Annual Incentive Compensation Plan - Halliburton Co.
ANNUAL INCENTIVE COMPENSATION PLAN
As Amended and Restated December 9, 1994
1.1 Purpose 1
2.1 Definitions 1
3.1 Participation 3
3.2 Changes in Participants During Plan Year 3
4.1 Administration 3
5.1 Performance Requirements 4
6.1 a. Awards 4
1. Awards for Category I and
Category II Participants 4
2. Individual Performance Awards for
Category II Participants 5
3. Discretionary Awards 5
4. Termination of Service During Plan Year 5
b. Payment of Awards 5
c. Tax Withholding 5
7.1 Rights of Participants and Beneficiaries 5
7.2 Governing Law 6
7.3 Amendment and Termination of Plan and Awards 6
7.4 Effective Date 6
HALLIBURTON COMPANY ANNUAL INCENTIVE COMPENSATION PLAN
1.1 Purpose. The Halliburton Company Annual Incentive Compensation Plan
serves to attract, motivate, reward, and retain senior management
talent required to achieve corporate objectives and increase
shareholder value. The Plan provides a means to link the annual cash
compensation of members of the Executive Committee, corporate officers
and other key managers of corporate support groups with the achievement
of financial goals and, for corporate support management, the
organizational objectives of the Company as a whole. Under the Plan,
participants are afforded the opportunity to earn additional
compensation above base pay contingent on the achievement of a
threshold level of business results, the measure for which is
established at the beginning of each annual performance period in
connection with the annual planning and budgeting process. The
additional compensation opportunity afforded participants under the
Plan increases proportionately with improved business results, subject
to a predefined maximum incentive compensation level.
A portion of the incentive compensation opportunity for
corporate support management can be earned through individual
performance, with the measure of performance predefined in certain
qualitative terms associated with organizational processes deemed
important to the achievement of the long term business strategies and
objectives of the Company.
2.1 Definitions. Except where the context otherwise indicates, the
following definitions shall apply:
a. 'Award' shall mean the dollar amount of incentive compensation
payable to a Participant under the Plan for a Plan Year.
b. Subject to the exceptions hereinafter set forth, 'Base Pay' shall
be the base salary of the Participant for a specified period in
effect on January 1 of a Plan Year without giving effect to
amounts which are paid or accrued on behalf of such Participant
under deferred compensation (other than compensation deferred
at the Participant's election pursuant to the Company's Elective
Deferral Plan), retirement or other benefit plans or arrangements
of the Company or a Subsidiary. In the event that during the
course of a Plan Year a Participant receives a promotion or
demotion or an employee of the Company or a Subsidiary becomes a
Participant under the Plan pursuant to the provisions of Section
3.2 hereof, the Company's Chief Executive Officer, in his sole
and absolute discretion, may specify that the base salary of such
Participant for a specified period in effect on a date other than
January 1 of the Plan Year shall be such Participant's Base Pay
for purposes of determinations made for the Plan Year.
c. 'Beneficiary' shall mean the person, persons, trust or trusts
entitled by Will or the laws of descent and distribution to
receive the benefits specified under the Plan in the event of the
Participant's death prior to the payment of an Award.
d. 'Board of Directors' shall mean the Board of Directors of the
e. 'Category I Participants' shall be all Participants who are so
categorized under Article III hereof.
f. 'Category II Participants' shall be all Participants who are
so categorized under Article III hereof.
g. 'Chief Executive Officer' shall mean the Chief Executive Officer
of the Company.
h. 'Compensation Committee' shall mean the Compensation Committee of
Directors of the Company, appointed by the Board of Directors
from among its members, no member of which shall be an employee
of the Company or a Subsidiary.
i. 'Company' shall mean Halliburton Company and its successors.
j. 'Corporate Target' shall mean the level of performance for the
Company and its Subsidiaries for a Plan Year on a consolidated
basis which the Compensation Committee determines must be
attained for a Participant to receive a Maximum Incentive Payout.
k. 'Corporate Threshold' shall mean a minimum level of performance,
determined for the Company and its Subsidiaries for a Plan Year
on a consolidated basis, which must be attained for any Awards
for such Plan Year to be made pursuant to the Plan.
l. 'Executive Committee' shall mean the Executive Committee of the
m. 'Incentive Compensation Spread' shall be the difference obtained
by subtracting the Minimum Incentive Payout from the Maximum
n. 'Individual Performance Award' shall be equal to one (1) month's
Base Pay for a Participant or such part thereof as the Chief
Executive Officer, in his absolute discretion, shall determine.
