Exhibit 10.20
BOARD OF DIRECTORS AMENDED
AUGUST 26, 2002
DEFERRED COMPENSATION PLAN
FOR
NON-EMPLOYEE DIRECTORS
OF
PHILLIPS PETROLEUM COMPANY
Section 1. Purpose of the Plan
The amount of total compensation which is paid to the Non-Employee Director for
services rendered as a Non-Employee Director is set by resolution of the Board
of Directors and is comprised of a portion paid in cash ("Cash Compensation")
and a portion paid in shares ("Stock Compensation") of Phillips Petroleum
Company common stock $1.25 par value ("Phillips Common Stock"). "Cash
Compensation" shall also include any portion of the compensation that is paid to
a Continuing Director (as defined in Section 13) in cash (including, without
limitation, any cash compensation payable pursuant to any restricted stock unit)
by ConocoPhillips for services as a member of the ConocoPhillips Board (as
defined in Section 13), and "Stock Compensation" shall also include any portion
of the compensation that is paid to a Continuing Director by ConocoPhillips in
ConocoPhillips common stock $.01 par value ("CP Common Stock") for services as a
member of the ConocoPhillips Board. "Common Stock" shall mean Phillips Common
Stock or CP Common Stock, as the context may require.
The purpose of the Deferred Compensation Plan for Non-Employee Directors
("Plan") is to provide a program whereby a member of the Board of Directors of
Phillips Petroleum Company ("Company") who is not an officer, present employee,
nor former employee of the Company or
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any of its subsidiaries ("Non-Employee Director") may indicate a preference to:
1) defer the payment of part or all of the Cash Compensation payable to the
Non-Employee Director ("Cash Payment")
2) receive part or all of the Cash Compensation and part or all of the Stock
Compensation payable to the Non-Employee Director in shares of
Unrestricted Stock under the terms of the Phillips Petroleum Company Stock
Plan for Non-Employee Directors ("Unrestricted Stock Award")
3) receive part or all of the Cash Compensation and/or part or all of the
Stock Compensation in shares of Restricted Stock under the terms of the
Phillips Petroleum Company Stock Plan for Non-Employee Directors
("Restricted Stock Award"),
4) delay the lapsing of restrictions on Restricted Stock or delay the
settlement of Restricted Stock Units due to the attainment of certain ages
under the terms of the Phillips Petroleum Company Stock Plan for
Non-Employee Directors ("Restricted Stock Lapsing"),
5) defer the value of shares of unrestricted Common Stock which would
otherwise be delivered to the Non-Employee Director as a result of
restrictions being lapsed on shares of Restricted Stock or when Restricted
Stock Units or similar Awards are settled due to the attainment of certain
ages or at Retirement under the terms of the Phillips Petroleum Company
Stock Plan for Non-Employee Directors or under the terms of the grant of
such Awards ("Value of Restricted Stock or Awards"), and
6) defer the payment of all or a portion of the lump sum payment from the
Non-Employee Director Retirement Plan ("Retirement Payment").
Section 2. Indications of Preference
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(a) Cash Payment. For each calendar year, a Non-Employee Director may indicate
a preference to have payment of part or all of the Non-Employee Director's
Cash Compensation deferred. On or before December 1 of each year, the
indication of preference to defer Cash Compensation to be paid in the next
calendar year may be made by giving written notice thereof to the
Corporate Secretary, except that such indication of preference may be made
by the end of the month in which a Non-Employee Director is first elected
to the Board of Directors. The Chief Executive Officer (CEO) shall
consider such indication of preference and shall decide whether to accept
or reject the preference expressed as soon as practicable. Such indication
of preference to defer Cash Compensation, if accepted, becomes irrevocable
on the date of such acceptance.
(b) Unrestricted Stock Award. For each calendar year, a Non-Employee Director
may indicate a preference to receive Unrestricted Stock for part or all of
the Cash Compensation and/or part or all of the Stock Compensation that
would be paid in the next calendar year. On or before December 1 of each
year, such indication of preference to receive Unrestricted Stock instead
of cash and/or for the Stock Compensation may be made by giving written
notice thereof to the Corporate Secretary, except that such indication of
preference may be made by the end of the month in which a Non-Employee
Director is first elected to the Board of Directors. The CEO shall
consider such indication of preference and shall decide whether to accept
or reject the preference expressed as soon as practicable. Such indication
of preference to receive Unrestricted Stock, if accepted, becomes
irrevocable on the date of such acceptance.
