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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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Filed by the Registrant þ |
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Anadarko Petroleum Corporation
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
P.O. Box 1330
Houston, Texas
77251-1330
March 27,
2007
TO THE
STOCKHOLDERS:
The 2007 Annual Meeting of Stockholders of Anadarko Petroleum
Corporation will be held at The Woodlands Waterway Marriott
Hotel and Convention Center, 1601 Lake Robbins Drive, The
Woodlands, Texas, 77380 on Wednesday, May 16, 2007, at
8:00 a.m. (CDT).
The Notice of the Annual Meeting and Proxy Statement, which are
attached, provide information concerning the matters to be
considered at the meeting. The meeting will be a business-only
meeting. There will be no management presentation.
We value your opinions and encourage you to participate in this
years meeting by voting your proxy. You may vote either by
Internet or by telephone using the instructions on the proxy
card or by signing and returning your proxy card in the enclosed
envelope. You may also attend and vote at the Annual Meeting.
Very truly yours,
JAMES T. HACKETT
Chairman of the Board, President and
Chief Executive Officer
TABLE OF CONTENTS
P. O. Box 1330
Houston, Texas
77251-1330
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Anadarko Petroleum
Corporation will be held at The Woodlands Waterway Marriott
Hotel and Convention Center, 1601 Lake Robbins Drive, The
Woodlands, Texas, 77380, on Wednesday, May 16, 2007, at
8:00 a.m. (CDT) to:
(1) elect four directors;
(2) ratify the appointment of KPMG LLP as the
Companys independent auditor for 2007; and
(3) transact such other business as may properly come
before the meeting and any adjournments or postponements thereof.
If you are a record holder of common stock at the close of
business on March 21, 2007, the record date, then you are
entitled to receive notice of and to vote at the meeting.
Please take the time to vote by following the Internet or
telephone voting instructions on the enclosed proxy card or by
completing and mailing the proxy card. A postage-prepaid
envelope has been provided for your convenience if you wish to
vote by mail. You may also attend and vote at the meeting. You
may revoke your proxy at any time before the vote is taken by
following the instructions in this proxy statement.
Regardless of the number of Anadarko common stock shares you
hold, as a stockholder your vote is very important and the Board
strongly encourages you to exercise your right to vote.
BY ORDER OF THE BOARD OF DIRECTORS
Robert K. Reeves
Senior Vice President, General Counsel,
and Chief Administrative Officer
Dated: March 27, 2007
The Woodlands, Texas
P. O. Box 1330
Houston, Texas 77251-1330
PROXY
STATEMENT
ANNUAL MEETING OF
STOCKHOLDERS
May 16, 2007
GENERAL
INFORMATION
We are furnishing you this proxy statement in connection with
the solicitation of proxies by our Board of Directors to be
voted at the Annual Meeting of Stockholders of Anadarko
Petroleum Corporation. The Annual Meeting will be held on
Wednesday, May 16, 2007. In this proxy statement, Anadarko
Petroleum Corporation is referred to as the Company
or Anadarko. This proxy statement and the enclosed
proxy card are first being mailed to stockholders of record on
or about March 30, 2007.
QUESTIONS
AND ANSWERS ABOUT THE MEETING
Where and
when is the Annual Meeting?
The Annual Meeting will be at The Woodlands Waterway Marriott
Hotel and Convention Center, 1601 Lake Robbins Drive, The
Woodlands, Texas, 77380, on Wednesday, May 16, 2007, at
8:00 a.m. (CDT).
Who may
vote?
You may vote if you were the record holder of Anadarko common
stock as of the close of business on March 21, 2007, the
record date for the meeting. Each share of Anadarko common stock
is entitled to one vote at the meeting. On the record date,
there were 468,105,218 shares of common stock outstanding
and entitled to vote at the meeting.
May I
attend the Annual Meeting?
Yes. Attendance is limited to stockholders of record as of the
record date for the meeting. Admission will be on a first-come,
first-served basis. You may be asked to present valid picture
identification, such as a drivers license or passport. If
your shares are held in the name of a bank, broker, or other
holder of record and you plan to attend the meeting, you must
present proof of your ownership of Company stock, such as a
current bank or brokerage account statement reflecting ownership
as of the record date for the meeting, to be admitted. Cameras,
recording devices and other electronic devices will not be
permitted at the meeting.
What am I
voting on?
You are voting on:
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the election of four directors;
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the ratification of KPMG LLP as our independent auditor for
2007; and
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any other business properly coming before the meeting.
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How does
the Board recommend that I vote?
The Board recommends that you vote:
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FOR each of the nominees for director; and
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FOR the ratification of KPMG LLP as our independent
auditor for 2007.
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Why
should I vote?
Your vote is very important. Regardless of the number of shares
you hold, the Board strongly encourages you to exercise your
right to vote as a stockholder of the Company.
How do I
vote?
You may vote by any of the following methods.
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Vote on the Internet at the website for Internet voting. Simply
follow the instructions on the proxy card and you can confirm
that your vote has been properly recorded. If you vote on the
Internet, you can request electronic delivery of future proxy
materials. Internet voting facilities for stockholders of record
will be available 24 hours a day and will close at
11:59 p.m. (EDT) on May 15, 2007.
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Vote by telephone by using the toll-free number listed on the
proxy card and following the instructions on the proxy card.
Easy-to-follow
voice prompts allow you to vote your shares and confirm that
your vote has been properly recorded. Telephone voting
facilities for stockholders of record will be available
24 hours a day and will close at 11:59 p.m. (EDT) on
May 15, 2007.
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Vote by mail by completing, signing, dating and returning your
proxy card in the pre-addressed, postage-paid envelope provided.
If you vote by mail and your proxy card is returned unsigned,
then your vote cannot be counted. If you vote by mail and the
returned proxy card is signed without indicating how you want to
vote, then your proxy will be voted as recommended by the Board
of Directors. If mailed, your completed and signed proxy card
must be received by May 15, 2007.
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You may attend and vote at the meeting. The Board recommends
that you vote on the Internet, by telephone or by mail as it is
not practical for most stockholders to attend and vote at the
meeting. Using one of these methods to vote your proxy card will
not limit your right to vote at the meeting if you later decide
to attend in person. If your shares are held in street name
(e.g., held in the name of a bank, broker, or other
holder of record) you must obtain a proxy, executed in your
favor, from your bank, broker or other holder of record to be
able to vote at the meeting.
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If I vote
by telephone or Internet, do I need to return my proxy
card?
No.
If I vote
by mail, telephone or Internet, may I still attend the
meeting?
Yes.
Is my
vote confidential?
Yes. All voting records which identify stockholders are kept
permanently confidential except as necessary to meet legal
requirements and in other limited circumstances such as proxy
contests. The vote tabulators and the inspectors of election are
required to execute confidentiality agreements.
Can I
change my vote?
If you are a stockholder of record, you may revoke your proxy at
any time before the vote is taken by:
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voting at a later time by Internet or telephone;
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voting in person at the meeting; or
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delivering to the Corporate Secretary of Anadarko a proxy with a
later date or a written revocation of your proxy.
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If you are a street name stockholder and you vote by proxy, you
may later revoke your proxy by informing the holder of record in
accordance with that entitys procedures.
How many
votes must be present to hold the meeting?
Your shares are counted as present at the meeting if you attend
the meeting and vote in person or if you properly return a proxy
by Internet, telephone or mail. In order for us to hold our
meeting, holders of a majority of our common stock entitled to
vote must be present in person or by proxy at the meeting. This
is referred to as a quorum. Abstentions and broker non-votes
will be counted as present for purposes of determining a quorum.
What is a
broker non-vote?
The New York Stock Exchange permits brokers to vote their
customers shares held in street name on routine matters
when the brokers have not received voting instructions from
their customers. Brokers may not vote their customers
shares held in street name on non-routine matters unless they
have received voting instructions from their customers.
Non-voted shares on non-routine matters are called broker
non-votes. Broker non-votes will have no effect on the vote for
any matter properly introduced at the Annual Meeting.
What are
routine matters?
The election of directors and the ratification of the
independent auditor are examples of routine matters on which
brokers may vote even if they have not received instructions
from their customers.
What are
non-routine matters?
Non-routine matters are matters such as stockholder proposals,
although there are no stockholder proposals under consideration
at the Annual Meeting.
How many
votes are needed to approve each of the proposals?
Directors are elected by plurality vote. This means that the
director nominees who receive the most votes will be elected to
fill the available seats on the Board. Neither abstentions nor
broker non-votes will have an effect on the votes for or against
the election of a director.
Could
other matters be decided at the meeting?
We are not aware of any matters that will be considered at the
Annual Meeting other than those on the proxy card. However, if
any other matters arise at the Annual Meeting, the person named
in your proxy will vote in accordance with their best judgment.
Where can
I find the voting results of the meeting?
We will announce voting results at the meeting, and we will
publish the final results in our quarterly report for the second
quarter of 2007. You can get a copy of this and other reports
free of charge on the Companys website at
www.anadarko.com, or by contacting our Investor Relations
Department at investor@anadarko.com.
3
ANADARKO
BOARD OF DIRECTORS
Item 1
Election of Directors
The Board of Directors of Anadarko is divided into three classes
of directors for purposes of election. One class of directors is
elected at each annual meeting of stockholders to serve for a
three-year term. All of the director nominees listed below are
current directors of the Company.
At the 2007 meeting, the terms of four directors are expiring.
All four of the directors have been nominated and, if elected at
this meeting, will hold office until the expiration of each of
their terms in 2010. Those directors not up for election this
year will continue in office for the remainder of their terms.
If a nominee is unavailable for election, then the proxies will
be voted for the election of another nominee proposed by the
Board or, as an alternative, the Board may reduce the number of
directors to be elected at the meeting.
The Board recommends that you vote FOR each of
the nominees listed below.
Directors
Nominated this Year by the Board of Directors for Terms Expiring
in 2010
Larry Barcus (69) Since 1990, Mr. Barcus
has served as Chairman of L.G. Barcus and Sons, Inc., a general
contractor, located in Kansas City, Kansas with operations
nationwide. He has also served as Chairman of First Community
Bancshares and Chairman of First Community Bank since 1995.
Mr. Barcus has been a director of the Company since 1986.
James L. Bryan (70) Mr. Bryan is a
retired business executive. From 1999 until December 2003,
Mr. Bryan was Executive Vice President of Newpark Drilling
Fluids, Inc., an oilfield services firm headquartered in
Houston, Texas. He retired as Senior Vice President of Dresser
Industries, Inc. in 1998. He had been a Vice President of
Dresser since 1990. Mr. Bryan has been a director of the
Company since 1986.
H. Paulett Eberhart (53) Since January
2007, Ms. Eberhart has served as President and Chief
Executive Officer of Invensys Process Systems, a process
automation company. From 2003 until March 2004,
Ms. Eberhart was President Americas of
Electronic Data Systems Corporation (EDS), an information
technology and business process outsourcing company. From 2002
to 2003, she was Senior Vice President EDS and
President Solutions Consulting. She was also a
member of the Executive Operations Team and Investment Committee
of EDS. Ms. Eberhart was an employee of EDS from 1978 to
2004. Ms. Eberhart is a member of the Financial Executives
International and American Institute of Certified Public
Accountants. Ms. Eberhart also serves on the Board of
Directors of Advanced Micro Devices, Inc. and Solectron
Corporation. Ms. Eberhart has been a director of the
Company since 2004.
James T. Hackett (53) Mr. Hackett was
named President and Chief Executive Officer of the Company in
December 2003 and Chairman of the Board of the Company in
January 2006. Prior to joining the Company, Mr. Hackett was
the Chief Operating Officer of Devon Energy Corporation from
April 2003 to December 2003, following Devons merger with
Ocean Energy, Inc. Mr. Hackett was President and Chief
Executive Officer of Ocean Energy, Inc. from March 1999 to April
2003 and was Chairman of the Board from January 2000 to April
2003. He served as Chief Executive Officer and President of
Seagull Energy Corporation from September 1998 until March 1999
and as Chairman of the Board from January 1999 to March 1999
prior to its merger with Ocean Energy. He currently serves as a
Director of Fluor Corporation and Temple-Inland, Inc. and serves
as Chairman of the Federal Reserve Bank of Dallas.
Continuing
Directors with Terms Expiring in 2008
John R. Butler, Jr. (68) Since 1976,
Mr. Butler has been Chairman of J. R. Butler and Company, a
reservoir engineering company located in Houston, Texas. He was
Chairman and Chief Executive Officer of GeoQuest International
Holdings, Inc., Senior Chairman of Petroleum Information Corp.
and Vice Chairman of Petroleum Information/Dwights, L.L.C. until
1997. Since October 2006, Mr. Butler has served as a
director of BreitBurn Energy Partners LP, a NASDAQ listed
company, and also serves as a director of the Houston
4
chapter of the National Association of Corporate Directors. He
is currently a member of the Society of Petroleum Evaluation
Engineers, and was also Chairman of the Society of Exploration
Geophysicists Foundation until December 2001. Mr. Butler
has been a director of the Company since 1996.
Luke R. Corbett (59) Mr. Corbett joined
Anadarkos board in 2006 following Anadarkos
acquisition of Kerr-McGee Corporation, where he had served as
Chairman and Chief Executive Officer since 1999.
Mr. Corbett had been with Kerr-McGee since 1985 when he
joined the companys Exploration and Production Division as
vice president of geophysics. In subsequent years, he held a
wide array of senior executive positions with Kerr-McGee.
Mr. Corbett also serves on the boards of OGE Energy
Corporation and Noble Corporation.
John R. Gordon (58) Mr. Gordon is Senior
Managing Director of Deltec Asset Management LLC, an 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. Mr. Gordon has been a director
of the Company since 1988.
Continuing
Directors with Terms Expiring in 2009
Robert J. Allison, Jr. (68)
Mr. Allison has been Chairman Emeritus of the Board of the
Company since January 2006 and a director since 1985. He was
Chairman of the Board from 1986 until December 2005. He also
served as Chief Executive Officer of the Company from 1986 until
January 2002, and from March 2003 until December 2003.
Mr. Allison is also a director of Freeport-McMoRan
Copper & Gold Inc.
John W. Poduska, Sr. (69)
Mr. Poduska is a retired business executive. He was
Chairman of Advanced Visual Systems, Inc., a provider of
visualization software, from 1992 until 2002. Mr. Poduska
is a director of Novell, Inc. and Safeguard Scientific, Inc. He
was a director of Union Pacific Resources Group, Inc. from 1995
until 2000. Mr. Poduska has been a director of the Company
since 2000.
5
CORPORATE
GOVERNANCE
In 2006, the Board continued to focus on excellence in corporate
governance through implementing and refining various processes
that the Board and its committees adopted in 2002. A majority of
the Board has been comprised of independent directors since the
Company became an independent company in 1986. The Audit
Committee, the Compensation and Benefits Committee (referred to
in this document as the Compensation Committee), the Nominating
and Corporate Governance Committee and the Enterprise Resource
Planning Committee have each been comprised entirely of
independent directors since their inception. The written
charters for the Audit Committee, the Compensation Committee and
the Nominating and Corporate Governance Committee can be found
on the Companys website at www.anadarko.com together with
the Code of Business Conduct and Ethics, the Code of Ethics for
the Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer, and the Corporate Governance Guidelines. Any
of these documents will be furnished in print free of charge to
any stockholder who requests it.
Board of
Directors
Director
Independence
In accordance with New York Stock Exchange (NYSE) rules, the
Board affirmatively determines the independence of each director
and director nominee in accordance with the Companys
director independence standards, which are contained in the
Companys Corporate Governance Guidelines found
on the Companys website at
http://www.anadarko.com/investor_relations/governance.asp.
Based on these standards, at its meeting held on
February 13, 2007, the Boards Nominating and
Corporate Governance Committee determined that each of the
following non-employee directors is independent and has no
relationship with the Company, except as a director and
stockholder of the Company:
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Larry Barcus
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James L. Bryan
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H. Paulett Eberhart
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John R.
Butler, Jr.
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John R. Gordon
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John W.
Poduska, Sr.
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In addition, based on such standards, the Board affirmatively
determined that: (a) Mr. Hackett is not independent
because he is the President and Chief Executive Officer of the
Company; (b) Mr. Corbett is not independent because,
as part of his change of control agreement with Kerr-McGee
Corporation, the Company will continue to provide him office
space and secretarial assistance through August 2007; and
(c) Mr. Allison is not independent because, as part of
his retirement package, the Company will continue to provide him
use of the Companys aircraft, office space, secretarial
assistance and a monitored residential security system during
his lifetime. With respect to Mr. Butler, the Board
specifically considered that Mr. Butlers
son-in-law
is a non-executive employee of the Company. The Board determined
that this is not a relevant factor in determining
Mr. Butlers independence.
The Company is required to report whether any director attended
fewer than 75% of the sum of the total number of Board meetings
and the total number of Board committee meetings that a director
was eligible to attend in 2006. There were 13 Board meetings and
31 Board committee meetings in 2006. All of the Companys
directors exceeded the attendance threshold. All of the
directors attended the 2006 Annual Meeting of Stockholders
except for Mr. Conrad Albert, whose term of service expired
at the end of the Annual Meeting. Under the Companys
Corporate Governance Guidelines, directors are expected to
attend regularly scheduled Board meetings and meetings of
committees on which they serve, as well as the Annual Meeting of
Stockholders.
Corporate
Governance Guidelines
The Corporate Governance Guidelines are posted on the
Companys website at
http://www.anadarko.com/investor_relations/governance.asp.
6
Code
of Business Conduct and Ethics
The Code of Business Conduct and Ethics is posted on the
Companys website at
http://www.anadarko.com/investor_relations/governance.asp. In
February 2007, the Board reviewed the Code of Business Conduct
and Ethics and determined that no changes were necessary at that
time.
Selection
of Directors
The Companys Corporate Governance Guidelines state that
the Nominating and Corporate Governance Committee shall, for
positions on the Board of Directors not currently filled:
(a) identify the personal characteristics needed in a
director nominee so that the Board as a whole will possess the
Qualifications of the Board as a Whole as these
qualifications are set forth in the Corporate Governance
Guidelines; (b) compile, through such means as the
Committee considers appropriate, a list of potential director
nominees thought to possess the Individual Qualifications
identified in the Corporate Governance Guidelines;
(c) if the Committee so determines it to be appropriate,
engage an outside consultant to assist in the search for
nominees and to conduct background investigations on all
nominees regardless of how nominated; (d) review the resume
of each nominee; (e) conduct interviews with the nominees
meeting the desired set of qualifications; (f) following
interviews, compile a short list of nominees (which, at the
discretion of the Committee, may consist of a single individual)
who may meet, at a minimum, with the Chairman of the Board, the
Chief Executive Officer and the Chairman of the Nominating and
Corporate Governance Committee
and/or the
Lead Director; and (g) evaluate the nominee(s) in
relationship to the culture of the Company and the Board and its
needs.
Stockholder
Participation in the Selection of Director
Nominees
The Nominating and Corporate Governance Committee did not
receive any names of individuals suggested for nomination to the
Companys Board of Directors by its stockholders during the
past year. However, the Board will consider individuals
identified by stockholders on the same basis as nominees
identified from other sources. Stockholders wishing to submit
the name of an individual for consideration must submit the
recommendation in writing to the Companys Corporate
Secretary by certified or registered mail to the Companys
mailing address, including:
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the name, address and comprehensive biography of the director
nominee and an explanation of why the nominee is qualified to
serve as a director;
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the name, address and telephone number of the stockholder or
group of stockholders making the recommendation, proof of
ownership, number of shares and length of time the shares of the
Companys voting securities have been beneficially owned by
the stockholder or group of stockholders, and a representation
that the stockholder or group of stockholders is entitled to and
will remain entitled to vote at the Companys next annual
meeting; and
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a letter in writing from the individual being recommended
certifying his or her willingness to serve, if elected as a
director.
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For more information on stockholder participation in the
selection of director nominees, please refer to that section in
the Companys Corporate Governance Guidelines, which are
posted on the Companys website at
http://www.anadarko.com/investor_relations/governance.asp.
Directors
Continuing Education
The Companys Director Education Policy encourages all
members of the Board of Directors to attend director education
programs appropriate to their individual backgrounds to stay
abreast of developments in corporate governance and best
practices relevant to their contribution to the Board of
Directors as well as their responsibilities in their specific
committee assignments. The Director Education Policy provides
that the Company will reimburse the Board of Directors for all
costs associated with attending any director education program.
7
Lead
Director at the Non-management Directors Executive
Sessions
The Board of Directors has elected Mr. Gordon as its Lead
Director. As Lead Director, Mr. Gordons role is to
aid and assist the Chairman and the remainder of the Board of
Directors in assuring effective corporate governance in managing
the affairs of the Board of Directors and the Company.
Additionally, Mr. Gordon presides at executive sessions of
the non-management directors. The executive sessions are held
immediately after each regularly scheduled quarterly meeting of
the Board of Directors and at any other board meetings as
requested by the directors. Mr. Gordon is also a member of
the Executive Committee of the Board, providing additional
representation for the independent directors in any actions
taken by the Executive Committee between Board meetings.
Communication
with the Directors of the Company
The Board of Directors welcomes questions or comments about the
Company and its operations. Interested parties may contact the
Board of Directors, including the Lead Director, at
nominating_governance@apcdirector.com or at Anadarko Petroleum
Corporation, Attn: Corporate Secretary, 1201 Lake Robbins Drive,
The Woodlands, Texas, 77380. Any questions or comments will be
kept confidential, if requested. These procedures may change
from time to time, and you are encouraged to visit our website
for the most current means of contacting our directors.
Transactions
with Entities Connected to Independent Directors
Invensys Process Systems, Inc. and its affiliates provide the
Company with process automation services. In 2006, Anadarko paid
Invensys approximately $1.5 million in connection with
these services. This amount is less than 1% of Invensyss
consolidated gross revenues for its fiscal year ended at
March 31, 2006. Ms. Eberhart, a director of the
Company, became President and CEO of Invensys in January, 2007.
Compensation
and Benefits Committee Interlocks and Insider
Participation
The Compensation Committee is made up of three independent,
non-employee directors, Messrs. Bryan, Gordon and Poduska.
No interlocking relationship exists between the members of our
Compensation Committee and the board of directors or
compensation committee of any other company.
Director
Compensation
The Company primarily uses a combination of cash and stock-based
incentive compensation to attract and retain qualified
candidates to serve on the Board. In setting director
compensation, the Company considers the significant amount of
time that directors expend in fulfilling their duties to the
Company as well as the skill level required by the Company of
members of the Board. The Compensation Committee maintains
responsibility for determining the compensation programs and
levels for non-employee directors. The Compensation
Committees consultant periodically assists in reviewing
director compensation by providing benchmark compensation data
and recommendations for program design.
