HALLIBURTON COMPANY ANNUAL REWARD PLAN
INDEX
ARTICLE I................................................................... 1
PURPOSE..................................................................... 1
ARTICLE II.................................................................. 1
DEFINITIONS................................................................. 1
2.1 Definitions................................................... 1
2.2 Number........................................................ 4
2.3 Headings...................................................... 4
ARTICLE III................................................................. 4
PARTICIPATION............................................................... 4
3.1 Participants.................................................. 4
3.2 Partial Plan Year Participation............................... 4
3.3 No Right to Participate....................................... 5
3.4 Plan Exclusive................................................ 5
ARTICLE IV.................................................................. 5
ADMINISTRATION.............................................................. 5
ARTICLE V................................................................... 6
REWARD DETERMINATIONS....................................................... 6
5.1 Performance Measure............................................. 6
5.2 Reward Determinations........................................... 6
5.3 Reward Opportunities............................................ 7
5.4 Discretionary Adjustments ...................................... 7
5.5 Discretionary Bonuses........................................... 7
ARTICLE VI.................................................................. 7
DISTRIBUTION OF REWARDS..................................................... 7
6.1 Form and Timing of Payment...................................... 7
6.2 Mandatory Deferral.............................................. 8
6.3 Elective Deferral............................................... 8
6.4 Tax Withholding................................................. 8
6.5 No Interest or Dividend Equivalents............................. 9
6.6 Small Accounts.................................................. 9
ARTICLE VII................................................................. 9
TERMINATION OF EMPLOYMENT................................................... 9
7.1 Termination of Service During Plan Year......................... 9
7.2 Termination of Service After End of Plan Year But Prior to Full
Payment......................................................... 10
ARTICLE VIII................................................................ 10
RIGHTS OF PARTICIPANTS AND BENEFICIARIES.................................... 10
8.1 Status as a Participant or Beneficiary.......................... 10
8.2 Employment...................................................... 10
8.3 Nontransferability.............................................. 10
8.4 Nature of Plan.................................................. 11
ARTICLE IX.................................................................. 12
CORPORATE CHANGE............................................................ 12
ARTICLE X................................................................... 12
AMENDMENT AND TERMINATION................................................... 12
ARTICLE XI.................................................................. 12
MISCELLANEOUS............................................................... 12
11.1 Governing Law................................................... 12
11.2 Severability.................................................... 13
11.3 Successor....................................................... 13
11.4 Effective Date.................................................. 13
ARTICLE I
PURPOSE
The purpose of the Halliburton Company Annual Reward Plan (the 'Plan')
is to reward senior management for improving financial results which drive the
creation of shareholder value, and thereby, serve to attract, motivate, reward
and retain senior management talent. The Plan provides a means to link total and
individual cash compensation to Company performance, as measured by Cash Value
Added ('CVA'), on the basis of Participant sharing in CVA improvement, a
demonstrated driver of shareholder value. In addition, to further relate
compensation earned under the Plan to shareholder value creation and to provide
incentives for Participants to focus on a time frame longer than one year, the
Plan provides that one-half of incentive compensation earned for a Plan Year
will be paid in cash following the end of the Plan Year and the remaining
one-half will be denominated in Common Stock Equivalents and paid in cash
installments in the second and third years after the Plan Year based on the
value of such Common Stock Equivalents at the time of payment.
ARTICLE II
DEFINITIONS
2.1 Definitions. Where the following words and phrases appear in the
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
'Affiliate' shall mean any Subsidiary, division or designated group of
the Company.
'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 full
payment of a Reward.
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'Board of Directors' shall mean the Board of Directors of the Company.
'Bonus Shares' shall mean a specified number of units assigned to a
Participant for a particular Plan Year which are used to calculate the
Reward for such Plan Year. The value of each Bonus Share is determined by
dividing the total number of Bonus Shares for all Participants into the
Bonus Pool as of the end of a particular Plan Year; provided, however, that
the Committee may, in its discretion, in lieu of the foregoing, establish,
as of the beginning of a Plan Year, a formula pursuant to which the value
of a Bonus Share can be determined at given levels of CVA performance,
regardless of changes during such Plan Year in the aggregate number of
Bonus Shares.
'Bonus Pool' shall mean the amount available for payment of Rewards
based upon CVA performance for a particular Plan Year as established by the
Committee.
'Cause' shall mean (i) the conviction of the Participant of a felony
under Federal law or the law of the state in which such action occurred,
(ii) dishonesty in course of fulfilling the Participant's employment duties
or (iii) the disclosure by the Participant to any unauthorized person or
competitor of any confidential information or confidential knowledge as to
the business or affairs of the Company.
