UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Anadarko Petroleum Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TO OUR STOCKHOLDERS:
The 2019 Annual Meeting of Stockholders of Anadarko Petroleum Corporation will be held at 1201 Lake Robbins Drive, The Woodlands, Texas, 77380 on Tuesday, May 14, 2019, at 5:00 p.m. (Central Daylight Time).
The attached Notice of Annual Meeting of Stockholders and proxy statement provide information concerning the matters to be considered at the Annual Meeting. The Annual Meeting will cover only the business contained in the proxy statement and will not include a management presentation.
Pursuant to rules promulgated by the U.S. Securities and Exchange Commission, we are also providing access to our proxy materials over the Internet. As a result, we are mailing to most of our stockholders a Notice of Internet Availability of Proxy Materials (Notice) instead of a paper copy of this proxy statement, a proxy card and our 2018 annual report. The Notice contains instructions on how to access those documents over the Internet, as well as instructions on how our proxy materials. All stockholders who do not receive a Notice should receive a paper copy of the proxy materials by mail. We believe that the Notice process allows us to provide our stockholders with information in a more timely manner, reduces our printing and mailing costs, and helps to conserve natural resources.
Your Vote is Important
Your vote is important and we encourage you to vote even if you are unable to attend the Annual Meeting. You may vote by Internet or by telephone using the instructions on the Notice or, if you received a paper copy of the proxy card, by signing and returning it in the postage-paid envelope provided for your convenience. You may also attend and vote at the Annual Meeting.
Very truly yours,
R. A. WALKER Chairman of the Board and Chief Executive Officer |
www.anadarko.com
1201 Lake Robbins Drive
The Woodlands, Texas 77380
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
YOUR VOTE IS IMPORTANT:
Please take the time to vote by following the Internet or telephone voting instructions provided. If you received a paper copy of the proxy card, you may also vote by completing and mailing the proxy card in the postage-paid envelope provided for your convenience. You may also attend and vote at the Annual Meeting. You may revoke your proxy at any time before the polls close at the Annual Meeting by following the instructions in this proxy statement.
As a stockholder, your vote is very important and the Companys Board of Directors strongly encourages you to exercise your right to vote.
BY ORDER OF THE BOARD OF DIRECTORS
Philip H. Peacock
Vice President, Deputy General Counsel,
Corporate Secretary and Chief Compliance Officer
March 29, 2019
The Woodlands, Texas
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Stockholders to be Held on May 14, 2019:
The proxy statement and annual report for 2018 are available at
https://materials.proxyvote.com/032511
Cautionary Language Regarding Forward-Looking Statements
This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this proxy statement, including Anadarkos ability to successfully complete the share-repurchase or debt-reduction programs; and to successfully plan, secure additional government and partner approvals, enter into additional long-term sales contracts, take FID and the timing thereof, finance, build and operate the necessary infrastructure and LNG park in Mozambique. See Risk Factors in Anadarkos 2018 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements.
1201 Lake Robbins Drive
The Woodlands, Texas 77380
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 14, 2019
1 |
Dear Fellow Stockholder:
On behalf of the Anadarko Board of Directors, we would like to thank you for your continued investment in Anadarko. We remain focused on overseeing the successful execution of Anadarkos long-term strategy, and are committed to delivering capital-efficient growth while returning capital to stockholders.
As a Board, we regularly review the Boards composition as well as the individual directors skillsets, including a thorough annual review of the Board, its committees and each director, for alignment with Anadarkos long-term strategy and to ensure that we are able to continue providing the most effective oversight on behalf of stockholders. We have a highly qualified and experienced Board that is diverse in terms of not just skills and background, but also personal characteristics such as race and gender. We have refreshed our Board over the years with fresh perspectives complementing our existing directors skillsets, experience and institutional knowledge. In 2018, we were pleased to welcome Alexandra Pruner and Michael Grimm to the Board. Both bring a variety of diverse experiences and perspectives to the table, and bolster our Boards ability to continue to effectively oversee Anadarkos strategy, as well as other matters important to our ability to succeed over the long-term.
Our Boards deliberations have for many years been informed by feedback from our stockholders gained through regular, proactive engagement. We greatly value our engagements with stockholders and, since 2012, Anadarko has regularly reached out to at least its 50 largest stockholders to solicit feedback on corporate governance, executive compensation, sustainability and environmental issues, among other matters. These discussions have resulted in changes to the Companys governance and compensation practices over the years, including enhancements to the 2018 compensation programs to increase focus on capital efficiency and safety performance.
During the spring of 2018, Anadarko sought feedback from stockholders owning approximately 64% of the Companys outstanding common stock. Additionally, in the fall of 2018 Anadarko sought feedback from stockholders owning approximately 58% of the Companys outstanding common stock. These conversations helped inform the Boards views on several issues, including enhanced climate change risk reporting, and resulted in a 2018 Climate Change Risk Assessment and Management Report, which, when published in November 2018, reflected the valuable input of our stockholders. Investors also provided very positive feedback on the report in subsequent discussions, as well as additional helpful feedback for our Board to consider going forward.
I encourage you to read more about our Board of Directors, Anadarkos corporate governance practices and executive compensation discussed in this proxy statement. Thank you for your continued support and valued input.
LEAD DIRECTOR
H. Paulett Eberhart
2 |
This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. For more complete information regarding the Companys 2018 performance, please also review the Companys Annual Report on Form 10-K for the year ended December 31, 2018.
2019 Annual Meeting of Stockholders:
Date and Time: |
Tuesday, May 14, 2019, at 5:00 p.m. | |
Location: |
1201 Lake Robbins Drive The Woodlands, Texas 77380 | |
Record Date: |
March 19, 2019 | |
Mail Date: |
March 29, 2019 |
Proposals and Board Recommendations:
Proposal |
Board Vote Recommendation |
Page Reference | ||||||||
1. Election of the Twelve Directors Named in this Proxy Statement |
FOR EACH DIRECTOR NOMINEE |
12 | ||||||||
Management Proposals |
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2. Ratification of KPMG LLP as Independent Auditor for 2019 |
FOR | 80 | ||||||||
3. Approve 2019 Omnibus Incentive Compensation Plan |
FOR | 81 | ||||||||
4. Approve, on an Advisory Basis, the Companys Named Executive Officer 2018 Compensation |
FOR | 89 | ||||||||
Stockholder Proposal |
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5. Paris Compliant Business Plan |
AGAINST | 90 |
Director Nominees:
Name | Age | Director Since |
Independent | Audit Committee |
Compensation and Benefits Committee |
Governance and Risk Committee |
Executive Committee | ||||||||||||||||||||||||||||
Anthony R. Chase |
64 | 2014 | Yes | M | |||||||||||||||||||||||||||||||
David E. Constable |
57 | 2016 | Yes | M | |||||||||||||||||||||||||||||||
H. Paulett Eberhart* |
65 | 2004 | Yes | C | M | ||||||||||||||||||||||||||||||
Claire S. Farley |
60 | 2017 | Yes | M | |||||||||||||||||||||||||||||||
Peter J. Fluor |
71 | 2007 | Yes | M | |||||||||||||||||||||||||||||||
Joseph W. Gorder |
61 | 2014 | Yes | C | M | ||||||||||||||||||||||||||||||
John R. Gordon |
70 | 1988 | Yes | M | |||||||||||||||||||||||||||||||
Sean Gourley |
39 | 2015 | Yes | M | |||||||||||||||||||||||||||||||
Michael K. Grimm |
64 | 2018 | Yes | M | |||||||||||||||||||||||||||||||
Eric D. Mullins |
56 | 2012 | Yes | C | M | ||||||||||||||||||||||||||||||
Alexandra Pruner |
57 | 2018 | Yes | M | |||||||||||||||||||||||||||||||
R. A. Walker (CEO) |
62 | 2012 | No | C |
*Lead Director
C=Chair
M=Member
3 |
Proxy Summary
4 |
Proxy Summary
Corporate Governance Highlights
The Board monitors emerging best practices in corporate governance in order to incorporate them into its process to enhance value for our stockholders. Through such efforts, as well as in response to stockholder feedback, we have implemented or enhanced the following practices:
✓ |
Annual election of all directors | ✓ | Strong stock ownership requirements | ||||||
✓ |
Majority vote standard in uncontested elections | ✓ | No poison pill | ||||||
✓ |
Proxy Access | ✓ | No pledging or hedging of Company securities | ||||||
✓ |
Independent Board other than CEO | ✓ | Expanded disclosure on political expenditures | ||||||
✓ |
Independent Lead Director | ✓ | Board oversight of ESG matters |
Board Refreshment and Experience
Composition of Independent Directors*
* | As of December 31, 2018 |
5 |
Proxy Summary
6 |
Proxy Summary
7 |
Proxy Summary
ESG Reporting
We recognize that ESG reporting is an area of interest for our stakeholders, and in recent years we have made significant strides in improving overall transparency. We continue to take steps to enhance our disclosure on ESG matters important to our stakeholders.
We provide information regarding our ESG practices through a number of different resources. As a member of IPIECA, we look to the 2015 Oil and Gas Industry Guidance on Voluntary Sustainability Reporting as well as the Global Reporting Initiatives (GRI) 2016 Consolidated Set of Sustainability Reporting Standards for direction on sustainability topics for inclusion.
Additional information regarding Anadarkos ESG practices is available in the following areas:
Corporate Responsibility Website
www.anadarko.com/Corporate-Responsibility/
2017 HSE and Sustainability Report
www.anadarko.com/content/documents/apc/Responsibility/2017_HSE_Report.pdf
2018 Climate Change Risk Assessment and Management Report
www.anadarko.com/content/documents/apc/Responsibility/ClimateChange-RiskAssess-Mngt-FINAL.pdf
ESG Metrics Scorecard
www.anadarko.com/Corporate-Responsibility/Metrics/
8 |
Proxy Summary
9 |
Proxy Summary
CEO Realized Pay Demonstrates Alignment with Company Performance. Consistent with our pay-for-performance philosophy, 91% of the CEOs total direct compensation is at-risk. Accordingly, the value that is intended to be received by the CEO is aligned with the Companys actual operational and financial performance, including its stock-price performance. As demonstrated below, the value actually received by the CEO can differ substantially from grant date values, which are calculated and reported in the Summary Compensation Table (SCT) and related proxy tables as required by the SEC.
Cumulative realized pay for the CEO over the last three years was less than one-half of the aggregate target value, demonstrating the efficacy of our plans pay-for-performance construction.
The chart above compares reported pay and realized pay for 2016, 2017 and 2018. The amounts include each direct compensation element, i.e., salary, non-equity incentive plan compensation/bonus, performance units, restricted stock units and non-qualified stock options. The SCT column in the chart depicts the data reported in the 2018 SCT, while the Realized column depicts the actual value received (or vested) by the CEO in each year, including actual performance-based compensation paid for prior performance periods. The methodology for calculating realized pay for purposes of this chart is more fully described in the table on Appendix A.
10 |
Proxy Summary
Elements of our 2018 Compensation Program
Component |
Award | Performance Metrics | Purpose | |||
Base Salary |
Cash | N/A | Provides a fixed level of competitive compensation to attract and retain executive talent. | |||
Annual Incentive Program (AIP) |
Cash | Operational Reserve Additions Growth per DAS Sales Volume Growth per DAS |
Replacing proved reserves is essential for an exploration and production company. Reserve growth is measured on a debt-adjusted share basis to determine whether reserves are being replaced in a capital-efficient manner that is accretive to stockholder value. Sales volumes reflect the conversion of reserves into operating cash flows. Sales volume growth is similarly measured on a debt-adjusted share basis to determine whether sales volume growth is being achieved in a manner that is accretive to stockholder value. | |||
Financial Cash Flow Return on Invested Capital Controllable Cash Costs |
These metrics focus on capital efficiency and financial discipline. The Company allocates the majority of its capital to assets that generate strong economic margins and returns while a portion is allocated to long-term projects that are intended to provide future reserves and sales volume. The Controllable Cash Costs performance metric incentivizes employees to manage and reduce costs to maximize margins and profitability. | |||||
HSE Performance Total Recordable Incident Rate (TRIR) Level 3 Incidents |
Health and safety is very important to us and critical to our success. Accordingly, the Health, Safety and Environmental (HSE) performance metric includes both (i) TRIR for both employees and contractors and (ii) Level 3 safety and environmental incidents in order to focus employees and contractors on maintaining a safe work environment. A Level 3 Incident generally involves a significant environmental impact, an impact to the public and/or significant monetary damages, or a fatality or permanent disability. As a result, our HSE performance metrics capture both the number and the severity of the incidents in a given year. | |||||
Equity Compensation |
Performance Units (50%) | 3-Year Total Stockholder Return (TSR) | TSR provides not only an effective comparison of our performance against an industry peer group, but also an absolute performance-based component as the value of vested awards is tied to the price of our common stock at the time of payout. | |||
Non-Qualified Stock Options (25%) | Absolute Stock Price | Stock Options reward absolute value creation and typically vest pro rata annually over three years, encouraging both performance and retention. | ||||
Restricted Stock Units (25%) |
Absolute Stock Price | Restricted Stock Units align with absolute stock price performance and provide retentive value, especially in a volatile and cyclical industry. |
11 |
Anadarko Board of Directors
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
Nominees for Director Nominated by the Board of Directors for Terms Expiring in 2020
ANTHONY R. CHASE |
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Mr. Chase, 64, has served as Chairman, Chief Executive Officer and owner of ChaseSource, L.P., a Houston-based staffing and real estate development firm since 2008. He served as an Executive Vice President of Crest Investment Company, a Houston-based private equity firm, from January 2009 until December 2009. Prior to these positions, he served as the Chairman and Chief Executive Officer of ChaseCom, L.P., a global customer relationship management and staffing services company that he founded and owned until its sale in 2007 to AT&T. Mr. Chases entrepreneurial track record also includes two other successful business ventures, including Chase Radio Partners, which he founded, developed and ultimately sold, and Cricket Wireless, which he co-founded, developed and later sold. Mr. Chase has also been a Professor of Law at the University of Houston since 1991 and has published numerous environmental law and other law review articles during his tenure. Mr. Chase is on the board of directors of the Greater Houston Partnership, and served as its Chairman during 2012. From July 2004 to July 2008, he served as a director of the Federal Reserve Bank of Dallas, and also served as its Deputy Chairman from 2006 until his departure in July 2008. He is also on the board of directors of the Houston Endowment and the Texas Medical Center and serves on the Board of Trustees for St. Johns School and KIPP Schools. Mr. Chase holds Bachelor of Arts, Master of Business Administration and Juris Doctor degrees from Harvard University. In addition to Mr. Chases current public-company directorship noted in the box to the right, in the past five years he also served on the boards of Paragon Offshore plc, Sarepta Therapeutics, Inc. (NASDAQ: SRPT) and Western Gas Holdings, LLC, a subsidiary of Anadarko.
Key Contributions to the Board. Mr. Chases unique experience as a successful and widely respected entrepreneur, business leader, and environmental and business legal scholar provides invaluable perspective to the Board. In addition, he has significant experience with strategic transactions and mergers and acquisitions. |
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Director Since:
February 2014
Independent
Current Directorships:
Nabors Industries Ltd.
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DAVID E. CONSTABLE
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Mr. Constable, 57, has been a senior advisor at Cerberus Capital Management, one of the worlds leading private investment firms, since March 2017. He served as an advisor to the board of Sasol Limited (JSE: SOL) (NYSE: SSL) (Sasol), an international integrated energy and chemicals company based in South Africa, from July 2016 until July 2017. Prior to that, he served as Sasols President and Chief Executive Officer from July 2014 through June 2016 and previously served as Chief Executive Officer from July 2011 through July 2014. Prior to Sasol, Mr. Constable spent nearly 30 years at Fluor Corporation (NYSE: FLR) (Fluor) where he lived on several continents and served in various leadership positions, primarily in the oil and gas, refining, chemical, power and mining industries. Prior to moving to Sasol, Mr. Constable served as Group President of Operations for Fluor. He is a member of The Business Council and a past member of the World Economic Forum International Business Council. Mr. Constable holds a bachelors of science degree in civil engineering from the University of Alberta, and graduated from the International Management Program at the Thunderbird School of Global Management, as well as the Advanced Management Program at the Wharton School of the University of Pennsylvania. In addition to Mr. Constables current public-company directorships noted in the box to the right, in the past five years he also served on the board of Sasol.
Key Contributions to the Board. Mr. Constables experience as a public company CEO, as well as his project-management expertise and broad international business experience, make him a valued member of the Board. |
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Director Since:
July 2016
Independent
Current Directorships:
ABB Ltd
Rio Tinto Limited
Rio Tinto plc
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13 |
Anadarko Board of Directors
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
Nominees for Director Nominated by the Board of Directors for Terms Expiring in 2020
H. PAULETT EBERHART (Lead Director) |
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Ms. Eberhart, 65, has served as Chairman and Chief Executive Officer of HMS Ventures, a privately held business involved with technology services and the acquisition and management of real estate since March 2014. From January 2011 through March 2014, she served as the President and Chief Executive Officer of CDI Corp. (NYSE: CDI) (CDI), a provider of engineering and information technology outsourcing and professional staffing services. She served as a consultant to CDI from April 2014 through December 2014. Ms. Eberhart also served as Chairman and Chief Executive Officer of HMS Ventures from January 2009 until January 2011. She served as President and Chief Executive Officer of Invensys Process Systems, Inc. (Invensys), a process automation company, from January 2007 to January 2009. From 1978 to 2004, she was an employee of Electronic Data Systems Corporation (EDS), an information technology and business process outsourcing company, and held roles of increasing responsibility over time, including senior level financial and operating roles. From 2003 until March 2004, Ms. Eberhart was President of Americas of EDS, and from 2002 to 2003 she served as President of Solutions Consulting at EDS. Ms. Eberhart is a Certified Public Accountant. In addition to Ms. Eberharts current public-company directorships noted in the box to the right, in the past five years she also served on the boards of Ciber, Inc., Cameron International Corporation, CDI and Advanced Micro Devices, Inc. (NASDAQ: AMD).
Key Contributions to the Board. Ms. Eberhart brings a wealth of operational, accounting and financial experience to the Board, as well as managerial, manufacturing and global experience, through her numerous years of service as an executive officer for EDS, Invensys and CDI. She also held various other operating and financial positions during her 26 years at EDS. In addition, she gained significant experience through her service on the boards of other public companies and her involvement with various civic and charitable organizations. |
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Director Since:
August 2004
Independent
Current Directorships:
LPL Financial Holdings Inc.
Valero Energy Corporation
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CLAIRE S. FARLEY |
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Ms. Farley, 60, has served as Vice Chair of Energy, advising the Energy group, for KKR & Co. L.P. (NYSE: KKR) (KKR), a global investment firm that manages investments including private equity, energy, infrastructure, real estate, credit strategies and hedge funds, since February 2017. Prior to that she served as Vice Chairman for KKRs energy and infrastructure business from 2015 through February 2017, as Partner for KKRs energy and infrastructure business from 2012 through 2015 and as Managing Director for KKRs energy and infrastructure business from November 2011 through December 2012. Prior to joining KKR, from September 2010 to October 2011, Ms. Farley co-founded and served as Co-Chief Executive Officer of RPM Energy, LLC, which partnered with KKR to invest in unconventional oil and gas resources. Prior to co-founding RPM Energy, Ms. Farley was a Senior Advisor at Jefferies Randall & Dewey, the global oil and natural gas industry advisory group at Jefferies Group, Inc., from August 2008 to September 2010 and was Co-President of Jefferies Randall & Dewey from February 2005 to July 2008. Prior to that, Ms. Farley served as Chief Executive Officer of Randall & Dewey, an oil and natural gas asset transaction advisory firm, from September 2002 until its acquisition by Jefferies Group, Inc. in February 2005. From January 2001 to May 2002 she served as Chief Executive Officer of Trade-Ranger Inc., a start-up venture, and as Chief Executive Officer of Intelligent Diagnostics Corporation, also a start-up venture, from October 1999 to January 2001. Prior to that, Ms. Farley spent 18 years (1981 to 1999) at Texaco, Inc. where her roles included Chief Executive Officer, Hydro Texaco; President, North American Production Division; and President, Worldwide Exploration & New Ventures. In addition to Ms. Farleys current public-company directorships noted in the box to the right, in the past five years she also served on the boards of Encana Corporation (TSX: ECA) (NYSE: ECA) and FMC Technologies, Inc.
Key Contributions to the Board. Ms. Farley is a respected leader in the energy industry with a strong track record of success, including extensive experience in finance, strategic investments, mergers and acquisitions, and exploration and new ventures. |
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Director Since:
February 2017
Independent
Current Directorships:
LyondellBasell Industries N.V.
TechnipFMC plc
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14 |
Anadarko Board of Directors
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
Nominees for Director Nominated by the Board of Directors for Terms Expiring in 2020
PETER J. FLUOR |
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Mr. Fluor, 71, has been Chairman and Chief Executive Officer of Texas Crude Energy, LLC, a private, independent oil and gas exploration company located in Houston, Texas, since 1990. He has been employed by Texas Crude Energy, LLC since 1972 and took over the responsibilities of President in 1980. Mr. Fluor serves as lead director of Fluor Corporation (NYSE: FLR). In addition to Mr. Fluors current public-company directorship noted in the box to the right, in the past five years he also served on the board of Cameron International Corporation.
Key Contributions to the Board. Mr. Fluor brings more than 45 years of exploration and production operations, exploration and production service, finance, banking and managerial experience to the Board as a result of his experience at Texas Crude Energy, LLC, as well as his service as a director of other public companies and involvement with various civic and charitable organizations. |
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Director Since:
August 2007
Independent
Current Directorships:
Fluor Corporation
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JOSEPH W. GORDER |
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Mr. Gorder, 61, is Chairman, President and Chief Executive Officer of Valero Energy Corporation (NYSE: VLO) (Valero), an international manufacturer and marketer of transportation fuels, other petrochemical products and power. He served as President and Chief Operating Officer of Valero from November 2012, until he assumed the role of Chief Executive Officer on May 1, 2014. He assumed the role of Chairman of the Board effective December 31, 2014. Mr. Gorder previously served as Executive Vice President and Chief Commercial Officer beginning in January 2011, and formerly led Valeros European operations from its London office. He previously served as Executive Vice President Marketing and Supply beginning in December 2005. Prior to that, he held several positions with Valero and Ultramar Diamond Shamrock Corporation with responsibilities for corporate development and marketing. Mr. Gorder is also Chairman and Chief Executive Officer of Valero Energy Partners LP (NYSE: VLP), a midstream logistics master limited partnership. Valero Energy Partners LP is a subsidiary of Valero formed in 2013.
Key Contributions to the Board. Mr. Gorders more than 30 years of career experience in and knowledge of global energy markets provides invaluable insight to the Board and strategically assists Anadarko as it pursues its expanding business opportunities. |
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Director Since:
July 2014
Independent
Current Directorships:
Valero Energy Corporation
Valero Energy Partners LP
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15 |
Anadarko Board of Directors
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
Nominees for Director Nominated by the Board of Directors for Terms Expiring in 2020
JOHN R. GORDON |
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Mr. Gordon, 70, is Senior Managing Director of Deltec Asset Management LLC, a registered investment firm located in New York, New York. He was President of Deltec Securities Corporation from 1988 until it was converted into Deltec Asset Management LLC. Prior to joining Deltec Asset Management LLC, Mr. Gordon was a managing director of Kidder, Peabody & Co., where he spent 12 years in the firms corporate finance department.
Key Contributions to the Board. Mr. Gordons role as Senior Managing Director of Deltec Asset Management LLC since 1988 provides him with significant finance and banking experience (including in the energy industry) as well as considerable managerial expertise. He also has significant involvement in various civic and charitable organizations. |
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Director Since:
April 1988
Independent
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SEAN GOURLEY |
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Dr. Gourley, 39, has served as Chief Executive Officer of Primer Technologies, Inc., a company building software to power artificial intelligence applications for the finance and military intelligence industries, since he founded it in February 2015. From March 2009 to January 2015, he was the Chief Technology Officer of Quid, Inc., a San Francisco-based augmented intelligence company he founded that builds software for strategic decision-making. Dr. Gourley studied at The University of Oxford as a Rhodes Scholar where he received a Ph.D. in physics, and he received both his Bachelor of Science and Master of Science in physics from the University of Canterbury in Christchurch, New Zealand. He was additionally a Post-Doctoral Research Fellow at the Said Business School at Oxford University and is currently an Equity Partner with Data Collective Venture Capital Fund, investing in key data and algorithmic technologies.
Key Contributions to the Board. As a highly successful executive and entrepreneur in the technology sector, Dr. Gourley brings a unique and valuable perspective to the Board. His leadership in big data, algorithmic technologies, information technology and software pertaining to artificial intelligence and strategic decision-making provides skill sets to the Board that can be beneficially applied and leveraged across the Companys global operations. Dr. Gourleys expertise complements and enhances the Companys ability to leverage technology as a competitive advantage. |
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Director Since:
September 2015
Independent
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16 |
Anadarko Board of Directors
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
Nominees for Director Nominated by the Board of Directors for Terms Expiring in 2020
MICHAEL K. GRIMM |
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Mr. Grimm, 64, is President of Rising Star Petroleum, L.L.C. He is the immediate Past Chairman of the Board for RSP Permian, Inc. Prior to being named Chairman, Mr. Grimm was a Co-Founder of RSP Permian in 2010, and served as a Co-Chief Executive Officer until 2014. From 2006 to 2017, Mr. Grimm served as President and Chief Executive Officer of Rising Star Energy Development Company, and from 1995 to 2006, he served as President and Chief Executive Officer of Rising Star Energy, L.L.C., an upstream exploration and production company active in onshore continental United States that he co-founded in 1995. From 1990 to 1994, Mr. Grimm was Vice President of Land and Exploration for Placid Oil Company. Prior to that, Mr. Grimm was employed for 13 years in the Land and Exploration Departments for Amoco Production Company in Houston and New Orleans. Mr. Grimm has more than 41 years of experience in the oil and natural gas industry. In addition to Mr. Grimms current public-company directorship noted in the box to the right, in the past five years he also served on the board of Energy Transfer Partners, L.P., before it became Energy Transfer LP, since December 2005.
Key Contributions to the Board. Mr. Grimm is a respected leader in the energy industry with a strong track record of success in the U.S. onshore, most recently in West Texas, where one of Anadarkos most prolific growth assets is located.
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Director Since:
November 2018
Independent
Current Directorships:
Energy Transfer LP
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ERIC D. MULLINS |
||||
Mr. Mullins, 56, serves as the Managing Director and Co-Chief Executive Officer of Lime Rock Resources, a company that he co-founded in 2005 which acquires, operates and improves lower-risk oil and natural gas properties. From May 2011 through October 2015, he also served as the Co-Chief Executive Officer and Chairman of the Board of Directors of LRE GP, LLC, the general partner of LRR Energy, L.P., an oil and natural-gas company. Prior to co-founding Lime Rock Resources, Mr. Mullins served as a Managing Director in the Investment Banking Division of Goldman Sachs (NYSE: GS) where he led numerous financing, structuring and strategic advisory transactions in the divisions Natural Resources Group. In addition to his current public-company directorships noted in the box to the right, in the past five years he served on the board of LRE GP, LLC.
Key Contributions to the Board. Mr. Mullinss career experiences and knowledge in financing and strategic mergers and acquisitions for exploration and production companies greatly assists and enhances the Boards ability to provide effective strategic oversight of a sustainable and growing enterprise. |
| |||
Director Since:
May 2012
Independent
Current Directorships:
Pacific Gas and Electric Company
PG&E Corporation
| ||||
17 |
Anadarko Board of Directors
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
Nominees for Director Nominated by the Board of Directors for Terms Expiring in 2020
ALEXANDRA PRUNER |
||||
Ms. Pruner, 57, has served as Senior Advisor to Perella Weinberg Partners, a global independent advisory firm providing strategic and financial advice and asset-management services, since December 2018. Prior to that, she served as Chief Financial Officer of Perella Weinberg Partners since it combined in December 2016 with Tudor, Pickering, Holt & Co., LLC, an energy-focused investment bank and asset management firm. Prior to that, she served as Chief Financial Officer and a member of the Management Committee at Tudor, Pickering, Holt & Co., LLC since the firms founding in 2007. Ms. Pruner served as Senior Vice President, Strategic Business Development and publisher of World Oil magazine for Gulf Publishing Company from 2002 to 2007. Prior to joining Gulf Publishing Company, she spent two years in the technology sector serving the energy industry, including as Vice President, Energy Vertical at Idea Integration, an IT development and design firm, and Vice President, Marketing for PetroCosm Corporation, an oilfield service B2B procurement and supply chain management company. She served as Director of Investor Relations and Corporate Communications for The Houston Exploration Company, an independent exploration and production company, from 1997 to 2000 and as Director of Corporate Communications and Investor Relations for NUI Corporation, a multi-state natural gas distribution company, from 1991 to 1996. Ms. Pruner has extensive experience with the energy industry and in investment banking, having also been with Shearson Lehman Brothers from 1984 to 1990, including as Vice President, Corporate Affairs and Vice President, Government Affairs.
Key Contributions to the Board. Ms. Pruners experience in the oil and natural gas industry and her strategic leadership in finance and investment banking make her a valuable member of the Board. |
| |||
Director Since:
November 2018
Independent
Current Directorships:
Plains All American Pipeline, L.P.
Plains GP Holdings, L.P.
| ||||
R. A. WALKER (Chairman of the Board) |
||||
Mr. Walker, 62, was named Chairman of the Board of the Company in May 2013, in addition to the role of Chief Executive Officer and director, both of which he assumed in May 2012. He also served as President from February 2010 until November 2018. He previously served as Chief Operating Officer from March 2009 until his appointment as Chief Executive Officer. He served as Senior Vice President, Finance and Chief Financial Officer from September 2005 until March 2009. Mr. Walker is Chairman for the Houston Museum of Natural Science, Vice Chairman and Executive Committee member of the Business Council, Business Roundtable, All-American Wildcatters (Chairman 2017 and 2018), and the Board of Directors of the American Petroleum Institute (Executive Committee). He also serves as a director and the Chairman of the Risk Committee at BOK Financial Corporation (NASDAQ: BOKF). In addition to his current public-company directorship noted in the box to the right, in the past five years Mr. Walker also served on the board of CenterPoint Energy, Inc. (NYSE: CNP).
Key Contributions to the Board. Mr. Walker has significant energy, banking and asset management experience, in addition to his role as Anadarkos Chairman and Chief Executive Officer. He has served on numerous boards of public, private, industry trade associations and philanthropic organizations. |
| |||
Director Since:
May 2012
Not Independent Management
Current Directorships:
BOK Financial Corporation
| ||||
18 |
Corporate Governance
20 |
Corporate Governance
21 |
Corporate Governance
The Board has four standing committees: (i) the Audit Committee; (ii) the Compensation Committee; (iii) the Governance and Risk Committee; and (iv) the Executive Committee. For each of the standing committees of the Board, the table below shows the current membership, the principal functions and the number of meetings held in 2018:
Name, Members and Meetings |
Principal Functions | |
AUDIT COMMITTEE(1) Eric D. Mullins (Chair)(2) Anthony R. Chase John R. Gordon Mark C. McKinley Alexandra Pruner
Meetings in 2018: 7 |
Discusses the integrity of the Companys accounting policies, internal controls, financial reporting practices and the financial statements with management, the independent auditor and internal audit.
Reviews and discusses with management the Companys risk assessment framework and risk management policies, including the framework with respect to significant financial risk exposures.
Monitors the qualifications, independence and performance of the Companys internal audit function and independent auditor, and meets periodically with management, internal audit and the independent auditor in separate executive sessions.
Establishes and maintains procedures for the submission, receipt, retention and treatment of complaints and concerns received by the Company regarding accounting, internal controls or auditing matters, including those received through the confidential anonymous Anadarko Hotline.
Monitors compliance with legal and regulatory requirements and the business practices and ethical standards of the Company.
Approves the appointment, compensation, retention and oversight of the work of the Companys independent auditor and establishes guidelines for the retention of the independent auditor for any permissible services.
Prepares the Audit Committee report, which is on page 35. | |
COMPENSATION AND BENEFITS COMMITTEE(3) Joseph W. Gorder (Chair) Peter J. Fluor Michael K. Grimm
Meetings in 2018: 6 |
Approves and evaluates the Companys director and officer compensation plans, policies and programs.
Conducts an annual review and evaluation of the CEOs performance in light of the Companys goals and objectives.
Retains, and is directly responsible for the oversight of, compensation or other consultants to assist in the evaluation of director or executive compensation and otherwise to aid the Compensation Committee in meeting its responsibilities. For additional information on the role of compensation consultants, please see Compensation Discussion and Analysis beginning on page 38. | |
Reviews annually the Companys compensation-related risk profile to confirm that compensation-related risks are not reasonably likely to have a material adverse effect on the Company.
Periodically reviews and discusses with its independent compensation consultants and senior management the Companys policy on executive severance arrangements, and recommends any proposed changes to the Board to the extent required by the Compensation Committee charter.
Reviews the Compensation Discussion and Analysis, disclosure related to advisory votes by stockholders on executive compensation, including frequency of such votes, and other relevant disclosure made in the proxy statement.
Produces an annual Compensation Committee report, which is on page 36. |
22 |
Corporate Governance
Name, Members and Meetings |
Principal Functions | |
GOVERNANCE AND H. Paulett Eberhart (Chair) David E. Constable Claire S. Farley Sean Gourley
Meetings in 2018: 5 |
Recommends nominees for director to the full Board and, subject to the Boards power and authority to determine the eligibility of nominees nominated by stockholders pursuant to Section 2.9 of the Companys By-Laws, ensures such nominees possess the director qualifications set forth in the Companys Corporate Governance Guidelines.
Reviews the qualifications of existing Board members before they are nominated for re-election to the Board.
Recommends members of the Board for committee membership.
Proposes Corporate Governance Guidelines for the Company and reviews them annually.
Oversees the Companys compliance structure and programs.
Develops and oversees an evaluation process for the Board and its committees.
Reviews and approves related-person transactions in accordance with the Boards procedures.
Reviews and investigates reports to the confidential anonymous Anadarko Hotline regarding material non-financial matters.
Reviews and discusses with management the Companys significant risk exposures and the steps management has taken to identify, monitor and mitigate such exposures.
Oversees the work of the Companys independent reserve engineering consultant.
Oversees the Anadarko Petroleum Corporation Political and Public Engagement Policy and the Companys political activity, including annually reviewing the Companys political contributions and trade association payments.
Reviews and discusses with management the Companys environmental, health and safety programs. | |
EXECUTIVE COMMITTEE R. A. Walker (Chair) H. Paulett Eberhart Joseph W. Gorder Eric D. Mullins
Meetings in 2018: 0 |
Acts with the power and authority of the Board, in accordance with the Companys By-Laws, in the management of the business and affairs of the Company while the Board is not in session.
Approves specific terms of financing or other transactions that have previously been approved by the Board. |
(1) | The Board has determined that each member of the Audit Committee is independent as independence for audit committee members is defined in Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended (Exchange Act), and under the standards set forth by the NYSE. None of the Audit Committee members serve on the audit committee of more than two other public companies. |
(2) | The Board has determined that Mr. Mullins qualifies as an audit committee financial expert under the rules of the SEC based upon his education and employment experience. |
(3) | The Board has determined that each member of the Compensation Committee is: (i) independent under the standards set forth by the NYSE that govern Compensation Committee membership; (ii) a non-employee director under Rule 16b-3 of the Exchange Act; and (iii) an outside director under Section 162(m) of the Internal Revenue Code of 1986, as amended (IRC). |
(4) | The Board has determined that each member of the Governance and Risk Committee is independent under the standards set forth by the NYSE that govern Board membership. |
23 |
Corporate Governance
24 |
Corporate Governance
The Governance and Risk Committee considers these and other factors when evaluating potential candidates for the Board. Other factors considered include board refreshment and director tenure, age and gender. Together, this balance of skillsets, experiences and personal backgrounds allows our directors to provide the diversity of thought that is critical to the Boards decision-making and oversight process.
Composition of Independent Directors Ensures Strong Oversight*
* | As of December 31, 2018 |
25 |
Corporate Governance
26 |
Corporate Governance
27 |
Corporate Governance
28 |
Corporate Governance
DIRECTOR COMPENSATION TABLE FOR 2018
The following table sets forth information concerning total non-employee director compensation earned during the 2018 fiscal year by each director who served on the Board in 2018. Mr. Walker does not receive any compensation for his service as a director.
Name
|
Fees Earned
|
Stock
|
Option
|
Non-Equity
|
Change in
|
All Other
|
Total($)
| ||||||||||||||||||||||||||||
Anthony R. Chase(4) |
115,625 | 250,028 | 0 | 0 | 0 | 2,042 | 367,695 | ||||||||||||||||||||||||||||
David E. Constable(4) |
111,875 | 250,028 | 0 | 0 | 0 | 2,042 | 363,945 | ||||||||||||||||||||||||||||
H. Paulett Eberhart(5) |
170,000 | 250,028 | 0 | 0 | 0 | 2,042 | 422,070 | ||||||||||||||||||||||||||||
Claire S. Farley(4) |
111,875 | 250,028 | 0 | 0 | 0 | 2,042 | 363,945 | ||||||||||||||||||||||||||||
Peter J. Fluor |
0 | 360,190 | 0 | 0 | 0 | 2,042 | 362,232 | ||||||||||||||||||||||||||||
Joseph W. Gorder |
0 | 385,148 | 0 | 0 | 0 | 2,042 | 387,190 | ||||||||||||||||||||||||||||
John R. Gordon |
110,000 | 250,028 | 0 | 0 | 0 | 2,042 | 362,070 | ||||||||||||||||||||||||||||
Sean Gourley |
110,000 | 250,028 | 0 | 0 | 0 | 2,042 | 362,070 | ||||||||||||||||||||||||||||
Michael K. Grimm(6) |
14,025 | 123,644 | 0 | 0 | 0 | 977 | 138,646 | ||||||||||||||||||||||||||||
Mark C. McKinley |
110,000 | 250,028 | 0 | 0 | 0 | 2,042 | 362,070 | ||||||||||||||||||||||||||||
Eric D. Mullins |
0 | 385,148 | 0 | 0 | 0 | 2,042 | 387,190 | ||||||||||||||||||||||||||||
Alexandra Pruner(6)
|
|
14,025
|
|
|
123,644
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
977
|
|
|
138,646
|
|
(1) | The amounts in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of (i) the annual deferred shares granted to each non-employee director in 2018 and (ii) the deferred shares granted to those directors who elected to receive deferred shares in lieu of the cash fees that they earned for service to the Company in 2018 as follows: |
a. | Each director, other than Mr. Grimm and Ms. Pruner, received 3,921 deferred shares granted in connection with their election by stockholders on May 15, 2018, with a grant date fair value of $250,028. |
b. | Messrs. Fluor, Gorder and Mullins received deferred shares that were awarded in lieu of the receipt of a cash retainer and other fees. Pursuant to their elections, Mr. Fluor was awarded 2,048 deferred shares with a grant date fair value of $110,162 and Messrs. Gorder and Mullins were awarded 2,512 deferred shares with a grant date fair value of $135,120. |
c. | Mr. Grimm and Ms. Pruner received 2,437 deferred shares for their partial year of service from their appointment to the Board on November 15, 2018 through the Annual Meeting, with a grant date fair value of $123,644. |
The value ultimately realized by each director may or may not be equal to the determined values. For a discussion of valuation assumptions, see Note 1 Summary of Significant Accounting Policies Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2018. As of December 31, 2018, each of the non-employee directors had aggregate outstanding deferred shares as follows: Mr. Chase 21,331; Mr. Constable 13,877; Ms. Eberhart 53,513; Ms. Farley 10,285; Mr. Fluor 51,045; Mr. Gorder 28,182; Mr. Gordon 59,286; Dr. Gourley 17,960; Mr. Grimm 2,437; Mr. McKinley 20,231; Mr. Mullins 26,471, and Ms. Pruner 2,437. |
(2) | The non-employee directors did not receive any stock option awards in 2018. As of December 31, 2018, only the following non-employee directors had aggregate outstanding vested and exercisable stock options as follows: Mr. Fluor 3,400 and Mr. Gordon 3,400. There were no unvested options as of December 31, 2018. |
(3) | For all non-employee directors, except for Mr. Grimm and Ms. Pruner, the amounts in this column include annual premiums paid by the Company for each directors benefit in the amount of $121 for Accidental Death & Dismemberment (AD&D) coverage and $1,921 for Personal Excess Liability (PEL) coverage. For Mr. Grimm and Ms. Pruner, the amounts include $16 for AD&D coverage and $961 for PEL coverage for their partial year of service on the Board during 2018. |
29 |
Corporate Governance
(4) | The amount in the Fees Earned or Paid in Cash column includes fees earned for service on a special committee of the Board established in 2017 to provide review and oversight with respect to various activities in Colorado. The committee was terminated in May 2018. The amounts represent pro-rated payments based on the $15,000 annual retainer for the chairman of the committee, Mr. Chase, and the $5,000 annual fee for committee members. |
(5) | In addition to her 2018 annual board retainer, the total compensation reported for Ms. Eberhart includes additional annual retainers for her service as Lead Director and as Chair of the Governance and Risk Committee during 2018. |
(6) | Mr. Grimm and Ms. Pruner were appointed to the Board effective November 15, 2018. |
30 |
Beneficial Owners and Management
The information provided below summarizes the beneficial ownership of each named executive officer (NEO), each of our directors, all of our directors and executive officers as a group, and owners of more than five percent of our outstanding common stock. Generally, beneficial ownership includes those shares of common stock held by someone who has investment and/or voting authority of such shares or has the right to acquire such common stock within 60 days. The ownership includes common stock that is held directly and also stock held indirectly through a relationship, a position as a trustee, or under a contract or understanding. Unless otherwise indicated, the address of the persons below is 1201 Lake Robbins Drive, The Woodlands, TX 77380.
DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth the number of shares and percentage of Anadarko common stock beneficially owned by our NEOs, each of our directors, and all of our executive officers and directors as a group as of March 19, 2019. None of the common stock beneficially owned as set forth below is pledged as security.
Amount and Nature of Beneficial Ownership
| ||||||||||||||||||||
Name of Beneficial Owner
|
Number of Shares
|
Stock Acquirable
|
Total Beneficial
|
Percent of
| ||||||||||||||||
R. A. Walker(4) |
337,694 | 795,938 | 1,133,632 | * | ||||||||||||||||
Benjamin M. Fink |
19,896 | 90,690 | 110,586 | * | ||||||||||||||||
Robert G. Gwin(5) |
72,023 | 169,813 | 241,836 | * | ||||||||||||||||
Mitchell W. Ingram |
50,709 | 61,270 | 111,979 | * | ||||||||||||||||
Daniel E. Brown |
27,327 | 128,494 | 155,821 | * | ||||||||||||||||
Amanda M. McMillian |
18,891 | 76,231 | 95,122 | * | ||||||||||||||||
Anthony R. Chase |
27,557 | | 27,557 | * | ||||||||||||||||
David E. Constable |
13,877 | | 13,877 | * | ||||||||||||||||
H. Paulett Eberhart |
53,513 | | 53,513 | * | ||||||||||||||||
Claire S. Farley |
10,285 | | 10,285 | * | ||||||||||||||||
Peter J. Fluor |
166,324 | 3,400 | 169,724 | * | ||||||||||||||||
Joseph W. Gorder |
28,182 | 28,182 | * | |||||||||||||||||
John R. Gordon |
184,296 | 3,400 | 187,696 | * | ||||||||||||||||
Sean Gourley |
17,960 | | 17,960 | * | ||||||||||||||||
Michael K. Grimm |
2,437 | | 2,437 | * | ||||||||||||||||
Mark C. McKinley |
21,143 | | 21,143 | * | ||||||||||||||||
Eric D. Mullins |
35,534 | | 35,534 | * | ||||||||||||||||
Alexandra Pruner |
2,437 | | 2,437 | * | ||||||||||||||||
All directors and executive officers as a group (19 persons)
|
|
1,103,219
|
|
|
1,397,623
|
|
|
2,500,842
|
|
|
*
|
|
* | Less than one percent. |
(1) | This column does not include shares of common stock that the directors or executive officers of the Company have the right to acquire within 60 days of March 19, 2019. This column does include shares of common stock held in the Companys Benefits Trust as a result of the director compensation and deferral elections made in accordance with our benefit plans described elsewhere in this proxy statement. Those shares are subject to shared voting power with the trustee under that Trust and receive dividend equivalents on such shares, but the individuals do not have the power to dispose of, or direct the disposition of, such shares until such shares are distributed to them. In addition, some shares of common stock reflected in this column for certain individuals are subject to restrictions. |
31 |
Security Ownership of Certain
Beneficial Owners and Management
(2) | This column does not include the following number of restricted stock units, which are payable (after taxes are withheld) in the form of Company common stock: Mr. Walker 103,444; Mr. Fink 41,815; Mr. Gwin 45,166; Mr. Brown 57,215; Mr. Ingram 43,948; and Ms. McMillian 39,037. The restricted stock units do not have voting rights but do receive dividend equivalents which are reinvested in Company stock and paid upon vesting of the underlying award. |
(3) | In addition to the Anadarko common stock reported in the table, as of December 31, 2018, the directors and executive officers beneficially owned common units of Western Gas Partners, LP (WES) as follows: Mr. Fink 2,213; Mr. Gwin 5,000; Ms. McMillian 1,470; and Mr. McKinley 9,000. In addition, as of December 31, 2018, the directors and executive officers beneficially owned common units of Western Gas Equity Partners, LP (WGP) as follows: Mr. Fink 18,683; Mr. Gwin 100,000; Ms. McMillian 10,000; and Mr. Fluor 61,118. On February 28, 2019, a wholly owned subsidiary of WGP merged with WES, with WES continuing as the surviving entity and becoming a consolidated subsidiary of WGP (the Merger). In connection with the Merger, each WES common unit outstanding (other than certain common units held by certain Anadarko affiliates) was converted into the right to receive 1.525 WGP common units, and following the Merger, WES changed its name to Western Midstream Partners, LP. Based upon the WES and WGP ownership described above, and assuming that the Merger had been consummated on December 31, 2018, the directors and executive officers would have beneficially owned common units of Western Midstream Partners, LP as follows: Mr. Fink 22,058; Mr. Gwin 107,625; Ms. McMillian 12,242; Mr. Fluor 61,118; and Mr. McKinley 13,725. Mr. Fluor disclaims beneficial ownership with respect to 61,117 common units that are owned by his spouse. The Company owns a majority interest in Western Midstream Partners, LP through its wholly owned subsidiaries. As of March 19, 2019, there were approximately 452,990,862 common units of Western Midstream Partners, LP outstanding. The directors and executive officers, individually and as a group, beneficially own less than one percent of the outstanding common units of Western Midstream Partners, LP. |
(4) | Includes 108,000 shares of common stock held by a limited liability company (LLC) over which Mr. Walker and his spouse exercise investment control. The membership interests in the LLC are held by Mr. Walker, his spouse and family trusts of which he is the trustee. |
(5) | In 2017, Mr. Gwin transferred the economic interest in certain stock options and restricted stock units of Company common stock pursuant to a domestic relations order (DRO). The shares reported do not reflect the stock options or restricted stock units in which he has no economic or beneficial interest. |
32 |
Security Ownership of Certain
Beneficial Owners and Management
The following table shows certain information regarding the beneficial ownership of the Companys common stock as of March 19, 2019 by each person who is known by the Company to beneficially own more than five percent of the Companys common stock.
As of March 19, 2019, 501,939,804 shares of the Companys common stock were outstanding.
Title of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of
|
Percent of Class
| |||||||||
Common Stock |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
44,409,389 | (1) | 8.85 | % | |||||||
Common Stock |
Dodge & Cox 555 California Street, 40th Floor San Francisco, California 94104 |
44,065,467 | (2) | 8.78 | % | |||||||
Common Stock |
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
39,501,506 | (3) | 7.87 | % | |||||||
Common Stock
|
State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111
|
|
25,251,281
|
(4)
|
|
5.03
|
%
|
(1) | Based upon its Schedule 13G/A filed February 11, 2019, with the SEC with respect to Company securities held as of December 31, 2018, BlackRock, Inc. has sole voting power as to 39,977,558 shares of common stock, shared voting power as to 0 shares of common stock, sole dispositive power as to 44,409,389 shares of common stock and shared dispositive power as to 0 shares of common stock. |
(2) | Based upon its Schedule 13G/A filed February 14, 2019, with the SEC with respect to Company securities held as of December 31, 2018, Dodge & Cox has sole voting power as to 41,952,082 shares of common stock and sole dispositive power as to 44,065,467 shares of common stock. |
(3) | Based upon its Schedule 13G/A filed February 11, 2019, with the SEC with respect to Company securities held as of December 31, 2018, The Vanguard Group has sole voting power as to 595,905 shares of common stock, shared voting power as to 117,977 shares of common stock, sole dispositive power as to 38,803,492 shares of common stock and shared dispositive power as to 698,014 shares of common stock. |
(4) | Based upon its Schedule 13G filed February 13, 2019, with the SEC with respect to Company securities held as of December 31, 2018, State Street Corporation has shared voting power as to 22,993,346 shares of common stock and shared dispositive power as to 25,246,671 shares of common stock. |
33 |
The following report of the Audit Committee of the Company, dated February 12, 2019, shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission, nor shall this report be incorporated by reference into any filing made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The Audit Committee of the Board is responsible for independent, objective oversight of the Companys accounting functions and internal control over financial reporting. The Audit Committee is composed of four directors, each of whom is independent as defined by the New York Stock Exchange (NYSE) listing standards. The Audit Committee operates under a written charter approved by the Board of Directors, which is available on the Companys website at www.anadarko.com/content/documents/apc/Responsibility/Governance_Documents/Audit_Committee_Charter.pdf.
Management is responsible for the Companys internal control over financial reporting. The independent auditor is responsible for performing an independent audit of the Companys consolidated financial statements in accordance with generally accepted auditing standards in the United States of America and issuing a report thereon. The independent auditor is also responsible for performing an independent audit of the Companys internal control over financial reporting. The Audit Committees responsibility is to monitor and oversee these processes.
KPMG LLP served as the Companys independent auditor during 2018 and was appointed by the Audit Committee to serve in that capacity for 2019 (and we are seeking ratification by the Companys stockholders at this Annual Meeting of such appointment). KPMG LLP has served as the Companys independent auditor since its initial public offering in 1986, and served as the independent auditor of its predecessor since 1981 when it was a wholly owned subsidiary of another company.
In connection with these responsibilities, the Audit Committee met with management and the independent auditor to review and discuss the December 31, 2018 audited consolidated financial statements and managements assessment of the effectiveness of the Companys internal control over financial reporting as of December 31, 2018. The Audit Committee also discussed with the independent auditor the matters required to be discussed by standards of the Public Company Accounting Oversight Board (PCAOB).
The Audit Committee also received the written disclosures and the letter from the independent auditor required by the PCAOB regulating the independent auditors communications with the audit committee concerning independence and has discussed with the independent auditor that firms independence.
Based upon the Audit Committees review and discussions with management and the independent auditor referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC.
THE AUDIT COMMITTEE
Eric D. Mullins, Chair
David E. Constable
Claire S. Farley
Mark C. McKinley
35 |
Compensation and Benefits Committee Report on
2018 Executive Compensation
The Compensation Committee, the members of which are listed below, is responsible for establishing and administering the executive compensation programs of the Company. The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
THE COMPENSATION AND BENEFITS COMMITTEE
Joseph W. Gorder, Chair
Peter J. Fluor
Michael K. Grimm
36 |
Compensation and Benefits Committee
The Compensation and Benefits Committee designs our executive compensation programs to align the interests of our executive officers with those of our stockholders. We have a strong track record of engaging with stockholders to understand their perspectives on our compensation practices, and over the years have made a number of enhancements to our compensation programs and our disclosure based on the stockholder feedback that we have received.
As discussed last year, in 2017 we worked closely with our investors to identify the metrics that they believe best measure performance in our industry. Based on the feedback received, the Compensation and Benefits Committee revised the Annual Incentive Program for 2018 to more directly incentivize capital efficiency in the performance metrics and further increase our focus on the safety of our employees, contractors and the communities in which we live and operate.
Our 2018 compensation program design reflects the views of our stockholders, and we believe the compensation results are aligned with Anadarkos performance achievements on both a short- and long-term basis. As you will see in the disclosure that follows, while Anadarko performed well against key operational, financial and safety measures for 2018, realized compensation levels for our executive officers were fully reflective of our recent absolute and relative stock performance.
We appreciate your ongoing engagement, feedback and support as we continue our efforts to structure programs aligned with long-term stockholder value.
THE COMPENSATION AND BENEFITS COMMITTEE
|
Joseph W. Gorder, Chair
|
37 |
Compensation Discussion and Analysis
The following summarizes the performance metrics used in 2018 for the Companys performance-based compensation arrangements, highlights the rigor of such arrangements and shows the 2018 pay outcomes.
2018 Annual Incentive Program
Our strategy drives the design of our compensation programs, which reflect our pay-for-performance philosophy. In 2017 we developed compensation metrics for our 2018 AIP that supported our focus on capital efficiency and financial discipline, while also taking into account feedback from our stockholders. The metrics included a cash return calculation and capital efficiency on a DAS basis. We also expanded the safety performance metric, now known as the HSE performance metric, to include a combination of TRIR for both employees and contractors and serious (Level 3) safety and environmental incidents.
For 2018, the Compensation Committee (referred to in this section of the proxy statement as the Committee) set targets under the updated AIP metrics at challenging levels taking into consideration the then-current market and business environment, and at levels that generally required strong year-over-year performance for target payouts.
For more information on the 2018 AIP, see the discussion beginning on page 46.
39 |
Compensation Discussion and Analysis
2015 Performance Units Below-Target Payout. Based on Anadarkos TSR performance results relative to peers for the three-year period ended December 31, 2018, the NEOs earned below-target payouts of 60% of their performance units (out of a maximum 200%). See page 50 for more details regarding performance units.
40 |
Compensation Discussion and Analysis
CEO Realized Pay Demonstrates Alignment with Company Performance. Consistent with our pay-for-performance philosophy, 91% of the CEOs total direct compensation is at-risk. Accordingly, the value that is intended to be received by the CEO is aligned with the Companys actual operational and financial performance, including its stock-price performance. As demonstrated below, the value actually received by the CEO can differ substantially from grant date values, which are calculated and reported in the Summary Compensation Table (SCT) and related proxy tables as required by the SEC.
As the following pages demonstrate, cumulative realized pay for the CEO over the last three years was less than one-half of the aggregate target value, demonstrating the efficacy of our plans pay for performance construction.
The chart above compares reported pay and realized pay for 2016, 2017 and 2018. The amounts include each direct compensation element, i.e., salary, non-equity incentive plan compensation/bonus, performance units, restricted stock units and non-qualified stock options. The SCT column in the chart depicts the data reported in the 2018 SCT, while the Realized column depicts the actual value received (or vested) by the CEO in each year, including actual performance-based compensation paid for prior performance periods. The methodology for calculating realized pay for purposes of this chart is more fully described in the table on Appendix A.
41 |
Compensation Discussion and Analysis
42 |
Compensation Discussion and Analysis
The 2018 AIP performance metrics and results are discussed in more detail beginning on page 46.
Track Record of Good Governance Practices. Through our commitment to good governance, including our continued stockholder engagement efforts, over the past several years we have implemented the following practices related to our executive compensation programs:
What We Do | What We Dont Do | |||||||
|
Structure our executive officer compensation so that more than 85% of pay is at risk | No employment contracts with our executive officers | ||||||
Emphasize long-term performance in our equity-based incentive awards | No tax gross-ups on perquisites except with respect to the Companys standard relocation program available to all employees | |||||||
Require double-trigger for equity acceleration upon a change of control | No excise tax gross-ups in key employee change-of-control contracts entered into by newly appointed and/or newly hired executive officers, irrespective of an existing agreement | |||||||
Maintain a competitive compensation package | No pledging of Company securities | |||||||
Require strong stock ownership for executive officers and directors | No short sales or derivative transactions in Company stock, including hedges | |||||||
Provide for clawback provisions | No current payment of dividends on unvested awards and no repricing of stock options unless approved by stockholders |
43 |
Compensation Discussion and Analysis
2018 COMPENSATION FRAMEWORK EMPHASIZES PERFORMANCE-BASED PAY
Our executive compensation programs include direct and indirect compensation elements. We believe that a majority of an executive officers total compensation opportunity should be performance-based; however, we do not have a specified formula that dictates the overall weighting of each element.
As illustrated in the charts below, 79% of the CEOs, and an average of 74% of the other NEOs, current target total compensation opportunity is provided through equity-based incentive awards that are dependent upon long-term corporate performance and stock-price appreciation. Any value ultimately realized for these long-term equity-based incentive awards is directly tied to Anadarkos absolute and relative stock-price performance and will fluctuate in line with stockholder returns.
The charts above are based on the following: current base salaries, as discussed on page 46; target bonus opportunities approved by the Committee in 2018, as discussed on page 47; and the grant date value for the 2018 annual equity awards, as discussed on page 51.
44 |
Compensation Discussion and Analysis
Elements of our 2018 Compensation Program
Component |
Award |
Performance Metrics |
Purpose | |||
Base Salary |
Cash | N/A | Provides a fixed level of competitive compensation to attract and retain executive talent.
| |||
Annual Incentive Program (AIP) |
Cash | Operational Reserve Additions Growth per DAS Sales Volume Growth per DAS |
Replacing proved reserves is essential for an exploration and production company. Reserve growth is measured on a debt-adjusted share basis to determine whether reserves are being replaced in a capital-efficient manner that is accretive to stockholder value. Sales volumes reflect the conversion of reserves into operating cash flows. Sales volume growth is similarly measured on a debt-adjusted share basis to determine whether sales volume growth is being achieved in a manner that is accretive to stockholder value.
| |||
Financial Cash Flow Return on Invested Capital Controllable Cash Costs |
These metrics focus on capital efficiency and financial discipline. The Company allocates the majority of its capital to assets that generate strong economic margins and returns while a portion is allocated to long-term projects that are intended to provide future reserves and sales volume. The Controllable Cash Costs performance metric incentivizes employees to manage and reduce costs to maximize margins and profitability.
| |||||
HSE Performance Total Recordable Incident Rate (TRIR) Level 3 Incidents |
Health and safety is very important to us and critical to our success. Accordingly, the Health, Safety and Environmental (HSE) performance metric includes both (i) TRIR for both employees and contractors and (ii) Level 3 safety and environmental incidents in order to focus employees and contractors on maintaining a safe work environment. A Level 3 Incident generally involves a significant environmental impact, an impact to the public and/or significant monetary damages, or a fatality or permanent disability. As a result, our HSE performance metrics capture both the number and the severity of the incidents in a given year.
| |||||
Equity Compensation |
Performance Units (50%) | 3-Year Total Stockholder Return (TSR) | TSR provides not only an effective comparison of our performance against an industry peer group, but also an absolute performance-based component as the value of vested awards is tied to the price of our common stock at the time of payout.
| |||
Non-Qualified Stock Options (25%) | Absolute Stock Price | Stock Options reward absolute value creation and typically vest pro rata annually over three years, encouraging both performance and retention.
| ||||
Restricted Stock Units (25%) |
Absolute Stock Price | Restricted Stock Units align with absolute stock price performance and provide retentive value, especially in a volatile and cyclical industry.
|
45 |
Compensation Discussion and Analysis
2018 COMPENSATION STRUCTURE AND DECISIONS LINK DIRECT COMPENSATION ELEMENTS TO STRATEGY AND OUTCOMES
The following is a discussion of the specific actions taken by the Committee in 2018 related to each of our direct compensation elements. Each element is reviewed annually, as well as at the time of a promotion, other change in responsibilities, other significant corporate event or a material change in market conditions.
In setting new salary levels for each of the NEOs, the Compensation Committee considered a number of factors, including each executives experience, individual performance, internal pay equity, development, and other individual or organizational circumstances, including the current market and business environment.
The table below reflects the base salaries for the NEOs at the beginning of 2018 as well as any modifications approved by the Committee in November 2018, as part of its annual review of executive compensation:
Name |
Salary as of January 1, 2018($) |
Salary as of November 15, 2018($) |
Increase(%) | ||||||||||||
Mr. Walker |
1,300,000 | 1,300,000 | 0 | ||||||||||||
Mr. Fink |
(1 | ) | 625,000 | (1 | ) | ||||||||||
Mr. Gwin |
750,000 | 1,000,000 | 33.3 | ||||||||||||
Mr. Ingram |
650,000 | 775,000 | 19.2 | ||||||||||||
Mr. Brown |
625,000 | 675,000 | 8 | ||||||||||||
Ms. McMillian |
(1 | ) | 625,000 | (1 | ) |
(1) | Mr. Fink and Ms. McMillian served as senior vice presidents of the Company on January 1, 2018. Mr. Fink was appointed as Executive Vice President, Finance and Chief Financial Officer in November 2018, at which time his base salary was increased to $625,000. Ms. McMillian was appointed as Executive Vice President and General Counsel in August 2018, at which time her base salary was increased to $625,000. |
Coincident with Mr. Gwins appointment to President in November 2018, his base salary was increased as noted above. Mr. Ingram received an increase to his base salary to reflect the additional job responsibilities he assumed in May 2018, upon his appointment as Executive Vice President, International, Deepwater and Exploration. Mr. Brown received an increase to his base salary in 2018 to reflect the additional job responsibilities he assumed in November 2018 and his continued development in his role.
Performance-Based Annual Incentive Program (AIP)
The AIP is designed to focus on key performance metrics and targeted levels of performance that are intended to drive differentiating performance year-over-year and increase stockholder value. The Committee believes that the AIPs annual performance metrics, although short-term in nature, work together to position the Company for strong TSR performance over the long term. All employees of the Company, including our executive officers, are eligible to participate in the AIP, which is part of our 2012 Omnibus Plan. At the beginning of each year, the Committee reviews and approves the performance metrics and targeted levels of performance. These targeted levels of performance align with the Board-approved budget for the year and reflect the market and business environment in which we operate. (See Appendix A for definitions and calculation methods.) As discussed below, we engage in a rigorous process to set performance targets and appropriately align compensation levels with performance results.
46 |
Compensation Discussion and Analysis
Rigorous Process Utilized to Develop Strategic AIP Performance Targets. The Company employs a rigorous process to establish the annual capital budget, which directly promotes the Companys strategic objectives and is the basis for developing the AIP performance targets. The chart below outlines our process in detail from the initial budget build up process through final approval and certification of the Companys AIP results by the Committee.
Individual Target Bonus Opportunities. Individual target bonus opportunities are set as a percentage of base salary. Executives may earn from 0% up to 200% of their individual bonus target. The bonus targets for 2018 are shown in the table below. As part of its annual review of executive compensation, the Compensation Committee made the following changes to the NEOs bonus targets for 2018:
Name |
Target Bonus for 2017(%) |
Target Bonus for 2018(%) |
Increase(%) | ||||||||||||
Mr. Walker |
130 | 130 | 0 | ||||||||||||
Mr. Fink |
(1 | ) | 81.73 | (1) | N/A | ||||||||||
Mr. Gwin |
95 | 110 | 16 | ||||||||||||
Mr. Ingram |
95 | 110 | 16 | ||||||||||||
Mr. Brown |
95 | 110 | 16 | ||||||||||||
Ms. McMillian |
(1 | ) | 85.65 | (1) | N/A |
(1) | Mr. Fink and Ms. McMillian served as senior vice presidents of the Company on January 1, 2018 and were appointed as executive vice presidents in November and August of 2018, respectively. The Committee set a target bonus opportunity of 95% for each of these officers in their new role. Their target bonus opportunities and, as a result, actual bonus awards for 2018 were prorated using a blended rate calculated based on the percentage of 2018 that each executive served in their respective roles and the target bonus opportunity applicable to each role. |
Coincident with Mr. Gwins appointment to President in November 2018, his target bonus opportunity was increased as noted above. Mr. Ingram received an increase to his target bonus opportunity to reflect the additional job responsibilities he assumed in May 2018, upon his appointment as Executive Vice President, International, Deepwater and Exploration. Mr. Browns increase in 2018 reflects the additional job responsibilities he assumed in November 2018 and his continued development in his role. In addition, the Committee determined that Mr. Walkers target bonus opportunity for the 2019 AIP would increase to 150%.
47 |
Compensation Discussion and Analysis
2018 AIP Performance Results. During 2018, the Company performed well against our core operational, financial and safety measures. The Company continued to deliver on its strategy to create value for stockholders. In addition, its focus on strong operational and safety performance coupled with higher-than-expected oil prices and organic reserve additions resulted in above-target AIP achievement levels for 2018. The table below reflects the 2018 performance results against each of the specified targets. Each performance metric and the total AIP score are capped at 200%. For a detailed description of the 2018 AIP performance metrics, see page 45.
2018 AIP Performance Metrics |
2018 Target-Setting Considerations |
Relative Weighting Factor |
AIP Target Performance |
AIP Performance Results |
AIP Performance Score | |||||||||||||||||
Reserve Additions Growth per DAS(1) |
Target set at a level that required more than a 100% reserve replacement ratio | 20% | 11.9 | % | 22.8 | % | 27.8% | |||||||||||||||
Sales-Volume Growth per DAS(1) |
Target set at a level that required strong year-over-year increase in production on a divestiture-adjusted basis | 20% | 12.9 | % | 15.1 | % | 25.0% | |||||||||||||||
Cash Flow Return on Invested Capital(1) |
Target set based on current market and business environment | 20% | 19.0 | % | 27.0 | % | 36.4% | |||||||||||||||
Controllable Cash Costs ($/BOE)(2) |
Target incorporated certain controllable costs to maximize margins and profitability, including LOE, controllable G&A and transportation costs | 20% | 10.42 | 11.04 | 8.1% | |||||||||||||||||
Total Recordable Incident Rate (employees and contractors) |
Target set at a level that required strong year-over-year improvements | 10% | 0.55 | 0.49 | 14.3% | |||||||||||||||||
Level 3 Incidents(3) |
Target set at a level that required strong year-over-year improvements | 10% | 7 | 0 | 20.0% | |||||||||||||||||
|
|
|
|
|||||||||||||||||||
Calculated Performance Score |
100% | 131.6% | ||||||||||||||||||||
Committee Adjustments (see below for additional disclosure) |
Substantial progression of Mozambique LNG development project toward FID, which is expected to create significant long-term value for stockholders | 18.4% | ||||||||||||||||||||
Approved AIP Performance Score |
150.0% |
(1) | See Appendix A for definitions and calculation methods. |
(2) | Controllable Cash Costs are the sum of lease operating expense (LOE), controllable general and administrative (G&A) costs and oil and gas transportation costs per barrel of oil equivalent sales volume. LOE excludes the cost of deepwater work-overs because of timing uncertainty and magnitude. Controllable G&A includes costs that are subsequently reclassified to exploration expense for accounting purposes and excludes restricted stock, severance costs, restructuring costs, bonus plans and benefits costs. |
(3) | Level 3 Incidents generally involve a significant environmental impact, an impact to the public and/or significant monetary damages, or a fatality or permanent disability. |
48 |
Compensation Discussion and Analysis
The 2018 AIP awards for the NEOs are shown in the table below and are reflected in the Non-Equity Incentive Plan Compensation column (131.6%) and the Bonus column (18.4%) of the Summary Compensation Table.
Name |
Base Salary Earnings for 2018($) |
Target Bonus % |
Approved AIP Performance Score |
Individual Performance Adjustments |
Actual Bonus Award($) | ||||||||||||||||||||||||||||||||||||||||
Mr. Walker |
|
1,300,000 |
X |
|
130% |
X |
|
150% |
± |
|
0 |
= |
|
2,535,000 |
|||||||||||||||||||||||||||||||
Mr. Fink(1) |
|
514,423 |
X |
|
81.73% |
X |
|
150% |
± |
|
0 |
= |
|
630,700 |
|||||||||||||||||||||||||||||||
Mr. Gwin |
|
778,846 |
X |
|
110% |
X |
|
150% |
± |
|
0 |
= |
|
1,285,100 |
|||||||||||||||||||||||||||||||
Mr. Ingram |
|
664,423 |
X |
|
110% |
X |
|
150% |
± |
|
0 |
= |
|
1,096,300 |
|||||||||||||||||||||||||||||||
Mr. Brown |
|
630,769 |
X |
|
110% |
X |
|
150% |
± |
|
0 |
= |
|
1,040,800 |
|||||||||||||||||||||||||||||||
Ms. McMillian(1) |
|
578,269 |
X |
|
85.65% |
X |
|
150% |
± |
|
0 |
= |
|
742,900 |
(1) | The bonus targets for Mr. Fink and Ms. McMillian were prorated as a result of their appointments as executive vice presidents in November and August of 2018, respectively, using a blended rate calculated based on the percentage of 2018 that each served in their respective roles and the target bonus opportunity applicable to each role. For 2019, their bonus targets will be 95%. |
49 |
Compensation Discussion and Analysis
Our equity-based long-term incentive program is designed to reward our executive officers for sustained long-term share performance. This program represents an average of 74% of target total compensation opportunity for our NEOs other than the CEO, and 78% for the CEO. It includes a combination of equity-based awards that we believe are performance-based in absolute and relative terms, while also providing a necessary retentive element. For additional details on the terms of these awards see page 62.
Equity Award |
Allocation |
Purpose |
Vesting | ||||||
Performance Units |
50% | Reward absolute and relative TSR performance | 3-Year Performance Period | ||||||
Non-Qualified Stock Options |
|
25% |
Reward absolute value creation |
Pro Rata Annually Over 3 Years | |||||
Restricted Stock Units |
25% | Align with absolute stock price performance and provide retention value | Pro Rata Annually Over 3 Years |
50 |
Compensation Discussion and Analysis
Performance Unit Performance Period and Payout Opportunity. The following table reflects the payout scale for the annual performance unit program. The payout scale demonstrates rigorous performance unit standards required for target and maximum payouts, including above median performance in order to earn a target payout:
Final TSR Ranking |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||
TSR Performance Percentile |
100% | 91% | 82% | 73% | 64% | 55% | 46% | 36% | 27% | 18% | 9% | 0% | ||||||||||||||||||||||||||||||||||||||||||||||||
Payout as % of Target |
200% | 182% | 164% | 146% | 128% | 100% | 80% | 60% | 40% | 0% | 0% | 0% |
Equity Awards Granted During 2018
In 2018, the Committee approved the following awards under our 2012 Omnibus Plan for the NEOs. The target grant value of Mr. Walkers award was held flat as compared to awards granted in 2017. Mr. Gwin received an increase in target grant value of his award to reflect his appointment as President in November 2018. Mr. Ingram received an increase to reflect the additional job responsibilities he assumed in in May 2018, upon his appointment as Executive Vice President, International, Deepwater and Exploration. Mr. Browns increase in 2018 reflected the additional job responsibilities he assumed in November 2018 and his continued development in his role. Mr. Fink and Ms. McMillian received increases as a result of their appointments as executive vice presidents in 2018. These awards, as well as a description of the methodology for calculating the grant date fair value, are included in the Grants of Plan-Based Awards Table on page 62.
Performance Units (50%) |
Stock Options (25%) |
Restricted Stock Units (25%) | |||||||||||||||||||||||||||||||||
Name | Total LTI Grant Date Value($) |
Target # of Units |
Grant Date Value($) |
# of Stock Options |
Grant Date Value($) |
# of Units |
Grant Date | ||||||||||||||||||||||||||||
Mr. Walker |
10,868,290 | 88,952 | 5,433,188 | 172,205 | 2,660,102 | 49,991 | 2,775,000 | ||||||||||||||||||||||||||||
Mr. Fink |
2,937,484 | 24,042 | 1,468,485 | 46,542 | 718,948 | 13,512 | 750,051 | ||||||||||||||||||||||||||||
Mr. Gwin |
5,287,292 | 43,274 | 2,643,176 | 83,776 | 1,294,113 | 24,320 | 1,350,003 | ||||||||||||||||||||||||||||
Mr. Ingram |
4,895,692 | 40,069 | 2,447,415 | 77,570 | 1,198,247 | 22,519 | 1,250,030 | ||||||||||||||||||||||||||||
Mr. Brown |
4,895,692 | 40,069 | 2,447,415 | 77,570 | 1,198,247 | 22,519 | 1,250,030 | ||||||||||||||||||||||||||||
Ms. McMillian |
2,937,484 | 24,042 | 1,468,485 | 46,542 | 718,948 | 13,512 | 750,051 |
Performance Units Results for Performance Period Ended December 31, 2018
In January 2019, the Committee certified the performance results for the annual performance unit awards granted in 2015 for the three-year performance period that ended December 31, 2018. The performance results and Anadarkos ranking, as highlighted, were as follows:
2015 Annual Award Three-Year Performance Period (January 1, 2016 to December 31, 2018)
APC | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Final TSR Ranking |
1st | 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th | 10th | 11th | 12th | ||||||||||||||||||||||||||||||||||||||||||||||||
TSR |
40.4% | 34.5% | 30.2% | 7.4% | 6.3% | 3.8% | -0.7% | -3.6% | -24.2% | -27.4% | -30.9% | -42.5% | ||||||||||||||||||||||||||||||||||||||||||||||||
Payout as % of Target |
200% | 182% | 164% | 146% | 128% | 100% | 80% | 60% | 40% | 0% | 0% | 0% |
51 |
Compensation Discussion and Analysis
52 |
Compensation Discussion and Analysis
53 |
Compensation Discussion and Analysis
INDIRECT COMPENSATION ELEMENTS
As identified in the table below, the Company provides certain benefits and perquisites (considered indirect compensation elements) that are considered typical within our industry and necessary to attract and retain executive talent. The value of each element of indirect compensation is generally structured to be competitive within our industry.
Indirect Compensation Element
|
Primary Purpose
| |
Retirement Benefits |
Attracts talented executive officers and rewards them for extended service
Offers secure and tax-advantaged vehicles for executive officers to save effectively for retirement | |
Other Benefits (for example, healthcare, paid time off, disability and life insurance) and Perquisites |
Enhances executive welfare and financial security
Provides a competitive package to attract and retain executive talent, but does not constitute a significant part of an executive officers compensation | |
Severance Benefits |
Attracts and helps retain executives in a volatile and consolidating industry
Provides transitional income following an executives involuntary termination of employment
|
54 |
Compensation Discussion and Analysis
55 |
Compensation Discussion and Analysis
56 |
Compensation Discussion and Analysis
57 |
Compensation Discussion and Analysis
58 |
Compensation Discussion and Analysis
59 |
The following table summarizes the compensation for our NEOs for the fiscal year ended December 31, 2018, and, if the individual was an NEO for the applicable fiscal year, for the fiscal years ended December 31, 2017 and 2016.
