Exhibit 10.4

EX-10.4 6 sept3001exh10_4.htm DIRECTORS COMPENSATION PLAN Exhibit 10.4

OCEAN ENERGY, INC.

DIRECTORS COMPENSATION PLAN

Adopted July 19, 2001

OCEAN ENERGY, INC.
DIRECTORS COMPENSATION PLAN

Table of Contents

Page

SECTION 1. DEFINITIONS..................................................................................1

SECTION 2. ADMINISTRATION...............................................................................1

SECTION 3. PARTICIPANTS.................................................................................2

SECTION 4. BENEFITS.....................................................................................2

SECTION 5. GENERAL PROVISIONS...........................................................................3

OCEAN ENERGY, INC.
DIRECTORS COMPENSATION PLAN

PREAMBLE

WHEREAS, Ocean Energy, Inc. (the "Company") desires to adopt the Ocean Energy, Inc. Directors Compensation Plan (the "Plan")
in order to set forth the cash and stock compensation payable to Directors (as defined below) by the Company, including stock awards
provided pursuant to other plans of the Company;

NOW, THEREFORE, the Company hereby adopts the Plan as set forth herein, effective as of January 1, 2002.

SECTION 1.

DEFINITIONS

For purposes of the Plan, the following terms shall have the meaning indicated:

1.1 Board means the Board of Directors of the Company.

1.2 Committee means the Nominating Committee of the Board.

1.3 Company Stock means the common stock, par value $.10 per share, of the Company.

1.4 Director means a member of the Board who is not also an employee of the Company or a subsidiary thereof.

1.5 Restricted Stock means a share of Company Stock granted pursuant to this Plan that, prior to vesting, is subject to
forfeiture and is not transferable by the Director.

1.6 Treasury Stock means issued shares of Company Stock that are held by the Company.

1.7 Years of Service means the number of years that a Director has served on the Board (including the board of directors of any
predecessor corporation that has merged with the Company), with any fractional parts of a year measured in whole calendar months.

SECTION 2.

ADMINISTRATION

2.1 Administration. Except as otherwise specifically provided herein, the Plan shall be administered by the Committee. The
Committee shall have the complete authority and power to interpret the Plan, prescribe, amend and rescind rules relating to its
administration, determine a person's right to a payment and the amount of such payment, and to take all other actions necessary or
desirable for the administration of the Plan. All actions and decisions of the Committee shall be final and binding upon all
persons. In certain cases arising under the Plan, action or approval must be taken by either the full Board or by a committee of
"non-employee directors", as described in Rule 16b-3 promulgated by the Securities Exchange Commission.

SECTION 3.

PARTICIPANTS

3.1 Participants. Each Director shall be a participant in the Plan.

SECTION 4.

BENEFITS

4.1 Annual Retainer. Subject to any elections made by the Director under the Company's Outside Directors Deferred Fee Plan,
each calendar year each Director shall be paid an annual retainer in cash in the amount of $37,500 (plus an additional $5,000 for
each committee of the Board of which the Director is the chairman), which shall be payable in equal quarterly amounts on or as soon
as reasonably practical following the end of each calendar quarter in such year; provided, however, that a Director who ceases to be
a Director during a quarter, without regard to the reason, shall be paid a prorated portion of the retainer otherwise payable for
such quarter based on the number of days during such quarter that the individual served as a Director over the number of days in such
quarter.

4.2 Meeting Fees. Subject to any elections made by the Director under the Company's Outside Directors Deferred Fee Plan, each
Director shall be paid $1,500 for each meeting of the Board that such Director attends and $1,250 for each committee meeting that
such Director attends.

4.3 Annual Restricted Stock Grant. Each year on the first day on which the major stock exchanges are open, each Director on
such date shall be granted 1,000 shares of Restricted Stock. Shares of Restricted Stock shall become vested (nonforfeitable and
transferable) as to (i) [34% of the shares on the first anniversary of the date of grant, (ii) an additional 33% on the second
anniversary of the date of grant, and (iii) the remaining 33% on the third anniversary of the date of grant,] provided the Director
continues to serve as a Director on such applicable anniversary date. The shares of Restricted Stock automatically shall become
fully vested upon a Change in Control (as defined in the Company's 2001 Long-Term Incentive Plan or any successor thereto) and also
upon the Director's termination from the Board due to his death or a disability (as determined by the Committee). If a Director
ceases to be a member of the Board for any reason other than death or a disability approved by the Committee, all shares of unvested
Restricted Stock then held by the Director shall be automatically forfeited on such termination. Any Restricted Stock may be
evidenced in such manner as the Committee shall deem appropriate, including, without limitation, book-entry registration or issuance
of a stock certificate or certificates. In the event a certificate representing Restricted Stock is issued hereunder, such
certificate shall be registered in the name of the Director and shall bear an appropriate legend referring to the terms, conditions
and restrictions applicable to such Restricted Stock and, during the restricted period, shall be left on deposit with the Company
with a stock power endorsed in blank. Directors shall have the right to receive dividends paid on their Restricted Stock and to vote
such shares. Restricted Stock may not be sold, pledged, transferred or encumbered during the restricted period other than by will or
the laws of descent and distribution.

Notwithstanding anything in the Plan to the contrary, grants of shares of Restricted Stock may only be made hereunder from
shares of Treasury Stock. In the event the number of shares of Treasury Stock is insufficient on any date to make all such grants
provided for in this Section 4.3 in full, then all Directors who are entitled to receive grants on such date shall share ratably in
the number of shares of Treasury Stock available.

4.4 Annual Stock Option Grants. Each Director shall be entitled to receive stock options (and other stock-based awards, if any)
granted pursuant to the terms of the Company's 1999 and/or 2001 Long-Term Incentive Plan (or any successor plan), as applicable.

4.5 Severance Benefit. Upon a Director's termination from the Board due to any of the following events: (i) the Director is
not re-elected by the stockholders of the Company, (ii) the Director's death or a disability, as determined by the Committee, (iii)
the Director is not recommended for re-election by the Board and does not stand for re-election, (iv) the Director does not continue
as a member of the Board (or the board of directors of a successor to the Company) upon a Change in Control (as defined in the
Company's 2001 Long-Term Incentive Plan (or any successor plan)), or (v) the Company (or its successor) ceases to be an independent,
publicly traded entity, the Director shall be paid, in a lump sum within five business days of such termination, an amount equal to
the product of his Years of Service, including fractional parts thereof, (not to be less than one or to exceed five) and the highest
annual cash retainer in effect prior to such termination.

SECTION 5.

GENERAL PROVISIONS

5.1 Termination and Amendment. The Board may from time to time amend, suspend or terminate the Plan or a benefit hereunder, in
whole or in part; provided, however, no amendment, suspension or termination of the Plan or a benefit hereunder may, without the
written consent of such Director, impair the right of a Director to receive any benefit already accrued or awarded hereunder prior to
the effective date of such amendment, suspension or termination.

5.2 Applicable Law. The Plan shall be construed and governed in accordance with the laws of the State of Delaware without
regard to conflicts of laws principles.

Executed this ________________, 2001, effective for all purposes as of January 1, 2002.

OCEAN ENERGY, INC.

By:
Name:
Title: