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EXHIBIT 10.6
BURLINGTON RESOURCES INC.
DEFERRED COMPENSATION PLAN
As Amended and Restated Effective October 1, 1994
(Originally Effective January 1, 1989)
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BURLINGTON RESOURCES INC.
DEFERRED COMPENSATION PLAN
Table of Contents
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Page
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Section 1 Definitions . . . . . . . . . . . . . . . . 1
Section 2 Administration . . . . . . . . . . . . . . . 3
Section 3 Participants . . . . . . . . . . . . . . . . 4
Section 4 Benefits . . . . . . . . . . . . . . . . . . 4
Section 5 General Provisions. . . . . . . . . . . . . . 11
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BURLINGTON RESOURCES INC.
DEFERRED COMPENSATION PLAN
PREAMBLE
WHEREAS, Burlington Resources Inc. (the "Company") established the
Burlington Resources Inc. Deferred Compensation Plan (the "Plan") effective
January 1, 1989 to permit key employees of the Company and its subsidiaries to
defer all or part of their base salary, in order for the Company to attract and
retain exceptional employees; and
WHEREAS, the Company desires to amend and restate the Plan to effect
certain changes;
NOW, THEREFORE, the Company does hereby amend and restate the Plan as
set forth herein, effective October 1, 1994.
SECTION 1
DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings
indicated:
1.1 Account means a Memorandum Account, Special Deferral Memorandum Account,
and/or an Automatic Deferral Account, as each is defined in Section 4.4.
1.2 Base Salary means the Participant's base salary being paid by the Employer
for the applicable year or partial year, exclusive of bonuses and all
other items of compensation for the year.
1.3 Beneficiary means the person(s) designated by a Participant, on a form
provided by the Management Committee and filed with the Company's Human
Resources Department, to receive benefits from the Plan in the
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event of his or her death. A Participant may change his or her beneficiary
designation at any time. If no designated Beneficiary survives the
Participant, the Beneficiary shall be the Participant's surviving spouse
or, if none, his or her estate.
1.4 Board means the Board of Directors of the Company.
1.5 Company means Burlington Resources Inc., a Delaware corporation.
1.6 Company Stock Account means a notional subaccount of an Account credited
with Phantom Stock, as provided in Section 4.5.
1.7 Employer means the Company and its subsidiaries.
1.8 Fair Market Value means, as applied to a specific date, the mean between
the highest and lowest quoted selling prices at which the common stock of
the Company was sold on such date as reported inb the NYSE-Corporate
Transactions by The Wall Street Journal on such date or, if no Company
common stock was traded on such date, on the next preceding day on which
its common stock was so traded.
1.9 Interest Account means a notional subaccount of an Account credited with
interest, as provided in Section 4.5.
1.10 Management Committee means the committee appointed pursuant to Section
2.1 to administer the Plan.
1.11 Participant means each employee who participates in the Plan in
accordance with Section 3.
1.12 Permanent Disability means the Management Committee has found, upon the
basis of medical evidence satisfactory to it, that a Participant is
totally disabled, whether due to physical or mental condition, so as to
be prevented from engaging in further full-time employment by the
Employers and that such disability is reasonably expected to be
permanent or long-term.
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1.13 Phantom Stock means a phantom or notional share of common stock of the
Company. A Participant shall not possess any rights of a stockholder of
the Company with respect to a share of Phantom Stock, including, without
limitation, rights concerning voting dividends. A share of Phantom
Stock shall be payable solely in cash under the Plan.
1.14 Plan means the Burlington Resources Inc. Deferred Compensation Plan
either in its previous or present form or as amended from time to time.
1.15 Termination means a Participant's termination of employment with the
Employers, including by reason of death, retirement or Permanent
Disability.
SECTION 2
ADMINISTRATION
2.1 Management Committee. The Plan shall be administered by a
management committee (the "Management Committee") consisting of such executives
of the Company as the Chief Executive Officer of the Company shall designate.