In May 2006, the Compensation Committee reviewed benchmark
levels of compensation for directors against a peer group of
companies that included Apache Corporation, ConocoPhillips
Corporation, Devon Energy Corporation, EnCana Corporation, EOG
Resources Inc, Hess Corporation, Kerr-McGee Corporation,
Marathon Oil Corporation, Noble Energy Inc., Pioneer Natural
Resources Company and Occidental Petroleum Corporation. The
review determined that the Companys director compensation
program ranked slightly above the 75th percentile of the
peer group. Based on the results of the competitive review, the
Compensation Committee asked its consultant to provide
recommendations for any changes to the program at a later
meeting. The Compensation Committee had further deliberation at
the October 11, 2006 meeting, and at the November 14,
2006 meeting approved changes to the long-term incentive program
as described under Stock Plan for Non-management
Directors.
8
In addition to the deferred stock and stock options described
below, the non-management directors receive the following
compensation, which directors may elect to receive in cash,
common stock or a combination of both:
(1) an annual retainer of $50,000;
(2) an annual committee membership retainer of $6,000 for
each director who serves on the Audit Committee;
(3) an annual committee membership retainer of $3,000 for
each committee on which the director serves (except for members
of the Audit Committee and the Enterprise Resource Planning
Committee);
(4) a retainer of $15,000 for serving as the chairman of
the Compensation Committee or the Nominating and Corporate
Governance Committee, a retainer of $25,000 for serving as Audit
Committee chairman, a retainer of $25,000 for serving as Lead
Director;
(5) a fee of $2,000 for each Board meeting attended, plus
expenses related to attendance; and
(6) a fee of $2,000 for each committee meeting attended,
plus expenses related to attendance.
Stock
Plan for Non-management Directors
Under the Companys stock ownership guidelines for
non-management directors, each non-management director is
required to own Company stock in an amount equal to three times
the annual Board retainer for non-management directors.
Directors have three years from the date of their initial
election to the Board to comply with the guidelines. All
non-management directors, except for Mr. Corbett who was
elected to the Board on August 10, 2006, have met the
Companys stock ownership guidelines.
The Company grants stock based awards to non-management
directors under the 1998 Director Stock Plan. In 2006,
non-management directors received annual grants of deferred
stock and stock options. Each non-management director was
automatically issued 500 shares of deferred stock on the
first business day of each calendar quarter
January 3, April 3, July 3 and October 2
(2,000 shares annually). The deferred stock will be
distributed to the director when he or she resigns or retires
from the Board. Directors receive dividends on, and are entitled
to vote, the deferred stock. In addition, in 2006, upon approval
by the Compensation Committee, each non-management director was
granted an annual option to purchase 7,500 shares of common
stock. The 2006 grant was made on November 14 with the exercise
price equal to the closing stock price on that date. The options
will vest 100% one year from the date of grant and expire ten
years from the date of grant. The Company had previously defined
fair market value as the average high and low price on the day
of grant. However, effective with the November 14 award of stock
options, the Company modified its definition to be the closing
stock price on the date of grant to align its practice with the
new Securities and Exchange Commission (SEC) disclosure
requirements. Additionally, upon initial election to the Board,
non-management directors receive an initial grant of an option
to purchase 20,000 shares of common stock of the Company.
In accordance with the Boards option grant policy in place
at that time, Mr. Corbett received an initial grant of an
option to purchase 10,000 shares of common stock upon his
appointment to the Board on August 10, 2006 with the
exercise price equal to the average high and low price on the
date of grant. The options vest 100% on the date of grant and
expire ten years from the date of grant.
At the November 14, 2006 meeting, the Compensation
Committee approved changes to the non-management director equity
awards for 2007. Equity grants to non-management directors will
automatically be awarded each year on the date of the
Companys annual shareholder meeting. Each non-management
director will receive a grant of $130,000 in deferred stock and
$70,000 in stock options. Upon initial election to the Board,
non-management directors will receive an initial grant of
$150,000 in deferred shares. The material terms and conditions
of the awards granted will remain unchanged from those described
in the preceding paragraph.
9
Deferred
Compensation Program for Non-management Directors
Non-management directors are eligible to participate in the
Companys Deferred Compensation Plan. It allows directors
to defer receipt of up to 100% of their board and committee
retainers
and/or board
and committee meeting fees. The Deferred Compensation Plan
permits participants to allocate the deferred amounts among a
group of notional accounts that mirror the gains
and/or
losses of various investment funds. The interest rate earned on
the deferred amounts is not above-market or preferential. In
general, deferred amounts are distributed to the participant
upon termination or at a specific date as elected by the
participant. None of the Companys directors elected to
defer compensation into the Plan in 2006.
Other
Compensation
Non-management directors are covered under the Companys
Accidental Death & Dismemberment Plan and the Company
pays the annual premium for such coverage on behalf of each
director. The Company provides each director with Personal
Excess Liability coverage and pays the annual premium on their
behalf. For 2006, the Company made $2,500 cash contributions, in
honor of specified board members, to non-profit agencies as
selected by the director.
Director
Compensation Table for the Last Fiscal Year
The following table sets forth information concerning total
director compensation during the 2006 fiscal year for each
non-management director:
|
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Change in
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Pension Value
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and Nonqualified
|
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Non-Equity
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Deferred
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Fees Earned or
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Paid in Cash
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Awards
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Awards
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Compensation
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Earnings
|
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Compensation
|
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Total
|
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Name
|
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($)
|
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($) (1)
|
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($) (2)
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($)
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($)
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($) (3)
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($)
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Conrad P. Albert(4)
|
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35,234
|
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49,919
|
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|
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83,658
|
|
|
|
0
|
|
|
|
0
|
|
|
|
746
|
|
|
|
169,557
|
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Robert J. Allison, Jr.(5)
|
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82,000
|
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96,004
|
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|
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109,104
|
|
|
|
0
|
|
|
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0
|
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|
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4,290
|
|
|
|
291,398
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Larry Barcus
|
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108,250
|
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|
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96,004
|
|
|
|
109,104
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,790
|
|
|
|
315,148
|
|
James L. Bryan
|
|
|
137,000
|
|
|
|
96,004
|
|
|
|
109,104
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,290
|
|
|
|
346,398
|
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John R. Butler, Jr.(6)
|
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127,998
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|
|
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96,004
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|
|
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109,104
|
|
|
|
0
|
|
|
|
0
|
|
|
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4,290
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|
|
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337,396
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Luke R. Corbett(7)
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25,565
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21,818
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162,236
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|
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0
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|
|
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0
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746
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210,365
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H. Paulett Eberhart
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127,003
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96,004
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109,104
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0
|
|
|
|
0
|
|
|
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4,290
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|
|
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336,401
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John R. Gordon(8)
|
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143,000
|
|
|
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96,004
|
|
|
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109,104
|
|
|
|
0
|
|
|
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0
|
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|
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1,790
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|
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349,898
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John W. Poduska, Sr.
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131,000
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96,004
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109,104
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0
|
|
|
|
0
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|
|
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5,462
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|
|
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341,570
|
|
|
|
|
(1) |
|
Directors received deferred shares on January 3,
April 3, July 3 and October 2, 2006. The amounts
included in the Stock Awards column represent the
compensation cost recognized by the Company in 2006 related to
non-option awards to directors, computed in accordance with
Statement of Financial Accounting Standards No. 123(R)
(SFAS No. 123(R)). For a discussion of
valuation assumptions, see Note 5
Stock-Based Compensation of the Notes to Consolidated
Financial Statements included in our annual report under
Item 8 of the
Form 10-K
for the year ended December 31, 2006. As of
December 31, 2006, each of the non-management directors had
aggregate outstanding deferred shares as follows:
Mr. Allison 5,600 deferred shares;
Mr. Barcus 23,482 deferred shares;
Mr. Bryan 24,256 deferred shares;
Mr. Butler 11,518 deferred shares;
Mr. Corbett 500 deferred shares;
Ms. Eberhart 4,500 deferred shares;
Mr. Gordon 17,276 deferred shares; and
Mr. Poduska 7,360 deferred shares. |
|
(2) |
|
The annual stock option awards to all directors, excluding
Mr. Albert, were granted on November 14, 2006 at an
exercise price of $47.97 (the closing price on that date) and a
SFAS No. 123(R) value of $15.32. Mr. Corbett was
appointed to the Board on August 10, 2006 and received an
initial election award of 10,000 stock options on that date at
an exercise price of $47.13 (the average of the high and low
stock price on the date of grant which was the Companys
practice at that time for establishing fair market |
10
|
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|
|
value) and a SFAS No. 123(R) value of $14.74. The
amounts included in the Option Awards column
represent the compensation cost recognized by the Company in
2006 related to stock option awards to directors, computed in
accordance with SFAS No. 123(R). For a discussion of
valuation assumptions, see Note 5
Stock-Based Compensation of the Notes to Consolidated
Financial Statements included in our annual report under
Item 8 of the
Form 10-K
for the year ended December 31, 2006. As of
December 31, 2006, each of the non-management directors had
aggregate outstanding stock options as follows:
Mr. Albert 7,500 stock options;
Mr. Allison 22,500 stock options;
Mr. Barcus 82,500 stock options;
Mr. Bryan 102,500 stock options;
Mr. Butler 82,500 stock options;
Mr. Corbett 17,500 stock options;
Ms. Eberhart 42,500 stock options;
Mr. Gordon 102,500 stock options; and
Mr. Poduska 62,500 stock options. |
|
(3) |
|
For Ms. Eberhart and Messrs. Allison, Barcus, Bryan,
Butler, Gordon and Poduska, includes annual premiums paid by the
Company for each directors benefit in the amount of $140
and $1,650, respectively, for Accidental Death &
Dismemberment coverage and Personal Excess Liability coverage.
For Messrs. Albert and Corbett, includes $58 for Accidental
Death & Dismemberment coverage and $688 for Personal
Excess Liability coverage. Additionally, Mr. Poduska was
credited with $3,672 in earnings under the Deferred Compensation
Plan, as described on page 10. The Company also made
charitable contributions in the amount of $2,500 in honor of
each of Ms. Eberhart and Messrs. Allison, Bryan and
Butler to the charity of each directors choice. |
|
(4) |
|
Mr. Albert received deferred share grants on January 3 and
April 3, 2006. Mr. Albert did not stand for
re-election at the Annual Shareholder meeting on May 11,
2006; his service with the Board ended that day. Upon his
separation from the Board, the Company accelerated the vesting
of 7,500 stock options that were scheduled to vest on
November 15, 2006. |
|
(5) |
|
Certain ongoing benefits to Mr. Allison, which are not part
of his compensation for service as a director of the Company,
are discussed on page 54. |
|
(6) |
|
Mr. Butler received half of his fees in cash and half in
stock. |
|
(7) |
|
Certain ongoing benefits to Mr. Corbett, which are not part
of his compensation for services as a director for the Company,
are discussed on page 54. |
|
(8) |
|
Mr. Gordon received all of his fees in stock. |
11
The following table contains the Grant Date Fair Value of stock
option and deferred share awards made to non-management
directors during 2006.
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Grant Date Fair
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Exercise or
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Value of Stock
|
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|
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|
|
Base Price of
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and Option
|
|
|
Closing Price
|
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Stock
|
|
|
Deferred
|
|
|
Option Awards
|
|
|
Awards
|
|
|
on Grant Date
|
|
Directors
|
|
Grant Date
|
|
Options (#)
|
|
|
Shares (#)
|
|
|
($/Sh)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
All Directors excluding
Mr. Corbett
|
|
January 3
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
24,063
|
|
|
|
|
|
Mr. Albert(4)
|
|
March 2
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7,500
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43.56
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|
|
|
(10,647
|
)
|
|
|
50.87
|
|
All Directors excluding
Mr. Corbett
|
|
April 3
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
25,856
|
|
|
|
|
|
All Directors excluding
Mr. Albert and Mr. Corbett
|
|
July 3
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
24,268
|
|
|
|
|
|
Mr. Corbett
|
|
August 10
|
|
|
10,000
|
|
|
|
|
|
|
|
47.13
|
|
|
|
147,437
|
|
|
|
47.24
|
|
All Directors excluding
Mr. Albert
|
|
October 2
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
21,818
|
|
|
|
|
|
All Directors excluding
Mr. Albert
|
|
November 14
|
|
|
7,500
|
|
|
|
|
|
|
|
47.97
|
|
|
|
114,929
|
|
|
|
|
|
|
|
|
(1) |
|
Effective with the annual stock option awards made to the
directors on November 14, 2006, the Company elected to
change the definition of grant date fair market value from the
average of the high and low stock price on the date of grant to
the closing stock price on the date of grant. |
|
(2) |
|
The amounts included in the Grant Date Fair Value of Stock
and Option Awards column represent the grant date fair
value of the awards made to directors in 2006 computed in
accordance with SFAS No. 123(R). The value ultimately
realized by a director upon the actual vesting of the award(s)
or the exercise of the stock option(s) may or may not be equal
to the SFAS No. 123(R) determined value. For a
discussion of valuation assumptions, see
Note 5 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the
Form 10-K
for the year ended December 31, 2006. |
|
(3) |
|
The exercise price for stock options related to
Messrs. Albert and Corbett differ from the closing stock
price on the date of award. The difference for
Mr. Alberts stock option award that was modified on
March 2, 2006 is discussed in footnote (4) below. The
exercise price for Mr. Corbetts stock option award
that was granted on August 10, 2006 was based on the
average of the high and the low stock price on that date, which
was the Companys practice prior to November 14, 2006. |
|
(4) |
|
On March 2, 2006 the Board approved the accelerated vesting
of Mr. Alberts November 15, 2005 stock option
award contingent upon his continued service through the
remainder of his term, which ended on May 11, 2006. The
Grant Date Fair Value disclosure is the incremental fair value
calculated as of the modification date in accordance with
SFAS No. 123(R). The exercise price for this award was
not changed from its original price of $43.56. |
Committees
of the Board
The Board of Directors has five committees: the Audit Committee;
the Compensation and Benefits Committee (generally referred to
in this document as the Compensation Committee); the Nominating
and Corporate Governance Committee; the Executive Committee; and
the Enterprise Resource Planning Committee. The Audit Committee,
the Compensation Committee, the Nominating and Corporate
Governance Committee and the Enterprise Resource Planning
Committee are independent committees, which means that all of
the members of these committees have been determined by the
Board to be independent in accordance with the Companys
Corporate Governance Guidelines. The term of the Enterprise
Resource Planning Committee expired in February 2007. The
Executive Committee is not an independent committee as it has
both non-management and management directors as members;
however, the majority of the members of the Executive Committee
are independent directors. Each of the independent committees of
the Board and the
12
entire Board evaluated their performance in 2006. The
performance evaluations were supervised by the Nominating and
Corporate Governance Committee and discussed by the applicable
committee and the Board.
The table below shows the current membership of each committee
of the Board and the number of meetings each committee held in
2006:
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|
|
|
|
|
|
|
|
|
|
|
|
Nominating
|
|
|
|
|
|
Enterprise
|
|
|
|
|
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|
Compensation
|
|
|
& Corporate
|
|
|
|
|
|
Resource
|
|
Director
|
|
Audit
|
|
|
& Benefits
|
|
|
Governance
|
|
|
Executive
|
|
|
Planning***
|
|
|
Mr. Allison
|
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|
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|
X
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|
Mr. Barcus
|
|
|
X
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|
|
|
X
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|
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|
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|
Mr. Bryan
|
|
|
|
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|
X
|
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|
|
X
|
*
|
|
|
X
|
|
|
|
|
|
Mr. Butler
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Ms. Eberhart
|
|
|
X
|
*
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
X
|
*
|
Mr. Gordon
|
|
|
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
**
|
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|
|
Mr. Hackett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
*
|
|
|
|
|
Mr. Poduska
|
|
|
|
|
|
|
X
|
*
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
2006 Meetings
|
|
|
9
|
|
|
|
13
|
|
|
|
4
|
|
|
|
4
|
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|
1
|
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|
* |
|
Chairperson |
|
** |
|
Serves in his capacity as Lead Director |
|
*** |
|
Term expired in February 2007 |
Audit
Committee
The Board re-elected Ms. Eberhart and Messrs. Barcus
and Butler as members of the Audit Committee in May 2006. The
Audit Committee elected Ms. Eberhart as its chairperson in
May 2006. During 2006, the Audit Committee held nine meetings.
The purpose of the Audit Committee is to assist the Board in
monitoring:
|
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|
|
the integrity of the Companys financial statements;
|
|
|
|
the Companys compliance with legal and regulatory
requirements;
|
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|
|
the independent auditors qualifications and independence;
|
|
|
|
the performance of the Companys corporate and independent
auditors; and
|
|
|
|
the business practices and ethical standards of the Company.
|
The Audit Committee Charter (as adopted by the Board of
Directors and amended from time to time) has been posted on the
Companys website at
http://www.anadarko.com/investor_relations/governance.asp.
The Audit Committee is also directly responsible for:
|
|
|
|
|
the appointment, approval of compensation, retention and
oversight of the work of the Companys independent auditor,
KPMG LLP;
|
|
|
|
the preparation of the Audit Committee report, which is on
page 20; and
|
|
|
|
the appointment, compensation, retention and oversight of the
work of the Companys independent reserve engineering
consultants.
|
All of the members of the Audit Committee meet the independence
requirements of the NYSE, the Sarbanes-Oxley Act, the Securities
Exchange Act and the rules of the SEC adopted thereunder, and
the Companys Corporate Governance Guidelines.
In February 2007, the Board of Directors determined that
Ms. Eberhart is an Audit Committee financial expert as
defined by the SEC.
13
Compensation
Committee
The Board re-elected Messrs. Bryan, Gordon and Poduska as
members of the Compensation Committee in May 2006.
Mr. Poduska was re-elected as chairman of the Compensation
Committee by the Board in May 2006.
The Compensation Committee is responsible for establishing
executive compensation policies and programs consistent with
corporate objectives and stockholder interests. The Compensation
Committee operates under a written charter adopted by the Board
of Directors, which is reviewed on an annual basis and revised
as appropriate. The Compensation Committee reviewed its charter
at the November 14, 2006 meeting and approved changes that
reflect their responsibilities under the new SEC disclosure
requirements. The changes to the Compensation Committee charter
were approved by the Board at the February 2007 meeting. The
Board of Directors determines the Compensation Committees
membership, which is composed entirely of independent directors.
The Chairman of the Compensation Committee reports on committee
actions and recommendations at scheduled meetings of the Board
of Directors.
On at least an annual basis, the Compensation Committee reviews
the design and effectiveness of the short-term and long-term
incentive compensation programs to ensure that they are properly
aligned with and support the Companys business strategy.
Although the Compensation Committee is ultimately responsible
for determining executive compensation, it receives information
and guidance from executive officers, compensation consultants,
outside legal advisors and benchmarking reports to help the
Company establish and carry out its compensation program. The
role of each is discussed in more detail below.
Compensation Committee Members and
Meetings. The Compensation Committee is comprised
of three independent, non-employee directors, James L. Bryan,
John R. Gordon and John W. Poduska, Sr. Mr. Poduska is
currently the Chairman of the Compensation Committee and has
served in such capacity since 2002. The Compensation Committee
is required to meet as often as necessary, but at least once
each year, to carry out its responsibilities. In 2006, the
Compensation Committee met thirteen times, and in 2007 to date
the Compensation Committee has met four times. The Compensation
Committee reviews and approves an annual meeting calendar at the
beginning of each year which outlines the typical items to be
reviewed and acted upon at the regularly scheduled Board of
Directors meetings. Special meetings are then called as needed
to carry out the Compensation Committees duties. The
Compensation Committee held nine special meetings in 2006, of
which eight meetings included actions related to officer
appointments and separations, and the impact of the Kerr-McGee
Corporation and Western Gas Resources, Inc. acquisitions on the
Companys compensation and benefit programs. Meetings can
be called by any member of the Compensation Committee, but are
typically scheduled by the Chairman of the Compensation
Committee in consultation with Company management. The
Compensation Committees Chairman also works with Company
personnel to set the agendas for each meeting. The Compensation
Committee may form and delegate authority to subcommittees when
it determines that such action is appropriate under the
circumstances, and also delegates authority, as appropriate, to
Company management or personnel to carry out actions approved by
the Compensation Committee.
Role of the Compensation Committee in Executive
Compensation. The Compensation Committee is
responsible for translating our compensation objectives into a
compensation strategy that aligns the interests of our
executives with that of our shareholders. The Compensation
Committee has overall responsibility for approving and
evaluating the Companys director and executive officer
compensation plans, policies and programs. The Compensation
Committee is also responsible for producing an annual
Compensation Committee report, which is on page 21, and
reviewing the disclosures made in the proxy statement.
Additionally, the Compensation Committee has responsibility for
approving and evaluating broad-based incentive programs,
qualified equity plans and tax qualified benefit plans to ensure
that our compensation philosophy is executed consistently at all
levels of the Company.
14
In 2006, the Compensation Committee took several actions
relating to executive compensation. Generally, the Compensation
Committee made decisions with respect to the following subjects:
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approving performance measures and certifying performance
results for our incentive programs;
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approving bonus amounts for executive officers and bonus pools
for all employees;
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reviewing, recommending and ratifying new hire, promotional and
other equity awards;
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reviewing and approving changes to various compensation and
benefit plans and award agreements;
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recommending and approving new hire, retirement and severance
compensation packages;
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reviewing director and executive compensation;
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reviewing the Compensation Committees own charter,
performance and processes; and
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in conjunction with the Lead Director, conducting an annual
review and evaluation of the performance of the Chief Executive
Officer.
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For a more detailed discussion of the composition and
responsibilities of the Compensation Committee, please see the
Compensation Committees Charter at
http://www.anadarko.com/investor_relations/governance.asp.
Role of Executives in Executive
Compensation. Our executives play a meaningful
role in compensation design and decision making. Our Vice
President, Human Resources works primarily with our Chief
Executive Officer and our Senior Vice President, General Counsel
and Chief Administrative Officer, and from time to time our
Senior Vice President, Finance and Chief Financial Officer, to
assess the design of, and make recommendations with respect to,
the Companys compensation programs, plans and awards for
the executives and directors. Each executive officer is also
charged with alignment of their respective business or
functional unit goals and related strategy to support overall
Company objectives. This involves measuring the performance of
their organization, personnel and overall team against Company
objectives, and providing the resulting input for compensation
recommendations for such measured performance. From time to
time, and at the invitation of the Compensation Committee, the
Chief Executive Officer, Senior Vice President, General Counsel
and Chief Administrative Officer, Vice President, Human
Resources, Senior Vice President and Chief Financial Officer and
other members of the Board attended Compensation Committee
meetings in 2006. The individuals may attend executive sessions
at the invitation of the Compensation Committee, but executive
officers are not present when their compensation is discussed.