Name and Principal Position |
Year |
Salary ($)(1) |
Bonus ($)(2) |
Stock Awards ($)(3) |
Option Awards ($)(3) |
Non-Equity Incentive Plan Compensation ($)(4) |
Change in Pension Value and Non-Qualified Deferred Compensation Earnings |
All Other Compensation ($)(6) |
Total ($) | ||||||||||||||||||||||||||||||||||||
R. A. Walker Chairman and Chief Executive Officer |
2018 | 1,300,000 | 311,000 | 8,208,188 | 2,660,102 | 2,224,000 | 348,241 | 464,774 | 15,516,305 | ||||||||||||||||||||||||||||||||||||
2017 | 1,300,000 | 0 | 8,345,537 | 2,776,583 | 1,436,500 | 2,613,459 | 487,817 | 16,959,896 | |||||||||||||||||||||||||||||||||||||
2016 | 1,300,000 | 0 | 8,362,171 | 2,828,445 | 2,670,200 | 3,019,011 | 470,425 | 18,650,252 | |||||||||||||||||||||||||||||||||||||
Benjamin M. Fink |
2018 | 514,423 | 77,400 | 2,218,536 | 718,948 | 553,300 | 47,950 | 117,807 | 4,248,364 | ||||||||||||||||||||||||||||||||||||
EVP, Finance and |
|||||||||||||||||||||||||||||||||||||||||||||
Chief Financial Officer |
|||||||||||||||||||||||||||||||||||||||||||||
Robert G. Gwin(7) |
2018 | 778,846 | 157,600 | 3,993,179 | 1,294,113 | 1,127,500 | | (8) | 154,313 | 7,505,551 | |||||||||||||||||||||||||||||||||||
President |
2017 | 750,000 | 0 | 3,345,768 | 1,113,146 | 605,600 | 810,274 | 181,580 | 6,806,368 | ||||||||||||||||||||||||||||||||||||
2016 | 750,000 | 0 | 3,352,460 | 1,133,936 | 1,125,750 | 929,080 | 192,813 | 7,484,039 | |||||||||||||||||||||||||||||||||||||
Mitchell W. Ingram |
2018 | 664,423 | 134,500 | 3,697,445 | 1,198,247 | 961,800 | 80,651 | 162,250 | 6,899,316 | ||||||||||||||||||||||||||||||||||||
EVP, International, |
2017 | 627,885 | 400,000 | 3,345,768 | 1,113,146 | 507,000 | 107,021 | 218,803 | 6,319,623 | ||||||||||||||||||||||||||||||||||||
Deepwater and Exploration |
2016 | 625,000 | 400,000 | 4,536,040 | (9) | 1,133,936 | 938,150 | 47,687 | 304,060 | 7,984,873 | |||||||||||||||||||||||||||||||||||
Daniel E. Brown |
2018 | 630,769 | 127,700 | 3,697,445 | 1,198,247 | 913,100 | 68,269 | 135,416 | 6,770,946 | ||||||||||||||||||||||||||||||||||||
EVP, U.S. Onshore Operations |
2017 | 563,077 | 0 | 3,345,768 | 1,113,146 | 429,200 | 942,109 | 95,492 | 6,488,792 | ||||||||||||||||||||||||||||||||||||
Amanda M. McMillian |
2018 | 578,269 | 91,100 | 2,218,536 | 718,948 | 651,800 | | (8) | 91,441 | 4,350,094 | |||||||||||||||||||||||||||||||||||
EVP and General Counsel |
(1) | As part of its annual review of executive compensation in November 2018, the Committee determined that no changes should be made to the base salary for Mr. Walker. Mr. Finks and Ms. McMillians respective amounts represent salary earned prior to and following their appointment as Executive Vice President in November and August of 2018, respectively. Coincident with Mr. Gwins appointment to President in November 2018, his base salary was increased. Mr. Ingram received an increase to his base salary to reflect the additional job responsibilities he assumed in May 2018. Mr. Browns increase reflects the additional job responsibilities he assumed in November 2018 and his continued development in his role. |
(2) | The amounts indicated in this column for 2018 reflect the portion of the incentive cash bonus awards for 2018 paid out in February 2019 resulting from the Committees decision to increase the AIP calculated performance score from 131.6% to 150% in recognition of the Companys substantial progress toward a final investment decision related to the Mozambique LNG development project. This decision is discussed on page 49. The amounts reflected in this column for Mr. Ingram in 2016 and 2017 were for a cash retention award paid to him as part of a Retention Agreement between him and the Company entered into when he began employment with the Company on November 1, 2015. Under the terms of the agreement, Mr. Ingram received a cash retention award of $800,000, less applicable taxes, which was paid in two equal installments in November 2016 and 2017, respectively. |
(3) | The amounts included in these columns represent the aggregate grant date fair value of the awards granted to NEOs in 2018 computed in accordance with FASB ASC Topic 718. The value ultimately realized by the NEOs upon the actual vesting of the award(s) or the exercise of the stock option(s) may or may not be equal to this determined value. For a discussion of valuation assumptions, see Note 1 Summary of Significant Accounting Policies Share-Based Compensation and Note 23 Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2018. The values in the Stock Awards column represent the grant date fair values for both restricted stock unit and performance unit awards. The performance unit awards are subject to market conditions and have been valued based on the probable outcome of the market conditions as of the grant date. |
(4) | The amounts in this column reflect the portion of the incentive cash bonus awards for 2018 based on the AIP calculated performance score determined by the Compensation Committee prior to their application of discretion and paid out in February 2019 pursuant to the Companys AIP. These awards are discussed in further detail beginning on page 46. |
(5) | The amounts in this column reflect the annual aggregate change in the actuarial present value of each NEOs accumulated benefit, expressed as a lump sum, under the Companys pension plans described in more detail beginning on page 66. The amounts reported in this column are not a current cash payment but represent the year-over-year |
60 |
Executive Compensation
change in the value of the NEOs pension based on specified interest and discount rate assumptions for each year and include amounts that the NEO may not currently be entitled to receive because such amounts are not vested. The actual value of the pension will be determined at the time each NEO retires from the Company. The Companys Deferred Compensation Plan does not provide for above-market or preferential earnings so no such amounts are included. |
(6) | The amounts shown in this column are described further in the All Other Compensation Table below. The NEOs also receive benefits for which there is no incremental cost to the Company, such as tickets to certain sporting, civic, charitable and cultural events. |
(7) | Prior to his appointment as President in November 2018, Mr. Gwin served as the Executive Vice President, Finance and Chief Financial Officer of the Company. |
(8) | Mr. Gwin and Ms. McMillian each had a negative change in pension value for 2018: Mr. Gwin $(205,846); and Ms. McMillian $(28,076). |
(9) | This column includes the performance unit grant awarded to Mr. Ingram in February 2016, in addition to the annual grant he received in November 2016. Since Mr. Ingram was not employed with the Company in October 2015 and did not receive an annual long-term incentive award at the same time as the other NEOs, he received two performance unit awards in 2016. |
All Other Compensation Table for 2018
The following table describes each component of the All Other Compensation column for the fiscal year ended December 31, 2018 in the Summary Compensation Table but excludes other arrangements that are generally available to the Companys salaried employees on the U.S. payroll and do not discriminate in scope, terms or operation in favor of the NEOs, such as medical, dental, disability and group life insurance programs:
Name |
Personal ($)(1) |
Contributions by the ($) |
Club ($)(2) |
Financial/ ($)(3) |
Excess ($) |
Other ($)(4) |
Totals ($) | ||||||||||||||||||||||||||||
R. A. Walker(5) |
243,143 | 164,190 | 52,089 | 3,431 | 1,921 | 0 | 464,774 | ||||||||||||||||||||||||||||
Benjamin M. Fink |
13,677 | 82,152 | 3,377 | 16,680 | 1,921 | 0 | 117,807 | ||||||||||||||||||||||||||||
Robert G. Gwin |
27,598 | 83,067 | 25,047 | 16,680 | 1,921 | 0 | 154,313 | ||||||||||||||||||||||||||||
Mitchell W. Ingram |
7,444 | 117,142 | 17,857 | 16,680 | 1,921 | 1,206 | 162,250 | ||||||||||||||||||||||||||||
Daniel E. Brown |
37,475 | 63,598 | 15,742 | 16,680 | 1,921 | 0 | 135,416 | ||||||||||||||||||||||||||||
Amanda M. McMillian |
2,868 | 58,696 | 0 | 27,956 | 1,921 | 0 | 91,441 |
(1) | The amount reported reflects the value of personal aircraft use for 2018. The value of personal aircraft use is based on the Companys aggregate incremental direct operating costs, including cost of fuel, maintenance, landing and ramp fees, hangar fees, crew travel expenses, catering, navigation, and other miscellaneous trip-related variable costs. Because the Companys aircraft are used predominantly for business purposes, fixed costs, which do not change based on use of the aircraft, are excluded. The value of travel to board meetings for companies other than Anadarko or its affiliates and civic organizations for which the NEOs serve as directors is considered personal use and is included in the amount reported above. Compensation is imputed for personal use of our aircraft by the NEOs and their guests. Although families and invited guests are occasionally permitted to accompany executive officers on business flights, no additional compensation is included in the table because the aggregate incremental cost to the Company is de minimis. |
(2) | The amounts disclosed represent the payment of club membership fees. For those clubs not used exclusively for business, the entire amount has been included, although we believe that only a portion of this cost represents a perquisite. |
(3) | Ms. McMillians value represents 2018 reimbursements for financial planning services received in 2017 and 2018. |
(4) | The amount reported for Mr. Ingram includes a reimbursement of $611 for the cost of remaining relocation assistance with associated gross-up payment. The relocation assistance and associated gross-up payment were in accordance with the general relocation policy provided to employees. The amount also includes $595 for reimbursement of the cost of an executive physical. |
(5) | Mr. Walker has a personal usage limit of up to $300,000 that allows him to use Company aircraft for a limited amount of personal travel. In the event his usage exceeds such amount, he is required to reimburse the Company pursuant to a time-sharing agreement. As reported above, the amount of Mr. Walkers personal travel on the Companys aircraft during 2018 did not exceed his personal usage limit. |
61 |
Executive Compensation
62 |
Executive Compensation
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All
Other Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards ($)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Name |
Grant Date | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||
R. A. Walker |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP |
| 1,690,000 | 3,380,000 | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
PU |
11/15/2018 | | | | 35,581 | 88,952 | 177,904 | | | | 5,433,188 | ||||||||||||||||||||||||||||||||||||||||||||
RSU |
11/15/2018 | | | | | | | 49,991 | | | 2,775,000 | ||||||||||||||||||||||||||||||||||||||||||||
NQSO |
11/15/2018 | | | | | | | | 172,205 | 55.51 | 2,660,102 | ||||||||||||||||||||||||||||||||||||||||||||
Benjamin M. Fink |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP |
| 420,438 | 840,876 | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
PU |
11/15/2018 | | | | 9,617 | 24,042 | 48,084 | | | | 1,468,485 | ||||||||||||||||||||||||||||||||||||||||||||
RSU |
11/15/2018 | | | | | | | 13,512 | | | 750,051 | ||||||||||||||||||||||||||||||||||||||||||||
NQSO |
11/15/2018 | | | | | | | | 46,542 | 55.51 | 718,948 | ||||||||||||||||||||||||||||||||||||||||||||
Robert G. Gwin |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP |
| 856,731 | 1,713,461 | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
PU |
11/15/2018 | | | | 17,310 | 43,274 | 86,548 | | | | 2,643,176 | ||||||||||||||||||||||||||||||||||||||||||||
RSU |
11/15/2018 | | | | | | | 24,320 | | | 1,350,003 | ||||||||||||||||||||||||||||||||||||||||||||
NQSO |
11/15/2018 | | | | | | | | 83,776 | 55.51 | 1,294,113 | ||||||||||||||||||||||||||||||||||||||||||||
Mitchell W. Ingram |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP |
| 730,865 | 1,461,731 | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
PU |
11/15/2018 | | | | 16,028 | 40,069 | 80,138 | | | | 2,447,415 | ||||||||||||||||||||||||||||||||||||||||||||
RSU |
11/15/2018 | | | | | | | 22,519 | | | 1,250,030 | ||||||||||||||||||||||||||||||||||||||||||||
NQSO |
11/15/2018 | | | | | | | | 77,570 | 55.51 | 1,198,247 | ||||||||||||||||||||||||||||||||||||||||||||
Daniel E. Brown |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP |
| 693,846 | 1,387,692 | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
PU |
11/15/2018 | | | | 16,028 | 40,069 | 80,138 | | | | 2,447,415 | ||||||||||||||||||||||||||||||||||||||||||||
RSU |
11/15/2018 | | | | | | | 22,519 | | | 1,250,030 | ||||||||||||||||||||||||||||||||||||||||||||
NQSO |
11/15/2018 | | | | | | | | 77,570 | 55.51 | 1,198,247 | ||||||||||||||||||||||||||||||||||||||||||||
Amanda M. McMillian |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP |
| 495,287 | 990,575 | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
PU |
11/15/2018 | | | | 9,617 | 24,042 | 48,084 | | | | 1,468,485 | ||||||||||||||||||||||||||||||||||||||||||||
RSU |
11/15/2018 | | | | | | | 13,512 | | | 750,051 | ||||||||||||||||||||||||||||||||||||||||||||
NQSO |
11/15/2018 | | | | | | | | 46,542 | 55.51 | 718,948 |
(1) | The amounts in this column reflect the aggregate grant date fair value of awards made to NEOs in 2018 computed in accordance with FASB ASC Topic 718. The value ultimately realized by each NEO upon the actual vesting of the award(s) or exercise of the stock option(s) may or may not be equal to this determined value. For a discussion of the valuation assumptions, see Note 1 Summary of Significant Accounting Policies Share-Based Compensation and Note 23 Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2018. |
63 |
Executive Compensation
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2018
The following table reflects outstanding stock option awards and unvested and unearned stock awards (both time-based and performance-contingent) as of December 31, 2018, assuming a market value of $43.84 per share (the closing stock price of the Companys common stock on December 31, 2018).
Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock/Units(2) |
Performance Units(3) | ||||||||||||||||||||||||||||||||||||||||||||
Grant Date |
Option Awards(1) |
Number of Shares or Units of Stock That Have Not Vested(#) |
Market Value of Shares or Units of Stock That Have Not Vested($) |
Number of Unearned Shares, Units or Other Rights That Have Not Vested(#) |
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($) | ||||||||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options |
Option Exercise Price($) |
Option Expiration Date | |||||||||||||||||||||||||||||||||||||||||||
Name |
Exercisable(#) | Unexercisable(#) | |||||||||||||||||||||||||||||||||||||||||||
R. A. Walker |
05/15/2012 | 52,511 | 0 | 66.38 | 05/15/2019 | ||||||||||||||||||||||||||||||||||||||||
11/05/2012 | 169,600 | 0 | 70.70 | 11/05/2019 | |||||||||||||||||||||||||||||||||||||||||
11/06/2013 | 148,378 | 0 | 92.02 | 11/06/2020 | |||||||||||||||||||||||||||||||||||||||||
11/06/2014 | 118,005 | 0 | 93.51 | 11/06/2021 | |||||||||||||||||||||||||||||||||||||||||
10/26/2015 | 154,615 | 0 | 69.00 | 10/26/2022 | 46,529 | 2,039,831 | |||||||||||||||||||||||||||||||||||||||
11/10/2016 | 91,107 | 45,554 | 61.87 | 11/10/2023 | 15,296 | 670,577 | 47,631 | 2,088,143 | |||||||||||||||||||||||||||||||||||||
11/14/2017 | 61,722 | 123,444 | 48.05 | 11/14/2024 | 39,245 | 1,720,501 | 167,044 | 7,323,209 | |||||||||||||||||||||||||||||||||||||
11/15/2018 | 0 | 172,205 | 55.51 | 11/15/2025 | 50,333 | 2,206,599 | 88,952 | 3,899,656 | |||||||||||||||||||||||||||||||||||||
Benjamin M. Fink |
06/07/2013 | 1,614 | 0 | 87.98 | 06/07/2020 | ||||||||||||||||||||||||||||||||||||||||
11/06/2013 | 6,731 | 0 | 92.02 | 11/06/2020 | |||||||||||||||||||||||||||||||||||||||||
11/06/2014 | 16,462 | 0 | 93.51 | 11/06/2021 | |||||||||||||||||||||||||||||||||||||||||
10/26/2015 | 22,432 | 0 | 69.00 | 10/26/2022 | 3,857 | 169,091 | |||||||||||||||||||||||||||||||||||||||
11/10/2016 | 14,364 | 7,182 | 61.87 | 11/10/2023 | 1,723 | 75,536 | 4,291 | 188,117 | |||||||||||||||||||||||||||||||||||||
11/10/2016 | 16,534 | 724,851 | |||||||||||||||||||||||||||||||||||||||||||
02/13/2017 | 3,839 | 7,678 | 68.14 | 2/13/2024 | 1,875 | 82,200 | 2,321 | 101,753 | |||||||||||||||||||||||||||||||||||||
11/14/2017 | 21,409 | 42,816 | 48.05 | 11/14/2024 | 9,724 | 426,300 | 33,108 | 1,451,455 | |||||||||||||||||||||||||||||||||||||
11/15/2018 | 0 | 46,542 | 55.51 | 11/15/2025 | 13,604 | 596,399 | 24,042 | 1,054,001 | |||||||||||||||||||||||||||||||||||||
Robert G. Gwin(4) |
11/05/2012 | 30,224 | 0 | 70.70 | 11/05/2019 | ||||||||||||||||||||||||||||||||||||||||
11/06/2013 | 29,616 | 0 | 92.02 | 11/06/2020 | |||||||||||||||||||||||||||||||||||||||||
11/06/2014 | 24,644 | 0 | 93.51 | 11/06/2021 | |||||||||||||||||||||||||||||||||||||||||
10/26/2015 | 36,741 | 0 | 69.00 | 10/26/2022 | 13,748 | 602,712 | |||||||||||||||||||||||||||||||||||||||
11/10/2016 | 23,843 | 16,487 | 61.87 | 11/10/2023 | 5,550 | 243,312 | 17,289 | 757,950 | |||||||||||||||||||||||||||||||||||||
11/14/2017 | 24,745 | 49,489 | 48.05 | 11/14/2024 | 15,734 | 689,779 | 66,969 | 2,935,921 | |||||||||||||||||||||||||||||||||||||
11/15/2018 | 0 | 83,776 | 55.51 | 11/15/2025 | 24,486 | 1,073,466 | 43,274 | 1,897,132 | |||||||||||||||||||||||||||||||||||||
Mitchell W. Ingram |
02/08/2016 | 18,600 | 815,424 | ||||||||||||||||||||||||||||||||||||||||||
11/10/2016 | 36,525 | 18,263 | 61.87 | 11/10/2023 | 6,133 | 268,871 | 19,096 | 837,169 | |||||||||||||||||||||||||||||||||||||
11/14/2017 | 24,745 | 49,489 | 48.05 | 11/14/2024 | 15,734 | 689,779 | 66,969 | 2,935,921 | |||||||||||||||||||||||||||||||||||||
11/15/2018 | 0 | 77,570 | 55.51 | 11/15/2025 | 22,673 | 993,984 | 40,069 | 1,756,625 | |||||||||||||||||||||||||||||||||||||
Daniel E. Brown |
06/07/2013 | 1,614 | 0 | 87.98 | 06/07/2020 | ||||||||||||||||||||||||||||||||||||||||
09/09/2013 | 2,446 | 0 | 94.02 | 09/09/2020 | |||||||||||||||||||||||||||||||||||||||||
11/06/2013 | 16,155 | 0 | 92.02 | 11/06/2020 | |||||||||||||||||||||||||||||||||||||||||
11/06/2014 | 23,945 | 0 | 93.51 | 11/06/2021 | |||||||||||||||||||||||||||||||||||||||||
10/26/2015 | 33,160 | 0 | 69.00 | 10/26/2022 | 5,702 | 249,976 | |||||||||||||||||||||||||||||||||||||||
11/10/2016 | 26,429 | 13,215 | 61.87 | 11/10/2023 | 3,171 | 139,016 | 7,896 | 346,161 | |||||||||||||||||||||||||||||||||||||
11/10/2016 | 16,534 | 724,851 | |||||||||||||||||||||||||||||||||||||||||||
11/14/2017 | 24,745 | 49,489 | 48.05 | 11/14/2024 | 15,734 | 689,779 | 66,969 | 2,935,921 | |||||||||||||||||||||||||||||||||||||
11/15/2018 | 0 | 77,570 | 55.51 | 11/15/2025 | 22,673 | 993,984 | 40,069 | 1,756,625 |
64 |
Executive Compensation
Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock/Units(2) |
Performance Units(3) | ||||||||||||||||||||||||||||||||||||||||||||
Grant Date |
Option Awards(1) |
Number of Shares or Units of Stock That Have Not Vested(#) |
Market Value of Shares or Units of Stock That Have Not Vested($) |
Number of Unearned Shares, Units or Other Rights That Have Not Vested(#) |
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($) | ||||||||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options |
Option Exercise Price($) |
Option Expiration Date | |||||||||||||||||||||||||||||||||||||||||||
Name |
Exercisable(#) | Unexercisable(#) | |||||||||||||||||||||||||||||||||||||||||||
Amanda M. McMillian |
06/07/2013 | 1,614 | 0 | 87.98 | 06/07/2020 | ||||||||||||||||||||||||||||||||||||||||
11/06/2013 | 9,424 | 0 | 92.02 | 11/06/2020 | |||||||||||||||||||||||||||||||||||||||||
11/06/2014 | 11,973 | 0 | 93.51 | 11/06/2021 | |||||||||||||||||||||||||||||||||||||||||
10/26/2015 | 27,308 | 0 | 69.00 | 10/26/2022 | 4,696 | 205,873 | |||||||||||||||||||||||||||||||||||||||
11/10/2016 | 10,342 | 10,342 | 61.87 | 11/10/2023 | 2,481 | 108,767 | 6,179 | 270,887 | |||||||||||||||||||||||||||||||||||||
11/10/2016 | 16,534 | 724,851 | |||||||||||||||||||||||||||||||||||||||||||
11/14/2017 | 15,570 | 31,139 | 48.05 | 11/14/2024 | 7,072 | 310,036 | 24,078 | 1,055,580 | |||||||||||||||||||||||||||||||||||||
11/15/2018 | 0 | 46,542 | 55.51 | 11/15/2025 | 13,604 | 596,399 | 24,042 | 1,054,001 |
(1) | Stock options have a 7-year term and will typically vest ratably over three years in equal installments on the first, second, and third anniversaries of the date of grant. Stock options awards do not accrue dividends or dividend equivalents. |
(2) | Except as noted, the restricted stock units will vest pro rata annually over three years, beginning with the first anniversary of the grant date. At the end of each Vesting Period, unless deferred, the number of restricted stock units that vest are converted into shares of unrestricted Common Stock, less applicable withholding taxes. The shares reflected in these columns include dividend equivalents, which are accrued and reinvested in additional shares of Common Stock and paid upon the applicable vesting of the underlying award, less applicable withholding taxes. The 16,534 special restricted stock units, including their corresponding dividend equivalent units, granted to Messrs. Fink and Brown, and Ms. McMillian in November 2016 will fully vest four years from the grant date, provided each of the NEOs remains employed by Anadarko until such date. These special restricted stock units include their corresponding dividend equivalent units as of December 31, 2018 and the actual number of shares that vest may differ from these values. |
(3) | The number of outstanding units and the estimated payout percentages disclosed for each award are calculated based on our relative performance ranking as of December 31, 2018 and are not necessarily indicative of what the payout percent earned will be at the end of the specified performance period. The three-year performance period generally starts in January following the year of grant, however the February 2017 grant to Mr. Fink uses the performance period of the November 2016 grant which is January 1, 2017 to December 31, 2019, and the February 2016 grant to Mr. Ingram uses the performance period of the October 2015 grant which is January 1, 2016 to December 31, 2018. The relative performance rankings as of December 31, 2018 were: 60% for the 2015 grant, 60% for the 2016 grant, and 164% for the 2017 grant. For awards that were granted in 2018 with performance periods beginning in 2019, target payout has been assumed. |
(4) | Mr. Gwin transferred the economic interest in certain stock options, restricted stock units and performance units pursuant to a DRO. The values reported reflect only the awards for which Mr. Gwin retained beneficial ownership. |
65 |
Executive Compensation
OPTION EXERCISES AND STOCK VESTED IN 2018
The following table provides information about the aggregate dollar value realized during 2018 by the NEOs for Anadarko awards, including option exercises, vesting of restricted stock units and dividend equivalents and performance unit payouts.
Option Awards | Stock Awards | |||||||||||||||||||
Name |
Number of Shares Acquired on Exercise(#) |
Value Realized on Exercise($)(1) |
Number of Shares Acquired on Vesting(#)(2) |
Value Realized on Vesting($)(1) | ||||||||||||||||
R. A. Walker |
0 | 0 | 48,406 | 2,752,113 | ||||||||||||||||
Benjamin M. Fink |
0 | 0 | 8,881 | 498,520 | ||||||||||||||||
Robert G. Gwin |
0 | 0 | 19,407 | 1,103,390 | ||||||||||||||||
Mitchell W. Ingram |
0 | 0 | 34,321 | 1,899,659 | ||||||||||||||||
Daniel E. Brown |
0 | 0 | 13,061 | 731,846 | ||||||||||||||||
Amanda M. McMillian |
10,342 | 94,805 | 7,704 | 436,172 |
(1) | The value realized reflects the taxable value to the NEO as of the date of the option exercise, vesting of restricted stock units and dividend equivalents, or payment of performance unit awards. The amounts shown in the Value Realized on Exercise column represent the difference between the market price of Anadarko common stock at exercise and the applicable exercise price of such option(s). The amount shown in the Value Realized on Vesting column represents the aggregate number of restricted stock units and dividend equivalents or shares of restricted stock held by such named executive officer that vested during 2018 multiplied by the market price of Anadarko common stock on the applicable vesting date(s). For Mr. Gwin, these amounts do not include any value related to the transfer of the economic interest in certain stock options, restricted stock units, dividend equivalents and performance units pursuant to a DRO. The value of such transferred economic interest will be determined as of a future date, if and when the options are exercised, the restricted stock units and dividend equivalents vest or the performance unit awards are paid. The exercise prices of these stock options were higher than the price of our common stock on the date of transfer, and may be exercised in accordance with their terms, while the unvested stock awards will continue to vest in accordance with the applicable vesting schedule and performance criteria. |
(2) | The numbers disclosed include restricted stock units, dividend equivalents and performance unit awards paid in shares and cash, respectively, for which restrictions lapsed during 2018. For Mr. Gwin, the number above reflects all such awards, including the 1,445 shares of common stock that were transferred pursuant to a DRO following the 2018 vesting of his restricted stock units and dividend equivalents. |
The Company maintains the Anadarko Retirement Plan (the APC Retirement Plan) and the Kerr-McGee Corporation Retirement Plan (the KMG Retirement Plan), both of which are funded tax-qualified defined benefit pension plans. In addition, the Company maintains the Anadarko Retirement Restoration Plan, or the APC Retirement Restoration Plan, and the Kerr-McGee Benefits Restoration Plan, or the KMG Restoration Plan, both of which are unfunded, non-qualified pension benefit plans that are designed to provide for supplementary pension benefits due to limitations imposed by the IRC that restrict the amount of benefits payable under tax-qualified plans.
