def14a
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. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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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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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Anadarko Petroluem
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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P.O. Box 1330
Houston, Texas
77251-1330
March 31,
2008
TO OUR STOCKHOLDERS:
The 2008 Annual Meeting of Stockholders of Anadarko Petroleum
Corporation will be held at The Woodlands Resort &
Conference Center, 2301 N. Millbend Drive, The
Woodlands, Texas, 77380 on Tuesday, May 20, 2008, at
8:00 a.m. (Central Daylight Time).
The Notice of the Annual Meeting and Proxy Statement, which are
attached, provide information concerning the matters to be
considered at the Annual Meeting. The Annual Meeting will cover
only the business contained in the Proxy Statement and will not
include a management presentation.
Pursuant to new rules promulgated by the Securities and Exchange
Commission, we are providing access to our proxy materials over
the Internet. As a result, we are mailing to many of our
stockholders a Notice of Internet Availability of Proxy
Materials (Notice) instead of a paper copy of this Proxy
Statement and our Annual Report. The Notice contains
instructions on how to access those documents over the Internet,
as well as instructions on how to request a paper copy of our
proxy materials. All stockholders who do not receive a Notice
will receive a paper copy of the proxy materials by mail. We
believe that this new process will reduce the environmental
impact and lower the costs of printing and distributing our
proxy materials.
We value your opinions and encourage you to participate in this
years Annual Meeting by voting your proxy. You may vote by
Internet or by telephone using the instructions on the Notice,
or, if you received a paper copy of the proxy card, by signing
and returning it in the envelope provided. 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
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 Resort &
Conference Center, 2301 N. Millbend Drive, The
Woodlands, Texas, 77380, on Tuesday, May 20, 2008, at
8:00 a.m. (Central Daylight Time) to consider the following
proposals:
(1) elect three directors;
(2) ratify the appointment of KPMG LLP as the
Companys independent auditor for 2008;
(3) approve the Anadarko Petroleum Corporation 2008 Omnibus
Incentive Compensation Plan;
(4) approve the Anadarko Petroleum Corporation
2008 Director Compensation Plan;
(5) if presented, consider and vote on two stockholder
proposals; and
(6) transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
If you are a record holder of common stock at the close of
business on March 26, 2008, 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 provided. If you received a paper
copy of the proxy card, you may also vote by completing and
mailing the proxy card in the postage-prepaid envelope provided
for your convenience. You may also attend and vote at the Annual
Meeting. You may revoke your proxy at any time before the vote
is taken by following the instructions in this proxy statement.
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,
Chief Administrative Officer and Corporate Secretary
March 31, 2008
The Woodlands, Texas
Important
Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be Held on May 20, 2008:
The Proxy Statement and Annual Report for 2007 are available
at
http://bnymellon.mobular.net/bnymellon/apc.
TABLE OF
CONTENTS
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P. O. Box 1330
Houston, Texas
77251-1330
PROXY
STATEMENT
May 20, 2008
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, sometimes referred to as the Company or
Anadarko. The Annual Meeting will be held on Tuesday,
May 20, 2008. The proxy materials, including this proxy
statement, proxy card or voting instructions and our 2007 Annual
Report are being distributed and made available on or about
April 4, 2008.
In accordance with rules and regulations recently adopted by the
U.S. Securities and Exchange Commission, or SEC, we have
elected to provide access to our proxy materials to our
stockholders by providing access to such documents on the
Internet. Accordingly, a Notice of Internet Availability of
Proxy Materials, or the Notice, was mailed to most of our
stockholders on or about April 4, 2008. Stockholders will
have the ability to access the proxy materials on a website
referred to in the Notice or request a printed set of the proxy
materials to be sent to them, by following the instructions in
the Notice.
The Notice will also provide instructions on how to inform us to
send future proxy materials to you electronically by
e-mail or in
printed form by mail. If you choose to receive future proxy
materials by
e-mail, you
will receive an
e-mail next
year with instructions containing a link to those materials and
a link to the proxy voting site. Your election to receive proxy
materials by
e-mail or
printed form will remain in effect until you terminate it.
Choosing to receive future proxy materials by
e-mail will
allow us to provide you with the information you need in a
timelier manner, will save us the cost of printing and mailing
documents to you, and will conserve natural resources.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
Where and
when is the Annual Meeting?
The Annual Meeting will be at The Woodlands Resort &
Conference Center, 2301 N. Millbend Drive, The
Woodlands, Texas, 77380, on Tuesday, May 20, 2008, at
8:00 a.m. (Central Daylight Time).
Who may
vote?
You may vote if you were the record holder of Anadarko common
stock as of the close of business on March 26, 2008, the
record date for the Annual Meeting. Each share of Anadarko
common stock is entitled to one vote at the meeting. On the
record date, there were 478,386,502 shares of common stock
outstanding and entitled to vote at the Annual Meeting.
May I
attend the Annual Meeting?
Yes. Attendance is limited to stockholders of record as of the
record date for the Annual 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 Annual 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 Annual Meeting, to be admitted. Cameras,
recording devices and other electronic devices will not be
permitted at the Annual Meeting.
Why did I
receive a Notice in the mail regarding the Internet availability
of proxy materials this year instead of a full set of proxy
materials?
This year, in connection with new SEC rules that allow companies
to furnish their proxy materials over the Internet, we have sent
to most of our stockholders a Notice of Internet Availability of
Proxy Materials instead of a paper copy of the proxy materials.
Instructions on how to access the proxy materials over the
Internet or to request a paper copy may be found in the Notice.
In addition, stockholders may request to receive proxy materials
in printed form by mail or electronically by
e-mail on an
ongoing basis. A stockholders election to receive proxy
materials by mail or
e-mail will
remain in effect until the stockholder terminates it.
Why
didnt I receive a Notice in the mail regarding the
Internet availability of proxy materials?
We are providing certain stockholders, including those who have
previously requested to receive paper copies of the proxy
materials, with paper copies of the proxy materials instead of a
Notice. If you would like to reduce the costs incurred by us in
mailing proxy materials, you can consent to receiving all future
proxy statements, proxy cards and annual reports electronically
via e-mail
or the Internet. To sign up for electronic delivery, please
follow the instructions provided in your Notice, or if you
received a printed version of the proxy materials by mail, by
following the instructions provided with your proxy materials
and on your proxy card or voting instruction card to vote using
the Internet. When prompted, indicate that you agree to receive
or access stockholder communications electronically in the
future.
Can I
vote my shares by filling out and returning the
Notice?
No. The Notice will, however, provide instructions on how to
vote by Internet, by telephone, by requesting and returning a
paper proxy card, or by submitting a ballot in person at the
Annual Meeting.
How can I
access the proxy materials over the Internet?
Your Notice or proxy card will contain instructions on how to
view our proxy materials for the Annual Meeting on the Internet.
Our proxy materials are also available at
http://bnymellon.mobular.net/bnymellon/apc.
What am I
voting on?
You are voting on:
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the election of three directors;
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the ratification of KPMG LLP as our independent auditor for 2008;
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approval of the Anadarko Petroleum Corporation 2008 Omnibus
Incentive Compensation Plan;
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approval of the Anadarko Petroleum Corporation
2008 Director Compensation Plan;
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if presented, two stockholder proposals; and
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any other business properly coming before the Annual 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;
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FOR the ratification of KPMG LLP as our independent
auditor for 2008;
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FOR the approval of the 2008 Omnibus Incentive
Compensation Plan;
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FOR the approval of the 2008 Director Compensation
Plan; and
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AGAINST each of the stockholder proposals.
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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 Notice, or if you received a
proxy card by mail, 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 19, 2008.
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Vote by telephone by following the instructions on the Notice,
or if you received a proxy card, by 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 19, 2008.
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If you received a proxy card by mail, 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 19, 2008.
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You may attend and vote at the Annual Meeting. The Board
recommends that you vote using one of the methods discussed
above, as it is not practical for most stockholders to attend
and vote at the Annual Meeting. Using one of these methods to
vote will not limit your right to vote at the Annual 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 Annual Meeting.
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If I vote
by telephone or Internet and received a proxy card in the mail,
do I need to return my proxy card?
No.
If I vote
by mail, telephone or Internet, may I still attend the Annual
Meeting?
Yes.
Can I
change my vote?
If you are a stockholder of record, you may revoke your proxy at
any time before the voting polls are closed at the Annual
Meeting, by the following methods:
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voting at a later time by Internet or telephone;
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voting in person at the Annual Meeting;
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delivering to the Corporate Secretary of Anadarko a proxy with a
later date or a written revocation of your proxy; or
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giving notice to the inspector of election at the Annual Meeting.
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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 Annual Meeting?
Your shares are counted as present at the Annual Meeting if you
attend the Annual Meeting and vote in person or if you properly
return a proxy by Internet, telephone or mail. In order for us
to hold our Annual Meeting, holders of a majority of our common
stock entitled to vote must be present in person or by proxy at
the Annual 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, or the NYSE, 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 new equity compensation
plans and stockholder proposals.
How many
votes are needed to approve each of the proposals?
The election of each director requires the affirmative vote of a
majority of the votes cast for such director. Under our By-Laws,
a majority of votes are cast for the election of a director if
the number of votes cast for the director exceeds
the number of votes cast against the director, with
abstentions and broker non-votes not counted as a vote cast
either for or against the director. The
ratification of the independent auditor requires the affirmative
vote of a majority of the shares entitled to vote and present in
person or by proxy at the Annual Meeting. The approval of each
of the new equity compensation plans requires the affirmative
vote of the majority of votes cast for each respective proposal,
provided that the total votes cast represent a majority of all
shares entitled to vote.
Could
other matters be decided at the Annual Meeting?
We are not aware of any matters that will be considered at the
Annual Meeting other than those set forth in this proxy
statement. 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 Annual Meeting?
We will announce voting results at the Annual Meeting, and we
will publish the final results in our quarterly report for the
second quarter of 2008. You may access or obtain 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.
How can I
view the stockholder list?
A complete list of stockholders entitled to vote at the Annual
Meeting will be available to view during the Annual Meeting. You
may access this list at our offices at 1201 Lake Robbins Drive,
The Woodlands, Texas 77380 during ordinary business hours for a
period of ten days before the Annual Meeting.
4
Who pays
for the proxy solicitation related to the Annual
Meeting?
We do. In addition to sending you these materials or
otherwise providing you access to these materials, some of our
directors and officers as well as management and non-management
employees may contact you by telephone, mail,
e-mail or in
person. You may also be solicited by means of press releases
issued by Anadarko, postings on our website, www.anadarko.com,
and advertisements in periodicals. None of our officers or
employees will receive any extra compensation for soliciting
you. We have retained Morrow & Co., Inc. to assist us
in soliciting your proxy for an estimated fee of $7,500, plus
reasonable out-of-pocket expenses. Morrow will ask brokers and
other custodians and nominees whether other persons are
beneficial owners of Anadarko common stock. If so, we will
supply them with additional copies of the proxy materials for
distribution to the beneficial owners. We will also reimburse
banks, nominees, fiduciaries, brokers and other custodians for
their costs of sending the proxy materials to the beneficial
owners of Anadarko common stock.
If I want
to submit a stockholder proposal or nominate a director for the
2009 Annual Meeting, when is that proposal or nomination
due?
If you are an eligible stockholder and want to submit a proposal
for possible inclusion in next years proxy statement, your
proposal must be delivered to the attention of our Corporate
Secretary and must be received at our principal executive
offices no later than November 30, 2008 to be considered
for inclusion in the proxy statement and form of proxy relating
to the 2009 Annual Meeting. We will only consider proposals that
meet the requirements of the applicable rules of the Securities
and Exchange Commission, or SEC. Similarly, if you wish to
nominate an individual for election to our Board of Directors,
our By-Laws provide that you must provide your nomination in
writing to our Corporate Secretary no later than
February 19, 2009 and no earlier than January 20, 2009.
How can I
obtain a copy of the Annual Report on
Form 10-K?
Stockholders may request a free copy of our Annual Report on
Form 10-K
by submitting such request to the Corporate Secretary, Anadarko
Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands,
Texas
77380-1046.
Alternatively, stockholders can access our Annual Report on
Form 10-K
on Anadarkos website at www.anadarko.com.
Will I
get more than one copy of the proxy statement, annual report or
Notice if there are multiple stockholders at my
address?
In some cases, only one copy of this proxy statement, annual
report or Notice 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, annual report or Notice to a stockholder at a shared
address to which a single copy of the document was delivered.
Stockholders sharing an address may also submit requests for
delivery of a single copy of the proxy statement, annual report
or Notice. To request separate or single 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.
5
ANADARKO
BOARD OF DIRECTORS
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ITEM 1
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ELECTION
OF DIRECTORS
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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 Annual Meeting, the terms of three directors will expire.
All three of the directors have been nominated and, if elected
at this meeting, will hold office until the expiration of each
of their terms in 2011. 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 Annual Meeting.
Our By-Laws provide for the election of directors by the
majority vote of stockholders in uncontested elections. This
means the number of votes cast for a nominees election
must exceed the number of votes cast against such nominees
election in order for him or her to be elected to the Board of
Directors. In addition, each nominee is required to provide an
irrevocable letter of resignation that states that he or she
will resign in the event that director does not receive the
required majority vote. In the event a director fails to receive
a majority of votes cast and the Board accepts the resignation
tendered, then that director would cease to be a director of
Anadarko. Each of the nominees named below has submitted an
irrevocable letter of resignation that becomes effective in the
event he does not receive a majority of the votes cast for his
election and the Board decides to accept such resignation.
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF
THE NOMINEES LISTED BELOW.
Directors
to be Nominated this Year by the Board of Directors for Terms
Expiring in 2011
John R. Butler, Jr. (69) Since 1976,
Mr. Butler has been Chairman of J. R. Butler and Company, a
reservoir engineering company located in Houston, Texas. Since
August 2006, Mr. Butler has served as a director of
BreitBurn Energy Partners L.P., a publicly-traded upstream
master limited partnership, and also serves as a director of the
Houston chapter of the National Association of Corporate
Directors. He is currently a member of the Society of Petroleum
Evaluation Engineers. Mr. Butler has been a director of the
Company since 1996.
Luke R. Corbett (61) Mr. Corbett has
been a retired business executive since Kerr-McGee
Corporations merger with Anadarko in August 2006. He
served as Chairman and Chief Executive Officer of Kerr-McGee
from 1999 until August 2006. 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. Mr. Corbett has been a director of the Company
since August 2006.
John R. Gordon (59) 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. (69)
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, and 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.
6
Peter J. Fluor (60) Mr. Fluor has been
Chairman and CEO of Texas Crude Energy, Inc., a private,
independent oil and gas exploration company located in Houston,
Texas, since 1990. He has been employed by Texas Crude Energy,
Inc. since 1972 and took over the responsibilities of President
in 1980. Mr. Fluor serves as lead director of Fluor
Corporation, a director of Cameron International Corporation and
a director of The Welch Foundation. Mr. Fluor has been a
director of the Company since August 2007.
John W. Poduska, Sr. (70)
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.
Paula Rosput Reynolds (51) Ms. Reynolds
is President and CEO of Safeco Corporation, a property and
casualty insurance company located in Seattle, Washington. Prior
to joining Safeco in January 2006, she served as Chairman,
President and CEO of AGL Resources Inc., a regional energy
services holding company from August 2002 to December 2005.
Ms. Reynolds also previously served as President and CEO of
Houston-based Duke Energy North America, a subsidiary of Duke
Energy, which operated power-generating facilities across the
United States, and as Senior Vice President of Pacific Gas
Transmission Company, which owned and operated a major natural
gas pipeline in the Pacific Northwest. She is also a director of
Safeco Corporation and Delta Air Lines, Inc. Ms. Reynolds
has been a director of the Company since August 2007.
Continuing
Directors with Terms Expiring in 2010
Larry Barcus (70) Since January 2008,
Mr. Barcus has served as Vice Chairman of L.G. Barcus and
Sons, Inc., a general contractor, located in Kansas City, Kansas
with operations nationwide. He had previously served as Chairman
from 1990 to January 2008. He also served as Chairman of First
Community Bancshares and Chairman of First Community Bank, both
banking institutions, from 1995 to January 2007. Mr. Barcus
has been a director of the Company since 1986.
James L. Bryan (71) 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 (54)
Ms. Eberhart has served as President and Chief Executive
Officer of Invensys Process Systems, a process automation
company located in Plano, Texas, since January 2007. 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 Financial Executives
International and the American Institute of Certified Public
Accountants. Ms. Eberhart also serves as a director of
Advanced Micro Devices, Inc. Ms. Eberhart has been a
director of the Company since August 2004.
James T. Hackett (54) 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 currently serves as a director of Fluor Corporation and
Temple-Inland, Inc. and serves as Chairman of the Board of the
Federal Reserve Bank of Dallas. Mr. Hackett is retiring
from the Temple-Inland Board of Directors effective at
Temple-Inlands May 2, 2008 annual stockholder meeting.
7
CORPORATE
GOVERNANCE
Our Board of Directors recognizes that excellence in corporate
governance is essential in carrying out its responsibilities to
our constituents, including our stockholders, employees,
customers, communities and creditors. Our By-Laws, Corporate
Governance Guidelines, Board Committee charters and Code of
Business Conduct and Ethics provide the structure for our
corporate governance. We have been committed to good governance
for several years; a majority of our Board has been comprised of
independent directors since the Company became an independent
company in 1986. In addition, we have recently implemented the
director majority voting standard in uncontested director
elections, including the election of our directors at the Annual
Meeting.
The Audit Committee, the Compensation and Benefits Committee
(generally referred to in this proxy statement as the
Compensation Committee) and the Nominating and Corporate
Governance 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, as amended
from time to time, can be found on the Companys website at
http://www.anadarko.com/investor_relations/governance.asp,
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.
You can submit such a request to the Corporate Secretary,
Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The
Woodlands, Texas 77380-1046.
Each director that has served on our Board during 2007 has
attended at least 75 percent of the meetings of the Board
and of each committee on which he or she served. There were five
Board meetings and 27 Board committee meetings in 2007. In
addition, each of the incumbent directors, except for
Ms. Reynolds and Mr. Fluor who were elected in August
2007, attended the 2007 Annual Meeting of Stockholders. 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.
Committees
of the Board
The Board of Directors has four standing committees: the Audit
Committee; the Compensation Committee; the Nominating and
Corporate Governance Committee; and the Executive Committee. The
Audit Committee, the Compensation Committee and the Nominating
and Corporate Governance Committee are each comprised of
independent directors. The Executive Committee is not an
independent committee because it has both non-management and
management directors as members; however, a majority of the
members of the Executive Committee are independent directors. In
addition, the Board designates special committees from time to
time to address certain significant matters on behalf of the
Board. In January 2005, the Board created the Enterprise
Resource Planning Committee to provide input and advice to the
Company during its implementation of the Enterprise Resource
Planning project, which modernized and integrated back-office
software systems across the Company. That committee did not meet
during 2007 and expired by its terms in February 2007. In August
2007, the Board designated a Master Limited Partnership, or MLP,
Special Committee to handle certain Board matters related to the
creation and initial public offering of our midstream MLP.
8
The table below shows the current membership of each committee
of the Board and the number of meetings each committee held in
2007:
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|
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|
Nominating
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|
|
|
|
|
|
|
|
Compensation
|
|
|
& Corporate
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|
|
|
MLP Special
|
Director
|
|
Audit
|
|
& Benefits
|
|
|
Governance
|
|
Executive
|
|
Committee
|
|
Mr. Allison
|
|
|
|
|
|
|
|
|
|
X
|
|
|
Mr. Barcus
|
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X
|
|
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|
|
|
Chair
|
|
|
|
Chair
|
Mr. Bryan
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|
|
|
|
X
|
|
|
X
|
|
X
|
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|
Mr. Butler
|
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X
|
|
|
|
|
|
X
|
|
X
|
|
|
Ms. Eberhart
|
|
Chair
|
|
|
|
|
|
X
|
|
|
|
X
|
Mr. Fluor
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|
|
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X
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|
|
X
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|
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|
|
Mr. Gordon
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|
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X
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|
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X
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|
X*
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X
|
Mr. Hackett
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|
Chair
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|
Mr. Poduska
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Chair
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X
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|
X
|
Ms. Reynolds
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X
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X
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|
2007 Meetings
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10
|
|
|
9
|
|
|
4
|
|
2
|
|
2
|
|
|
|
* |
|
Serves in his capacity as Lead Director |
Audit
Committee
The Board re-appointed Ms. Eberhart and Messrs. Barcus
and Butler as members of the Audit Committee in May 2007, and
appointed Ms. Reynolds as a member of the Audit Committee
upon her election to the Board in August 2007. The Audit
Committee elected Ms. Eberhart as its chairperson during
2007. In February 2007, the Board of Directors designated
Ms. Eberhart as an audit committee financial
expert as defined by the SEC.
The purpose of the Audit Committee is to assist the Board in
monitoring:
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the integrity of the Companys financial statements;
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the Companys compliance with legal and regulatory
requirements;
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|
the independent auditors qualifications and independence;
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|
the performance of the Companys corporate and independent
auditors; and
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|
the business practices and ethical standards of the Company.
|
The Audit Committee is also directly responsible for:
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|
|
|
the appointment, approval of compensation, retention and
oversight of the work of the Companys independent auditor,
KPMG LLP;
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|
|
the preparation of the Audit Committee report, which is on
page 19; and
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|
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.
9
Compensation
Committee
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 stockholders.
The Compensation Committee has overall responsibility for:
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|
approving and evaluating the Companys director and
executive officer compensation plans, policies and programs;
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|
retaining compensation or other consultants to assist in the
evaluation of director or executive compensation and otherwise
to aid the Compensation Committee in meeting its
responsibilities;
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reviewing the disclosures made in the proxy statement;
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producing an annual Compensation Committee report, which is on
page 20; and
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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.
|
For a more detailed discussion of the composition and
responsibilities of the Compensation Committee and the processes
and procedures related to the determination of executive
compensation, please see the Compensation Committees
Charter and the Compensation Discussion and Analysis section of
this proxy statement beginning on page 21.
The Compensation Committee is comprised of four independent,
non-employee directors. The Board re-elected Messrs. Bryan,
Gordon and Poduska as members of the Compensation Committee in
May 2007, and elected Mr. Fluor as a member of the
Compensation Committee upon his appointment to the Board of
Directors in August 2007. Mr. Poduska was re-elected as
chairman of the Compensation Committee by the Board in May 2007.
Nominating
and Corporate Governance Committee
Mses. Eberhart and Reynolds and Messrs. Barcus, Bryan,
Butler, Fluor, Gordon and Poduska served as members of the
Nominating and Corporate Governance Committee during 2007.
Mr. Barcus was appointed as chairman of the Nominating and
Corporate Governance Committee in May 2007.
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.
|
Executive
Committee
The Board re-elected Messrs. Allison, Bryan, Butler, Gordon
and Hackett as members of the Executive Committee in May 2007.
Mr. Gordon serves 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
10
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 Executive Committee. In
accordance with the Companys By-Laws, 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.
MLP
Special Committee
The MLP Special Committee of the Board was established in August
2007 to provide oversight on behalf of the Board, and report
periodically to the Board as the Committee deems appropriate, in
connection with our formation of a midstream MLP and initial
public offering of limited partner interests in the MLP. The
Board appointed the Lead Director, Mr. Gordon, and the
chairperson of each independent Board Committee
(Mr. Barcus, Mr. Poduska and Ms. Eberhart) to the
MLP Special Committee. The Committee has a term of one year.
Board of
Directors
Director
Independence
In accordance with NYSE rules, the Board must affirmatively
determine 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 our Board, based upon a recommendation
from the Nominating and Corporate Governance Committee, has
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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John R. Gordon
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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 W. Poduska, Sr.
|
Peter J. Fluor
|
|
Paula Rosput Reynolds
|
In addition, the Board has 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 provided him office space (or compensation for such
space) and secretarial assistance through August 2007; and
(c) Mr. Allison is not independent because he had been
an executive officer of Anadarko for many years and, 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 does not impact Mr. Butlers independence.
With respect to Mr. Fluor, the Board specifically
considered that Mr. Fluors daughter is a
non-executive employee of the Company. The Board determined that
this does not impact Mr. Fluors independence. The
Board also specifically considered that Invensys Process
Systems, Inc. and its affiliates provide the Company with
process automation services. In 2007, Anadarko paid Invensys
approximately $536,000 in connection with these services. This
amount is less than 1% of Invensyss consolidated gross
revenues for its fiscal year ended March 31, 2007.
Ms. Eberhart, a director of the Company, became President
and CEO of Invensys in January 2007. Finally, the Board
specifically considered that Puget Sound Energy, Inc. and its
affiliates engage in gas purchases with the Company and its
affiliates. Ms. Reynolds, who joined the Companys
Board of Directors in August 2007, is married to
Mr. Stephen P. Reynolds, who currently serves as Chairman,
President and CEO of Puget. In 2007, Anadarko paid Puget
approximately $785,000 in connection with these purchases. This
amount is less than 1% of Pugets consolidated gross
revenues for its fiscal year ended at March 31, 2007.
11
For information regarding our policy on Transactions with
Related Persons, please see page 54 of this proxy statement.
Selection
of Directors
The Companys Corporate Governance Guidelines require that,
with respect to Board vacancies, the Nominating and Corporate
Governance Committee: (a) identify the personal
characteristics needed in a director nominee so that the Board
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.
Annual
Evaluations
The Board and each of the independent committees have conducted
self-evaluations related to their performance in 2007. The
performance evaluations were supervised by the Nominating and
Corporate Governance Committee and discussed by the applicable
committee and the Board.
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 or any
individual 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 to the extent
reasonably possible, 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. If you
wish to request copies of any of our governance documents,
please see page 8 of this proxy statement for instructions
on how to obtain them.
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 at the Companys principal executive offices,
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.
|
12
Nominations must be received no earlier than the close of
business on the 120th day prior to, and no later than the
close of business on the 90th day prior to, the first
anniversary of our last Annual Meeting. For more information on
stockholder participation in the selection of director nominees,
please refer to that section in our Corporate Governance
Guidelines and our By-Laws, 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.
Lead
Director at the Non-Employee 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-employee directors. Executive sessions are held 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.
Compensation
and Benefits Committee Interlocks and Insider
Participation
The Compensation Committee is made up of four independent,
non-employee directors, Messrs. Bryan, Fluor, Gordon and
Poduska. No interlocking relationship exists between the members
of our Compensation Committee or our executive officers and the
board of directors or compensation committee of any other
company.
Director
Compensation
Non-employee directors receive a combination of cash and
stock-based compensation designed to attract and retain
qualified candidates to serve on the Board. In setting director
compensation, the Board considers the significant amount of time
that directors spend in fulfilling their duties to the Company
and its stockholders as well as the skill level required by the
Companys Board members. The Compensation Committee is
responsible for determining the type and amount of compensation
for non-employee directors. The Compensation Committee directly
retained Hewitt Associates LLC in 2007 as its independent
consultant to assist in the annual review of director
compensation by providing benchmark compensation data and
recommendations for program design.
Retainer and Meeting Fees. The non-employee
directors receive the following compensation related to
retainers and meeting fees:
(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 MLP Special Committee);
13
(4) an annual retainer of $15,000 for serving as the
chairman of the Compensation Committee or the Nominating and
Corporate Governance Committee, an annual retainer of $25,000
for serving as Audit Committee chairman, an annual 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.
Members of the MLP Special Committee receive only meeting fees
and no other special retainer fees for their service on that
committee. Non-employee directors may elect to receive their
retainer and meeting fees in cash, common stock or a combination
of both. Receipt of compensation in the form of common stock
provides non-employee directors the opportunity to increase
their personal ownership in the Company and comply with the
established director stock ownership guidelines that require
directors to hold stock equivalent to three times the annual
Board retainer. This option also provides the directors a method
to invest in the Company as a stockholder and aligns their
interest with the stockholders of the Company. The number of
shares issued to directors for payment in lieu of their cash
fees is determined at the end of the quarter for which
compensation is earned, and is calculated by dividing the
closing stock price of the Companys common stock on the
date of grant into the applicable fee for that period.
Stock Plan for Non-employee
Directors. Stock-based awards made to
non-employee directors are made pursuant to the
1998 Director Stock Plan. In addition to the retainer and
meeting fee compensation discussed above, non-employee directors
receive annual equity grants. Equity grants to non-employee
directors will automatically be awarded each year on the date of
the Companys annual stockholder meeting. For 2007, each
non-employee director, other than Ms. Reynolds and
Mr. Fluor, received an annual equity grant with a value
targeted at approximately $200,000, with 65% of the value
delivered in deferred shares and 35% delivered in stock options.
The deferred stock will be distributed to the director only when
he or she ceases to serve as a director. The options vest one
year from the date of grant and expire ten years from the date
of grant. For 2007, upon initial election to the Board in
August, Ms. Reynolds and Mr. Fluor received an initial
grant of approximately $150,000 in deferred shares.
Under the Companys stock ownership guidelines for
non-employee directors, each director is required to own Company
stock in an amount equal to three times the annual Board
retainer. Directors have three years from the date of their
initial election to the Board to comply with the guidelines. All
non-employee directors currently exceed the Companys stock
ownership guidelines.
In February 2008, the Compensation Committee approved, subject
to approval by our stockholders at the Annual Meeting, the
2008 Director Compensation Plan. This Plan will replace the
1998 Director Stock Plan. If approved, the
1998 Director Stock Plan will be terminated and no further
awards will be made under the plan. The 2008 Director
Compensation Plan is described beginning on page 64 and is
attached to this proxy statement as Appendix B.
Deferred Compensation Program for Non-employee
Directors. Non-employee directors are eligible to
participate in the Companys Deferred Compensation Plan,
which 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. Ms. Reynolds is the only director who elected
to defer compensation during 2007.
Other Compensation. Non-employee 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 also
provides each director with Personal Excess Liability coverage
and pays the annual premium on their behalf.