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(c) Restricted Stock Award. For each calendar year, a Non-Employee Director
may indicate a preference to receive Restricted Stock for part or all of
the Cash Compensation and/or part or all of the Stock Compensation. On or
before December 1 of each year, such indication of preference to receive
Restricted Stock instead of cash and/or for the Stock Compensation that
would be paid in the next calendar year may be made by giving written
notice thereof to the Corporate Secretary, except that such indication of
preference may be made by the end of the month in which a Non-Employee
Director is first elected to the Board of Directors. The CEO shall
consider such indication of preference and shall decide whether to accept
or reject the preference expressed as soon as practicable. Such indication
of preference to receive Restricted Stock, if accepted, becomes
irrevocable on the date of such acceptance.
(d) Restricted Stock Lapsing or Restricted Stock Units Settled. Each year
Non-Employee Directors who are or will become 65 years of age prior to the
end of that calendar year or who are over 65 years old and have not
previously been given the opportunity may indicate a preference to delay
the lapsing of restrictions on Restricted Stock and that would otherwise
be lapsed, and to defer the receipt of shares of Common Stock that would
otherwise be delivered in settlement of restricted stock units or similar
awards, in either case based on their age under the terms of the Phillips
Petroleum Company Stock Plan for Non-Employee Directors until the day the
Director retires from the Board of Directors. The Non-Employee Director
must make the indication of preference by giving written notice thereof to
the Corporate Secretary on or before December 1 of that year, except that
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such indication of preference may be made within 30 days of the amendment
of this plan providing for such indication of preference or by the end of
the month in which a Non-Employee Director is first elected to the Board
of Directors if such Director would receive shares of Common Stock as a
result of restrictions being lapsed on shares of Restricted Stock or
pursuant to Awards based on their age under the terms of the Phillips
Petroleum Company Stock Plan for Non-Employee Directors. The CEO shall
consider such indication of preference and shall decide whether to accept
or reject the preference expressed as soon as practicable. Such indication
of preference to delay the lapsing of restrictions on Restricted Stock or
the settlement of Restricted Stock Units or Awards, if accepted, becomes
irrevocable on the date of such acceptance. Such approved indication of
preference shall apply to any Restricted Stock Units granted in exchange
for shares of Restricted Stock pursuant to the Exchange offer initiated by
the Company on December 17, 2001.
(e) Value of Restricted Stock and Restricted Stock Units.
(i) Each year Non-Employee Directors who are or will become 65
years of age prior to the end of that calendar year or who are
over 65 years old and have not previously been given the
opportunity may indicate a preference concerning the deferral
of the receipt of the value of all or part of the Common Stock
which would otherwise be delivered to the Non-Employee
Director as a result of restrictions being lapsed on shares of
Restricted Stock or and the settlement of Restricted Stock
Units or similar Awards based on their age under the terms of
the Phillips Petroleum Company Stock Plan for Non-Employee
Directors.
(ii) If the Non-Employee Director has previously indicated a
preference to delay the
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lapsing of restrictions on Restricted Stock or the settlement
of Restricted Stock Units or similar Awards until the Director
retires from the Board of Directors, or if the Non-Employee
Director Retires from the Board prior to being given an
opportunity to indicate such preference, such Non-Employee
Director may indicate a preference concerning the deferral of
the receipt of the value of all or part of the Common Stock
which would otherwise be delivered to the Non-Employee
Director as a result of restrictions being lapsed on shares of
Restricted Stock or the settlement of Restricted Stock Units
or Awards until the Director retires from the Board of
Directors. (iii) The Non-Employee Director must make the
indication of preference specified in Sections 2 (e) (i) and
(ii) herein by giving written notice to the Corporate
Secretary on or before December 1 of the applicable year,
except that such indication of preference may be made within
30 days of the amendment of this Plan providing for such
indication of preference or by the end of the month in which a
Non-Employee Director is first elected to the Board of
Directors or as soon as practicable prior to the Director's
Retirement from the Board if such Director would receive
shares of Common Stock as a result of restrictions being
lapsed on shares of Restricted Stock or the settlement of
Restricted Stock Units or Awards under the terms of the
Phillips Petroleum Company Stock Plan for Non-Employee
Directors prior to the next period for indicating such
preference. The CEO shall consider such indication of
preference and shall decide whether to accept or reject the
preference expressed as soon as practicable. Such indication
of preference to defer the value of Restricted Stock or
Restricted Stock Units or Awards, if accepted, becomes
irrevocable on the date of such acceptance.