'CEO' shall mean the Chief Executive Officer of the Company.
'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.
'Common Stock' shall mean the common stock, par value $2.50 per share,
of the Company.
'Common Stock Equivalent' shall mean a unit entitling a Participant to
receive at a designated time or times in the future a cash payment equal to
the Fair Market Value at such time or times of one share of Common Stock.
'Company' shall mean Halliburton Company and its successors.
'Corporate Change' shall have the meaning ascribed in Article II,
Paragraph (h) of the Company's 1993 Stock and Long-Term Incentive Plan, as
amended.
'CVA' shall mean the difference between operating cash flow and a
capital charge, calculated on a consolidated basis in accordance with the
criteria and guidelines set forth in the Corporate Policy entitled 'Cash
Value Added (CVA),' as in effect at the time any such calculation is made.
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'Deferred Payment Date' shall mean, with respect to a particular Plan
Year, the last business day of February of the second and third years
following the end of such Plan Year.
'Executive Committee' shall mean the Executive Committee of the
Company.
'Fair Market Value' shall mean the average closing price per share of
the Common Stock on the New York Stock Exchange (or, if the Common Stock is
not then listed on such exchange, such other national securities exchange
on which the Common Stock is then listed) for the ten (10) trading days
immediately preceding a Payment Date, a Deferred Payment Date or such other
date on which the Common Stock Equivalents are to be valued pursuant to the
Plan provisions. If the Common Stock is not publicly traded on a national
securities exchange at the time a determination of its value is required to
be made hereunder, the determination of its Fair Market Value shall be made
by the Committee in such manner as it deems appropriate.
'Key Employees' shall mean regular, full-time management employees of
the Company below the Company officer level.
'Participant Category' shall mean a grouping of Participants, as
determined by the Committee, based on level of responsibility.
'Participants' shall mean any employee of the Company or a Subsidiary
who participates in the Plan pursuant to the provisions of Article III
hereof.
'Payment Date' shall mean, with respect to a particular Plan Year, the
last business day of February of the year next following the end of such
Plan Year.
'Plan' shall mean the Halliburton Company Annual Reward Plan.
'Plan Year' shall mean the calendar year ending December 31, 1995 and
each subsequent calendar year thereafter.
'Reward' shall mean the dollar amount of incentive compensation
payable to a Participant under the Plan for a Plan Year determined in
accordance with Section 5.2.
'Reward Opportunity' shall mean, with respect to each Participant, the
aggregate value of such Participant's Bonus Shares which corresponds to
levels of pre-established CVA performance, determined pursuant to the
Reward Schedule.
'Reward Schedule' shall mean the schedule setting forth the basis on
which each of the Participants will share in the Bonus Pool for a
particular Plan Year.
'Section 16 Officer' shall mean an officer who is subject to Section
16 of the
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Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder.
'Subsidiary' shall mean any corporation 50 percent or more of whose
voting power is owned, directly or indirectly, by the Company.
2.2 Number. Wherever appropriate herein, words used in the singular shall
be considered to include the plural and words used in the plural shall be
considered to include the singular.
2.3 Headings. The headings of Articles and Sections herein are included
solely for convenience, and if there is any conflict between headings and the
text of the Plan, the text shall control.
ARTICLE III
PARTICIPATION
3.1 Participants. Employees who are members of the Executive Committee and
Company officers as of the beginning of each Plan Year shall be Participants for
such Plan Year. In addition, such other Key Employees as may be designated
annually as Participants by the CEO prior to the last day of February each Plan
Year shall be Participants under the Plan for such Plan Year.
3.2 Partial Plan Year Participation. If, after the beginning of a Plan
Year, an employee who was not previously a Participant is newly appointed or
elected as a member of the Executive Committee or a Company officer, such
employee shall become a Participant effective with such appointment or election
for the balance of the Plan Year, on a prorated basis, unless the Committee
shall determine, in its sole discretion, that the participation shall be delayed
until the beginning of the next Plan Year. If, after the beginning of the Plan
Year, a person is newly hired, promoted or transferred into a position in which
he or she is a Key
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Employee, the CEO may designate in writing such person as a Participant for the
balance of such Plan Year, on a prorated basis.
Contemporaneously with the promotion, demotion, reassignment or transfer of
a Participant which involves a change in Participant Category, the CEO (except
with respect to any action or status change involving himself or other Section
16 Officers, in which case such determination shall be made by the Committee)
shall, in his sole and absolute discretion, make appropriate adjustment in the
number of Bonus Shares assigned to such Participant, on a prorated basis for the
balance of the Plan Year, effective as of such change in status; provided,
however, that if such change in status involves a transfer to an Affiliate whose
employees do not participate in the Plan, such Participant's participation in
the Plan will be terminated effective with such transfer for the remainder of
the Plan Year without otherwise affecting such person's employment status, and
such Participant shall be entitled to receive a prorated Reward for the Plan
Year based on the time he or she was a Participant.