66 |
Executive Compensation
67 |
Executive Compensation
Mr. Brown is not eligible for early retirement under the KMG Retirement Plan. Early retirement benefits under the KMG Retirement Plans are calculated using the formula described above, however, the value is multiplied by an early retirement reduction factor as follows:
Age Benefit Payments Start |
First
Formula |
Second Formula Percentage of Normal Retirement Age Benefit Payable (Age Reductions for Benefits Earned On or After March 1, 1999) | |||||||||||||
Part A | Part B | ||||||||||||||
62 and older |
100% | 100% | 100% | ||||||||||||
61 |
100% | 95% | 100% | ||||||||||||
60 |
100% | 90% | 100% | ||||||||||||
59 |
95% | 85% | 95% | ||||||||||||
58 |
90% | 80% | 90% | ||||||||||||
57 |
85% | 75% | 85% | ||||||||||||
56 |
80% | 67.5% | 80% | ||||||||||||
55 |
75% | 60% | 75% | ||||||||||||
54 |
70% | 55% | 70% | ||||||||||||
53 |
65% | 50% | 65% | ||||||||||||
52 |
60% | 45% | 60% |
68 |
Executive Compensation
PENSION BENEFITS
Name |
Plan Name | Number of Years of Credited Service (#) |
Present Value of Accumulated Benefit ($) |
Payments During 2018 ($) | |||||||||||||
R. A. Walker(1) |
APC Retirement Plan | 13.000 | 854,357 | 0 | |||||||||||||
APC Retirement Restoration Plan | 21.000 | 20,590,045 | 0 | ||||||||||||||
Benjamin M. Fink |
APC Retirement Plan | 11.000 | 187,661 | 0 | |||||||||||||
APC Retirement Restoration Plan | 11.000 | 223,521 | 0 | ||||||||||||||
Robert G. Gwin(2) |
APC Retirement Plan | 13.000 | 355,377 | 211,323 | |||||||||||||
APC Retirement Restoration Plan | 13.000 | 2,124,958 | 1,689,270 | ||||||||||||||
Mitchell W. Ingram |
APC Retirement Plan | 3.167 | 61,205 | 0 | |||||||||||||
APC Retirement Restoration Plan | 3.167 | 180,922 | 0 | ||||||||||||||
Daniel E. Brown |
KMG Retirement Plan | 20.833 | 702,369 | 0 | |||||||||||||
KMG Restoration Plan | 20.833 | 2,461,953 | 0 | ||||||||||||||
Amanda M. McMillian |
APC Retirement Plan | 14.000 | 450,205 | 0 | |||||||||||||
APC Retirement Restoration Plan | 14.000 | 1,367,444 | 0 |
(1) | The value of Mr. Walkers APC Retirement Restoration benefit in the table includes the effect of the additional pension service credits equal to eight years of credited service provided in 2007 to recognize that he was a mid-career hire that we would like to retain for the remainder of his career. Providing him additional service credits recognized a portion of his prior industry and service years, which directly benefits us and our stockholders. Mr. Walker vested in these additional pension service credits on February 20, 2012. Mr. Walkers total pension values as of December 31, 2018, excluding these additional pension service credits is $13,275,442. |
(2) | The amounts reflected as distributions in 2018 for Mr. Gwin from both the APC Retirement Plan and the APC Retirement Restoration Plan were made pursuant to a qualified domestic relations order and DRO. |
69 |
Executive Compensation
70 |
Executive Compensation
Executive officers were given the opportunity to make voluntary deferral elections for all of their annual restricted stock unit and performance unit awards granted under the Companys 2012 Omnibus Plan. Any earnings and/or losses attributable to the deferred shares otherwise payable under these awards are based on the performance of the Companys stock over the deferral period. In general, deferred awards are distributed to the participant, in the form of Company common stock or cash, as designated by the Compensation Committee at the time of grant, upon termination or at a specific date as elected by the participant. The Company does not subsidize or match any deferrals of compensation into these plans.
Name |
Executive ($) |
Company ($) |
Aggregate ($) |
Aggregate Withdrawals / Distributions ($) |
Aggregate ($) | ||||||||||||||||||||
R. A. Walker |
|||||||||||||||||||||||||
Deferred Compensation Plan |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Savings Restoration Plan(1) |
0 | 152,190 | (117,254 | ) | 0 | 2,355,566 | |||||||||||||||||||
2012 Omnibus Plan
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
| ||||||||||
Benjamin M. Fink |
|||||||||||||||||||||||||
Deferred Compensation Plan |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Savings Restoration Plan(1) |
0 | 74,460 | (56,878 | ) | 0 | 702,170 | |||||||||||||||||||
2012 Omnibus Plan
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
| ||||||||||
Robert G. Gwin |
|||||||||||||||||||||||||
Deferred Compensation Plan |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Savings Restoration Plan(1)(2) |
0 | 76,144 | (60,928 | ) | (773,911 | ) | 777,394 | ||||||||||||||||||
2012 Omnibus Plan
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
| ||||||||||
Mitchell W. Ingram |
|||||||||||||||||||||||||
Deferred Compensation Plan |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Savings Restoration Plan(1) |
0 | 98,562 | (18,106 | ) | 0 | 301,974 | |||||||||||||||||||
2012 Omnibus Plan
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
| ||||||||||
Daniel E. Brown |
|||||||||||||||||||||||||
Deferred Compensation Plan |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Savings Restoration Plan(1) |
0 | 55,880 | (22,754 | ) | 0 | 251,235 | |||||||||||||||||||
2012 Omnibus Plan
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
| ||||||||||
Amanda M. McMillian |
|||||||||||||||||||||||||
Deferred Compensation Plan |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Savings Restoration Plan(1) |
0 | 52,158 | (28,747 | ) | 0 | 315,864 | |||||||||||||||||||
2012 Omnibus Plan
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
(1) | Company contributions in the Savings Restoration Plan are reported in the Summary Compensation Table for each of the NEOs under the All Other Compensation column for the fiscal year 2018. The Savings Restoration Plan Aggregate Balance includes amounts reported in the All Other Compensation column of the Summary Compensation Table for 2018 as well as amounts previously reported in prior Summary Compensation Tables. The amounts disclosed in the Summary Compensation Table, both as currently and previously reported, for each NEO are as follows: Mr. Walker $1,802,555; Mr. Fink $74,460; Mr. Gwin $844,564; Mr. Ingram $295,258; Mr. Brown $115,130; and Ms. McMillian $52,158. |
(2) | The amount reflected as a distribution in 2018 for Mr. Gwin represents a payment made pursuant to a DRO. |
71 |
Executive Compensation
72 |
Executive Compensation
For Cause Termination
Mr. Walker($) |
Mr. Fink($) |
Mr. Gwin($) |
Mr. Ingram($) |
Mr. Brown($) |
Ms. McMillian($) | |||||||||||||||||||||||||
Cash Severance |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Total |
0 | 0 | 0 | 0 | 0 | 0 |
Voluntary Termination (Including Retirement)
|
| |||||||||||||||||||||||
Mr. Walker($)(1) |
Mr. Fink($) |
Mr. Gwin($)(1) |
Mr. Ingram($) |
Mr. Brown($) |
Ms. McMillian($) |
|||||||||||||||||||
Continued Vesting of Option Awards(2) |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Payout of Performance Unit Awards(3) |
13,311,008 | 0 | 1,483,969 | 0 | 0 | 0 | ||||||||||||||||||
Continued Vesting of Restricted Stock Unit Awards(4) |
4,597,677 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total |
17,908,685 | 0 | 1,483,969 | 0 | 0 | 0 |
(1) | As of December 31, 2018, Messrs. Walker and Gwin were eligible for retirement, as defined by the Anadarko Petroleum Corporation Retiree Health Benefits Plan. Additionally, Mr. Walker is eligible for qualified retirement (which means retirement at or after age 60 with minimum 10 years of service), as defined in the award agreements. |
(2) | Reflects the value (determined as the excess, if any, of the fair market value of a share as of December 31, 2018, over the exercise price of such share (the in-the-money value)) of unvested stock options. Because the exercise price of all outstanding stock options exceeded the fair market value of our common stock on December 31, 2018, no value is reported for unvested stock options. The nonqualified stock option agreements provide for continued vesting according to the time-based vesting schedule in cases of a qualified retirement (which means retirement at or after age 60 with minimum 10 years of service). |
(3) | Under the terms of the performance unit agreements, retirement-eligible participants receive a payout, paid after the end of the performance period, based on actual performance and prorated for the number of months worked during the performance period. Additionally, the performance unit agreements provide for payout (with no proration) at the end of the performance period, based on actual performance, in cases of a qualified retirement (which means retirement at or after age 60 with minimum 10 years of service). Mr. Walkers and Gwins values reflect an estimated payout (prorated for Mr. Gwin) based on performance to date through December 31, 2018, which may not be indicative of the payout they will receive at the end of the performance period based on actual performance. The amount shown for Mr. Gwin reflects a reduction due to a transfer of the economic interest in certain equity awards pursuant to a DRO. |
73 |
Executive Compensation
(4) | Under the terms of the restricted stock unit agreements, upon a qualified retirement (which means retirement at or after age 60 with minimum 10 years of service), restricted stock units will be settled according to the applicable vesting schedule. Mr. Walkers value reflects an estimated payout based on the stock price as of December 31, 2018, which may not be indicative of the payout he will receive at the time of vesting. |
Involuntary Not For Cause Termination
Mr. Walker($) |
Mr. Fink($) |
Mr. Gwin($) |
Mr. Ingram($) |
Mr. Brown($) |
Ms. McMillian($) | |||||||||||||||||||||||||
Cash Severance(1) |
5,980,000 | 1,843,750 | 3,100,000 | 2,402,500 | 2,092,500 | 1,843,750 | ||||||||||||||||||||||||
Pro Rata AIP Bonus(2) |
2,535,000 | 630,700 | 1,285,100 | 1,096,300 | 1,040,800 | 742,900 | ||||||||||||||||||||||||
Accelerated Equity Compensation(3) |
17,908,685 | 4,700,612 | 7,597,560 | 7,482,349 | 7,586,337 | 4,120,521 | ||||||||||||||||||||||||
Retirement Restoration Plan Benefits(4) |
0 | 0 | 0 | 0 | 342,200 | 0 | ||||||||||||||||||||||||
Health and Welfare Benefits(5) |
107,974 | 10,980 | 7,052 | 10,686 | 9,164 | 15,579 | ||||||||||||||||||||||||
Total |
26,531,659 | 7,186,042 | 11,989,712 | 10,991,835 | 11,071,001 | 6,722,750 |
(1) | Mr. Walkers value represents two times the sum of his base salary in effect at the end of 2018 plus his target AIP bonus (with his target AIP calculated based on his salary in effect at the beginning of 2018); the value for all other NEOs represents two times base salary plus one times target AIP bonus, in each case calculated based on the NEOs base salary in effect at the end of 2018. |
(2) | All payments, if provided, will be paid at the end of the performance period following the Compensation Committees certification of corporate performance. All values in the table are based on base salary earnings for the year and reflect the actual bonuses awarded under the Companys 2018 AIP as discussed on page 49. |
(3) | Reflects the in-the-money value of unvested stock options (subject to Board approval as described below), the estimated current value of unvested performance units (based on actual performance as of December 31, 2018) and the value of unvested restricted stock units, all as of December 31, 2018. The amount shown for Mr. Gwin reflects a reduction due to a transfer of the economic interest in certain equity awards pursuant to a DRO. In the event of an involuntary termination, unvested performance units would be paid after the end of the applicable performance periods based on actual performance. Further, while the terms of the outstanding stock options do not require the Company to accelerate the vesting of the stock options upon an involuntary termination not for cause, the Committee has a historic practice of doing so. As such, the value of acceleration of the outstanding stock option awards is included above; however, because the exercise price of all outstanding stock options exceeded the fair market value of our common stock on December 31, 2018, no value is reported for the unvested stock options. The equity awards granted on or after November 10, 2016 also contain a non-disclosure covenant (indefinite duration) and non-disparagement and employee non-solicitation covenants (one year post-termination). |
(4) | Reflects the lump-sum present value of additional benefits related to the Companys supplemental pension benefits which are contingent upon the termination event. All values include special pension credits provided through an employment agreement, retention agreement, the APC Retirement Restoration Plan or the KMG Restoration Plan. On a case-by-case basis, the Compensation Committee may approve a special retirement benefit enhancement that is equivalent to the additional supplemental pension benefits that would have accrued assuming our NEOs were eligible for subsidized early retirement benefits. Messrs. Walker and Gwin are not eligible for this supplemental benefit because they were eligible for early retirement as of December 31, 2018. If the Compensation Committee were to have approved this special benefit for the other NEOs, the incremental value as of December 31, 2018, to the Retirement Restoration Plan benefits disclosed above would have been $869,732 for Ms. McMillian. |
(5) | Reflects the value of a total of six months of medical and dental active employee rates benefit coverage, with the exception of Mr. Walker, who is also eligible to receive an additional reimbursement for the cost of up to 18 months of COBRA continuation coverage, per the terms of his Severance Agreement. All amounts are present values determined in accordance with FASB ASC Topic 715. |
74 |
Executive Compensation
Change of Control: Involuntary Not For Cause Termination or Voluntary Termination For Good Reason
Mr. Walker($) |
Mr. Fink($) |
Mr. Gwin($) |
Mr. Ingram($) |
Mr. Brown($) |
Ms. McMillian($) | |||||||||||||||||||||||||
Cash Severance(1) |
8,383,375 | 2,584,125 | 6,164,675 | 3,743,938 | 3,406,250 | 2,843,750 | ||||||||||||||||||||||||
Pro Rata AIP Bonus(2) |
2,535,000 | 612,975 | 1,125,750 | 1,072,500 | 1,031,250 | 706,613 | ||||||||||||||||||||||||
Accelerated Equity Compensation(3) |
17,908,685 | 4,700,612 | 7,597,560 | 7,482,349 | 7,586,337 | 4,120,521 | ||||||||||||||||||||||||
Retirement Restoration Plan Benefits(4) |
0 | 378,390 | 2,529,315 | 457,337 | 342,200 | 2,091,547 | ||||||||||||||||||||||||
Nonqualified Deferred Compensation(5) |
492,570 | 279,630 | 289,008 | 384,600 | 198,756 | 184,500 | ||||||||||||||||||||||||
Health and Welfare Benefits(6) |
309,170 | 105,774 | 116,708 | 118,610 | 90,840 | 122,707 | ||||||||||||||||||||||||
Outplacement Assistance |
30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | ||||||||||||||||||||||||
Financial Counseling(7) |
N/A | N/A | 54,145 | N/A | N/A | N/A | ||||||||||||||||||||||||
Excise Tax and Gross-Up(8) |
N/A | N/A | 5,854,210 | N/A | N/A | N/A | ||||||||||||||||||||||||
Best-of-Net Tax Adjustment(9) |
0 | 0 | N/A | 0 | 0 | 0 | ||||||||||||||||||||||||
Total |
29,658,800 | 8,691,506 | 23,761,371 | 13,289,334 | 12,685,633 | 10,099,638 |
(1) | Messrs. Walkers and Ingrams and Ms. McMillians values represent 2.5 times the sum of base salary in effect at the end of 2018 plus the average of the two prior AIP bonus awards; Messrs. Finks and Browns values represent 2.5 times the sum of base salary in effect at the end of 2018 plus their target annual bonus (as defined in the applicable agreement) for 2018; Mr. Gwins value represents 2.9 times the sum of base salary in effect at the end of 2018 plus the highest AIP bonus paid in the past three years. |
(2) | Messrs. Walkers, Finks, Ingrams and Browns and Ms. McMillians values represent payment of a pro rata AIP bonus based on target AIP bonus percentage in effect for 2018, base salary in effect at the beginning of the year and the Companys actual performance under the Companys 2018 AIP as adjusted by the Committee as described on page 49; Mr. Gwins value represents a pro rata portion of the highest annual AIP bonus the officer received over the past three years. |
(3) | Includes the in-the-money value of unvested stock options, the value of unvested restricted stock units and the estimated current value of unvested performance units, all as of December 31, 2018. Because the exercise price of all outstanding stock options exceeded the fair market value of our common stock on December 31, 2018, no value is reported for the unvested stock options. The amount shown for Mr. Gwin reflects a reduction due to a transfer of the economic interest in certain equity awards pursuant to a DRO. Upon a Change of Control, any outstanding performance units would be converted into time-based restricted stock units of the surviving company, the value of which would be calculated based on the Companys actual TSR performance and the price of the Companys Common Stock at the time of the Change of Control. In the event of an involuntary not for cause or voluntary for good reason termination within two years following a Change of Control, the units will generally be paid on the first business day that is at least six months and one day following the separation from service. In the event of an involuntary not for cause or voluntary for good reason termination that is more than two years following a Change of Control, the units will be paid at the end of the performance period. For performance units payable based on actual performance, current values reflect estimates of actual performance as of December 31, 2018. The equity awards granted on or after November 10, 2016 also contain a non-disclosure covenant (indefinite duration) and non-disparagement and employee non-solicitation covenants (one year post-termination). |
(4) | Reflects the lump-sum present value of additional benefits related to the Companys supplemental pension benefits which are contingent upon the termination event. For Mr. Brown and Ms. McMillian, who as of December 31, 2018 were not retirement eligible, the value includes a special retirement benefit enhancement that is equivalent to the additional supplemental pension benefits that would have accrued assuming they were eligible for subsidized early retirement benefits. The value for Mr. Gwin has been reduced by the distribution made in 2018, pursuant to a DRO. All values include special pension credits, provided through an employment agreement, retention agreement, the APC Retirement Restoration Plan, the KMG Restoration Plan or a key employee change-of-control contract. |
(5) | Includes the value of an additional three years of employer contributions into the Savings Restoration Plan based on each officers current contribution rate to the Plan. |
(6) | Values represent 36 months of health and welfare benefit coverage. All amounts are present values determined in accordance with FASB ASC Topic 715. |
75 |
Executive Compensation
(7) | Values reflect the cost of continuation of financial counseling services for three years after termination. Per the terms of Mr. Walkers Severance Agreement, and the Key Employee Change of Control Contract for Executive Vice Presidents with Messrs. Fink, Ingram and Brown and Ms. McMillian, they are not eligible for post-termination financial counseling benefits. |
(8) | Values estimate the total payment required to make each executive officer whole for the 20% excise tax imposed by IRC Section 4999. Mr. Walker is not eligible for this excise tax gross-up benefit per the terms of his Severance Agreement, and Messrs. Fink, Ingram and Brown and Ms. McMillian are not eligible for this benefit pursuant to the terms of their respective Key Employee Change of Control Contract for Executive Vice Presidents. |
(9) | Reflects the aggregate impact of the best-of-net tax adjustment as prescribed under Mr. Walkers Severance Agreement and the Key Employee Change of Control Contract for Executive Vice Presidents with Messrs. Fink, Ingram and Brown and Ms. McMillian (as discussed on pages 56 - 58). |
Disability
Mr. Walker($) |
Mr. Fink($) |
Mr. Gwin($) |
Mr. Ingram($) |
Mr. Brown($) |
Ms. McMillian($) | |||||||||||||||||||||||||
Cash Severance |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Pro Rata AIP Bonus(1) |
1,690,000 | 420,438 | 856,731 | 730,865 | 693,846 | 495,287 | ||||||||||||||||||||||||
Accelerated Equity Compensation(2) |
17,908,685 | 4,700,612 | 7,597,560 | 7,482,349 | 7,586,337 | 4,120,521 | ||||||||||||||||||||||||
Health and Welfare Benefits(3) |
317,912 | 279,848 | 451,679 | 281,248 | 319,393 | 187,447 | ||||||||||||||||||||||||
Total |
19,916,597 | 5,400,898 | 8,905,970 | 8,494,462 | 8,599,576 | 4,803,255 |
(1) | Represents payment of a pro rata target AIP bonus based on target bonus percentages effective for the 2018 AIP and eligible earnings as of December 31, 2018. |
(2) | Includes the in-the-money value of unvested stock options, the value of unvested restricted stock units and the estimated current value of unvested performance units, all as of December 31, 2018. Because the exercise price of all outstanding stock options exceeded the fair market value of our common stock on December 31, 2018, no value is reported for the unvested stock options. The amount shown for Mr. Gwin reflects a reduction due to a transfer of the economic interest in certain equity awards pursuant to a DRO. Performance units would be paid after the end of the applicable performance period, based on actual performance. For performance units payable based on actual performance, current values reflect estimates of actual performance as of December 31, 2018. The equity awards granted on or after November 10, 2016, also contain a non-disclosure covenant (indefinite duration) and non-disparagement and employee non-solicitation covenants (one year post-termination). |
(3) | Reflects the cost of the continuation of additional death benefit coverage provided to executive officers of the Company until age 65. All amounts are present values determined in accordance with FASB ASC Topic 715. |
Death
Mr. Walker($) |
Mr. Fink($) |
Mr. Gwin($) |
Mr. Ingram($) |
Mr. Brown($) |
Ms. McMillian($) | |||||||||||||||||||||||||
Cash Severance |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Pro Rata AIP Bonus(1) |
1,690,000 | 420,438 | 856,731 | 730,865 | 693,846 | 495,287 | ||||||||||||||||||||||||
Accelerated Equity Compensation(2) |
16,442,938 | 4,327,490 | 6,957,139 | 6,894,717 | 6,671,395 | 3,889,221 | ||||||||||||||||||||||||
Life Insurance Proceeds(3) |
6,100,577 | 2,061,006 | 4,122,012 | 2,638,087 | 2,225,886 | 2,061,006 | ||||||||||||||||||||||||
Total |
24,233,515 | 6,808,934 | 11,935,882 | 10,263,669 | 9,591,127 | 6,445,514 |
(1) | Represents payment of a pro rata target AIP bonus based on target bonus percentages effective for the 2018 AIP and eligible earnings as of December 31, 2018. |
(2) | Includes the in-the-money value of unvested stock options, the target value of unvested performance units, and the value of unvested restricted stock units, all as of December 31, 2018. Because the exercise price of all outstanding stock options exceeded the fair market value of our common stock on December 31, 2018, no value is reported for the unvested stock options. The amount shown for Mr. Gwin reflects a reduction due to a transfer of the economic interest in certain equity awards pursuant to a DRO. |
76 |
Executive Compensation
(3) | Includes amounts payable under additional death benefits provided to executive officers and other key employees of the Company. These liabilities are not insured, and are self-funded by the Company. Proceeds are not exempt from federal taxes; values shown include an additional tax gross-up amount to equate benefits with nontaxable life insurance proceeds. Values exclude death benefit proceeds from programs available to all employees. |
In addition to the benefits outlined above, following termination for any reason, each of the NEOs would be paid the following vested amounts under our nonqualified benefit programs, which have been previously earned but not paid:
Mr. Walker($) |
Mr. Fink($) |
Mr. Gwin($) |
Mr. Ingram($) |
Mr. Brown($) |
Ms. McMillian($) | |||||||||||||||||||||||||
Retirement Restoration Plan Benefits(1) |
22,160,909 | 261,774 | 2,857,419 | 197,131 | 2,371,828 | 1,468,843 | ||||||||||||||||||||||||
Non-Qualified Deferred Compensation(2) |
2,355,566 | 702,170 | 777,394 | 301,974 | 251,235 | 315,864 | ||||||||||||||||||||||||
Total |
24,516,475 | 963,944 | 3,634,813 | 499,105 | 2,623,063 | 1,784,707 |
(1) | Reflects the lump-sum present value of vested benefits related to the Companys supplemental pension benefits. The value for Mr. Gwin has been reduced by the distribution made in 2018, pursuant to a DRO. |
(2) | Reflects the combined vested balances in the non-qualified Savings Restoration Plan and Deferred Compensation Plan. The value for Mr. Gwin has been reduced by the distribution made in 2018, pursuant to a DRO. |
77 |
ITEM 2 RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITOR
|
|
|
THE BOARD RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP TO AUDIT THE COMPANYS CONSOLIDATED FINANCIAL STATEMENTS FOR 2019. If the stockholders do not ratify the appointment of KPMG LLP, the Audit Committee will make the final determination of the independent auditor for 2019. |
80 |
Compensation Plan
ITEM 3 APPROVAL OF THE 2019 OMNIBUS INCENTIVE COMPENSATION PLAN
|
|
|
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE 2019 OMNIBUS INCENTIVE COMPENSATION PLAN.
|
Outstanding Equity Information
We believe we have demonstrated our commitment to sound equity compensation practices. For example, as set forth in the table below, our average three-year burn rate for 2016, 2017 and 2018 is 0.79%. Average three-year burn rate is calculated as the number of shares granted under the 2012 Omnibus Plan and our 2008 Director Compensation Plan in each fiscal year, including stock options, restricted stock awards, restricted stock units, and earned deferred shares, divided by the weighted average common shares outstanding. Management and our Board are cognizant of the expense attributable to compensatory stock awards, as well as dilution, and strive to maintain both at appropriate levels.
Year |
Stock Options Granted |
Full-Value Awards Granted |
Total Granted |
Weighted Average Common Shares Outstanding |
Burn Rate | ||||||||||||||||||||
2018 |
1,195,698 | 2,718,713 | 3,914,411 | 503,713,672 | 0.78% | ||||||||||||||||||||
2017 |
1,480,574 | 2,598,547 | 4,079,121 | 548,276,320 | 0.74% | ||||||||||||||||||||
2016 |
1,381,652 | 3,109,034 | 4,490,686 | 521,946,486 | 0.86% | ||||||||||||||||||||
Three-Year Average |
1,352,641 | 2,808,765 | 4,161,406 | 524,645,493 | 0.79% |
The table below sets forth information relating to the number of shares available for issuance with respect to the equity compensation plans available to directors, officers, employees and consultants of the Company at December 31, 2018.
Shares Subject to Outstanding Stock Options |
Shares Subject to Outstanding Full-Value |
Shares Remaining Available for Future Grant |
Total | |||
6,356,970(1) |
4,686,546 | 20,246,444 | 31,289,960 |
(1) | The weighted-average exercise price for the outstanding stock options is $67.00 and the weighted-average remaining contractual term is 3.92 years. |
81 |
2019 Omnibus Incentive
Compensation Plan
82 |
2019 Omnibus Incentive
Compensation Plan
83 |
2019 Omnibus Incentive
Compensation Plan
84 |
2019 Omnibus Incentive
Compensation Plan
85 |
2019 Omnibus Incentive
Compensation Plan
86 |
2019 Omnibus Incentive
Compensation Plan
87 |
2019 Omnibus Incentive
Compensation Plan
Equity Compensation Plans Table
The table below sets forth information relating to the number of shares authorized for issuance with respect to the equity compensation plans available to directors, officers, employees, and consultants of the Company at December 31, 2018. The closing price of a share of Anadarko common stock as reported by the NYSE on March 19, 2019 was $44.46.