Company management does not make recommendations on the Chief
Executive Officers compensation; the Compensation
Committee determines Chief Executive Officer compensation on its
own with input from its outside compensation consultant.
Additional executives and other employees attend at the
invitation of the Compensation Committee to present on areas
requiring specific knowledge.
Role of Compensation Consultants. As set forth
in the Compensation Committees charter, the Compensation
Committee has sole authority to retain (or terminate) any legal,
compensation, or other consultant to assist with the evaluation
of director or executive compensation matters. The Compensation
Committee utilizes an independent compensation consultant to
review executive compensation and benefit programs as well as
the individual components and total compensation levels provided
to the Chief Executive Officer and other executive officers. In
2006, the Compensation Committee directly retained Hewitt
Associates LLC as its outside compensation consultant for
matters related to executive compensation.
The Compensation Committees charge to Hewitt included the
following:
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help guide the Compensation Committees decision making
with respect to executive compensation;
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provide market data as background against which the Compensation
Committee can consider officer compensation assessment and
actions;
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advise the Compensation Committee how best to make decisions on
executive compensation matters while representing shareholder
interests;
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15
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apprise the Compensation Committee of trends and best practices
associated with executive and director compensation; and
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attend Compensation Committee meetings as scheduled throughout
the year, as the Compensation Committee deems appropriate.
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The Hewitt consultant attended eight out of the thirteen
Compensation Committee meetings in 2006 and assisted the
Compensation Committee by (1) providing competitive market
data and related assessment of executive compensation levels,
annual and long-term incentive plan design, and CEO compensation
considerations, (2) reviewing tally sheets for the named
executive officers and (3) reviewing current compensation
trends and providing information with respect to the new proxy
disclosure rules. Hewitt also provided advice regarding the
impact of the acquisitions and subsequent divestitures on our
compensation program design and objectives as well as the
appropriateness of the companies within our industry and
supplemental peer groups. When requested to do so by the
Compensation Committee, the Hewitt consultant also provides
recommendations for pay and program level changes.
From time to time, the Company also retains third-party
consultants, which may include Hewitt, for various purposes
including assistance with more broad-based compensation,
benefits and human resources related issues and assignments. The
nature and scope of such designated consultants
assignments depends on the particular needs of the Company at
that time. On an annual basis, the Compensation Committee
reviews the performance of the Committee-retained executive
compensation consultant (Hewitt) and determines whether to
retain such consultants services for the coming year. As
part of that process, the Committee reviews both the volume and
scope of additional non-executive related assignments conducted
by Hewitt.
Nominating
and Corporate Governance Committee
Ms. Eberhart and Messrs. Barcus, Bryan, Butler, Gordon
and Poduska served as members of the Nominating and Corporate
Governance Committee throughout 2006. Mr. Albert served on
the Committee through May 2006. Mr. Bryan served as
chairman of the Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee held four
meetings in 2006.
The Nominating and Corporate Governance Committee has overall
responsibility for:
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recommending nominees for director to the full Board;
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reviewing the qualifications of existing Board members before
they are nominated for re-election to the Board;
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recommending members of the Board for committee membership;
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proposing Corporate Governance Guidelines for the Company and
reviewing them annually;
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oversight of the Companys compliance structure and
programs;
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developing an evaluation process for the Board;
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overseeing the emergency and expected CEO succession
plans; and
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reviewing and investigating any reports to the Companys
anonymous reporting hotline regarding non-financial matters.
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The Nominating and Corporate Governance Committee Charter is
posted on the Companys website at www.anadarko.com.
Executive
Committee
The Board re-elected Messrs. Allison, Bryan, Butler, Gordon
and Hackett as members of the Executive Committee in May 2006.
Mr. Gordon served on the Executive Committee in his
capacity as Lead Director. This Committee is not an independent
committee; however, the majority of the members of the Executive
Committee are independent directors. Mr. Allison, a retired
Company executive, and Mr. Hackett, the Companys
Chairman, President and CEO, are members of this Committee.
Mr. Hackett is chairman of the
16
Executive Committee. In accordance with the Companys
bylaws, the Executive Committee acts with the power and
authority of the Board in the management of the business and
affairs of the Company while the Board is not in session. The
Executive Committee has generally held meetings to approve
specific terms of financing or other transactions that have
previously been approved by the Board. During 2006, the
Executive Committee met four times.
Enterprise
Resource Planning Committee
The Board created the Enterprise Resource Planning Committee in
January 2005 for the special purpose of providing input and
advice to the Company during its implementation of the
Enterprise Resource Planning Project. The Board elected
Messrs. Butler and Poduska and Ms. Eberhart as members
of the Enterprise Resource Planning Committee, with
Ms. Eberhart serving as the chairperson. Enterprise
Resource Planning integrates back-office systems across the
Company by implementing a modern, integrated software system
that automates the tasks necessary to perform various business
functions. The Enterprise Resource Planning Committee was
created with an initial term of one year. In February 2006, the
Board renewed and extended the term of the Enterprise Resource
Planning Committee by one year. The members of the Enterprise
Resource Planning Committee receive only the standard meeting
attendance fee and do not receive a committee membership
retainer or a retainer for serving as chairman of the committee.
The Enterprise Resource Planning Committee met once in 2006. The
Board did not take any action to renew and extend the term of
the Enterprise Resource Planning Committee which expired in
February 2007.
17
STOCK
OWNERSHIP
As of March 21, 2007, there were 468,105,218 shares of
Anadarko common stock outstanding entitled to vote at the
meeting. Each of these shares is entitled to one vote. The
information provided below summarizes the beneficial ownership
of officers and directors of the Company and owners of more than
5% of outstanding common stock. Beneficial ownership
generally includes those shares of common stock someone has the
power to vote, sell or acquire within 60 days. It includes
common stock that is held directly and also shares held
indirectly through a relationship, a position as a trustee or
under a contract or understanding.
Directors
and Executive Officers
On February 28, 2007, the directors and executive officers
of the Company beneficially owned, in the aggregate,
4,317,816 shares of Anadarko common stock (approximately
0.9% of the outstanding shares entitled to vote at that time).
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Amount and Nature of Beneficial Ownership
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Shares
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Number of Shares
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Acquirable
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Total
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Beneficially
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Within
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Beneficial
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Percent
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Name of Beneficial Owner
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Owned(1)
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60 Days
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Ownership
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of Class
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James T. Hackett
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302,257
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276,667
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578,924
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*
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R. A. Walker
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71,491
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7,600
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79,091
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*
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Karl F. Kurz
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66,152
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24,734
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90,886
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*
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Robert K. Reeves
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47,021
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101,001
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148,022
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*
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Mark L. Pease
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136,612
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(2)
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186,600
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323,212
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*
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David R. Larson
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15,527
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(2)
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15,527
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*
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Diane L. Dickey
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12,959
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(2)
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12,959
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*
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Robert J. Allison, Jr.
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529,262
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15,000
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544,262
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*
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Larry Barcus
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109,208
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75,000
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184,208
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*
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James L. Bryan
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24,256
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95,000
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119,256
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*
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John R. Butler, Jr.
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63,341
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(3)
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75,000
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138,341
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*
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Luke R. Corbett
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500
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10,000
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10,500
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*
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H. Paulett Eberhart
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4,500
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35,000
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39,500
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*
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John R. Gordon
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148,752
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95,000
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243,752
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*
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John W. Poduska, Sr.
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35,562
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(4)
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55,000
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90,562
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*
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All directors and executive
officers as a group, (24 persons)
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2,007,111
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2,310,705
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4,317,816
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*
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* |
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Less than one percent |
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(1) |
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This number does not include shares of common stock which the
directors or officers of the Company have the right to acquire
within 60 days of February 28, 2007. |
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(2) |
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These amounts are taken from the last Forms 4 filed with
respect to Ms. Dickey which was on January 5, 2006,
with respect to Mr. Larson on January 5, 2006, and
with respect to Mr. Pease on December 5, 2006. |
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(3) |
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This amount includes 6,148 shares held by a trust. |
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(4) |
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This amount includes 1,848 shares held by a family limited
partnership. |
18
Owners of
More than Five Percent of Anadarko Stock
The following table shows the beneficial owners of more than
five percent of the Companys common stock based on
information received as of February 15, 2007.
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Amount and Nature
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of Beneficial
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Title of Class
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Name and Address of Beneficial Owner
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Ownership
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Percent of Class
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Common Stock
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ClearBridge Advisors, LLC
399 Park Avenue
New York, NY 10022
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41,807,555
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(1)
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9.09
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%
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Common Stock
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Barclays Global Investors, NA.
45 Fremont Street, 17th Floor
San Francisco, CA 94105
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33,111,934
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(2)
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7.19
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%
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Common Stock
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Neuberger Berman Inc.
605 Third Avenue
New York, NY 10158
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28,665,136
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(3)
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6.24
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%
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(1) |
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Based upon its Schedule 13G filed February 6, 2007
with the SEC with respect to its securities as of
December 31, 2006, ClearBridge Advisors, LLC has shared
voting power as to 37,452,804 shares and shared dispositive
power as to 39,507,461 shares, ClearBridge Asset
Management, Inc. has shared voting power as to
67,815 shares and shared dispositive power as to
1,666,194 shares, and Smith Barney Fund Management LLC has
shared voting power as to 633,900 shares and shared
dispositive power as to 633,900 shares. |
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(2) |
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Based upon its Schedule 13G filed January 9, 2007 with
the SEC with respect to its securities as of December 31,
2006, Barclays Global Investors, NA has sole voting power as to
22,133,759 shares and sole dispositive power as to
25,562,896 shares, Barclays Global Fund Advisors has
sole voting and dispositive power as to 3,137,528 shares,
Barclays Global Investors, Ltd. has sole voting and dispositive
power as to 3,188,331 shares, Barclays Global Investors
Japan Trust and Banking Company Limited has sole voting and
dispositive power as to 467,247 shares, Barclays Global
Investors Japan Limited has sole voting and dispositive power as
to 755,932 shares. |
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(3) |
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Based upon its Schedule 13G filed February 13, 2007
with the SEC with respect to its securities as of
December 31, 2006, Neuberger Berman Inc. has sole voting
power as to 20,717,015 shares, shared voting power as to
964,800 shares and shared dispositive power as to
28,665,136 shares, and Neuberger Berman LLC has sole voting
power as to 20,717,015 shares, shared voting power as to
964,800 shares and shared dispositive power as to
28,665,136 shares. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys directors and executive
officers, and persons who own more than ten percent of a
registered class of the Companys equity securities, to
file with the SEC and any exchange or other system on which such
securities are traded or quoted, initial reports of ownership
and reports of changes in ownership of the Companys common
stock and other equity securities. Officers, directors and
greater than ten percent stockholders are required by the
SECs regulations to furnish the Company and any exchange
or other system on which such securities are traded or quoted
with copies of all Section 16(a) forms they filed with the
SEC.
To the Companys knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, the Company
believes that all reporting obligations of the Companys
officers, directors and greater than ten percent stockholders
under Section 16(a) were satisfied during the year ended
December 31, 2006, except that in June 2006 a late
Form 4 was filed for Charlene A. Ripley relating to the
exercise in 2004 of an option to purchase 455 shares of the
Companys common stock.
19
AUDIT
COMMITTEE REPORT
The following report of the Audit Committee of the Company
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 controls over financial reporting. The Audit
Committee is composed of three directors, each of whom is
independent as defined by the NYSE listing standards. The Audit
Committee operates under a written charter approved by the Board
of Directors.
Management is responsible for the Companys internal
controls 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 independent audits of the
Companys internal controls over financial reporting and of
managements assessment of the effectiveness of controls
over financial reporting. The Audit Committees
responsibility is to monitor and oversee these processes.
KPMG LLP served as the Companys independent auditor during
2006 and was appointed by the Audit Committee to serve in that
capacity for 2007. KPMG LLP has served as the Companys
independent auditor since its initial public offering
in 1986.
In connection with these responsibilities, the Audit Committee
met with management and the independent auditor to review and
discuss the December 31, 2006 financial statements and
matters related to Section 404 of the Sarbanes-Oxley Act of
2002. The Audit Committee also discussed with the independent
auditor the matters required by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
The Audit Committee also received written disclosures from the
independent auditor required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit
Committees) and the Audit Committee discussed with the
independent auditor that firms independence.
Based upon the Audit Committees (i) review and
discussions with management and the independent auditor and
(ii) review of the representations of management and the
independent auditor, the Audit Committee recommended that the
Board of Directors include the audited consolidated financial
statements in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with
the SEC.
THE AUDIT COMMITTEE
H. Paulett Eberhart, Chairperson
John R. Butler, Jr.
Larry Barcus
20
EXECUTIVE
COMPENSATION
Compensation and Benefits Committee Report
on 2006 Executive Compensation
The Compensation and Benefits Committee (Compensation
Committee), listed beginning on page 14, 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
John W. Poduska, Sr., Chairman
James L. Bryan
John R. Gordon
21
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis will focus on the
following:
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the objectives of our executive compensation program, including
the behaviors and results it is designed to encourage and reward;
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the elements of our executive compensation program and the
reasons why we have chosen these elements; and
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how we make compensation decisions and determine the amount of
each element of compensation.
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Objectives
of Our Executive Compensation Program
In August 2006, we acquired Kerr-McGee Corporation and Western
Gas Resources, Inc. in separate all-cash transactions totaling
$21.1 billion plus the assumption of $2.2 billion in
debt. Since the acquisitions, we have been restructuring the
Company and divesting selected assets to refocus our asset
portfolio and reduce debt. In light of the significant changes
in our organization, including our recent significant
acquisitions of Kerr-McGee and Western Gas Resources, our
Compensation Committee has been reviewing our compensation
programs, objectives and structure to reconfirm and ensure their
appropriateness. We believe that collectively our current
programs support our business strategy and align the interests
of our executive officers with those of our shareholders. While
the Compensation Committee will continue to evaluate appropriate
modifications to our compensation objectives and structure, the
following discussion reflects our executive compensation program
as applied by the Compensation Committee during 2006 and to date
in 2007.
The objectives of our executive compensation program are as
follows.
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To align the interests of our executives with those of our
shareholders. We link a significant portion of
compensation to the achievement of specific short-term and
long-term financial, operational and strategic goals for the
Company. To further align the interests of our executives with
those of our shareholders, we provide a meaningful component of
compensation in the form of stock-based awards.
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To attract and retain highly qualified and talented
executives to lead our company. In recent years,
there has been strong demand for talented executives within the
oil and gas exploration and production industry. Our overall
compensation levels are targeted to attract the type of talent
needed to achieve and maintain a leadership position in the
industry. Accordingly, we typically set our targeted total
compensation for our executives at or near the top quartile as
compared to our peer group and other appropriate benchmarks,
provided our performance exceeds that of peer companies.
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To foster a team approach to achievement of our business
objectives. We believe that an environment that
fosters collaboration will best ensure the achievement of our
long-term success. Accordingly, we have an internal pay equity
practice that recognizes the importance of all members of the
executive team and encourages collaboration in the achievement
of our business objectives.
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How We
Make Compensation Decisions
Compensation
Design
We establish target total compensation levels for each executive
officer. These target compensation levels are generally designed
to place our executive officer compensation at or near the top
quartile as compared to our industry peer group, if Company
performance exceeds that of our peers and individual performance
targets are achieved. In addition, in setting total compensation
levels for each executive officer, we compare target
compensation levels among each of our executive officers to
ensure they are appropriate when considering each
executives role, experience level and contribution to the
organization.
22
We also develop and review tally sheets of named
executive officer compensation. These provide management and the
Compensation Committee a single source for viewing total
compensation and include snapshots of:
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current total annual compensation, including salary, incentives,
stock compensation, benefits and perquisites;
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accumulated unvested stock award values, and total stock
ownership levels; and
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estimated termination liabilities for a variety of voluntary and
involuntary termination events.
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To achieve our objectives, our executive compensation program
consists of fixed components, such as base salaries, and
variable, or at risk, components such as short-term
and long-term compensation. Variable compensation components
such as annual cash bonuses or equity awards must either be
earned based on individual or Company performance or may be
subject to a substantial risk of forfeiture if certain
conditions are not met. Variable components are not guaranteed
to provide compensation. We establish target total compensation
so that the majority is variable. Variable compensation
comprises approximately 80% of the named executives
targeted annual total compensation, exclusive of benefits and
perquisites.
Base Salary. Base salaries are considered
fixed compensation because they provide a
predetermined level of income not tied to performance or risk of
forfeiture. Base salary levels are designed to:
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be commensurate with the relative size and scope of an
officers responsibilities relative to industry peer
companies;
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where considered appropriate, be competitive with salaries at
general industry companies; and
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|
|
reflect individual experience, expertise, and sustained
performance in the role.
|
Short-term Compensation. Short-term
compensation consists primarily of annual cash bonuses. The
short-term components are designed to:
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|
|
reward the contributions of all executive officers and employees
toward the Companys annual financial, operational and
strategic goals; and
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|
reward individual performance, and recognize the scope of
individual responsibility commensurate with other peers
internally and in the competitive marketplace.
|
Long-term Compensation. Long-term compensation
is comprised of various forms of equity compensation. The
long-term elements are designed to:
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|
reward achievement of internal performance goals and performance
relative to industry peers over a multi-year period (typically
three to five years);
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assist the Company in long-term retention of key
personnel; and
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further align the interests of our executive officers with our
shareholders.
|
The long-term incentive program uses a combination of
performance measures to focus the executive officers on
executing the Companys long-term strategic goals and
maximizing shareholder returns. Strong executive performance
demonstrated in the top half of the peer sector should deliver
pay results in the top quartile.
Compensation
Process
Benchmarking. Benchmarking is one of several
elements the Compensation Committee considers when approving
compensation actions. Other factors include individual
experience, internal equity, development
and/or
succession status, and other individual or organizational
circumstances. In addition, we believe that our compensation
program must also be competitive in the marketplace.
Benchmarking can assist the Compensation Committee in assessing
how competitive and reasonable our compensation practices and
programs are against companies of similar size and purpose. With
high commodity prices and a shortage of qualified
23
executive and commercial talent within the oil and gas industry,
benchmarking exercises continue to reflect increasing levels of
compensation. This is further supported by the size of
compensation packages being offered by competing companies to
employees within our industry. We believe that offering
competitive compensation arrangements to retain our executives
is beneficial to the Company to ensure continuity in our
operations and avoid the significant costs and loss of
efficiency involved with recruiting and replacement hiring.
In May 2006, the Compensation Committee approved the use of two
groups as reference points for future assessments of competitive
executive compensation practices:
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|
|
a primary benchmark group, which consists of select industry
peer companies similar in size and scope of operations; and
|
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|
|
a supplemental benchmark group, which consists of select
companies from diverse industries that are similar to our size
and scope.
|
The Company benchmarks total executive compensation against the
primary benchmark group. The supplemental benchmark group
illustrates broader trends and provides an additional reference
point for executive officer positions that are not exclusive to
the oil and gas industry. Our acquisitions of Kerr-McGee
Corporation and Western Gas Resources prompted the Compensation
Committee to revisit the composition of both primary and
supplemental benchmark groups in the latter part of 2006, not
only because of the Companys increase in assets and
revenues against the then current peer group list, but also as a
result of ongoing consolidation within the E&P industry that
reduced the population of comparable peer companies following
the acquisitions of Kerr-McGee and Burlington Resources.
Based on a review of available industry peers and their relative
size and scope based on latest available assets, revenues,
number of employees and market capitalization, the Company added
Chesapeake Energy Corporation, Chevron Corporation and EnCana
Corporation to its current industry peer group. Accordingly, the
current industry peer group consists of the following companies:
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Apache Corporation
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Chesapeake Energy Corporation
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Chevron Corporation
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ConocoPhillips
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Devon Energy Corporation
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EnCana Corporation
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EOG Resources, Inc.
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Hess Corporation
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Marathon Oil Corporation
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Noble Energy, Inc.
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Occidental Petroleum Corporation
|
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Pioneer Natural Resources Company
|
There are a very limited number of companies that closely
resemble Anadarko in size, scope and nature of business
operation. Our oil and gas industry peer group contains
companies in our industry that are both larger and smaller in
scope and that operate in different business segments in the
industry such as refining. However, we compete with these
companies for talent and believe the selected companies are
currently the most appropriate with respect to benchmarking
exercises. The differences and similarities between Anadarko and
its peer group are taken into consideration when referencing
benchmarks for compensation decisions.
24
Based on recommendations from the Committees compensation
consultant, the supplemental general industry peer group was
also revised to consist of the following companies based on the
Companys estimated new size and scope (capturing companies
both above and below our position), and available compensation
program information:
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Automatic Data Processing
|
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|
Baxter International Inc.
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Burlington Northern Santa Fe Corp.
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Campbell Soup Company
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Colgate-Palmolive Co.
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Emerson Electric Company
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First Data Corporation
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Gannett Co. Inc.
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Illinois Tool Works, Inc.
|
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ITT Corporation
|
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Kellogg Co.
|
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NiSource Inc.
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Pepco Holdings, Inc.
|
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PG&E Corporation
|
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|
Praxair, Inc.
|
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|
|
Texas Instruments Inc.
|
Elements
of Compensation
The elements of our compensation program include: (1) base
salary, (2) cash bonuses, (3) equity compensation, and
(4) other benefits, including welfare and retirement
benefits, perquisites, severance benefits and change of control
benefits. Our Chief Executive Officer, James T. Hackett,
provides recommendations to the Compensation Committee for each
component of pay for all executive officers while the
Compensation Committee, with input from Hewitt, determines on
its own the salary for Mr. Hackett. Mr. Hackett does
not make recommendations on his own compensation. The following
section describes these compensation elements and how we
determine the amount of each element.
Base
Salary
Base salary is considered an important component of each
executives total compensation package as it provides for a
basic level of annual income. In determining base salaries, the
Compensation Committee considers each executives
qualifications, past experience, performance and
accomplishments, overall scope of responsibilities, future
potential and related tax deductibility implications. We also
consider the competitive base salary practices at peer companies
along with the base salary levels of other executives within the
Company. Base salaries for executive officers are generally
targeted between the 50th and 75th percentiles of the
comparative market data of the industry peer group. The base
salaries of the named executive officers are reviewed on an
annual basis each November, and may be reviewed at the time of a
promotion or other change in responsibilities.