(f) Retirement Payment. If a Non-Employee Director prefers to defer under this
Plan all or
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part of the lump sum payment from the Non-Employee Director Retirement
Plan, the Non-Employee Director must indicate such preference to the Chief
Executive Officer (CEO) of the Company. The Non-Employee Director's
preference must be received by the Corporate Secretary in the period
beginning 150 days prior to and ending no less than 30 days prior to the
date the retirement payment is to be made. Such indication must be in
writing signed by the Non-Employee Director and must state the portion of
the lump sum payment the Non-Employee Director desires to be deferred. The
CEO shall consider such indication of preference as submitted and shall
decide whether to accept or reject the preference expressed as soon as
practicable. Such indication of preference to defer the Retirement
Payment, if accepted, becomes irrevocable on the date of such acceptance.
Section 3. Deferred Compensation Accounts
(a) Credit for Deferral. The Company will establish and maintain an account
for each Non-Employee Director who defers Cash Compensation, the Value of
Restricted Stock or Restricted Stock Units or Awards and/or a Retirement
Payment in which will be credited the amounts deferred. Amounts deferred
shall be credited as soon as practicable but not later than 30 days after
the date the payment would otherwise have been made. The value of the
underlying Restricted Stock or Restricted Stock Units or Awards shall be
the higher of (a) the average of the high and low selling prices of the
Common Stock on the date the restrictions lapse or the shares are to be
delivered, as applicable, or the last trading day before such date, if
such date is not a trading day, or (b) the average of the high three
monthly Fair Market Values of the Common Stock during the twelve calendar
months preceding the month in which the restrictions lapse or the shares
are to be delivered, as
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applicable. The monthly Fair Market Value of the Common Stock is the
average of the daily Fair Market Value of the Common Stock for each
trading day of the month. The daily Fair Market Value of the Common Stock
shall be deemed equal to the average of the reported highest and lowest
sales prices per share of such Common Stock as reported on the composite
tape of the New York Stock Exchange transactions.
(b) Designation of Investments. The amount in each Non-Employee Director's
Deferred Compensation Account shall be deemed to have been invested and
reinvested from time to time, in such "eligible securities" as the
Non-Employee Director shall designate. Prior to or in the absence of a
Non-Employee Director's designation, the Company shall designate an
"eligible security" in which the Non-Employee Director's Deferred
Compensation Account shall be deemed to have been invested until
designation instructions are received from the Non-Employee Director.
Eligible securities are those securities designated by the Chief Financial
Officer of the Company. The Chief Financial Officer of the Company may
include as eligible securities, stocks listed on a national securities
exchange, and bonds, notes, debentures, corporate or governmental, either
listed on a national securities exchange or for which price quotations are
published in The Wall Street Journal and shares issued by investment
companies commonly known as "mutual funds". The Non-Employee Director's
Deferred Compensation Account will be adjusted to reflect the deemed
gains, losses and earnings as though the amount deferred was actually
invested and reinvested in the eligible securities for the Non-Employee
Director's Deferred Compensation Account.
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Notwithstanding anything to the contrary in this Section 3(b), in the
event the Company actually purchases or sells such securities in the
quantities and at the times the securities are deemed to be purchased or
sold for a Non-Employee Director's Deferred Compensation Account, the
Account shall be adjusted accordingly to reflect the price actually paid
or received by the Company for such securities after adjustment for all
transaction expenses incurred (including without limitation brokerage fees
and stock transfer taxes).