14
Director
Compensation Table for 2007
The following table sets forth information concerning total
director compensation during the 2007 fiscal year for each
non-employee 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
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)(3)
|
|
|
($)
|
|
|
Robert J. Allison, Jr.(4)
|
|
|
64,000
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,442
|
|
|
|
330,871
|
|
Larry Barcus(5)
|
|
|
109,104
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,442
|
|
|
|
375,975
|
|
James L. Bryan
|
|
|
101,646
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,442
|
|
|
|
368,517
|
|
John R. Butler, Jr.(6)
|
|
|
101,000
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,442
|
|
|
|
367,871
|
|
Luke R. Corbett(7)
|
|
|
58,000
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,442
|
|
|
|
324,871
|
|
H. Paulett Eberhart
|
|
|
126,000
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,442
|
|
|
|
392,871
|
|
Peter J. Fluor(8)
|
|
|
40,000
|
|
|
|
149,967
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
577
|
|
|
|
190,544
|
|
John R. Gordon(9)
|
|
|
125,000
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,442
|
|
|
|
391,871
|
|
John W. Poduska, Sr.
|
|
|
111,000
|
|
|
|
129,800
|
|
|
|
135,629
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,305
|
|
|
|
381,734
|
|
Paula Rosput Reynolds(8)(10)
|
|
|
41,500
|
|
|
|
149,967
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
577
|
|
|
|
192,044
|
|
|
|
|
(1) |
|
The amounts included in the Stock Awards column
represent the compensation cost recognized by the Company in
2007 related to non-option awards to directors, computed in
accordance with Statement of Financial Accounting Standards
No. 123(R), or SFAS No. 123(R). For a discussion
of valuation assumptions, see Note 6
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, 2007. As of
December 31, 2007, each of the non-employee directors had
aggregate outstanding deferred shares as follows:
Mr. Allison 8,350 deferred shares;
Mr. Barcus 26,232 deferred shares;
Mr. Bryan 27,006 deferred shares;
Mr. Butler 14,268 deferred shares;
Mr. Corbett 3,250 deferred shares;
Ms. Eberhart 7,250 deferred shares;
Mr. Fluor 2,972 deferred shares;
Mr. Gordon 20,026 deferred shares;
Mr. Poduska 10,110 deferred shares; and
Ms. Reynolds 2,972 deferred shares. |
|
(2) |
|
The amounts included in the Option Awards column
represent the compensation cost recognized by the Company in
2007 related to stock option awards to directors, computed in
accordance with SFAS No. 123(R). For a discussion of
valuation assumptions, see Note 6
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, 2007. As of
December 31, 2007, each of the non-employee directors had
aggregate outstanding stock options as follows:
Mr. Allison 22,500 vested and exercisable stock
options and 3,950 unvested stock options that vest May 16,
2008; Mr. Barcus 82,500 vested and exercisable
stock options and 3,950 unvested stock options that vest
May 16, 2008; Mr. Bryan 82,500 vested and
exercisable stock options and 3,950 unvested stock options that
vest May 16, 2008; Mr. Butler 82,500
vested and exercisable stock options and 3,950 unvested stock
options that vest May 16, 2008;
Mr. Corbett 17,500 vested and exercisable stock
options and 3,950 unvested stock options that vest May 16,
2008; Ms. Eberhart 42,500 vested and
exercisable stock options and 3,950 unvested stock options that
vest May 16, 2008; Mr. Gordon 82,500
vested and exercisable stock options and 3,950 unvested stock
options that vest May 16, 2008; and
Mr. Poduska 42,500 vested and exercisable stock
options and 3,950 unvested stock options that vest May 16,
2008. |
|
(3) |
|
For Ms. Eberhart and Messrs. Allison, Barcus, Bryan,
Butler, Corbett, Gordon and Poduska, the amounts included in the
All Other Compensation column include annual
premiums paid by the Company for each directors benefit in
the amount of $142 and $1,300, respectively, for Accidental
Death & Dismemberment coverage and Personal Excess
Liability coverage. For Mr. Fluor and Ms. Reynolds,
the amount |
15
|
|
|
|
|
includes $50 for Accidental Death & Dismemberment
coverage and $527 for Personal Excess Liability coverage.
Additionally, Mr. Poduska was credited with $3,863 in
earnings under the Deferred Compensation Plan, as described on
page 14. |
|
(4) |
|
Certain ongoing benefits provided to Mr. Allison, which are
not part of his compensation for service as a director of the
Company, are discussed on page 54. |
|
(5) |
|
The amount in the Fees Earned or Paid in Cash column
for Mr. Barcus includes $750 in retainer fees that should
have been paid in 2006, but due to administrative error were not
paid until 2007. |
|
(6) |
|
Mr. Butler elected to receive half of his fees in cash and
half in common stock. |
|
(7) |
|
Certain ongoing benefits provided to Mr. Corbett, which are
not part of his compensation for service as a director of the
Company, are discussed on page 11. |
|
(8) |
|
The fees provided to Mr. Fluor and Ms. Reynolds
represent the fees earned beginning with their election to the
Board in August 2007. |
|
(9) |
|
Mr. Gordon elected to receive all of his director fees in
common stock. |
|
(10) |
|
Ms. Reynolds deferred $19,750 of her retainer and meeting
fees into the Companys Deferred Compensation Plan. |
The following table contains the grant date fair value of stock
option and deferred share awards made to each non-employee
director, as indicated, during 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
Exercise or
|
|
|
Value of Stock
|
|
|
|
|
|
|
|
|
|
|
|
Base Price of
|
|
|
and Option
|
|
|
|
|
|
Stock
|
|
|
Deferred
|
|
|
Option Awards
|
|
|
Awards
|
|
Directors
|
|
Grant Date
|
|
Options (#)
|
|
|
Shares (#)
|
|
|
($/Sh)(1)
|
|
|
($)(2)
|
|
|
All Directors, excluding
Mr. Fluor and Ms. Reynolds
|
|
May 16
|
|
|
|
|
|
|
2,750
|
|
|
|
|
|
|
|
129,800
|
|
All Directors, excluding
Mr. Fluor and Ms. Reynolds
|
|
May 16
|
|
|
3,950
|
|
|
|
|
|
|
|
47.20
|
|
|
|
56,737
|
|
Mr. Fluor and Ms. Reynolds(3)
|
|
August 6
|
|
|
|
|
|
|
2,972
|
|
|
|
|
|
|
|
149,967
|
|
|
|
|
(1) |
|
Closing stock price on 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 non-employee directors in 2007
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 6 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, 2007. |
|
(3) |
|
The amounts included for Mr. Fluor and Ms. Reynolds
represent the initial equity award they each received upon their
election to the Board on August 6, 2007. |
16
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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
As of March 21, 2008, the directors and executive officers
of the Company beneficially owned, in the aggregate,
2,864,490 shares of Anadarko common stock, including shares
that may be acquired within 60 days (approximately 0.6% of
the outstanding shares entitled to vote at that time).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Beneficial Ownership
|
|
|
Number of Shares
|
|
Shares
|
|
|
|
|
|
|
of Common Stock
|
|
Acquirable
|
|
Total
|
|
|
|
|
Beneficially
|
|
Within
|
|
Beneficial
|
|
Percent
|
Name of Beneficial Owner
|
|
Owned(1)(2)
|
|
60 Days
|
|
Ownership
|
|
of Class
|
|
James T. Hackett
|
|
|
215,437
|
|
|
|
407,935
|
|
|
|
623,372
|
|
|
|
*
|
|
R. A. Walker
|
|
|
64,492
|
|
|
|
69,334
|
|
|
|
133,826
|
|
|
|
*
|
|
Karl F. Kurz(3)
|
|
|
62,256
|
|
|
|
59,201
|
|
|
|
121,857
|
|
|
|
*
|
|
Charles A. Meloy
|
|
|
30,811
|
|
|
|
12,734
|
|
|
|
43,545
|
|
|
|
*
|
|
Robert K. Reeves
|
|
|
41,921
|
|
|
|
221,968
|
|
|
|
263,889
|
|
|
|
*
|
|
Robert J. Allison, Jr.
|
|
|
532,012
|
|
|
|
26,450
|
|
|
|
558,462
|
|
|
|
*
|
|
Larry Barcus
|
|
|
111,958
|
|
|
|
86,450
|
|
|
|
198,408
|
|
|
|
*
|
|
James L. Bryan
|
|
|
27,006
|
|
|
|
86,450
|
|
|
|
113,456
|
|
|
|
*
|
|
John R. Butler, Jr.(3)(4)
|
|
|
67,059
|
|
|
|
83,540
|
|
|
|
150,509
|
|
|
|
*
|
|
Luke R. Corbett
|
|
|
3,250
|
|
|
|
21,450
|
|
|
|
24,700
|
|
|
|
*
|
|
H. Paulett Eberhart
|
|
|
7,250
|
|
|
|
46,450
|
|
|
|
53,700
|
|
|
|
*
|
|
Peter J. Fluor
|
|
|
3,972
|
|
|
|
0
|
|
|
|
3,972
|
|
|
|
*
|
|
John R. Gordon(3)
|
|
|
153,909
|
|
|
|
86,450
|
|
|
|
240,359
|
|
|
|
*
|
|
John W. Poduska, Sr.
|
|
|
39,296
|
|
|
|
46,450
|
|
|
|
85,746
|
|
|
|
*
|
|
Paula Rosput Reynolds
|
|
|
3,572
|
|
|
|
0
|
|
|
|
3,572
|
|
|
|
*
|
|
All directors and executive officers as a group,
(18 persons)
|
|
|
1,482,382
|
|
|
|
1,382,108
|
|
|
|
2,864,490
|
|
|
|
*
|
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Does not include shares of common stock which the directors or
officers of the Company have the right to acquire within
60 days of March 21, 2008. This column does include
shares of common stock held in the Companys Executive and
Director Benefits Trust as a result of the director compensation
and deferral elections made in accordance with our benefit plans
described elsewhere in this proxy statement. These individuals
share voting power with the trustee under that plan and receive
dividend equivalents on such shares, but do not have the power
to dispose of, or direct the disposition of, such shares until
such shares are distributed. In addition, some shares of common
stock reflected in this column for certain individuals are
subject to restrictions. |
|
(2) |
|
Does not include the following number of restricted stock units,
which do not have voting rights but do receive dividend
equivalents: Mr. Hackett, 82,400; Mr. Walker, 20,600;
Mr. Kurz, 21,500; Mr. Meloy, 11,500; and
Mr. Reeves, 16,800. The terms associated with these awards
are described in more detail on page 41. |
17
|
|
|
(3) |
|
Includes shares held in bank or brokerage margin accounts or
escrow accounts securing brokerage accounts (Karl F. Kurz,
22,575 shares; John R. Butler, Jr., 19,313 shares; and
John R. Gordon, 133,886 shares). |
|
(4) |
|
Includes 16,000 shares pledged as security for a
third-party loan. |
Certain
Beneficial Owners
The following table shows the beneficial owners of more than
five percent of the Companys common stock as of
December 31, 2007 based on information available as of
February 15, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
|
|
of Beneficial
|
|
|
|
|
Title of Class
|
|
Name and Address of Beneficial Owner
|
|
Ownership
|
|
|
Percent of Class
|
|
|
Common Stock
|
|
ClearBridge Advisors, LLC
399 Park Avenue
New York, NY 10022
|
|
|
41,155,192
|
(1)
|
|
|
8.82
|
%
|
Common Stock
|
|
Neuberger Berman Inc.
605 Third Avenue
New York, NY 10158
|
|
|
27,063,468
|
(2)
|
|
|
5.80
|
%
|
|
|
|
(1) |
|
Based upon its Schedule 13G filed February 14, 2008
with the SEC with respect to Company securities held as of
December 31, 2007, ClearBridge Advisors, LLC has shared
voting power as to 34,667,753 shares of common stock and
shared dispositive power as to 40,685,492 shares of common
stock, and Smith Barney Fund Management LLC has shared
voting power as to 469,700 shares of common stock and
shared dispositive power as to 469,700 shares of common
stock. |
|
(2) |
|
Based upon its Schedule 13G filed February 13, 2008
with the SEC with respect to Company securities held as of
December 31, 2007, Neuberger Berman Inc. has sole voting
power as to 21,017,709 shares of common stock, and shared
dispositive power as to 27,063,468 shares of common stock,
and Neuberger Berman LLC has sole voting power as to
21,017,709 shares of common stock, and shared dispositive
power as to 27,063,468 shares of common stock. |
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, 2007, except that in February 2008 a late
Form 4 was filed for Robert P. Daniels relating to the
charitable donation in 2006 of 100 shares of the
Companys common stock.
18
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 four 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. The
Audit Committees responsibility is to monitor and oversee
these processes.
KPMG LLP served as the Companys independent auditor during
2007 and was appointed by the Audit Committee to serve in that
capacity for 2008. 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, 2007 financial statements and
matters related to Section 404 of the Sarbanes-Oxley Act of
2002. During 2007, the Company changed its method of accounting
for its oil and gas exploration and development activities from
full cost to the successful efforts method. The Audit Committee
met with management and the independent auditor to review and
discuss this change in accounting principle. The Audit Committee
also discussed with the independent auditor the matters required
by Statement on Auditing Standards No. 114 (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, 2007 filed with the SEC.
THE AUDIT COMMITTEE
H. Paulett Eberhart, Chairperson
Larry Barcus
John R. Butler, Jr.
Paula G. Rosput Reynolds
19
COMPENSATION
AND BENEFITS COMMITTEE REPORT
ON 2007 EXECUTIVE COMPENSATION
The Compensation Committee, listed beginning on page 10, 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
Peter J. Fluor
John R. Gordon
20
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis focuses on the
following:
|
|
|
|
|
the principles on which our executive compensation program is
based;
|
|
|
|
how we make compensation decisions and determine the amount of
each element of compensation;
|
|
|
|
the elements of our total executive compensation program and the
reasons why we have chosen these elements; and
|
|
|
|
an analysis of the material compensation decisions made by the
Compensation Committee during 2007.
|
How We
Make Compensation Decisions
Design
Principles
We believe that the interests of our executive officers must be
aligned with the interests of our stockholders and that we must
be able to attract and retain highly qualified executive
officers as leaders to ensure our success. In support of this
belief, our executive compensation programs are designed to
adhere to the following principles:
|
|
|
|
|
a majority of total executive compensation must be in the form
of equity compensation tied to our stock price performance;
|
|
|
|
our executives should maintain significant levels of equity
ownership;
|
|
|
|
total executive compensation must provide an appropriate mix of
both fixed and variable compensation to support a strong
pay-for-performance relationship;
|
|
|
|
our performance-based compensation programs must be tied to
performance measures that emphasize an increase in stockholder
value over time;
|
|
|
|
a meaningful portion of compensation should be forfeitable upon
voluntary termination to encourage sustained executive retention;
|
|
|
|
total compensation opportunity and awards should be reflective
of each executive officers role, experience level and
individual contribution to the organization; and
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our executives must also be motivated to contribute as team
members to our overall success, as opposed to merely achieving
specific individual objectives.
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Resources
and Other Considerations Used in the Compensation
Decision-Making Process
The Compensation Committee utilizes several different tools and
resources in reviewing elements of executive compensation and
making compensation decisions. These decisions, however, are not
purely formulaic and the Compensation Committee ultimately
exercises judgment and discretion in making them.
Compensation Consultant. The Compensation
Committee utilizes an independent executive compensation
consultant to review executive compensation and benefit
programs. In 2007, the Compensation Committee directly retained
Hewitt Associates LLC, or Hewitt, as its outside compensation
consultant. In this engagement, Hewitt reports directly and
exclusively to the Compensation Committee; however, at the
Compensation Committees direction the consultant works
directly with management to review or prepare materials for
Compensation Committee consideration. Hewitt attended seven of
the nine Compensation Committee meetings in 2007. The
Compensation Committee did not engage any consultant other than
Hewitt during 2007 to provide executive compensation consulting
services. The Compensation Committees engagement of Hewitt
included the following services:
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providing relevant market data (including benchmarking, surveys,
trends and best practices information) as a background against
which the Compensation Committee could consider total executive
officer compensation elements and awards;
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21
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advising the Compensation Committee on aligning compensation
programs with the interests of our stockholders; and
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attending and participating in Compensation Committee meetings
throughout the year as the Compensation Committee deems
appropriate.
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In 2007, Hewitt provided additional services to the Company not
related to executive compensation, including broad-based
employee compensation and benefits services and actuarial
services. In early 2008, we retained a firm other than Hewitt to
provide the actuarial services on a go-forward basis. As part of
Hewitts engagement agreement with the Compensation
Committee, any significant new engagement between us and Hewitt
is contingent upon notification to the full Compensation
Committee. The Compensation Committee reviews the engagement of
its independent compensation consultant on an annual basis, and
as part of that process reviews a summary of all services
provided by Hewitt and related costs.
Benchmarking. Benchmarking is a tool that
provides the Compensation Committee a relative comparison of how
competitive and reasonable our current executive compensation
practices and programs are against companies of similar size and
purpose. As part of the benchmarking process, the Compensation
Committee utilizes a competitive compensation analysis, prepared
by Hewitt, as a frame of reference in making
compensation-related decisions.
The competitive executive compensation analysis conducted by
Hewitt during 2007 continued to reflect increasing levels of
executive compensation, driven largely by a shortage of
qualified executive talent, high commodity prices and the
appreciation of stock prices in the oil and gas industry. This
increase is further reflected in the overall size of the
compensation packages being offered to all levels of employees
by companies within our industry. Because we operate in a very
competitive and challenging industry, we target total executive
compensation above median levels in order to successfully
compete for talent. Offering competitive compensation
arrangements to attract and retain our executives is beneficial
to us and to our stockholders because it supports continuity in
our leadership and operations and allows us to avoid the
significant costs and loss of efficiency involved with
recruiting and replacing talent.
In August 2007, the Compensation Committee conducted its annual
review of two benchmarking groups to use as reference points for
assessments of competitive executive compensation data:
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a primary peer group, which consists of select oil and gas
industry peer companies similar to us in size, scope and nature
of business operations; and
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a supplemental group, which consists of select companies from
diverse industries that are similar to us in size (based
primarily on annual revenues).
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We benchmark total executive compensation against the primary
peer group. The supplemental 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 current primary peer group consists of the following
companies in our industry:
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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
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Within the oil and gas industry, there are a very limited number
of companies that closely resemble us in size, scope and nature
of business operations. Our primary peer group contains
companies in our industry that are both larger and smaller in
scope and that operate in related business segments in the
industry in which we have no operations, such as refining. We
compete with these companies for talent and believe the selected
companies are currently the most appropriate with respect to
executive compensation benchmarking. The
22
differences and similarities between us and the companies in our
primary peer group are taken into consideration when referencing
benchmarks for executive compensation decisions. No changes were
made to the primary peer group in 2007.
The supplemental group, as listed below, was revised in 2007
based on recommendations from Hewitt and the Compensation
Committees request that more local companies be reflected
in the benchmarking process. The selection of these companies
was based primarily on revenue size, capturing companies both
above and below our relative position.
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Automatic Data Processing
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Baker Hughes, Inc.
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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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Halliburton Company
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Illinois Tool Works, Inc.
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ITT Corporation
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Kellogg Co.
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PG&E Corporation
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Praxair, Inc.
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Texas Instruments Inc.
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Waste Management, Inc.
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Tally Sheets. In order to provide the
Compensation Committee a single source for viewing the aggregate
value of all material elements of executive compensation,
tally sheets are created for each of our named
executive officers on an annual basis. The tally sheets provide
a snapshot of:
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current total annual compensation, including base salary, annual
cash incentives, equity compensation, benefits and perquisites;
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accumulated unvested equity award values and total stock
ownership levels; and
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estimated termination benefits for a variety of voluntary and
involuntary termination events, including change of control.
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The Compensation Committee does not assign a weighting to the
tally sheets in their overall decision making process.
Role of CEO
and/or Other
Executive Officers in Determining Executive
Compensation. Our Chief Executive Officer,
Mr. Hackett, provides recommendations to the Compensation
Committee for each element of compensation for each of the
executive officers other than himself. The Compensation
Committee, with input from Hewitt, determines each element of
compensation for Mr. Hackett and the other named executive
officers. At the Compensation Committees request, our
executive officers assess the design of and make recommendations
related to our compensation and benefit programs, including
recommendations related to the appropriate financial and
non-financial performance measures used in our incentive
programs. Executive officers may also attend meetings at the
invitation of the Compensation Committee.
Other Considerations. In addition to the above
resources, the Compensation Committee considers other factors
when making compensation decisions, such as individual
experience, individual performance, internal equity, development
and/or
succession status, and other individual or organizational
circumstances. With respect to equity-based awards, the
Compensation Committee also considers the cost of such awards,
the impact on dilution, and the relative value of each element
comprising total target executive compensation.
23
Stock Ownership Guidelines. We have maintained
stock ownership guidelines for executive officers since 1993
with the goal of promoting equity ownership and aligning our
executive officers interests with our stockholders. The
ownership guidelines are currently established at the following
minimum levels:
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Ownership Status
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Position
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Guideline
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as of 12/31/2007
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Chief Executive Officer
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5 x base salary
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Exceeds
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Chief Operating Officer
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3 x base salary
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Exceeds
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Senior Vice Presidents
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2.5 x base salary
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Exceeds
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Vice Presidents
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2 x base salary
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Exceeds
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The Compensation Committee reviews the stock ownership levels
annually. In determining stock ownership levels, we include:
shares held directly by the executive; shares held indirectly
through our Employee Savings Plan; unvested restricted stock;
unvested restricted stock units; and the target number of
outstanding performance units. Outstanding unexercised stock
options are not included. In addition, the Company has a policy
that prohibits directors, officers or employees from engaging in
short sales, transactions involving stock options or restricted
stock, or other derivative-type transactions relating to our
stock.
Regulatory Requirements. Together with the
Compensation Committee, we carefully review the design of our
compensation programs and related decisions as they relate to
current tax, accounting and securities regulations. We seek to
comply with all required regulations while providing executive
compensation opportunity that is mutually beneficial to us, our
employees, and our stockholders and in support of our
compensation principles.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, limits a companys ability to deduct compensation
paid in excess of $1 million during any fiscal year to each
of certain 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 cash awards under the Annual Incentive Plan
satisfy the performance-based requirements and, as such, are
fully deductible. Because Mr. Hacketts base salary is
above $1 million, the portion of base salary in excess of
$1 million is not deductible. Grants of restricted stock
unit awards made in 2007 are not considered performance-based
and the value of those awards are generally subject to the
deductibility limitations under Section 162(m). In March
2008, the Compensation Committee approved a plan to qualify 2009
restricted stock and restricted stock unit grants as
performance-based compensation under
Section 162(m). The Compensation Committee is committed to
providing compensation that qualifies as performance-based and
is fully deductible. However, the Compensation Committee
believes it is important to provide compensation that is not
fully deductible when it is in our best interest and the best
interest of our stockholders.
Section 409A of the Internal Revenue Code provides that all
amounts deferred under a nonqualified deferred compensation plan
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.
We have designed or amended our programs to either be exempt
from Section 409A or, if subject to Section 409A, to
be in compliance with applicable regulations.
Statement of Financial Accounting Standards No. 123
(revised 2004), Share-Based Payment, or
SFAS No. 123(R), requires the recognition of expense
for the fair value of share-based payments. The statement became
effective for us beginning January 1, 2006. We 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, Restricted Shares and
Restricted Stock Units under our 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 our
results of operations or its financial position. We did not make
any changes to our programs in 2007 as a result of the
implementation of SFAS No. 123(R).
24
Elements
of Total Executive Compensation
The elements of the total compensation program we provide to our
executive officers include: base salary, annual cash incentives,
equity compensation, and other benefits, including welfare and
retirement benefits, perquisites, severance benefits and change
of control benefits. We believe that a majority of executive
compensation should be performance-based; however, we do not
have a specific formula that dictates the overall weighting of
each element as a part of total compensation. The Compensation
Committee determines total compensation based on a review of
competitive compensation data, consistency with our overall
compensation philosophy and their judgment as a committee.
The table below identifies each element of total compensation
and the primary purpose for using each element. The level of
each element of direct compensation (both fixed and
variable) is generally targeted between the
50th and 75th percentiles of our primary peer group,
unless otherwise specified. When making decisions on each of
these elements, the Compensation Committee takes into
consideration the multiple factors discussed above in the How We
Make Compensation Decisions section.
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Direct Compensation
Element
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Primary Purposes
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Fixed
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Base Salary
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Base salary provides a fixed level of income to compensate
executives for their level of responsibility and must be
competitive against our primary peer group in order to attract
and retain qualified talent.
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Variable/Performance-Based
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Annual Cash Incentives
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Annual cash incentive awards are used to motivate and reward
executives for the achievement of short-term Company objectives
and/or individual performance goals.
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Restricted Stock/Restricted Stock Units
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These equity awards align the interests of executives with our
stockholders by emphasizing long-term growth in our stock value.
They also provide an element of attraction and retention and may
be used to recognize a promotion or other significant
achievements.
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Stock Options
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These equity awards align the interests of executives with our
stockholders by emphasizing long-term growth in our stock value.
Stock options only provide value to executives when our stock
price appreciates. They also provide an element of attraction
and retention and may be used to recognize a promotion or other
significant achievements.
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Performance Units
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These equity awards are designed to motivate and reward
executives for the achievement of longer-term strategic Company
objectives that serve to enhance our Total Stockholder Return
relative to a specified group of oil and gas companies.
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25
The charts below illustrate each of the fixed and variable
elements as a proportion of the total amount of the executive
officers total direct compensation. Base salary
information is based on salaries that were effective in November
2007, as discussed on page 27, target bonus opportunities
effective for 2008, as discussed on page 29, and the
estimated grant date value for the 2007 annual equity awards, as
discussed on page 32.
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The above charts indicate that over 85% of total direct
compensation is variable and over 70% is in the form of equity
grant values, with the CEO having approximately 82% of his
compensation in the form of equity. In addition to the above
elements of total direct compensation, we also provide indirect
elements of compensation, such as retirement and other benefits
that are considered a part of the total compensation package
offered to our executive officers. These programs are designed
to be competitive in our industry and enable us to attract and
retain qualified executive talent.
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Indirect Compensation
Element
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Primary Purposes
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Retirement and Other Benefits
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Retirement programs and other benefits are designed to be
competitive in our industry in order to attract and retain
qualified employees. These programs are intended to protect
against catastrophic expenses (health care, disability and life
insurance) and provide an opportunity to save effectively for
retirement (pension and retirement savings, or 401(k)).
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Perquisites
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Perquisites do not constitute a significant part of executive
compensation. However, a limited number of perquisites are
provided in order to deliver a competitive package to attract
and retain executive officers.
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Post-Termination Benefits
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Post-termination benefit programs provide a source of temporary,
transitional income following an executive officers
involuntary termination of employment. The existence of such
programs serves to facilitate the attraction and retention of
executive officers in a volatile and consolidating industry in
which formal severance plans are common.
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Following is a discussion of each compensation element and the
specific actions taken by the Compensation Committee in 2007
related to each element, including the implementation of
executive compensation program design changes. In determining
each of these elements, the Compensation Committee considers the
resources discussed above. Each of these elements is reviewed on
an annual basis, and may be reviewed at the time of a promotion,
other change in responsibilities, other significant corporate
events or a material change in market conditions. The same
design principles and factors are applied in a consistent manner
to all named executive officers. Material differences in the
amount of compensation awarded to each of the named executive
officers generally reflect the differences in the individual
responsibility and experience of each officer and the
differences in the amounts of compensation paid to officers in
comparable positions in our primary peer group. For example, our
CEOs compensation is significantly higher than the
compensation of the other named
26
executive officers. This difference in compensation reflects
that our primary peer group benchmark data is substantially
higher for the CEO role than for the other named executive
officer positions, reflecting the higher degree of
responsibility and scrutiny the CEO position entails for the
image, strategic direction, financial condition, and operating
results of the Company.
Base
Salary
The table below reflects the base salaries that were approved by
the Compensation Committee in 2007:
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Salary as of
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Salary Effective
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Name
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January 1, 2007
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November 2007
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Increase %
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Mr. Hackett
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$
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1,400,000
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$
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1,500,000
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7.1
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%
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Mr. Walker
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$
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525,000
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$
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650,000
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23.8
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%
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Mr. Kurz
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$
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475,000
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$
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650,000
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36.8
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%
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Mr. Meloy
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$
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475,000
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$
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550,000
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15.8
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%
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Mr. Reeves
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$
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440,000
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$
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500,000
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13.6
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%
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The benchmarking analysis provided by Hewitt showed that base
salaries for executives in our primary peer group increased 15%
on average from last years analysis. As a result of this
significant movement, larger than normal increases were approved
to maintain a competitive position relative to our primary peer
group. Generally, the base salaries for the named executive
officers fall within the targeted range (between 50th and
75th percentiles) except as noted below.
Mr. Kurzs base salary was increased from $475,000 to
$525,000 in February 2007 and to $650,000 in November 2007 in
recognition of his increased responsibilities in his new role as
Chief Operating Officer. Despite these significant increases in
base salary, Mr. Kurzs base salary is still
positioned slightly below the competitive market median based in
part on his experience and relatively new appointment to the
Chief Operating Officer role. Mr. Meloy received a larger
than normal increase to reflect the value we place internally on
operational leadership and to reflect his individual performance
over the past year, specifically related to integrating the
operations of three separate companies as a result of our
acquisitions of Kerr-McGee Corporation and Western Gas
Resources, Inc. in 2006. His base salary is positioned above the
competitive market 75th percentile to reflect his
individual contributions and the emphasis we place on senior
operational leadership.
Annual
Cash Incentives (Bonuses)
Our executive officers participate in the Annual Incentive Plan,
which we sometimes refer to as the AIP, which was last approved
by stockholders in 2004. In February 2007, the Compensation
Committee established a baseline performance hurdle under the
AIP for the named executive officers of $2.5 billion of
cash flow from continuing operations for the fiscal year. If
this performance hurdle is not achieved, no bonuses are earned
under the AIP. If the performance hurdle is met, the bonus pool
is funded at the maximum bonus opportunity level for each named
executive officer. The Compensation Committee may apply negative
discretion in determining actual awards, taking into
consideration our actual performance against corporate annual
performance goals (as discussed below), each individual
officers performance and contributions, and other factors
as deemed appropriate by the Compensation Committee. The bonus
pool was fully funded based on our exceeding the established
performance hurdle by more than $2 billion in cash flow
from continuing operations (adjusted to exclude the taxes
associated with asset divestitures) for the year ended
December 31, 2007.