During 2006, off-cycle salary increases were provided for
Mr. Walker and Mr. Kurz. On May 10, 2006, the
Compensation Committee approved a base salary increase for
Mr. Walker from $425,000 to $475,000. The new base salary
reflected Mr. Walkers increasing leadership position
and development in his role as the
25
Companys Chief Financial Officer and is closer to the
median competitive market value, consistent with the
Companys stated compensation philosophy. On August 9,
2006, the Compensation Committee approved a base salary increase
for Mr. Kurz in recognition of his increased
responsibilities in his new role as Senior Vice President, North
America Operations, Midstream and Marketing. The increase in
base salary from $375,000 to $450,000 was effective
August 1, 2006 and positioned Mr. Kurzs base
salary at a level equivalent to the base salaries of other
internal operational Senior Vice Presidents.
The results of the salary benchmarking study prepared by Hewitt
Associates for 2006 determined that Mr. Hacketts
salary was between the 50th and 75th percentiles of
the oil and gas industry peers. Salaries of the other named
executive officers were positioned at or below the median of the
peer benchmark. Merit increases normally take effect on
November 1st of each year and the 2006 merit increases
for our officers, approved by the Compensation Committee on
November 14, 2006 ranged from 4% to 12% with an average
increase of 7%. The named executive officers received increases
as follows based on the individual executive officers
performance and a review of the Companys peers:
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Salary Effective
|
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November 1,
|
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|
|
|
Name
|
|
Previous Salary
|
|
|
2006
|
|
|
Increase %
|
|
|
Mr. Hackett
|
|
$
|
1,300,000
|
|
|
$
|
1,400,000
|
|
|
|
7.7
|
%
|
Mr. Walker
|
|
$
|
475,000
|
|
|
$
|
525,000
|
|
|
|
10.5
|
%
|
Mr. Reeves
|
|
$
|
420,000
|
|
|
$
|
440,000
|
|
|
|
4.8
|
%
|
Mr. Kurz
|
|
$
|
450,000
|
|
|
$
|
475,000
|
|
|
|
5.6
|
%
|
Mr. Pease(1)
|
|
$
|
450,000
|
|
|
$
|
475,000
|
|
|
|
5.6
|
%
|
Mr. Larson(2)
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|
Ms. Dickey(2)
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(1) |
|
Mr. Pease separated from the Company on December 31,
2006. |
|
(2) |
|
Mr. Larson and Ms. Dickey separated from the Company
on August 31, 2006. |
On February 12, 2007, Mr. Kurzs base salary was
increased to $525,000 in recognition of his increased
responsibilities in his new role as Chief Operating Officer.
Bonuses
Our officers participate in the Annual Incentive Plan, which was
last approved by shareholders in 2004. The plan puts a
significant portion of an executives compensation at risk
by linking potential annual compensation to the Companys
achievement of specific performance metrics during the year. The
performance metrics are established at the beginning of each
year by the Compensation Committee.
In February 2006 the Compensation Committee approved internal
operational, financial and safety measures including a minimum
level of performance above which bonuses begin to accrue, a
target level of performance required to earn the target bonus
payout and the respective weightings for each measure.
The calculations for the bonus payouts for 2006 were weighted:
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25% for reserve additions,
|
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|
|
25% for production volume growth,
|
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|
15% for finding and development costs per Barrel of Oil
Equivalent (BOE) of Reserves Added,
|
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|
25% for earnings before interest, taxes, depreciation and
amortization (EBITDA) divided by sales volume for the year, and
|
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|
|
10% for total recordable incident rate per 100 regular
employees, which was calculated as the lost time accidents plus
medical treatment cases multiplied by 200,000 hours divided by
total company hours worked.
|
26
During 2006, the Company did not achieve the performance
measures adopted for reserve additions or finding and
development costs but did achieve 200% of the production volume
growth metric, 270% of the EBITDA metric and 192% of the safety
metric.
For 2006, individual bonus targets for named executive officers
ranged from 60% to 130%. Executives may receive up to 200% of
their individual bonus target if the Company significantly
exceeds the specified performance metrics and, conversely, no
bonus is paid if the Company does not achieve a minimum
threshold level of performance as detailed above. The bonus
targets are intended to provide a designated level of
compensation opportunity, as stated in our philosophy, when the
executive officers achieve their specified performance metrics
as approved by the Compensation Committee.
Actual bonus awards are determined by the Compensation Committee
according to the Companys and each named executive
officers level of achievement against the established
performance metrics. Annual incentive awards are determined as a
percentage of each named executive officers earnings for
the plan year. The awards paid to the named executives under the
shareholder-approved Annual Incentive Plan are generally
deductible for federal income tax purposes because they qualify
as performance-based compensation under Section 162(m) of
the Internal Revenue Code. The Annual Incentive Plan awards for
2006 paid to each of the named executive officers are shown in
the table below and are reflected in the non-equity incentive
plan compensation column of the Summary Compensation Table. The
opportunity for awards under the Annual Incentive Plan (from
threshold to maximum payment) are included in the Grants of
Plan-Based Awards table. Prorated changes in the annual target
bonus levels can occur during the year if there are changes in
an officers job responsibilities that warrant such a
target change.
Following the Compensation Committees formal evaluation of
the Companys performance for 2006, as measured against the
prescribed performance metrics, the Compensation Committee
confirmed that the formulaic calculation for the 2006
performance goals for purposes of Section 162(m) was equal
to 137% of target for the named executives under the Annual
Incentive Plan. The Compensation Committee applied downward
discretion in determining the actual awards for the named
executive officers after taking into consideration each named
executives contributions and role in the integration
efforts and accomplishments that followed the mid-year
acquisitions as well as several factors that served to influence
the calculated 137% performance rating. The Compensation
Committee noted that the Companys safety results for the
year were excellent and greatly exceeded expectations. The
Compensation Committee also noted that while production growth
results exceeded expectations, it was largely influenced by the
increased production attributable to the acquisitions of
Kerr-McGee and Western Gas Resources. Additionally, above-target
performance for EBITDA/BOE (a cash flow per barrel measure) was
primarily due to higher than budgeted revenue realizations for
2006, which were in part externally driven. While the
Companys reserve additions and finding and development
costs did not achieve the thresholds adopted for 2006, the
Compensation Committee considered the circumstances related to
those results.
Based on the above considerations for each performance measure,
the Compensation Committee approved a 110% performance rating
under the Annual Incentive Plan for determining bonus payouts to
employees. In selected cases, the Committee approved special
awards beyond this level, including for some of the named
executives. The approved bonus awards to Messrs. Hackett,
Walker, Reeves and Kurz represent 110%, 135%, 135% and 110%,
respectively, of each officers 2006 bonus target. The
higher awards for Messrs. Walker and Reeves were in
recognition of their leadership and contributions towards the
successful acquisitions, divestitures and related merger
integration.
Based on the Compensation Committees review in November
2006 of the competitive market data provided by the compensation
consultant, the Committee approved continuation of the same
bonus targets for 2007 (as outlined in the table below) for
Messrs. Hackett, Walker, Reeves and Kurz. In February 2007,
the Compensation Committee approved an increase in the bonus
target for Mr. Kurz from 95% to 100% for 2007 in
recognition of his appointment to the role of Chief Operating
Officer.
27
Targets and actual awards for each of the named executive
officers are illustrated in the table below.
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Threshold
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Actual
|
|
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|
Payout as a
|
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Target
|
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Maximum
|
|
|
|
|
|
Award as a
|
|
|
|
% of
|
|
|
Payout as a
|
|
|
Award as a
|
|
|
Actual
|
|
|
% of
|
|
Name
|
|
Salary
|
|
|
% of Salary
|
|
|
% of Salary
|
|
|
Award ($)
|
|
|
Target
|
|
|
Mr. Hackett
|
|
|
0
|
%
|
|
|
130
|
%
|
|
|
260
|
%
|
|
$
|
1,882,834
|
|
|
|
110.0
|
%
|
Mr. Walker
|
|
|
0
|
%
|
|
|
85
|
%
|
|
|
170
|
%
|
|
$
|
535,500
|
|
|
|
135.0
|
%
|
Mr. Reeves
|
|
|
0
|
%
|
|
|
85
|
%
|
|
|
170
|
%
|
|
$
|
485,775
|
|
|
|
135.0
|
%
|
Mr. Kurz
|
|
|
0
|
%
|
|
|
85
|
%/95%(1)
|
|
|
170/190
|
%(1)
|
|
$
|
404,823
|
|
|
|
110.0
|
%
|
Mr. Pease(2)
|
|
|
0
|
%
|
|
|
95
|
%
|
|
|
190
|
%
|
|
|
|
|
|
|
|
|
Mr. Larson(2)
|
|
|
0
|
%
|
|
|
60
|
%
|
|
|
120
|
%
|
|
|
|
|
|
|
|
|
Ms. Dickey(2)
|
|
|
0
|
%
|
|
|
60
|
%
|
|
|
120
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Kurz began 2006 with an incentive target of 85% of
salary. His target was increased from 85% to 95% effective
August 1, 2006 in recognition of his increased
responsibilities in his new role as Senior Vice President, North
America Operations, Midstream and Marketing.
Mr. Kurzs actual bonus award for 2006 was based on
his 85% bonus target from January 1, 2006 through
July 31, 2006 and his 95% bonus target from August 1,
2006 through December 31, 2006. |
|
(2) |
|
The Annual Incentive Plan requires participants to be employed
on the day of payout in order to receive an award.
Mr. Pease separated from the Company on December 31
and Mr. Larson and Ms. Dickey separated on
August 31; as a result, they did not receive payouts under
the Annual Incentive Plan for 2006. |
Equity
Compensation
The Company periodically makes equity-based awards under the
1999 Stock Incentive Plan to align the interests of executive
officers with those of shareholders by emphasizing the long-term
growth in value of the Company. The 1999 Stock Incentive Plan
was last approved by shareholders in May 2005. For 2006, the
annual equity awards consisted of a combination of stock
options, time-based restricted stock and performance unit
awards. Stock options and performance units are intended to
qualify as performance based under
Section 162(m) of the Internal Revenue Code whereas
time-based restricted stock is not considered performance based
for purposes of this IRS statute and regulations promulgated
thereunder. The annual long-term incentive target value of the
awards has been allocated so that approximately one-third of the
value is provided by each of the three incentive vehicles. The
Compensation Committee believes this award structure provides a
combination of equity-based vehicles that is performance-based
in absolute and relative terms, while also encouraging
retention. In addition, the use of performance unit awards and
restricted shares enables the Company to better manage its stock
dilution.
In determining the value of awards provided to each named
executive officer, the Compensation Committee reviews
competitive market data to determine appropriate stock awards
based on the executives position and the market value of
the stock. The Compensation Committee takes into account the
scope of the individuals position, ability to influence
results and create shareholder value, past performance and
future expectations. In addition, the Compensation Committee
considers the cost of the awards, the impact on dilution, the
value in relation to other components of target compensation and
the value of previous stock grants when determining the grant
sizes for executive officers.
Annual long-term incentive awards for named executive officers
are typically made at the regularly scheduled meeting of the
Compensation Committee each November. In 2006, the annual
long-term incentive awards were approved by the Compensation
Committee at a special meeting on December 4, 2006. The
2006 awards were delayed slightly in 2006 to allow the Company
to complete its restructuring activities associated with the
acquisitions of Kerr-McGee Corporation and Western Gas Resources
in August and to coincide as closely as possible with the
December 1, 2006 equity awards made to non-officer
employees. On occasion, the Compensation Committee will approve
awards to officers during the course of the year to induce an
executive to join the Company or to recognize a significant
promotion or performance achievement. The actual hiring equity
award is made on the executives first day of employment
with the Company. Promotional and
28
achievement awards are approved by the Compensation Committee at
a regularly scheduled or special meeting of the Compensation
Committee and the grant date is always the date of approval.
Stock Options. We believe stock options align
the interests of our executives with those of shareholders since
an executive can only benefit if our stock price increases.
Consistent with awards under the Annual Incentive Plan, stock
options support our pay for performance philosophy. Stock
options awarded to our executive officers incorporate the
following features:
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|
|
|
|
the term of the grant does not exceed seven years;
|
|
|
|
the exercise price is not less than the market price on the date
of grant;
|
|
|
|
repricing of options to a lower strike price is prohibited,
unless approved by shareholders;
|
|
|
|
options typically vest 33% per year beginning with the
first anniversary of the date of grant; and
|
|
|
|
generally, an executive will forfeit any unvested stock options
if the executive terminates voluntarily or is terminated for
cause prior to the vesting date.
|
In order to simplify reporting under the new SEC requirements
and to ease administration of the Company equity compensation
plans, we elected to change the definition of grant date fair
market value effective with the awards made to directors in
November 2006 and to non-officer employees and executives in
December 2006 from the average high and low stock prices on the
date of grant to the closing stock price on the date of grant.
Restricted Stock. Restricted stock provides
executives an opportunity to receive shares of company stock
provided they remain employed with the Company for a set period
of time. Awards of restricted stock provide a valuable retention
element to the overall compensation package for our executives.
As with stock options, restricted stock awards provide a stock
ownership vehicle and direct link to shareholder value creation
since the value of the award can fluctuate up or down with
changes in the Companys stock price. Restricted stock
awards typically vest equally over three years from the date of
grant. Executives receive dividends on the shares and also have
voting rights. Generally, an executive will forfeit any unvested
restricted shares if the executive terminates voluntarily or is
terminated for cause prior to the vesting date.
Performance Units. Performance unit awards may
be earned by the named executive officers if specific goals,
focused on the long-term strategic objectives of the Company,
are achieved. Each performance award is denominated in shares of
our stock and has a three-year cliff vesting
performance period. Each named executive officer is awarded a
target award. Payments can range from 0% to 200% of each
individuals initial award at grant. Executives do not have
voting rights and no dividends are paid on these awards until
earned.
The ultimate payout of these awards, if any, is dependent on two
equally-weighted performance measures: Reserve Replacement
Efficiency (RRE) and Total Shareholder Return (TSR).
|
|
|
|
|
RRE is an industry-specific metric that helps assess returns on
invested capital. RRE is calculated as the after-tax cash margin
per Barrel of Oil Equivalent divided by Finding and Development
Costs per Barrel of Oil Equivalent. For the 2007 to 2009
performance cycle, if RRE is below 1.2, no award will be earned.
A RRE between 1.2 and 1.35 results in a payment between 50% and
100% of target. A RRE between 1.35 and 2.0 will result in
payments between 100% and 200% of target.
|
|
|
|
The TSR measure provides an external comparison of the
Companys performance against a peer group of companies and
will only provide payout if the Companys relative total
shareholder return ranks in the top half of the peer group with
a maximum payout of 200% of target, if the Companys TSR
ranks first in the peer group of companies. The peer group for
the 2007 to 2009 performance cycle includes Apache Corporation,
ConocoPhillips, Devon Energy Corporation, EnCana Corporation,
EOG Resources Inc., Hess Corporation, Marathon Oil Corporation,
Noble Energy Inc., Occidental Petroleum Corporation, Pioneer
Natural Resources Company and Talisman Energy Inc. If any peer
companies cease to exist during the performance period, the
Compensation Committee has approved Chevron Corporation,
Chesapeake Energy Corporation and XTO Energy, Inc. as
replacement companies (in the order provided).
|
29
As part of the Compensation Committees November 2006
annual review of competitive total compensation levels for
executive officers, the Compensation Committee considered each
component of compensation, including base salary and target
bonus opportunity, in determining appropriate long-term
incentive awards for executive officers. Based on the
competitive review, the Compensation Committee made stock
option, restricted share and performance unit awards to the
executive officers, including the named executive officers as
reflected in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
|
|
|
|
|
|
|
Performance
|
|
Name
|
|
Stock Options
|
|
|
Restricted Stock
|
|
|
Units
|
|
|
Mr. Hackett
|
|
|
191,000
|
|
|
|
58,500
|
|
|
|
62,000
|
|
Mr. Walker
|
|
|
46,400
|
|
|
|
14,300
|
|
|
|
15,100
|
|
Mr. Reeves
|
|
|
35,500
|
|
|
|
10,900
|
|
|
|
11,600
|
|
Mr. Kurz
|
|
|
38,200
|
|
|
|
11,800
|
|
|
|
12,400
|
|
Mr. Pease(1)
|
|
|
38,200
|
|
|
|
11,800
|
|
|
|
12,400
|
|
Mr. Larson(2)
|
|
|
|
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Ms. Dickey(2)
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(1) |
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Mr. Pease separated from the Company on December 31,
2006. |
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(2) |
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Mr. Larson and Ms. Dickey separated from the Company
on August 31, 2006. |
The stock options and restricted shares noted above were
approved by the Compensation Committee on December 4, 2006.
The stock options were granted at a fair market value based on
the closing stock price on December 4th, will vest pro-rata
over three years beginning one year from the date of grant and
are subject to a seven-year term. The restricted shares will
vest pro-rata over three years, beginning one year from the date
of grant. The Performance Units and related performance measures
were approved by the Compensation Committee on December 11,
2006 for the three-year performance period beginning
January 1, 2007. On January 10, 2007, the Compensation
Committee approved special stock option awards for
Messrs. Hackett, Walker, Kurz, Reeves and certain other
officers. The grants to named executive officers were made to
recognize each executives performance and leadership in
executing the acquisitions and integration of Kerr-McGee and
Western Gas Resources into Anadarko, as well as leadership
during the Companys implementation and integration of
accounting and information technology systems. On
January 23, 2007, at the request of Messrs. Hackett,
Kurz, Reeves and Walker, the Compensation Committee modified the
terms of such stock option awards for these officers to raise
the strike price of their option awards from $40.51 to $48.90 so
that these officers could only realize the value of such awards
after the Companys stock price exceeds the trading price
prior to the announcement of the acquisitions. Each of these
officers executed an amendment to his respective stock option
agreement reflecting this change in strike price.
Retirement
Benefits
We offer various retirement benefits to our employees to match
competitive practices in our industry, provide for long-term
retention of key personnel, provide comprehensive financial
security, and allow our employees to take advantage of the tax
and financial security benefits long-term retirement planning
can provide.
Employee Savings Plan. The Anadarko Employee
Savings Plan (the Savings Plan) is a tax-qualified
retirement savings plan that allows participating employees the
opportunity to contribute up to 30% of eligible compensation on
a before-tax basis or on an after-tax basis, into their Savings
Plan accounts. Eligible compensation for named executive
officers includes salary and payments under the Companys
Annual Incentive Plan. Under the Savings Plan, the Company
matches an amount equal to one dollar for each dollar
contributed by participating employees up to six percent of
their total eligible compensation.
Pursuant to IRS rules, effective for 2006, the Savings Plan
limits the additions that can be made to a
participating employees account to $44,000 per year.
Additions include the Companys matching
contributions, employee before-tax contributions and employee
after-tax contributions.
30
Of those additions, the current maximum before-tax contribution
is $15,000 per year (or $20,000 per year for eligible
participants age 50 and over). In addition, no more than
$220,000 of 2006 annual compensation may be taken into account
in computing benefits under the Savings Plan.
Savings Restoration Plan. The Company has a
Savings Restoration Plan that accrues a benefit substantially
equal to the amount that, in the absence of the limits set forth
above, would have been allocated to an employees account
as Company matching contributions under the Savings Plan.
Amounts in the Savings Restoration Plan receive earnings based
on the performance of Company stock. In January 2007, the
Company amended this Plan so that the earnings are no longer
tied to the performance of Company stock, but permits
participants to allocate the deferred amounts among a group of
notional accounts that mirror the gains
and/or
losses of various investment funds provided in the Savings Plan.
Amounts deferred, if any, under the Savings Plan and the related
Restoration Plan by the named executive officers are included in
the Salary and Non-Equity Incentive Plan
Compensation columns of the Summary Compensation Table.
Our matching contributions allocated to the named executive
officers under the Savings Plan and the related Restoration Plan
are shown in the All Other Compensation column of
the Summary Compensation Table.
Retirement Plans. The Anadarko Retirement Plan
(the Retirement Plan) is a funded, tax-qualified,
noncontributory defined-benefit pension plan that covers all
United States employees. Due to limitations imposed by the
Internal Revenue Code that restrict the amount of benefits
payable under tax-qualified plans, the Company also sponsors a
Retirement Restoration Plan (collectively the Retirement
Plans) that covers all employees. Benefits under the
Retirement Plans are based upon the employees years of
service and the greater of either:
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the annual average highest compensation over three consecutive
calendar years out of the last 10 years of employment with
the Company; or
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the annual average compensation over the last 36 consecutive
months of employment.
|
The Retirement Plans do not require contributions by employees
and an employee becomes vested in his or her benefit at the
completion of five years of service as defined in the Retirement
Plans. Compensation covered by the Retirement Plans for the
named executive officers includes salary and payments under the
Annual Incentive Plan. The amount of compensation that may be
considered in calculating benefits under the Retirement Plan is
limited by law. For 2006, the annual limitation is $220,000.
Compensation in excess of $220,000 is recognized in the
Restoration Plan.
Benefits under our Retirement Plan are calculated as an annuity
equal to the sum of:
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1.4% x average compensation x years of service; and
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0.4% x (average compensation − covered compensation) x
years of service (limited to 35 years).
|
Covered compensation is the average (without indexing) of the
Social Security taxable wage base during the
35-year
period ending with the last day of the year in which an
individual reaches Social Security retirement age. Benefits are
calculated based on a normal retirement age of 65; however,
employees may receive a reduced benefit as early as age 55.
Employees may choose to receive their benefits under several
different forms provided under the Retirement Plan.
Detail regarding the accrued benefits for each of the named
executive officers is provided under the Pension Benefits Table.
Under the terms of his employment agreement, Mr. Hackett is
eligible to receive supplemental pension benefits upon meeting
certain employment conditions. Details of these arrangements are
discussed further in the Employment Agreement section below and
in the Pension Benefits Table on page 52.
Other
Benefits
In addition to the benefits discussed above, we also provide
other benefits such as medical, dental, vision, flexible
spending accounts, life insurance and disability coverage to
each named executive officer. These benefits, along with paid
time off and holidays, are also provided to all other eligible
U.S. based employees.
31
Further, executive officers are eligible for certain additional
benefits such as excess liability, life and disability
insurance. The executive disability plan was discontinued
effective January 1, 2007.
We also maintain a Deferred Compensation Plan for directors and
certain employees, including the named executive officers. The
Deferred Compensation Plan allows employees to voluntarily defer
receipt of up to 75% of their salary
and/or up to
100% of their annual incentive bonus payments. The Deferred
Compensation Plan permits participants to allocate the deferred
amounts among a group of notional accounts that mirror the gains
and/or
losses of various investment funds provided in the Savings Plan.
In general, deferred amounts are distributed to the participant
upon termination or at a specific date as elected by the
participant. The Company does not subsidize or match these
deferred amounts. Detail regarding participation in the plan by
the named executive officers can be found in the Non-Qualified
Deferred Compensation Table on page 53.