In the case of any deemed purchase not actually made by the Company, the
Deferred Compensation Account shall be charged with a dollar amount equal
to the quantity and kind of securities deemed to have been purchased
multiplied by the fair market value of such security on the date of
reference and shall be credited with the quantity and kind of securities
so deemed to have been purchased. In the case of any deemed sale not
actually made by the Company, the account shall be charged with the
quantity and kind of securities deemed to have been sold, and shall be
credited with a dollar amount equal to the quantity and kind of securities
deemed to have been sold multiplied by the fair market value of such
security on the date of reference. As used herein "fair market value"
means in the case of a listed security the closing price on the date of
reference, or if there were no sales on such date, then the closing price
on the nearest preceding day on which there were such sales, and in the
case of an unlisted security the mean between the bid and asked prices on
the date of reference, or if no such prices are available for such date,
then the mean between the bid and asked prices to the nearest preceding
day for which such prices are available.
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The Treasurer may also designate a Fund Manager to provide services which
may include recordkeeping, Non-Employee Director accounting, Non-Employee
Director communication, payment of installments to the Non-Employee
Director, tax reporting and any other services specified by the Company in
agreement with the Fund Manager.
(c) Payments. A Non-Employee Director's Deferred Compensation Account shall be
debited with respect to payments made from the account pursuant to this
Plan as of the date such payments are made from the account. The payment
shall be made as soon as practicable, but no later than 30 days, after the
installment payment date.
If any person to whom a payment is due hereunder is under legal disability
as determined in the sole discretion of the Chief Executive Officer, the
Company shall have the power to cause the payment due such person to be
made to such person's guardian or other legal representative for the
person's benefit, and such payment shall constitute a full release and
discharge of the Company and any fiduciary of the Plan.
(d) Statements. At least one time per year the Company or the Company's
designee will furnish each Non-Employee Director a written statement
setting forth the current balance in the Non-Employee Director's Deferred
Compensation Account, the amounts credited or debited to such account
since the last statement and the payment schedule of deferred amounts and
deemed gains, losses and earnings accrued thereon as provided by the
deferred payment option selected by the Non-Employee Director.
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Section 4. Deferred Payment Options
(a) Payment Options for Cash Compensation and the Value of Restricted Stock or
Restricted Stock Units or Awards. A Non-Employee Director, at the time
notice of an indication of preference to defer Cash Compensation or the
Value of Restricted Stock or Restricted Stock Units or Awards is given,
shall also specify in writing whether the Cash Compensation or the Value
of Restricted Stock or Restricted Stock Units or Awards deferred by such
indication and any deemed gains, losses and earnings accrued thereon is to
be paid in one lump sum or in annual installments of not less than 5 nor
more than 10. If a lump sum payment is selected, the Non-Employee Director
will specify the date the lump sum payment is to be made so long as the
date is the first day of a calendar quarter and is at least one year from
the date of the election or is specified as the first day of the calendar
quarter following retirement from the Board of Directors. If annual
installments of not less than 5 nor more than 10 are selected, the first
installment will begin as soon as practicable after the first day of the
calendar quarter which is on or after the Non-Employee Director's
retirement. After a payment option is selected the first time a
Non-Employee Director defers Cash Compensation or the value of Restricted
Stock or Restricted Stock Units or Awards, all subsequent deferrals of
Cash Compensation and/or the value of Restricted Stock or Restricted Stock
Units or Awards will have the same payment option.
b) Payment Options for Retirement Payment.
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(i) The payment option for a deferred Retirement Payment for a
Non-Employee Director who has previously deferred Cash Compensation
or the Value of Restricted Stock or Restricted Stock Units or Awards
will be the same as the payment option for the deferred
Compensation.
(ii) The payment option for a deferred Retirement Payment for a
Non-Employee Director who has not previously deferred Cash
Compensation or the Value of Restricted Stock or Restricted Stock
Units or Awards will be 10 annual installments with the first
installment to begin as soon as practicable after the first day of
the calendar quarter which is on or after the Non-Employee
Director's Retirement, except that a different payment schedule may
be selected by the Non-Employee Director at the time the
Non-Employee Director submits a preference to defer all or part of
the lump sum Retirement payment. The payment options in this
situation are: annual installments of not less than 5 nor more than
10, semi-annual installments of not less than 10 nor more than 20,
or quarterly installments of not less than 20 nor more than 40. The
first installment to commence as soon as practicable after any date
specified by the Non-Employee Director, so long as such date is the
first day of a calendar quarter and is at least one year from the
date the payout option was selected. Subject to Section 5, if the
CEO, accepts the Non-Employee Director's indication of preference,
the method of payment of the deferred Retirement Payment shall
become irrevocable.