Subject to review by the Compensation and Nominating Committee of the Board,
the Management Committee shall have the complete authority and power to
interpret the Plan, prescribe, amend and rescind rules relating to its
administration, select eligible Participants, determine a Participant's (or
Beneficiary's) right to a payment and the amount of such payment, and to take
all other actions necessary or desirable for the administration of the Plan.
All actions and decisions of the Management Committee shall be final and
binding upon all Participants and Beneficiaries. No member of the Management
Committee shall vote on any matter that pertains solely to himself or herself.
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SECTION 3
PARTICIPANTS
3.1 Participants. The Management Committee shall determine and
designate the executives of the Company and other key employees of the
Employers who are eligible to defer Base Salary under the Plan (the
"Participants"). Participants will be limited to those employees who, because
of their management or staff positions, have the principal responsibility for
the management, direction and success of the Company as a whole or a subsidiary
or a particular business unit thereof. Directors of the Company who are
full-time executives of the Company shall be eligible to participate in the
Plan. Each Participant must be a "member of a select group of management" or
"highly compensated," as those terms are defined in Section 201(2) of the
Employee Retirement Income Secuirty Act of 1974, as amended. Further, a
Participant shall not be eligible to make deferrals under the Plan with respect
to any year unless the Participant has also elected to make such year 401(k)
contributions to the Company's qualified defined contribution plan at the
highest contribution rate permitted under that plan and any reduction in his or
her 401(k) contribution rate under such qualified plan prior to making the
maximum 401(k) contribution for that year as permitted by the terms of the
qualified plan shall result in the automatic suspension of the Participant's
deferrals under this Plan for the remainder of that year.
SECTION 4
BENEFITS
4.1 Voluntary Deferrals. Before January 1 of any year (or, with
respect to employees who first become Participants during a year, on or before
the date on which they become Participants) each Participant may elect to have
the payment of all or a portion of his or her Base Salary for that year (or, if
later, so much of the year as commences on the day following the date on which
the employee becomes a
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Participant) deferred until his or her Termination. The election shall be
irrevocable and shall be made on a form prescribed by the Management Committee,
which shall govern the amount deferred, the form of its payment pursuant to
Section 4.8 following the Participant's Termination, and, except as provided
below, the investment of the Participant's Memorandum Account for such deferral
period pending its payment. A Participant's deferral election shall apply only
to Base Salary earned during that calendar year or partial year, as the case
may be. If a Participant has not made a deferral election, the Base Salary
payable to him or her for that year shall be paid in accordance with the
Employer's normal payroll practices.
4.2 Special Deferrals. The Management Committee may, in its
discretion, approve deferred payments ("Special Deferrals") as follows.
Before January 1 of any year (or, with respect to employees who first become
Participants during a year, on or before the date on which they become
Participants) each Participant may elect to have the payment of all or a
portion of his or her Base Salary for that year (or, if later, so much of the
year as commences on the day following the date on which the employee becomes a
Participant) deferred until a date or dates specified by the Management
Committee, which, with respect to any Special Deferral invested in Phantom
Stock, must be more than six months after the effective date of such deferral.
The Participant's election shall be irrevocable and shall be made on a form
prescribed by the Management Committee. A Participant's Special Deferral
election shall apply only to Base Salary earned during that calendar year or
partial year, as the case may be. If a Participant has not made a Special
Deferral election, the Base Salary paid to him or her for that year (or partial
year) shall be paid in accordance with Section 4.1.