Perquisites
The Company provides a limited number of perquisites to the
named executives to supplement their other compensation. These
perquisites are assessed annually as part of the total
competitive review and include:
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Financial counseling, tax preparation and estate
planning Officers are eligible to receive
reimbursement for eligible expenses up to a specified annual
maximum. For 2006, the financial counseling and tax preparation
benefits were limited to $18,075 in the first year of use and
$10,825 for each following year, although actual costs may be
less. Officers may choose to utilize an external provider of
their choice and the Company will reimburse eligible expenses up
to the stated annual maximum dollar limits. The estate planning
services are made available to officers on an as-needed basis
and the services have typically been utilized every three years.
The Company pays the cost for such services directly to the
Company-selected provider. All expenses related to financial
counseling, tax preparation and estate planning, whether
reimbursed to the officer or paid on the officers behalf,
are considered taxable income to the officer.
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Executive Physical Program Officers are
allowed to have a complete and professional personal physical
exam on an annual basis.
|
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|
Management Disability insurance Provides for
monthly income of 70% of base salary in the event of disability,
up to a maximum of $35,000 per month. This program has been
eliminated for 2007.
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Personal Excess Liability insurance The
Company pays an annual premium to maintain liability coverage on
behalf of each officer. The annual premium is imputed and
considered taxable income to the officer.
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|
Personal use of corporate aircraft The
Company maintains aircraft for business travel purposes.
Officers may, from time to time, utilize such aircraft for
personal travel. When so utilized, the compensation related to
such personal use is imputed and considered taxable income to
the officer as required.
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|
Country Club membership The Company
reimburses officers the monthly dues related to business use. In
2006, the Company paid for a country club membership for
Mr. Walker. This payment was imputed as income and was
grossed-up
for applicable withholding taxes.
|
Under certain circumstances, additional perquisites may be
provided to certain officers. In general, these perquisites are
provided for business purposes but may be used by the officer
for personal use. Mr. Hackett has voluntarily declined to
utilize the financial planning, tax preparation and estate
planning perquisites offered by the Company. As required by the
Board of Directors, the Company provides security services for
Mr. Hackett at his home. Pursuant to our security policy,
the Company also requires Mr. Hackett to use the
Companys aircraft for personal use as well as business
travel. It is clearly understood that even when Mr. Hackett
utilizes an aircraft for personal usage, he will engage in
business activities while in flight. However, anytime
Mr. Hackett employs the Companys aircraft solely for
personal use, compensation is imputed to Mr. Hackett for
that use and for any passengers that may be accompanying
Mr. Hackett. Personal use includes outside Board service,
which indirectly benefits the Company. Compensation will be
imputed, as required, to any executive officer who utilizes the
Companys aircraft for personal use.
32
The incremental cost to the Company of each perquisite provided
is included in the All Other Compensation column of
the Summary Compensation Table. Individual perquisite values are
disclosed in the All Other Compensation Table and
supporting footnotes following the Summary Compensation Table on
page 44.
Severance
Benefits
Severance Plan. The Anadarko Severance Plan
generally covers all regular full time and part time
U.S. non-officer employees. The Severance Plan provides
severance benefits to non-officer employees under certain
involuntary termination scenarios based on the amount of their
compensation and years of service with the Company. Severance is
not paid if an employee separates voluntarily, retires, or is
terminated as a result of cause or for death or disability.
Executive Officers of the Company participate in the Anadarko
Petroleum Corporation Officer Severance Plan and do not
participate in the broad-based severance plan. Participants in
the Officer Severance Plan are designated by the Compensation
Committee. Participating Officers will be eligible for severance
under the Officer Severance Plan if they are terminated
involuntarily from the Company.
Under the terms of the Officer Severance Plan, involuntary
termination means any termination that does not result from a
resignation or retirement and does not include the following:
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a termination for cause;
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|
a termination as a result of death;
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|
a termination as the result of a qualifying disability;
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|
a termination that the Company expects to be temporary;
|
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|
a termination for continued failure to perform duties or
responsibilities;
|
|
|
|
a termination in connection with any corporate sale transaction
where continued employment is available; or
|
|
|
|
a termination if the employee is eligible to receive benefits
from the Anadarko Petroleum Corporation Change of Control
Severance Pay Plan or a Key Employee Change of Control Contract.
|
Benefits provided under the Officer Severance Plan may vary
depending upon the officers level within the organization
and years of service with the company and are made at the
discretion of the Compensation Committee. Officers receiving
benefits under the Officer Severance Plan are required to
execute an agreement releasing the Company from any and all
claims from any and all kinds of actions arising from the
officers employment with the Company or the termination of
such employment. In practice, we have typically provided the
following severance benefits to officers terminated
involuntarily from the Company:
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a payment equal to 2 times the officers annual base salary;
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|
a payment equal to one years target bonus under the Annual
Incentive Plan;
|
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|
a pro-rata bonus under the Annual Incentive Plan for the year of
termination;
|
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|
if not retirement eligible, a special retirement benefit
enhancement equal to the present value at the officers
current age of the difference between the deferred vested
benefit and the subsidized early retirement benefit at
age 55;
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|
if applicable, the present value of retiree life insurance;
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|
a payment equal to the cost of providing financial planning
services for two years;
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|
the option to continue existing medical and dental coverage
levels at current active employee rates for up to 6 months.
After 6 months, the Company will pay the cost of COBRA
until the first to occur of (a) 18 months or
(b) obtaining comparable coverage as a result of employment
with another employer;
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the vesting of some or all unvested restricted shares and stock
options; and
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|
the vesting and payout of some or all outstanding performance
units at target level.
|
33
Effective August 31, 2006, David R. Larson, the
Companys Vice President, Investor Relations and Financial
Planning and Diane L. Dickey, the Companys Vice President,
Chief Accounting Officer, separated from the Company.
Mr. Larson and Ms. Dickey received benefits under the
Officer Severance Plan that were substantially similar to those
described above.
Effective December 31, 2006, Mark L. Pease, Senior Vice
President of Exploration and Production Technology and Services,
separated from the Company and was eligible to receive benefits
under the Officer Severance Plan. The benefits provided to
Mr. Pease were substantially similar to the benefits
described above except Mr. Pease received a payment equal
to 2.5 times his annual base salary. This benefit was in
recognition of his 27 years of valuable service and
leadership with the Company. Complete details of
Mr. Peases severance package can be found in our
Form 8-K
filed with the SEC on December 11, 2006. On
January 10, 2007, the Compensation Committee approved a
six-month extension of the exercise period related to
Mr. Peases outstanding stock options, to the extent
such options do not expire prior to the end of such six-month
period.
Payments under the plan for Mr. Pease, Mr. Larson and
Ms. Dickey are included in the All Other
Compensation column of the Summary Compensation Table.
Change
of Control Benefits
The Company utilizes various change of control benefits to
assure that the Company will have the continued dedication of
our regular full and part-time non-officer employees as well as
our executive officers through the threat or occurrence of a
change of control of the Company. These benefits also help
diminish the distractions and risks created by a pending or
threatened change of control and encourage each employees
full attention and dedication to the Company.
Key Employee Change of Control Contracts. We
have also entered into key employee change of control contracts
with all executive officers of the Company, including the named
executive officers, with the exception of Mr. Hackett whose
change of control benefits are included in
Mr. Hacketts employment agreement described on
page 41. These contracts have an initial three-year term
that is automatically extended for one year upon each
anniversary, unless a notice not to extend is given by the
Company. If a change of control of the Company (as defined
below) occurs during the term of the contract, then the contract
becomes operative for a fixed three-year period. These contracts
generally provide that the executives terms of employment
(including position, work location, compensation and benefits)
will not be adversely changed during the three-year period after
a change of control. If the Company terminates the
executives employment (other than for cause, death or
disability), the executive terminates for good reason during
such three-year period, or, in certain transactions, the
executive terminates employment for any reason during the
30-day
period following the first anniversary of the change of control,
or upon certain terminations prior to a change of control or in
connection with or in anticipation of a change of control, the
named executive officer is generally entitled to receive the
following payment and benefits:
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earned but unpaid compensation;
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|
up to 2.9 times the executives base salary plus annual
bonus (based on historic annual bonus);
|
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|
the Company matching contributions which would have been made
had the executive continued to participate in the Savings Plans
for up to an additional three years;
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|
the value of any investments credited to the executive under the
Savings Restoration Plan; and
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|
the present value of the accrued retirement benefit under the
Retirement Plans and the additional retirement benefits,
including retiree medical, which the executive would have
received had he or she continued service for up to an additional
three years.
|
In addition, the change of control contracts provide for a
continuation of various medical, dental, disability and life
insurance benefits and financial counseling for a period of up
to three years. The contracts also provide for outplacement
services and the payment of all legal fees and expenses incurred
by the executive in enforcing any right or benefit provided by
the change of control contract. The executive will also
34
be entitled to receive a payment in an amount sufficient to make
the executive whole for any excise tax on excess parachute
payments imposed under Section 4999 of the Internal Revenue
Code.
As a condition to receipt of change of control benefits, the
executive must remain employed by the Company and provide
services commensurate with his or her position until the
executive is terminated pursuant to the provisions of the
agreement. The executive must also agree to retain in confidence
any and all confidential information known to him or her
concerning the Company and its business so long as the
information is not otherwise publicly disclosed. In 2006, no
amounts were paid under the change of control contracts.
Change of Control Stock Plans. In
addition to the change of control benefits discussed above, the
Companys stock plans provide that upon a change of control
of the Company:
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outstanding options and stock appreciation rights that are not
vested and exercisable become fully vested and exercisable;
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the restrictions on any outstanding restricted stock lapse; and
|
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|
if any performance awards or performance-based restricted stock
awards are outstanding, they become fully vested and the
performance goals are deemed to be earned at target unless
otherwise provided in the participants award agreement.
|
For purposes of the change of control contracts and the
Companys stock plans, a change of control is generally
defined as any one of the following occurrences:
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|
any individual, entity or group acquiring beneficial ownership
of 20% or more of either the outstanding shares of the
Companys common stock or the combined voting power of the
Company;
|
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|
|
individuals who constitute the Board of Directors on the date of
either the change of control contract or the Companys
stock plans, as applicable, cease to constitute a majority of
the Board, provided that an individual whose election or
nomination as a director is approved by a vote of at least a
majority of the directors as of the date of either the change of
control contract or the Companys stock plans, as
applicable, will be deemed a member of the incumbent Board;
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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, unless
following the business combination:
|
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|
all or substantially all of the beneficial owners of the
Companys outstanding common stock prior to the business
combination own more than 60% of the outstanding common stock of
the corporation resulting from the business combination;
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|
no person, entity or group owns 20% or more of the outstanding
voting securities of the corporation resulting from the business
combination; and
|
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|
at least a majority of the board of the corporation resulting
from the business combination were members of the Companys
Board prior to the business combination; or
|
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|
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|
Approval by the Companys shareholders of a complete
liquidation or dissolution of the Company.
|
Change of Control Employment
Agreements. The employment agreement with James
T. Hackett described on page 41 provides benefits in
connection with a change of control.
35
Potential
Payments Upon Termination or Change of Control
The following tables reflect potential payments to our named
executive officers under existing contracts, agreements, plans
or arrangements, whether written or unwritten, for various
scenarios involving a
change-of-control
or termination of employment of each named executive officer,
assuming a December 31, 2006 termination date, and, where
applicable, using the closing price of our common stock of
$43.52 (as reported on the New York Stock Exchange as of
December 29, 2006). The footnotes listed below the
following tables apply to all of the tables in this section.
James T.
Hackett
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Voluntary for Good
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|
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Reason or
|
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Involuntary for
|
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Involuntary
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|
|
|
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Executive Benefit
|
|
Cause or Voluntary
|
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Involuntary Not For
|
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Termination
|
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|
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|
|
and Payments
|
|
Termination
|
|
|
Cause Termination
|
|
|
(Change-in-Control)
|
|
|
Disability
|
|
|
Death
|
|
Upon Separation
|
|
(Scenario A)
|
|
|
(Scenario B)
|
|
|
(Scenario C)(1)
|
|
|
(Scenario D)
|
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(Scenario E)
|
|
|
Compensation:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(2)
|
|
$
|
|
|
|
$
|
9,660,000
|
|
|
$
|
9,660,000
|
|
|
$
|
|
|
|
$
|
|
|
Annual Incentive Plan Compensation
(AIP)(3)(4)
|
|
$
|
|
|
|
$
|
1,820,000
|
|
|
$
|
1,820,000
|
|
|
$
|
1,711,667
|
|
|
$
|
1,711,667
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(5)
|
|
$
|
|
|
|
$
|
5,050,625
|
|
|
$
|
5,050,625
|
|
|
$
|
5,050,625
|
|
|
$
|
5,050,625
|
|
Performance Shares(6)
|
|
$
|
|
|
|
$
|
10,096,640
|
|
|
$
|
10,096,640
|
|
|
$
|
10,096,640
|
|
|
$
|
10,096,640
|
|
Stock Awards(7)
|
|
$
|
|
|
|
$
|
8,638,720
|
|
|
$
|
8,638,720
|
|
|
$
|
8,638,720
|
|
|
$
|
8,638,720
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefits(8)
|
|
$
|
|
|
|
$
|
3,532,138
|
|
|
$
|
7,148,506
|
|
|
$
|
|
|
|
$
|
|
|
Nonqualified Deferred
Compensation(9)
|
|
$
|
425,333
|
|
|
$
|
425,333
|
|
|
$
|
1,011,953
|
|
|
$
|
425,333
|
|
|
$
|
425,333
|
|
Health and Welfare Benefits(10)
|
|
$
|
|
|
|
$
|
43,564
|
|
|
$
|
87,995
|
|
|
$
|
1,168,701
|
|
|
$
|
|
|
Life Insurance Proceeds(11)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,451,613
|
|
Disability Payments(12)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,653,283
|
|
|
$
|
|
|
Outplacement Assistance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
30,000
|
|
|
$
|
|
|
|
$
|
|
|
Financial Counseling(13)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Excise Tax &
Gross-Up(14)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
11,644,098
|
|
|
$
|
|
|
|
$
|
|
|
Total
|
|
$
|
425,333
|
|
|
$
|
39,267,019
|
|
|
$
|
55,188,537
|
|
|
$
|
30,744,970
|
|
|
$
|
32,374,598
|
|
36
R.A.
Walker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Executive Benefit
|
|
Cause or Voluntary
|
|
|
Involuntary Not For
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Termination
|
|
|
Cause Termination
|
|
|
(Change-in-Control)
|
|
|
Disability
|
|
|
Death
|
|
Upon Separation
|
|
(Scenario A)
|
|
|
(Scenario B)
|
|
|
(Scenario C)(1)
|
|
|
(Scenario D)
|
|
|
(Scenario E)
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(2)
|
|
$
|
|
|
|
$
|
1,496,250
|
|
|
$
|
2,884,239
|
|
|
$
|
|
|
|
$
|
|
|
Annual Incentive Plan Compensation
(AIP)(3)(4)
|
|
$
|
|
|
|
$
|
396,667
|
|
|
$
|
469,565
|
|
|
$
|
396,667
|
|
|
$
|
396,667
|
|
Long Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(5)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Performance Shares(6)
|
|
$
|
|
|
|
$
|
1,806,080
|
|
|
$
|
1,806,080
|
|
|
$
|
1,806,080
|
|
|
$
|
1,806,080
|
|
Stock Awards(7)
|
|
$
|
|
|
|
$
|
2,593,777
|
|
|
$
|
2,593,777
|
|
|
$
|
2,593,777
|
|
|
$
|
2,593,777
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement
Benefits(8)(15)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Nonqualified Deferred
Compensation(9)
|
|
$
|
21,607
|
|
|
$
|
21,607
|
|
|
$
|
200,629
|
|
|
$
|
21,607
|
|
|
$
|
21,607
|
|
Health and Welfare Benefits(10)
|
|
$
|
|
|
|
$
|
44,414
|
|
|
$
|
67,502
|
|
|
$
|
315,785
|
|
|
$
|
|
|
Life Insurance Proceeds(11)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,652,242
|
|
Disability Payments(12)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,708,962
|
|
|
$
|
|
|
Outplacement Assistance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
30,000
|
|
|
$
|
|
|
|
$
|
|
|
Financial Counseling(13)
|
|
$
|
|
|
|
$
|
22,560
|
|
|
$
|
31,800
|
|
|
$
|
|
|
|
$
|
|
|
Excise Tax &
Gross-Up(14)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,646,891
|
|
|
$
|
|
|
|
$
|
|
|
Total
|
|
$
|
21,607
|
|
|
$
|
6,381,354
|
|
|
$
|
10,730,483
|
|
|
$
|
8,842,878
|
|
|
$
|
6,470,373
|
|
37
Karl F.
Kurz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Executive Benefit
|
|
Cause or Voluntary
|
|
|
Involuntary Not For
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Termination
|
|
|
Cause Termination
|
|
|
(Change-in-Control)
|
|
|
Disability
|
|
|
Death
|
|
Upon Separation
|
|
(Scenario A)
|
|
|
(Scenario B)
|
|
|
(Scenario C)(1)
|
|
|
(Scenario D)
|
|
|
(Scenario E)
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(2)
|
|
$
|
|
|
|
$
|
1,401,250
|
|
|
$
|
2,528,075
|
|
|
$
|
|
|
|
$
|
|
|
Annual Incentive Plan Compensation
(AIP)(3)(4)
|
|
$
|
|
|
|
$
|
368,021
|
|
|
$
|
396,750
|
|
|
$
|
368,021
|
|
|
$
|
368,021
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(5)
|
|
$
|
|
|
|
$
|
3,557,873
|
|
|
$
|
3,557,873
|
|
|
$
|
3,557,873
|
|
|
$
|
3,557,873
|
|
Performance Shares(6)
|
|
$
|
|
|
|
$
|
1,758,208
|
|
|
$
|
1,758,208
|
|
|
$
|
1,758,208
|
|
|
$
|
1,758,208
|
|
Stock Awards(7)
|
|
$
|
|
|
|
$
|
1,969,976
|
|
|
$
|
1,969,976
|
|
|
$
|
1,969,976
|
|
|
$
|
1,969,976
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefits(8)
|
|
$
|
194,218
|
|
|
$
|
338,749
|
|
|
$
|
828,672
|
|
|
$
|
194,218
|
|
|
$
|
194,218
|
|
Nonqualified Deferred
Compensation(9)
|
|
$
|
332,687
|
|
|
$
|
332,687
|
|
|
$
|
489,602
|
|
|
$
|
332,687
|
|
|
$
|
332,687
|
|
Health and Welfare Benefits(10)
|
|
$
|
|
|
|
$
|
40,597
|
|
|
$
|
61,508
|
|
|
$
|
289,415
|
|
|
$
|
|
|
Life Insurance Proceeds(11)(16)
|
|
$
|
|
|
|
$
|
169,745
|
|
|
$
|
169,745
|
|
|
$
|
|
|
|
$
|
1,494,886
|
|
Disability Payments(12)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,873,494
|
|
|
$
|
|
|
Outplacement Assistance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
30,000
|
|
|
$
|
|
|
|
$
|
|
|
Financial Counseling(13)
|
|
$
|
|
|
|
$
|
22,560
|
|
|
$
|
31,800
|
|
|
$
|
|
|
|
$
|
|
|
Excise Tax &
Gross-Up(14)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,892,542
|
|
|
$
|
|
|
|
$
|
|
|
Total
|
|
$
|
526,905
|
|
|
$
|
9,959,666
|
|
|
$
|
14,714,751
|
|
|
$
|
12,343,891
|
|
|
$
|
9,675,869
|
|
38
Robert K.