Once the bonus pool is funded, the Compensation Committee uses
the following formula as a guideline for applying negative
discretion in determining individual bonus payments:
27
Individual Target Bonus
Opportunities. Individual target bonus
opportunities are generally established to provide bonus
opportunities between the 50th and 75th percentile
levels of our primary peer group. Individual target bonus
opportunities are set as a percentage of base salary. Executive
officers may earn up to 200% of their individual bonus target.
The bonus targets for 2007 are shown in the table below:
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Minimum
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Target
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Maximum
|
|
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Payout as a
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Payout as a
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Payout as a
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Name
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% of Salary
|
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|
% of Salary
|
|
|
% of Salary
|
|
|
Mr. Hackett
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0
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%
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|
|
130
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%
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|
|
260
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%
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Mr. Walker
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0
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%
|
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|
85
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%
|
|
|
170
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%
|
Mr. Kurz
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|
0
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%
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|
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100
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%
|
|
|
200
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%
|
Mr. Meloy
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0
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%
|
|
|
95
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%
|
|
|
190
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%
|
Mr. Reeves
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|
|
0
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%
|
|
|
85
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%
|
|
|
170
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%
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Mr. Kurzs incentive target was increased from 95% to
100% in February 2007 in recognition of his appointment to the
role of Chief Operating Officer. Mr. Meloys target
bonus was established based on internal equity factors rather
than the benchmark data in order to reflect the value we place
internally on operational leadership; as a result of this
approach, his target opportunity is above the
75th percentile of the benchmark data.
AIP Performance Score. In determining the
performance score under the Companys AIP for 2007, the
Compensation Committee approved the following internal
operational, financial and safety measures and weightings:
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Operational Measures (Reserve Additions and Production
Volumes) The primary business objectives for an
exploration company are to find and produce reserves. Including
specific operational goals on reserve additions and production
volumes provides a direct line of sight for our operations
personnel and gives them a direct stake in our operational
successes.
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Financial Measures (Capital Expenditures and EBITDAX/BOE)
These financial measures focus on financial
discipline and encourage employees to manage costs relative to
gross margins and the commodity price environment. For AIP
purposes, EBITDAX is defined as operating income before
exploration expense, depletion, depreciation and amortization
expense, impairments, net gains (losses) on sales, and
unrealized gains (losses) on derivatives.
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Safety The health and safety of our employees
is important to us and critical to our success. Accordingly, we
include as part of our performance metrics a target total
recordable incident rate per 100 employees so that
employees are focused on maintaining a safe work environment.
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In both approving performance goals and measuring the
Companys performance against those goals, the Compensation
Committee may use its discretion in determining the extent to
which such goals or results properly reflect the Companys
achievement of overall business objectives, including any
material changes in the Companys operations or business
objectives during the course of a given year. The table below
reflects both the target and performance results against the
target for each measure under the AIP:
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Relative
|
|
|
|
|
|
AIP
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|
AIP
|
|
|
|
Weighting
|
|
|
AIP Target
|
|
|
Performance
|
|
|
Performance
|
|
2007 AIP Performance
Goals
|
|
Factor
|
|
|
Performance(1)
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|
|
Results(1)
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|
|
Score
|
|
|
Reserve Additions, MMBOE
|
|
|
25
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%
|
|
|
191.6
|
|
|
|
227.5
|
|
|
|
44
|
%
|
Production Volumes, MMBOE
|
|
|
25
|
%
|
|
|
189.2
|
|
|
|
195.6
|
|
|
|
57
|
%
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Capital Expenditures, $MM
|
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|
20
|
%
|
|
$
|
4,200
|
|
|
$
|
4,038
|
|
|
|
32
|
%
|
EBITDAX/BOE, $
|
|
|
20
|
%
|
|
$
|
29.58
|
|
|
$
|
32.44
|
|
|
|
28
|
%
|
Total Recordable Incident Rate (Safety)
|
|
|
10
|
%
|
|
|
.75
|
|
|
|
0.90
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
161
|
%
|
28
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|
|
(1) |
|
Target performance goals for 2007 were established based on the
Companys expected portfolio of retained assets for 2007.
These goals did not reflect the effect of the Companys
conversion from the full cost method of accounting to the
successful efforts method of accounting, which occurred during
the second half of 2007. Accordingly, these factors were taken
into account in the final determination of performance results
for 2007. |
Individual Performance Adjustments. In
determining a named executive officers bonus payment, the
Compensation Committee may make an adjustment based on
individual performance, while maintaining an overall view toward
downward discretion from the maximum bonus pool funding. This
adjustment allows the Compensation Committee to recognize an
individuals significant contributions that may not be
reflected in the overall AIP performance score. The Compensation
Committee did not make any individual performance adjustments
for the named executive officers 2007 bonus payments in
recognition of the team effort exhibited by our senior
management in driving the Companys success.
The Annual Incentive Plan awards earned for 2007 and 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.
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|
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Base Salary
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|
Target Bonus
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|
AIP
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Individual
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|
Earnings for
|
|
|
|
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|
as % of Base
|
|
|
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|
|
Performance
|
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|
Performance
|
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|
|
Actual Bonus
|
|
Name
|
|
2007
|
|
|
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|
Salary
|
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|
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|
|
Score %
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|
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|
|
Adjustments
|
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|
Award ($)
|
|
|
Mr. Hackett
|
|
$
|
1,415,385
|
|
|
|
X
|
|
|
|
130
|
%
|
|
|
X
|
|
|
|
161
|
%
|
|
|
+/−
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
2,962,400
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|
Mr. Walker
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|
$
|
544,231
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|
|
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X
|
|
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85
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%
|
|
|
X
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|
|
|
161
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%
|
|
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+/−
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|
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0
|
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|
|
=
|
|
|
$
|
744,780
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|
Mr. Kurz
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|
$
|
538,462
|
|
|
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X
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|
|
|
100
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%
|
|
|
X
|
|
|
|
161
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%
|
|
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+/−
|
|
|
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0
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|
|
=
|
|
|
$
|
866,923
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|
Mr. Meloy
|
|
$
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486,555
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|
|
|
X
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|
|
|
95
|
%
|
|
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X
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|
|
|
161
|
%
|
|
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+/−
|
|
|
|
0
|
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|
|
=
|
|
|
$
|
744,186
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|
Mr. Reeves
|
|
$
|
449,231
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|
|
|
X
|
|
|
|
85
|
%
|
|
|
X
|
|
|
|
161
|
%
|
|
|
+/−
|
|
|
|
0
|
|
|
|
=
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|
|
$
|
614,772
|
|
The Compensation Committee established the following bonus
targets for the named executive officers effective
January 1, 2008:
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|
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|
Target Bonus
|
|
|
|
as % of
|
|
Name
|
|
Salary
|
|
|
Mr. Hackett
|
|
|
130
|
%
|
Mr. Walker
|
|
|
100
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%
|
Mr. Kurz
|
|
|
100
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%
|
Mr. Meloy
|
|
|
95
|
%
|
Mr. Reeves
|
|
|
90
|
%
|
These targets reflect a fifteen and five percent increase over
the 2007 bonus targets for Messrs. Walker and Reeves,
respectively. These increases were made based on competitive
benchmark data and provide each of them with target bonus
opportunities that fall between our targeted position of the
50th and 75th percentiles of our primary peer group.
Equity
Compensation
The Compensation Committee makes equity-based awards under our
1999 Stock Incentive Plan. Equity-based awards for named
executive officers have typically been made at the regularly
scheduled meeting of the Compensation Committee each November.
Equity awards for newly-hired executive officers are made on the
executive officers first day of employment with us. Equity
awards made in connection with promotions or in recognition of
achievements are approved by the Compensation Committee and the
grant date is generally the date of approval.
Our annual awards consist of a combination of stock options,
time-based restricted stock units and performance unit awards,
with each award type allocated to represent approximately
one-third of the total
29
grant date value for the named executive officers. The
Compensation Committee believes this award structure provides a
combination of equity-based awards that is performance-based in
absolute and relative terms, while also encouraging retention.
In addition, the use of performance unit awards and restricted
stock units enables us to better manage our stock dilution.
Annual equity award levels are generally positioned between the
50th and 75th percentile levels of our primary peer
group. Mr. Meloys annual award level was established
based on internal equity factors rather than the benchmark data
in order to reflect the value we place internally on operational
leadership; as a result of this approach, his annual equity
award is above the 75th percentile of the benchmark data.
In November 2007, the Compensation Committee made changes to the
design of our annual executive long-term incentive program.
Below is a summary of the provisions of each of the equity award
types, including a description of any plan design changes made
and the reasons for those changes.
Stock Options. Stock options incorporate the
following features:
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|
|
the term of the grant does not exceed seven years;
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|
|
the exercise price is not less than the market price on the date
of grant;
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|
|
repricing of options to a lower exercise price is prohibited,
unless approved by stockholders;
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|
|
options typically vest equally over three years, beginning with
the first anniversary of the date of grant; and
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|
|
generally, an executive officer will forfeit any unvested stock
options if the executive terminates voluntarily or is terminated
for cause prior to the vesting date.
|
Restricted Stock Units. Restricted stock units
were introduced in 2007 to replace the Companys prior
practice of granting shares of restricted stock. Restricted
stock units are similar to restricted shares, but also provide
executive officers the ability to defer taxation on a voluntary
basis. Restricted stock units incorporate the following features:
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|
|
restricted stock units typically vest equally over three years,
beginning with the first anniversary of the date of grant;
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|
executive officers receive dividend equivalents on the units,
but do not have voting rights;
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|
|
generally, an executive officer will forfeit any unvested
restricted stock units if the executive terminates voluntarily
or is terminated for cause prior to the vesting date; and
|
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|
|
executive officers have the ability to defer restricted stock
unit awards.
|
Performance Units. Performance units may be
earned by the executive officers if specific goals, focused on
our long-term strategic objectives, are achieved. Each
performance unit award is denominated in shares of our stock,
with payout based on performance over a specified performance
period. Each executive officer is awarded a target award, with
actual payment ranging from 0% to 200% of the target award.
Executives do not have voting rights and no dividends are paid
on these awards until earned.
Historically, our performance unit program was based on the
attainment of two separate performance objectives over a
three-year performance period. Fifty percent of the award was
based on an internal measure, Reserve Replacement Efficiency
(RRE) and the remaining fifty percent was based on an external
relative measure, Total Stockholder Return (TSR). In 2007, the
Compensation Committee approved the following changes to our
performance unit program:
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|
eliminated RRE as a performance measure and implemented relative
TSR as the sole performance measure in order to simplify the
program and provide a greater focus on relative stockholder
performance;
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|
included both a two-year and a three-year performance period for
each award that allows for the diversification of payout
opportunities over multiple measurement periods; and
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30
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|
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|
|
modified the payout scale to allow for reduced payout below
median performance to provide appropriate recognition of
achievements of long-term strategic business objectives which
may not have a direct and immediate impact on our relative TSR.
|
The TSR measure provides an external comparison of our
performance against an industry peer group. The industry peer
group 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 of these peer companies
ceases 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).
The following table reflects the payout scale for the new annual
performance unit program:
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Final TSR Ranking
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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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7
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8
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9
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10
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11
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12
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Payout as% of Target
|
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200%
|
|
182%
|
|
164%
|
|
146%
|
|
128%
|
|
110%
|
|
92%
|
|
72%
|
|
54%
|
|
0%
|
|
0%
|
|
0%
|
Below is an example of how the performance unit payout scale
works, assuming an executive officer received a target award of
20,000 performance units.
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Target
|
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|
|
|
|
|
|
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|
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|
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|
Performance
|
|
Relative TSR
|
|
|
|
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|
|
Units for
|
|
Ranking for
|
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|
Each
|
|
the
|
|
|
|
|
|
|
|
|
Total Target
|
|
|
Performance
|
|
Performance
|
|
Performance
|
|
|
Payout
|
|
|
Actual Payout
|
|
Timing of
|
Award
|
|
|
Period
|
|
Period
|
|
Period
|
|
|
%
|
|
|
Earned
|
|
Payout
|
|
20,000
performance
units
|
|
|
50% tied to a two-year performance period
|
|
10,000
(20,000 x 50%)
|
|
|
3rd
|
|
|
|
164
|
%
|
|
16,400 shares
(10,000 x 164%)
|
|
Paid after end of two-year performance period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50% tied to a three-year performance period
|
|
10,000
(20,000 x 50%)
|
|
|
10th
|
|
|
|
0
|
%
|
|
0 shares
(10,000 x 0%)
|
|
Paid after end of three-year performance period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Awards Made During 2007
On January 10, 2007, the Compensation Committee approved
special stock option awards for Messrs. Hackett, Walker,
Kurz, Reeves and certain other executive officers. The grants to
named executive officers were made to recognize each executive
officers performance and leadership in executing the
successful acquisitions of Kerr-McGee and Western Gas and the
subsequent integration of these companies with Anadarko, as well
as leadership during our implementation and integration of
accounting and information technology systems. On
January 23, 2007, at the request of Messrs. Hackett,
Walker, Kurz and Reeves, the Compensation Committee modified the
terms of such stock option awards for these officers to raise
the exercise price of their stock option awards from $40.51 to
$48.90 so that these executive officers could only realize the
value of such awards after our stock price exceeded the trading
price prior to the announcement of the acquisitions. Each of
these executive officers executed an amendment to his respective
stock option agreement reflecting this change in exercise price.
31
On November 6, 2007, the Compensation Committee approved
the following annual long-term incentive awards. These awards,
together with the above-referenced awards, are also included in
the Grants of Plan Based Awards Table on page 41.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Target Number
|
|
|
|
Number of
|
|
|
Restricted Stock
|
|
|
of Performance
|
|
Name
|
|
Stock Options
|
|
|
Units
|
|
|
Units
|
|
|
Mr. Hackett
|
|
|
250,000
|
|
|
|
82,400
|
|
|
|
87,500
|
|
Mr. Walker
|
|
|
62,200
|
|
|
|
20,600
|
|
|
|
21,800
|
|
Mr. Kurz
|
|
|
64,900
|
|
|
|
21,500
|
|
|
|
22,800
|
|
Mr. Meloy
|
|
|
34,600
|
|
|
|
11,500
|
|
|
|
12,200
|
|
Mr. Reeves
|
|
|
50,900
|
|
|
|
16,800
|
|
|
|
17,800
|
|
Also, in November 2007, the Compensation Committee determined
that the corporate acquisitions in 2006, the divestitures in
2006 and 2007, and our change to the successful efforts
accounting method in 2007 had an impact on both the
appropriateness of RRE as a performance measure and our ability
to measure RRE under the outstanding performance unit
agreements. The Compensation Committee determined that the
original performance targets established for RRE in prior
performance unit awards did not contemplate these significant
organizational changes and were no longer relevant. As a result,
in November 2007, the Compensation Committee cancelled, without
value and subject to approval by participants, all outstanding
performance unit awards that had performance periods ending
after December 31, 2007 and had performance metrics of both
RRE and relative TSR. This decision allowed for an immediate and
complete transition away from RRE as a performance metric. The
table below shows the performance unit awards cancelled for each
named executive officer.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
Performance
|
|
|
Performance
|
|
|
|
|
|
|
Units with
|
|
|
Units with
|
|
|
Total Number
|
|
|
|
Performance
|
|
|
Performance
|
|
|
of Performance
|
|
|
|
Period Ending
|
|
|
Period Ending
|
|
|
Units
|
|
Name
|
|
12/31/2008
|
|
|
12/31/2009
|
|
|
Cancelled
|
|
|
Mr. Hackett
|
|
|
90,000
|
|
|
|
62,000
|
|
|
|
152,000
|
|
Mr. Walker
|
|
|
26,400
|
|
|
|
15,100
|
|
|
|
41,500
|
|
Mr. Kurz
|
|
|
18,600
|
|
|
|
12,400
|
|
|
|
31,000
|
|
Mr. Meloy
|
|
|
|
|
|
|
12,400
|
|
|
|
12,400
|
|
Mr. Reeves
|
|
|
17,200
|
|
|
|
11,600
|
|
|
|
28,800
|
|
In addition to the annual equity awards set forth above, each of
the named executive officers received a one-time transitional
performance unit award, with payout based solely on our relative
TSR performance over a specified performance period. The purpose
of these transitional awards was to recognize that in cancelling
the outstanding performance unit awards with one and two years
remaining under their performance periods, the executive
officers total compensation opportunity relative to our
primary peer group would not remain competitive. The
transitional awards are similar in value and opportunity to only
the unexpired portions of the cancelled awards, considering the
Companys performance achieved from their respective grant
through the date they were cancelled. Fifty percent of the
transitional performance unit awards have a one-year performance
period and the remaining fifty percent have a two-year
performance period. Both performance periods began on
January 1, 2008. The table below reflects the number of
units each officer received under this transitional program and
are also included in the Grants of Plan-Based Awards Table on
page 41:
|
|
|
|
|
|
|
Total Target Number
|
|
|
|
of Transitional
|
|
|
|
Performance
|
|
Name
|
|
Units
|
|
|
Mr. Hackett
|
|
|
76,200
|
|
Mr. Walker
|
|
|
20,037
|
|
Mr. Kurz
|
|
|
15,438
|
|
Mr. Meloy
|
|
|
9,300
|
|
Mr. Reeves
|
|
|
14,376
|
|
32
Performance
Shares/Units Results for Performance Periods Ending
in 2007
In February 2008, the Compensation Committee certified the
performance results for the four-year performance period ending
December 2, 2007 under Mr. Hacketts performance
share award. The performance shares awarded to Mr. Hackett
in 2003 were part of his new hire package and provided him the
opportunity to earn payouts, based on Anadarkos relative
TSR ranking, for both a two-year performance period and a
four-year performance period. A target of 80,000 performance
shares was established for each performance period with the
opportunity to earn a maximum of 160,000 performance shares for
each performance period. In February 2006, based on
Anadarkos relative TSR performance under the prescribed
performance matrix for the two-year performance period
(December 3,
2003-December 2,
2005), the Compensation Committee awarded Mr. Hackett
28,800 shares. The following table lists the target number
of performance shares granted and actual performance shares
earned by Mr. Hackett under his performance share award for
the four-year performance period that ended December 2,
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
Target
|
|
Performance Shares
|
Name
|
|
Performance Shares
|
|
Earned
|
|
Mr. Hackett
|
|
|
80,000
|
|
|
|
0
|
|
Also in February 2008, the Compensation Committee certified the
performance results for the 2005 annual performance unit awards
for specified executives with a three-year performance period
that ended December 31, 2007. Under the provisions of this
award, 50% of the targeted performance units were subject to
Anadarkos relative TSR against a defined group of oil and
gas companies and 50% of the targeted performance units were
subject to Anadarkos average RRE for the performance
period. The following table lists the target number of
performance units awarded and actual performance units earned by
the named executive officers under the provisions of the 2005
performance unit awards for the three-year performance period
that ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
Target
|
|
Performance Units
|
Name
|
|
Performance Units
|
|
Earned
|
|
Mr. Kurz
|
|
|
9,400
|
|
|
|
0
|
|
Mr. Reeves
|
|
|
19,400
|
|
|
|
0
|
|
2008
Omnibus Incentive Compensation Plan
In February 2008, the Compensation Committee approved, subject
to approval by our stockholders at the Annual Meeting, the 2008
Omnibus Incentive Compensation Plan. This Plan will replace both
the AIP and the 1999 Stock Incentive Plan. If approved, the AIP
and the 1999 Stock Incentive Plan will be terminated and no
further awards will be made under those plans. The Plan is
described beginning on page 57 and is attached to this
proxy statement as Appendix A.
Retirement
Benefits
Our executive officers participate in the following retirement
and related plans.
Employee Savings Plan. The Anadarko Employee
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 base salary
and certain annual cash incentive payments. Under the Savings
Plan, we match an amount equal to one dollar for each dollar
contributed by participants up to six percent of their total
eligible compensation. This plan is subject to applicable IRS
limitations regarding contributions under this plan.
Savings Restoration Plan. The Savings
Restoration Plan accrues a benefit substantially equal to the
amount that, in the absence of any IRS limitations, would have
been allocated to an employees account as a matching
contribution under the Savings Plan. The Savings Restoration
Plan permits participants to allocate the matching contributions
among a group of notional accounts that mirror the gains
and/or
losses of various
33
investment funds provided in the Savings Plan. Notional earnings
are credited to their account based on the market rate of return
provided by the investment funds.
Amounts deferred, if any, under the Savings Plan and the Savings
Restoration Plan by the named executive officers are included,
respectively, 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 Savings
Restoration Plan are included in the All Other
Compensation column of the Summary Compensation Table.
Retirement Plans. Anadarko provides funded,
tax-qualified retirement benefits for all U.S. employees,
including the named executive officers, under the Anadarko
Retirement Plan for legacy Anadarko employees and the Kerr-McGee
Corporation Retirement Plan for legacy Kerr-McGee Corporation
employees. Due to IRS limitations that restrict the amount of
benefits payable under tax-qualified plans, we also sponsor
nonqualified restoration plans that cover the named executive
officers and certain other employees. These nonqualified
restoration plans include the Retirement Restoration Plan for
legacy Anadarko employees and the Benefits Restoration Plan for
legacy Kerr-McGee Corporation employees. Benefits under the
retirement plans are based upon the employees years of
service and a final average pay calculation.
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
participants includes base salary and certain annual cash
incentive payments. The amount of compensation that may be
considered in calculating benefits under the retirement plans is
limited by IRS regulations.
In November 2007, the Compensation Committee amended the
Retirement Restoration Plan to provide for certain supplemental
retirement benefits for Messrs. Hackett, Walker and Reeves.
The amendment provides for a one-time service credit of eight
years and five years to Messrs. Walker and Reeves,
respectively, if they each remain employed by us until the age
of 55. This service credit will be considered applicable service
towards our retirement benefit programs, including pension and
retiree medical and dental benefits. The amendment also provides
that Mr. Hackett will receive a special service credit to
be applied towards his eligibility for our retiree medical and
dental benefit programs. This benefit will accrue in a manner
similar to the special pension crediting in
Mr. Hacketts employment agreement. The value of the
retiree medical and dental benefit will be provided to
Messrs. Hackett, Walker and Reeves through a lump sum
payment upon termination of their employment. However, the lump
sum payment for such benefits will not be made to
Messrs. Walker and Reeves if, at the time of termination of
employment, (1) they have not reached age 55;
(2) we no longer provide subsidized retiree and medical
benefits; or (3) if they have satisfied the eligibility
requirements for the current subsidized retiree medical and
dental benefits in normal course under our retiree medical plan.
Such payment will not be made to Mr. Hackett if, at the
time of termination of employment, (1) we no longer provide
subsidized retiree medical benefits; (2) he has satisfied
the eligibility requirements for the current subsidized retiree
medical and dental benefits in normal course under our retiree
medical plan; or (3) he voluntarily resigns or is
terminated for cause prior to reaching age 55. The current
estimated value of the supplemental pension benefit is
approximately $1.75 million for Mr. Walker and
approximately $800,000 for Mr. Reeves. The present value of
the lump sum payment for the retiree medical and dental for each
individual is currently estimated to be between $60,000-$71,000
for retiree-only coverage, $130,000-$155,000 for
retiree-plus-spouse coverage, and $170,000-$195,000 for
retiree-plus-family coverage.
These supplemental retirement benefits were provided to
Messrs. Walker and Reeves to recognize that they were both
mid-career hires that we would like to retain for the remainder
of their careers. Providing them additional service credits
recognizes a portion of their prior industry experience and
service years which directly benefits us and our stockholders.
They are both approximately five years away from the vesting
requirement of age 55 and we believe this retention period
is significantly long enough to be beneficial to our
stockholders. The size of the equity awards that would have
otherwise been granted to Messrs. Walker and Reeves, had
the supplemental benefits not been provided, was reduced by
approximately 50% of the current estimated value of the
supplemental pension benefit. These benefits will also be
coordinated with these
34
individuals Key Employee Change of Control Contracts to
ensure no duplication of benefits under this arrangement.
In addition to the retirement benefits included in the
Retirement Restoration Plan and the Benefits Restoration Plan,
Messrs. Hackett and Meloy are both eligible to receive
supplemental pension benefits upon meeting certain employment
conditions under the terms of their employment agreement and
retention agreement, respectively. Details of these
arrangements, including the accrued benefits for each of the
named executive officers, are discussed further in the
Employment Agreements section beginning on page 38 and in
the Pension Benefits Table on page 45.
Other
Benefits
In addition to the retirement benefits discussed above, we also
provide other benefits such as medical, dental, vision, flexible
spending accounts, payments for certain relocation costs, 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.
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. We do not subsidize or match these deferred
amounts. Details regarding participation in the plan by the
named executive officers can be found in the Nonqualified
Deferred Compensation Table on page 48.
Perquisites
We provide a limited number of perquisites to the named
executive officers 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
Executive officers are eligible to receive
reimbursement for eligible expenses up to a specified annual
maximum. For 2007, the financial counseling and tax preparation
benefits were limited to $18,840 in the first year of use and
$11,280 for each following year, although actual costs may be
less. The estate planning services are made available to
executive officers on an as-needed basis and the services have
typically been utilized once every three years. All expenses
related to financial counseling, tax preparation and estate
planning are considered taxable income to the executive officer.
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Executive Physical Program Executive officers
are eligible to receive reimbursement for a complete and
professional personal physical exam on an annual basis.
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Personal Excess Liability Insurance We pay an
annual premium to maintain excess 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 We
maintain 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 executive
officer as required by applicable regulations.
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Country Club Membership We reimburse officers
for monthly dues and any additional business expenses.
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Entertainment Events and Other We purchase
tickets to various sporting and entertainment events for
business purposes. We have also leased recreational facilities
for business purposes. If not used for business purposes, we may
make these tickets and facilities available to our employees,
including our executive officers, as a form of recognition and
reward for their efforts.
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35
Mr. Hackett has voluntarily declined to utilize the
financial planning, tax preparation and estate planning
perquisites offered by us. As required by the Board, we provide
security services for Mr. Hackett at his home. Pursuant to
our security policy, we also require Mr. Hackett to use our
aircraft for personal use as well as business travel. Any time
Mr. Hackett uses our aircraft for personal use, although it
is understood that he engages in business activities while in
flight, compensation is imputed to Mr. Hackett for that use
and for any passengers that accompany Mr. Hackett. Personal
use includes his participation on outside board service, which
indirectly benefits us.
Our incremental cost of the various perquisites 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 39.
Severance
Benefits
Officer Severance Plan. Our named executive
officers are eligible for benefits under the Officer Severance
Plan. Benefits provided under this plan may vary depending upon
the executive officers level within the organization and
years of service with us and are made at the discretion of the
Compensation Committee. Executive officers receiving benefits
under the Officer Severance Plan are required to execute an
agreement releasing us from any and all claims from any and all
kinds of actions arising from the executive officers
employment with us or the termination of such employment. In
practice, we have typically provided the following involuntary
termination (as defined on page 49) severance benefits for
our executive officers:
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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 our Annual
Incentive Plan;
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a pro rata bonus under our Annual Incentive Plan for the year of
termination;
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if not eligible for retirement, 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, we 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, unvested
restricted stock units and stock options; and
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the vesting and payout of some or all outstanding performance
units at target level.
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Change
of Control Benefits
Key Employee Change of Control Contracts. We
have also entered into key employee change of control contracts
with all of our executive officers, including the named
executive officers, with the exception of Mr. Hackett whose
change of control benefits are included in his employment
agreement described on page 38. These key employee change
of control contracts have an initial three-year term that is
automatically extended for one year upon each anniversary,
unless we provide notice not to extend. If we experience a
change of control (as defined on page 49) during the term
of the executive officers contract, then the contract
becomes operative for a fixed three-year period. These contracts
generally provide that the executive officers 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 we (or any successor in
interest) terminate the executive officers employment
(other than for cause (as defined on page 49), death or
disability), the executive officer terminates for good reason
(as defined on page 50) during such three-year period, or
upon certain terminations prior to a change of control or in
connection with or in anticipation of a
36
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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2.9 times the executive officers base salary plus Annual
Incentive Plan bonus (based on historic Annual Incentive Plan
bonus);
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our matching contributions which would have been made had the
executive officer 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 officer
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 the executive officer continued service for up to
an additional three years.
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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 officer in enforcing any right or benefit
provided by the change of control contract. The executive will
also 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. These provisions, in addition to attracting and retaining
executive officers, also allow these officers to realize the
full value of the intended benefit awarded under these
contracts. If an executive officer loses his or her job
following a change of control event that meets certain IRS
criteria, the executive officer must pay an additional 20%
excise tax simply for collecting the pay that is due. The
gross-up
makes the executive officer whole by paying the 20% excise tax
amount and the additional income taxes generated by such
payment. It does not pay the executives normal income
taxes.
As a condition to receipt of change of control benefits, the
executive officer must remain employed by us and provide
services commensurate with his or her position until the
executive is terminated pursuant to the provisions of the
contract. The executive officer must also agree to retain in
confidence any and all confidential information known to him or
her concerning us and our business so long as the information is
not otherwise publicly disclosed. In 2007, no amounts were paid
under the change of control contracts.
Change of Control Equity Plans. In
addition to the change of control benefits discussed above, our
equity plans provide that upon a change of control of Anadarko:
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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 and
restricted stock units lapse; and
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if any performance unit awards or performance-based restricted
stock or restricted stock unit awards are outstanding, they
become fully vested and the performance goals are deemed to be
earned at target.
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We believe this single-trigger treatment in our
stock plans is appropriate because:
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it provides employees with the same opportunities as our
stockholders who are free to sell their equity at the time of
the change of control and to realize the value created at the
time of the transaction;
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it ensures that continuing employees are treated the same as
terminated employees; and
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it is particularly appropriate for performance-based equity,
given the potential difficulty of replicating or meeting the
performance goals after the change of control.