Notwithstanding the preceding sentence or any other provisions of
this Plan which provide that certain determinations with respect
to Individual Performance Awards shall be made by the Chief
Executive Officer (including, but not limited to, defining
qualitative performance criteria and the extent to which each
Participant shall have satisfied his or her individual
performance criteria), such determinations may be made by those
to whom the Chief Executive Officer has delegated such
responsibility and authority in writing. Any determinations made
pursuant to such a delegation shall have the same force and
effect as if made by the Chief Executive Officer.
o. 'Maximum Incentive Payout' shall mean the maximum amount of an
Award payable to a Participant. The Maximum Incentive Payout for
a Category I Participant shall be an amount equal to six (6)
month's Base Pay. For Categor II Participants, the Maximum
Incentive Payout shall be an amount equal to three (3) month's
Base Pay (without giving effect to an Individual Performance
p. 'Minimum Incentive Payout' shall mean the minimum amount of an
Award payable to a Participant. The amount of the Minimum
Incentive Payout for Category I Participants is an amount equal
to one (1) month's Base Pay. For Category II Participants, the
Minimum Incentive Payout shall be an amount equal to one half
month's Base Pay.
q. 'Participant' shall mean any employee of the Company or a
Subsidiary who participates in the Plan pursuant to the
provisions of Article III hereof.
r. 'Performance Target Range' shall mean the Corporate Target minus
the Corporate Threshold.
s. 'Plan' shall mean the Halliburton Company Annual Incentive
Compensation Plan, as the same may be from time to time amended.
t. 'Plan Year' shall mean the calendar year ending December 31, 1991
and each subsequent calendar year thereafter.
u. 'Subsidiary' shall mean any corporation 50 percent or more of
whose voting power is owned directly or indirectly by the
v. 'Termination of Service' shall mean the cessation of a
Participant's employment with the Company or a Subsidiary for any
w. 'Total Incentive Compensation Opportunity' shall mean the
aggregate amount of compensation which may be received annually
by a Participant under the Plan.
3.1 Participation. Members of the Executive Committee and Company officers
(other than officers of the Energy Services Division and assistant
officers) shall be Participants annually. In addition, such other
management employees as may be annually designated as Participants by
the Company's Chief Executive Officer shall be Participants under the
Plan. Members of the Executive Committee shall be Category I
Participants. All other Participants shall be Category II Participants.
The provisions of this Section are subject to the provisions of the
next succeeding Section.
3.2 Changes in Participants During Plan Year. If during the course of a
Plan Year an employee of the Company or a Subsidiary, by reason of
having been newly elected to the Executive Committee or as an officer
of the Company, would otherwise have been a Participant or a different
category of Participant had such employee's status been the same at the
beginning of the Plan Year, the Chief Executive Officer (except with
respect to any actions or status changes involving himself, in which
case the determination shall be made by the Compensation Committee), in
his sole and absolute discretion, may determine (i) in the case of such
newly elected member of the Executive Committee or Company officer,
whether participation or a change in category should be effective with
such election or delayed until the inception of the next Plan Year and
(ii) where applicable, appropriate and equitable modifications in the
Total Incentive Compensation Opportunity and in the qualitative
performance criteria the attainment of which may result in an
Individual Performance Award. In the event that during the course of
the Plan Year, a person is newly hired by, or transferred to, the
Company in a management position and the Chief Executive Officer feels
such employee's participation in the Plan is merited, the Chief
Executive Officer shall designate in writing such employee as a
Participant in the Plan for such Plan Year and make those
determinations which he deems appropriate of the type specified in
clause (ii) of the preceding sentence.