Reeves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Executive Benefit
|
|
Cause or Voluntary
|
|
|
Involuntary Not For
|
|
|
Termination
|
|
|
|
|
|
|
|
and Payments
|
|
Termination
|
|
|
Cause Termination
|
|
|
(Change-in-Control)
|
|
|
Disability
|
|
|
Death
|
|
Upon Separation
|
|
(Scenario A)
|
|
|
(Scenario B)
|
|
|
(Scenario C)(1)
|
|
|
(Scenario D)
|
|
|
(Scenario E)
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(2)
|
|
$
|
|
|
|
$
|
1,254,000
|
|
|
$
|
2,566,500
|
|
|
$
|
|
|
|
$
|
|
|
Annual Incentive Plan Compensation
(AIP)(3)(4)
|
|
$
|
|
|
|
$
|
359,833
|
|
|
$
|
445,000
|
|
|
$
|
359,833
|
|
|
$
|
359,833
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(5)
|
|
$
|
|
|
|
$
|
1,494,388
|
|
|
$
|
1,494,388
|
|
|
$
|
1,494,388
|
|
|
$
|
1,494,388
|
|
Performance Shares(6)
|
|
$
|
|
|
|
$
|
2,097,664
|
|
|
$
|
2,097,664
|
|
|
$
|
2,097,664
|
|
|
$
|
2,097,664
|
|
Stock Awards(7)
|
|
$
|
|
|
|
$
|
1,243,148
|
|
|
$
|
1,243,148
|
|
|
$
|
1,243,148
|
|
|
$
|
1,243,148
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement
Benefits(8)(15)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
800,586
|
|
|
$
|
|
|
|
$
|
|
|
Nonqualified Deferred
Compensation(9)
|
|
$
|
84,977
|
|
|
$
|
84,977
|
|
|
$
|
244,277
|
|
|
$
|
84,977
|
|
|
$
|
84,977
|
|
Health and Welfare Benefits(10)
|
|
$
|
|
|
|
$
|
42,612
|
|
|
$
|
64,586
|
|
|
$
|
266,592
|
|
|
$
|
|
|
Life Insurance Proceeds(11)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,384,736
|
|
Disability Payments(12)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,210,664
|
|
|
$
|
|
|
Outplacement Assistance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
30,000
|
|
|
$
|
|
|
|
$
|
|
|
Financial Counseling(13)
|
|
$
|
|
|
|
$
|
22,560
|
|
|
$
|
31,800
|
|
|
$
|
|
|
|
$
|
|
|
Excise Tax &
Gross-Up(14)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,718,781
|
|
|
$
|
|
|
|
$
|
|
|
Total
|
|
$
|
84,977
|
|
|
$
|
6,599,182
|
|
|
$
|
11,736,731
|
|
|
$
|
8,757,266
|
|
|
$
|
6,664,747
|
|
|
|
|
(1) |
|
Scenario C assumes an effective date of a Change of Control to
be December 31, 2006. |
|
(2) |
|
In Scenario B, cash severance for all Named Executive Officers,
except for Mr. Hackett, assumes a payment equal to 200% of
the officers base salary plus 100% of the target bonus. In
Scenario C, cash severance for all officers, except
Mr. Hackett, assumes a payment equal to 290% of the sum of
the Named Executive Officers salary plus highest bonus
paid in the past three years. For Mr. Hackett, both
Scenario B and C assume a payment equal to 300% of salary plus
target bonus. |
|
(3) |
|
Named Executive Officers can be eligible in some instances to
receive bonus payments for the year a termination occurs. For
all Named Executive Officers, except Mr. Hackett, the
Annual Incentive Plan values in Scenario B assume payment of a
pro-rata bonus based on target bonus percentages and eligible
earnings as of December 31, 2006. For all Named Executive
Officers, except Mr. Hackett, Annual Incentive Plan values
in Scenario C assume the full-year equivalent of the highest
annual bonus the officer received over the past three years. For
Mr. Hackett in both Scenario B and C, Annual Incentive Plan
values assume payment of a pro-rata bonus based on the target
bonus percentage and base salary in effect as of
December 31, 2006. |
|
(4) |
|
In Scenarios D and E, the values assume that the Compensation
Committee would have exercised their discretion to pay the 2006
Annual Incentive amount at the target level earned, based on
actual bonus targets and eligible earnings for the year. In
2007, the Committee approved a feature in the 2007 Annual
Incentive Plan that would pay target bonuses based on eligible
earnings for all employees in the event of death or disability. |
|
(5) |
|
Calculated as the
in-the-money
value of unvested stock options as of December 29, 2006. |
|
(6) |
|
Calculated as the target value of unvested performance
units/shares as of December 29, 2006. |
|
(7) |
|
Calculated as the value of unvested restricted stock awards as
of December 29, 2006. |
39
|
|
|
(8) |
|
Supplemental retirement benefits include the lump sum present
value of vested benefits related to the Companys
supplemental pension benefits. In Scenario B, for all officers
except Mr. Hackett, the value includes special retirement
benefit enhancement that is equivalent to the additional
supplemental pension benefits that would have accrued assuming
the Named Executive Officers were eligible for subsidized early
retirement benefits. Values exclude vested amounts payable under
the qualified plans available to all employees. |
|
(9) |
|
Includes the combined balances in the nonqualified Savings
Restoration Plan and Deferred Compensation Plan. In Scenario C,
values assume an additional three years of employer
contributions in the Savings Restoration Plan based on each
Named Executive Officers current contribution rate to the
plan. |
|
(10) |
|
Values under Scenario B and Scenario C represent an additional
24 and 36 months, respectively, of health and welfare
benefit coverage for each Named Executive Officer, except
Mr. Hackett. Mr. Hackett receives 18 months under
Scenario B and 36 months under Scenario C. For Scenario D,
values include continuation of additional death benefit coverage
provided to officers of the Company until age 65 as
described in footnote 11. All amounts are present values
determined in accordance with SFAS No. 106
Employers Accounting for Postretirement Benefits other
than Pensions. |
|
(11) |
|
Values in Scenario E include amounts payable under additional
death benefits provided to officers and other key employees of
the company. These liabilities are not insured, but 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. |
|
(12) |
|
Values represent the full executive disability benefit payable
as a present value, calculated as a monthly payment of 70% of
salary from December 31, 2006 until age 65, using a
discount rate of 5.75% per year. |
|
(13) |
|
Values assume current financial counseling services continue for
two years after termination in Scenario B, and three years in
Scenario C. The table shows the present value of the benefit
assuming a 4% growth rate in the cost of the services and a
5.89% annual discount rate. Mr. Hackett does not currently
use this company-provided service; benefits are not assumed to
be extended to him after termination. |
|
(14) |
|
Values estimate the total payment required to make each
executive whole for the 20% excise tax imposed by
Section 280G of the Internal Revenue code. |
|
(15) |
|
Mr. Walker and Mr. Reeves are not yet vested in their
accrued benefits under the Retirement Restoration Plan. If the
Committee chose to accelerate vesting in Scenario B, the present
value of accrued benefits would equal $87,805 and $319,395 for
Mr. Walker and Mr. Reeves, respectively. For
Mr. Reeves accrued benefits under the Retirement
Restoration Plan will become fully vested under Scenario C. For
Mr. Walker, assuming vesting was accelerated in Scenario C
the accrued benefit including additional service would equal
$393,596. |
|
(16) |
|
In Scenarios B, C and E the values include the present value of
Mr. Kurzs retiree death benefit in the Management
Life Insurance Plan (MLIP). The MLIP provides for a
retiree death benefit equal to one times final base salary. This
retiree death benefit is only applicable to participants who
were employed by the Company on June 30, 2003. Therefore,
this benefit is only applicable to Mr. Kurz. |
Director
and Officer Indemnification Agreements
The Company has entered into indemnification agreements with its
directors and certain executive officers, in part to enable the
Company to attract and retain qualified directors and executive
officers. These agreements require the Company, among other
things, to indemnify such persons against certain liabilities
that may arise by reason of their status or service as directors
or officers, to advance their expenses for proceedings for which
they may be indemnified and to cover such person under any
directors and officers liability insurance policy
the Company may maintain from time to time. These agreements are
intended to provide indemnification rights to the fullest extent
permitted under applicable Delaware law and are in addition to
any other rights the Companys directors and executive
officers may have under the Companys restated certificate
of incorporation, bylaws and applicable law.
40
Employment
Agreements
The only named executive officer with which the Company has
entered into an employment agreement is the Companys
Chairman, President and Chief Executive Officer, Mr. James
T. Hackett.
James
T. Hackett Employment Agreement
On December 11, 2006, our Board of Directors approved a new
Employment Agreement for James T. Hackett, our Chairman,
President and Chief Executive Officer. The agreement replaces
Mr. Hacketts previous Employment Agreement and Change
of Control Contract which had been in place since December 2003.
The consolidated agreement provides for a clearer and more
simplified transition between a pre-change of control
relationship and a post-change of control relationship. The
consolidated agreement has also been revised to update or delete
provisions in the prior employment agreement that were outdated
or no longer necessary. Additionally, the consolidated agreement
incorporates certain changes that are expected to be necessary
in order to comply with Section 409A of the Internal
Revenue Code (such as imposing a six-month waiting period on
certain payments).
Under the terms of the agreement, Mr. Hackett receives a
minimum annual base salary of $1,400,000, and is eligible for an
annual cash bonus at a target of 130%, not to exceed 260%, of
annual base salary. The agreement also outlines certain payments
and benefits to be paid to Mr. Hackett under various
termination scenarios, including:
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a Without Cause Termination or Termination for Good Reason,
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a Without Cause Termination or Termination for Good Reason
within three years after a change of control, or Termination in
Anticipation of a Change of Control,
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termination for Death or Disability, and
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voluntary Termination (other than for Good Reason).
|
The above scenarios are discussed in more detail on page 36
of this proxy statement. The Company will provide a
gross-up
payment to Mr. Hackett to the extent any of the above
payments become subject to the federal excise tax relating to
golden parachute payments, similar to his original employment
agreement, when he was hired in December 2003. Pre-Change of
Control severance benefits are conditioned upon
Mr. Hacketts and the Companys execution of a
mutual release, which was not a feature of the original contract.
Mr. Hackett is also subject to covenants regarding
confidentiality, non-competition and non-solicitation. The
non-competition obligation applies for one year following
Mr. Hacketts termination of employment with the
Company if Mr. Hackett voluntarily terminates his
employment with the Company (other than for Good Reason) on or
before December 3, 2010. If Mr. Hackett remains
employed by the Company until at least December 3, 2008,
the agreement also provides Mr. Hackett with a special
pension benefit, computed so that his total pension benefits
from the Company will equal those to which he would have been
entitled if his actual years of employment with the Company were
doubled. This provision was a feature of the original employment
agreement and offset Mr. Hacketts foregone retirement
benefits at his prior employer.
Mr. Hackett voluntarily reduced the Change of Control
benefits from his original employment agreement.
The above description is not a full summary of all of the terms
and conditions of the agreement and is qualified in its entirety
by the full text of the agreement.
Stock
Ownership Guidelines
We have maintained stock ownership guidelines for executive
officers since 1993 with a goal of promoting equity ownership
and aligning managements interests with our shareholders.
The ownership guidelines are currently established at the
following minimum levels:
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five times base salary for the Chief Executive Officer;
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three times base salary for the Chief Operating Officer;
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41
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two and one-half times base salary for Senior Vice
Presidents; and
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two times base salary for Vice Presidents.
|
The Compensation Committee reviews officer ownership levels
annually. At the May 2006 Compensation Committee meeting, the
Compensation Committee determined that all officers exceeded the
required ownership thresholds. Shares held directly by the
executive, shares held indirectly through the Anadarko Employee
Savings Plan, unvested Restricted Stock and the target number of
outstanding Performance Units are included in determining an
executives share ownership. Outstanding unexercised Stock
Options are not included. We believe these guidelines have
accomplished the desired objective of requiring our executives
to acquire and maintain, for the duration of their careers, a
significant position in Company stock.
Regulatory
Requirements
The Company and the Compensation Committee carefully review the
impact of its compensation program design and award decisions as
it relates to tax, accounting and securities regulations. We
seek to comply with all required regulations while providing
compensation program design and opportunity that is mutually
beneficial to its employees, the Company and shareholders and in
support of its compensation philosophy.
Section 162(m) of the Internal Revenue Code, as amended
(the Code), limits a companys ability to
deduct compensation paid in excess of $1 million during any
fiscal year to each of the named executive officers, unless the
compensation is performance-based as defined under
federal tax laws. Stock options and performance units awarded
under the 1999 Stock Incentive Plan and awards under the Annual
Incentive Plan generally satisfy the performance-based
requirements and as such are fully deductible. Since
Mr. Hacketts salary is above $1 million, the
portion in excess of $1 million is not deductible by the
Company. Restricted stock awards under the 1999 Stock Incentive
Plan are not considered performance based and are generally not
deductible. The Compensation Committee is committed to providing
compensation that qualifies as deductible. However, when
providing compensation that is consistent with the strategic
goals of the Company, the Compensation Committee may provide
compensation that is non-deductible when it believes it is in
the best interest of the Company and its shareholders. In this
regard, for fiscal year 2006, the amount of base salary in
excess of $1,000,000 for any named executive officer was not
deductible for federal income tax purposes.
Internal Revenue Code Section 409A provides that all
amounts deferred under a nonqualified deferred compensation plan
for all taxable years are currently included in gross income to
the extent not subject to a substantial risk of forfeiture and
not previously included in gross income, unless certain
requirements are met. The Internal Revenue Service has issued
proposed regulations regarding the application of
Section 409A with final regulations expected in 2007. In
the meantime, companies are expected to comply in good
faith with the proposed regulations. Anadarkos
Deferred Compensation Plan was created in 2005 in the same time
frame as the passage of Section 409A. As such, the program
was designed to comply with Section 409A. Depending on the
design characteristics, Section 409A can impact a broad
range of compensation programs including voluntary deferral
plans, restoration and supplemental retirement plans, severance
plans and certain equity vehicles. The Company and the
Compensation Committee, with the help of internal and external
advisors, designs and amends its programs to either be exempt
from 409A or, if properly subject to 409A, in good faith
compliance with the regulations.
SFAS No. 123 (revised 2004), Share-Based
Payment, requires the recognition of expense for the fair
value of share-based payments. The statement is effective for
the Company beginning January 1, 2006. The Company had
previously adopted the fair value method of accounting for
share-based payments effective January 1, 2003, using the
modified prospective method described in
SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure. Awards
of Stock Options, Performance Units, and Restricted Shares under
the Companys 1999 Stock Incentive Plan are accounted for
under SFAS No. 123(R). The adoption of
SFAS No. 123(R) did not have a material impact on the
Companys results of operations or its financial position.
The Company did not make any changes to its programs in 2006 as
a result of the implementation of SFAS No. 123(R).
42
In September 2006, the SEC adopted amendments to the disclosure
requirements for executive compensation. The amendments apply to
filings under the Securities Exchange Act of 1934 and the
Securities Act of 1933, including disclosure in this proxy
statement. In order to simplify reporting under the new
requirements and to ease administration of the Companys
equity compensation plans, the Company elected to change its
definition of grant date fair market value from the average high
and low stock prices on the date of grant to the closing stock
price on the date of grant. This change was approved by the
Compensation Committee effective November 14, 2006. During
2006 the Compensation Committee approved compensation changes
and awards to its officers. Before making these decisions, the
Committee considered the impact of these decisions on its
disclosure requirements under the new rules, in particular to
the determination of the named executive officers.
Conclusion
We believe the design of the Companys total executive
compensation program provides executives the motivation to
maximize long-term operational performance using sound financial
controls and high standards of integrity. The programs currently
offered have been critical elements in the hiring of numerous
executives since 2003 and have been equally effective in
retaining executives during a period of extreme demand and
shortage of talented executives within the oil and gas
exploration and production industry. We believe that this focus
will continue to be reflected in our operational, financial and
stock price performance. We also believe that total compensation
for each executive should be, and is, commensurate with the
execution of specified short-term and long-term operational,
financial and strategic objectives.
43
SUMMARY
COMPENSATION TABLE FOR THE LAST FISCAL YEAR
The following table summarizes the compensation of our Chief
Executive Officer, Chief Financial Officer and our three highest
paid executive officers other than our CEO and CFO for the
fiscal year ended December 31, 2006. Also included are two
additional executive officers for whom disclosure would have
been required but for the fact that they were no longer serving
as executive officers at the end of the fiscal year.
Summary
Compensation Table
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Change in
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Pension Value
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and
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)(1)
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($)(2)
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($)(3)
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($)(4)
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($)(5)
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($)(6)
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James T. Hackett
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Chairman, President and Chief
Executive Officer
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2006
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1,316,667
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160,860
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(7)
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5,252,940
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1,592,237
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1,882,834
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2,633,633
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595,295
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13,434,466
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R. A. Walker
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Senior Vice President, Finance and
Chief Financial Officer
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2006
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466,667
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0
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1,189,283
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308,691
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535,500
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59,493
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334,118
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2,893,752
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Mark L. Pease(8)(12)
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Former Senior Vice President,
Exploration and Technology Services
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2006
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454,167
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0
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3,562,211
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|
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480,370
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0
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482,044
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2,412,418
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7,391,210
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Robert K. Reeves
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Senior Vice President, General
Counsel and Chief Administrative Officer
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2006
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423,333
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0
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1,008,172
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549,750
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485,775
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93,904
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89,414
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2,650,348
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Karl F. Kurz(9)
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Chief Operating Officer
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2006
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410,417
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0
|
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992,798
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458,923
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404,823
|
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125,726
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92,091
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2,484,778
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David R. Larson(10)(12)
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Former Vice President, Investor
Relations and Financial Planning
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2006
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184,095
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0
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815,903
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2,381,708
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0
|
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261,649
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1,454,485
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5,097,840
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Diane L. Dickey(11)(12)
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Former Vice President, Chief
Accounting Officer
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2006
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215,064
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0
|
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|
591,201
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|
|
|
434,812
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|
|
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0
|
|
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|
142,813
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|
|
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1,709,319
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3,093,209
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(1) |
|
Restricted stock awards to Messrs. Hackett, Walker, Pease,
Reeves and Kurz were made on December 4, 2006 and valued at
$48.69 per share. Performance unit awards to
Messrs. Hackett, Walker, Pease, Reeves and Kurz were made
on December 11, 2006 and valued at $49.86 per share
and a SFAS No. 123(R) value of $48.21. Restricted
Stock grants are time-based awards that typically vest pro-rata
over three years. Performance units generally will have no value
unless the Company meets and exceeds its threshold three-year
return on capital and total shareholder return metrics. The
amounts in this column reflect the compensation cost recognized
by the Company for the fiscal year ended December 31, 2006,
in accordance with SFAS No. 123(R) for non-option
stock awards granted pursuant to the 1999 Stock Incentive Plan
and may include amounts from awards granted in and prior to
2006. For a discussion of valuation assumptions, see
Note 5 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the
Form 10-K
for year ended December 31, 2006. For information regarding
the non-option stock awards granted to the named executives in
2006, please see the Grants of Plan-Based Awards Table. |
|
(2) |
|
Stock Option grants to Messrs. Hackett, Walker, Pease,
Reeves and Kurz were made on December 4, 2006 with a strike
price of $48.69 per share and a SFAS No. 123(R)
value of $15.39. The amounts in this column reflect the
compensation cost recognized by the Company for the fiscal year
ended December 31, 2006, in accordance with
SFAS No. 123(R) for option awards granted pursuant to
the 1999 Stock Incentive Plan and may include amounts from
option awards granted in and prior to 2006. For a discussion of
valuation assumptions, see Note 5
Stock-Based Compensation of the Notes to Consolidated
Financial Statements included in our annual report under
Item 8 of the
Form 10-K
for year ended December 31, 2006. For information regarding
the option awards granted to the named executives in 2006,
please see the Grants of Plan-Based Awards Table. |
44
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(3) |
|
The amounts in this column reflect the cash bonus awards
determined by the Compensation Committee at its
February 12, 2007 meeting and made to the named executives
under the Companys Annual Incentive Plan. To the extent
the payments were not deferred by the executive, they were paid
out on February 23, 2007. These awards are discussed in
further detail beginning on page 26. |
|
(4) |
|
The amounts in this column reflect the actuarial increase in the
present value of the named executive officers benefits
under the Companys Retirement Plan and Retirement
Restoration Plan determined using interest rate and mortality
rate assumptions consistent with those used in the
Companys financial statements and includes amounts which
the named executive officer may not currently be entitled to
receive because such amounts are not vested. Amounts include the
actuarial change in the present value of the accumulated
benefits under the Companys Retirement Plan and Retirement
Restoration Plan. The Companys Deferred Compensation Plan
does not provide for above market or preferential earnings so no
amounts are included for the Deferred Compensation Plan. |
|
(5) |
|
The amounts shown in this column for each named executive
officer are described further in the All Other
Compensation table below. |
|
(6) |
|
The amounts in the Total column represent the sum of
all columns of the Summary Compensation Table for each of the
named executive officers. |
|
(7) |
|
The amount in the Bonus column for Mr. Hackett
reflects a special bonus approved by the Compensation Committee
in May 2006 in the form of 3,000 shares of company stock,
the details of which can be found in the Grants of Plan-Based
Awards Table. |
|
(8) |
|
Mr. Pease separated from the Company on December 31,
2006. |
|
(9) |
|
Mr. Kurz deferred $61,562.50 of his 2006 base salary and
$80,964.60 of his 2006 bonus under the Annual Incentive Plan
into the Companys Deferred Compensation Plan. |
|
(10) |
|
Mr. Larson separated from the Company on August 31,
2006. Mr. Larson deferred $25,000.00 of his 2006 base
salary into the Companys Deferred Compensation Plan. |
|
(11) |
|
Ms. Dickey separated from the Company on August 31,
2006. Ms. Dickey deferred $9,166.64 of her 2006 base salary
into the Companys Deferred Compensation Plan. |
|
(12) |
|
Effective with their separations from the Company, the
Compensation Committee approved the acceleration of vesting on
certain unvested stock option and restricted stock awards for
Mr. Pease, Mr. Larson and Ms. Dickey. In
addition, Mr. Peases stock options were modified to
provide an additional six months to the exercise period.