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Director
and Officer Indemnification Agreements
We have entered into indemnification agreements with our
directors and certain executive officers, in part to enable us
to attract and retain qualified directors and executive
officers. These agreements require us,
37
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 that we 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 our directors and executive
officers may have under our restated certificate of
incorporation, bylaws and applicable law.
Employment
Agreements
We have entered into an employment agreement with
Mr. Hackett and a retention agreement with Mr. Meloy.
Both agreements are discussed below.
Mr. Hackett
Employment Agreement
Under the terms of Mr. Hacketts employment agreement,
he receives a minimum annual base salary of $1,500,000, and is
eligible for an annual incentive cash bonus at a target of not
less than 130% of annual base salary with a maximum annual
incentive cash bonus of 200% of the target. This 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 (involuntary) termination (as defined on
page 49) or termination for good reason (as defined on
page 50),
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a without cause (involuntary) 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).
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The above scenarios are discussed in more detail on page 49
of this proxy statement. We 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
excess parachute payments. Pre-change of control severance
benefits are conditioned upon the execution of a mutual release
between us and Mr. Hackett.
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 us if
Mr. Hackett voluntarily terminates his employment with us
(other than for good reason) on or before December 3, 2010.
If Mr. Hackett remains employed by us 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 us will equal those to
which he would have been entitled if his actual years of
employment with us were doubled. This service crediting
provision was implemented when Mr. Hackett was hired in
order to compensate for projected retirement benefits being
forgone in leaving his former employer.
Mr. Meloy
Retention Agreement
Mr. Meloy was an officer for Kerr-McGee at the time of its
acquisition by us in August 2006. As a result of our desire to
retain him as an executive officer, we entered into a retention
agreement with him. The retention benefits were intended to
compensate him for certain severance benefits he was otherwise
entitled to receive under the change of control agreement he had
with Kerr-McGee. Under the terms of his retention agreement,
Mr. Meloy is to receive the following benefits:
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cash payment equal to $1,150,000, 50% of which was paid in
August 2007, one year from the closing date of the acquisition
and 50% of which is payable in August 2008, two years from the
closing date of the acquisition;
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25,000 shares of restricted stock, 50% of which vested one
year from the closing date of the acquisition and 50% of which
vests two years from the closing date of the acquisition;
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38
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if he stays employed with us for three years from the closing
date of the acquisition, he will receive credit for five
additional years in age and service towards his pension
benefits; and
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if he is involuntarily terminated without cause or terminates by
reason of death or disability prior to three years from the
closing date of the acquisition, he will receive age and service
credit to age 52.
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If Mr. Meloy were to voluntarily terminate or be terminated
for cause prior to the designated vesting dates, he would
forfeit any unvested or unpaid retention benefits.
The above descriptions of Mr. Hacketts employment
agreement and Mr. Meloys retention agreement are not
a full summary of all of the terms and conditions of these
agreements and are qualified in their entirety by the full text
of the agreements.
Conclusion
We believe the design of our total executive compensation
program aligns the interests of our executive officers with
those of our stockholders and provides executive officers with
the necessary motivation to maximize long-term operational and
financial performance of the Company, while using sound
financial controls and high standards of integrity. The programs
currently offered have been critical elements in the successful
hiring of numerous executives and have been equally effective in
retaining executive officers during a period of strong
competitive demand and a shortage of talented executives within
the oil and gas exploration and production industry. We believe
that our executive compensation program will continue to be
reflected in positive operational, financial and stock price
performance. We also believe that total compensation for each
executive officer should be, and is, commensurate with the
execution of specified short-term and long-term operational,
financial and strategic objectives.
EXECUTIVE
COMPENSATION
Summary
Compensation Table For 2007
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, 2007.
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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($)
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James T. Hackett(6)
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Chairman, President and Chief
Executive Officer
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2007
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1,415,385
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0
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6,198,884
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3,155,045
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2,962,400
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693,859
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572,368
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14,997,941
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2006
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1,316,667
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160,860
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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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2007
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544,231
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0
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1,413,378
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757,314
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744,780
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1,017,885
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137,527
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4,615,115
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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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Karl F. Kurz(7)
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Chief Operating Officer
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2007
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538,462
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0
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1,094,540
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810,201
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866,923
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149,259
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80,517
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3,539,902
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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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Charles A. Meloy(8)
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Senior Vice President,
Worldwide Operations
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2007
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486,555
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575,000
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1,082,205
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228,056
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744,186
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1,416,457
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105,228
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4,637,687
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Robert K. Reeves
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Senior Vice President, General
Counsel and Chief
Administrative Officer
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2007
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449,231
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0
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871,180
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928,539
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614,772
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603,245
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81,555
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3,548,522
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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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(1) |
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The amounts in this column reflect the compensation cost
recognized by the Company for the fiscal year ended
December 31, 2007, in accordance with
SFAS No. 123(R) for non-option stock awards granted |
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pursuant to the 1999 Stock Incentive Plan and includes amounts
from awards granted in and prior to 2007. For a discussion of
valuation assumptions, see Note 6
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, 2007. For information
regarding the non-option stock awards granted to the named
executives in 2007, please see the Grants of Plan-Based Awards
Table. |
|
(2) |
|
The amounts in this column reflect the compensation cost
recognized by the Company for the fiscal year ended
December 31, 2007, 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 2007. For a discussion of
valuation assumptions, see Note 6
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, 2007. For information
regarding the option awards granted to the named executives in
2007, please see the Grants of Plan-Based Awards Table. |
|
(3) |
|
The amounts in this column reflect the cash bonus awards for
2007 that were determined by the Compensation Committee in
February 2008 pursuant to the Companys Annual Incentive
Plan. To the extent the payments were not deferred by the named
executive officer, they were paid out in February 2008. These
awards are discussed in further detail beginning on page 27. |
|
(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 by 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. The Companys
Deferred Compensation Plan does not provide for above-market or
preferential earnings so no such amounts are included. |
|
(5) |
|
The amounts shown in this column for each named executive
officer are described further in the All Other Compensation
Table below. |
|
(6) |
|
The amount reflected in the Bonus column for
Mr. Hackett in 2006 is the value of a special bonus in the
form of 3,000 shares of Company stock. |
|
(7) |
|
Mr. Kurz deferred $80,769 of his 2007 base salary and
$130,038 of his 2007 non-equity incentive plan compensation
under the Annual Incentive Plan pursuant to the Deferred
Compensation Plan. |
|
(8) |
|
The $575,000 reflected in the Bonus column for
Mr. Meloy in 2007 is a cash retention bonus paid to him as
part of his retention agreement entered into on August 10,
2006. The details of this agreement are discussed on
page 38. Compensation information for 2006 is not reflected
for Mr. Meloy because he was not a named executive officer
last year. |
All Other
Compensation Table
The following table describes each component of the All Other
Compensation column in the Summary Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Company to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
|
|
and Savings
|
|
|
Club
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of
|
|
|
Restoration
|
|
|
Membership
|
|
|
Financial/
|
|
|
Excess
|
|
|
|
|
|
|
|
|
|
Aircraft
|
|
|
Plan
|
|
|
Dues
|
|
|
Tax/Estate
|
|
|
Liability
|
|
|
Other
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
Planning
|
|
|
Insurance
|
|
|
($)
|
|
|
($)
|
|
|
James T. Hackett(2)
|
|
|
371,360
|
|
|
|
197,893
|
|
|
|
|
|
|
|
|
|
|
|
1,300
|
|
|
|
1,815
|
|
|
|
572,368
|
|
R. A. Walker
|
|
|
54,240
|
|
|
|
64,784
|
|
|
|
17,203
|
|
|
|
|
|
|
|
1,300
|
|
|
|
|
|
|
|
137,527
|
|
Karl F. Kurz
|
|
|
11,340
|
|
|
|
56,597
|
|
|
|
|
|
|
|
11,280
|
|
|
|
1,300
|
|
|
|
|
|
|
|
80,517
|
|
Charles A. Meloy(3)
|
|
|
23,100
|
|
|
|
56,855
|
|
|
|
3,848
|
|
|
|
10,990
|
|
|
|
1,300
|
|
|
|
9,135
|
|
|
|
105,228
|
|
Robert K. Reeves
|
|
|
14,040
|
|
|
|
56,100
|
|
|
|
6,365
|
|
|
|
3,750
|
|
|
|
1,300
|
|
|
|
|
|
|
|
81,555
|
|
|
|
|
(1) |
|
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 |
40
|
|
|
|
|
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. |
|
|
|
(2) |
|
The Companys security policy requires the Chief Executive
Officer to use Company 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 amount in the
Other column for Mr. Hackett represents the
cost of a
Company-provided
physical examination and expenditures to maintain his home
security system. |
|
(3) |
|
The amount in the Other column for Mr. Meloy
represents the cash-out of unused vacation time related to his
service at Kerr-McGee. |
Grants of
Plan-Based Awards in 2007
The following table sets forth information concerning annual
incentive awards, stock options, restricted stock units and
performance units granted during 2007 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
|
|
|
|
|
Equity Incentive Plan Awards(1)
|
|
Equity Incentive Plan Awards(2)
|
|
Shares of
|
|
Securities
|
|
of Option
|
|
of Stock
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock or
|
|
Underlying
|
|
Awards
|
|
and Option
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Units (#)(3)
|
|
Options(4)(#)
|
|
($/Sh)(5)
|
|
Awards(6)
|
|
James T. Hackett
|
|
|
|
|
|
|
0
|
|
|
|
1,820,000
|
|
|
|
3,640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,800
|
|
|
$
|
48.90
|
|
|
$
|
1,575,880
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
$
|
59.87
|
|
|
$
|
4,639,400
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,400
|
|
|
|
|
|
|
|
|
|
|
$
|
4,933,288
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,625
|
|
|
|
87,500
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,732,563
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,574
|
|
|
|
76,200
|
|
|
|
152,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,824,504
|
|
R. A. Walker
|
|
|
|
|
|
|
0
|
|
|
|
446,250
|
|
|
|
892,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,000
|
|
|
$
|
48.90
|
|
|
$
|
526,149
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,200
|
|
|
$
|
59.87
|
|
|
$
|
1,154,283
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,600
|
|
|
|
|
|
|
|
|
|
|
$
|
1,233,322
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,886
|
|
|
|
21,800
|
|
|
|
43,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,428,227
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,410
|
|
|
|
20,037
|
|
|
|
40,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,278,614
|
|
Karl F. Kurz
|
|
|
|
|
|
|
0
|
|
|
|
525,000
|
|
|
|
1,050,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,000
|
|
|
$
|
48.90
|
|
|
$
|
526,149
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,900
|
|
|
$
|
59.87
|
|
|
$
|
1,204,388
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,500
|
|
|
|
|
|
|
|
|
|
|
$
|
1,287,205
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,156
|
|
|
|
22,800
|
|
|
|
45,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,493,742
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,168
|
|
|
|
15,438
|
|
|
|
30,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
978,774
|
|
Charles A. Meloy
|
|
|
|
|
|
|
0
|
|
|
|
451,250
|
|
|
|
902,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,600
|
|
|
$
|
59.87
|
|
|
$
|
642,093
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,500
|
|
|
|
|
|
|
|
|
|
|
$
|
688,505
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,294
|
|
|
|
12,200
|
|
|
|
24,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
799,283
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,511
|
|
|
|
9,300
|
|
|
|
18,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
548,655
|
|
Robert K. Reeves
|
|
|
|
|
|
|
0
|
|
|
|
374,000
|
|
|
|
748,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,000
|
|
|
$
|
48.90
|
|
|
$
|
526,149
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,900
|
|
|
$
|
59.87
|
|
|
$
|
944,582
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,800
|
|
|
|
|
|
|
|
|
|
|
$
|
1,005,816
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,806
|
|
|
|
17,800
|
|
|
|
35,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,166,167
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,882
|
|
|
|
14,376
|
|
|
|
28,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
911,004
|
|
|
|
|
(1) |
|
Reflects estimated future cash payouts under the Companys
Annual Incentive Plan. The estimated amounts are calculated
based on the applicable annual bonus target and base salary for
each named executive officer in effect for the 2007 measurement
period. If threshold levels of performance are not met, then the
payout can be zero. Actual bonus payouts under the Annual
Incentive Plan for 2007 are based on actual base salaries earned
in 2007 and are reflected in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table. |
|
(2) |
|
Reflects the estimated future payout under the Companys
performance unit awards. Executives may earn from 0% to 200% of
the targeted award based on the Companys relative TSR
performance over a |
41
|
|
|
|
|
specified performance period. The first award for each named
executive represents the 2007 annual performance unit award.
Fifty percent of this award is tied to a two-year performance
period and the remaining fifty percent is tied to a three-year
performance period. The second award for each named executive
officer represents a one-time transitional performance unit
award. Fifty percent of this award is tied to a one-year
performance period and the remaining fifty percent is tied to a
two-year performance period. The threshold value represents the
minimum payment (other than zero) that may be earned based on
the payout scale described on page 31. |
|
(3) |
|
Reflects the number of restricted stock units awarded in 2007.
For accounting purposes, the 2007 annual restricted stock unit
awards have a grant date of November 6, 2007. This date is
based on the date the Compensation Committee approved the award
and the date the terms of the awards were communicated to the
participants. The effective grant date for participants is
December 3, 2007. The awards vest equally over three years,
beginning with the first anniversary of the participant grant
date. Executive officers receive dividend equivalents on the
units, but do not have voting rights. |
|
(4) |
|
Reflects the number of stock options each named executive
officer was awarded in 2007. These options vest equally over
three years, beginning with the first anniversary of the date of
grant and have a term of seven years. |
|
(5) |
|
The exercise price for option awards is generally set as the
closing stock price on the date of grant. On January 23,
2007, at the request of Messrs. Hackett, Walker, Kurz and
Reeves, the Compensation Committee modified the terms of their
January 10, 2007 stock option awards to raise the exercise
price from $40.51 (the closing stock price on the grant date) to
$48.90 so that they could only realize the value of such awards
after the Companys stock price exceeds the trading price
prior to the announcement of the acquisitions of Kerr-McGee and
Western Gas. |
|
(6) |
|
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 2007 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 6 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, 2007. |
42
Outstanding
Equity Awards at Fiscal Year-End 2007
The following table reflects outstanding stock option awards
classified as exercisable and unexercisable as of
December 31, 2007 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 $65.69 a share (the closing stock price of the Companys
stock on December 31, 2007).
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan Awards
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Market
|
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|
|
|
|
|
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|
|
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|
|
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|
|
Payout
|
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|
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|
|
|
|
|
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Value of
|
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|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares,
|
|
Units or
|
|
|
Option Awards
|
|
Units of
|
|
Units of
|
|
Units or
|
|
Other
|
|
|
Number of Securities
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
Other Rights
|
|
Rights
|
|
|
Underlying Unexercised Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have
|
Name
|
|
Exercisable (#)
|
|
Unexercisable
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Not Vested (#)
|
|
Not Vested ($)
|
|
James T. Hackett(1)
|
|
|
250,000
|
|
|
|
0
|
|
|
|
23.3175
|
|
|
|
12/3/2013
|
|
|
|
20,000
|
|
|
|
1,313,800
|
|
|
|
87,500
|
|
|
|
5,747,875
|
|
|
|
|
53,334
|
|
|
|
26,666
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
39,000
|
|
|
|
2,561,910
|
|
|
|
76,200
|
|
|
|
5,005,578
|
|
|
|
|
63,667
|
|
|
|
127,333
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
82,400
|
|
|
|
5,412,856
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
122,800
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
250,000
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Walker(2)
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
45.8000
|
|
|
|
9/6/2012
|
|
|
|
23,000
|
|
|
|
1,510,870
|
|
|
|
21,800
|
|
|
|
1,432,042
|
|
|
|
|
15,200
|
|
|
|
7,600
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
5,400
|
|
|
|
354,726
|
|
|
|
20,037
|
|
|
|
1,316,231
|
|
|
|
|
15,467
|
|
|
|
30,933
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
9,533
|
|
|
|
626,223
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
41,000
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
20,600
|
|
|
|
1,353,214
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
62,200
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karl F. Kurz(3)
|
|
|
14,000
|
|
|
|
0
|
|
|
|
22.4750
|
|
|
|
10/31/2009
|
|
|
|
24,000
|
|
|
|
1,576,560
|
|
|
|
22,800
|
|
|
|
1,497,732
|
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
3,800
|
|
|
|
249,622
|
|
|
|
15,438
|
|
|
|
1,014,122
|
|
|
|
|
10,800
|
|
|
|
5,400
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
7,866
|
|
|
|
516,718
|
|
|
|
|
|
|
|
|
|
|
|
|
12,734
|
|
|
|
25,466
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
21,500
|
|
|
|
1,412,335
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
41,000
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
64,900
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles A. Meloy(4)
|
|
|
12,734
|
|
|
|
25,466
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
12,500
|
|
|
|
821,125
|
|
|
|
12,200
|
|
|
|
801,418
|
|
|
|
|
0
|
|
|
|
34,600
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
7,866
|
|
|
|
516,718
|
|
|
|
9,300
|
|
|
|
610,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,500
|
|
|
|
755,435
|
|
|
|
|
|
|
|
|
|
Robert K. Reeves(5)
|
|
|
85,000
|
|
|
|
85,000
|
|
|
|
26.6000
|
|
|
|
3/22/2011
|
|
|
|
3,533
|
|
|
|
232,083
|
|
|
|
17,800
|
|
|
|
1,169,282
|
|
|
|
|
16,600
|
|
|
|
0
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
7,266
|
|
|
|
477,304
|
|
|
|
14,376
|
|
|
|
944,359
|
|
|
|
|
9,867
|
|
|
|
4,933
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
16,800
|
|
|
|
1,103,592
|
|
|
|
|
|
|
|
|
|
|
|
|
11,834
|
|
|
|
23,666
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
41,000
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
50,900
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Hacketts options vest as follows: 26,666 on
11/15/2008; 63,667 on 12/4/2008, 63,666 on 12/4/2009; 40,934 on
1/10/2008, 40,933 on 1/10/2009 and 40,933 on 1/10/2010; 83,334
on 11/6/2008, 83,333 on
11/6/2009
and 83,333 on 11/6/2010. Mr. Hacketts restricted
stock shares and units vest as follows: 20,000 shares on
11/15/2008; 19,500 shares on 12/4/2008 and
19,500 shares on 12/4/2009; 27,467 units on 12/3/2008,
27,467 units on 12/3/2009, and 27,466 units on
12/3/2010. Mr. Hacketts performance awards have the
following performance periods: 43,750 units are tied to a
performance period beginning 1/1/2008 and ending 12/31/2009 and
43,750 units are tied to a performance period beginning
1/1/2008 and ending 12/31/2010; 38,100 units are tied to a
performance period beginning 1/1/2008 and ending
12/31/2008
and 38,100 units are tied to a performance period beginning
1/1/2008 and ending 12/31/2009. |
|
(2) |
|
Mr. Walkers options vest as follows: 25,000 on
9/6/2009; 7,600 on 11/15/2008; 15,467 on 12/4/2008 and 15,466 on
12/4/2009; 13,667 on 1/10/2008, 13,667 on 1/10/2009 and 13,666
on 1/10/2010; 20,734 on
11/6/2008,
20,733 on 11/6/2009 and 20,733 on 11/6/2010.
Mr. Walkers restricted stock shares and units vest as
follows: 11,500 shares on 9/6/2008 and 11,500 shares
on 9/6/2009; 5,400 shares on 11/15/2008; |
43
|
|
|
|
|
4,767 shares on 12/4/2008 and 4,766 shares on
12/4/2009; 6,867 units on 12/3/2008, 6,867 units on
12/3/2009
and 6,866 units on 12/3/2010. Mr. Walkers
performance awards have the following performance periods:
10,900 units are tied to a performance period beginning
1/1/2008 and ending 12/31/2009 and 10,900 units are tied to
a performance period beginning 1/1/2008 and ending 12/31/2010;
10,018 units are tied to a performance period beginning
1/1/2008 and ending 12/31/2008 and 10,019 units are tied to
a performance period beginning 1/1/2008 and ending 12/31/2009. |
|
(3) |
|
Mr. Kurzs options vest as follows: 5,400 on
11/15/2008; 12,733 on 12/4/2008 and 12,733 on 12/4/2009; 13,667
on 1/10/2008, 13,667 on 1/10/2009 and 13,666 on 1/10/2010;
21,634 on 11/6/2008, 21,633 on
11/6/2009
and 21,633 on 11/6/2010. Mr. Kurzs restricted stock
shares and units vest as follows: 24,000 shares on
5/12/2008; 3,800 shares on 11/15/2008; 3,933 shares on
12/4/2008 and 3,933 shares on 12/4/2009; 7,167 units
on 12/3/2008, 7,167 units on 12/3/2009 and 7,166 units
on 12/3/2010. Mr. Kurzs performance awards have the
following performance periods: 11,400 units are tied to a
performance period beginning 1/1/2008 and ending 12/31/2009 and
11,400 units are tied to a performance period beginning
1/1/2008 and
ending 12/31/2010; 7,719 units are tied to a performance
period beginning 1/1/2008 and ending 12/31/2008 and
7,719 units are tied to a performance period beginning
1/1/2008 and ending 12/31/2009. |
|
(4) |
|
Mr. Meloys options vest as follows: 12,733 on
12/4/2008 and 12,733 on 12/4/2009; 11,534 on 11/6/2008, 11,533
on 11/6/2009 and 11,533 on 11/6/2010. Mr. Meloys
restricted stock shares and units vest as follows:
12,500 shares on 8/10/2008; 3,933 shares on 12/4/2008
and 3,933 shares on 12/4/2009; 3,834 units on
12/3/2008, 3,833 units on 12/3/2009 and 3,833 units on
12/3/2010. Mr. Meloys performance awards have the
following performance periods: 6,100 units are tied to a
performance period beginning 1/1/2008 and ending 12/31/2009 and
6,100 units are tied to a performance period beginning
1/1/2008 and ending 12/31/2010; 4,650 units are tied to a
performance period beginning 1/1/2008 and ending 12/31/2008 and
4,650 units are tied to a performance period beginning
1/1/2008 and ending 12/31/2009. |
|
(5) |
|
Mr. Reeves options vest as follows: 85,000 on
3/22/2008; 4,933 on 11/15/2008; 11,833 on 12/4/2008 and 11,833
on 12/4/2009; 13,667 on 1/10/2008, 13,667 on 1/10/2009 and
13,666 on 1/10/2010; 16,967 on
11/6/2008,
16,967 on 11/6/2009 and 16,966 on 11/6/2010.
Mr. Reeves restricted stock shares and units vests as
follows: 3,533 shares on 11/15/2008; 3,633 shares on
12/4/2008 and 3,633 shares on 12/4/2009; 5,600 units
on 12/3/2008, 5,600 units on 12/3/2009 and 5,600 units
on 12/3/2010. Mr. Reeves performance awards have the
following performance periods: 8,900 are tied to a performance
period beginning 1/1/2008 and ending 12/31/2009 and 8,900 are
tied to a performance period beginning 1/1/2008 and ending
12/31/2010; 7,188 are tied to a performance period beginning
1/1/2008 and ending 12/31/2008 and 7,188 are tied to a
performance period beginning 1/1/2008 and ending 12/31/2009. |
Option
Exercises and Stock Vested in 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise ($)(1)
|
|
|
Vesting (#)(2)
|
|
|
Vesting ($)(1)
|
|
|
James T. Hackett
|
|
|
250,000
|
|
|
|
6,718,575
|
|
|
|
139,500
|
|
|
|
7,983,260
|
|
R. A. Walker
|
|
|
0
|
|
|
|
0
|
|
|
|
21,667
|
|
|
|
1,163,218
|
|
Karl F. Kurz
|
|
|
160,000
|
|
|
|
6,220,153
|
|
|
|
9,600
|
|
|
|
549,495
|
|
Charles A. Meloy
|
|
|
0
|
|
|
|
0
|
|
|
|
16,434
|
|
|
|
837,972
|
|
Robert K. Reeves
|
|
|
0
|
|
|
|
0
|
|
|
|
17,766
|
|
|
|
913,099
|
|
|
|
|
(1) |
|
The Value Realized reflects the taxable value to the named
executive officer as of the date of the option exercise or
vesting of restricted stock. The actual value ultimately
realized by the named executive officer may be more or less than
the Value Realized calculated in the above table depending on
the timing in which the named executive officer held or sold the
shares associated with the exercise or vesting occurrence. |
|
(2) |
|
Shares acquired on vesting include restricted stock shares whose
restrictions lapsed during 2007. |
44
Pension
Benefits for 2007
The Company maintains the Anadarko Retirement Plan, or the APC
Retirement Plan, and the Kerr-McGee Corporation Retirement Plan,
or the KMG Retirement Plan, both of which are funded
tax-qualified defined benefit pension plans. In addition, the
Company maintains the Anadarko Retirement Restoration Plan, or
the APC Retirement Restoration Plan, and the Kerr-McGee Benefits
Restoration Plan, or the KMG Restoration Plan, both of which are
unfunded, nonqualified pension benefit plans that are designed
to provide for supplementary pension benefits due to limitations
imposed by the Internal Revenue Code, or IRC, that restrict the
amount of benefits payable under tax-qualified plans.
APC Retirement Plan and APC Retirement Restoration Plan,
collectively the APC Retirement Plans. The APC
Retirement Plans cover all legacy Anadarko United States based
employees. The APC Retirement Restoration Plan covers all legacy
Anadarko United States based employees that are affected by the
IRC limitations. Benefits under these plans are based upon the
employees years of service and the greater of either:
|
|
|
|
|
the annual average of the employees highest compensation
over three consecutive calendar years out of the last
10 years of employment with the Company; or
|
|
|
|
the annual average compensation over the last 36 consecutive
months of employment with the Company.
|
The APC 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. Compensation covered
by the APC Retirement Plans includes base salary and payments
under the Annual Incentive Plan. The amount of compensation for
2007 that may be considered in calculating benefits under the
APC Retirement Plan is $225,000 due to the annual IRC
limitation. Compensation in excess of $225,000 is recognized in
determining benefits payable under the APC Retirement
Restoration Plan.
Benefits under the APC Retirement Plans are calculated as a
life-only annuity (meaning that benefits end upon
the participants death) and are equal to the sum of:
|
|
|
|
|
1.4% x average compensation x years of service with the Company;
plus
|
|
|
|
0.4% x (average compensation covered compensation) x
years of service with the Company (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 APC Retirement Plans.
KMG Retirement Plan and KMG Restoration Plan, collectively
the KMG Retirement Plans. The KMG Retirement Plan
covers all legacy Kerr-McGee Corporation United States based
employees. The KMG Restoration Plan covers all legacy Kerr-McGee
Corporation United States based employees that are affected by
the IRC limitations. Benefits under these plans are based upon
the employees years of service and the average monthly
earnings during the 36 highest paid consecutive months of the
last 120 months of employment.
The KMG 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. Compensation covered
by the KMG Retirement Plans includes base salary and payments
under the Annual Incentive Plan. The amount of compensation for
2007 that may be considered in calculating benefits under the
KMG Retirement Plan is $225,000 due to the annual IRC
limitation. Compensation in excess of $225,000 is recognized in
determining benefits payable under the KMG Restoration Plan.
45
Benefits under the KMG Retirement Plans are calculated as a
life-only annuity equal to the sum of Part A and
Part B:
Part A:
|
|
|
|
|
1.1% x average compensation x years of service prior to
March 1, 1999; plus
|
|
|
|
0.5% x (average compensation covered compensation) x
years of service prior to March 1, 1999 (limited to
35 years).
|
Part B:
|
|
|
|
|
1.667% x average compensation x years of service on or after
March 1, 1999 (limited to 30 years); plus
|
|
|
|
0.75% x average compensation x years of service on or after
March 1, 1999 in excess of 30 years; less
|
|
|
|
1% x primary social security benefit x years of service on or
after March 1, 1999 as of age 65 (limited to
30 years) x (years of service on or after March 1,
1999 divided by years of service on or after March 1, 1999
at age 65)
|
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 52.
Employees may choose to receive their benefits under several
different forms provided under the KMG Retirement Plans.
The present values provided in the below table are based on the
pension benefits accrued through December 31, 2007,
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 APC Retirement Plans and
age 60 for the KMG Retirement Plans. All pre-retirement
decrements such as pre-retirement mortality and terminations
have been ignored for the purposes of these calculations. The
interest rate used for discounting payments back to
December 31, 2007 is 6%, consistent with the weighted
average discount rate used in the accounting valuation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present Value of
|
|
Payments
|
|
|
|
|
Years of
|
|
Accumulated
|
|
During
|
|
|
|
|
Credited Service
|
|
Benefit
|
|
Last Fiscal Year
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
($)
|
|
James T. Hackett(1)(2)
|
|
APC Retirement Plan
|
|
|
4.0000
|
|
|
|
102,559
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
8.0000
|
|
|
|
3,711,849
|
|
|
|
0
|
|
R. A. Walker(1)(3)
|
|
APC Retirement Plan
|
|
|
2.0000
|
|
|
|
42,768
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
10.0000
|
|
|
|
1,034,609
|
|
|
|
0
|
|
Karl F. Kurz
|
|
APC Retirement Plan
|
|
|
7.0000
|
|
|
|
116,778
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
7.0000
|
|
|
|
323,779
|
|
|
|
0
|
|
Charles A. Meloy(4)
|
|
KMG Retirement Plan
|
|
|
25.5830
|
|
|
|
584,120
|
|
|
|
0
|
|
|
|
KMG Restoration Plan
|
|
|
30.5830
|
|
|
|
3,194,662
|
|
|
|
0
|
|
Robert K. Reeves(1)(3)
|
|
APC Retirement Plan
|
|
|
4.0000
|
|
|
|
81,482
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
9.0000
|
|
|
|
738,169
|
|
|
|
0
|
|
|
|
|
(1) |
|
As of December 31, 2007, Messrs. Hackett, Walker, and
Reeves were not yet vested in benefits payable under the APC
Retirement Plans. 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 APC
Retirement Plans. |
|
(2) |
|
Mr. Hackett has an employment agreement that will provide
him with an additional pension service credit under the APC
Retirement 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 APC Retirement Restoration Plan
benefit in the table includes the effect of this additional
pension service credit assuming its application as of
December 31, 2007. However, as of December 31, 2007,
Mr. Hackett has not yet earned the right to this |
46
|
|
|
|
|
additional pension service credit. Mr. Hacketts APC
Retirement Restoration Plan value as of December 31, 2007
excluding the effect of the additional pension service credit is
$1,492,222, for a total pension value of $1,594,781, all of
which will not be vested until 2008. |
|
(3) |
|
Messrs. Walker and Reeves will be provided additional
pension service credits under the APC Restoration Plan if they
remain employed until age 55. These additional pension service
credits were provided to recognize that they were both
mid-career hires that we would like to retain for the remainder
of their careers. Providing them additional service credits
recognizes a portion of their prior industry and service years
which directly benefits us and our stockholders. The value
reflected in the APC Retirement Restoration Plan amount includes
the effect of this additional pension credit assuming its
application as of December 31, 2007. However, as of
December 31, 2007, Messrs. Walker and Reeves have not
yet earned the right to this additional pension service credit.