4.3 Automatic Deferrals. If the Management Committee determines
that all or part of the Base Salary to be paid to a Participant for a year
would be
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nondeductible by the Company or a subsidiary for Federal tax purposes due to
the limitations of Section 162(m) of the Internal Revenue Code, so much of the
Base Salary that would not be deductible that year shall be deferred
automatically and, unless the Management Committee, in its sole discretion,
directs otherwise, credited to the Participant's Automatic Memorandum Account,
which, pursuant to the Participants' election, shall be invested and payable as
follows;
(a) invested in the Interest Account and payable in the first year or
years in which the Management Committee, in its sole discretion,
determines either such payment(s) would be deductible or to forego the
deduction;
(b) invested in the Interest Account and payable upon the
Participant's Termination; or
(c) invested in the Company Stock Account and payable upon the
Participant's Termination.
A Participant's election must be made prior to the deferral date and,
if (b) or (c) is elected, the election must also specify the form in which the
Account is to be paid as provided in Section 6.9. If the Participant does not
timely make an election with respect to an automatic deferral, he or she shall
be deemed to have elected option (a) above. Automatic Memorandum Accounts are
payable only in cash.
4.4 Memorandum Accounts. Each year the Company shall establish a
ledger or notional account (the "Memorandum Account") for each Participant who
has elected to defer payment of his or her Base Salary that year for the
purpose of reflecting the Company's obligation to pay the deferred Base Salary
for such year as specified pursuant to Section 4.8; provided, however, that
all Memorandum Accounts established for a Participant that are to be paid in
the same manner, i.e., a lump sum, 60 installments or 120 installments, may be
combined into a single Memorandum Account. Similarly, a separate Special
Memorandum Account shall be established for each Special Deferral for each
Participant; however, all Special Deferrals of a Participant that are to be
paid at the same time and in the same manner may be
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combined into a single Special Memorandum Account. In addition, a separate
Automatic Memorandum Account shall be established for each automatic deferral
made pursuant to Section 4.3 with respect to a Participant.
4.5 Investment of Accounts. Except as provided below, each Account
shall accrue interest on the deferred Base Salary credited to such Account from
the date such Base Salary is credited to the Account through the date of its
distribution (the "Interest Account"). Such interest shall be credited to the
Interest Account at the end of each calendar quarter or such other periods as
may be determined by the Management Committee. The Management Committee shall
determine, in its sole discretion, the rate of interest to be credited
periodically to the Interest Accounts.
With respect to an election to defer (or an automatic deferral of)
Base Salary for any year beginning after 1993, a Participant may irrevocably
request that the Management Committee credit all or a specified percentage of
his or her Base Salary deferred that year in shares of Phantom Stock; however,
the Management Committee shall not be obligated to honor any such Participant's
request. If the Management Committee elects to honor any such request, it
shall establish a separate notional subaccount for such Participant under his
or her Account, which shall be credited with whole and fractional shares of
Phantom Stock periodically as of the payroll dates of the deferrals in such
year, and with phantom (notional) dividends with respect to the Phantom Stock,
which shall be credited as being reinvested in additional shares of Phantom
Stock (the "Company Stock Account"). All credits and debits to the Company
Stock Account shall be made based on the Fair Market Value per share of the
Company's common stock on the applicable date. If the Management Committee
chooses to not honor any Participant's request to invest his or her Account in
shares of Phantom Stock, the Participant's deferral automatically shall be held
in the Interest Account.
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4.6 Special Phantom Stock Investment Elections. Each Participant
who has an Account under the Plan on October 1, 1994 (including with respect
to deferrals made in 1994) shall be given a one-time irrevocable election to
request that all or a specified percentage of his or her Account balances as of
that date, as elected by the Participant, be invested in the Company Stock
Account; however, the Management Committee shall not be obligated to honor any
such request. This election shall be in such form as the Management Committee
shall establish, and must be made prior to October 1, 1994.
4.7 Change in Section 16(b) Rules. Notwithstanding anything in the
Plan to the countrary, if the rules promulgated under Section 16(b) of the
Securities Act of 1934, as amended, are amended or interpreted by the
Securities and Exchange Commission to permit "insiders" to make investment
changes with respect to their accounts under cash only type of plans like the
Plan, the Management Committee, in its sole discretion, may amend the Plan in
any manner it deems appropriate to allow Participants the ability to request,
from time to time, investment changes with respect to their future deferrals
and/or their existing Account balances under the Plan and may also add
additional notional subaccounts under the Plan for such other investments as
the Management Committee deems appropriate to offer under the Plan.