Plan Category | (a) Number of |
(b) Weighted-average |
(c) Number of | ||||||||||||
Equity compensation plans approved by security holders |
6,356,970 | $ | 67.00 | 20,246,444 | |||||||||||
Equity compensation plans not approved by security holders |
| | | ||||||||||||
Total |
6,356,970 | $ | 67.00 | 20,246,444 |
The approval of the 2019 Omnibus Plan requires the affirmative vote of a majority of the stock entitled to vote and present in person or by proxy at the Annual Meeting. Abstentions are counted as votes present and entitled to vote and have the same effect as votes against the proposal. Broker non-votes are not counted as either votes for or votes against the proposal.
FOR THE REASONS STATED ABOVE, THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE 2019 OMNIBUS INCENTIVE COMPENSATION PLAN.
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Stockholder Proposal
91 |
Stockholder Proposal
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Stockholder Proposal
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General Information
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General Information
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General Information
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General Information
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Additional Information
CEO Reported vs. Realized Pay (2016-2018)
The following table illustrates the calculation methodology used to determine the differences between the amount reported in the 2018 Summary Compensation Table (SCT) and the amount actually realized, or received, by the CEO in 2018 for each of the following direct compensation elements, including actual performance-based compensation which was paid in 2018 for prior performance periods: Salary; Bonus; Non-Equity Incentive Plan Compensation; and Long-Term Incentive Awards (Stock Awards and Option Awards):
CEO Reported Pay(1) | CEO Realized Pay* | |||||||||
2018 Summary Compensation Table($) |
2018 Actual Compensation Paid($) | |||||||||
Salary |
1,300,000 | 1,300,000 | ||||||||
Bonus(2) |
311,000 | 0 | ||||||||
Non-Equity Incentive Plan Compensation(3) |
2,224,000 | 1,436,500 | ||||||||
Stock Awards Performance Units(4) |
5,433,188 | 0 | ||||||||
Option Awards(5) |
2,660,102 | 391,935 | ||||||||
Stock Awards Restricted Stock Units(6) |
2,775,000 | 2,752,113 | ||||||||
Total 2018 Compensation |
14,703,290 | 5,880,548 |
* | Includes actual performance-based compensation paid to CEO in 2018 as determined in footnotes 3-6 below. |
(1) | The amounts in the CEO Reported Pay column reflect the total direct compensation (calculated as Salary, Bonus, Non-Equity Incentive Plan Compensation, and the grant value of Long-Term Incentive Awards) for 2018 as reported in the 2018 SCT on page 60 of the proxy statement. The grant date fair values for performance units, restricted stock units and options are described in footnote (3) to the 2018 SCT. |
(2) | The amount in the CEO Reported Pay column reflects the portion of the incentive cash bonus awards for 2018, paid in February 2019, resulting from the Committees decision to increase the AIP calculated performance score from 131.6% to 150%. |
(3) | The CEO Realized Pay column reflects the Non-Equity Incentive Plan Compensation Mr. Walker earned under the Companys AIP for the 2017 performance year, which was paid in February 2018. |
(4) | The CEO Realized Pay column reflects the zero payout in January 2018 for Mr. Walkers 2014 performance unit award for the three-year performance period commencing January 1, 2015 and ended December 31, 2017. See the Option Exercises and Stock Vested in 2018 Table on page 66 of the proxy statement for more details. |
(5) | The CEO Realized Pay column reflects the intrinsic value at vesting of any in-the-money stock options that vested during the performance year. Except for the 2017 grant, the vesting price of the other two tranches of stock options which vested during 2018 were below the respective exercise price. |
(6) | The CEO Realized Pay column reflects the value at vesting of restricted stock units that vested during 2018. See the Options Exercises and Stock Vested in 2018 Table on page 66 of the proxy statement for more details. |
Definitions and Calculation Methods for 2018 AIP Performance Metrics
The 2018 Annual Incentive Program (AIP) included new performance metrics that demonstrate our continued commitment to capital efficiency and financial discipline: Cash Flow Return on Invested Capital; Sales Volume Growth per Debt-Adjusted Share; and Reserved Additions Growth per Debt-Adjusted Share. The new performance metrics are defined and calculated as follows:
Cash Flow Return on Invested Capital (CFROIC)
CFROIC is calculated as follows:
Consolidated Cash Flow from Operations (CFFO) WGP CFFO + WGP distributions to APC
Stockholders Equity + APC Debt
CFFO Defined by generally accepted accounting principles and is disclosed in Anadarkos Annual Report on Form 10-K in the consolidated statement of cash flows. It represents the cash generated by the Companys exploration and production and midstream operations, and excludes cash flows from investing or financing activities.
A-1 |
Appendix A
Additional Information
Stockholders Equity The portion of the balance sheet that represents the capital received from investors in exchange for stock plus retained earnings minus treasury stock.
APC Debt The year-end balance of outstanding debt and excludes debt related to WGP.
Results were adjusted to neutralize certain non-operational impacts necessary to minimize unintended benefits or detriments related to non-operating variables.
Sales Volume Growth per Debt-Adjusted Share is defined as:
Current Year Sales Volume per DAS
Prior Year Sales Volume per DAS
The current year sales volume is defined as reported sales volume for the year.
Reserve Additions Growth per Debt-Adjusted Share is defined as:
Current Year Reserve Additions per DAS
Prior Year Reserve Additions per DAS
Reserve Additions include performance revisions of prior-year estimates, extensions, discoveries and improved recovery. It does not include reserve changes due to price revisions, acquisitions or divestitures.
Debt-adjusted shares are calculated as:
A-2 |
Appendix B
2019 Omnibus Incentive Compensation Plan
ANADARKO PETROLEUM CORPORATION
2019 OMNIBUS INCENTIVE COMPENSATION PLAN
(Effective as of , 2019)
Appendix B
2019 Omnibus Incentive Compensation Plan
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2019 Omnibus Incentive Compensation Plan
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2019 Omnibus Incentive Compensation Plan
ANADARKO PETROLEUM CORPORATION
2019 OMNIBUS INCENTIVE COMPENSATION PLAN
(Effective as of , 2019)
PURPOSES
The purposes of the Anadarko Petroleum Corporation 2019 Omnibus Incentive Compensation Plan (the Plan) are to promote the interests of Anadarko Petroleum Corporation (the Company) and its stockholders by strengthening its ability to attract, retain and motivate Employees and Consultants of the Company and any Subsidiary by furnishing suitable recognition of their performance, ability and experience, to align their interests and efforts to the long-term interests of the Companys stockholders, and to provide them with a direct incentive to achieve the Companys strategic and financial goals. In furtherance of these purposes, the Plan provides for the grant of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Incentive Awards, Cash Awards, and Other Stock-Based Awards to Participants in accordance with the terms and conditions set forth below.
DEFINITIONS
Unless otherwise required by the context, the following terms when used in the Plan shall have the meanings set forth in this Section 2:
Any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Incentive Award, Cash Award or Other Stock-Based Award, in each case payable in cash and/or in Common Stock as may be designated by the Plan Administrator.
The written agreement or other documentation setting forth the terms, conditions, rights and duties applicable to an Award granted under the Plan (which, in the discretion of the Plan Administrator, need not be countersigned by a Participant). The Plan Administrator may, in its discretion, provide for the use of electronic, internet or other non-paper Award Agreements. The requirement for delivery of a written agreement is satisfied by electronic delivery of such agreement provided that evidence of the Participants receipt of such electronic delivery is available to the Company and such delivery is not prohibited by applicable laws and regulations.
The person or persons designated by the Participant pursuant to Section 7.3(f) or Section 18.8 to whom payments are to be paid pursuant to the terms of the Plan in the event of the Participants death.
The Board of Directors of the Company.
As defined in Section 13.1.
Cause shall have the meaning ascribed thereto in any employment, consulting or similar service agreement between a Participant and an Employer, or, in the absence of such agreement, a termination of a Participants employment with the Company and its Subsidiaries resulting from (a) substandard work performance or repeated unreliability that has not been cured to the Employers satisfaction; (b) workplace misconduct; (c) excessive absenteeism; (d) violation of safety rules;
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Appendix B
2019 Omnibus Incentive Compensation Plan
(e) violation of an Employers policies, including without limitation, the Employers Code of Business Conduct and Ethics; (f) fraud or other dishonesty against the Employer; (g) engagement in conduct that the Participant knows or should know is materially injurious to the business or reputation of the Employer; (h) falsifying Employer or Employee records (including an employment application); (i) on-the-job intoxication or being under the influence of alcohol or an illegal narcotic or a drug not being used as prescribed; (j) unauthorized use of Employer equipment or confidential information of an Employer or third party who has entrusted such information to the Employer; or (k) conviction of a misdemeanor involving moral turpitude or a felony. With respect to a Consultant, Cause shall also include a breach by the Consultant of the applicable consulting or similar service agreement. Whether a Participant has been terminated for Cause will be determined by the Board in its sole discretion with respect to a Section 16 Insider and, with respect to all other Participants, by the Vice President of Human Resources or the Companys General Counsel, each in his or her sole discretion.
Any increase or reduction in the number of shares of Common Stock, any change (including, without limitation, in the case of a spin-off, dividend or other distribution in respect of shares, a change in value) in the shares of Common Stock or any exchange of shares of Common Stock for a different number or kind of shares of Common Stock or other securities of the Company or another corporation, by reason of a reclassification, recapitalization, merger, consolidation, reorganization, spin-off, split-up, issuance of warrants, rights or debentures, stock dividend, stock split or reverse stock split, extraordinary cash dividend, property dividend, combination or exchange of shares, repurchase of shares, change in corporate structure or otherwise.
Except as otherwise provided in an Award Agreement, the occurrence of any of the following after the Effective Date:
(a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a Person) acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of Common Stock of the Company (the Outstanding Company Common Stock) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 2.8(c); or
(b) individuals who, as of the Effective Date, constitute the Board (the Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Companys stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(c) consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a Business Combination), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of Common Stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting
B-2 |
Appendix B
2019 Omnibus Incentive Compensation Plan
securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, with respect to an Award that (i) is subject to Section 409A and (ii) a Change of Control would accelerate the timing of payment thereunder, the term Change of Control shall mean a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as defined in Section 409A and the authoritative guidance issued thereunder, but only to the extent inconsistent with the above definition, and only to the minimum extent necessary to comply with Section 409A as determined by the Compensation and Benefits Committee of the Board.
The Internal Revenue Code of 1986, as amended and in effect from time to time, and the temporary or final regulations of the Secretary of the U.S. Treasury adopted pursuant to the Code.
The Common Stock of the Company, $0.10 par value per share, or such other class of shares or other securities as may be applicable pursuant to the provisions of Section 5.
As defined in Section 1.
Any consultant, agent, advisor or independent contractor (including a non-employee member of the Board) who renders services to the Company or any Subsidiary that qualifies as a consultant under the applicable rules of the Securities and Exchange Commission for registration of Common Stock on a Form S-8 Registration Statement.
As defined in Section 9.5.
The effective date of the Plan is , 2019, the date on which it was approved by the stockholders of the Company.
Any officer or other employee of the Company or of any Subsidiary. An Employee on a leave of absence for such periods and purposes conforming to the personnel policy of the Company may be considered still in the employ of the Company or a Subsidiary for purposes of eligibility for participation in the Plan.
As to any Participant on any date, the Company or a Subsidiary that employs or retains the Participant on such date.
The Securities Exchange Act of 1934, as amended and rules promulgated thereunder.
As of any given date, the closing sales price at which Common Stock is sold on such date as reported in the NYSE-Composite Transactions by The Wall Street Journal or any other comparable service the Plan Administrator may determine is reliable for such date, or if no Common Stock was traded on such date, on the next preceding day on which Common Stock was so
B-3 |
Appendix B
2019 Omnibus Incentive Compensation Plan
traded. If the Fair Market Value of the Common Stock cannot be determined pursuant to the preceding provisions, the Fair Market Value of the Common Stock shall be determined by the Plan Administrator in such a manner as it deems appropriate, consistent with the requirements of Section 409A.
An Award other than of Options or Stock Appreciation Rights, which is settled by the issuance of Common Stock.
Unless otherwise provided in an Award Agreement, the term Good Reason shall have the following meaning as applied to a Participant who is an Employee: (i) to the extent defined in an Employees employment agreement, severance agreement or individual change of control agreement, the term Good Reason shall have the same meaning as set forth in such agreement with respect to such Employee, and (ii) in the case of an Employee not covered by clause (i) above, the term Good Reason shall have the same meaning as set forth in the Companys Change of Control Severance Plan, as it may be amended from time to time. With respect to a Participant who is not an Employee, Good Reason shall have the meaning ascribed thereto in the applicable Award Agreement and, in the absence of the definition of such term in such agreement, the provisions in Section 16 relating to Good Reason shall not be applicable to such Participants Award evidenced by such agreement.
A percentage of base salary, a fixed dollar amount or other measure of compensation which Participants are eligible to receive, in cash, Common Stock and/or other Awards under the Plan, at the end of a Performance Period if certain performance measures are achieved.
An option intended to meet the requirements of an incentive stock option as defined in Section 422 of the Code, as in effect at the time of grant of such Option, or any statutory provision that may hereafter replace such section.
A committee designated by the Board (either by resolution or by provisions contained in the Plan) and consisting of the Chief Executive Officer, provided that such officer is a member of the Board, and such other members of the Board as the Board may determine from time to time.
The maximum grants set forth in Section 5.2(a).
An Option which is not intended to meet the requirements of an incentive stock option as defined in Section 422 of the Code.
An Incentive Stock Option or a Nonqualified Option.
The price per share of Common Stock at which an Option is exercisable.
As defined in Section 13.2.
An eligible Employee or a Consultant (which includes, for the avoidance of doubt, a non-employee member of the Board) to whom Awards are granted under the Plan as set forth in Section 4. References to a Participant in the Plan will be interpreted to mean an Employee, a Consultant, Employees or Consultants as individual groups or as one group in the aggregate, as the context so provides.
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Appendix B
2019 Omnibus Incentive Compensation Plan
One or more performance goals specified by the Plan Administrator. Without limiting the scope of the preceding sentence, the Plan Administrator may use such business criteria, individual goals and other measures of performance as it may deem appropriate in establishing any Performance Goals applicable to an Award, and any such Performance Goals may differ among Awards granted to any one Participant or to different Participants. Performance Goals may be applied individually, alternatively or in any combination, and a Performance Goal may apply to an individual, the Company as a whole or to a Subsidiary or a business unit of the Company or any Subsidiary, either individually, alternatively or in any combination. Performance Goals may be measured either annually or cumulatively over a period of time, on an absolute basis or relative to the pre-established target, to previous years results or to a designated comparison group, in each case as specified by the Plan Administrator. The Plan Administrator may make such adjustments to the Performance Goals as and when it determines are appropriate. The Plan Administrator shall determine in its discretion the extent to which the applicable Performance Goals were, in fact, achieved and the amounts to be paid, vested or delivered as a result thereof.
That period of time during which Performance Goals are evaluated to determine the vesting or granting of Awards under the Plan, as the Plan Administrator may determine, provided that the period is no longer than ten (10) years.
An Award granted under the Plan representing the right to receive a number of shares of Common Stock for each Performance Share granted, as the Plan Administrator may determine.
An Award granted under the Plan representing the right to receive a payment (either in cash or Common Stock) equal to the value of a Performance Unit, as the Plan Administrator may determine.
As defined in Section 7.3(f).
As defined in Section 1.
Those committees appointed and authorized pursuant to Section 3 to administer the Plan.
The Anadarko Petroleum Corporation 2012 Omnibus Incentive Compensation Plan, as amended.
Common Stock granted under the Plan that is subject to the requirements of Section 10 and such other restrictions as the Plan Administrator deems appropriate. References to Restricted Stock in the Plan shall include Restricted Stock awarded in conjunction with Incentive Awards pursuant to Section 12, unless the context otherwise requires.
An Award granted under the Plan representing a right to receive a payment (either in cash and/or Common Stock) equal to the value of a share of Common Stock.
As defined in Sections 10.2 and 11.2, as applicable.
Rule 16b-3 of the General Rules and Regulations under the Exchange Act.
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Appendix B
2019 Omnibus Incentive Compensation Plan
Any person who is selected by the Plan Administrator to receive an Award pursuant to the Plan and who is or is reasonably expected to become subject to the requirements of Section 16 of the Exchange Act, and the rules and regulations promulgated thereunder.
Section 409A of the Code.
The Securities Act of 1933, as amended and rules promulgated thereunder.
Any right granted under Section 8.
An entity that is designated by the Plan Administrator as a subsidiary for purposes of the Plan and that is a corporation, partnership, joint venture, limited liability company, limited liability partnership, or other entity in which the Company owns directly or indirectly, fifty percent (50%) or more of the voting power or profit interests, or as to which the Company or one of its affiliates serves as general or managing partner or in a similar capacity. Notwithstanding the foregoing, for purposes of Options intended to qualify as Incentive Stock Options, the term Subsidiary shall mean a corporation (or other entity treated as a corporation for tax purposes) in which the Company directly or indirectly holds more than fifty percent (50%) of the voting power.
(a) As to an Employee, the time when the employee-employer relationship between a Participant and the Company or any Employer is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Participant simultaneously commences or remains in employment or service with the Company or any Employer.
(b) As to a Consultant, the time when the engagement of a Participant as a Consultant to the Company or any Employer is terminated for any reason, with or without Cause, including, without limitation, by resignation, discharge, death or retirement, but excluding terminations where the Consultant simultaneously commences or remains in employment or service with the Company or any Employer.
ADMINISTRATION
(a) The Compensation and Benefits Committee of the Board shall be the Plan Administrator with respect to all Section 16 Insiders. As to these individuals, the Plan Administrator (including each individual that is a member thereof) shall be constituted at all times so as to (i) be independent, as such term is defined pursuant to the rules of any stock exchange on which the Common Stock may then be listed, and (ii) meet the non-employee director standards of Rule 16b-3.
(b) Other than as set forth in Section 3.1(a) and subject to Section 3.4 (and subject to applicable law), the Management Committee shall be the Plan Administrator. The Board may from time to time remove members from, or add members to, the Management Committee.
(c) Notwithstanding Sections 3.1(a) and 3.1(b), the Board may designate itself or the Compensation and Benefits Committee of the Board as the Plan Administrator as to any Participant or groups of Participants unless such designation with respect to a Participant or groups of Participants would not be in compliance with the requirements of the Code, the Exchange Act or the Securities Act.
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Appendix B
2019 Omnibus Incentive Compensation Plan
(d) The above committees hereby designate the appropriate Employees or other agents of the Company to handle the day-to-day administrative matters of the Plan.
3.2 Authority of Plan Administrator
Subject to the express terms and conditions set forth herein, the Plan Administrator shall have the power from time to time to:
(a) select the Participants to whom Awards shall be granted under the Plan and the number of shares or amount of cash subject to such Awards and prescribe the terms and conditions (which need not be identical) of each such Award;
(b) set the terms and conditions of any Award consistent with the terms of the Plan (which may be based on Performance Goals or other performance measures as the Plan Administrator shall determine), and make any amendments, modifications or adjustments to such Awards (including, without limitation, accelerating the vesting of any Award), subject to any limitations imposed under Section 409A;
(c) construe and interpret the Plan and the Awards granted hereunder and establish, amend and revoke rules and regulations for the administration of the Plan, including, without limitation, correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in any Award Agreement, in the manner and to the extent it shall deem necessary or advisable, including so that the Plan and the operation of the Plan comply with Rule 16b-3, the Code, to the extent applicable, and other applicable laws, and otherwise to make the Plan fully effective;
(d) except as otherwise provided in an Award Agreement, exercise its discretion at any time prior to a Change of Control to reduce or increase the amounts that would otherwise by payable under any Award;
(e) exercise its discretion with respect to the powers and rights granted to it as set forth in the Plan; and
(f) generally, exercise such powers and perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan.
All decisions and determinations by the Plan Administrator in the exercise of the above powers shall be final, binding and conclusive upon the Company, a Subsidiary, the Participants and all other persons having or claiming any interest therein. The Plan Administrator shall cause the Company at the Companys expense to take any action related to the Plan which may be necessary to comply with the provisions of any federal, state or foreign law or any regulations issued thereunder, which the Plan Administrator determines are intended to be complied with. All Awards and any administrative action taken by the Plan Administrator shall be in conformity with all applicable federal, state, and local laws and shall not discriminate on the basis of sex, race, color, religion, national origin, citizenship, age, disability, marital or veterans status, sexual orientation or any other legally protected categories.
3.3 Indemnification of Plan Administrator
Each member of any committee acting as Plan Administrator, while serving as such, shall be entitled, in good faith, to rely or act upon any advice of the Companys independent auditors, counsel or consultants hired by the committee, or other agents assisting in the administration of the Plan. The Plan Administrator and any Employee of the Company acting at the direction or on behalf of the Company shall not be personally liable for any action or determination taken or made, or not taken or made, in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected under the Companys charter or by-laws with respect to any such action or determination.
3.4 Delegation to Management Committee
To the maximum extent permitted by applicable law and subject to Section 3.1, the Board and the Compensation and Benefits Committee of the Board hereby delegate to the Management Committee the authority (i) to designate the Employees and Consultants who shall be Participants, (ii) to determine the Awards to be granted to any such Participants or (iii) both (i) and (ii); provided, however, that the Management Committee shall not have the authority to grant Awards to any member of the Management Committee or a Section 16 Insider and shall be subject to such other limitations set forth in the Plan. This provision shall be deemed to constitute a delegation from the Board to the Management Committee without further action by the Board. However, the Board or the Compensation and Benefits Committee of the Board may, from time to time, limit the total number of shares Common Stock subject to such delegation.
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Appendix B
2019 Omnibus Incentive Compensation Plan
ELIGIBILITY
To be eligible to be a Participant, an individual must be an Employee or a Consultant of an Employer, as of the date on which the Plan Administrator grants to such individual an Award under the Plan. Members of the Board shall be eligible to participate in the Plan. Each grant of an Award under the Plan shall be evidenced by an Award Agreement.
SHARES AVAILABLE FOR THE PLAN
(a) Share Authorization
Subject to Section 5.1(b), Section 5.1(d) and adjustment as provided in Section 5.3, the maximum aggregate number of shares of Common Stock available for issuance under the Plan on or after the Effective Date shall be 35,900,000 shares, less the sum of (i) one (1) share for every one (1) share that was subject to an Option or Stock Appreciation Right granted under the Prior Plan after December 31, 2018 and on or before the Effective Date and (ii) 2.21 shares for every one (1) share that was granted under the Prior Plan as a Full Value Award after December 31, 2018 and on or before the Effective Date.
(b) Limit on Full Value Awards Flexible Share Pool
Each share of Common Stock subject to a Full Value Award granted on or after the Effective Date shall reduce the shares that remain available for issuance under the Plan by 2.21 shares of Common Stock. Each share of Common Stock subject to an Award granted on or after the Effective Date other than a Full Value Award shall reduce the shares that remain available for issuance under the Plan by one (1) share of Common Stock.
(c) Limit on Incentive Stock Options
The maximum aggregate number of shares that may be issued under the Plan through Incentive Stock Options granted under the Plan on or after the Effective Date shall be equal to the share authorization set forth in Section 5.1(a) (as adjusted as provided in such Section).
(d) Share Usage
Any shares of Common Stock related to Awards that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares of Common Stock (but including shares forfeited with respect to Restricted Stock) or are settled in cash in lieu of shares of Common Stock (or, after December 31, 2018, any shares of Common Stock related to awards granted under the Prior Plan that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such share of Common Stock (but including shares forfeited with respect to restricted stock) or that are settled in cash) shall, in any such case, be added to the shares of Common Stock available for grant under the Plan in accordance with this Section 5.1(d). However, shares of Common Stock that are subject to Stock Appreciation Rights (or stock appreciation rights awarded under the Prior Plan) but are not issued or delivered as a result of the net settlement in shares of Common Stock of such Stock Appreciation Rights (or such stock appreciation rights awarded under the Prior Plan) shall not be available again for grant under the Plan. Furthermore, any shares of Common Stock withheld to satisfy tax withholding obligations on an Award issued under the Plan, shares of Common Stock tendered to pay the exercise price of an Award under the Plan, and shares of Common Stock repurchased on the open market with the proceeds of an Option exercise (or any of the foregoing as it relates to withholding, payments or repurchases pertaining to awards granted under the Prior Plan) will, in any such case, no longer be eligible to be again available for grant under the Plan. In addition, the full number of Incentive Stock Options exercised shall be counted against the number of shares that may be issued under the Plan through Incentive Stock Options awarded under the Plan on or after the Effective Date pursuant to Section 5.1(c), regardless of the number of shares of Common Stock actually issued upon exercise of such Incentive Stock Options. The shares of Common Stock available for issuance under the Plan may be authorized and unissued shares of Common Stock or treasury shares of Common Stock.
Any shares of Common Stock that again become available for Awards under the Plan pursuant to the preceding provisions of this Section shall be added as (i) one (1) share for every one (1) share subject to Options or Stock Appreciation Rights granted
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under the Plan or options or stock appreciation rights granted under the Prior Plan and (ii) 2.21 shares for every one (1) share subject to Awards granted under the Plan other than Options or Stock Appreciation Rights or awards granted under the Prior Plan other than options or stock appreciation rights.