The value of Mr. Walkers APC Retirement Restoration
Plan benefit as of December 31, 2007 excluding the effect
of the additional pension service credit is $124,938, for a
total pension value of $167,706. The value of
Mr. Reeves APC Retirement Restoration Plan benefit as
of December 31, 2007 excluding the effect of the additional
pension service credit is $270,453, for a total pension value of
$351,935. |
|
(4) |
|
Mr. Meloy has a retention agreement that will provide him
with an additional pension service credit under the KMG
Restoration Plan if he remains employed with the Company through
August 10, 2009. The additional pension service credit was
included in his retention agreement to compensate him for
certain severance benefits he was otherwise entitled to receive
under the change of control agreement he had with Kerr-McGee.
The value reflected for Mr. Meloys KMG Restoration
Plan benefit includes the effect of this addition pension credit
assuming its application as of December 31, 2007. However,
as of December 31, 2007, Mr. Meloy has not yet earned
this right to this additional pension service credit.
Mr. Meloys KMG Restoration Plan value as of
December 31, 2007 excluding the effect of the additional
pension service credit is $2,589,754, for a total pension value
of $3,173,874. |
47
Nonqualified
Deferred Compensation for 2007
The Company maintains a Deferred Compensation Plan for directors
and certain employees, including the named executive officers.
The Deferred Compensation Plan allows certain 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 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
or as required by the Plan. The Company does not subsidize or
match any deferrals of compensation into the Plan.
The Company has a Savings Restoration Plan that accrues a
benefit substantially equal to the amount that, in the absence
of certain IRC limitations, would have been allocated to a named
executive officers account as Company matching
contributions under the Savings Plan. Prior to January 2007,
amounts in the Savings Restoration Plan received 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
James T. Hackett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
180,932
|
|
|
|
2,734
|
|
|
|
0
|
|
|
|
608,999
|
|
R. A. Walker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
52,034
|
|
|
|
2,443
|
|
|
|
0
|
|
|
|
76,083
|
|
Karl F. Kurz(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
161,734
|
|
|
|
0
|
|
|
|
34,050
|
|
|
|
0
|
|
|
|
418,773
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
41,597
|
|
|
|
(142
|
)
|
|
|
0
|
|
|
|
151,153
|
|
Charles A. Meloy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
51,201
|
|
|
|
6,663
|
|
|
|
0
|
|
|
|
91,531
|
|
Robert K. Reeves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
41,446
|
|
|
|
396
|
|
|
|
0
|
|
|
|
126,820
|
|
|
|
|
(1) |
|
Company contributions in the Savings Restoration Plan are
reported in the Summary Compensation Table for each of the named
executive officers under the All Other Compensation
column for the fiscal year 2007. |
|
(2) |
|
Mr. Kurzs contributions in the Deferred Compensation
Plan include $80,769 of his 2007 base salary reported in the
Summary Compensation Table under the Salary column
for the fiscal year 2007 and $80,965 of his 2006 bonus earned in
2006 but paid in 2007 that is reported in the Summary
Compensation Table under the Non-Equity Incentive Plan
Compensation column for the fiscal year 2006. |
48
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, 2007 termination date, and, where applicable,
using the closing price of our common stock of $65.69 (as
reported on the NYSE as of December 31, 2007). As of
December 31, 2007, none of our executive officers were
eligible for retirement; accordingly, no table is included for
this event.
The following are general definitions that apply to the
termination scenarios detailed below. These definitions have
been summarized and are qualified in their entirety by the full
text of the applicable plans or agreements to which our
executive officers are parties.
Involuntary Termination is generally defined as any
termination that does not result from the following termination
events:
|
|
|
|
|
resignation;
|
|
|
|
retirement;
|
|
|
|
for cause;
|
|
|
|
death;
|
|
|
|
qualifying disability;
|
|
|
|
extended leave of absence;
|
|
|
|
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 a Key Employee Change of Control Contract.
|
For Cause is generally defined as:
|
|
|
|
|
the willful and continued failure of the executive to perform
substantially the executives duties with the Company or
one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness) or material
breach of any material provision in an employment agreement (if
applicable), after written demand for substantial performance is
delivered to the executive by the Board or the CEO of the
Company which specifically identifies the manner in which the
Board or CEO believes that the executive has not substantially
performed the executives duties, or
|
|
|
|
the willful engaging by the executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious
to the Company.
|
A Change of Control is generally defined as any one
of the following occurrences:
|
|
|
|
|
any individual, entity or group acquires beneficial ownership of
20% or more of either the outstanding shares of our common stock
or our combined voting power;
|
|
|
|
individuals who constitute the Board (as of the date of either a
given change of control contract or an award agreement under our
equity 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 an award agreement under our equity plans,
as applicable, will be deemed a member of the incumbent Board;
|
49
|
|
|
|
|
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of our assets or the
acquisition of assets of another entity, unless following the
business combination:
|
|
|
|
|
|
all or substantially all of the beneficial owners of our
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;
|
|
|
|
no person, entity or group owns 20% or more of the outstanding
voting securities of the corporation resulting from the business
combination; and
|
|
|
|
at least a majority of the board of the corporation resulting
from the business combination were members of our Board prior to
the business combination; or
|
|
|
|
|
|
approval by our stockholders of our complete liquidation or
dissolution.
|
Good Reason is generally defined as any one of the
following occurrences within three years of a Change of Control:
|
|
|
|
|
diminution in Executives position, authority, duties or
responsibilities that were effective immediately prior to the
Change of Control, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
|
|
|
|
any failure by the Company to provide compensation to the
Executive at levels that were effective immediately prior to the
Change of Control, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
|
|
|
|
any material change in the location, as defined in the
applicable agreement, where the Executive was employed
immediately preceding the Change of Control, or the Company
requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to
the Change of Control;
|
|
|
|
any termination by the Executive for any reason during the
30-day
period immediately following the first anniversary of a Change
of Control;
|
|
|
|
any purported termination by the Company of the Executives
employment otherwise than as expressly permitted in their Change
of Control or Employment Agreement; or
|
|
|
|
any failure by the Company to require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to assume the terms provided in the Executives
Change of Control or Employment Agreement.
|
Disability is generally defined as the absence of
the Executive from the Executives duties with the Company
on a full-time basis for 180 business days as a result of
incapacity due to mental or physical illness which is determined
to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the
Executives legal representative.
Additional details of the post-termination arrangements can be
found in the Compensation Discussion and Analysis on
page 36.
50
Involuntary
For Cause or Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Supplemental Pension Benefits(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
317,933
|
|
|
$
|
2,058,829
|
|
|
$
|
|
|
Nonqualified Deferred Compensation(2)
|
|
$
|
608,999
|
|
|
$
|
76,083
|
|
|
$
|
569,926
|
|
|
$
|
91,531
|
|
|
$
|
126,820
|
|
Total
|
|
$
|
608,999
|
|
|
$
|
76,083
|
|
|
$
|
887,859
|
|
|
$
|
2,150,360
|
|
|
$
|
126,820
|
|
|
|
|
(1) |
|
Reflects the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits. |
|
(2) |
|
Reflects the combined vested balances in the nonqualified
Savings Restoration Plan and Deferred Compensation Plan. |
Involuntary
Not For Cause Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance(1)
|
|
$
|
10,350,000
|
|
|
$
|
1,950,000
|
|
|
$
|
1,950,000
|
|
|
$
|
2,197,500
|
|
|
$
|
1,450,000
|
|
Pro-rata Bonus for 2007(2)
|
|
$
|
1,950,000
|
|
|
$
|
462,596
|
|
|
$
|
538,462
|
|
|
$
|
462,228
|
|
|
$
|
381,846
|
|
Accelerated Equity Compensation(3)
|
|
$
|
26,313,744
|
|
|
$
|
8,835,036
|
|
|
$
|
7,885,648
|
|
|
$
|
4,139,907
|
|
|
$
|
8,745,412
|
|
Supplemental Pension Benefits(4)
|
|
$
|
5,480,959
|
|
|
$
|
|
|
|
$
|
539,251
|
|
|
$
|
5,740,082
|
|
|
$
|
|
|
Nonqualified Deferred Compensation(5)
|
|
$
|
608,999
|
|
|
$
|
76,083
|
|
|
$
|
569,926
|
|
|
$
|
91,531
|
|
|
$
|
126,820
|
|
Health and Welfare Benefits(6)
|
|
$
|
238,433
|
|
|
$
|
58,913
|
|
|
$
|
268,082
|
|
|
$
|
49,114
|
|
|
$
|
52,828
|
|
Financial Counseling(7)
|
|
$
|
|
|
|
$
|
23,929
|
|
|
$
|
23,929
|
|
|
$
|
23,929
|
|
|
$
|
23,929
|
|
Total
|
|
$
|
44,942,135
|
|
|
$
|
11,406,557
|
|
|
$
|
11,775,298
|
|
|
$
|
12,704,291
|
|
|
$
|
10,780,835
|
|
|
|
|
(1) |
|
Mr. Hacketts value assumes three times his base
salary plus target bonus; all other named executive officer
values assume two times base salary plus one times target bonus.
Mr. Meloys cash severance value also includes his
unvested retention bonus of $575,000, which is scheduled to vest
August 10, 2008, but would vest earlier in the event of an
involuntary not for cause termination. |
|
(2) |
|
Mr. Hacketts value assumes payment of a pro-rata
bonus based on the target bonus percentage and base salary in
effect as of December 31, 2007; all other named executive
officer values assume a pro-rata bonus based on target bonus
percentages effective for the 2007 AIP and eligible earnings as
of December 31, 2007. |
|
(3) |
|
Reflects the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock shares and units, all as of
December 31, 2007. |
|
(4) |
|
For all named executive officers except for Mr. Hackett,
the values include a special retirement benefit enhancement that
is equivalent to the additional supplemental pension benefits
that would have accrued assuming they were eligible for
subsidized early retirement benefits. Values exclude vested
amounts payable under the qualified plans available to all
employees. All values include special pension credits, if
applicable, provided through an employment agreement, retention
agreement, the APC Retirement Restoration Plan or the KMG
Restoration Plan. Messrs. Walker and Reeves are not yet
vested in their accrued benefits under the APC Retirement
Restoration Plan. If the Compensation Committee chose to
accelerate the vesting, the present value of the accrued
benefits would equal $248,928 and $522,381, respectively. |
|
(5) |
|
Reflects the combined vested balances in the nonqualified
Savings Restoration Plan and Deferred Compensation Plan. |
|
(6) |
|
Mr. Hacketts value represents 18 months of
health and welfare benefit coverage and the lump sum value of
subsidized retiree medical benefits; all other named executive
officer values represent 24 months of health and welfare
benefit coverage. All amounts are present values determined in
accordance with SFAS No. 106
Employers Accounting for Postretirement Benefits other
than Pensions. Mr. Kurzs value also includes the
present value of a retiree death benefit in the Management Life
Insurance Plan, or |
51
|
|
|
|
|
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. |
|
(7) |
|
Values assume financial counseling services continue for two
years after termination. Mr. Hackett does not currently use
this company-provided service and therefore benefits are not
assumed to be extended to him after termination. |
Change
of Control: Involuntary Termination or Voluntary For Good
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance(1)
|
|
$
|
10,350,000
|
|
|
$
|
3,437,950
|
|
|
$
|
3,058,987
|
|
|
$
|
3,506,975
|
|
|
$
|
2,858,748
|
|
Pro-rata Bonus for 2007(2)
|
|
$
|
1,950,000
|
|
|
$
|
535,500
|
|
|
$
|
404,823
|
|
|
$
|
461,026
|
|
|
$
|
485,775
|
|
Accelerated Equity Compensation(3)
|
|
$
|
26,313,744
|
|
|
$
|
8,835,036
|
|
|
$
|
7,885,648
|
|
|
$
|
4,139,907
|
|
|
$
|
8,745,412
|
|
Supplemental Pension Benefits(4)
|
|
$
|
8,457,039
|
|
|
$
|
1,764,166
|
|
|
$
|
1,023,296
|
|
|
$
|
6,134,522
|
|
|
$
|
1,306,169
|
|
Nonqualified Deferred Compensation(5)
|
|
$
|
1,217,909
|
|
|
$
|
289,473
|
|
|
$
|
759,794
|
|
|
$
|
273,516
|
|
|
$
|
304,259
|
|
Health and Welfare Benefits(6)
|
|
$
|
306,733
|
|
|
$
|
246,946
|
|
|
$
|
293,683
|
|
|
$
|
73,837
|
|
|
$
|
79,478
|
|
Outplacement Assistance
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
Financial Counseling(7)
|
|
$
|
|
|
|
$
|
33,795
|
|
|
$
|
33,795
|
|
|
$
|
33,795
|
|
|
$
|
33,795
|
|
Excise Tax and
Gross-up(8)
|
|
$
|
13,045,776
|
|
|
$
|
4,291,590
|
|
|
$
|
3,422,340
|
|
|
$
|
3,694,714
|
|
|
$
|
3,168,999
|
|
Total
|
|
$
|
61,671,201
|
|
|
$
|
19,464,456
|
|
|
$
|
16,912,366
|
|
|
$
|
18,348,292
|
|
|
$
|
17,012,635
|
|
|
|
|
(1) |
|
Mr. Hacketts value assumes three times his base
salary plus target bonus; all other named executive officer
values assume 2.9 times the sum of base salary plus the highest
bonus paid in the past three years. Mr. Meloys cash
severance value also includes his unvested retention bonus of
$575,000, which is scheduled to vest August 10, 2008, but
would vest earlier in the event of an involuntary termination or
voluntary termination for good reason under a change of control
situation. |
|
(2) |
|
Mr. Hacketts value assumes payment of pro-rata bonus
based on the target bonus percentage and base salary in effect
as of December 31, 2007; all other named executive officer
values assume the full-year equivalent of the highest annual
bonus the officer received over the past three years. |
|
(3) |
|
Includes the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock shares and units, all as of
December 31, 2007. |
|
(4) |
|
The values include a 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. All values include special pension
credits, provided through an employment agreement, retention
agreement, the APC Retirement Restoration Plan, the KMG
Restoration Plan and change of control agreement. |
|
(5) |
|
Includes the combined balances in the nonqualified Savings
Restoration Plan and Deferred Compensation Plan plus an
additional three years of employer contributions into the
Savings Restoration Plan based on each officers current
contribution rate to the Plan. |
|
(6) |
|
Values represent 36 months of health and welfare benefit
coverage. Messrs. Hacketts and Walkers values
also include the lump sum value of subsidized retiree medical
benefits. All amounts are present values determined in
accordance with SFAS No. 106
Employers Accounting for Postretirement Benefits other
than Pensions. Mr. Kurzs value also includes the
present value of a retiree death benefit in the 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. |
52
|
|
|
(7) |
|
Values assume financial counseling services continue for three
years after termination. Mr. Hackett does not currently use
this company-provided service and therefore benefits are not
assumed to be extended to him after termination. |
|
(8) |
|
Values estimate the total payment required to make each
executive whole for the 20% excise tax imposed by
Section 280G of the IRC. |
Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
575,000
|
|
|
$
|
|
|
Pro-rata Bonus for 2007(2)
|
|
$
|
1,840,000
|
|
|
$
|
462,596
|
|
|
$
|
538,462
|
|
|
$
|
462,228
|
|
|
$
|
381,846
|
|
Accelerated Equity Compensation(3)
|
|
$
|
26,313,744
|
|
|
$
|
8,835,036
|
|
|
$
|
7,885,648
|
|
|
$
|
4,139,907
|
|
|
$
|
8,745,412
|
|
Supplemental Pension Benefits(4)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
317,933
|
|
|
$
|
6,134,522
|
|
|
$
|
|
|
Nonqualified Deferred Compensation(5)
|
|
$
|
608,999
|
|
|
$
|
76,083
|
|
|
$
|
569,926
|
|
|
$
|
91,531
|
|
|
$
|
126,820
|
|
Health and Welfare Benefits(6)
|
|
$
|
1,231,424
|
|
|
$
|
380,569
|
|
|
$
|
389,660
|
|
|
$
|
329,708
|
|
|
$
|
295,654
|
|
Total
|
|
$
|
29,994,167
|
|
|
$
|
9,754,284
|
|
|
$
|
9,701,629
|
|
|
$
|
11,732,896
|
|
|
$
|
9,549,732
|
|
|
|
|
(1) |
|
Mr. Meloys cash severance value includes his unvested
retention bonus of $575,000, which is scheduled to vest
August 10, 2008, but would vest earlier in the event of
termination by reason of disability. |
|
(2) |
|
Represents payment of a pro-rata target bonus based on target
bonus percentages effective for the 2007 AIP and eligible
earnings as of December 31, 2007. |
|
(3) |
|
Reflects the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock shares and units, all as of
December 31, 2007. |
|
(4) |
|
Reflects the lump sum present value of vested benefits related
to the Companys supplemental pension benefits.
Mr. Meloys value includes the special pension credits
provided through his retention agreement. |
|
(5) |
|
Reflects the combined vested balances in the nonqualified
Savings Restoration Plan and Deferred Compensation Plan. |
|
(6) |
|
Reflects the continuation of additional death benefit coverage
provided to officers of the Company until age 65. All
amounts are present values determined in accordance with
SFAS No. 106 Employers Accounting
for Postretirement Benefits other than Pensions. |
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
575,000
|
|
|
$
|
|
|
Pro-rata Bonus for 2007(2)
|
|
$
|
1,840,000
|
|
|
$
|
462,596
|
|
|
$
|
538,462
|
|
|
$
|
462,228
|
|
|
$
|
381,846
|
|
Accelerated Equity Compensation(3)
|
|
$
|
26,313,744
|
|
|
$
|
8,835,036
|
|
|
$
|
7,885,648
|
|
|
$
|
4,139,907
|
|
|
$
|
8,745,412
|
|
Supplemental Pension Benefits(4)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
317,933
|
|
|
$
|
6,134,522
|
|
|
$
|
|
|
Nonqualified Deferred Compensation(5)
|
|
$
|
608,999
|
|
|
$
|
76,083
|
|
|
$
|
569,926
|
|
|
$
|
91,531
|
|
|
$
|
126,820
|
|
Life Insurance Proceeds(6)
|
|
$
|
7,081,039
|
|
|
$
|
2,045,633
|
|
|
$
|
2,045,633
|
|
|
$
|
1,730,921
|
|
|
$
|
1,573,564
|
|
Total
|
|
$
|
35,843,782
|
|
|
$
|
11,419,348
|
|
|
$
|
11,357,602
|
|
|
$
|
13,134,109
|
|
|
$
|
10,827,642
|
|
|
|
|
(1) |
|
Mr. Meloys cash severance value includes his unvested
retention bonus of $575,000, which is scheduled to vest
August 10, 2008, but would vest earlier in the event of
termination by reason of death. |
|
(2) |
|
Represents payment of a pro-rata target bonus based on target
bonus percentages effective for the 2007 AIP and eligible
earnings as of December 31, 2007. |
|
(3) |
|
Includes the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock shares and units, all as of
December 31, 2007. |
53
|
|
|
(4) |
|
Includes the lump sum present value of vested benefits related
to the Companys supplemental pension benefits.
Mr. Meloys value includes the special pension credits
provided through his retention agreement. |
|
(5) |
|
Includes the combined vested balances in the nonqualified
Savings Restoration Plan and Deferred Compensation Plan. |
|
(6) |
|
Includes 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. |
TRANSACTIONS
WITH RELATED PERSONS
The Company recognizes that related person transactions can
present potential or actual conflicts of interest and it is the
Companys preference that related person transactions are
avoided as a general matter. However, the Company also
recognizes that there are situations, including certain
transactions negotiated on an arms length basis, where
related person transactions may be in, or may not be
inconsistent with, the best interest of the Company or our
stockholders. Therefore, the Company has procedures for the
approval, ratification and review of ongoing related person
transactions. Either the Boards Nominating and Corporate
Governance Committee or the full Board (as determined by the
Nominating and Corporate Governance Committee) will review,
ratify or approve, as necessary, any related person transactions
prior to the transaction being entered into, or ratify any
related person transactions that have not been previously
approved, in which a director, five percent owner, executive
officer or immediate family member of any such person has a
material interest, and which the transaction is in an amount in
excess of $120,000, either individually or in the aggregate of
several transactions during any calendar year. This review
typically occurs in connection with regularly scheduled Board of
Directors meetings.
Ongoing
Benefits
In 2004, the Company and Mr. Allison entered into an
agreement that replaced 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 and 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 to him 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 personal residence.
|
|
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 2008. The Board of Directors, at the
request of the Audit Committee, 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 2008. If the
stockholders do not ratify the appointment of KPMG LLP, the
Audit Committee will make the final determination of the
independent auditor for 2008.
54
INDEPENDENT
AUDITOR
KPMG LLP, an independent registered public accounting firm,
served as the Companys independent auditor during 2007.
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 2007
and 2006 and for other services provided by KPMG LLP.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
7,965,000
|
|
|
$
|
6,426,000
|
|
Audit-related Fees
|
|
|
3,206,000
|
|
|
|
866,000
|
|
Tax Fees
|
|
|
242,000
|
|
|
|
366,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
11,413,000
|
|
|
$
|
7,658,000
|
|
|
|
|
|
|
|
|
|
|
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
Form 10-Qs.
During 2007, the Company incurred approximately $1,125,000
related to the Companys change in accounting principle
from full cost to successful efforts.
Audit-related fees are primarily for the audits of the
Companys benefit plans, other audits, consents, comfort
letters and certain financial accounting consultation. During
2007 and 2006, the Company incurred approximately $1,595,000 and
$197,000, respectively, of audit-related fees associated with
properties divested by the Company. These amounts are included
in the table above and are reimbursable by the purchasers of the
properties. Approximately $938,000 of the audit-related fees are
associated with the formation and audit of Western Gas Partners,
LP, a newly formed 100% owned subsidiary of the Company who
filed a registration statement on
Form S-1
in 2007.
Tax fees are primarily for tax planning compliance and services
including approximately $234,000 and $285,000 in 2007 and 2006,
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
Chairman, to whom such authority has been conditionally
delegated, prior to engagement. During 2007, 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
ITEMS 3
AND 4 APPROVAL OF NEW COMPENSATION PLANS
In February 2008, the Board of Directors unanimously approved
the following plans, subject to stockholder approval:
|
|
|
|
|
the 2008 Omnibus Incentive Compensation Plan, or the Omnibus
Plan; and
|
|
|
|
the 2008 Director Compensation Plan, or the Director Plan.
|
The effective date for both the Omnibus Plan and the Director
Plan will be the date they are approved by our stockholders.
Collectively, these plans play an important role in our human
resource and business strategy. The Omnibus Plan will enable us
to attract, motivate and retain experienced and highly qualified
individuals in an environment that is challenged with tremendous
competition for new talent as well as experienced industry
specialists. The Director Plan will enable us to successfully
attract and retain highly qualified and experienced individuals
to serve as members of our Board of Directors.
The Board believes that stockholder approval of the Omnibus Plan
and the Director Plan is important to allow us to continue to
appropriately motivate and compensate employees and non-employee
directors who are in a position to contribute materially to the
success and long-term objectives of the Company. Consistent with
our compensation philosophy, we believe stock-based compensation
fosters and strengthens our employees and our
directors sense of proprietorship and personal involvement
in the Company. By holding a personal stake in Anadarko, these
individuals are encouraged to devote their best efforts towards
the achievement of our business objectives and our success,
thereby advancing the interests of Anadarko and our stockholders.
The table and footnotes below provide updated supplemental
information to the Equity Compensation Plan Table disclosed in
Item 12 of our Annual Report on
Form 10-K,
which was filed with the SEC on February 29, 2008.
|
|
|
|
|
|
|
Equity Compensation Plans
|
|
|
|
Approved by Security Holders
|
|
|
Number of securities remaining available for future issuance
under equity compensation plans as of December 31, 2007
|
|
|
7,996,038
|
|
Awards granted to employees and non-employee directors under the
Companys existing equity compensation plans from
January 1, 2008 to March 14, 2008
|
|
|
2,401,154
|
|
Awards cancelled and returned for issuance under the
Companys existing equity compensation plans from
January 1, 2008 to March 14, 2008
|
|
|
70,844
|
|
Number of securities remaining available for issuance under the
Companys existing equity compensation plans as of
March 14, 2008
|
|
|
5,665,728
|
|
As of March 14, 2008, the Company had 5,015,539 stock
options outstanding with a weighted average exercise price of
$44.45 and a weighted average remaining contractual term of
5.3 years. Additionally, as of March 14, 2008, the
Company had 6,636,067 shares of unvested restricted stock
and restricted stock units outstanding, and had performance unit
awards outstanding covering a maximum of 934,424 shares.
56
2008
OMNIBUS INCENTIVE COMPENSATION PLAN
|
|
ITEM 3
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APPROVAL
OF THE 2008 OMNIBUS INCENTIVE COMPENSATION PLAN
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We currently maintain the 1999 Stock Incentive Plan (or the 1999
Plan) and the Annual Incentive Plan from which we make
equity-based and cash-based incentive awards to employees,
respectively. As of March 14, 2008, there were
approximately 4,959,646 shares of our common stock reserved
and available for future awards under the 1999 Plan. If the
Omnibus Plan is approved by stockholders, all future equity and
cash incentive awards to employees will be made from the Omnibus
Plan and we will not grant any additional awards under the 1999
Plan and the Annual Incentive Plan. Equity awards previously
granted under the 1999 Plan will remain outstanding in
accordance with their terms. Any shares that remain available
for grant under the 1999 Plan at the time of stockholder
approval will be rolled into the Omnibus Plan and will be
counted toward the maximum share authorization being requested
for the Omnibus Plan.
The Omnibus Plan provides for the granting of awards in any
combination of the following:
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stock options;
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stock appreciation rights;
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restricted stock
and/or
restricted stock units;
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performance shares
and/or
performance units;
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incentive awards;
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cash awards; and
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other stock-based awards.
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We are seeking stockholder approval for a maximum share
authorization of 33,000,000 common shares under the Omnibus Plan.
Importantly, the Omnibus Plan does not allow downward repricing
of stock options (without stockholder consent), reloads or the
granting of discounted options. Provisions have been included to
meet the requirements for deductibility of executive
compensation under Section 162(m) of the Internal Revenue
Code with respect to performance-based compensation awarded to
participants the Plan Administrator deems are subject to
Section 162(m).
The following is a general summary of the material provisions
of the Omnibus Plan and is qualified in its entirety by the full
text of the Omnibus Plan, which is attached to this proxy
statement as Appendix A. Capitalized terms not defined in
the summary are defined in the plan document.
Term of Plan. The Omnibus Plan will expire
10 years from date of stockholder approval.
Participants. Employees of our Company or any
Affiliate of our Company are considered eligible participants
under the Omnibus Plan.
Shares Authorized. Subject to stockholder
approval, a maximum share authorization of 33,000,000 common
shares is reserved for issuance under the Omnibus Plan.
Following stockholder approval, any common shares remaining
under the 1999 Plan (approximately 4,959,646 common shares
estimated as of March 14, 2008) will be rolled over
into the Omnibus Plan. In no event will the maximum number of
common shares available under the Omnibus Plan, including any
shares rolled over from the 1999 Plan, exceed 33,000,000. The
shares to be delivered under the Omnibus Plan may be made
available from any combination of shares held in Anadarkos
treasury or authorized but unissued shares of Anadarkos
common stock.
The Omnibus Plan is a flexible authorization plan. Shares issued
as full value awards (that is, awards other than stock options
or stock appreciation rights) count against the Omnibus
Plans share authorization at a rate of 2.27 to 1, while
shares issued as stock options or stock appreciation rights
count against the share authorization at a rate of 1 to 1.
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Shares are counted against the authorization only to the extent
they are actually issued. Shares which terminate by expiration,
forfeiture, cancellation, or otherwise are settled in cash in
lieu of shares, or exchanged for awards not involving shares,
will again be available for grant under the Omnibus Plan,
including those awards granted under the 1999 Plan. The full
number of Stock Appreciation Rights granted that are to be
settled by the issuance of shares will be counted against the
number of shares authorized for award under the Omnibus Plan,
regardless of the number of shares actually issued upon
settlement of such Stock Appreciation Rights. Any shares of
stock withheld to satisfy tax withholding obligations, shares
tendered to pay the exercise price of an award and shares
repurchased on the open market with the proceeds of an option
exercise will not be eligible to again be available for grant.
The number of shares authorized to be issued under the Omnibus
Plan, as well as individual limitations and exercise prices,
will be subject to adjustments for stock dividends, stock
splits, recapitalizations, mergers, or similar corporate events.
No adjustments will be made if such adjustments would result in
adverse taxation to a participant under Section 409A of the
Internal Revenue Code.