4.8 Payment of Accounts. Except as provided below, upon a
Participant's Termination or on any Special Deferral payment date, the Company
shall pay to such Participant (or to his or her Beneficiary in case of the
Participant's death) an amount in cash equal to the balance then credited to
his or her affected Account(s) as follows:
(a) a lump sum payment; or
(b) in 60 consecutive substantially equal monthly installments; or
(c) in 120 consecutive substantially equal monthly installments,
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whichever form of payment has been elected by the Participant. However,
if a Participant elects to receive the distribution of a Company Stock
Account in installments, his or her Company Stock Account automatically
shall be converted into an Interest Account as of the Participant's
date of Termination or Special Deferral payment date, as the case may
be.
Payment of Accounts shall commence or be made in the month following
the month in which the Participant's Termination or Special Deferral payment
date occurs; provided, however, if the Management Committee determines that all
or part of a payment to be made to a Participant pursuant to this Section 4.8
would be nondeductible by the Company or a subsidiary for Federal tax purposes
due to the limitations of Section 162(m) of the Internal Revenue Code, so much
of the payment, if any, that would be deductible in the year of Termination (or
Special Deferral payment date) shall be paid to the Participant immediately
following his or her Termination (or Special Deferral payment date) and, unless
the Management Committee, in its sole discretion, directs otherwise, the balance
of the Account shall be paid to the Participant (i) with respect to a
Termination, not later than the end of the third month of the next following
year and (ii) with respect to a Special Deferral payment date, in the first
year in which the Management Committee, in its sole discretion, determines
either such payment would be deductible or to forego such deduction, in each
case such delayed payment being based on the value of the Account at the time
of such actual payment.
Notwithstanding anything in the Plan to the contrary however, each
Participant who has an Account under the Plan on October 1, 1994 shall be given
a one-time irrevocable election to change, within the distribution options
specified above, the manner in which one or more of such Accounts is to be paid
on his or her Termination; provided, however, no such distribution election
change shall be effective with respect to any Termination (or Special Deferral
payment date)
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occurring prior to January 1, 1995, unless such Termination is due to the
Participant's death, Permanent Disability occurring after October 1, 1994, or
involuntary termination by the Company or a subsidiary (whether a termination
is involuntary shall be determined by the Committee). Such distribution
election change shall be in such form as established by the Management Committee
and must be made prior to October 1, 1994.
Further, if the Management Committee determines at any time that
Participants may be given the ability to change their election as to the form
of distribution of their Account(s) without causing the loss of any exempt
treatment to "insiders" for securities laws purposes, the Management Committee
may amend the Plan to provide for such election changes as it deems
appropriate.
4.9 Acceleration of Payments. Notwithstanding a Participant's
election to the contrary, the Management Committee, in its sole discretion, may
accelerate the payment of all or part of the unpaid balance of a Participant's
Account(s) in the event of the Participant's Termination, or upon its
determination that the Participant (or his or her Beneficiary in the case of
the Participant's death) has incurred a "severe financial hardship" resulting
from a sudden and unexpected illness or accident of such person or of a
dependent, a loss of such person's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of such person. The Management Committee in making its
determination of severe financial hardship may consider such factors and
require such information as it deems appropriate, but, in any case, payment may
not be made to the extent that such hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise or (ii) by liquidation
of such person's assets, to the extent liquidation of such assets will not
itself cause severe financial hardship. However, notwithstanding the
foregoing, the Management Committee shall not accelerate the payment of any
Common Stock
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Account maintained for a Participant if such acceleration would cause the loss
on any exempt treatment under the Plan for "insiders" for securities laws
purposes.