Substitute Awards (as defined below) shall not reduce the shares authorized for issuance under the Plan or the limitations on grants to a Participant under Section 5.2, nor shall shares subject to a Substitute Award be added to the shares available for issuance under the Plan as provided above. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may, if and to the extent determined by the Board and subject to compliance with applicable stock exchange requirements, be used for Awards under the Plan and shall not reduce the shares authorized for issuance under the Plan (and shares subject to such Awards shall not be added to the shares available for issuance under the Plan as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not, prior to such acquisition or combination, employed by (and who were not non-employee directors or consultants of) the Company or any of its Subsidiaries immediately prior to such acquisition or combination. For purposes of this Section Substitute Awards shall mean Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
(a) Maximum Grants
Subject to adjustment as provided in Section 5.3, no Participant may be granted (i) Options or Stock Appreciation Rights during any calendar year with respect to more than 2,500,000 shares of Common Stock and (ii) Awards (other than Options or Stock Appreciation Rights) during any calendar year that are denominated in shares of Common Stock under which more than 1,500,000 shares of Common Stock may be earned for each twelve (12) months in the vesting period or Performance Period (which vesting or Performance Period, as applicable, shall not exceed ten (10) years). No Participant may be granted Awards during any calendar year that are not denominated in shares of Common Stock under which more than $10,000,000 (including the Fair Market Value of any shares of Common Stock paid in satisfaction of such Awards) may be earned for each twelve (12) months in the vesting or Performance Period (which vesting or Performance Period, as applicable, shall not exceed ten (10) years). Each of the limitations in this paragraph shall be multiplied by two (2) with respect to Awards granted to a Participant during the first calendar year in which the Participant commences employment with the Company and its Subsidiaries.
(b) Additional Limitation Applicable to Non-Employee Directors
Notwithstanding any provisions to the contrary in the Plan, in any other incentive compensation plan of the Company or any of its Subsidiaries, or any other compensatory policy or program of the Company applicable to its non-employee directors (collectively, the Director Programs), the sum of A and B for any individual, non-employee director for any single calendar year beginning on or after January 1, 2019 shall not exceed $750,000, where:
A | equals the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all awards granted under the Director Programs (other than with respect to compensation described in B below) to such director during such calendar year; and |
B | equals the aggregate cash value of such directors retainer, meeting attendance fees, committee assignment fees, lead director retainer, committee chair and member retainers and other Board fees related to service on the Board or committee(s) of the Board that are initially denominated as a cash amount or any other property other than Common Stock (whether paid currently or on a deferred basis or in cash or other property (including Common Stock)) for such calendar year; |
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provided, however, that the limitation described in this sentence shall be determined without regard to grants of awards under the Director Programs and compensation, if any, paid to a non-employee director during any period in which such individual was an Employee or Consultant (other than in the capacity of a non-employee director).
5.3 Adjustments in Authorized Shares
(a) In the event of a Change in Capitalization, the Plan Administrator shall make such adjustments, if any, as it determines are appropriate and equitable, and to the extent such an action does not conflict with Delaware or other applicable laws or securities exchange rules, to (i) the maximum number and class of shares of Common Stock or other stock or securities with respect to which Awards may be granted under the Plan, (ii) the maximum number and class of shares of Common Stock or other stock or securities that may be issued upon exercise of Nonqualified Options, Incentive Stock Options and Stock Appreciation Rights, (iii) the Maximum Grants, (iv) the number and class of shares of Common Stock or other stock or securities which are subject to outstanding Awards granted under the Plan and the Option Price or exercise price therefor, if applicable, and (v) the Performance Goals; provided, however, that in the case of an equity restructuring (within the meaning of the Financial Accounting Standards Board Accounting Standards No. Update Topic 718), the Board shall make such equitable or appropriate adjustments described in the preceding provisions of this paragraph to reflect such equity restructuring. Any such adjustment shall be final, binding and conclusive on all persons claiming any right or interest under the Plan.
(b) If, by reason of a Change in Capitalization, a Participant shall be entitled to, or shall be entitled to exercise an Option or Stock Appreciation Right with respect to, new, additional or different shares of stock or securities of the Company or any other corporation, such new, additional or different shares shall thereupon be subject to all of the conditions, restrictions and performance criteria which were applicable to the shares of Common Stock that such shares replaced or to the Option or Stock Appreciation Right, as the case may be, prior to such Change in Capitalization.
5.4 Effect of Certain Transactions
Following (a) the liquidation or dissolution of the Company or (b) a merger, sale or consolidation of the Company (a Transaction), (i) each outstanding Award shall be treated as provided for in the agreement entered into in connection with the Transaction (which treatment may be different as among different types of Awards and different holders thereof) or (ii) if not so provided in such agreement, each Participant shall be entitled to receive in respect of each share of Common Stock subject to any outstanding Awards, upon exercise of any Option or Stock Appreciation Right or payment or transfer in respect of any other Award, the same number and kind of stock, securities, cash, property or other consideration that each holder of a share of Common Stock was entitled to receive in the Transaction in respect of a share of Common Stock; provided, however, that such stock, securities, cash, property, or other consideration shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to Awards prior to such Transaction, but giving effect to any applicable provision of the Plan or any Award Agreement if the Transaction is a Change of Control. Without limiting the generality of the foregoing, the treatment of outstanding Options and Stock Appreciation Rights pursuant to clause (i) of this Section 5.4 in connection with a Transaction may include the cancellation of outstanding Options and Stock Appreciation Rights upon consummation of the Transaction provided either (x) the holders of affected Options and Stock Appreciation rights have been given a period of at least fifteen (15) days prior to the date of the consummation of the Transaction to exercise the Options and Stock Appreciation Rights (whether or not they were otherwise exercisable) or (y) the holders of the affected Options and Stock Appreciation Rights are paid (in cash or cash equivalents) in respect of each share of Common Stock covered by the Options or Stock Appreciation Rights being cancelled an amount equal to the excess, if any, of the per share price paid or distributed to stockholders in the Transaction (the value of any non-cash consideration to be determined by the Plan Administrator in its sole discretion) over the exercise price thereof. For avoidance of doubt, (1) the cancellation of Options and Stock Appreciation Rights pursuant to clause (y) of the preceding sentence may be effected notwithstanding anything to the contrary contained in the Plan or any Award Agreement and (2) if the amount determined pursuant to clause (y) of the preceding sentence is zero or less, the affected Options and Stock Appreciation Rights may be cancelled without any payment therefor. The treatment of any Award as provided in this Section 5.4 shall be conclusively presumed to be appropriate for purposes of Section 5.3.
AWARD AGREEMENTS
Upon a determination by the Plan Administrator that an Award is to be granted to a Participant pursuant to Section 7, 8, 9, 10, 11, 12 or 13, an Award Agreement shall be provided to such Participant as soon as practicable specifying, without limitation,
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the terms, conditions, rights and duties related thereto, including terms requiring forfeiture of Awards in the event of a Termination of Service by the Participant and terms relating to the Clawback/Forfeiture Events under Section 18.1. Each Award Agreement shall be subject to the terms and conditions of the Plan.
STOCK OPTIONS
Subject to the limitations in Sections 5.1 and 5.2, Options may be granted to eligible Participants in such number, and at such times during the term of the Plan, as the Plan Administrator shall determine. The Plan Administrator may grant an Option or provide for the grant of an Option, either from time to time in the discretion of the Plan Administrator or automatically upon the occurrence of specified events, including, without limitation, the achievement of Performance Goals or other performance measures, the satisfaction of an event or condition within the control of the recipient of the Option or within the control of others. The granting of an Option shall take place when the Plan Administrator by resolution, written consent or other appropriate action determines to grant such an Option to a particular Participant at the Option Price. Each Option granted under the Plan shall be identified in the Award Agreement as either an Incentive Stock Option or a Nonqualified Option (or if no such identification is made, then it shall be a Nonqualified Option). No Incentive Stock Option shall be granted to any Participant who is not an Employee of the Company or any subsidiary corporation of the Company (as defined in Section 424(f) of the Code).
7.2 Special Provisions Applicable to Incentive Stock Options
Each provision of the Plan and each Incentive Stock Option granted thereunder shall be construed so that each such Option shall qualify as an Incentive Stock Option, and any provision thereof that cannot be so construed shall be disregarded, unless the Employee agrees otherwise. Incentive Stock Options, in addition to complying with the other provisions of the Plan relating to Options generally, shall be subject to the following conditions:
(a) Ten Percent (10%) Stockholders
An Employee must not, immediately before an Incentive Stock Option is granted to him or her, own stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of its parent or any subsidiary corporation (within the meaning of Section 424 of the Code). This requirement is waived if (i) the Option Price of the Incentive Stock Option to be granted is at least one hundred ten percent (110%) of the Fair Market Value of the stock subject to the Option, determined at the time the Option is granted, and (ii) the Option is not exercisable more than five (5) years from the date the Option is granted.
(b) Annual Limitation
To the extent that the aggregate Fair Market Value (determined at the time of the grant of the Option) of the stock with respect to which Incentive Stock Options are exercisable for the first time by the Employee during any calendar year exceeds One Hundred Thousand Dollars ($100,000), such Options shall be treated as Nonqualified Options. In applying the limitation in the preceding sentence in the case of multiple Option grants, unless otherwise required by applicable law, Options which were intended to be Incentive Stock Options shall be treated as Nonqualified Options according to the order in which they were granted such that the most recently granted Options are first treated as Nonqualified Options.
(c) Additional Terms
Any other terms and conditions which the Plan Administrator determines, upon advice of counsel, must be imposed for the Option to be an Incentive Stock Option.
(d) Notice of Disqualifying Disposition
If an Employee shall make any disposition of shares of Common Stock issued pursuant to an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to disqualifying dispositions), the Employee shall notify the Company of such disposition within twenty (20) days thereof.
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Except as otherwise provided in the Award Agreement and Section 7.2, all Incentive Stock Options and Nonqualified Options under the Plan shall be granted subject to the following terms and conditions:
(a) Option Price
The Option Price shall be determined by the Plan Administrator in any reasonable manner, but shall not be less than the Fair Market Value of the Common Stock on the date the Option is granted, except in the case of Options that are granted in assumption of, or in substitution for, outstanding awards previously granted by (i) a company acquired by the Company or a Subsidiary, or (ii) a company with which the Company or a Subsidiary combines.
(b) Duration of Options
Options shall be exercisable at such time and under such conditions as set forth in the Award Agreement, but in no event shall any Option (whether a Nonqualified Option or an Incentive Stock Option) be exercisable later than the tenth (10th) anniversary of the date of its grant.
(c) Exercise of Options
Common Stock covered by an Option may be purchased at one time or in such installments over the option period as may be provided in the Award Agreement. Any Common Stock not purchased on an applicable installment date may be purchased thereafter at any time prior to the expiration of the Option in accordance with its terms. To the extent that the right to purchase Common Stock has accrued thereunder, an Option may be exercised from time to time by notice to the Company setting forth the amount of Common Stock with respect to which the Option is being exercised.
(d) Payment
The purchase price of Common Stock purchased under Options shall be paid in full to the Company upon the exercise of the Option by delivery of consideration equal to the product of the Option Price and the Common Stock purchased (the Purchase Price). Such consideration may be either (i) in cash or (ii) at the discretion of the Plan Administrator, in Common Stock (by either actual delivery of Common Stock or by attestation presenting satisfactory proof of beneficial ownership of such Common Stock) already owned by the Participant, or any combination of cash and Common Stock. The Fair Market Value of such Common Stock as delivered shall be valued as of the day of exercise. The Plan Administrator can determine that additional forms of payment will be permitted. To the extent permitted by the Plan Administrator and applicable laws and regulations (including, without limitation, federal tax and securities laws, regulations and state corporate law), an Option may also be exercised in a cashless exercise by delivery of a properly executed exercise notice together with irrevocable instructions to a broker approved by the Company to promptly deliver to the Company sufficient proceeds to pay the Purchase Price. A Participant shall have none of the rights of a stockholder until the Common Stock is issued to the Participant.
The Plan Administrator may permit a Participant to pay all or a portion of the Purchase Price by having Common Stock with a Fair Market Value equal to all or a portion of the Purchase Price be withheld from the shares issuable to the Participant upon the exercise of the Option. The Fair Market Value of such Common Stock as is withheld shall be determined as of the same day as the exercise of the Option.
(e) Restrictions
The Plan Administrator shall determine and reflect in the Award Agreement, with respect to each Option, the nature and extent of the restrictions, if any, to be imposed on the Common Stock which may be purchased thereunder, including, without limitation, restrictions on the transferability of such Common Stock acquired through the exercise of such Options for such periods as the Plan Administrator may determine. In addition, to the extent permitted by applicable laws and regulations, the Plan Administrator may require that a Participant who wants to effectuate a cashless exercise of Options be required to sell the Common Stock acquired in the associated exercise to the Company, or in the open market through the use of a broker selected by the Company, at such price and on such terms as the Plan Administrator may determine at the time of grant, or otherwise. Without limiting the foregoing, the Plan Administrator may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Common Stock issued as a result of the exercise of an Option, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by one or
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more Participants and (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers. No dividend equivalents may be granted in connection with any Option.
(f) Transferability of Options
Notwithstanding Section 18.2 and only if allowed by the Plan Administrator in its discretion, Nonqualified Options may be transferred to a Participants immediate family members, directly or indirectly or by means of a trust, corporate entity or partnership (a person who thus acquires this option by such transfer, a Permitted Transferee). A transfer of a Nonqualified Option may only be effected by the Company at the request of the Participant and shall become effective upon the Permitted Transferee agreeing to such terms as the Plan Administrator may require and only when recorded in the Companys record of outstanding Options. In the event an Option is transferred as contemplated hereby, the Option may not be subsequently transferred by the Permitted Transferee except a transfer back to the Participant or by will or the laws of descent and distribution. A transferred Option may be exercised by a Permitted Transferee to the same extent as, and subject to the same terms and conditions as, the Participant (except as otherwise provided herein), as if no transfer had taken place. As used herein, immediate family member shall mean, with respect to any person, such persons child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, and shall include adoptive relationships. In the event of exercise of a transferred Option by a Permitted Transferee, any amounts due to (or to be withheld by) the Company upon exercise of the Option shall be delivered by (or withheld from amounts due to) the Participant, the Participants estate or the Permitted Transferee, in the reasonable discretion of the Company.
In addition, to the extent permitted by applicable law and Rule 16b-3, the Plan Administrator may permit a recipient of a Nonqualified Option to designate in writing during the Participants lifetime a Beneficiary to receive and exercise the Participants Nonqualified Options in the event of such Participants death.
Notwithstanding any provision in the Plan to the contrary, no Option may be transferred for consideration to a financial institution.
(g) Purchase for Investment
The Plan Administrator shall have the right to require that each Participant or other person who shall exercise an Option under the Plan, and each person into whose name the Common Stock shall be issued pursuant to the exercise of an Option, represent and agree that any and all Common Stock purchased pursuant to such Option is being purchased for investment only and not with a view to the distribution or resale thereof and that such Common Stock will not be sold except in accordance with such restrictions or limitations as may be set forth in the Option or by the Plan Administrator. This Section 7.3(g) shall be inoperative during any period of time when the Company has obtained all necessary or advisable approvals from governmental agencies and has completed all necessary or advisable registrations or other qualifications of the Common Stock as to which Options may from time to time be granted as contemplated in Section 17.
(h) No Repricing or Exchange
Other than pursuant to Section 5.3, the Plan Administrator may not take any action (i) to amend the terms of an outstanding Option to reduce the Option Price thereof, cancel an Option and replace it with a new Option with a lower Option Price, or that has an economic effect that is the same as any such reduction or cancellation or (ii) to cancel an outstanding Option having an Option Price above the then-current Fair Market Value of the Common Stock in exchange for the grant of another type of Award or cash (other than in connection with a Change of Control), without, in each such case, first obtaining approval of the Companys stockholders of such action.
STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights
Subject to the limitations in Sections 5.1 and 5.2, Stock Appreciation Rights may be granted to Participants in such number, and at such times during the term of the Plan, as the Plan Administrator shall determine. The Plan Administrator may grant a Stock Appreciation Right or provide for the grant of a Stock Appreciation Right, either from time to time in the discretion of the
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Plan Administrator or automatically upon the occurrence of specified events, including, without limitation, the achievement of Performance Goals or other performance measures, the satisfaction of an event or condition within the control of the recipient of the Stock Appreciation Right or within the control of others. The granting of a Stock Appreciation Right shall take place when the Plan Administrator by resolution, written consent or other appropriate action determines to grant such a Stock Appreciation Right to a particular Participant at a particular price. A Stock Appreciation Right may be granted freestanding or in tandem or in combination with any other Award under the Plan.
8.2 Exercise of Stock Appreciation Rights
A Stock Appreciation Right may be exercised upon such terms and conditions and for such term as the Plan Administrator shall determine; provided, however, no Stock Appreciation Right shall be exercisable later than the tenth (10th) anniversary of the date of its grant. Upon exercise of a Stock Appreciation Right, a Participant shall be entitled to receive Common Stock, or the cash equivalent, with an aggregate Fair Market Value determined by multiplying (i) the difference between the Fair Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right over the price determined by the Plan Administrator on the date of grant (which price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant, except in the case of Stock Appreciation Rights that are granted in assumption of, or in substitution for, outstanding awards previously granted by (x) a company acquired by the Company or a Subsidiary, or (y) a company with which the Company or a Subsidiary combines) times (ii) the number of shares of Common Stock with respect to which the Stock Appreciation Right is exercised. The value of any fractional shares shall be paid in cash.
8.3 Special Provisions Applicable to Stock Appreciation Rights
Stock Appreciation Rights are subject to the following restrictions:
(a) A Stock Appreciation Right granted in tandem with any other Award under the Plan shall be exercisable at such time or times as the Award to which it relates shall be exercisable, or at such other times as the Plan Administrator may determine.
(b) The right of a Participant to exercise a Stock Appreciation Right granted in tandem with any other Award under the Plan shall be canceled if and to the extent the related Award is exercised or canceled. To the extent that a Stock Appreciation Right is exercised, the related Award shall be deemed to have been surrendered unexercised and canceled.
(c) A holder of Stock Appreciation Rights shall have none of the rights of a stockholder until the Common Stock, if any, is issued to such holder pursuant to such holders exercise of such rights. No dividend equivalents may be granted in connection with any Stock Appreciation Right.
(d) The acquisition of Common Stock pursuant to the exercise of a Stock Appreciation Right shall be subject to the same restrictions as would apply to the acquisition of Common Stock acquired upon exercise of an Option, as set forth in Section 7.3.
Other than pursuant to Section 5.3, the Plan Administrator may not take any action (i) to amend the terms of an outstanding Stock Appreciation Right to reduce the grant price thereof, cancel a Stock Appreciation Right and replace it with a new Stock Appreciation Right with a lower grant price, or that has an economic effect that is the same as any such reduction or cancellation or (ii) to cancel an outstanding Stock Appreciation Right having a grant price above the then-current Fair Market Value of the Common Stock in exchange for the grant of another type of Award or cash (other than in connection with a Change of Control), without, in each such case, first obtaining approval of the Companys stockholders of such action.
PERFORMANCE SHARES AND PERFORMANCE UNITS
9.1 Grant of Performance Shares and Performance Units
Subject to the limitations in Sections 5.1 and 5.2, (a) Performance Shares or Performance Units may be granted to Participants at any time and from time to time as the Plan Administrator shall determine, and (b) the Plan Administrator shall have complete discretion in determining the number of Performance Shares or Performance Units granted to each Participant and the terms and conditions thereof. Performance Shares and Performance Units may be granted alone or in combination with any other Award under the Plan.
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9.2 Value of Performance Shares and Performance Units
The Plan Administrator shall establish Performance Goals for any specified Performance Periods. Prior to each grant of Performance Shares or Performance Units, the Plan Administrator shall establish an initial amount of Common Stock for each Performance Share and an initial value for each Performance Unit granted to each Participant for that Performance Period. Prior to each grant of Performance Shares or Performance Units, the Plan Administrator also shall set the Performance Goals that will be used to determine the extent to which the Participant receives Common Stock for the Performance Shares or payment of the value of the Performance Units awarded for such Performance Period. With respect to each such Performance Goal utilized during a Performance Period, the Plan Administrator may assign percentages or other relative values to various levels of performance which shall be applied to determine the extent to which the Participant shall receive a payout of the number of Performance Shares or value of Performance Units awarded.
9.3 Payment of Performance Shares and Performance Units
After a Performance Period has ended, the holder of a Performance Share or Performance Unit shall be entitled to receive the value thereof as determined by the Plan Administrator. The Plan Administrator shall make this determination by first determining the extent to which the Performance Goals set pursuant to Section 9.2 have been met. The Plan Administrator shall then determine the applicable percentage or other relative value to be applied to, and will apply such percentage or other relative value to, the number of Performance Shares or value of Performance Units to determine the payout to be received by the Participant. In addition, with respect to Performance Shares and Performance Units granted to each Participant, no payout shall be made hereunder except upon a determination by the Plan Administrator that the applicable Performance Goals have been satisfied to a particular extent.
9.4 Form and Timing of Payment
The payment described in Section 9.3 shall be made in Common Stock, or in cash, or partly in Common Stock and partly in cash, at the discretion of the Plan Administrator and set forth in the Award Agreement. The value of any fractional shares shall be paid in cash. Payment shall be made in a lump sum or installments as prescribed in the applicable Award Agreement. If Common Stock is to be converted into an amount of cash on any date, or if an amount of cash is to be converted into Common Stock on any date, such conversion shall be done at the then-current Fair Market Value of the Common Stock on such date.
The Plan Administrator may provide that Performance Shares or Performance Units awarded under the Plan shall be entitled to an amount per Performance Share or Performance Unit equal in value to the cash dividend, if any, paid per share of Common Stock on issued and outstanding shares, on the dividend payment dates (Dividend Payment Date) occurring during the period between the date on which the Performance Shares or Performances Unit are granted to the Participant and the date on which such Performance Shares or Performance Units are settled under the Plan (or such other period as designated by the Plan Administrator). Such paid amounts called dividend equivalents shall be accrued and paid in cash and/or Common Stock (including reinvestment in additional shares of Common Stock) and paid at such time as the Performance Share or Performance Unit to which it relates vests and settles or at such later time as provided in the applicable Award Agreement (for the avoidance of doubt, such dividend equivalents shall also be subject to restrictions and risk of forfeiture to the same extent as the underlying Award). The number of shares of Common Stock to be issued and/or reinvested shall be determined based on the Fair Market Value on the Dividend Payment Date.
RESTRICTED STOCK
10.1 Grant of Restricted Stock
Subject to the limitations in Sections 5.1 and 5.2, Restricted Stock may be granted to Participants in such number and at such times during the term of the Plan as the Plan Administrator shall determine. The Plan Administrator may grant Restricted Stock or provide for the grant of Restricted Stock, either from time to time in the discretion of the Plan Administrator or automatically upon the occurrence of specified events.
Restricted Stock shall be subject to Section 18.2 for the period determined by the Plan Administrator and provided in the applicable Award Agreement (the Restriction Period). During the Restriction Period, the Plan Administrator shall evidence the
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restrictions on the shares of Restricted Stock in such a manner as it determines is appropriate (including, without limitation, (i) by means of appropriate legends on shares of Restricted Stock that have been certificated and (ii) by means of appropriate stop-transfer orders on shares of Restricted Stock credited to book-entry accounts).
The Plan Administrator shall impose such other restrictions on Restricted Stock granted pursuant to the Plan as it may deem advisable, including Performance Goals or other performance measures or vesting requirements. The Plan Administrator may require, under such terms and conditions as it deems appropriate or desirable, that the certificates for Restricted Stock delivered under the Plan may be held in custody by a bank or other institution, or that the Company may itself hold such shares in custody until the Restriction Period expires or until restrictions thereon otherwise lapse, and may require, as a condition of any issuance of Restricted Stock that the Participant shall have delivered a stock power endorsed in blank relating to the shares of Restricted Stock.
10.4 Voting Rights; Dividends and Other Distributions
A Participant receiving a grant of Restricted Stock shall be recorded as a stockholder of the Company. Except as otherwise provided under the terms of the Plan or an Award Agreement, a Participant who receives a grant of Restricted Stock shall have the rights of a stockholder with respect to such shares (except as provided in the restrictions on transferability), including the right to vote the shares and receive dividends and other distributions paid with respect to the underlying shares of Common Stock; provided, however, that any cash distributed with respect to a share of Common Stock subject to the Restricted Stock shall be treated in the following manner as determined by the Plan Administrator in its sole discretion and set forth in an Award Agreement: (i) paid in cash on or about the Dividend Payment Date or accrued and paid at such time, if any, as the underlying Restricted Stock to which it relates vests and settles; (ii) paid in Common Stock on or about the Dividend Payment Date or accrued and/or reinvested in additional shares of Common Stock (or Restricted Stock) and paid at such time (or, in the case of additional shares of Restricted Stock, vest at such time), if any, as the underlying Restricted Stock to which it relates vests and settles; or (iii) any combination of the foregoing. The number of shares of Common Stock to be issued and/or reinvested shall be determined based on the Fair Market Value on the Dividend Payment Date. Notwithstanding any preceding provision in this Section to the contrary, any cash, stock or other property distributed as a dividend or otherwise with respect to any award of Restricted Stock that vests based on achievement of performance measures shall either (x) not be paid or credited or (y) be subject to restrictions and risk of forfeiture to the same extent as the underlying Restricted Stock with respect to which such cash, stock or other property has been distributed.
10.5 Issuance of Shares; Settlement of Awards
When the restrictions imposed by Sections 10.2 and 10.3 expire or otherwise lapse with respect to one or more shares of Restricted Stock, the Participant shall be obligated to return to the Company any certificate(s) representing shares of Restricted Stock (if applicable), and the Company shall deliver to the Participant one (1) share of Common Stock (which may be delivered in book-entry or certificated form) in satisfaction of each share of Restricted Stock, which shares so delivered shall not contain any legend. Any fractional shares subject to such Restricted Stock shall be paid to the Participant in cash. The delivery of shares pursuant to this Section 10.5 shall be subject to any required share withholding to satisfy tax withholding obligations pursuant to Section 18.10.
RESTRICTED STOCK UNITS
11.1 Grant of Restricted Stock Units
Subject to the limitations in Sections 5.1 and 5.2, Restricted Stock Units may be granted to Participants in such number and at such times during the term of the Plan as the Plan Administrator shall determine. The Plan Administrator may grant Restricted Stock Units or provide for the grant of Restricted Stock Units, either from time to time in the discretion of the Plan Administrator or automatically upon the occurrence of specified events.