Limitations on Awards. The Omnibus Plan
imposes annual per-participant award limits. The annual
per-participant limits are as follows:
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Award(s)
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Annual Limit
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Stock Options
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Maximum 2,500,000 shares to any one individual
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Stock Appreciation Rights
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Maximum 2,500,000 shares to any one individual
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Restricted Stock or Restricted Stock Units
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Maximum 1,500,000 shares or the value of
1,500,000 shares to any one individual
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Performance Shares or Performance Units
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Maximum 1,500,000 shares or the value of
1,500,000 shares to any one individual
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Incentive Awards
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Maximum $10,000,000 to a Covered Employee
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Cash Awards
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Maximum award to any one individual may not exceed greater of
$10,000,000 or the value of 1,500,000 shares
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Other Stock-Based Awards
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Maximum 1,500,000 shares to any one individual
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Administration. Unless otherwise specified by
the Board, the Compensation Committee is the Plan Administrator
with respect to all Covered Employees and all Section 16
Insiders and the Management Committee is the Plan Administrator
with respect to all other employees. The Management Committee
will consist of the CEO, provided that such individual is a
member of the Board, and any other member of the Board as the
Board may determine from time to time. The Plan Administrator is
responsible for administering the Omnibus Plan and has the
discretionary power to interpret the terms and intent of the
Omnibus Plan and any related documentation, to determine
eligibility for awards and the terms and conditions of awards,
to adopt rules, regulations, forms, instruments and guidelines
and to exercise such powers and perform such acts as are deemed
necessary or advisable to promote the best interests of Anadarko
with respect to the Omnibus Plan. Determinations of the Plan
Administrator made under the Omnibus Plan are final and binding.
The Plan Administrator may rely on officers, employees or other
agents of the Company to handle the day-to-day administrative
matters of the Omnibus Plan.
Award Terms. All awards to employees under the
Omnibus Plan are subject to the terms, conditions and
limitations as determined by the Plan Administrator. Awards may
be made in combination with, in replacement of, or as
alternatives to, grants under the Omnibus Plan or other plans of
our Company or subsidiaries, including plans of any acquired
entity.
Under the Omnibus Plan, employees may be granted either
incentive stock options that comply with the requirements of
Section 422 of the Internal Revenue Code or nonqualified
stock options that do not comply with those requirements. Stock
options must have an exercise price per share that is not less
than the fair market value of our common stock on the date of
grant, except in the case of stock options granted in assumption
of, or in substitution for, outstanding awards previously
granted by an acquired company or a company with which Anadarko
combines. Subject to certain adjustment provisions that only
apply to specified corporate events or the approval of our
stockholders, the exercise price of all stock options granted
under the
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Omnibus Plan may not be decreased. Stock options have a maximum
term of ten years from the date of grant. Employees may pay the
exercise price with cash or its equivalent, with previously
acquired shares of our common stock, or by any other means
approved by the Plan Administrator, including by means of a
broker-assisted exercise.
Stock appreciation rights may be granted under the Omnibus Plan
in tandem with a stock option, in whole or in part, or may be
granted separately. The exercise price of a stock appreciation
right may not be less than the fair market value of our common
stock on the date of grant, except in the case of stock
appreciation rights granted in assumption of, or in substitution
for, outstanding awards previously granted by an acquired
company or a company with which Anadarko combines. Subject to
certain adjustment provisions that only apply to specified
corporate events or the approval of our stockholders, the
exercise price of all stock appreciation rights made under the
Omnibus Plan may not be decreased. Stock appreciation rights
have a maximum term of ten years from the date of grant.
A restricted stock award consists of shares of stock that are
transferred to the participant subject to restrictions that may
result in forfeiture if specified conditions are not satisfied.
Rights to dividends may be extended to and made part of a
restricted stock award, at the discretion of the Plan
Administrator. A holder of restricted stock is treated as a
current stockholder and is entitled to voting rights. A
restricted stock unit award results in the transfer of shares of
stock to the participant only after specified conditions are
satisfied. Rights to dividend equivalents, payable in cash or
shares, may be extended to and made part of any restricted stock
unit award, at the discretion of the Plan Administrator. A
holder of a restricted stock unit award is treated as a
stockholder with respect to the award only when the shares of
common stock are delivered in the future. Except as permitted by
the Plan Administrator and specified in the award agreement,
restricted stock and restricted stock unit awards settled in
stock that are not performance-based will vest over a minimum
period of three years, and restricted stock and restricted stock
unit awards settled in stock that are performance-based will
vest over a minimum period of one year.
A performance award (whether granted as a performance share or a
performance unit) consists of a grant made subject to the
attainment of one or more performance goals for a specified
performance period (as determined by the Plan Administrator) and
may be intended to meet the requirements of qualified
performance-based compensation under Section 162(m) of the
Internal Revenue Code. Performance awards will only be earned by
participants if the performance goals are met for the
performance period. At the discretion of the Plan Administrator
and as prescribed in the award agreement, payment may be made in
the form of cash, shares or a combination of cash and shares.
Incentive awards consist of grants denominated in cash and may
be intended to meet the requirements of qualified
performance-based compensation under Section 162(m) of the
Internal Revenue Code. The Plan Administrator will determine the
performance goals applicable to the payout for incentive awards
to Covered Employees for each performance period. The
Compensation Committee cannot adjust an incentive award upward
for a Covered Employee, but retains the discretion to adjust the
incentive award downward. At the discretion of the Plan
Administrator, payment of incentive awards may be made in cash
and/or other
equity-based awards as provided under the Omnibus Plan and will
be paid no later than March 15 following the end of the calendar
year for which the incentive awards are applicable.
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For any awards intended to meet the requirements of
Section 162(m) of the Internal Revenue Code, the grant or
vesting of such awards may be based upon one or more performance
goals that apply to the specified participant, one or more
business units of the company, or the Company as a whole. Prior
to the payment of any award based on the achievement of
performance goals intended to qualify under Section 162(m)
of the Internal Revenue Code, the Compensation Committee must
certify in writing that the applicable performance goals and any
material terms were, in fact, satisfied. The business criteria
(defined as Performance Goals under the Omnibus
Plan) on which performance goals intended to qualify
compensation as performance-based compensation for purposes of
Section 162(m) of the Internal Revenue Code may be based
are:
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Financial Goals
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Earnings
Revenues
Debt level
Cost reduction targets
Interest-sensitivity gap levels
EBITDAX
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Earnings per share
Cash flow from operations
Equity ratios
Capital expended
Weighted average cost of capital
Return on assets
Debt/proved developed reserves (PDP)
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Net income
Free cash flow
Expenses
Working capital
Operating or profit margin
Return on equity or capital employed
Debt/proved reserves
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Operating Goals
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Amount of the oil and gas reserves
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Oil and gas reserve additions
Costs of finding oil and gas reserves
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Oil and gas replacement ratios
Natural gas and/or oil production
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Corporate and Other Goals
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Total shareholder return
Asset quality levels
Investments
Satisfactory internal or external audits
Achievement of balance sheet or income statement
objectives
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Market share
Assets
Asset sale targets
Value of assets
Employee retention/attrition rates
Improvement of financial ratings
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Charge-offs
Non-performing assets
Fair Market Value of Common Stock
Regulatory compliance
Safety targets
Economic value added
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Cash awards may be made to participants as determined by the
Plan Administrator. The Plan Administrator will determine the
terms and conditions of such cash awards, including whether the
payout of such awards is subject to the achievement of
performance goals.
Other stock-based awards may be equity-based or equity-related
awards other than stock options, stock appreciation rights,
restricted stock, restricted stock units, performance shares or
performance units. The terms and conditions of other stock-based
awards will be determined by the Plan Administrator. Payment
under any other stock-based awards may be made in common stock
or cash, as determined by the Plan Administrator.
Termination of Employment. Unless otherwise
specified in a participants award agreement, all unvested
and/or
unexercisable awards will automatically be forfeited upon
termination of employment for any reason. With respect to
options or stock appreciation rights, the participant will have
at least three (3) months following termination in which to
exercise the vested portion of the awards. In the event of a
termination for cause (as defined in the Omnibus Plan), all of a
participants awards, whether vested or unvested,
exercisable or unexercisable, will automatically be forfeited.
The Plan Administrator will have sole discretion for determining
termination provisions for awards.
Treatment of Awards Upon a Change of
Control. In the event of a change of
control of Anadarko, as defined in the Omnibus Plan, any
outstanding stock option or stock appreciation right will become
fully
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exercisable, and any outstanding performance share, performance
unit, restricted stock, restricted stock unit, other stock-based
award or other cash award that was forfeitable will become
non-forfeitable and fully vested, and to the extent applicable,
will be converted into shares of Anadarko common stock or cash,
as applicable.
Clawback Provision. In the event the Company
is required to prepare an accounting restatement as a result of
material noncompliance, the Plan Administrator may determine
that a Participant who is deemed to have knowingly engaged or
failed to prevent such misconduct will be required to reimburse
the Company an amount equal to any Award earned or accrued
during the
12-month
period following the first public issuance or filing with the
United Stated Securities and Exchange Commission.
Transferability of Awards. Award rights may
not be transferred, assigned, pledged or hypothecated in any
manner other than by will or by the applicable laws of descent
and distribution unless the Participant has received the
Companys prior written consent. However, as outlined in
the Omnibus Plan, certain transfers may be made to
permitted transferees upon approval of the Plan
Administrator.
Amendment to the Plan. Subject to the Board of
Directors, the Plan Administrator may amend the Omnibus Plan as
it may deem proper and in the best interests of Anadarko,
provided however that to the extent required by applicable law,
regulation or stock exchange rule, stockholder approval will be
required. No change can be made to any award granted under the
Omnibus Plan without the consent of the participant if such
change would impair the right of the participant under the
provisions of the award to acquire or retain common stock or
cash that the participant may have otherwise acquired.
U.S.
Federal Income Tax Consequences
The following is a brief description of the federal income tax
treatment that will generally apply to awards made under the
Omnibus Plan, based on federal income tax laws currently in
effect. The summary is not intended to be exhaustive and, among
other things, does not describe state, local or foreign income
and other tax consequences. The exact federal income tax
treatment of an award will depend on the specific nature and
form of such award.
Incentive Stock Options. An employee generally
will not recognize taxable income upon grant or exercise of an
incentive stock option. However, the amount by which the fair
market value of the shares on the exercise date of an incentive
stock option exceeds the purchase price generally will
constitute an item of adjustment for alternative minimum tax
purposes, and may therefore result in alternative minimum tax
liability to the option holder. Incentive stock option tax
treatment will be available only if the participant has been an
employee of Anadarko or its subsidiaries within three months of
the date of exercise. Anadarko will not be entitled to any
business expense deduction on the grant or exercise of an
incentive stock option. If the employee has held the shares
acquired upon exercise of an incentive stock option for at least
two years after the date of grant and for at least one year
after the date of exercise, upon disposition of the shares by
the employee, the difference, if any, between the sales price of
the shares and the exercise price of the option will be treated
as a long-term capital gain or loss. If the employee does not
satisfy these holding period requirements (a disqualifying
disposition), the employee will generally recognize
ordinary income for the year of disposition, in an amount equal
to the excess of the fair market value of the shares on the date
the option was exercised over the option exercise price (or, if
less, the amount realized upon disposition over the exercise
price). Any excess of the amount realized by the employee on the
disqualifying disposition over the fair market value of the
shares on the date of exercise of the option will be a
short-term capital gain. Anadarko generally will be entitled to
a deduction in the year of disposition equal to the amount of
ordinary income recognized by the employee. The employees
basis in the shares acquired upon exercise of an incentive stock
option is equal to the exercise price paid, plus any amount
includible as ordinary income as a result of a disqualifying
disposition. A subsequent disqualifying disposition of shares
acquired upon exercise of an incentive stock option will
eliminate the alternative minimum taxable income adjustment if
the disposition occurs in the same taxable year as the exercise.
A disqualifying disposition in a subsequent taxable year will
not affect the alternative minimum tax computation in the
earlier year.
Nonqualified Stock Options. An employee will
not recognize any income at the time of grant of a nonqualified
stock option and Anadarko will not be entitled to a tax
deduction with respect to such grant.
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Generally, upon exercise of a nonqualified stock option, the
employee will recognize ordinary income in an amount equal to
the amount by which the fair market value of the shares on the
date of exercise exceeds the exercise price of the option.
Subject to any deduction limitation under Section 162(m) of
the Code (which is discussed below), Anadarko will be entitled
to a federal income tax deduction in the year of exercise in the
same amount as the taxable compensation recognized by the
employee. The employees basis in the stock for purposes of
measuring the amount of gain will be the exercise price paid to
Anadarko plus the amount of compensation includible in income at
the time of exercise. An employees subsequent disposition
of shares acquired upon the exercise of a nonqualified stock
option will ordinarily result in long-term or short-term capital
gain or loss, depending on the holding period of the shares.
Generally, the shares received on exercise of an option or stock
appreciation right under the Omnibus Plan are not subject to
restrictions on transfer or risks of forfeiture and, therefore,
the participant will recognize income on the date of exercise of
a nonqualified stock option or stock appreciation right.
However, if the optionee is subject to Section 16(b) of the
Exchange Act, the Section 16(b) restriction will be
considered a substantial risk of forfeiture for tax purposes.
Under current law, employees who are either directors or
officers of the Company will be subject to restrictions under
Section 16(b) of the Exchange Act during their term of
service and for up to six months after termination of service.
Exchange Act
Rule 16b-3
provides an exemption from the restrictions of
Section 16(b) for the grant of derivative securities, such
as stock options, under qualifying plans. The Omnibus Plan is
intended to satisfy the requirements for exemption under
Exchange Act
Rule 16b-3.
Therefore, the grant of awards will not be considered a purchase
and the exercise of the awards to acquire the underlying shares
of the Company common stock will not be considered a purchase or
a sale. Thus, ordinary income will be recognized and measured on
the date of exercise.
Payment of Option Exercise Price in Shares. If
a nonqualified option is exercised by tendering previously owned
shares of Anadarko common stock in payment of the exercise
price, then, instead of the treatment described above, the
tender generally will not be considered a taxable disposition of
the previously owned shares and no gain or loss will be
recognized with respect to the equivalent number of new shares
(the exchanged shares) acquired at the time of
exercise. The employees basis and holding period for the
exchanged shares will be the same as the previously owned shares
exchanged. The employee will, however, have ordinary income
equal to the fair market value on the date of exercise of the
new additional shares received in excess of the number of
exchanged shares. The employees basis in the new
additional shares will be equal to the amount of such
compensation income and the holding period will begin on the
date of exercise. However, if an incentive stock option is
exercised by tendering previously owned shares of Anadarko
common stock in payment of the exercise price, if the previously
owned shares were acquired on the exercise of an incentive stock
option and have not satisfied statutory holding period
requirements, a disqualifying disposition will occur and the
employee will recognize income and be subject to other basis
allocation and holding period adjustments with respect to the
exchanged shares.
Stock Appreciation Rights and Performance
Awards. When stock appreciation rights are
exercised or when performance awards are settled or paid, the
amount of cash and the fair market value of property received by
the employee (including shares) will be ordinary income, unless
the property is subject to transfer restrictions or forfeiture.
Restricted Stock. Restricted Stock granted
under the Omnibus Plan may, in the determination of the Plan
Administrator, be subject to rights of repurchase, forfeiture
and other transfer restrictions. The tax consequences of stock
granted under the Omnibus Plan depends on whether the stock is
subject to restrictions and, if so, whether the restrictions are
deemed to create a substantial risk of forfeiture
under Section 83 of the Code (for example, stock granted
under the Omnibus Plan that is subject to forfeiture if the
employee terminates employment prior to the time the
restrictions lapse, which right lapses over a period of
continued employment, is considered a substantial risk of
forfeiture under Section 83 of the Code). If stock is
not subject to a substantial risk of forfeiture, the
employee normally will recognize taxable ordinary income equal
to the value of the stock on the date on which the stock is
granted less any amount paid for that stock. If the stock is
subject to a substantial risk of forfeiture, the
employee normally will recognize taxable ordinary income as and
when the substantial risk of forfeiture lapses in
the amount equal to the fair market value of the shares at the
time they are no longer subject to the substantial risk of
forfeiture less the amount
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paid for the stock. Upon disposition of the stock, the employee
will recognize a capital gain or loss equal to the difference
between the selling price and the sum of the amount paid for the
stock plus any amount recognized as ordinary income upon grant
or vesting of the stock. The gain or loss will be long- or
short-term depending on how long the employee held the stock.
A recipient of stock subject to a substantial risk of
forfeiture may make an election under Code
Section 83(b) to recognize ordinary income on the date the
employee receives the restricted stock, rather than waiting
until the substantial risk of forfeiture lapses. If
the employee makes a Section 83(b) election, the employee
will be required to recognize as ordinary income on the date the
employee receives the stock grant the difference, if any,
between the fair market value of the stock on the award date and
the purchase price paid. If the employee makes a
Section 83(b) election, the employee will not be required
to recognize any income when the substantial risk of
forfeiture lapses.
The shares acquired will have a cost basis equal to the fair
market value on the date the restrictions lapse (or the date of
grant if a Section 83(b) election is made). When the
employee disposes of the shares acquired, any amount received in
excess of the shares cost basis will be treated as long-
or short-term capital gain, depending upon the holding period of
the shares. If the amount the employee receives is less than the
cost basis of the shares, the loss will be treated as long- or
short-term capital loss, depending upon the holding period of
the shares.
Other Awards. In addition to the types of
awards described above, the Omnibus Plan authorizes certain
other awards that may include payments in cash, common stock, or
a combination of cash and common stock. The tax consequences of
such awards will depend upon the specific terms of such awards.
Generally, however, a participant who receives an award payable
in cash will recognize ordinary income with respect to such
award at the earliest time at which the participant has an
unrestricted right to receive the amount of the cash payment,
and the Company will be entitled to a corresponding deduction at
that time. In general, the sale or grant of stock to a
participant under the Omnibus Plan will be a taxable event at
the time of the sale or grant if such stock at that time is not
subject to a substantial risk of forfeiture or is transferable
within the meaning of Section 83 of the Internal Revenue
Code in the hands of the participant. (For such purposes, stock
is ordinarily considered to be transferable if it can be
transferred to another person who takes the stock free of any
substantial risk of forfeiture.) In such case, the participant
will recognize ordinary income, and the Company will be entitled
to a deduction, equal to the excess of the fair market value of
such stock on the date of the sale or grant over the amount, if
any, paid for such stock. Stock that at the time of receipt by a
participant is subject to a substantial risk of forfeiture and
that is not transferable within the meaning of Section 83
generally will be taxed under the rules applicable to Restricted
Stock as described above.
Other Tax Issues. The terms of awards granted
under the Omnibus Plan may provide for accelerated vesting or
payment of an award in connection with a change of control of
the Company. In that event and depending upon the individual
circumstances of the recipient, certain amounts with respect to
such awards may constitute excess parachute payments
under the golden parachute provisions of the
Internal Revenue Code. Pursuant to these provisions, a
participant will be subject to a 20% excise tax on any
excess parachute payments and the Company will be
denied any deduction with respect to such payment.
In general, Section 162(m) of the Internal Revenue Code
imposes a $1,000,000 limit on the amount of compensation that
may be deducted by the Company in any tax year with respect to
the Companys named executive officers, including any
compensation relating to an award granted under the Omnibus
Plan. Compensation that is considered to be performance-based
will not have to be taken into account for purposes of the
$1,000,000 limitation, and accordingly, should be deductible by
the Company without limitation under Section 162(m).
Provided an option is approved by a committee comprised of two
or more outside directors, has an exercise price of
at least fair market value on the date of grant, the plan under
which the option is granted imposes a per person limit on the
number of shares covered by awards and the material terms of the
plan under which the option is granted have been disclosed to
and approved by stockholders, any compensation deemed paid by
the Company in connection with the disqualifying disposition of
incentive stock option shares or the exercise of non-statutory
options will qualify as performance-based compensation for
purposes of Section 162(m). An award may also qualify as
performance-based compensation if the administrator conditions
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the grant, vesting, or exercisability of such an award on the
attainment of a pre-established objective performance goal.
If any award granted under the Omnibus Plan is considered
deferred compensation under Internal Revenue Code
Section 409A, then certain requirements must be met for the
deferral to be effective for federal tax purposes. These
requirements include: ensuring that any election to defer made
by the employee is done within the time period(s) permitted by
Section 409A; certain limitations on distributions; and,
the prohibition of accelerating the time or schedule of any
payment of deferred amounts except in certain permitted
circumstances. If these requirements are not met, the employee
will be immediately taxable on such purportedly deferred
amounts, a penalty of 20% of such amounts deferred after
December 31, 2004 will be imposed, and interest will accrue
at the underpayment rate plus one percent on the underpayments
that would have occurred had the compensation been includible in
the taxable year in which first deferred or, if later, the first
taxable year in which such deferred compensation is not subject
to a substantial risk of forfeiture.
The taxable income resulting from awards under the Omnibus Plan,
other than incentive stock options, will constitute wages
subject to withholding and the Company will be required to make
whatever arrangements are necessary to ensure that funds
equaling the amount of tax required to be withheld are available
for payment, including the deduction of required withholding
amounts from the employees other compensation and
requiring payment of withholding amounts as part of the exercise
price or as a condition to receiving shares pursuant to an
award. The Company will generally be required to withhold
applicable taxes with respect to any ordinary income recognized
by a participant in connection with awards made under the
Omnibus Plan. Whether or not such withholding is required, the
Company will report such information to the Internal Revenue
Service as may be required with respect to any income
attributable to transactions involving awards.
Dividends paid on the restricted shares prior to the lapse of
restrictions will be taxable as additional compensation income
to the recipient in the year received and subject to withholding.
New
Plan Benefits
All awards granted under the Omnibus Plan are subject to the
discretion of Anadarkos Compensation Committee or the
Board of Directors, as appropriate. Therefore, the total
benefits that will be received by any particular person or group
under the Omnibus Plan are not determinable at this time. To
date, no awards have been made under the Omnibus Plan. The
closing price of a share of Anadarko common stock as reported by
the NYSE on March 14, 2008 was $64.50.
For more information on the number of shares subject to
outstanding options, warrants, and rights and other awards under
the Prior Plans, see the supplemental equity compensation plans
table on page 56 of this proxy statement.
The approval of the Omnibus Plan requires the affirmative vote
of a majority of the votes cast on the proposal, provided that
the total votes cast represent a majority of all shares entitled
to vote. Abstentions and broker non-votes are not counted as
votes cast, and therefore do not affect the outcome of the
proposal.
For the reasons stated above, THE BOARD RECOMMENDS THAT YOU
VOTE FOR THE APPROVAL OF THE 2008 OMNIBUS INCENTIVE
COMPENSATION PLAN.
2008
DIRECTOR COMPENSATION PLAN
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ITEM 4
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APPROVAL
OF THE 2008 DIRECTOR COMPENSATION PLAN
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We currently maintain the 1998 Director Stock Plan (or the
1998 Plan) from which we make equity awards to non-employee
directors. The 1998 Plan also allows our directors to elect
payment of all or a portion of their fees and retainers in
common shares. While an adequate number of common shares remain
under the 1998 Plan, we believe that the 2008 Director
Compensation Plan (or the Director Plan) incorporates additional
flexibility that is required to design and offer competitive
compensation programs for non-employee directors. Following
stockholder approval of the Director Plan, all future equity
awards and director compensation will
64
be made from the Director Plan and we will not grant any
additional equity awards under the 1998 Plan. Equity awards
previously granted under the 1998 Plan will remain outstanding
in accordance with their terms.
In addition to providing for the payment of Board and Committee
service, the Director Plan provides for the granting of equity
awards in any combination of the following:
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nonqualified stock options;
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stock appreciation rights;
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restricted stock
and/or
restricted stock units; and
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other stock-based awards.
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We are seeking stockholder approval for a maximum authorization
of 1,500,000 common shares under the Director Plan.
Importantly, the Director Plan does not allow downward repricing
of stock options (without stockholder consent), reloads or the
granting of discounted options.
The following is a general summary of the material provisions
of the Director Plan and is qualified in its entirety by the
full text of the Director Plan, which is attached to this proxy
statement as Appendix B. Capitalized terms not defined in
the summary are defined in the plan document.
Term of Plan. The Director Plan will expire
10 years from date of stockholder approval.
Administration. In the absence of a specific
Board designation to the contrary, the Director Plan will be
administered by the Compensation Committee. The Compensation
Committee will interpret the Director Plan, will prescribe,
amend and rescind rules relating to the Plan as it deems proper
and in the best interest of Anadarko and will take any other
actions necessary for the administration of the Plan.
Participants. Each non-employee director of
Anadarko will be eligible to participate in the Director Plan
immediately upon his or her election to our Board of Directors.
As of February 12, 2008, the date the Board adopted the
Plan, there were nine directors eligible to participate.
Shares Authorized. Subject to stockholder
approval, a maximum authorization of 1,500,000 common shares is
reserved for issuance under the Director Plan. The shares to be
delivered under the Director Plan may be made available from any
combination of shares held in Anadarkos treasury or
authorized but unissued shares of Anadarkos common stock.
The Director Plan is a flexible authorization plan. Shares
issued as full value awards (that is, awards other than stock
options or stock appreciation rights) count against the Director
Plans share authorization at a rate of 2.27 to 1, while
shares issued as stock options or stock appreciation rights
count against the share authorization at a rate of 1 to 1.
Shares are counted against the authorization only to the extent
they are actually issued. Shares which terminate by expiration,
forfeiture, cancellation, or otherwise are settled in cash in
lieu of shares, or exchanged for awards not involving shares,
will again be available for grant under the Director Plan. The
full number of Stock Appreciation Rights granted that are to be
settled by the issuance of shares will be counted against the
number of shares authorized for award under the Director Plan,
regardless of the number of shares actually issued upon
settlement of such Stock Appreciation Rights. Any shares of
stock withheld to satisfy tax withholding obligations, shares
tendered to pay the exercise price of an award and shares
repurchased on the open market with the proceeds of an option
exercise will not be eligible to again be available for grant.
The number of shares authorized to be issued under the Director
Plan will be subject to adjustments for stock dividends, stock
splits, recapitalizations, mergers, or similar corporate events.
No adjustments will be made if such adjustments would result in
adverse taxation to a participant under Section 409A of the
Internal Revenue Code.
Award Terms. All awards to non-employee
directors under the Director Plan are subject to the terms,
conditions and limitations as determined by the Plan
Administrator.
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Under the Director Plan, non-employee directors may be granted
nonqualified stock options. Stock options must have an exercise
price per share that is not less than the fair market value of
our common stock on the date of grant, except in the case of
stock options granted in assumption of, or in substitution for,
outstanding awards previously granted by an acquired company or
a company with which Anadarko combines. Subject to certain
adjustment provisions that only apply to specified corporate
events or the approval of our stockholders, the exercise price
of all stock options granted under the Director Plan may not be
decreased. Stock options have a maximum term of ten years from
the date of grant. Non-employee directors may pay the exercise
price with cash or its equivalent, with previously acquired
shares of our common stock, or by any other means approved by
the Plan Administrator, including by means of a broker-assisted
exercise.
Stock appreciation rights may be granted under the Director Plan
in tandem with a stock option, in whole or in part, or may be
granted separately. The exercise price of a stock appreciation
right may not be less than the fair market value of our common
stock on the date of grant, except in the case of stock
appreciation rights granted in assumption of, or in substitution
for, outstanding awards previously granted by an acquired
company or a company with which Anadarko combines. Subject to
certain adjustment provisions that only apply to specified
corporate events or the approval of our stockholders, the
exercise price of all stock appreciation rights made under the
Director Plan may not be decreased. Stock appreciation rights
have a maximum term of ten years from the date of grant.
A restricted stock award consists of shares of stock that are
transferred to the participant subject to restrictions that may
result in forfeiture if specified conditions are not satisfied.
Rights to dividends may be extended to and made part of a
restricted stock award, at the discretion of the Plan
Administrator. A holder of restricted stock is treated as a
current stockholder and is entitled to voting rights. A
restricted stock unit award results in the transfer of shares of
stock to the participant only after specified conditions are
satisfied. Rights to dividend equivalents, payable in cash or
shares, may be extended to and made part of any restricted stock
unit award, at the discretion of the Plan Administrator. A
holder of a restricted stock unit award is treated as a
stockholder with respect to the award only when the shares of
common stock are delivered in the future. Except as permitted by
the Plan Administrator and specified in the award agreement,
restricted stock and restricted stock unit awards will be
subject to a time vesting period of no less than one year from
the date of grant.
Board Compensation. The Board of Directors
will establish, by resolution or otherwise, from time to time,
the amount of each participants compensation. For purposes
of the Director Plan, the term compensation means
the participants annual retainer and meeting fees, if any,
for each regular or special meeting of the Board and for any
committee meetings attended. Such compensation will be
determined in accordance with our By-Laws and will be paid,
unless deferred by the participant in accordance with the terms
of the Director Plan or our Deferred Compensation Plan, within
thirty days after the end of the Plan Quarter (as defined in the
Director Plan) in which it is earned. The Plan Administrator, if
necessary, may determine prior to the beginning of the
applicable Plan Quarter for which the compensation is to be paid
that payment will be made at a later date.
By December 31 of the calendar year, or at such later time as
may be provided under Section 409A of the Internal Revenue
Code, a participant will be entitled to elect to receive his or
her compensation for the following year in any combination of
cash, deferred cash, common stock and deferred shares of common
stock. If no election is received for the specified year, the
participant will be deemed to have made an election to receive
their compensation in the form of undeferred cash. Elections are
irrevocable and will apply to the compensation earned during the
year for which the election is effective.
If a participant elects to have all or a specified percentage of
his or her compensation for a given year deferred in cash or
shares of common stock, such cash or common stock, as the case
may be, will be recorded in a deferred account as of the date
the compensation otherwise would have been paid. If a
participant elects to defer compensation in cash, the
participants deferred account will be credited with an
amount equal to the amount deferred. Deferred cash elections are
only available pursuant to the Director Plan if the participant
is not otherwise eligible to participate in one of our other
deferred compensation plans or programs which allow participants
to defer their cash compensation. If a participant elects to
defer compensation in the form of
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shares of deferred common stock, or if an amount is required to
be taken in shares of deferred common stock, the
participants account will be credited with an amount equal
to the amount deferred plus a premium (or Conversion Premium),
as may be specified by the Board, for the purpose of determining
the number of shares of common stock which will be credited to
the participants account (or Common Stock Deferral).
