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Exhibit 10.1
EQUITABLE RESOURCES, INC.
EXECUTIVE SHORT-TERM INCENTIVE PLAN
Section 1. Incentive Plan Purposes. The main purposes of the Equitable
Resources, Inc. (the "Company") Executive Short-Term Incentive Plan (the "Plan")
are to maintain a competitive level of total cash compensation and to align the
interests of the Company's executive employees with those of the Company's
shareholders and with the strategic objectives of the Company. By placing a
portion of executive employee compensation at risk, the Company can reward
performance based on the overall performance of the Company.
Section 2. Effective Date. The effective date of this Plan is January
1, 2001. The Plan will remain in effect from year to year (each calendar year
shall be referred to herein as a "Plan Year") until formally amended or
terminated in writing by the Company's Board of Directors or the Compensation
Committee of the Board of Directors ("Committee"), as defined in Section 4 and
as provided in Section 12.
Section 3. Eligibility.
(a) Any employee who is a "covered employee", as defined in
Section 162(m)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated
thereunder, as determined at the end of the immediately
preceding Plan Year, and any employee who the Committee, as
defined in Section 4, believes will be a covered employee for
a Plan Year, shall be eligible to participate in the Plan;
provided, however, that no employee who participates in the
Company's annual Short-Term Incentive Plan shall be eligible
to participate in the Plan.
(b) The Committee may designate any eligible employee for
participation in the Plan in its complete and sole discretion.
Eligible employees who are designated to participate in the
Plan for any Plan Year will be notified in writing of their
participation and given a Plan document for their reference.
Section 4. Administration of the Plan. The Plan shall be administered
by the Committee, which shall be comprised solely of two or more outside
directors within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder. On an annual basis, the Committee shall designate the
participants and determine the Performance Goals, as defined in Section 5 of the
Plan, and the Incentive Targets, as defined in Section 6 of the Plan. Prior to
payment of any Incentive Awards, as defined in Section 6 of the Plan, the
Committee shall certify that the Performance Goals and other material terms were
satisfied. The Committee shall also review and approve any proposed amendments
to the Plan throughout the Plan Year.
Section 5. Performance Goals.
(a) Each participant shall have specific performance goals (the
"Performance Goals") determined for his or her position for
the subject Plan Year. These Performance Goals will support
the approved business plan of the Company, affiliate or
business unit, as applicable, and be based upon the specific
performance measures established by the Committee for the Plan
Year.
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(b) A copy of each participant's Performance Goals shall be
determined in writing, and kept on file with the appropriate
business segment Human Resources Department, not later than 90
days after the commencement of the Plan Year to which they
relate; provided that in no event will Performance Goals be
established after 25 percent of the Plan Year has elapsed or
when the outcome of such Performance Goals is no longer
substantially uncertain. The participants' Performance Goals
for each Plan Year shall be attached hereto as Attachment A.
(c) The Performance Goals determined by the Committee will be
based upon one or more of the following objective performance
measures and expressed in either, or a combination of,
absolute or relative values: earnings per share growth rates,
return on total capital, earnings per share, stock price,
revenues, costs (aggregate or per unit), net income, operating
income, operating margin, cash flow, market share, return on
equity, return on assets and total shareholder return. The
Performance Goals may be based upon the attainment of one or
more levels of performance of the Company, its affiliates or
business units, as measured against one or more of the
performance measures.
(d) When the Performance Goals are determined by the Committee,
the Committee shall also specify the manner in which the
Performance Goals shall be calculated. The Committee may
determine that unusual items or certain specified events or
occurrences, including changes in accounting standards or tax
laws, shall be excluded from the calculation of the
Performance Goal.
Section 6. Incentive Targets and Awards.
(a) Incentive compensation targets ("Incentive Targets") shall be
determined by the Committee and expressed as a percentage of
the participants' base salary in effect at the time the
Performance Goal is established. The Incentive Targets shall
be based upon the level of achievement of the Performance
Goals, and shall be determined by the Committee at the
commencement of each Plan Year and specified on Attachment B
hereto.
(b) Incentive awards ("Incentive Awards") may be earned by
participants during a Plan Year; provided, however, that
payment of any Incentive Award under the Plan to a participant
(i) shall be contingent upon the attainment of the Performance
Goals established by the Committee for the Plan Year and (ii)
may not exceed the participant's Incentive Target established
for the actual level of achievement attained.
(c) The Committee shall have no discretion to increase any
Incentive Target or Incentive Award payable that would
otherwise be due upon attainment of the Performance Goals, but
the Committee may in its discretion reduce or eliminate such
Incentive Target or Incentive Award; provided, however, that
the exercise of such negative discretion shall not be
permitted to result in any increase in the amount of any
Incentive Target or Incentive Award payable to any other
participant.
(d) The maximum Incentive Award payable to any participant for any
Plan Year is an amount equal to three times the participant's
annual base salary in effect at the time the Incentive Target
is determined or, if less, $3,000,000.
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(e) Except as provided in Section 7 of the Plan, Incentive Awards
shall be paid in cash as promptly as practicable following the
end of a Plan Year and after the Committee has determined and
certified in writing the extent to which the Performance Goals
have been attained and the Incentive Awards have been earned.