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(c) Payment Option Revision. If a Non-Employee Director specified annual
installments of not less than 5 nor more than 10 pursuant to Section 4(a)
herein, the Non-Employee Director may at any time during a period
beginning 365 days prior to and ending 90 days prior to the date the
Non-Employee Director terminates Board service due to (a) not being
nominated for election to the Board; or (b) not being reelected to Board
service after being so nominated; or (c) resignation from Board service as
a result of the Director's disability or any reason acceptable to a
majority of the remaining members of the Board of Directors ("Retires" or
"Retirement"), or as soon as practicable if there are less than 90 days
prior to Retirement in the manner prescribed by the Company, revise such
payment option and select one of the following payment options in place of
such payment option:
(i) annual installments of not less than 5 nor more than 10,
(ii) semi-annual installments of not less than 10 nor more than 20, or
(iii) quarterly installments of not less than 20 nor more than 40,
with the first installment to commence, as soon as practicable following
any date specified by the Non-Employee Director so long as such date is
the first day of a calendar quarter, is on or after the Non-Employee
Director's Retirement Date, is at least one year from the date the payment
option was revised and is no later than five (5) years after the
Non-Employee Director's Retirement Date.
(d) Installment Amount. The amount of each installment shall be determined by
dividing the balance in the Non-Employee Director's Deferred Compensation
Account as of the date the installment is to be paid, by the number of
installments remaining to be paid (inclusive
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of the current installment).
Section 5. Death of Non-Employee Director
Upon the death of a Non-Employee Director, the Non-Employee Director's
beneficiary or beneficiaries designated in accordance with Section 6 of this
Plan, or, in the absence of an effective beneficiary designation, the surviving
spouse, the surviving children (natural or adopted) in equal shares, or the
Estate of the deceased Non-Employee Director, in that order of priority, shall
receive the beneficiary's or beneficiaries' portion of the payments in
accordance with the deferred payment schedule selected by the Non-Employee
Director, whether the Non-Employee Director's death occurred before or after
such payments have commenced; provided, however, such payments may be made in a
different manner if the beneficiary or beneficiaries entitled to receive such
payments, due to an unanticipated emergency caused by an event beyond the
control of the beneficiary or beneficiaries that results in financial hardship
to the beneficiary or beneficiaries, so requests and the CEO gives written
consent to the method of payment requested.
Section 6. Designation of Beneficiary
Each Non-Employee Director who defers under this Plan shall designate a
beneficiary or beneficiaries to receive the entire balance of the Non-Employee
Director's Deferred Compensation Account by giving signed written notice of such
designation to the Corporate Secretary. The Non-Employee Director may from time
to time change or cancel any previous
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beneficiary designation in the same manner. The last written beneficiary
designation received by the Corporate Secretary shall be controlling over any
prior designation and over any testamentary or other disposition. After receipt
by the Corporate Secretary of such written designation, it shall take effect as
of the date on which it was signed by the Non-Employee Director, whether the
Non-Employee Director is living at the time of such receipt, but without
prejudice to the Company on account of any payment made under this Plan before
receipt of such designation.
Section 7. Nonassignability
The right of a Non-Employee Director or beneficiary or other person who becomes
entitled to receive payments under this Plan shall not be pledged, assigned or
subject to garnishment, attachment or any other legal process by the creditors
of or other claimants against the Non-Employee Director, beneficiary, or other
such person.
Section 8. Administration, Interpretation and Amendment
The Plan shall be administered by the Chief Executive Officer of the Company.
The decision of the Chief Executive Officer with respect to any questions
arising as to the interpretation of this Plan, including the severability of any
and all of the provisions thereof, shall be final, conclusive and binding. The
Company reserves the right to amend this Plan from time to time or to terminate
the Plan entirely, provided, however, that no amendment may affect the balance
in a Non-Employee Director's account on the effective date of the amendment. In
the event of
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termination of the Plan, the Chief Executive Officer in the Chief Executive
Officer's sole discretion, may elect to pay in one lump sum as soon as
practicable after termination of the Plan, the balance then in the Non-Employee
Director's account.