3.3 No Right to Participate. Except as provided in Sections 3.1 and 3.2, no
Participant or other employee of the Company shall, at any time, have a right to
participate in the Plan for any Plan Year, notwithstanding having previously
participated in the Plan.
3.4 Plan Exclusive. No employee shall simultaneously participate in this
Plan and in any short-term incentive plan of an Affiliate.
ARTICLE IV
ADMINISTRATION
Each Plan Year, the Committee shall establish the basis for payments under
the Plan in relation to given CVA performance levels, as more fully described in
Article V hereof, and,
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following the end of each Plan Year, determine the actual Reward payable to each
Participant. The Committee is authorized to construe and interpret the Plan, to
prescribe, amend and rescind rules, regulations and procedures relating to its
administration and to make all other determinations necessary or advisable for
administration of the Plan. The CEO shall have such authority as is expressly
provided in the Plan. In addition, as permitted by law, the Committee may
delegate such of its authority granted under the Plan (except with respect to
matters relating to the CEO and other Section 16 Officers) as it deems
appropriate to the CEO or a committee, which committee need not be composed
entirely of members of the Board of Directors. The determinations of the
Committee, the CEO or any committee to which authority has been delegated
pursuant hereto shall be conclusive and binding. Subject only to compliance with
the express provisions hereof, the Committee, the CEO and any other committee to
which responsibility has been delegated may act in their sole and absolute
discretion with respect to the Plan.
ARTICLE V
REWARD DETERMINATIONS
5.1 Performance Measure. CVA shall be the sole performance measure in
determining performance goals for any Plan Year.
5.2 Reward Determinations. Prior to the last day of February of each Plan
Year, the Committee shall establish a formula relating the size of the Bonus
Pool to CVA performance beyond a threshold level and a Reward Schedule which
aligns the level of CVA performance with Reward Opportunities, such that the
level of achievement of CVA performance at the end of the Plan Year will
determine the actual Reward. After the end of
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each Plan Year, the Committee shall determine the extent to which CVA
performance has been achieved and the amount of the Reward shall be computed for
each Participant in accordance with the Reward Schedule.
5.3 Reward Opportunities. The established Reward Opportunities may vary in
relation to the Participant Categories and within the Participant Categories. In
the event a Participant changes Participant Categories during a Plan Year, the
Participant's Bonus Shares shall be adjusted to reflect the amount of time in
each Participant Category during the Plan Year.
5.4 Discretionary Adjustments. Once established, CVA performance levels
will not be changed during the Plan Year. However, if the Committee, in its sole
and absolute discretion, determines that a change in the Company's business,
operations, corporate or capital structure, the manner in which it conducts
business or any other material change or event will have a consequence the
Committee did not intend which affects the Bonus Pool formula, then the
Committee may, reasonably contemporaneously with such change or event, make such
adjustments as it shall deem appropriate and equitable in the manner of
computing CVA for purposes of application to the Bonus Pool formula for the Plan
Year.
5.5 Discretionary Bonuses. Notwithstanding any other provision contained
herein to the contrary, the Committee may, in its sole discretion, make such
other or additional bonus payments to a Participant as it shall deem
appropriate.
ARTICLE VI
DISTRIBUTION OF REWARDS
6.1 Form and Timing of Payment. One-half of the amount of each Reward shall
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be paid in cash on the Payment Date. Payment of the remaining amount of the
Reward shall be deferred and paid in accordance with the provisions set forth
below.
The remaining one-half of the Reward shall be converted into Common Stock
Equivalents, the number of which shall be determined by using the Fair Market
Value per share of the Common Stock as of the Payment Date, rounded to the next
even-numbered whole share. A cash payment equal to the Fair Market Value of
one-half of the Common Stock Equivalents as of the first Deferred Payment Date
shall be made on such date; and a cash payment equal to the Fair Market Value of
the remaining Common Stock Equivalents as of the second Deferred Payment Date
shall be made on such date.
6.2 Mandatory Deferral. Notwithstanding the provisions of Section 6.1, 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 a Reward 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,' unless the Committee, in its
discretion, determines that such deferral should not be required.
6.3 Elective Deferral. Nothing herein shall be deemed to preclude a
Participant's election to defer receipt of a percentage of his or her Reward
beyond the time such amount would have been payable hereunder pursuant to the
Halliburton Elective Deferral Plan or other similar plan.
