Exhibit 10.2
The Board of Directors of Unocal Corporation reserves the right
to change the definition of "Change of Control" and
other provisions of this Agreement to comply with the
American Jobs Creation Act of 2004.
UNOCAL CORPORATION
LONG-TERM INCENTIVE PLAN OF 2004
PERFORMANCE SHARE AWARD AGREEMENT
AWARD AGREEMENT
effective as of
____________, between
UNOCAL CORPORATION
(hereinafter called the "Company") and
______________
(hereinafter called
the
"Participant").
1. Award Grant. The Company hereby awards to Participant ______________
Performance Share Units (each unit shall be
deemed to be the
equivalent of one
share of Common Stock of the Company). Such Performance Share Units will be
credited to the Performance Share account maintained for Participant under
the
Long-Term Incentive Plan of 2004.
2. Rights to Payment of Performance Share Units. It is understood that the
amount of the foregoing award earned and paid will be established by the
Management Development and Compensation
Committee of the Board
of Directors of
the Company (the "Committee") based on the Company's
percentile
ranking with
respect to a group of companies (the "Peer Group Companies") during the
three-year Award Period which ends on ____________________. The percentile
ranking will be the weighted average of the Company's
percentile
ranking with
respect to the Peer Group Companies as to
five measures, weighted as indicated:
(a) Comparative Return to Shareholders
(50%)
(b) Discretionary Cash Flow per Debt
Adjusted Share (12.5%)
(c) Production Growth per Debt
Adjusted Share (12.5%)
(d) Finding and Development Cost per
BOE Added (12.5%)
(e) Production and G&A Cost per
Unit Production (12.5%)
"Return to Stockholders" is the sum of cash
dividends and share price
appreciation expressed as a percentage of
the beginning share price. The actual
payment of the Performance Share Units
awarded will be determined in accordance
with the following:
<TABLE>
-----------------------------------------
-----------------------------
Percentile Rank
Payout Percentage
-----------------------------------------
-----------------------------
<C>
<C>
100%
200%
-----------------------------------------
-----------------------------
95%
190%
90%
180%
85%
170%
-----------------------------------------
-----------------------------
80%
160%
-----------------------------------------
-----------------------------
75%
150%
70%
140%
65%
130%
-----------------------------------------
-----------------------------
60%
120%
-----------------------------------------
-----------------------------
55%
110%
50%
100%
45%
83%
40%
67%
-----------------------------------------
-----------------------------
35%
50%
-----------------------------------------
-----------------------------
30%
0%
25%
0%
15%
0%
10%
0%
5%
0%
0%
0%
-----------------------------------------
-----------------------------
</TABLE>
-1-
<PAGE>
Under the foregoing formula, Participant
will be entitled to payment of 100% of
the Performance Share Units awarded if the
Company's weighted average ranking is
at the 50th percentile. However, in no
event shall the Participant receive in
excess of 200% of the Units awarded, and
payment is further subject to the
limitation contained in Section 3 below.
Notwithstanding anything to the
contrary stated above, the Committee may
reduce the payment based on other
factors at the discretion of the Committee
unless a Change of Control has
occurred.
The Committee has determined the Peer Group Companies to be used for
purposes of the comparison of Return to
Stockholders. During the Award Period no
changes will be made by the Committee to the Peer Group
Companies,
except as
required because of merger, dissolution or similar
circumstance with respect to
such companies.
3. Payment of Awards. Payments made hereunder shall be equal in amount to
the
Fair Market Value on the Valuation
Date of the number of
shares of Common Stock
equivalent to the number of Performance Share Units earned and payable to
Participant pursuant to paragraph 2 above, subject to a maximum Fair Market
Value of not more than 400% of the Fair
Market Value of such
Performance Share
Units at the time of granting the
Performance
Share Units.
Payments shall be
made on ________________ or as soon as practicable
thereafter.
The Committee
will determine the form of payout,
which will normally be
partially in cash and
partially in shares of the Company's Common
Stock.
Upon the
occurrence of a Change in Control (as such term is defined
below),
each Performance Share Unit will become payable to the Participant (such
Performance Share Award to be paid by the
Company), solely in cash, as if the
Award Period ended as of the occurrence of
such Change in Control. The Committee
may estimate average shareholder
returns or other
performance measures
for any
such period for which reports are not yet
available. However,
upon a Change of
Control, participant shall receive not less
than the number of Performance Share
Units awarded, subject to limits indicated in the above paragraph. As used
herein, "Change in Control" means any of
the following:
(a) The
acquisition by any individual, entity or group (within the
meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")(a "Person") of beneficial
ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined
voting power of
the
then outstanding voting securities of the Company
entitled to vote generally in
the election of directors (the "outstanding C