4.1 Administration. Performance requirements, as more fully discussed in
Article V hereof, shall be set by the Compensation Committee and, where
applicable, the Chief Executive Officer. As to Category I Participants,
the Compensation Committee shall have the responsibility to construe
and interpret the Plan; to prescribe, amend and rescind rules and
regulations relating to the administration of the Plan and to make all
other determinations necessary or advisable for administration of the
Plan. With respect to Category II Participants, the Executive Committee
shall have the duties with respect to the Plan set forth in the
preceding sentence unless it shall delegate such duties to the Chief
Executive Officer. Subject only to compliance with the express
provisions hereof, the Compensation Committee, the Executive Committee
and the Chief Executive Officer may act in their sole and absolute
discretion with respect to the Plan.
5.1 Performance Requirements. Prior to the last day of February of each
Plan Year, the Compensation Committee will approve the Corporate Target
for the Plan Year taking into consideration the benefits to the
Company's shareholders upon achievement of such Corporate Target
relative to the aggregate cost of the Awards potentially payable as a
result thereof, and will approve the Corporate Threshold for such Plan
Year which must be achieved in order for any Award under the Plan to be
payable. The Corporate Target may be based on such measurements,
financial or otherwise, as the Compensation Committee may from time to
time deem appropriate. If the Compensation Committee deems a change in
the Company's business, operations, corporate or capital structure, the
manner in which it conducts business or any other change to be
extraordinary and material and determines that, as a result of such
change, the established Corporate Target or Corporate Threshold is no
longer appropriate, it may modify the Corporate Target or Corporate
Threshold as deemed appropriate and equitable in its sole and absolute
Prior to the last day of February of each Plan Year, qualitative
performance criteria shall also be defined by the Company's Chief
Executive Officer for each Category II Participant, the attainment of
which shall result in an Individual Performance Award, if other
conditions precedent to the payment of such Award under the terms of
the Plan are satisfied.
As soon as practicable, after the end of a Plan Year, the Compensation
Committee will determine whether the Corporate Threshold and the
Corporate Target were attained and the Chief Executive Officer of the
Company shall determine the extent to which each Participant has
satisfied his or her individual performance requirements for purposes
of receiving an Individual Performance Award. Determinations of the
Compensation Committee and the Chief Executive Officer shall be
conclusive and binding on all Participants and Beneficiaries.
6.1 a. Awards. Participants, depending upon whether they are Category
I Participants or Category II Participants, shall have a
Total Incentive Compensation Opportunity through Awards
under the Plan for a Plan Year as follows:
1. Awards for Category I and Category II Participants. Subject
to the provisions of Section 6.1.a.4. below, the amount of
an Award to a Participant shall be determined as follows:
(a) If the Corporate Threshold is achieved, the Participant
shall receive the Minimum Incentive Payout applicable
to such Participant's category.
(b) If the Corporate Target is achieved, the Participant
shall receive the Maximum Incentive Payout applicable
to such Participant's category.
(c) If the level of performance achieved exceeds the
Corporate Threshold but is less than the Corporate
Target, a Participant shall receive an amount equal to
the Minimum Incentive Payment applicable to such
Participant's category plus that percentage of the
Incentive Compensation Spread which is equal to the
percentage of the Performance Target Range that is
actually earned or achieved, not to exceed 100 percent.
2. Individual Performance Awards for Category II Participants.
Subject to the provisions of Section 6.1.a.4 below and provided
that such Participant attains the prescribed level of achievement
of qualitative performance requirements, a Category II
Participant shall receive an Individual Performance Award.
3. Discretionary Awards. Notwithstanding any other provision
contained herein to the contrary, the Compensation Committee may,
in its sole discretion, make such other or additional Awards to
a Participant as it shall deem appropriate.
