed to have earned, as of
the end of the Performance Period, the number of Earned Performance
Units that you would have earned in accordance with Section 2 had
you remained employed through the end of the Performance Period.
Any portion of your Performance Units that is eligible to be earned
pursuant to the preceding sentence, but is not earned as of the end
of the Performance Period, shall terminate and be canceled upon the
expiration of such Performance Period.
(d)
Other Termination of Employment
. Unless otherwise determined by the Committee at or
after grant, in the event that your employment with the Company or
a Subsidiary terminates prior to the end of the Performance Period
for any reason other than those listed in Section 4(a), 4(b) or
4(c), all of your Performance Units shall terminate and
automatically be canceled upon such termination of
employment.
5. Change of Control .
Notwithstanding the provisions of Section 1 through
Section 4 hereof or the terms of any Change of Control Agreement
between you and the Company or a Subsidiary (a “
CIC Agreement
”), if you have been continuously employed
from the grant specified above until the date that the Change of
Control occurs (the “ Change
of Control Date ”) or you
are treated, for purposes of such CIC Agreement, to have remained
in employment through the Change of Control Date, upon the
occurrence of a Change of Control your rights in respect of the
Performance Units shall be determined as provided in Section 5(a).
If your employment shall have terminated prior to the Change of
Control Date, but at least some of your Performance Units remain
outstanding pursuant to Section 4(b) or Section 4(c), your rights
in respect of your outstanding Performance Units shall be
determined as provided in Section 5(b).
(a) If
a Change of Control occurs, you will be issued a number of shares
of Common Stoc
