2004 Incentive Compensation Plan Performance Targets for MarkWest Executives
This document outlines the 2004 incentive compensation plan for executives of MarkWest Hydrocarbon, Inc. and MarkWest Energy Partners, L.P. Executives are eligible for bonus awards based on company operating cash flow, distributed cash flow, and individual or departmental goals. Awards are only paid if certain financial thresholds are met, with payouts ranging from 20% to 65% of base salary, depending on performance. Incentive awards are split equally between cash and equity. The plan is designed to reward executives for meeting or exceeding budget targets.
Exhibit 10.2
2004 INCENTIVE COMPENSATION PLAN
PERFORMANCE TARGETS
Intent: To provide a reward for achieving budget targets.
Measurement Criteria: The incentive award for each executive under the 2004 incentive compensation plan was derived from three measurement criteria 1) MarkWest Hydrocarbon, Inc. (“MarkWest Hydrocarbon”) operating cash flow (weighted 40% of the total bonus award) 2) MarkWest Energy Partner’s, L.P. (“MarkWest Energy”) distributed cash flow (weighted 40% of the total bonus award), and 3) department/individual goals (weighted 20% of the total bonus award).
Threshold: The payout of incentive awards was contingent upon EBITDA (earnings before interest, taxes, depreciation, depletion and amortization) being 90% to 100% of target for both MarkWest Energy and MarkWest Hydrocarbon.
Incentive Award Range: The incentive award range was set from 20% to 35% of base salary for officers and executives if budget targets are achieved, with opportunity of percentages to be increased to up to 35% to 65% of base salary for achieving stretch performance.
Payout: Base incentive award 50% cash and 50% equity (restricted stock or phantom units).
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