The actual number of shares of common stock which will be
credited to the participants deferred account will equal
the Common Stock Deferral divided by the fair market value of
the common stock on the applicable Payment Date (as defined in
the Director Plan). With respect to shares of common stock
credited to a participants deferred account, the
participant will have the right to receive dividend equivalents
and other distributions thereon. The Board or Compensation
Committee may determine that dividend equivalents and other
distributions will be paid in cash on a current basis or
reinvested promptly in additional shares of common stock and
such additional shares will be credited to the
participants deferred account.
Payment. Payment of compensation deferred by a
participant generally will be made or, in the case of
installments over a period of years, begin to be made in the
month following the date on which the participant ceases to be a
director of Anadarko. As directed by the election made by the
participant at the time of deferral, deferred cash will be paid
in either an immediate lump-sum cash payment, a lump sum cash
payment at a specified future date or in periodic installments
over a specified period of years. As directed by the
participants election made at the time of deferral,
deferred common stock will be distributed to the participant in
either an immediate lump-sum distribution, a lump sum
distribution at a specified future date or annual installments
over a specified period of years; provided, however, such
distribution may be delayed until a later date as may be
necessary to comply with Section 16(b) of the Securities
Exchange Act of 1934, as amended. The amount which will be paid
and/or
distributed to a participant (or to the participants
beneficiary in the case of a participants death) will
equal the amount credited to the participants deferred
account in the form of cash, plus any interest thereon, plus a
number of shares of common stock equal to the number of whole
shares credited to the participants deferred account. No
fractional shares of common stock will be distributed. The value
of any fractional shares of common stock will be paid in a
lump-sum cash payment.
The balances of a participants deferred account will be
distributed in full to the participants beneficiary in the
event of a participants death or Permanent Disability (as
defined in the Director Plan). In the case of an unforeseeable
emergency (as defined in the Director Plan), a participant may
request a distribution from his or her deferred account in
accordance with Section 409A of the Internal Revenue Code.
Change of Control. In the event of a change of
control, all stock options, stock appreciation rights and other
stock-based awards will become fully vested and exercisable and
the restriction periods applicable to shares of restricted stock
and restricted stock units will immediately lapse. Irrespective
of a participants deferral elections, all cash deferrals
and stock deferrals will be paid to a participant (or his or her
beneficiary in the case of the participants death) within
30 days after the date of the change of control, or at a
later time as may be required to enable the participant to avoid
liability under Section 16(b) of the Exchange Act. However,
the accelerated vesting of restricted stock, restricted stock
units and other stock-based awards and the immediate payment of
cash deferrals and stock deferrals will not be made to a
participant if, following a change of control, the participant
continues to serve as a member of the Board of the Company or
its successor.
For purposes of the Director Plan, Change of Control has the
same meaning given such term in the 2008 Omnibus Incentive
Compensation Plan, which is subject to the approval of
Anadarkos stockholders at the Annual Meeting.
Termination and Amendment. Subject to our
Board of Directors, the Compensation Committee may from time to
time amend the Plan as it may deem proper and in the best
interest of Anadarko; provided, however, stockholder approval
will be requested to the extent required by applicable law,
regulation or stock exchange. Subject to Section 409A of
the Internal Revenue Code, the Board of Directors may suspend or
terminate the Plan at any time. No amendment, suspension or
termination may impair the right of a participant (or his or her
beneficiary in the case of the participants death) to
receive benefits accrued under the Director Plan prior to the
effective date of such amendment, suspension or termination.
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U.S.
Federal Income Tax Consequences
The following is a brief description of the federal income tax
treatment that will generally apply to awards made under the
Director Plan, based on federal income tax laws currently in
effect. The summary is not intended to be exhaustive and, among
other things, does not describe state, local or foreign income
and other tax consequences. The exact federal income tax
treatment of an award will depend on the specific nature and
form of such award.
Nonqualified Stock Options. A participant will
not recognize any income at the time of grant of a nonqualified
stock option and Anadarko will not be entitled to a tax
deduction with respect to such grant. Generally, upon exercise
of a nonqualified stock option, the participant will recognize
ordinary income in an amount equal to the amount by which the
fair market value of the shares on the date of exercise exceeds
the exercise price of the option. Anadarko will be entitled to a
federal income tax deduction in the year of exercise in the same
amount as the taxable compensation recognized by the
participant. The participants basis in the stock for
purposes of measuring the amount of gain will be the exercise
price paid to Anadarko plus the amount of compensation
includible in income at the time of exercise. A
participants subsequent disposition of shares acquired
upon the exercise of a nonqualified stock option will ordinarily
result in long- or short-term capital gain or loss, depending on
the holding period of the shares.
Generally, the shares received on exercise of an option or stock
appreciation right under the Director Plan are not subject to
restrictions on transfer or risks of forfeiture and, therefore,
the participant will recognize income on the date of exercise of
a nonqualified stock option or stock appreciation right.
However, if the optionee is subject to Section 16(b) of the
Exchange Act, the Section 16(b) restriction will be
considered a substantial risk of forfeiture for tax purposes.
Under current law, directors of the Company will be subject to
restrictions under Section 16(b) of the Exchange Act during
their term of service and for up to six months after termination
of service. Exchange Act
Rule 16b-3
provides an exemption from the restrictions of
Section 16(b) for the grant of derivative securities, such
as stock options, under qualifying plans. The Director Plan is
intended to satisfy the requirements for exemption under
Exchange Act
Rule 16b-3.
Therefore, the grant of awards will not be considered a purchase
and the exercise of the awards to acquire the underlying shares
of the Company common stock will not be considered a purchase or
a sale. Thus, ordinary income will be recognized and measured on
the date of exercise.
Payment of Option Exercise Price in Shares. If
a nonqualified option is exercised by tendering previously owned
shares of Anadarko common stock in payment of the exercise
price, then, instead of the treatment described above, the
tender generally will not be considered a taxable disposition of
the previously owned shares and no gain or loss will be
recognized with respect to the equivalent number of new shares
(the exchanged shares) acquired at the time of
exercise. The participants basis and holding period for
the exchanged shares will be the same as the previously owned
shares exchanged. The participant will recognize ordinary income
equal to the fair market value on the date of exercise of the
new shares received in excess of the number of exchanged shares.
The participants basis in the new additional shares will
be equal to the amount of such income and the holding period
will begin on the date of exercise.
Stock Appreciation Rights. When stock
appreciation rights are exercised, the amount of cash and the
fair market value of property received by the participant
(including shares) will be ordinary income, unless the property
is subject to transfer restrictions or forfeiture.
Restricted Stock. Restricted Stock granted
under the Director Plan may, in the determination of the Plan
Administrator, be subject to rights of repurchase, forfeiture
and other transfer restrictions. The tax consequences of stock
granted under the Director Plan depends on whether the stock is
subject to restrictions and, if so, whether the restrictions are
deemed to create a substantial risk of forfeiture
under Section 83 of the Code (for example, stock granted
under the Director Plan that is subject to forfeiture if the
director terminates service prior to the time the restrictions
lapse, which right lapses over a period of continued service, is
considered a substantial risk of forfeiture under
Section 83 of the Code). If stock is not subject to a
substantial risk of forfeiture, the participant
normally will recognize taxable ordinary income equal to the
value of the stock on the date on which the stock is granted
less any amount paid for that stock. If the stock is subject to
a substantial risk of forfeiture, the participant
normally will recognize taxable ordinary income as
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and when the substantial risk of forfeiture lapses
in the amount equal to the fair market value of the shares at
the time they are no longer subject to the substantial
risk of forfeiture less the amount paid for the stock.
Upon disposition of the stock, the participant will recognize a
capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for the stock plus any
amount recognized as ordinary income upon grant or vesting of
the stock. The gain or loss will be long- or short-term
depending on how long the participant held the stock.
A recipient of stock subject to a substantial risk of
forfeiture may make an election under Code
Section 83(b) to recognize ordinary income on the date the
participant receives the restricted stock, rather than waiting
until the substantial risk of forfeiture lapses. If
the participant makes a Section 83(b) election, the
participant will be required to recognize as ordinary income on
the date the participant receives the stock grant the
difference, if any, between the fair market value of the stock
on the award date and the purchase price paid. If the
participant makes a Section 83(b) election, the participant
will not be required to recognize any income when the
substantial risk of forfeiture lapses.
The shares acquired will have a cost basis equal to the fair
market value on the date the restrictions lapse (or the date of
grant if a Section 83(b) election is made). When the
participant disposes of the shares acquired, any amount received
in excess of the shares cost basis will be treated as
long- or short-term capital gain, depending upon the holding
period of the shares. If the amount the participant receives is
less than the cost basis of the shares, the loss will be treated
as long- or short-term capital loss, depending upon the holding
period of the shares.
Other Awards. In addition to the types of
awards described above, the Director Plan authorizes certain
other awards that may include payments in cash, common stock, or
a combination of cash and common stock. The tax consequences of
such awards will depend upon the specific terms of such awards.
Generally, however, a participant who receives an award payable
in cash will recognize ordinary income with respect to such
award at the earliest time at which the participant has an
unrestricted right to receive the amount of the cash payment,
and the Company will be entitled to a corresponding deduction at
that time. In general, the sale or grant of stock to a
participant under the Director Plan will be a taxable event at
the time of the sale or grant if such stock at that time is not
subject to a substantial risk of forfeiture or is transferable
within the meaning of Section 83 of the Internal Revenue
Code in the hands of the participant. (For such purposes, stock
is ordinarily considered to be transferable if it can be
transferred to another person who takes the stock free of any
substantial risk of forfeiture.) In such case, the participant
will recognize ordinary income, and the Company will be entitled
to a deduction, equal to the excess of the fair market value of
such stock on the date of the sale or grant over the amount, if
any, paid for such stock. Stock that at the time of receipt by a
participant is subject to a substantial risk of forfeiture and
that is not transferable within the meaning of Section 83
generally will be taxed under the rules applicable to Restricted
Stock as described above.
Other Tax Issues. The terms of awards granted
under the Director Plan may provide for accelerated vesting or
payment of an award in connection with a change of control of
the Company. In that event and depending upon the individual
circumstances of the recipient (e.g., whether the Director owns
more than one percent of the fair market value of all classes of
outstanding stock of the Company), certain amounts with respect
to such awards may constitute excess parachute
payments under the golden parachute provisions
of the Internal Revenue Code. Pursuant to these provisions, a
participant will be subject to a 20% excise tax on any
excess parachute payments and the Company will be
denied any deduction with respect to such payment.
If any award granted under the Director Plan is considered
deferred compensation under Internal Revenue Code
Section 409A, then certain requirements must be met for the
deferral to be effective for federal tax purposes. These
requirements include: ensuring that any election to defer made
by the participant is done within the time period(s) permitted
by Section 409A; certain limitations on distributions; and,
the prohibition of accelerating the time or schedule of any
payment of deferred amounts except in certain permitted
circumstances. If these requirements are not met, the
participant will be immediately taxable on such purportedly
deferred amounts, a penalty of 20% of such amounts deferred
after December 31, 2004 will be imposed, and interest will
accrue at the underpayment rate plus one percent on the
underpayments that would
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have occurred had the compensation been includible in the
taxable year in which first deferred or, if later, the first
taxable year in which such deferred compensation is not subject
to a substantial risk of forfeiture.
Dividends paid on the restricted shares prior to the lapse of
restrictions will be taxable as additional compensation income
to the recipient in the year received and subject to withholding.
New
Plan Benefits
The grant of awards under the Director Plan is subject to the
discretion of Anadarkos Compensation Committee or the
Board of Directors, as appropriate. It is not possible to
specify the amount of benefits that will be paid to each
participant under the Director Plan since each
participants ultimate benefit will depend upon his or her
election to receive cash, deferred cash, or deferred shares of
common stock. To date, no awards have been granted to
participants under the Director Plan. See page 13 of this
proxy statement for a more detailed description of the
compensation currently paid to Anadarkos non-employee
directors. The closing price of a share of Anadarko common stock
as reported by the NYSE on March 14, 2008 was $64.50.
For more information on the number of shares subject to
outstanding options, warrants, and rights and other awards under
the Prior Plans, see the supplemental equity compensation plans
table on page 56 of this proxy statement.
The approval of the Director Plan requires the affirmative vote
of a majority of the votes cast on the proposal, provided that
the total votes cast represent a majority of all shares entitled
to vote. Abstentions and broker non-votes are not counted as
votes cast, and therefore do not affect the outcome of the
proposal.
For the reasons stated above, THE BOARD RECOMMENDS THAT YOU
VOTE FOR THE APPROVAL OF THE 2008 DIRECTOR
COMPENSATION PLAN.
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ITEM 5
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IF
PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER PROPOSAL
REGARDING DECLASSIFICATION OF THE COMPANYS BOARD OF
DIRECTORS
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Gerald R. Armstrong, located at 820 Sixteenth Street,
No. 705, Denver, Colorado
80202-3227,
telephone
(303) 355-1199,
the beneficial owner of more than $2,000 worth of the
Companys common stock, has notified the Company that he
intends to present the following resolution at the meeting for
action by the stockholders.
Proposal
by Gerald R. Armstrong
RESOLUTION
That the shareholders of ANADARKO PETROLEUM CORPORATION request
its Board of Directors to take the steps necessary to eliminate
classification of terms of the Board of Directors to require
that all Directors stand for election annually. The Board
declassification shall be completed in a manner that does not
affect the unexpired terms of the previously-elected Directors.
STATEMENT
The proponent believes the election of directors is the
strongest way that shareholders influence the directors of any
corporation. Currently, our board of directors is divided into
three classes with each class serving three-year terms. Because
of this structure, shareholders may only vote for one-third of
the directors each year. This is not in the best interest of
shareholders because it reduces accountability.
U. S. Bancorp, Associated Banc-Corp, Piper-Jaffray
Companies, Fifth-Third Bancorp, Pan Pacific Retail Properties,
Qwest Communications International, Xcel Energy, Greater Bay
Bancorp, North Valley Bancorp, Pacific Continental Corporation,
Regions Financial Corporation, CoBiz Financial Inc.,
Marshall & Illsley Corporation, and Wintrust
Financial, Inc. are among the corporations electing directors
annually because of the efforts of the proponent.
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The performance of our management and our Board of Directors is
now being more strongly tested due to economic conditions and
the accountability for performance must be given to the
shareholders whose capital has been entrusted in the form of
share investments.
A study by researchers at Harvard Business School and the
University of Pennsylvanias Wharton School titled
Corporate Governance and Equity Prices (Quarterly
Journal of Economics, February, 2003), looked at the
relationship between corporate governance practices (including
classified boards) and firm performance. The study found a
significant positive link between governance practices favoring
shareholders (such as annual directors election) and firm value.
While management may argue that directors need and deserve
continuity, management should become aware that continuity and
tenure may be best assured when their performance as directors
is exemplary and is deemed beneficial to the best interests of
the corporation and its shareholders.
The proponent regards as unfounded the concern expressed by some
that annual election of all directors could leave companies
without experienced directors in the event that all incumbents
are voted out by shareholders. In the unlikely event that
shareholders do vote to replace all directors, such a decision
would express dissatisfaction with the incumbent directors and
reflect a need for change.
If you agree that shareholders may benefit from greater
accountability afforded by annual election of all
directors, please vote FOR this proposal.
Board
of Directors Statement Regarding Proposal
After careful consideration of the stockholder proposal, and on
the recommendation of the Nominating and Corporate Governance
Committee, the Board has concluded that it is in the best
interests of the Company and its stockholders to maintain the
Companys current classified board structure.
Under the Companys Restated Certificate of Incorporation
and By-Laws, the Board is divided into three classes, with
directors elected to staggered three-year terms. Approximately
one-third of the Companys directors stand for election
each year and the entire Board can be replaced in the course of
three annual meetings. We believe the Companys classified
board structure strengthens the independence of our non-employee
directors and enhances the Boards ability to develop and
execute long-term strategic planning by providing stability,
continuity and experience.
Independence
The Board believes that the longer assured term of office
provided by three-year terms, rather than one-year terms,
increases the independence of our non-employee directors. With
one-year terms, directors are less insulated from management or
other groups who may have an agenda that is not aligned with the
long-term interests of all stockholders. Independence may also
be enhanced when directors are not concerned about being
re-nominated by the Companys other directors every year.
The classified current board structure permits our directors to
act independently and to focus on the long-term interests of the
Company and its stockholders.
Stability,
Continuity and Experience
The Companys classified board provides stability,
continuity, and ensures that a majority of the Companys
directors at any given time have prior experience as directors
of the Company. Under the current system, after an election, at
least two-thirds of the Board will typically have had at least
one year of experience as a director of the Company. Board
continuity enables directors to develop substantive knowledge
about the Company, its business strategy, and its long-term
strategic goals. Directors with three-year terms are able to
build on past experience with the Company and their knowledge
about its business and affairs and are well positioned to make
long-term strategic decisions that are in the best interest of
the Company and its stockholders.
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Director
Quality
A classified Board also assists Anadarko in attracting and
retaining highly qualified directors who are willing to make a
longer-term commitment to the Company. Directors who agree to
serve three-year terms demonstrate a willingness to commit the
time and resources necessary to understand the Company, its
operations and its competitive environment. Given the current
corporate governance climate, in which many qualified
individuals are increasingly reluctant to serve on public
boards, Anadarko could also be placed at a competitive
disadvantage in recruiting qualified director candidates if
their Board service could potentially be limited to a one-year
period.
Accountability
The Board also believes that annual elections for each director
are not necessary to promote accountability. All directors are
required to uphold their fiduciary duties to Anadarko and its
stockholders, regardless of the length of their term of office.
Accountability depends on the selection of responsible and
experienced individuals, not on whether they serve terms of one
year or three years.
The Board is committed to sound corporate governance practices
that will benefit Anadarkos stockholders and regularly
re-examines these practices. The Board has implemented a variety
of measures to further foster accountability, including adoption
of Corporate Governance Guidelines that focus on the
independence and quality of directors, the effective functioning
of the Board, and an annual evaluation of the Board and its
committees. The Board has further demonstrated this commitment
by its recent adoption of a majority vote standard for director
elections.
Protection
Against Unfair and Abusive Takeover Practices
A classified Board reduces the Companys vulnerability to
unfriendly or unsolicited takeover tactics that may not be in
the best interests of the Companys stockholders. A
classified Board structure encourages potential acquirers to
initiate arms-length negotiations with management and seasoned
directors. Because only one-third of Anadarkos directors
are elected at any annual meeting of stockholders, at least two
annual meetings would be required to replace a majority of the
Board and to dismantle other stockholder protection measures.
This gives the directors the time and leverage necessary to
evaluate the adequacy and fairness of any takeover proposal,
consider alternative proposals, and to ultimately negotiate the
best result for all stockholders. The classified board structure
does not prevent or preclude unsolicited takeover attempts, but
it empowers the incumbent Board to negotiate terms to maximize
the value of the transaction to all Anadarkos stockholders.
Declassification of the Board would eliminate these benefits and
could make the Company a target for unsolicited hostile
overtures from investor groups focusing on short-term financial
gains. A mere attempt to obtain control, even if unsuccessful,
can seriously disrupt the conduct of the business of a company
and cause it to incur substantial expense.
In particular, in recent years, hedge funds and other activist
investors increasingly have been using the threat of a proxy
fight to pressure boards to put the company in play or to take
other actions that produce short-term gains at the expense of
strategies that would achieve meaningful long-term stockholder
value. Classified board structures have been shown to be an
effective means of protecting long-term stockholder interests
against these types of abusive tactics.
Recommendation
Only
This stockholder proposal is a request that the Board take the
steps necessary to eliminate the classified board structure.
Approval of this proposal by stockholders would not in itself
effectuate the changes contemplated by the proposal. Further
action by stockholders and the Board would be required to amend
the Companys Restated Certificate of Incorporation and
By-Laws.
THE BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
72
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ITEM 6
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IF
PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER PROPOSAL
REGARDING AN AMENDMENT TO ANADARKOS NON-DISCRIMINATION
POLICY TO INCLUDE SEXUAL ORIENTATION AND GENDER
IDENTITY.
|
The New York City Employees Retirement System, together
with other related funds, located at 1 Centre Street, New York,
NY
10007-2341,
telephone
(212) 669-2651,
is the beneficial owner of more than $2,000 worth of the
Companys common stock, and has notified the Company that
it intends to present the following resolution at the meeting
for action by the stockholders.
SEXUAL
ORIENTATION
Submitted
By William C. Thompson, Jr., Comptroller, City of New York,
on
behalf of the Boards of Trustees of the New York City Pension
Funds
WHEREAS, corporations with non-discrimination policies
relating to sexual orientation have a competitive advantage to
recruit and retain employees from the widest talent pool;
Employment discrimination on the basis of sexual orientation
diminishes employee morale and productivity;
The company has an interest in preventing discrimination and
resolving complaints internally so as to avoid costly litigation
and damage its reputation as an equal opportunity employer;
Atlanta, Seattle, Los Angeles, and San Francisco have
adopted legislation restricting business with companies that do
not guaranteed equal treatment for lesbian and gay employees and
similar legislation is pending in other jurisdictions;
The company has operations in and makes sales to institutions in
states and cities which prohibit discrimination on the basis of
sexual orientation;
A recent National Gay and Lesbian Taskforce study has found that
16% -44% of gay men and lesbians in twenty cities nationwide
experienced workplace harassment or discrimination based on
their sexual orientation;
National public opinion polls consistently find more than
three-quarters of the American people support equal rights in
the workplace for gay men, lesbians, and bisexuals;
A number of Fortune 500 corporations have implemented
non-discrimination policies encompassing the following
principles:
1) Discrimination based on sexual orientation and gender
identity will be prohibited in the companys employment
policy statement.
2) The companys non-discrimination policy will be
distributed to all employees.
3) There shall be no discrimination based on any
employees actual or perceived health condition, status, or
disability.
4) There shall be no discrimination in the allocation of
employee benefits on the basis of sexual orientation or gender
identity.
5) Sexual orientation and gender identity issues will be
included in corporate employee diversity and sensitivity
programs.
6) There shall be no discrimination in the recognition of
employee groups based on sexual orientation or gender identity.
7) Corporate advertising policy will avoid the use of
negative stereotypes based on sexual orientation or gender
identity.
73
8) There shall be no discrimination in corporate
advertising and marketing policy based on sexual orientation or
gender identity.
9) There shall be no discrimination in the sale of goods
and services based on sexual orientation or gender identity, and
10) There shall be no policy barring on corporate
charitable contributions to groups and organizations based on
sexual orientation.
RESOLVED: The Shareholders request that
management implement equal employment opportunity policies based
on the aforementioned principles prohibiting discrimination
based on sexual orientation and gender identity.
STATEMENT: By implementing policies
prohibiting discrimination based on sexual orientation and
gender identity, the Company will ensure a respectful and
supportive atmosphere for all employees and enhance its
competitive edge by joining the growing ranks of companies
guaranteeing equal opportunity for all employees.
Board
of Directors Statement Regarding Proposal
Anadarko Petroleum Corporation is proud of its commitment to a
diverse and harassment-free workplace. Although the Company has
historically had a de facto policy prohibiting
discrimination on the basis of sexual orientation, in response
to this proposal we recently updated our written policy to
reflect this principle. Accordingly, our policy now prohibits
discrimination on the basis of race, ethnicity, national origin,
color, gender, sexual orientation, age, citizenship,
veterans status, marital status, disability or any other
legally-protected status. You can view our entire Code of
Business Conduct and Ethics at
http://www.anadarko.com/PDF/CodeBusinessConductEthics2005.pdf.
Our corporate values also require our employees to act with the
highest ethical standards, respect diversity in thought,
practice and culture, and never to tolerate intimidation. We
believe that our current policies adequately reflect our strong
commitment to non-discrimination, and that we have already
substantially implemented the principles reflected in the above
proposal. We therefore believe that there is no need to adopt
this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
BY ORDER OF THE BOARD OF DIRECTORS
Robert K. Reeves
Senior Vice President, General Counsel,
Chief Administrative Officer and Corporate Secretary
Dated: March 31, 2008
The Woodlands, Texas
See
enclosed proxy card please vote
promptly
Appendices:
A 2008 Omnibus Incentive Compensation Plan
B 2008 Director Compensation Plan
74
APPENDIX A
ANADARKO
PETROLEUM CORPORATION
2008 OMNIBUS INCENTIVE COMPENSATION PLAN
Effective as of [May , 2008]
A-1
TABLE OF
CONTENTS
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SECTION 1 PURPOSES
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A-5
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SECTION 2 DEFINITIONS
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A-5
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2.1
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AWARD
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A-5
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2.2
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AWARD AGREEMENT
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A-5
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2.3
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BENEFICIARY
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A-5
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2.4
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BOARD
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A-5
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2.5
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CASH AWARDS
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A-5
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2.6
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CAUSE
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A-5
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2.7
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CHANGE IN CAPITALIZATION
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A-6
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2.8
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CHANGE OF CONTROL
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A-6
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2.9
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CODE
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A-7
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2.10
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COMMON STOCK
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A-7
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2.11
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COMPANY
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A-7
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2.12
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COVERED EMPLOYEE
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A-7
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2.13
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EFFECTIVE DATE
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A-7
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2.14
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EMPLOYER
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A-7
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2.15
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EXCHANGE ACT
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A-7
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2.16
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FAIR MARKET VALUE
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A-7
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2.17
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FULL VALUE AWARD
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A-8
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2.18
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INCENTIVE AWARD
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A-8
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2.19
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INCENTIVE STOCK OPTION
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A-8
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2.20
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MANAGEMENT COMMITTEE
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A-8
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2.21
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MAXIMUM ANNUAL EMPLOYEE GRANT
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A-8
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2.22
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NONQUALIFIED OPTION
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A-8
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2.23
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OPTION
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A-8
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2.24
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OPTION PRICE
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A-8
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2.25
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OTHER STOCK-BASED AWARD
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A-8
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2.26
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PARTICIPANT
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A-8
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2.27
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PERFORMANCE GOALS
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A-9
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2.28
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PERFORMANCE PERIOD
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A-10
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2.29
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PERFORMANCE SHARES
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A-10
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2.30
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PERFORMANCE UNITS
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A-10
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2.31
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PERMITTED TRANSFEREE
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A-10
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2.32
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PLAN
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A-10
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2.33
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PLAN ADMINISTRATOR
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A-10
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2.34
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PRIOR PLANS
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A-10
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2.35
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RESTRICTED STOCK
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A-10
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2.36
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RESTRICTED STOCK UNITS
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A-10
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2.37
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RESTRICTION PERIOD
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A-11
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2.38
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RULE 16B-3
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A-11
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2.39
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SECTION 16 INSIDER
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A-11
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2.40
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SECTION 162(M)
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A-11
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2.41
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SECTION 409A
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A-11
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2.42
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SPECIFIED EMPLOYEE
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A-11
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A-2
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2.43
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STOCK APPRECIATION RIGHT
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A-11
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2.44
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SUBSIDIARY
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A-11
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SECTION 3 ADMINISTRATION
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A-11
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3.1
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PLAN ADMINISTRATOR
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A-11
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3.2
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AUTHORITY OF PLAN ADMINISTRATOR
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A-12
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3.3
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INDEMNIFICATION OF PLAN ADMINISTRATOR
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A-12
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3.4
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DELEGATION TO MANAGEMENT COMMITTEE
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A-13
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SECTION 4 ELIGIBILITY
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A-13
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SECTION 5 SHARES AVAILABLE FOR THE PLAN
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A-13
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5.1
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AGGREGATE SHARES
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A-13
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5.2
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LIMITATIONS
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A-14
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5.3
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ADJUSTMENTS IN AUTHORIZED SHARES
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A-14
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5.4
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EFFECT OF CERTAIN TRANSACTIONS
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A-15
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SECTION 6 STOCK OPTIONS
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A-15
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6.1
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GRANT OF OPTIONS
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A-15
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6.2
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SPECIAL PROVISIONS APPLICABLE TO INCENTIVE STOCK OPTIONS
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A-16
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6.3
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TERMS OF OPTIONS
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A-16
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SECTION 7 STOCK APPRECIATION RIGHTS
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A-19
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7.1
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GRANT OF STOCK APPRECIATION RIGHTS
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A-19
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7.2
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EXERCISE OF STOCK APPRECIATION RIGHTS
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A-19
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7.3
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SPECIAL PROVISIONS APPLICABLE TO STOCK APPRECIATION RIGHTS
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A-19
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7.4
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NO REPRICING
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A-20
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SECTION 8 PERFORMANCE SHARES AND PERFORMANCE UNITS
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A-20
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8.1
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GRANT OF PERFORMANCE SHARES AND PERFORMANCE UNITS
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A-20
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8.2
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VALUE OF PERFORMANCE SHARES AND PERFORMANCE UNITS
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A-20
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8.3
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PAYMENT OF PERFORMANCE SHARES AND PERFORMANCE UNITS
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A-20
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8.4
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FORM AND TIMING OF PAYMENT
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A-20
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SECTION 9 RESTRICTED STOCK
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A-21
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9.1
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GRANT OF RESTRICTED STOCK
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A-21
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9.2
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RESTRICTION PERIOD
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A-21
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9.3
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OTHER RESTRICTIONS
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A-21
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9.4
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VOTING RIGHTS; DIVIDENDS AND OTHER DISTRIBUTIONS
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A-21
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9.5
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ISSUANCE OF SHARES; SETTLEMENT OF AWARDS
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A-21
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SECTION 10 RESTRICTED STOCK UNITS
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A-22
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10.1
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GRANT OF RESTRICTED STOCK UNITS
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A-22
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10.2
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RESTRICTION PERIOD
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A-22
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10.3
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OTHER RESTRICTIONS
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A-22
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10.4
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DIVIDEND EQUIVALENTS
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A-22
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10.5
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ISSUANCE OF SHARES; SETTLEMENT OF AWARDS
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A-22
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SECTION 11 INCENTIVE AWARDS
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A-23
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11.1
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INCENTIVE AWARDS
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A-23
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11.2
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PERFORMANCE GOAL CERTIFICATION
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A-23
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11.3
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DISCRETION TO REDUCE AWARDS; PARTICIPANTS PERFORMANCE
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A-23
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11.4
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REQUIRED PAYMENT OF INCENTIVE AWARDS
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A-23
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11.5
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RESTRICTED STOCK ELECTION
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A-24
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A-3
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SECTION 12 CASH AWARDS AND OTHER STOCK-BASED AWARDS
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A-24
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12.1
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GRANT OF CASH AWARDS
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A-24
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12.2
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OTHER STOCK-BASED AWARDS
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A-24
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12.3
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VALUE OF CASH AWARDS AND OTHER STOCK-BASED AWARDS
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A-24
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12.4
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PAYMENT OF CASH AWARDS AND OTHER STOCK-BASED AWARDS
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A-24
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SECTION 13 DEFERRAL ELECTIONS
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A-25
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SECTION 14 TERMINATION OF EMPLOYMENT
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A-25
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SECTION 15 EFFECT OF A CHANGE OF CONTROL
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A-25
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SECTION 16 REGULATORY APPROVALS AND LISTING
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A-26
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SECTION 17 GENERAL PROVISIONS
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A-26
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17.1
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FORFEITURE EVENTS AND NONTRANSFERABILITY
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A-26
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17.2
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NO INDIVIDUAL RIGHTS
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A-27
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17.3
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OTHER COMPENSATION
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A-27
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17.4
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LEAVES OF ABSENCE
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A-27
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17.5
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TRANSFERS
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A-27
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17.6
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UNFUNDED OBLIGATIONS
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A-27
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17.7
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BENEFICIARIES
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A-28
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17.8
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GOVERNING LAW
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A-28
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17.9
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SATISFACTION OF TAX OBLIGATIONS
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A-28
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17.10
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PARTICIPANTS IN FOREIGN JURISDICTIONS
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A-29
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SECTION 18 REGULATORY COMPLIANCE
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A-29
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18.1
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RULE 16B-3
OF THE EXCHANGE ACT AND SECTION 162(M) OF THE CODE
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A-29
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18.2
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SECTION 409A OF THE CODE
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A-29
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SECTION 19 ESTABLISHMENT AND TERM OF PLAN
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A-29
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SECTION 20 AMENDMENT, TERMINATION OR DISCONTINUANCE OF
THE PLAN
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A-30
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20.1
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AMENDMENT OF PLAN
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A-30
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20.2
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TERMINATION OR SUSPENSION OF PLAN
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A-30
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20.3
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CODE SECTION 162(M) APPROVAL
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A-30
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A-4
ANADARKO
PETROLEUM CORPORATION
2008 OMNIBUS INCENTIVE COMPENSATION PLAN
SECTION 1
PURPOSES
The purposes of the Anadarko Petroleum Corporation 2008 Omnibus
Incentive Compensation Plan (the Plan) are to
promote the interests of Anadarko Petroleum Corporation (the
Company) and its stockholders by strengthening its
ability to attract, retain and motivate salaried employees of
the Company and any Subsidiary by furnishing suitable
recognition of their ability and experience, to align their
interests and efforts to the long-term interests of the
Companys stockholders, and to provide them with a direct
incentive to achieve the Companys strategic and financial
goals. In furtherance of these purposes, the Plan provides for
the grant of Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance
Units, Incentive Awards, Cash Awards, and Other Stock-Based
Awards to Participants in accordance with the terms and
conditions set forth below.