Section 9. Nonsegregation
Amounts deferred pursuant to this Plan and the crediting of amounts to a
Non-Employee Director's Deferred Compensation Account shall represent the
Company's unfunded and unsecured promise to pay compensation in the future. With
respect to said amounts, the relationship of the Company and a Non-Employee
Director shall be that of debtor and general unsecured creditor. While the
Company may make investments for the purpose of measuring and meeting its
obligations under this Plan such investments shall remain the sole property of
the Company subject to claims of its creditors generally, and shall not be
deemed to form or be included in any part of the Deferred Compensation Account.
Section 10. Funding
All amounts payable under the Plan are unfunded and unsecured benefits and shall
be paid solely from the general assets of the Company and any rights accruing to
the Non-Employee Director or the beneficiary under this Plan shall be those of
an unsecured general creditor; provided, however, that the Company may establish
a grantor trust to pay part or all of its Plan payment obligations so long as
the Plan remains unfunded for federal tax purposes.
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Section 11. Miscellaneous
(a) Except as otherwise provided herein, the Plan shall be binding upon the
Company, its successors and assigns, including but not limited to any
corporation which may acquire all or substantially all of the Company's
assets and business or with or into which the Company may be consolidated
or merged.
(b) This Plan shall be construed, regulated, and administered in accordance
with the laws of the State of Delaware except to the extent that said laws
have been preempted by the laws of the United States.
Section 12. Effective Date of the Plan
This Plan is amended and restated effective as of December 10, 2001.
Section 13. Continuing Directors and Noncontinuing Directors
Notwithstanding anything contained in this Plan to the contrary:
(a) Elections made by a Non-Employee Director who is a member of the board of
directors (the "ConocoPhillips Board") of ConocoPhillips (a "Continuing
Director") immediately following the closing (the "Closing") of the
transactions (the "Merger") contemplated by the Agreement and Plan of
Merger dated as of November 18, 2001 by and among Phillips
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Petroleum Company, CorvettePorsche Corp., Porsche Merger Corp., Corvette
Merger Corp., and Conoco Inc. (the "Merger Agreement") shall be effective
for the following compensation received from ConocoPhillips with respect
to service as a Continuing Director for the portion of calendar year 2002
that follows the Closing, without any action on the part of such
Continuing Director, Phillips Petroleum Company or ConocoPhillips: (i) the
deferral of the receipt of Cash Compensation, (ii) the receipt of
Unrestricted Stock in lieu of Cash Compensation or Stock Compensation,
(iii) the receipt of Restricted Stock in lieu of Cash Compensation or
Stock Compensation, (iv) the deferral of the lapsing of restrictions on
Restricted Stock that would otherwise lapse, (v) the deferral of receipt
of the value of all or part of the Common Stock which would otherwise be
delivered to the Continuing Director as a result of restrictions being
lapsed; and (vi) the deferral of receipt of a lump sum payment from the
Non-employee Director Retirement Plan; and
(b) ConocoPhillips shall be the co-sponsor of this Plan and shall be the
obligor hereunder with respect to compensation of Continuing Directors for
services on the ConocoPhillips Board that is deferred hereunder;
(c) A Continuing Director shall not be deemed to have "retired" or otherwise
terminated service as a Non-Employee Director for any purpose of this Plan
solely as a result of such director's ceasing to be a director of Phillips
Petroleum Company in connection with the Merger, and no distributions of
the Continuing Directors' account balances under the Plan shall be made
solely as a result of the consummation of the transactions contemplated by
the Merger Agreement. For any Continuing Director, service as a member of
the ConocoPhillips Board shall be treated as service as a Non-Employee
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Director, and "retirement" or any other termination of service from the
ConocoPhillips Board shall be deemed to be a retirement or termination of
service (as applicable) as a Non-Employee Director for all purposes of
this Plan.
(d) Each individual who ceases to be a Non-Employee Director in connection
with the Merger who is not a Continuing Director shall be deemed to have
retired as of the Closing Date for purposes of this Plan (including,
without limitation, for purposes of Section 4).
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