Linn Energy, LLC (LINE)

Employee Incentive Compensation Program

Our EICP is an annual cash incentive program, which provides guidelines for the calculation of annual non-equity incentive based compensation, subject to Committee oversight and modification. We expect that future awards under our EICP will include various incentive levels based on the participant’s accountability and impact on our operations, with target award opportunities that are established as a percentage of base salary. These targets may range from 25% of base salary to 250% of base salary for our named executive officers.

For fiscal 2006, EICP awards were based upon achievement of overall corporate growth and unitholder return and the individual’s performance related to the achievement of our financial performance.   With respect to corporate growth in 2006, the Committee specifically considered factors including the completion of our initial public offering, the completion of five acquisitions of oil and gas properties, the company’s 145% increase in enterprise value as measured by change in our market capitalization from our initial public offering through December 31, 2006 and over 60% unitholder return.

Based on our achievements in 2006 and the Committee’s evaluation of the relative contributions of each of our named executive officers to our financial performance, the Committee approved the payment of cash bonuses such that each named executive officer’s 2006 total compensation would approximate the 90th percentile of similarly situated executives in our 2006 peer group.  Accordingly, the following cash bonus payments were paid in January 2007:

(1)          Mr. Ellis joined us in December 2006 and was not eligible to participate in the EICP.  Awards made to our named executive officers for performance in 2006 are reflected in column (d) of the Summary Compensation Table, since specific performance targets were not established for 2006.

(2)          Awards made to our named executive officers for performance in 2006 are reflected in column (d) of the Summary Compensation Table, since specific performance targets were not established for 2006.  In the future, we expect EICP awards to be reflected in column (g).

Although not firmly established for 2007, the Committee is in the process of establishing minimum, target and maximum levels for each component of the financial objective portion of the EICP. Payments of awards under the EICP will be based upon the achievement of both financial and non-financial objectives for the current year. In 2007, we will present for consideration and approval by our Board the 2007 financial performance targets. Named executive officers participating in the EICP are eligible to receive:

·                  a payment of at least 25% and up to 50% of the target award opportunity for the financial objective portion of the EICP award if we achieve or exceed the minimum performance level but do not achieve the target performance level;

·                  a payment of at least 50% and up to 100% of the target award opportunity for the financial objective portion of the EICP award if we achieve or exceed the target performance level but do not attain the maximum performance level;

·                  a payment up to 250% of the target award opportunity for the financial objective portion of the EICP award if we achieve or exceed the maximum performance level; and

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·                  no payment for the financial objective portion of the EICP award unless we achieve the minimum performance level (as computed for the total financial objective portion).

Upon completion of the fiscal year, the Committee will assess our performance for each corporate financial objective of the EICP comparing the actual fiscal year results to the pre-determined minimum, target and maximum levels for each objective and an overall percentage amount for the corporate financial objectives is calculated.

In making the annual determination of the minimum, target and maximum levels, the Committee may consider the specific circumstances facing our company during the coming year. Unitholder return metrics are set in alignment with our strategic plan and expectations regarding our performance.