6.4 Tax Withholding. The Company or employing Subsidiary through which
payment of a Reward is to be made shall have the right to deduct from any
payment hereunder
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any amounts that Federal, state, local or foreign tax laws require with respect
to such payments.
6.5 No Interest or Dividend Equivalents. No interest or dividend
equivalents shall be accrued or paid under this Plan on the amount of any
portion of a Reward as to which distribution is deferred. Nothing herein shall
prohibit the crediting of earnings or dividend equivalents as provided in the
Halliburton Elective Deferral Plan on portions of Rewards as to which payment is
deferred pursuant to such other plan.
6.6 Small Accounts. Notwithstanding the provisions of Section 6.1 and
Article VII, the Committee may, on a case by case basis to facilitate Plan
administration, authorize a lump sum cash payment of a Reward or the remaining
portion of a Reward if it deems the amount thereof to be too small to justify
its deferral.
ARTICLE VII
TERMINATION OF EMPLOYMENT
7.1 Termination of Service During Plan Year. In the event a Participant's
employment is terminated during a Plan Year for any reason other than
termination for Cause, provided that a Reward would have been payable under the
Plan for such Plan Year, such Participant's Reward for such Plan Year shall be
prorated based upon that portion of the Plan Year during which he or she was a
Participant and paid in accordance with Section 6.1, except in the case of
death, in which case the entire amount of prorated Reward shall be paid to the
Participant's estate on the Payment Date.
If a Participant's employment is terminated for Cause during a Plan Year,
all of such Participant's rights to a Reward for such Plan Year shall be
forfeited.
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7.2 Termination of Service After End of Plan Year But Prior to Full
Payment. If a Participant's employment is terminated for any reason other than
termination for Cause subsequent to the end of an applicable Plan Year but prior
to the payment of a Reward in full, the amount of the Reward then unpaid shall
be paid to the Participant in accordance with Section 6.1, except in the case of
death, in which case the amount of the Reward then unpaid shall be paid
immediately to such Participant's estate.
If a Participant's employment is terminated for Cause subsequent to the end
of an applicable Plan Year but prior to the payment of a Reward in full, all of
such Participant's rights to the amount of the Reward then unpaid shall be
forfeited.
ARTICLE VIII
RIGHTS OF PARTICIPANTS AND BENEFICIARIES
8.1 Status as a Participant or Beneficiary. Neither status as a Participant
or Beneficiary shall be construed as a commitment that any Reward will be paid
or payable under the Plan.
8.2 Employment. Nothing contained in the Plan or in any document related to
the Plan or to any Reward 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 person's compensation,
to change the position held by such person or to terminate the employment of
such person, with or without Cause.
8.3 Nontransferability. No benefit payable under, or interest in, this Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge,
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encumbrance 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 attempt
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. The foregoing notwithstanding,
nothing in this Section 8.3 shall prevent transfer by Will or by applicable laws
of descent and distribution.
8.4 Nature of Plan. 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 Reward 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 a Reward 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
herewith.
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ARTICLE IX
CORPORATE CHANGE
In the event of a Corporate Change, (i) with respect to a Participant's
Reward Opportunity for the Plan Year in which the Corporate Change occurred,
such Participant shall be entitled to an immediate cash payment equal to the
maximum amount of Reward he or she would have been entitled to receive for the
Plan Year, prorated to the date of the Corporate Change; and (ii) with respect
to Rewards earned in prior Plan Years which have not been paid in full, the Fair
Market Value of each Participant's remaining Common Stock Equivalents for all
such Plan Years shall be determined as of the Corporate Change and paid in cash
immediately.
ARTICLE X
AMENDMENT AND TERMINATION
Notwithstanding anything herein to the contrary, the Committee may, at any
time, terminate or, from time to time amend, modify or suspend the Plan;
provided, however, that, without the prior consent of the Participants affected,
no such action may adversely affect any rights or obligations with respect to
any Rewards theretofore earned for a particular Plan Year, whether or not the
amounts of such Rewards have been computed and whether or not such Rewards are
then payable.
ARTICLE XI
MISCELLANEOUS
11.1 Governing Law. The Plan and all related documents shall be governed
by, and construed in accordance with, the laws of the State of Texas, except to
the extent preempted by federal law.
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11.2 Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully severable
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.
11.3 Successor. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
11.4 Effective Date. The Plan shall become effective as of January 1, 1995,
for Plan Years beginning on and after January 1, 1995, and shall remain in
effect until such time as it may be terminated pursuant to Article X.
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