Mr. Pease, Mr. Larson and Ms. Dickey each
received payouts of their outstanding performance units at the
target performance level. Mr. Larson forfeited 49,200 stock
options and 8,532 restricted shares upon his separation from the
Company. The amount recognized for financial reporting purposed
for these modifications are included in the Stock Awards and
Options Awards columns of the Summary Compensation Table. In
addition, the incremental fair value of the modifications to
each award is included in the Grants of Plan-Based Awards Table. |
45
All Other
Compensation Table
The following table describes each component of the All Other
Compensation column in the Summary Compensation Table:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings Plan
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
and Savings
|
|
|
Club
|
|
|
Payment under
|
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|
|
|
|
|
|
|
|
|
|
Use of
|
|
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Restoration
|
|
|
Membership
|
|
|
Officer
|
|
|
Tax
|
|
|
|
|
|
|
|
|
|
Aircraft
|
|
|
Plan
|
|
|
Dues
|
|
|
Severance Plan
|
|
|
Benefits
|
|
|
Other
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
James T. Hackett(1)
|
|
|
387,800
|
|
|
|
200,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,303
|
|
|
|
595,295
|
|
R. A. Walker(2)
|
|
|
91,490
|
|
|
|
34,875
|
|
|
|
116,755
|
(3)
|
|
|
|
|
|
|
72,243
|
|
|
|
18,755
|
|
|
|
334,118
|
|
Mark L. Pease(4)
|
|
|
16,810
|
|
|
|
55,840
|
|
|
|
8,288
|
|
|
|
2,295,865
|
|
|
|
5,094
|
|
|
|
30,521
|
|
|
|
2,412,418
|
|
Robert K. Reeves(5)
|
|
|
|
|
|
|
52,100
|
|
|
|
6,365
|
|
|
|
|
|
|
|
5,094
|
|
|
|
25,855
|
|
|
|
89,414
|
|
Karl F. Kurz(6)
|
|
|
8,400
|
|
|
|
48,430
|
|
|
|
|
|
|
|
|
|
|
|
5,094
|
|
|
|
30,167
|
|
|
|
92,091
|
|
David R. Larson(7)
|
|
|
|
|
|
|
21,280
|
|
|
|
4,888
|
|
|
|
1,413,521
|
|
|
|
2,483
|
|
|
|
12,313
|
|
|
|
1,454,485
|
|
Diane L. Dickey(8)
|
|
|
|
|
|
|
22,700
|
|
|
|
|
|
|
|
1,675,823
|
|
|
|
2,267
|
|
|
|
8,529
|
|
|
|
1,709,319
|
|
|
|
|
(1) |
|
Pursuant to the Companys security policy, the Company
requires the Chief Executive Officer to use the Companys
aircraft for personal use as well as business travel. The value
of travel to board meetings for companies and civic
organizations for which Mr. Hackett serves as a director is
considered personal use and is included in the amount reported
above. 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, 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 amount in the Other
column represents the following for Mr. Hackett:
(a) personal excess liability insurance premiums;
(b) long-term disability insurance premiums;
(c) Company-provided physical examinations; and
(d) expenditures to maintain Mr. Hacketts home
security system. |
|
(2) |
|
The amount in the Other column represents the
following for Mr. Walker: (a) personal excess
liability insurance premiums; (b) long-term disability
insurance premiums; and (c) closing gifts related to the
Kerr-McGee and Western acquisitions. |
|
(3) |
|
The amounts in the Club Membership column include
the initiation fee plus club dues paid on behalf of
Mr. Walker. |
|
(4) |
|
The amount in the Other column represents the
following for Mr. Pease: (a) personal excess liability
insurance premiums; (b) long-term disability insurance
premiums; (c) reimbursement for financial counseling and
tax planning; (d) Company-provided physical examinations;
and (e) closing gifts related to the Kerr-McGee and Western
acquisitions. |
|
(5) |
|
The amount in the Other column represents the
following for Mr. Reeves: (a) personal excess
liability insurance premiums; (b) long-term disability
insurance premiums; (c) reimbursement for financial
counseling and tax planning; and (d) closing gifts related
to the Kerr-McGee and Western acquisitions. |
|
(6) |
|
The amount in the Other column represents the
following for Mr. Kurz: (a) personal excess liability
insurance premiums; (b) long-term disability insurance
premiums; (c) reimbursement for financial counseling and
tax planning; (d) Company-provided physical examinations;
and (e) closing gifts related to the Kerr-McGee and Western
acquisitions. |
|
(7) |
|
The amount in the Other column represents the
following for Mr. Larson: (a) personal excess
liability insurance premiums; (b) long-term disability
insurance premiums; (c) reimbursement for financial
counseling and tax planning; and (d) estate planning. |
|
(8) |
|
The amount in the Other column represents the
following for Ms. Dickey: (a) personal excess
liability insurance premiums; (b) long-term disability
insurance premiums; and (c) reimbursement for financial
counseling and tax planning. |
46
GRANTS OF
PLAN-BASED AWARDS IN LAST FISCAL YEAR
The following table sets forth information concerning annual
incentive awards, stock options, restricted stock and
performance units granted during 2006 to each of the named
executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise or
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Number of
|
|
Base Price
|
|
Fair Value
|
|
Closing
|
|
|
|
|
Equity Incentive Plan Awards(1)
|
|
Equity Incentive Plan Awards(2)
|
|
Shares of
|
|
Securities
|
|
of Option
|
|
of Stock
|
|
Price on
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock or
|
|
Underlying
|
|
Awards
|
|
and Option
|
|
Grant
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Units (#) (2)
|
|
Options(2) (#)
|
|
($/Sh) (3)
|
|
Awards(4)
|
|
Date
|
|
James T. Hackett
|
|
|
|
|
|
|
0
|
|
|
|
1,690,000
|
|
|
|
3,380,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/10/2006
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
$
|
160,860
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,000
|
|
|
$
|
48.69
|
|
|
$
|
2,940,197
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,500
|
|
|
|
|
|
|
|
|
|
|
$
|
2,848,365
|
|
|
|
|
|
|
|
|
12/11/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,500
|
|
|
|
62,000
|
|
|
|
124,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,989,020
|
|
|
|
|
|
R. A. Walker
|
|
|
|
|
|
|
0
|
|
|
|
361,250
|
|
|
|
722,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,400
|
|
|
$
|
48.69
|
|
|
$
|
714,268
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,300
|
|
|
|
|
|
|
|
|
|
|
$
|
696,267
|
|
|
|
|
|
|
|
|
12/11/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,775
|
|
|
|
15,100
|
|
|
|
30,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
727,971
|
|
|
|
|
|
Mark L. Pease(6)
|
|
|
|
|
|
|
0
|
|
|
|
427,500
|
|
|
|
855,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,200
|
|
|
$
|
48.69
|
|
|
$
|
588,039
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,800
|
|
|
|
|
|
|
|
|
|
|
$
|
574,542
|
|
|
|
|
|
|
|
|
12/11/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
12,400
|
|
|
|
24,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
597,804
|
|
|
|
|
|
|
|
|
12/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
|
$
|
24.27
|
|
|
$
|
36,445
|
|
|
$
|
43.52
|
|
|
|
|
12/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
|
$
|
21.45
|
|
|
$
|
11,840
|
|
|
$
|
43.52
|
|
|
|
|
12/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,600
|
|
|
$
|
33.37
|
|
|
$
|
21,067
|
|
|
$
|
43.52
|
|
|
|
|
12/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,800
|
|
|
$
|
43.56
|
|
|
$
|
(92,091
|
)
|
|
$
|
43.52
|
|
|
|
|
12/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,200
|
|
|
$
|
48.69
|
|
|
$
|
(459,290
|
)
|
|
$
|
43.52
|
|
Robert K. Reeves
|
|
|
|
|
|
|
0
|
|
|
|
357,000
|
|
|
|
714,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,500
|
|
|
$
|
48.69
|
|
|
$
|
546,476
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,900
|
|
|
|
|
|
|
|
|
|
|
$
|
530,721
|
|
|
|
|
|
|
|
|
12/11/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,900
|
|
|
|
11,600
|
|
|
|
23,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
559,236
|
|
|
|
|
|
Karl F. Kurz
|
|
|
|
|
|
|
0
|
|
|
|
318,750
|
|
|
|
637,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,200
|
|
|
$
|
48.69
|
|
|
$
|
588,039
|
|
|
|
|
|
|
|
|
12/4/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,800
|
|
|
|
|
|
|
|
|
|
|
$
|
574,542
|
|
|
|
|
|
|
|
|
12/11/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
12,400
|
|
|
|
24,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
597,804
|
|
|
|
|
|
David R. Larson(7)
|
|
|
|
|
|
|
0
|
|
|
|
150,000
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,800
|
|
|
$
|
33.37
|
|
|
$
|
(40,631
|
)
|
|
$
|
46.91
|
|
|
|
|
8/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
$
|
21.45
|
|
|
$
|
1,697,420
|
|
|
$
|
46.91
|
|
|
|
|
8/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,200
|
|
|
$
|
43.56
|
|
|
$
|
(83,134
|
)
|
|
$
|
46.91
|
|
Diane L. Dickey(8)
|
|
|
|
|
|
|
0
|
|
|
|
165,000
|
|
|
|
330,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,666
|
|
|
$
|
33.37
|
|
|
$
|
22,734
|
|
|
$
|
46.91
|
|
|
|
|
8/31/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,800
|
|
|
$
|
43.56
|
|
|
$
|
(43,267
|
)
|
|
$
|
46.91
|
|
|
|
|
(1) |
|
Reflects estimated future cash payouts under the Companys
Annual Incentive Plan. The estimated amounts are calculated
based on the applicable bonus target and base salary for each
named executive as of January 1, 2006. If threshold levels
of performance are not met, then the payout can be zero. Actual
bonus payouts under the Annual Incentive Plan for 2006 for
Messrs. Hackett, Walker, Reeves and Kurz are discussed in
the CD&A narrative and are reflected in the Non-Equity
Incentive Plan Compensation column of the Summary
Compensation Table. |
|
(2) |
|
Equity incentive plan awards, including performance units, stock
options and restricted shares, were awarded under the
Companys 1999 Stock Incentive Plan. |
|
(3) |
|
Effective with the annual stock option awards made to the named
executives on December 4, 2006, the Company elected to
change the definition of grant date fair market value from the
average of the high and low stock price on the date of grant to
the closing stock price on the date of grant. |
|
(4) |
|
The amounts included in the Grant Date Fair Value of Stock
and Option Awards column represent the grant date fair
value of the awards made to named executives in 2006 as well as
the incremental cost of modifications to awards to specified
terminating executives computed in accordance with
SFAS No. 123(R). The value ultimately realized by the
executive upon the actual vesting of the award(s) or the
exercise of the stock option(s) may or may not be equal to the
SFAS No. 123(R) determined value. For a discussion of
valuation assumptions, see Note 5
Stock-Based Compensation of |
47
|
|
|
|
|
the Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the
Form 10-K
for the year ended December 31, 2006. |
|
(5) |
|
On May 10, 2006, Mr. Hackett was awarded
3,000 shares of stock by the Compensation Committee for his
overall leadership and strategic direction since employment and
in recognition of his contribution to continuing improvement in
Company performance. |
|
(6) |
|
Awards with a grant date of December 31, 2006 for
Mr. Pease were modifications to previously granted awards
upon his separation from the Company. The Company accelerated
the vesting of Mr. Peases unvested stock options and
provided an additional six months for him to exercise the
options. The Grant Date Fair Value is the incremental cost of
the modification calculated in accordance with
SFAS No. 123(R). The original exercise price of the
outstanding options (as noted in the Exercise or Base
Price of Option Awards column) was not amended. |
|
(7) |
|
Awards with a grant date of August 31, 2006 for
Mr. Larson were modifications to previously granted awards
upon his separation from the Company. The Company accelerated
the vesting of certain unvested stock options and restricted
shares while Mr. Larson also forfeited certain stock
options and restricted shares. The Grant Date Fair Value is the
incremental cost of the modification calculated in accordance
with SFAS No. 123(R). The original exercise price of
the outstanding options (as noted in the Exercise or Base
Price of Option Awards column) was not amended. |
|
(8) |
|
Awards with a grant date of August 31, 2006 for
Ms. Dickey were modifications to previously granted awards
upon her separation from the Company. The Company accelerated
the vesting of Ms. Dickeys unvested stock options.
The Grant Date Fair Value is the incremental cost of the
modification calculated in accordance with
SFAS No. 123(R). The original exercise price of the
outstanding options (as noted in the Exercise or Base
Price of Option Awards column) was not amended. |
48
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table reflects outstanding stock option awards
classified as exercisable and unexercisable as of
December 29, 2006 for each of the named executives. The
table also reflects unvested and unearned stock awards (both
time-based and performance-contingent) assuming a market value
of $43.52 a share (the closing stock price of the Companys
stock on December 29, 2006).
|
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|
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|
|
|
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|
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|
|
|
|
Stock Awards
|
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|
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|
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Equity
|
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Incentive
|
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|
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Plan
|
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Awards:
|
|
|
Option Awards
|
|
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|
|
|
|
Market or
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Equity
|
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Equity
|
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Payout
|
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|
|
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Incentive
|
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|
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|
|
|
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|
Incentive Plan
|
|
Value of
|
|
|
|
|
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|
Plan
|
|
|
|
|
|
|
|
Market
|
|
Awards:
|
|
Unearned
|
|
|
Number of
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Number of
|
|
Shares,
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Unearned
|
|
Units or
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Shares, Units
|
|
Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
or Other Rights
|
|
Rights That
|
|
|
Options (#)
|
|
Options (#)
|
|
Unexercised
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have Not
|
|
Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Vested (#)
|
|
Vested ($)
|
|
James T. Hackett(1)
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
N/A
|
|
|
|
23.3175
|
|
|
|
12/3/2013
|
|
|
|
100,000
|
|
|
|
4,352,000
|
|
|
|
80,000
|
|
|
|
3,481,600
|
|
|
|
|
26,667
|
|
|
|
53,333
|
|
|
|
N/A
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
40,000
|
|
|
|
1,740,800
|
|
|
|
90,000
|
|
|
|
3,916,800
|
|
|
|
|
0
|
|
|
|
191,000
|
|
|
|
N/A
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
58,500
|
|
|
|
2,545,920
|
|
|
|
62,000
|
|
|
|
2,698,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Walker(2)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
N/A
|
|
|
|
45.8000
|
|
|
|
9/6/2012
|
|
|
|
34,500
|
|
|
|
1,501,440
|
|
|
|
|
|
|
|
|
|
|
|
|
7,600
|
|
|
|
15,200
|
|
|
|
N/A
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
10,800
|
|
|
|
470,016
|
|
|
|
26,400
|
|
|
|
1,148,928
|
|
|
|
|
0
|
|
|
|
46,400
|
|
|
|
N/A
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
14,300
|
|
|
|
622,336
|
|
|
|
15,100
|
|
|
|
657,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark L. Pease(3)
|
|
|
160,000
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
24.2656
|
|
|
|
7/14/2007
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
32,000
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
21.4525
|
|
|
|
9/30/2007
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
18,600
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
33.3650
|
|
|
|
9/30/2007
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
17,800
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
43.5550
|
|
|
|
9/30/2007
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
38,200
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
48.6900
|
|
|
|
9/30/2007
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert K. Reeves(4)
|
|
|
85,000
|
|
|
|
85,000
|
|
|
|
N/A
|
|
|
|
26.6000
|
|
|
|
3/22/2011
|
|
|
|
6,666
|
|
|
|
290,104
|
|
|
|
|
|
|
|
|
|
|
|
|
11,067
|
|
|
|
5,533
|
|
|
|
N/A
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
3,933
|
|
|
|
171,164
|
|
|
|
19,400
|
|
|
|
844,288
|
|
|
|
|
4,934
|
|
|
|
9,866
|
|
|
|
N/A
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
7,066
|
|
|
|
307,512
|
|
|
|
17,200
|
|
|
|
748,544
|
|
|
|
|
0
|
|
|
|
35,500
|
|
|
|
N/A
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
10,900
|
|
|
|
474,368
|
|
|
|
11,600
|
|
|
|
504,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karl F. Kurz(5)
|
|
|
14,000
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
22.4750
|
|
|
|
10/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
160,000
|
|
|
|
N/A
|
|
|
|
21.4525
|
|
|
|
10/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,334
|
|
|
|
2,666
|
|
|
|
N/A
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
1,866
|
|
|
|
81,208
|
|
|
|
9,400
|
|
|
|
409,088
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
1,044,480
|
|
|
|
|
|
|
|
|
|
|
|
|
5,400
|
|
|
|
10,800
|
|
|
|
N/A
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
7,600
|
|
|
|
330,752
|
|
|
|
18,600
|
|
|
|
809,472
|
|
|
|
|
0
|
|
|
|
38,200
|
|
|
|
N/A
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
11,800
|
|
|
|
513,536
|
|
|
|
12,400
|
|
|
|
539,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Larson(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane L. Dickey(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Hacketts options vest as follows: 250,000 options
on
12/3/2007;
26,667 options on
11/15/2007,
26,666 options on
11/15/2008;
63,667 options on
12/4/2007,
63,667 options on
12/4/2008
and 63,666 options on
12/4/2009.
Mr. Hacketts restricted stock vests as follows:
100,000 shares on
12/03/2007;
20,000 shares on
11/15/2007;
20,000 shares on
11/15/2008;
19,500 shares on
12/04/2007;
19,500 shares on
12/04/2008
and 19,500 shares on
12/04/2009.
The performance periods for Mr. Hacketts performance
unit awards end on
12/2/2007,
12/31/2008
and
12/31/2009. |
|
(2) |
|
Mr. Walkers options vest as follows: 25,000 options
on 9/6/2007;
25,000 options on
9/6/2009;
7,600 options on
11/15/2007;
7,600 options on
11/15/2008;
15,467 options on
12/4/2007;
15,467 options on |
49
|
|
|
|
|
12/4/2008
and 15,466 options on
12/4/2009.
Mr. Walkers restricted stock vests as follows:
11,500 shares on
9/6/2007;
11,500 shares on
9/6/2008;11,500 shares
on 9/6/2009;
5,400 shares on
11/15/2007;
5,400 shares on
11/15/2008;
4,767 shares on
12/4/2007;
4,767 shares on
12/4/2008;
and 4,766 shares on
12/4/2009.
The performance periods for Mr. Walkers performance
unit awards end on
12/31/2008
and
12/31/2009. |
|
(3) |
|
Mr. Peases options vested upon his termination from
the Company on December 31, 2006. The exercise period for
Mr. Peases vested options was extended from three
months to nine months after his date of termination, but may be
exercised no later than the end of the specified option term.
Mr. Peases restricted shares were vested upon his
date of termination and his performance units were paid out at
target upon his separation from the Company. |
|
(4) |
|
Mr. Reeves options vest as follows: 85,000 options on
3/22/2008;
5,533 options on
11/16/2007;
4,933 options on
11/15/2007;
4,933 options on
11/15/2008;
11,834 options on
12/4/2007;
11,833 options on
12/4/2008
and 11,833 options on
12/4/2009.
Mr. Reeves restricted stock vests as follows:
6,666 shares on
3/22/2007;
3,933 shares on
11/16/2007;
3,533 shares on
11/15/2007;
3,533 shares on
11/15/2008;
3,634 shares on
12/4/2007;
3,633 shares on
12/4/2008
and 3,633 shares on
12/4/2009.
The performance periods for Mr. Reeves performance
units end on
12/31/2007,
12/31/2008
and
12/31/2009. |
|
(5) |
|
Mr. Kurzs options vest as follows: 160,000 options on
10/30/07;
2,666 options on
11/16/2007;
5,400 options on
11/15/2007;
5,400 options on
11/15/2008;
12,734 options on
12/4/2007;
12,733 options on
12/4/2008
and 12,733 options on
12/4/2009.
Mr. Kurzs restricted stock vests as follows:
1,866 shares on
11/16/2007;
24,000 shares on
5/12/2008;
3,800 shares on
11/15/2007;
3,800 shares on
11/15/2008;
3,934 shares on
12/4/2007;
3,933 shares on
12/4/2008
and 3,933 shares on
12/4/2009.
The performance periods for Mr. Kurzs performance
units end on
12/31/2007,
12/31/2008
and
12/31/2009. |
|
(6) |
|
Certain of Mr. Larsons options were vested upon his
termination from the Company on August 31, 2006. Under the
terms of the stock option agreement(s), Mr. Larson has
90 days in which to exercise outstanding vested options
following termination. Certain of Mr. Larsons
restricted shares were vested upon his date of termination and
his performance units were paid out at target upon his
separation from the Company. |
|
(7) |
|
Ms. Dickeys options vested upon her termination from
the Company on August 31, 2006. Under the terms of the
stock option agreement(s), Ms. Dickey had 90 days in
which to exercise outstanding vested options following
termination. Ms. Dickeys restricted shares were
vested upon her date of termination and her performance units
were paid out at target upon her separation from the Company. |
50
OPTION
EXERCISES AND STOCK VESTED IN LAST FISCAL YEAR
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
Name
|
|
Exercise (#) (1)
|
|
|
Exercise ($) (2)
|
|
|
Vesting(#) (1)
|
|
|
Vesting ($) (2)
|
|
|
James T. Hackett
|
|
|
0
|
|
|
|
0
|
|
|
|
123,000
|
|
|
|
6,003,260
|
|
R. A. Walker
|
|
|
0
|
|
|
|
0
|
|
|
|
16,900
|
|
|
|
827,893
|
|
Mark L. Pease
|
|
|
0
|
|
|
|
0
|
|
|
|
100,300
|
|
|
|
4,427,216
|
|
Robert K. Reeves
|
|
|
0
|
|
|
|
0
|
|
|
|
14,133
|
|
|
|
678,253
|
|
Karl F. Kurz
|
|
|
20,000
|
|
|
|
394,300
|
|
|
|
13,666
|
|
|
|
637,082
|
|
David R. Larson
|
|
|
161,800
|
|
|
|
3,922,328
|
|
|
|
21,068
|
|
|
|
983,454
|
|
Diane L. Dickey
|
|
|
285,800
|
|
|
|
7,343,268
|
|
|
|
21,866
|
|
|
|
1,020,705
|
|
|
|
|
(1) |
|
Shares acquired on vesting includes restricted stock whose
restrictions have lapsed during 2006. Amounts for
Mr. Pease, Mr. Larson and Ms. Dickey also include
shares issued under performance unit awards that became payable
at target upon their separation from the Company. Amounts for
Mr. Hackett include 3,000 shares awarded in 2006
reflecting a special bonus approved by the Compensation
Committee in May 2006, the details of which can be found in the
footnotes of the Summary Compensation Table and Grants of
Plan-Based Awards Table. |
|
(2) |
|
The Value Realized reflects the taxable value to the named
executive as of the date of the option exercise, vesting of
restricted shares or payout of performance awards. The actual
value ultimately realized by the named executive may be more or
less than the Value Realized calculated in the above table
depending on the timing in which the named executive held or
sold the shares associated with the exercise or vesting
occurrence. |
51
PENSION
BENEFITS FOR THE LAST FISCAL YEAR
The Company maintains the Anadarko Retirement Plan (the
Retirement Plan), a funded tax-qualified defined
benefit pension plan. In addition, the Company also maintains
the Anadarko Retirement Restoration Plan (the Restoration
Plan), an unfunded, nonqualified pension benefit that is
designed to provide for supplementary pension benefits due to
limitations imposed by the Internal Revenue Code that restrict
the amount of benefits payable under tax-qualified plans. For a
more complete description of the Retirement Plan and Restoration
Plan and the benefits under those plans, please refer to those
sections in the Retirement Benefits section of
Compensation Discussion and Analysis on page 22.
The present values provided in the below table are based on the
pension benefits accrued through December 31, 2006,
assuming that such benefit is paid in the same form as reflected
in the accounting valuation. The benefits are assumed to
commence at the plans earliest unreduced retirement age,
which is age 62 for the Anadarko Plans. All pre-retirement
decrements such as pre-retirement mortality and terminations
have been ignored for the purposes of these calculations. After
retirement, mortality is assumed to follow the RP-2000 Combined
Health Mortality Table Projected to 2010 using Scale AA. The
interest rate used for discounting payments back to
December 31, 2006 is 5.75%, consistent with the accounting
valuation.
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Present Value of
|
|
|
Payments
|
|
|
|
|
|
Years of
|
|
|
Accumulated
|
|
|
During
|
|
|
|
|
|
Credited Service
|
|
|
Benefit
|
|
|
Last Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
James T. Hackett(1)(2)
|
|
Anadarko Retirement Plan
|
|
|
3.0000
|
|
|
|
73,315
|
|
|
|
0
|
|
|
|
Anadarko Retirement Restoration
Plan
|
|
|
6.0000
|
|
|
|
3,047,233
|
|
|
|
0
|
|
R. A. Walker(2)
|
|
Anadarko Retirement Plan
|
|
|
1.0000
|
|
|
|
20,532
|
|
|
|
0
|
|
|
|
Anadarko Retirement Restoration
Plan
|
|
|
1.0000
|
|
|
|
38,961
|
|
|
|
0
|
|
Mark L. Pease
|
|
Anadarko Retirement Plan
|
|
|
28.0000
|
|
|
|
600,407
|
|
|
|
0
|
|
|
|
Anadarko Retirement Restoration
Plan
|
|
|
28.0000
|
|
|
|
1,867,335
|
|
|
|
0
|
|
Robert K. Reeves(2)
|
|
Anadarko Retirement Plan
|
|
|
3.0000
|
|
|
|
58,791
|
|
|
|
0
|
|
|
|
Anadarko Retirement Restoration
Plan
|
|
|
3.0000
|
|
|
|
157,616
|
|
|
|
0
|
|
Karl F. Kurz
|
|
Anadarko Retirement Plan
|
|
|
6.0000
|
|
|
|
97,079
|
|
|
|
0
|
|
|
|
Anadarko Retirement Restoration
Plan
|
|
|
6.0000
|
|
|
|
194,218
|
|
|
|
0
|
|
David R. Larson
|
|
Anadarko Retirement Plan
|
|
|
26.7885
|
|
|
|
511,603
|
|
|
|
0
|
|
|
|
Anadarko Retirement Restoration
Plan
|
|
|
26.7885
|
|
|
|
499,257
|
|
|
|
0
|
|
Diane L. Dickey
|
|
Anadarko Retirement Plan
|
|
|
29.0000
|
|
|
|
622,072
|
|
|
|
0
|
|
|
|
Anadarko Retirement Restoration
Plan
|
|
|
29.0000
|
|
|
|
810,116
|
|
|
|
0
|
|
|
|
|
(1) |
|
Mr. Hackett has an employment agreement that will provide
him with an additional pension service credit under the
Restoration Plan if he remains employed with the Company through
December 3, 2008. The additional pension service credit was
included in his employment agreement to replace his forgone
benefits at a previous employer. The value of
Mr. Hacketts Restoration Plan in the table includes
the effect of this additional pension service credit assuming
its application as of December 31, 2006. However, as of
December 31, 2006, Mr. Hackett has not yet earned the
right to this additional pension service credit.