4. Termination of Service During Plan Year. If a Termination of
Service occurs with respect to a Participant prior to the end of
a Plan Year, following the end of the Plan Year and provided that
an Award would have been payable to the Participant under the
terms of the Plan had a Termination of Service not occurred prior
to the end of the Plan Year, the Compensation Committee or the
Chief Executive Officer (depending on whether the Participant was
a Category I or Category II Participant) in its or his sole
discretion may determine, through proration or otherwise, the
amount which s uch Participant or Beneficiary should receive. In
the case of a Category II Participant, the Chief Executive
Officer in determining whether an Individual Performance Award
should be made to the Participant or Beneficiary shall estimate
in his sole and absolute discretion the level of achievement of
qualitative performance requirements by the Participant prior to
his or her Termination of Service. Notwithstanding the preceding
provisions of this subsection, in the event that the Compensation
Committee, Executive Committee or Chief Executive Officer, as
applicable, determines in its or his sole and absolute discretion
that such Participant has entered or plans to enter into
competition with the Company or a Subsidiary, the Compensation
Committee, Executive Committee or Chief Executive Officer, as
applicable, may direct that no Award payment shall be made to
such terminated Participant.
b. Payment of Awards.
1. Except as otherwise provided in Section 6.1.b.2. below,
each Participant shall receive payment, in a cash lump sum,
of his or her Award as soon as practicable following the
determinations with respect thereto made pursuant to Section
2. With respect to a Participant who is a 'covered employee'
for purposes of Section 162(m) of the Internal Revenue Code
of 1986, as amended, payment of that portion of an Award
which would otherwise cause such Participant's compensation
to exceed the limitation on the amount of compensation
deductible by the Company in any taxable year pursuant to
such Section 162(m), shall be deferred until such
Participant is no longer a 'covered employee.'
c. Tax Withholding. The Company or employing Subsidiary through
which payment of an Award is to be made shall have the right to
deduct from any payment hereunder any amounts that Federal,
state, local or foreign tax law requires with respect to such
7.1 Rights of Participants and Beneficiaries
a. Neither status as a Participant or Beneficiary shall be construed
as a commitment that any Award will be made under the Plan.
b. Nothing contained in the Plan or in any document related to the
Plan or to any Award shall confer upon any Participant any right
to continue as an employee or in the employ of the Company or a
Subsidiary or constitute any contract or agreement of
employment or interfere in any way with the right of the Company
or a Subsidiary to reduce such persons compensation, to change
the position held by such person or to terminate the employment
of such person, with or without cause.
c. No benefit payable under, or interest in, this Plan shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, incumbrance or charge and any such
attempted action shall be void and no such benefit or interest
shall be, in any manner, liable for, or subject to debts,
contracts, liabilities or torts of any Participant or
Beneficiary. Any a ttempt at transfer, assignment or other
alienation prohibited by the preceding sentence shall be
disregarded and all amounts payable hereunder shall be paid only
in accordance with the provisions of the Plan.
d. No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset of the
Company or any Subsidiary by reason of any Award hereunder. There
shall be no funding of any benefits which may become payable
hereunder. Nothing contained in the Plan (or in any document
related thereto), nor the creation or adoption of the Plan, nor
any action taken pursuant to the provisions of the Plan shall
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company or a Subsidiary
and any Participant, Beneficiary or other person. To the extent
that a Participant, Beneficiary or other person acquires a right
to receive payment with respect to an Award hereunder, such
right shall be no greater than the right of any unsecured
general creditor of the Company or any Subsidiary. All amounts
payable under the Plan shall be paid from the general assets of
the Company or a Subsidiary, as applicable, and no special or
separate fund or deposit shall be established and no segregation
of assets shall be made to assure payment of such amounts.
Nothing in the Plan shall be deemed to give any employee
any right to participate in the Plan except in accordance
7.2 Governing Law. The Plan and all related documents shall be governed by,
and construed in accordance with, the laws of the State of Texas. If
any provision hereof shall be held by a court of competent jurisdiction
to be invalid and unenforceable, the remaining provisions of the Plan
shall continue to be fully effective.
7.3 Amendment and Termination of Plan and Awards. Notwithstanding anything
herein to the contrary, the Compensation Committee may, at any time,
terminate or, from time to time amend, modify or suspend the Plan. No
Award may be made during any suspension of the Plan or after its
7.4 Effective Date. The Plan shall become effective as of January 1, 1991,
for Plan Years beginning on or after January 1, 1991, and shall remain
in effect until such time as it may be terminated pursuant to Section