4.10 Payment of Burlington Northern Inc. Deferred Base Salary. Base
Salary that was deferred by a Participant under the Burlington Northern Inc.
Deferred Compensation Plan, together with interest accrued thereon, shall be
paid by the Company in accordance with the terms of this Plan and shall be in
lieu of payment by Burlington Northern Inc.
SECTION 5
GENERAL PROVISIONS
5.1 Unfunded Obligation. The amounts to be paid to Participants
pursuant to this Plan are unfunded obligations of the Company. The Company is
not required to segregate any monies from its general funds, to create any
trusts, or to make any special deposits with respect to this obligation. Title
to and beneficial ownership of any investments, including trust investments,
which the Company may make to fulfill this obligation shall at all times remain
in the Company. Any investments and the creation or maintenance of any trust or
notional accounts shall not create or constitute a trust or a fiduciary
relationship between the Management Committee or the Company and a Participant,
or otherwise create any vested or beneficial interest in any Participant or his
or her Beneficiary or his or her creditors in any assets of the Company
whatsoever. The Participants (and Beneficiaries) shall have no claim against
the Company for any changes in the value of any Accounts and shall be general
unsecured creditors of the Company with respect to any payment due under this
Plan.
5.2 Incapacity of Participant or Beneficiary. If the Mangement
Committee finds that any Participant or Beneficiary to whom a payment is
payable under the Plan is unable to care for his or her affairs because of
illness or accident or is under a legal disability, any payment due (unless a
prior claim therefore shall have
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been made by a duly appointed legal representative) at the discretion of the
Management Committee, may be paid to the spouse, child, parent or brother or
sister of such Participant or Beneficiary or to any person whom the Management
Committee has determined has incurred expense for such Participant or
Beneficiary. Any such payment shall be a complete discharge of the obligations
of the Company under the provisions of the Plan.
5.3 Nonassignment. The right of a Participant or Beneficiary to the
payment of any amounts under the Plan may not be assigned, transferred, pledged
or encumbered in any manner nor shall such right or other interests be subject
to attachment, garnishment, execution or other legal process.
5.4 No Right to Continued Employment. Nothing in the Plan shall be
construed to confer upon any Participant any right to continued employment with
the Employers, nor interfere in any way with the right of an Employer to
terminate the employment of such Participant at any time without assigning any
reason therefor.
5.5 Withholding Taxes. Appropriate taxes shall be withheld from the
Participant's Base Salary with respect to all deferrals made under the Plan and
from all payments made to Participants and Beneficiaries pursuant to the Plan.
5.6 Termination and Amendment. The Compensation and Nominating
Committee of the Board may from time to time amend, suspend or terminate the
Plan, in whole or in part, and if the Plan is suspended or terminated, the
Compensation Committee and Nominating Committee may reinstate any or all of its
provisions. The Management Committee may also amend the Plan; provided,
however, it may not suspend or terminate the Plan, or substantially increase
the obligations of the Company under the Plan (provided, however, the addition
of new notional subaccounts for investments shall not be deemed an increase in
the obligations of the Company), or expand the classification of employees who
are eligible to participate in the Plan. No amendment, suspension or
termination of the Plan may impair the
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right of a Participant or his or her Beneficiary to receive the benefit accrued
hereunder prior to the effective date of such amendment, suspension or
termination.
5.7 Compliance with Securities Laws. It is the intention of the
Company that, so long as any of the Company's equity securities are registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), this Plan shall be construed to meet the
requirements for exemption from Section 16 of the Exchange Act and, if any Plan
provision is later found to be contrary to meeting the requirements for such
exemption, that provision shall be deemed null and void. Notwithstanding
anything in the Plan to the contrary, the Compensation and Nominating
Committee, in its absolute discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
Participants who are officers and directors subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other Participants.
5.8 Applicable Law. Except to the extent preempted by applicable
federal law, the Plan shall be construed and governed in accordance with the
laws of the State of Texas.
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