Restricted Stock Units shall be subject to Section 18.2 for the period determined by the Plan Administrator and provided in the applicable Award Agreement (the Restriction Period).
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Appendix B
2019 Omnibus Incentive Compensation Plan
The Plan Administrator shall impose such other restrictions on Restricted Stock Units granted pursuant to the Plan as it may deem advisable, including Performance Goals or other performance measures or vesting requirements. A Participant receiving a grant of Restricted Stock Units shall not be recorded as a stockholder of the Company and shall not acquire any rights of a stockholder unless or until the Participant is issued shares of Common Stock in settlement of such Restricted Stock Units.
The Plan Administrator may provide that Restricted Stock Units awarded under the Plan shall be entitled to an amount per Restricted Stock Unit equal in value to the cash dividend, if any, paid per share of Common Stock on issued and outstanding shares, on the Dividend Payment Dates occurring during the period between the date on which the Restricted Stock Units are granted to the Participant and the date on which such Restricted Stock Units are settled, cancelled, forfeited, waived, surrendered or terminated under the Plan (or such other period designated by the Plan Administrator). Any such paid amounts called dividend equivalents shall be treated in the following manner as determined by the Plan Administrator in its sole discretion and set forth in an Award Agreement: (i) paid in cash on or about the Dividend Payment Date or accrued and paid at such time, if any, as the underlying Restricted Stock Unit to which it relates vests and settles; (ii) paid in Common Stock on or about the Dividend Payment Date or accrued and/or reinvested in additional shares of Common Stock and paid at such time as the underlying Restricted Stock Units to which it relates vests and settles; or (iii) any combination of the foregoing. The number of shares of Common Stock to be issued and/or reinvested shall be determined based on the Fair Market Value on the Dividend Payment Date. Notwithstanding any preceding provision in this Section to the contrary, any cash, stock or other property distributed as a dividend or otherwise with respect to any award of Restricted Stock Units that vests based on achievement of performance measures shall either (x) not be paid or credited or (y) be subject to restrictions and risk of forfeiture to the same extent as the underlying Restricted Stock Units with respect to which such cash, stock or other property has been distributed.
11.5 Issuance of Shares; Settlement of Awards
When the restrictions imposed by Sections 11.2 and 11.3 expire or otherwise lapse with respect to one or more Restricted Stock Units, Restricted Stock Units shall be settled (i) in cash or (ii) by the delivery to the Participant of the number of shares of Common Stock equal to the number of the Participants Restricted Stock Units that are vested, or any combination thereof, as the Plan Administrator shall determine. Any fractional shares subject to such Restricted Stock Units shall be paid to the Participant in cash. The delivery of shares pursuant to this Section 11.5 shall be subject to any required share withholding to satisfy tax withholding obligations pursuant to Section 18.10.
INCENTIVE AWARDS
The Plan Administrator shall establish Performance Goals or other performance measures which must be achieved for any Participant to receive payment with respect to an Incentive Award for a particular Performance Period. The Performance Goals or other performance measures may be based on any combination of corporate and business unit Performance Goals or other performance measures. The Plan Administrator may also establish one or more Company-wide Performance Goals or other performance measures which must be achieved for any Participant to receive payment with respect to an Incentive Award for that Performance Period. Such Performance Goals or other performance measures may include a threshold level of performance below which no Incentive Award shall be earned, target levels of performance at which specific Incentive Awards will be earned, and a maximum level of performance at which the maximum level of Incentive Awards will be earned. Each Incentive Award shall specify the amount of cash, Common Stock and/or the amount of any other Awards subject to such Incentive Award.
12.2 Attainment of Performance Goal
An Incentive Award shall become payable to the extent provided herein in the event that the Plan Administrator determines prior to payment of the Incentive Award that the Performance Goals or other performance measures selected for a particular Performance Period have been attained. In no event will an Incentive Award be payable under the Plan if the threshold level of performance set for each Performance Goal or other performance measure for the applicable Performance Period is not attained.
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Appendix B
2019 Omnibus Incentive Compensation Plan
12.3 Participants Performance
A Participants individual performance must be satisfactory as determined by the Plan Administrator, regardless of the Companys performance and the attainment of Performance Goals or other performance measures, before he or she may be paid an Incentive Award. In evaluating a Participants performance, the Plan Administrator shall consider the Performance Goals or other performance measures, the Participants responsibilities and accomplishments, and such other factors as it deems appropriate.
12.4 Required Payment of Incentive Awards
The Plan Administrator shall make a determination as soon as administratively possible after the information that is necessary to make such a determination is available for a particular Performance Period whether the Performance Goals or other performance measures for the Performance Period have been achieved, the amount of the Incentive Award for each Participant and whether the Incentive Award shall be paid in cash, Common Stock and/or other Awards under the Plan. In the absence of an election by the Participant pursuant to Section 14, the Incentive Award shall be paid as soon as practicable after the end of the calendar year, but in no event later than March 15 following the end of the calendar year, in which the foregoing determinations have been made.
CASH AWARDS AND OTHER STOCK-BASED AWARDS
Subject to the terms and provisions of the Plan, the Plan Administrator, at any time and from time to time, may grant cash awards to Participants in such amounts and upon such terms, including the achievement of Performance Goals or other specific performance measures, as the Plan Administrator may determine (each, a Cash Award).
The Plan Administrator may grant other types of equity-based or equity-related Awards not otherwise described by the terms of the Plan (including the grant or offer for sale of unrestricted shares of Common Stock and Awards or shares of Common Stock in lieu of obligations to pay cash or deliver other property or Common Stock (including obligations to pay deferred compensation under any plan or program maintained by the Company or any Subsidiary or any other form of compensation)) in such amounts and subject to such terms and conditions, as the Plan Administrator shall determine (each, an Other Stock-Based Award). Such Other Stock-Based Awards may involve the transfer of Common Stock to Participants (either on a current or deferred basis), or payment in cash or otherwise of amounts based on or valued in whole or in part by reference to the value of Common Stock.
13.3 Value of Cash Awards and Other Stock-Based Awards
Each Cash Award granted pursuant to this Section 13 shall specify a payment amount or payment range as determined by the Plan Administrator. Each Other Stock-Based Award shall be expressed in terms of Common Stock or units based on Common Stock, as determined by the Plan Administrator. The Plan Administrator may establish performance measures applicable to such Awards in its discretion. If the Plan Administrator exercises its discretion to establish performance measures, the number and/or value of such Cash Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance measures are met.
13.4 Payment of Cash Awards and Other Stock-Based Awards
Payment, if any, with respect to a Cash Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash and/or Common Stock as the Plan Administrator determines and as set forth in the applicable Award Agreement. The value of any fractional shares shall be paid in cash.
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Appendix B
2019 Omnibus Incentive Compensation Plan
DEFERRAL ELECTIONS
The Plan Administrator may, to the extent permitted by applicable law, permit Employees and Consultants to defer Awards. Any such deferrals shall be subject to such terms, conditions and procedures that the Company may establish from time to time in its sole discretion and consistent with the advance and subsequent deferral election requirements of Section 409A.
TERMINATION OF SERVICE
The Award Agreement applicable to each Award shall set forth the effect of a Termination of Service upon such Award; provided, however, that, unless explicitly set forth otherwise in an Award Agreement or as determined by the Plan Administrator, (i) all of a Participants unvested and/or unexercisable Awards shall automatically be forfeited upon a Termination of Service for any reason, and, as to Awards consisting of Options or Stock Appreciation Rights, the Participant shall be permitted to exercise the vested portion of the Option or Stock Appreciation Right for at least three (3) months following his or her Termination of Service (but in no event beyond the maximum term of the Option or Stock Appreciation Right), and (ii) all of a Participants Awards (whether vested or unvested, exercisable or unexercisable) shall automatically be forfeited upon the Participants Termination of Service for Cause. Provisions relating to the effect of a Termination of Service upon an Award shall be determined in the sole discretion of the Plan Administrator and need not be uniform among all Awards or among all Participants. Unless the Plan Administrator determines otherwise, the transfer of employment of a Participant as between the Company and a Subsidiary shall not constitute a Termination of Service. The Plan Administrator shall have the discretion to determine the effect, if any, that a sale or other disposition of an Employer will have on the Participants Awards.
EFFECT OF A CHANGE OF CONTROL
Unless otherwise provided in the Plan, an Award Agreement or another agreement, in the event of a Change of Control:
(a) | Any Options and Stock Appreciation Rights outstanding which are not then exercisable and vested shall become fully exercisable and vested upon the termination of the Participants employment or service without Cause or for Good Reason during the Applicable Period. |
(b) | The restrictions applicable to any Restricted Stock or Restricted Stock Unit Award which are not performance based shall lapse and such Restricted Stock or Restricted Stock Unit shall become free of all restrictions and become fully vested and transferable upon the termination of the Participants employment or service without Cause or for Good Reason during the Applicable Period. |
(c) | The restrictions applicable to any Performance Share or Performance Unit Award and any performance-based Restricted Stock or Restricted Stock Unit granted pursuant to Sections 9, 10 or 11 or any other Award (including a Cash Award, an Incentive Award, and an Other Stock-Based Award) that is subject to the attainment of Performance Goals or other performance measures shall become free of all restrictions and become fully vested and transferable upon the termination of the Participants employment or service without Cause or for Good Reason during the Applicable Period; provided, however, that any such Awards shall only vest to the extent the applicable Performance Goals or other performance measures have been achieved and the amount of vesting shall be based on actual performance. |
(d) | Any restrictions applicable to Cash Awards and Other Stock-Based Awards which are not performance based shall immediately lapse and become payable within twenty (20) days following the termination of the Participants employment or service without Cause or for Good Reason during the Applicable Period. |
(e) | Notwithstanding subparagraph (d) above, all Other Stock-Based Awards held by a Participant who is a non-employee member of the Board (irrespective of other payment elections that may be applicable to such Awards) shall be paid to the Participant (or his or her Beneficiary in the case of his or her death) within thirty (30) days after the date of the Change of Control, or at such later time as may be required to enable the Participant to avoid liability under Section 16(b) of the Exchange Act; provided, however, no such Awards shall be paid to the Participant if he or she continues to serve as a member of the Board or upon the board of directors of the Companys successor, until such time said Awards would otherwise be paid. |
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Appendix B
2019 Omnibus Incentive Compensation Plan
For purposes of this Section 16 and unless otherwise provided in the Award Agreement, the term Applicable Period shall have the following meaning: (i) to the extent provided in an Employees employment agreement, severance agreement or individual change of control agreement, the term Applicable Period shall mean the protection period following a Change of Control provided in the such agreement with respect to such Employee, (ii) in the case of any Employee not covered by clause (i) above, the term Applicable Period shall mean the protection period following a Change of Control provided in the Companys Change of Control Severance Plan, as it may be amended from time to time; and (iii) in the case of a Participant who is not an Employee, the term Applicable Period shall mean the twelve-month period following a Change of Control.
In addition to the Plan Administrators authority set forth in Sections 5.3, in order to maintain the Participants rights in the event of any Change of Control, the Plan Administrator, as constituted before such Change of Control, is hereby authorized, and has sole discretion, as to any Award, either at the time such Award is made hereunder or any time thereafter, to take any one or more of the following actions: (i) cause any such Award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after such Change of Control; (ii) provide that Options and Stock Appreciation Rights outstanding as of the date of the Change of Control shall be cancelled and terminated without payment if the Fair Market Value of one share as of the date of the Change of Control is less than the per share Option exercise price or Stock Appreciation Right grant price; or (iii) provide that each Option and Stock Appreciation Right outstanding shall terminate within a specified number of days after notice to the Participant, and/or that each Participant shall receive, with respect to each share subject to such Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such share immediately prior to the occurrence of such Change of Control over the exercise price per share of such Option and/or Stock Appreciation Right (such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction, if applicable) or in a combination thereof, as the Plan Administrator, in its discretion, shall determine).
REGULATORY APPROVALS AND LISTING
The Company shall not be required to issue any certificate or create a book-entry account for shares of Common Stock under the Plan prior to:
(a) obtaining any approval or ruling from the Securities and Exchange Commission, the Internal Revenue Service or any other governmental agency which the Company, in its sole discretion, shall determine to be necessary or advisable;
(b) listing of such shares on any stock exchange on which the Common Stock may then be listed; and
(c) completing any registration or other qualification of such shares under any federal or state laws, rulings or regulations of any governmental body which the Company, in its sole discretion, shall determine to be necessary or advisable.
All certificates, or book-entry accounts, for shares of Common Stock delivered under the Plan shall also be subject to such stop-transfer orders and other restrictions as the Plan Administrator may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which Common Stock is then listed and any applicable federal or state securities laws, and the Plan Administrator may cause a legend or legends to be placed on any such certificates, or notations on such book-entry accounts, to make appropriate reference to such restrictions. The foregoing provisions of this paragraph shall not be effective if and to the extent that the shares of Common Stock delivered under the Plan are covered by an effective and current registration statement under the Securities Act or if and so long as the Plan Administrator determines that application of such provisions are no longer required or desirable. In making such determination, the Plan Administrator may rely upon an opinion of counsel for the Company. Without limiting the foregoing, the Plan Administrator may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by a Participant of any shares of Common Stock issued under the Plan, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by one or more Participants and (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
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Appendix B
2019 Omnibus Incentive Compensation Plan
GENERAL PROVISIONS
18.1 Clawback/Forfeiture Events
(a) Awards shall be subject to any clawback policy maintained by the Company, as it may exist or be amended from time to time, subject to the discretion of the Plan Administrator. Furthermore, if required by Company policy, by the Sarbanes-Oxley Act of 2002 and/or by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or other applicable laws, each Participants Award shall be conditioned on repayment or forfeiture in accordance with such applicable laws, Company policy, and any relevant provisions in the related Award Agreement.
(b) The Plan Administrator may specify in an Award Agreement or otherwise that a Participants rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, without limitation, termination of employment or service for Cause, violation of material policies that may apply to the Participant, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company or a Subsidiary.
(c) Nothing in the Plan shall prevent a Participant from exercising any legally protected whistleblower rights, including pursuant to Section 21F of the Exchange Act or the rules thereunder.
Unless otherwise provided in the Plan and permitted by law, including but not limited to the Code, the right of a Participant or Beneficiary to the payment of any Award granted under the Plan and the rights and privileges conferred thereby shall not be subject to execution, attachment or similar process and may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will or by the applicable laws of descent and distribution unless the Participant has received the Plan Administrators prior written consent; provided, however, that no Award may be transferred for consideration to a financial institution. Except as otherwise provided for under the Plan, if any Participant attempts to transfer, assign, pledge, hypothecate or otherwise dispose of any Award under the Plan or of any right or privilege conferred thereby, contrary to the provisions of the Plan or such Award, or suffers the sale or levy or any attachment or similar process upon the rights and privileges conferred hereby, all affected Awards held by such Participant shall be immediately forfeited.
Nothing contained in the Plan, or in any Award granted pursuant to the Plan, shall confer upon any Participant any right to continue in the employ of, or as a Consultant for, the Company or a Subsidiary, nor interfere in any way with the right of the Company or a Subsidiary to terminate the employment or service of such Participant at any time with or without assigning any reason therefor, except to the extent expressly provided otherwise in a written agreement between the Participant and the Company or any Employer.
Unless determined otherwise by the Plan Administrator or required by contractual obligations, the grant, vesting or payment of Awards under the Plan shall not be considered as part of an Employees salary or used for the calculation of any other pay, allowance, pension or other benefit unless otherwise permitted by other benefit plans provided by the Company or a Subsidiary, or required by law or by contractual obligations of the Company or a Subsidiary.
18.5 Leaves of Absence and Change in Status
Leaves of absence for such periods and purposes conforming to the personnel policy of the Company, or of a Subsidiary, as applicable, shall not be deemed a Termination of Service, unless a Participant commences a leave of absence from which he or she is not expected to return to active employment or service with the Company or a Subsidiary. The foregoing notwithstanding, with respect to Incentive Stock Options, employment shall not be deemed to continue beyond the first three (3) months of such leave unless the Participants reemployment rights are guaranteed by statute or contract. With respect to any Participant who, after the date an Award is granted under the Plan, ceases to be employed by or provide services to the
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Appendix B
2019 Omnibus Incentive Compensation Plan
Company or a Subsidiary on a full-time basis but continues to be employed or provide services on a part-time basis, the Plan Administrator may make appropriate adjustments, as determined in its sole discretion, as to the number of shares issuable under, the vesting schedule of, or the amount payable under any unvested Awards held by such Participant.
In the event a Participant is transferred from the Company to a Subsidiary, or vice versa, or is promoted or given different responsibilities, Awards granted to the Participant prior to such date shall not be affected.
Any amounts (deferred or otherwise) to be paid to Participants pursuant to the Plan are unfunded obligations. Neither the Company nor any Subsidiary is required to segregate any monies from its general funds, to create any trusts or to make any special deposits with respect to this obligation. The Plan Administrator, in its sole discretion, may direct the Company to share with a Subsidiary the costs of a portion of the Awards paid to Participants who are executives of those companies. Beneficial ownership of any investments, including trust investments which the Company may make to fulfill this obligation, shall at all times remain in the Company. Any investments and the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or a fiduciary relationship between the Plan Administrator, the Company or any Subsidiary and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participants Beneficiary or the Participants creditors in any assets of the Company or a Subsidiary whatsoever. The Participants shall have no claim against the Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to the Plan.
The designation of a Beneficiary shall be on a form provided by the Company, executed by the Participant (with the consent of the Participants spouse, if required by the Company for reasons of community property or otherwise), and delivered to a designated representative of the Company. The Company may, in its discretion, utilize an electronic process for Beneficiary designations. A Participant may change his or her Beneficiary designation at any time. A designation by a Participant under any predecessor plans shall remain in effect under the Plan unless such designation is revoked or changed under the Plan. In the event that a Participant becomes divorced, a Beneficiary designation under the Plan or a predecessor plan in favor of his or her divorced spouse shall become void as of the effective date of the divorce, unless the Participant re-designates the former spouse as his or her Beneficiary following the effective date of the divorce. If no Beneficiary is designated, if the designation is ineffective, or if the Beneficiary dies before the balance of a Participants benefit is paid, the balance shall be paid to the Participants spouse, or if there is no surviving spouse, to the Participants estate. Notwithstanding the foregoing, however, a Participants Beneficiary shall be determined under applicable state law if such state law does not recognize Beneficiary designations under plans of this sort and is not preempted by laws which recognize the provisions of this Section 18.8. In the event that the Plan Administrator determines that two or more claims are made by claimed Beneficiaries against the Plan for an Award, the Plan Administrator may initiate an interpleader action in a court of competent jurisdiction to resolve the controversy.
In the event that an Award has vested, its restrictions have lapsed, or it has been exercised and the underlying shares of Common Stock relating to such award have been transferred to a brokerage account, it is the responsibility of the Participant to establish and maintain beneficiary designations with that broker.
The Plan shall be construed and governed in accordance with the laws of the State of Texas.
18.10 Satisfaction of Tax Obligations
Appropriate provision shall be made for all taxes required to be withheld in connection with the exercise, grant, vesting or other taxable event of Awards under the applicable laws and regulations of any governmental authority, whether federal, state or local and whether domestic or foreign, including, without limitation, the required withholding of a sufficient amount of Common Stock otherwise issuable to a Participant to satisfy the said required minimum tax withholding obligations. To the extent provided by the Plan Administrator, a Participant is permitted to deliver Common Stock (including shares acquired pursuant to the exercise of an Option or Stock Appreciation Right other than the Option or Stock Appreciation Right currently being
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Appendix B
2019 Omnibus Incentive Compensation Plan
exercised, to the extent permitted by applicable law) for payment of withholding taxes on the exercise of an Option or Stock Appreciation Right or upon the grant, vesting or payout of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Incentive Awards or Other Stock-Based Awards. Common Stock may be required to be withheld from the shares issuable to a Participant upon the exercise of an Option or Stock Appreciation Right or upon the grant, vesting or payout of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Incentive Awards or Other Stock-Based Awards to satisfy such minimum required tax withholding obligations. Notwithstanding the preceding provisions of this Section 18.10, withholding taxes may be based on rates in excess of the minimum required tax withholding rates if the Plan Administrator (a) determines that such withholding would not result in adverse accounting, tax or other consequences to the Company or any Employer (other than immaterial administrative, reporting or similar consequences) and (b) authorizes withholding at such greater rates. The Fair Market Value of Common Stock as delivered pursuant to this Section 18.10 shall be determined as of the day of release, and shall be calculated in accordance with Section 2.18.
Any Participant who makes a Section 83(b) election under the Code shall, within ten (10) days of making such election, notify the Company in writing of such election and shall provide the Company or such Participants Employer with a copy of such election form filed with the Internal Revenue Service.
A Participant is solely responsible for obtaining, or failing to obtain, tax advice with respect to participation in the Plan prior to the Participants (i) entering into any transaction under or with respect to the Plan, (ii) designating or choosing the times of distributions under the Plan, or (iii) disposing of any Common Stock issued under the Plan.
18.11 Participants in Foreign Jurisdictions
The Plan Administrator shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of any countries in which the Company or any Subsidiary may operate to ensure the viability of the benefits from Awards granted to Participants employed or providing services in such countries, to meet the requirements of local laws that permit the Plan to operate in a qualified or tax-efficient manner, to comply with applicable foreign laws and to meet the objectives of the Plan; provided, however, that no such action taken pursuant to this Section 18.11 shall result in a material revision of the Plan under applicable securities exchange governance rules.
REGULATORY COMPLIANCE
19.1 Rule 16b-3 of the Exchange Act
The Companys intention is that, so long as any of the Companys equity securities are registered pursuant to Section 12(b) or 12(g) of the Exchange Act, the Plan shall comply in all respects with the rules of any exchange on which the Common Stock is traded and with Rule 16b-3. If any Plan provision is determined not to be in compliance with the foregoing intention, that provision shall be deemed modified as necessary to meet the requirements of any such exchange and Rule 16b-3.
The Plan is intended to be administered, operated and construed in compliance with Section 409A and any guidance issued thereunder. Notwithstanding this or any other provision of the Plan to the contrary, the Board or the Plan Administrator may amend the Plan in any manner, or take any other action, that either of them determines, in its sole discretion, is necessary, appropriate or advisable to cause the Plan to comply with Section 409A and any guidance issued thereunder. Any such action, once taken, shall be deemed to be effective from the earliest date necessary and applicable to avoid a violation of Section 409A and shall be final, binding and conclusive on all Employees, Consultants and other individuals having or claiming any right or interest under the Plan.
Notwithstanding the provisions of the Plan or any Award Agreement, if a Participant is a specified employee upon his or her separation from service (within the meaning of such terms in Section 409A under such definitions and procedures as established by the Company in accordance with Section 409A), any portion of a payment, settlement or other distribution made upon such a separation from service that would cause the acceleration of, or an addition to, any taxes pursuant to Section 409A will not commence or be paid until a date that is six (6) months and one (1) day following the applicable separation from service. Any payments, settlements or other distributions that are delayed pursuant to this Section 19.2 following the applicable separation from service shall be accumulated and paid to the Participant in a lump sum without interest on the first business day immediately following the required delay period.
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Appendix B
2019 Omnibus Incentive Compensation Plan
ESTABLISHMENT AND TERM OF PLAN
The Plan was adopted by the Board on February 13, 2019, and is subject to approval by the Companys stockholders at the 2019 annual meeting of the Companys stockholders. If approved by the stockholders, then no further awards will be made under the Prior Plan after the Effective Date. The Plan shall become effective on the Effective Date if it is approved on such date by the Companys stockholders, and the Plan shall remain in effect, subject to the right of the Board to terminate the Plan at any time pursuant to Section 21, until all Common Stock subject to it shall have been purchased or acquired according to the provisions herein. However, in no event may an Award be granted under the Plan on or after the tenth (10th) anniversary of the Effective Date. After the Plan is terminated, no future Awards may be granted pursuant to the Plan, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plans terms and conditions.
AMENDMENT, TERMINATION OR DISCONTINUANCE OF PLAN
Subject to approval of the Board with respect to amendments that are required by law or regulation or stock exchange rules to be submitted to the stockholders of the Company for approval, the Compensation and Benefits Committee of the Board may from time to time make such amendments to the Plan as it may deem proper and in the best interest of the Company, including, without limitation, any amendment necessary to ensure that the Company may obtain any regulatory approval referred to in Section 17; provided, however, that (i) to the extent required by applicable law, regulation or stock exchange rule, and as provided in Sections 7.3(h) and 8.4, stockholder approval shall be required, and (ii) except as otherwise provided in the Plan, no change in any Award previously granted under the Plan may be made without the consent of the Participant if such change would impair the right of the Participant under the Award to acquire or retain Common Stock or cash that the Participant may have acquired as a result of the Plan.
21.2 Termination or Suspension of Plan
The Compensation and Benefits Committee of the Board may at any time suspend the operation of or terminate the Plan with respect to any Common Stock or rights which are not at that time subject to any Award outstanding under the Plan.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed effective as of , 2019.
ANADARKO PETROLEUM CORPORATION
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Joseph H. Mongrain |
Vice President, Human Resources |
B-24 |
1201 LAKE ROBBINS DRIVE THE WOODLANDS, TX 77380
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ANADARKO PETROLEUM CORPORATION
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ANADARKO PETROLEUM CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
May 14, 2019
The undersigned hereby appoint(s) R. A. Walker, Robert G. Gwin and Amanda M. McMillian, and any two of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and vote, as designated on the reverse side of this proxy, all of the shares of Common Stock of Anadarko Petroleum Corporation that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at 5:00 p.m., Central Daylight Time, on May 14, 2019, at Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380 and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND AS RECOMMENDED BY THE BOARD OF DIRECTORS FOR EACH PROPOSAL.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
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(If you noted any Address Changes/Comments above, please mark the corresponding box on the reverse side.)
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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