Section 7. Deferral. Except as otherwise determined by the Committee at
the commencement of the Plan Year, participants who directly report to the
Company's Chief Executive Officer (the "CEO") and the CEO will be required to
defer twenty percent (20%) of their Incentive Award into the Company's common
stock fund under and pursuant to the Company's Deferred Compensation Plan, if at
the time of payment they have not met the stock ownership guidelines set by the
Committee. Except as otherwise determined by the Committee at the commencement
of the Plan Year, participants who directly report to executives who report
directly to the CEO will be required to defer ten percent (10%) of their
Incentive Award into the Company's common stock fund under and pursuant to the
Company's Deferred Compensation Plan, if at the time of payment they have not
met the stock ownership guidelines set by the Committee. No amount in excess of
the amount of the Incentive Award deferred shall be payable to the participant
for such deferral, except as may be based upon the actual future rate of return
on such specified predetermined investment.
Section 8. Impact on Benefit Plans. Payments under the Plan shall not
be considered as earnings for purposes of the Company's qualified retirement
plans or any such retirement or benefit plan unless specifically provided for
and defined under such plans.
Section 9. Tax Consequences. It is intended that nothing in this Plan
shall change the tax consequences of the Plan under Federal or State law and
specifically shall not cause the participants in the Plan to be taxed currently
under the Constructive Receipt or Economic Benefit Doctrines and as expressed in
Sections 451 and 83 of the Code. The terms, requirements and limitations of this
Plan shall be interpreted and applied in a manner consistent with Section 162(m)
of the Code.
Section 10. Change of Status. In making decisions regarding employees'
participation in the Plan, the Committee may consider any factors that they may
consider relevant. The following guidelines are provided as general information
regarding employee status changes:
(a) New Hire, Transfer, Promotion. A newly hired employee will
participate in the Plan Year following the year in which they
are hired, unless otherwise specified in their employment offer.
An employee who is promoted or transferred during the first 90
day period of the Plan Year to a position qualifying for
participation may be recommended for a pro rata Incentive Award
under the Plan based on the level of participation in his or her
previous program and the percentage of the Plan Year the
employee is in the participating position. This includes
employees who leave positions that qualify for incentive
payments in other Company business segments. These potential
payments shall be considered when determining the employee's
Incentive Target and Incentive Award under this Plan.
(b) Demotion. No Incentive Award shall be paid to an employee who
has been demoted during the Plan Year because of performance. If
the demotion is due to an
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organizational change, a pro rata Incentive Award may be made,
provided the employee otherwise qualifies for payment of an
Incentive Award.
(c) Termination. No Incentive Award shall be paid to any employee
whose services are terminated during the Plan Year for reasons
of misconduct, failure to perform, or other cause. If the
termination is due to reasons such as reorganization, and not
due to the fault of the employee, the employee may be considered
for a pro rata Incentive Award, provided the employee otherwise
qualifies for payment of an Incentive Award.
(d) Resignation. No Incentive Award shall be paid to an employee who
resigns for any reason before Incentive Awards are paid,
provided, however, if the employee has voluntarily terminated
his or her employment with the Company's consent, a pro rata
Incentive Award may be made, provided the employee otherwise
qualifies for payment of an Incentive Award.
(e) Death and Disability. An employee whose status as an active
employee is changed during the Plan Year for any reason other
than the reasons cited above, including termination for death or
disability, may be considered for a pro rata Incentive Award,
provided the employee otherwise qualifies for payment of an
Incentive Award. In the event that an Incentive Award is paid on
behalf of an employee who has terminated employment by reason of
death, any such payments or other amounts due shall be paid to
the employee's estate.
Nothing in the Plan or in any Incentive Target or Incentive Award shall confer
any right on any employee to continue in the employ of the Company, its
affiliates or any business unit.
Section 11. Dispute Resolution. The following is the exclusive
procedure to be followed by all participants in resolving disputes arising from
payments made under this Plan. All disputes relative to a given Plan Year must
be presented to the Committee within thirty (30) days following the payment date
of the Incentive Award for that Plan Year, or the participant's right to dispute
a payment will be irrevocably waived. The employee with the concern will be
given an opportunity to present his or her issues to the Committee. A decision
will be rendered by the Committee within ten (10) business days of the meeting.
The Chairperson of the Committee will be responsible for preparing a written
version of the decision. The decision by the Committee regarding the matter is
final and binding on all Plan participants.
Section 12. Amendment or Termination of this Plan. The Company's Board
of Directors or the Committee shall have the right to amend or terminate the
Plan at any time, provided, however, that the material terms of the Performance
Goals, including any amendments to the class of employees eligible to receive
compensation pursuant to, or participate in, the Plan, the criteria upon which
the Performance Goals are based or the maximum amount of compensation payable
hereunder, may not be amended without shareholder approval. No employee or
participant shall have any vested right to payment of any Incentive Award
hereunder prior to its payment. The Company shall notify affected employees in
writing of any amendment or Plan termination.