Mr. Hacketts Restoration Plan value as of
December 31, 2006 excluding the effect of the additional
pension service credit is $827,977, for a total pension value of
$901,292, all of which will not be vested until 2008. |
|
(2) |
|
As of December 31, 2006, Messrs. Hackett, Walker, and
Reeves were not yet vested in the Retirement Plan and the
Restoration Plan. A participant becomes fully vested in the
plans upon the completion of five years of service with the
Company. For Messrs. Hackett, Walker, and Reeves the values
under the Present Value of Accumulated Benefit
column assume that these officers are vested in the Retirement
Plan and Restoration Plan. |
52
NONQUALIFIED
DEFERRED COMPENSATION FOR THE LAST FISCAL YEAR
The Company maintains a Deferred Compensation Plan for directors
and certain employees, including the named executive officers.
The Deferred Compensation Plan allows employees to voluntarily
defer receipt of up to 75% of their salary
and/or up to
100% of their annual incentive bonus payments. It allows
directors to defer receipt of up to 100% of their board and
committee retainers
and/or board
and committee meeting fees. The Deferred Compensation Plan
permits participants to allocate the deferred amounts among a
group of notional accounts that mirror the gains
and/or
losses of various investment funds. The notional accounts do not
provide for above market or preferential earnings. In general,
deferred amounts are distributed to the participant upon
termination or at a specific date as elected by the participant.
The Company does not subsidize or match any deferrals of
compensation into the Plan. Executive contributions to the
Deferred Compensation Plan for 2006 include salary and any
portion of the 2005 Annual Incentive Plan award deferred at the
election of the executive. The 2005 Annual Incentive award was
payable in 2006. Any amounts deferred under the 2006 Annual
Incentive Plan award, as disclosed in the Summary Compensation
Table, will be included in this table in 2007.
The Company has a Savings Restoration Plan that accrues a
benefit substantially equal to the amount that, in the absence
of certain limits imposed by the Internal Revenue Code, would
have been allocated to an employees account as Company
matching contributions under the Savings Plan. Amounts in the
Savings Restoration Plan receive earnings based on the
performance of Company stock. In January 2007, the Company
amended this Plan so that the earnings are no longer tied to the
performance of Company stock, but permits participants to
allocate the deferred amounts among a group of notional accounts
that mirror the gains
and/or
losses of various investment funds provided in the Savings Plan.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Company
|
|
|
|
|
|
Aggregate
|
|
|
Aggregate Balance
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Aggregate Earnings
|
|
|
Withdrawals/
|
|
|
at Last Fiscal
|
|
|
|
Last Fiscal Year
|
|
|
Last Fiscal Year
|
|
|
in Last Fiscal Year
|
|
|
Distributions
|
|
|
Year-End
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
James T. Hackett
Deferred Compensation
Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
186,992
|
|
|
|
(37,814
|
)
|
|
|
0
|
|
|
|
425,333
|
|
R. A. Walker
Deferred Compensation
Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
23,800
|
|
|
|
(2,193
|
)
|
|
|
0
|
|
|
|
21,607
|
|
Mark L. Pease
Deferred Compensation
Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
42,640
|
|
|
|
(31,918
|
)
|
|
|
0
|
|
|
|
386,283
|
|
Robert K. Reeves
Deferred Compensation
Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
38,900
|
|
|
|
(7,584
|
)
|
|
|
0
|
|
|
|
84,977
|
|
Karl F. Kurz
Deferred Compensation
Plan
|
|
|
118,263
|
|
|
|
0
|
|
|
|
20,078
|
|
|
|
0
|
|
|
|
222,989
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
35,230
|
|
|
|
(9,505
|
)
|
|
|
0
|
|
|
|
109,698
|
|
David R. Larson
Deferred Compensation
Plan
|
|
|
42,800
|
|
|
|
0
|
|
|
|
11,628
|
|
|
|
0
|
|
|
|
123,930
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
8,943
|
|
|
|
(615
|
)
|
|
|
16,957
|
|
|
|
23,610
|
|
Diane L. Dickey
Deferred Compensation
Plan
|
|
|
36,917
|
|
|
|
0
|
|
|
|
9,262
|
|
|
|
0
|
|
|
|
82,765
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
9,500
|
|
|
|
(1,039
|
)
|
|
|
71,072
|
|
|
|
28,300
|
|
53
TRANSACTIONS
WITH MANAGEMENT AND OTHERS
Ongoing
Benefits
In 2004, the Company replaced, in its entirety, the Memorandum
of Understanding dated October 26, 2000 between the Company
and Mr. Allison. The 2004 Agreement was effective as of
Mr. Allisons retirement from the Company in December
2003. The Agreement provides that during Mr. Allisons
lifetime, he has the use of the Companys aircraft, or an
alternative aircraft for up to 200 hours annually. If the
Company no longer maintains an aircraft, the Company will
provide an annual payment sufficient to allow him to secure
comparable aircraft usage. In addition, the Agreement provides
that the Company will furnish Mr. Allison, during his
lifetime, office space, secretarial assistance, office utilities
and a monitored security system for his residence.
On June 22, 2006, the Company entered into an Amended and
Restated Continuity Agreement with Mr. Corbett, pursuant to
which, among other things, Mr. Corbett was granted the
following benefits until August 10, 2007:
|
|
|
|
|
use of Mr. Corbetts office in Oklahoma City,
Oklahoma, or, at the Companys option, use of a different
office in Oklahoma City, Oklahoma, having similar square footage
and in the same class of building as Mr. Corbetts
current office, and
|
|
|
|
exclusive use of the services of a secretary to be hired and
compensated by Mr. Corbett, provided, that the Company will
reimburse Mr. Corbett for all reasonable compensation and
benefits provided to the secretary up to a maximum of $60,000
(plus an income tax
gross-up)
for the one-year period.
|
Performance
Unit Agreements
On December 11, 2006, the Compensation Committee adopted a
form of performance unit agreement under the Companys 1999
Stock Incentive Plan. All executive officers will be eligible to
receive awards pursuant to the performance unit agreement.
Under the performance unit agreement, a participant may earn up
to a certain number of performance units. Each
performance unit represents the value of one share of the
Companys common stock. Payout of performance units is
contingent upon the achievement of certain performance goals,
based on total shareholder return relative to a predetermined
peer group and reserve replacement efficiency, over a
predetermined performance period, as described further in the
agreement. Performance units earned for a given performance
period will only be issued to a participant following the
Compensation Committees review and certification of the
actual performance results for the applicable performance
period. The Compensation Committee may cause the Company to pay
out an award in cash, shares of Company common stock, or a
combination of both.
A participant will receive the target amount of
performance units in the event of death, disability, change of
control, or involuntary termination (as such terms are used in
the agreement). If a participant retires before the end of a
performance period, and the performance goals for such
performance period are met, the participant will receive a
pro-rata portion of the performance units based on the number of
months of employment completed during the performance period. If
a participant terminates for any other reason, the award will be
forfeited.
Invensys
Process Systems, Inc.
Invensys Process Systems, Inc. and its affiliates provide the
Company with process automation services. In 2006, Anadarko paid
Invensys approximately $1.5 million in connection with
these services. This amount is less than 1% of Invensyss
consolidated gross revenues for its fiscal year ended at
March 31, 2006. Ms. Eberhart, a director of the
Company, became President and CEO of Invensys in January, 2007.
54
Item 2
Ratification of the Appointment of the Independent
Auditor
The Audit Committee has appointed KPMG LLP, an independent
registered public accounting firm, to audit the Companys
financial statements for 2007. The management of the Company is
asking you to ratify that appointment.
The Board recommends that you vote FOR
ratification of the appointment of KPMG LLP to audit the
Companys financial statements for 2007. If the
stockholders do not ratify the appointment of KPMG LLP, the
Audit Committee will make the final determination of the
independent auditor for 2007.
STOCKHOLDER
PROPOSALS FOR THE 2008 ANNUAL MEETING OF
STOCKHOLDERS
An eligible stockholder who wants to have a qualified proposal
considered for inclusion in the proxy statement for the 2008
Annual Meeting must notify the Corporate Secretary of the
Company no later than November 23, 2007 to be considered
for inclusion in the proxy statement and form of proxy relating
to the 2008 Annual Meeting. Under the Companys By-Laws,
for any stockholder proposal that is not included in the 2007
proxy statement and form of proxy to be brought before the 2008
Annual Meeting, such proposal must be received by the Corporate
Secretary of the Company at its principal executive offices as
more fully described in the Companys By-Laws.
INDEPENDENT
AUDITOR
KPMG LLP, an independent registered public accounting firm,
served as the Companys independent auditor during 2006.
Representatives of KPMG LLP will be present at the meeting to
make a statement, if they desire to do so, and to respond to
appropriate questions from stockholders.
The following table presents fees for the audits of the
Companys annual consolidated financial statements for 2006
and 2005 and for other services provided by KPMG LLP.
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
Audit Fees
|
|
$
|
6,426,000
|
|
|
$
|
3,583,000
|
|
Audit-Related Fees
|
|
|
866,000
|
|
|
|
566,000
|
|
Tax Fees
|
|
|
366,000
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
7,658,000
|
|
|
$
|
4,669,000
|
|
|
|
|
|
|
|
|
|
|
Audit fees are primarily for the audit of the Companys
consolidated financial statements including the audit of the
effectiveness of the Companys internal controls over
financial reporting and the reviews of the Companys
financial statements included in the
Forms 10-Q.
Audit-related fees are primarily for the audits of the
Companys benefit plans, other audits, consents, comfort
letters and certain financial accounting consultation. Tax fees
are primarily for tax planning compliance and services including
approximately $285,000 and $280,000 in 2006 and 2005,
respectively, for services related to individual income tax
services for Company employees in connection with foreign
assignments. The Audit Committee has concluded that the
provision of tax services is compatible with maintaining KPMG
LLPs independence.
The Audit Committee adopted a Pre-Approval Policy with respect
to services which may be performed by KPMG LLP. This policy
lists specific audit-related and tax services as well as any
other services that KPMG LLP is authorized to perform and sets
out specific dollar limits for each specific service, which may
not be exceeded without additional Audit Committee
authorization. The Audit Committee receives quarterly reports on
the status of expenditures pursuant to that Pre-Approval Policy.
The Audit Committee reviews the policy at least annually in
order to approve services and limits for the current year. Any
service that is not clearly enumerated in the policy must
receive specific pre-approval by the Audit Committee or by its
Chairperson, to whom such authority has been conditionally
delegated, prior to engagement. During 2006, no fees for
services outside the scope of audit, review, or attestation that
exceed the waiver provisions of
17 CFR 210.2-01(c)(7)(i)(C) were approved by the Audit
Committee.
55
PROXY
SOLICITATION
The Company pays for the cost of preparing, assembling and
mailing the material in connection with the solicitation of
proxies. The Company expects that the solicitation of proxies
will be primarily by mail but solicitations may also be made
personally or by telephone, email or facsimile by officers and
other employees of the Company without additional compensation.
The Company pays all costs of solicitation, including certain
expenses of brokers and nominees who mail proxy material to
their customers or principals. In addition, the Company has
engaged Morrow & Co., Inc. to assist in the
solicitation of proxies for this meeting at an estimated fee of
$7,500 plus disbursements.
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
In some cases, only one copy of this proxy statement or annual
report is being delivered to multiple stockholders sharing an
address unless we have received contrary instructions from one
or more of the stockholders. We will deliver promptly, upon
written or oral request, a separate copy of this proxy statement
or annual report to a stockholder at a shared address to which a
single copy of the document was delivered. To request separate
or multiple delivery of these materials now or in the future, a
stockholder may submit a written request to the Corporate
Secretary, Anadarko Petroleum Corporation, 1201 Lake Robbins
Drive, The Woodlands, Texas
77380-1046
or an oral request by calling the Corporate Secretary at
(832) 636-1000.
BY ORDER OF THE BOARD OF DIRECTORS
Robert K. Reeves
Senior Vice President, General Counsel and
Chief Administrative Officer
Dated:
March 27, 2007
The Woodlands, Texas
See enclosed proxy card please vote
promptly
56
|
|
|
Proxy Card ANADARKO PETROLEUM CORPORATION
|
|
Page 1 of 4 |
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ANADARKO PETROLEUM CORPORATION
The undersigned hereby appoints James T. Hackett, R.A. Walker and Robert K. Reeves, and
each of them, with power to act without the other and with power of substitution, as proxies and
attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side,
all the shares of Anadarko Petroleum Corporation Common Stock which the undersigned is entitled to
vote, and, in their discretion, to vote upon such other business as may properly come before the
Annual Meeting of Stockholders of the company to be held May 16, 2007 or at any adjournment or
postponement thereof, with all powers which the undersigned would possess if present at the
Meeting.
(Continued and to be marked, dated and signed, on the other side)
|
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|
|
|
|
|
|
|
|
Address Change/Comments (Mark the corresponding box on the reverse side)
|
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Ù FOLD AND DETACH HERE Ù
You can now access yourAnadarko PetroleumCorporation account online.
Access your Anadarko Petroleum Corporation stockholder account online via Investor ServiceDirect® (ISD).
Mellon Investor Services LLC, Transfer Agent for Anadarko Petroleum Corporation, now makes it
easy and convenient to get current information on your stockholder account.
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View account status
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View payment history for dividends |
View certificate history
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Make address changes |
View book-entry information
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Obtain a duplicate 1099 tax form |
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Establish/change your PIN |
Visit us on the web at http://www.melloninvestor.com
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
Investor ServiceDirect® is a registered trademark of Mellon Investor Services LLC
****TRY IT OUT****
www.melloninvestor.com/isd/
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Proxy Card ANADARKO PETROLEUM CORPORATION
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Page 2 of 4 |
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
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Proxy Card ANADARKO PETROLEUM CORPORATION
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Page 3 of 4 |
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THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED FOR ITEMS 1 AND 2.
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Please
Mark Here
for
Address
Change or
Comments
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o |
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SEE REVERSE SIDE |
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The Board of Directors |
recommends |
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WITHHELD |
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a vote FOR Items 1 and 2. |
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FOR |
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FOR ALL |
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FOR |
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AGAINST |
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ABSTAIN |
ITEM 1. Election of Directors |
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o |
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ITEM
2. Ratification of
appointment of
independent auditors. |
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o |
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Nominees: |
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01 Larry Barcus |
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02 James L. Bryan |
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03 H. Paulett Eberhart |
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04 James T. Hackett |
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WILL |
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ATTEND |
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Withheld for the nominees you
list below: (Write
that nominees name in the
space provided below.) |
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If you plan to attend the
Annual Meeting, please
mark the WILL ATTEND
box. |
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Each signatory to this proxy acknowledges |
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receipt from Anadarko Petroleum Corporation prior |
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to execution of this proxy of a notice of Annual |
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Meeting of Stockholders and a proxy statement |
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dated March 27, 2007. |
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Signature
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Signature
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Dated
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, 2007 |
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. |
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
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Proxy Card ANADARKO PETROLEUM CORPORATION
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Page 4 of 4 |
as if you marked, signed and returned your proxy card.
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INTERNET
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OR |
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TELEPHONE |
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http://www.proxyvoting.com/apc
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1-866-540-5760 |
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Use the internet to vote your proxy.
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Use any touch-tone telephone to |
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Have your proxy card in hand
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vote your proxy. Have your proxy |
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when you access the web site.
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card in hand when you call. |
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If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.melloninvestor.com/isd where step-by-step instructions will prompt you
through enrollment.
You can view the Annual Report and Proxy Statement
on the internet at www.anadarko.com
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Proxy Card ANADARKO PETROLEUM CORPORATION
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Page 1 of 3 |
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ANADARKO PETROLEUM CORPORATION
The undersigned hereby appoints James T. Hackett, R.A. Walker and Robert K. Reeves, and
each of them, with power to act without the other and with power of substitution, as proxies and
attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side,
all the shares of Anadarko Petroleum Corporation Common Stock which the undersigned is entitled to
vote, and, in their discretion, to vote upon such other business as may properly come before the
Annual Meeting of Stockholders of the company to be held May 16, 2007 or at any adjournment or
postponement thereof, with all powers which the undersigned would possess if present at the
Meeting.
(Continued and to be marked, dated and signed, on the other side)
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Address Change/Comments (Mark the corresponding box on the reverse side)
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Ù FOLD AND DETACH HERE Ù
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Proxy Card ANADARKO PETROLEUM CORPORATION
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Page 2 of 3 |
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THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED FOR ITEMS 1 AND 2.
|
|
Please
Mark Here
for
Address
Change or
Comments
|
|
o |
|
|
SEE REVERSE SIDE |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
The Board of Directors |
recommends |
|
|
|
WITHHELD |
|
|
|
|
|
|
|
|
a vote FOR Items 1 and 2. |
|
FOR |
|
FOR ALL |
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
ITEM 1. Election of Directors |
|
o |
|
o |
|
ITEM
2. Ratification of
appointment of
independent auditors. |
|
o |
|
o |
|
o |
|
Nominees: |
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|
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01 Larry Barcus |
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02 James L. Bryan |
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03 H. Paulett Eberhart |
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04 James T. Hackett |
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WILL |
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ATTEND |
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Withheld for the nominees you
list below: (Write
that nominees name in the
space provided below.) |
|
If you plan to attend the
Annual Meeting, please
mark the WILL ATTEND
box. |
|
o |
|
|
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Each signatory to this proxy acknowledges |
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receipt from Anadarko Petroleum Corporation prior |
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|
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|
|
to execution of this proxy of a notice of Annual |
|
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|
|
|
|
|
Meeting of Stockholders and a proxy statement |
|
|
|
|
|
|
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dated March 27, 2007. |
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Signature
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Signature
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Dated
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, 2007 |
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. |
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
|
|
|
Proxy Card ANADARKO PETROLEUM CORPORATION
|
|
Page 3 of 3 |
as if you marked, signed and returned your proxy card.
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INTERNET
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OR |
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TELEPHONE |
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http://www.proxyvoting.com/apc-2
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1-866-540-5760 |
|
|
Use the internet to vote your proxy.
|
|
|
|
|
Use any touch-tone telephone to |
|
|
Have your proxy card in hand
|
|
|
|
|
vote your proxy. Have your proxy |
|
|
when you access the web site.
|
|
|
|
|
card in hand when you call. |
|
|
|
|
|
|
|
|
|
|
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.melloninvestor.com/isd where step-by-step instructions will prompt you
through enrollment.
You can view the Annual Report and Proxy Statement
on the internet at www.anadarko.com
|
|
|
Proxy Card ANADARKO PETROLEUM CORPORATION
|
|
Page 1 of 3 |
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ANADARKO PETROLEUM CORPORATION
The undersigned hereby appoints James T. Hackett, R.A. Walker and Robert K. Reeves, and
each of them, with power to act without the other and with power of substitution, as proxies and
attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side,
all the shares of Anadarko Petroleum Corporation Common Stock which the undersigned is entitled to
vote, and, in their discretion, to vote upon such other business as may properly come before the
Annual Meeting of Stockholders of the company to be held May 16, 2007 or at any adjournment or
postponement thereof, with all powers which the undersigned would possess if present at the
Meeting.
(Continued and to be marked, dated and signed, on the other side)
|
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|
|
|
|
|
|
|
|
|
|
Address Change/Comments (Mark the corresponding box on the reverse side)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Ù FOLD AND DETACH HERE Ù
|
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|
Proxy Card ANADARKO PETROLEUM CORPORATION
|
|
Page 2 of 3 |
|
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|
|
|
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED FOR ITEMS 1 AND 2.
|
|
Please
Mark Here
for
Address
Change or
Comments
|
|
o |
|
|
SEE REVERSE SIDE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors |
recommends |
|
|
|
WITHHELD |
|
|
|
|
|
|
|
|
a vote FOR Items 1 and 2. |
|
FOR |
|
FOR ALL |
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
ITEM 1. Election of Directors |
|
o |
|
o |
|
ITEM
2. Ratification of
appointment of
independent auditors. |
|
o |
|
o |
|
o |
|
Nominees: |
|
|
|
|
|
|
|
|
01 Larry Barcus |
|
|
|
|
|
|
|
|
02 James L. Bryan |
|
|
|
|
|
|
|
|
03 H. Paulett Eberhart |
|
|
|
|
|
|
|
|
|
04 James T. Hackett |
|
|
|
|
|
|
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|
WILL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATTEND |
|
|
|
|
Withheld for the nominees you
list below: (Write
that nominees name in the
space provided below.) |
|
If you plan to attend the
Annual Meeting, please
mark the WILL ATTEND
box. |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Each signatory to this proxy acknowledges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
receipt from Anadarko Petroleum Corporation prior |
|
|
|
|
|
|
|
|
to execution of this proxy of a notice of Annual |
|
|
|
|
|
|
|
|
Meeting of Stockholders and a proxy statement |
|
|
|
|
|
|
|
|
dated March 27, 2007. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
|
|
|
|
Signature
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|
Dated
|
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|
, 2007 |
|
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|
|
|
|
|
|
|
|
|
|
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. |
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
|
|
|
Proxy Card ANADARKO PETROLEUM CORPORATION
|
|
Page 3 of 3 |
as if you marked, signed and returned your proxy card.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERNET
|
|
|
OR |
|
|
TELEPHONE |
|
|
http://www.proxyvoting.com/apc-2
|
|
|
|
|
1-866-540-5760 |
|
|
Use the internet to vote your proxy.
|
|
|
|
|
Use any touch-tone telephone to |
|
|
Have your proxy card in hand
|
|
|
|
|
vote your proxy. Have your proxy |
|
|
when you access the web site.
|
|
|
|
|
card in hand when you call. |
|
|
|
|
|
|
|
|
|
|
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.melloninvestor.com/isd where step-by-step instructions will prompt you
through enrollment.
You can view the Annual Report and Proxy Statement
on the internet at www.anadarko.com