SECTION 2
DEFINITIONS
Unless otherwise required by the context, the following terms
when used in the Plan shall have the meanings set forth in this
Section 2:
2.1 Award
Any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Share, Performance Unit,
Incentive Award, Cash Award or Other Stock-Based Award, in each
case payable in cash or in Common Stock as may be designated by
the Plan Administrator.
2.2 Award
Agreement
The written agreement setting forth the terms and conditions
applicable to an Award granted under the Plan (which, in the
discretion of the Plan Administrator, need not be countersigned
by a Participant). The Plan Administrator may, in its
discretion, provide for the use of electronic, internet or other
non-paper Award Agreements.
2.3 Beneficiary
The person or persons designated by the Participant pursuant to
Section 6.3(f) or Section 17.7 of this Plan to whom
payments are to be paid pursuant to the terms of the Plan in the
event of the Participants death.
2.4 Board
The Board of Directors of the Company.
2.5 Cash
Awards
As defined in Section 12.1.
2.6 Cause
Cause shall have the meaning ascribed thereto in any
employment or similar agreement between a Participant and an
Employer, or, in the absence of such agreement, a termination of
a Participants employment with the Company and its
Subsidiaries resulting from (a) substandard work
performance or repeated unreliability that has not been cured to
the Employers satisfaction; (b) workplace misconduct;
(c) excessive absenteeism; (d) violation of safety
rules; (e) violation of Employers policies, including
without
A-5
limitation, the Employers Code of Business Conduct
and Ethics; (f) fraud or other dishonesty against the
Employer; (g) engagement in conduct that the Participant
knows or should know is materially injurious to the business or
reputation of the Employer; (h) falsifying Employer or
employee records (including an employment application);
(i) on-the-job intoxication or being under the influence of
alcohol or an illegal narcotic or a drug not being used as
prescribed; (j) unauthorized use of Employer equipment or
confidential information of an Employer or third party who has
entrusted such information to the employer; or
(k) conviction of a felony or misdemeanor involving moral
turpitude. Whether a Participant has been terminated for Cause
will be determined by the Employer in the exercise of its
discretion.
2.7 Change
in Capitalization
Any increase or reduction in the number of shares of Common
Stock, any change (including, without limitation, in the case of
a spin-off, dividend or other distribution in respect of shares,
a change in value) in the shares of Common Stock or any exchange
of shares of Common Stock for a different number or kind of
shares of Common Stock or other securities of the Company or
another corporation, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization,
spin-off,
split-up,
issuance of warrants, rights or debentures, stock dividend,
stock split or reverse stock split, extraordinary cash dividend,
property dividend, combination or exchange of shares, repurchase
of shares, change in corporate structure or otherwise.
2.8 Change
of Control
The occurrence of any of the following after the Effective Date:
(a) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
Person) acquires beneficial ownership (within the
meaning of
Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either
(A) the then outstanding shares of Common Stock of the
Company (the Outstanding Company Common Stock) or
(B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the Outstanding Company Voting
Securities); provided, however, that for purposes
of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any
acquisition pursuant to a transaction which complies with
clauses (A), (B) and (C) of Section 2.8(c); or
(b) individuals who, as of the Effective Date, constitute
the Board (the Incumbent Board) cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by
the Companys stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board; or
(c) consummation by the Company of a reorganization, merger
or consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition of assets of another entity (a Business
Combination), in each case, unless, following such
Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of
Common Stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the
Companys assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as
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the case may be, (B) no person (excluding any employee
benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of Common Stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(d) approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, with respect to an Award that is
(i) subject to Section 409A and (ii) a Change of
Control would accelerate the timing of payment thereunder, the
term Change of Control shall mean a change in the
ownership or effective control of the Company, or in the
ownership of a substantial portion of the assets of the Company
as defined in Section 409A and the authoritative guidance
issued thereunder, but only to the extent inconsistent with the
above definition, and only to the minimum extent necessary to
comply with Section 409A as determined by the Committee.
2.9 Code
The Internal Revenue Code of 1986, as amended and in effect from
time to time, and the temporary or final regulations of the
Secretary of the U.S. Treasury adopted pursuant to the Code.
2.10 Common
Stock
The Common Stock of the Company, $0.10 par value per share,
or such other class of shares or other securities as may be
applicable pursuant to the provisions of Section 5.
2.11 Company
As defined in Section 1.
2.12 Covered
Employee
With respect to any grant of an Award, a Participant who the
Plan Administrator deems is or may be or become a covered
employee as defined in Section 162(m) of the Code for
any year.
2.13 Effective
Date
The effective date of the Plan is [May 20, 2008], the date
on which it was approved by the stockholders of the Company.
2.14 Employer
As to any Participant on any date, the Company or a Subsidiary
that employs the Participant on such date.
2.15 Exchange
Act
The Securities Exchange Act of 1934, as amended and rules
promulgated thereunder.
2.16 Fair
Market Value
As of any given date, the closing sales price at which Common
Stock is sold on such date as reported in the NYSE-Composite
Transactions by The Wall Street Journal or any other
comparable service the Plan Administrator may determine is
reliable for such date, or if no Common Stock was traded on such
date, on the next preceding day on which Common Stock was so
traded. If the Fair Market Value of the Common Stock cannot be
determined
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pursuant to the preceding provisions, the Fair Market
Value of the Common Stock shall be determined by the Plan
Administrator in such a manner as it deems appropriate,
consistent with the requirements of Section 409A.
2.17 Full
Value Award
An Award other than of Options or Stock Appreciation Rights,
which is settled by the issuance of Common Stock.
2.18 Incentive
Award
A percentage of base salary, a fixed dollar amount or other
measure of compensation which Participants are eligible to
receive, in cash
and/or other
Awards under the Plan, at the end of a Performance Period if
certain performance measures are achieved.
2.19 Incentive
Stock Option
An option intended to meet the requirements of a qualified
stock option as defined in Section 422 of the Code,
as in effect at the time of grant of such Option, or any
statutory provision that may hereafter replace such section.
2.20 Management
Committee
A committee designated by the Board (either by resolution or by
provisions contained in this Plan) and consisting of the Chief
Executive Officer, provided that such officer is a member of the
Board, and such other members of the Board as the Board may
determine from time to time.
2.21 Maximum
Annual Employee Grant
The Maximum Annual Employee Grant set forth in Section 5.2.
2.22 Nonqualified
Option
An Option which is not intended to meet the requirements of a
qualified stock option as defined in
Section 422 of the Code.
2.23 Option
An Incentive Stock Option or a Nonqualified Option.
2.24 Option
Price
The price per share of Common Stock at which an Option is
exercisable.
2.25 Other
Stock-Based Award
As defined in Section 12.2.
2.26 Participant
An eligible employee of an Employer to whom Awards are granted
under the Plan as set forth in Section 4.
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2.27 Performance
Goals
The Plan Administrator may grant Awards subject to one or more
Performance Goals set forth in the table below (collectively the
Performance Goals) to any Participant, including,
without limitation, to any Covered Employee. As to any such
Awards, the Plan Administrator shall establish one or more of
the Performance Goals for each Performance Period in writing.
Each Performance Goal selected for a particular Performance
Period shall include any one or more of the following, either
individually, alternatively or in any combination, applied to
either the Company as a whole or to a Subsidiary or a business
unit of the Company or any Subsidiary, either individually,
alternatively or in any combination, and measured either
annually or cumulatively over a period of time, on an absolute
basis or relative to the pre-established target, to previous
years results or to a designated comparison group, in each
case as specified by the Plan Administrator:
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Financial Goals
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Earnings
Revenues
Debt level
Cost reduction targets
Interest-sensitivity gap levels
EBITDAX
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Earnings per share
Cash flow from operations
Equity ratios
Capital expended
Weighted average cost of capital
Return on assets
Debt/proved developed reserves (PDP)
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Net income
Free cash flow
Expenses
Working capital
Operating or profit margin
Return on equity or capital employed
Debt/proved reserves
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Operating Goals
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Amount of the oil and gas reserves
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Oil and gas reserve additions
Costs of finding oil and gas reserves
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Oil and gas replacement ratios
Daily natural gas and/or oil production
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Corporate and Other Goals
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Total shareholder return
Asset quality levels
Investments
Satisfactory internal or external audits
Achievement of balance sheet or income statement objectives
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Market share
Assets
Asset sale targets
Value of assets
Employee retention/attrition rates
Improvement of financial ratings
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Charge-offs
Non-performing assets
Fair Market Value of Common Stock
Regulatory compliance
Safety targets
Economic value added
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The Plan Administrator may adjust the Performance Goals to
include or exclude extraordinary charges, gains or losses on the
disposition of business units, losses from discontinued
operations, restatements and accounting changes and other
unplanned special charges such as restructuring expenses,
acquisitions, acquisition expenses, including expenses related
to goodwill and other intangible assets, stock offerings, stock
repurchases and loan loss provisions. The Plan Administrator may
also provide for the manner in which performance will be
measured against the Performance Goals (or may adjust the
Performance Goals) to reflect the impact of specified corporate
transactions, a Change in Capitalization, special charges,
accounting policy changes and tax law changes. In addition, the
Plan Administrator may make such adjustments to the Performance
Goals applicable to Participants who are not Covered Employees
as it determines are appropriate. Such adjustments may occur at
the time of the granting of an Award, or at any time thereafter,
but, in the case of Covered Employees, only to the extent
permitted by Section 162(m). Performance Goals may include
a threshold level of performance below which no Awards shall be
earned, target levels of performance at which
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specific Awards will be earned, and a maximum level of
performance at which the maximum level of Awards will be earned.
In establishing Performance Goals with respect to Covered
Employees, the Plan Administrator shall ensure such Performance
Goals (i) are established no later than the end of the
first 90 days of the Performance Period (or such other time
permitted by the Internal Revenue Service), and
(ii) satisfy all other applicable requirements imposed by
Section 162(m), including the requirement that such
Performance Goals be stated in terms of an objective formula or
standard, and the Plan Administrator may not in any event
increase the amount of compensation payable to a Covered
Employee upon the satisfaction of any Performance Goal. Prior to
the payment of any performance-based compensation
within the meaning of Section 162(m), the Plan
Administrator shall certify in writing the extent to which the
applicable Performance Goals were, in fact, achieved and the
amounts to be paid, vested or delivered as a result thereof;
provided, that the Plan Administrator may reduce, but not
increase, such amount.
2.28 Performance
Period
That period of time during which Performance Goals are evaluated
to determine the vesting or granting of Awards under the Plan,
as the Plan Administrator may determine.
2.29 Performance
Shares
An Award granted under the Plan representing the right to
receive a number of shares of Common Stock for each Performance
Share granted, as the Plan Administrator may determine.
2.30 Performance
Units
An Award granted under the Plan representing the right to
receive a payment (either in cash or Common Stock) equal to the
value of a Performance Unit, as the Plan Administrator may
determine.
2.31 Permitted
Transferee
As defined in Section 6.3(f).
2.32 Plan
As defined in Section 1.
2.33 Plan
Administrator
Those committees appointed and authorized pursuant to
Section 3 to administer the Plan.
2.34 Prior
Plans
The Anadarko Petroleum Corporation 1999 Stock Incentive Plan, as
amended and the Anadarko Petroleum Corporation Annual Incentive
Plan, as amended.
2.35 Restricted
Stock
Common Stock granted under the Plan that is subject to the
requirements of Section 9 and such other restrictions as
the Plan Administrator deems appropriate. References to
Restricted Stock in this Plan shall include Restricted Stock
awarded in conjunction with Incentive Awards pursuant to
Section 11, unless the context otherwise requires.
2.36 Restricted
Stock Units
An Award granted under the Plan representing a right to receive
a payment (either in cash or Common Stock) equal to the value of
a share of Common Stock.
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2.37 Restriction
Period
As defined in Sections 9.2 and 10.2.
2.38 Rule 16b-3
Rule 16b-3
of the General Rules and Regulations under the Exchange Act.
2.39 Section 16
Insider
Any person who is selected by the Plan Administrator to receive
an Award pursuant to the Plan and who is or may be or become
subject to the requirements of Section 16 of the Exchange
Act, and the rules and regulations promulgated thereunder.
2.40 Section 162(m)
Section 162(m) of the Code, and regulations promulgated
thereunder.
2.41 Section 409A
Section 409A of the Code, and regulations promulgated
thereunder.
2.42 Specified
Employee
As defined in Section 18.2.
2.43 Stock
Appreciation Right
Any right granted under Section 7.
2.44 Subsidiary
An entity that is designated by the Plan Administrator as a
subsidiary for purposes of the Plan and that is a corporation,
partnership, joint venture, limited liability company, limited
liability partnership, or other entity in which the Company owns
directly or indirectly, fifty percent (50%) or more of the
voting power or profit interests, or as to which the Company or
one of its affiliates serves as general or managing partner or
in a similar capacity. Notwithstanding the foregoing, for
purposes of Options intended to qualify as Incentive Stock
Options, the term Subsidiary shall mean a
corporation (or other entity treated as a corporation for tax
purposes) in which the Company directly or indirectly holds more
than fifty percent (50%) of the voting power.
SECTION 3
ADMINISTRATION
3.1 Plan
Administrator
(a) The Compensation and Benefits Committee of the Board of
Directors shall be the Plan Administrator with respect to all
Covered Employees and all Section 16 Insiders. As to these
officers, the Plan Administrator shall be constituted at all
times so as to (i) be independent as such term
is defined pursuant to the rules of any stock exchange on which
the Common Stock may then be listed, and (ii) meet the
non-employee director standards of
Rule 16b-3
and the outside director requirements of Section 162(m), so
long as any of the Companys equity securities are
registered pursuant to Section 12(b) or 12(g) of the
Exchange Act.
(b) Other than as set forth in Section 3.1(a) and
subject to Section 3.4 (and subject to applicable law), the
Management Committee shall be the Plan Administrator. The Board
may from time to time remove members from, or add members to,
the Management Committee.
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(c) Notwithstanding Sections 3.1(a) and 3.1(b), the
Board of Directors may designate itself or the Compensation and
Benefits Committee of the Board of Directors as the Plan
Administrator as to any Participant or groups of Participants.
(d) The above committees may rely on officers, employees or
other agents of the Company to handle the day-to-day
administrative matters of the Plan.
3.2 Authority
of Plan Administrator
Subject to the express terms and conditions set forth herein,
the Plan Administrator shall have the power from time to time to:
(a) determine those individuals to whom Awards shall be
granted under the Plan and the number of shares or amount of
cash subject to such Awards and prescribe the terms and
conditions (which need not be identical) of each such Awards,
including, in the case of stock Options and Stock Appreciation
Rights, the Option Price, vesting schedule and duration;
(b) set the terms and conditions of any Award consistent
with the terms of the Plan (which may be based on Performance
Goals or other performance measures as the Plan Administrator
shall determine), and make any amendments, modifications or
adjustments to such Awards as are permitted by the Plan;
(c) construe and interpret the Plan and the Awards granted
hereunder and establish, amend and revoke rules and regulations
for the administration of the Plan, including, without
limitation, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any Award
Agreement, in the manner and to the extent it shall deem
necessary or advisable, including so that the Plan and the
operation of the Plan comply with
Rule 16b-3,
the Code to the extent applicable and other applicable law, and
otherwise to make the Plan fully effective;
(d) exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(e) generally, exercise such powers and perform such acts
as are deemed necessary or advisable to promote the best
interests of the Company with respect to the Plan.
All decisions and determinations by the Plan Administrator in
the exercise of the above powers shall be final, binding and
conclusive upon the Company, a Subsidiary, the Participants and
all other persons having or claiming any interest therein. The
Plan Administrator shall cause the Company at the Companys
expense to take any action related to the Plan which may be
necessary to comply with the provisions of any federal, state or
foreign law or any regulations issued thereunder, which the Plan
Administrator determines are intended to be complied with.
Notwithstanding the foregoing, the Plan Administrator shall not
be entitled to exercise any discretion otherwise authorized
hereunder with respect to any Awards held by Covered Employees
if the ability to exercise such discretion or the exercise of
such discretion itself would cause the compensation attributable
to such Awards to fail to qualify as performance-based
compensation under Section 162(m).
3.3 Indemnification
of Plan Administrator
Each member of any committee acting as Plan Administrator, while
serving as such, shall be entitled, in good faith, to rely or
act upon any advice of the Companys independent auditors,
counsel or consultants hired by the committee, or other agents
assisting in the administration of the Plan. The Plan
Administrator and any officers or employees of the Company
acting at the direction or on behalf of the Company shall not be
personally liable for any action or determination taken or made,
or not taken or made, in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified
and protected under the Companys charter or by-laws with
respect to any such action or determination.
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3.4 Delegation
to Management Committee
To the maximum extent permitted by applicable law, the Board of
Directors and the Compensation and Benefits Committee hereby
delegates to the Management Committee the authority (i) to
designate the officers and employees who shall be Participants,
(ii) to determine the Awards to be granted to any such
Participants or (iii) both (i) and (ii);
provided, however, that the Management Committee
shall not have the authority to grant Awards to any member of
the Management Committee and shall be subject to such other
limitations set forth in this Plan. This provision shall be
deemed to constitute a delegation from the Board to the
Management Committee without further action by the Board.
However, the Board or the Compensation and Benefits Committee
shall, from time to time, limit the total number of shares
Common Stock subject to such delegation.
SECTION 4
ELIGIBILITY
To be eligible for selection by the Plan Administrator to
participate in the Plan, an individual must be an employee
(other than an employee who is a member of a unit covered by a
collective bargaining agreement) of an Employer, as of the date
on which the Plan Administrator grants to such individual an
Award under the Plan or any other employee who, in the judgment
of the Plan Administrator, holds a position of responsibility
and is able to contribute substantially to the Companys
continued success. Members of the Board of Directors who are
full-time employees shall be eligible to participate in the
Plan. Members of the Board of Directors who are not employees
are not eligible to participate in the Plan. Each grant of an
Award under the Plan shall be evidenced by an Award Agreement.
SECTION 5
SHARES AVAILABLE FOR THE PLAN
5.1 Aggregate
Shares
Subject to adjustment as provided in Section 5.3, the
maximum number of shares of Common Stock available for grant to
Participants under this Plan on or after the Effective Date
shall be 33,000,000 shares of Common Stock, which shall
consist of (i) a number of shares of Common Stock not
previously authorized for issuance under any plan, plus
(ii) the number of shares of Common Stock remaining
available for issuance under the Prior Plans but not subject to
outstanding awards as of the Effective Date, plus (iii) the
number of shares of Common Stock subject to awards outstanding
under the Prior Plans as of the Effective Date, but only to the
extent such outstanding awards are forfeited, expire, or
otherwise terminate without issuance of such shares of Common
Stock.
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(b)
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Limit
on Full Value Awards Flexible Share
Pool
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To the extent that a share of Common Stock is issued pursuant to
the grant or exercise of a Full Value Award, it shall reduce the
share authorization by 2.27 shares of Common Stock; and to
the extent that a share of Common Stock is issued pursuant to
the grant or exercise of an Award other than a Full Value Award,
it shall reduce the share authorization by one (1) share of
Common Stock.
Shares of Common Stock covered by an Award shall only be counted
as used to the extent they are actually issued. Any shares of
Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation, or otherwise without the issuance of
such shares of Common Stock, are settled in cash in lieu of
shares of Common Stock, or are exchanged with the
Committees permission, prior to the issuance of shares of
Common Stock, for Awards not involving shares of Common Stock,
shall be available again for grant under this Plan. However, the
full number of Stock Appreciation Rights granted that are to be
settled by the issuance
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of shares of Common Stock shall be counted against the number of
shares of Common Stock available for award under the Plan,
regardless of the number of shares of Common Stock actually
issued upon settlement of such Stock Appreciation Rights.
Furthermore, any shares of Common Stock withheld to satisfy tax
withholding obligations on an Award issued under the Plan,
shares of Common Stock tendered to pay the exercise price of an
Award under the Plan, and shares of Common Stock repurchased on
the open market with the proceeds of an Option exercise will no
longer be eligible to be again available for grant under this
Plan. The shares of Common Stock available for issuance under
this Plan may be authorized and unissued shares of Common Stock
or treasury shares of Common Stock.
5.2 Limitations
Subject to adjustment as provided in Section 5.3, the
following limitations shall apply:
(a) Options: The maximum aggregate number
of shares subject to Options granted in any one calendar year to
any one Participant shall be 2,500,000.
(b) Stock Appreciation Rights: The
maximum number of shares subject to Stock Appreciation Rights
granted in any one calendar year to any one Participant shall be
2,500,000.
(c) Performance Shares or Performance
Units: The maximum aggregate grant with respect
to Performance Shares or Performance Units that a Participant
may receive in any one calendar year shall be
1,500,000 shares, or equal to the value of
1,500,000 shares, determined as of the date of vesting or
payout, as applicable.
(d) Restricted Stock or Restricted Stock
Units: The maximum aggregate grant with respect
to Awards of Restricted Stock or Restricted Stock Units in any
one calendar year to any one Participant shall be
1,500,000 shares, or equal to the value of
1,500,000 shares, as determined as of the date of vesting
or payout, as applicable.
(e) Incentive Awards: The maximum
aggregate amount awarded or credited in any one calendar year
with respect to an Incentive Award shall be $10,000,000.
(f) Cash Awards: The maximum aggregate
amount awarded to or credited with respect to Cash Awards to any
one Participant in any one calendar year may not exceed the
greater of $10,000,000 dollars or the value of
1,500,000 shares, determined as of the date of vesting or
payout, as applicable.
(g) Other Stock-Based Awards: The maximum
aggregate grant with respect to Other Stock-Based Awards in any
one calendar year to any one Participant shall be
1,500,000 shares.
5.3 Adjustments
in Authorized Shares
(a) In the event of a Change in Capitalization, the Plan
Administrator shall make such adjustments, if any, as it
determines are appropriate and equitable to (a) the maximum
number and class of shares of Common Stock or other stock or
securities with respect to which Awards may be granted under the
Plan, (b) the maximum number and class of shares of Common
Stock or other stock or securities that may be issued upon
exercise of Nonqualified Options and Incentive Stock Options,
(c) the Maximum Annual Employee Grants, (d) the number
and class of shares of Common Stock or other stock or securities
which are subject to outstanding Awards granted under the Plan
and the Option Price or exercise price therefore, if applicable
and (e) the Performance Goals; provided, however, that in
the case of an equity restructuring (within the
meaning of the Financial Standards Board Statement of Financial
Accounting Standards No. 123 (revised 2004), the Board
shall make an equitable or appropriate adjustment to outstanding
Awards to reflect such equity restructuring. Any such adjustment
shall be final, binding and conclusive on all persons claiming
any right or interest under the Plan.
(b) Any such adjustment in the shares of Common Stock or
other stock or securities (x) subject to outstanding
Incentive Stock Options (including any adjustments in the
exercise price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3)
of the Code and only to the extent otherwise permitted by
Sections 422 and 424 of the Code or (y) subject to
outstanding Awards that are
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intended to qualify as performance-based compensation under
Section 162(m) shall be made in such a manner as not to
adversely affect the treatment of the Awards as
performance-based compensation.
(c) If, by reason of a Change in Capitalization, a
Participant shall be entitled to, or shall be entitled to
exercise an Option or Stock Appreciation Right with respect to,
new, additional or different shares of stock or securities of
the Company or any other corporation, such new, additional or
different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were
applicable to the shares of Common Stock that such shares
replaced or to the Option or Stock Appreciation Right, as the
case may be, prior to such Change in Capitalization.
(d) No adjustments made under this Section 5 shall be
made if such adjustment would result in adverse taxation to a
Participant under Section 409A.
5.4 Effect
of Certain Transactions
Following (a) the liquidation or dissolution of the Company
or (b) a merger or consolidation of the Company (a
Transaction), (i) each outstanding Award shall
be treated as provided for in the agreement entered into in
connection with the Transaction (which treatment may be
different as among different types of Awards and different
holders thereof) or (ii) if not so provided in such
agreement, each Participant shall be entitled to receive in
respect of each share of Common Stock subject to any outstanding
Awards, upon exercise of any Option or Stock Appreciation Right
or payment or transfer in respect of any other Award, the same
number and kind of stock, securities, cash, property or other
consideration that each holder of a share of Common Stock was
entitled to receive in the Transaction in respect of a share of
Common Stock; provided, however, that such stock, securities,
cash, property, or other consideration shall remain subject to
all of the conditions, restrictions and performance criteria
which were applicable to Awards prior to such Transaction, but
giving effect to any applicable provision of this Plan or any
Award Agreement if the Transaction is a Change of Control.
Without limiting the generality of the foregoing, the treatment
of outstanding Options and Stock Appreciation Rights pursuant to
clause (i) of this Section 5.4 in connection with a
Transaction in which the consideration paid or distributed to
the Companys stockholders is not entirely shares of common
stock of the acquiring or resulting corporation may include the
cancellation of outstanding Options and Stock Appreciation
Rights upon consummation of the Transaction provided either
(x) the holders of affected Options and Stock Appreciation
rights have been given a period of at least fifteen
(15) days prior to the date of the consummation of the
Transaction to exercise the Options and Stock Appreciation
Rights (whether or not they were otherwise exercisable) or
(y) the holders of the affected Options and Stock
Appreciation Rights are paid (in cash or cash equivalents) in
respect of each share of Common Stock covered by the Options or
Stock Appreciation Rights being cancelled an amount equal to the
excess, if any, of the per share price paid or distributed to
stockholders in the Transaction (the value of any non-cash
consideration to be determined by the Plan Administrator in its
sole discretion) over the exercise price thereof. For avoidance
of doubt, (1) the cancellation of Options and Stock
Appreciation Rights pursuant to clause (y) of the preceding
sentence may be effected notwithstanding anything to the
contrary contained in this Plan or any Award Agreement and
(2) if the amount determined pursuant to clause (y) of
the preceding sentence is zero or less, the affected Options and
Stock Appreciation Rights may be cancelled without any payment
therefore. The treatment of any Award as provided in this
Section 5.4 shall be conclusively presumed to be
appropriate for purposes of Section 5.3.
SECTION 6
STOCK OPTIONS
6.1 Grant
of Options
Options may be granted to eligible employees in such number, and
at such times during the term of the Plan as the Plan
Administrator shall determine, the Plan Administrator taking
into account the duties of the respective employees, their
present and potential contributions to the success of the
Company or its Subsidiaries, and such other factors as the Plan
Administrator shall deem relevant in accomplishing the purposes
of the Plan. The Plan Administrator may grant an Option or
provide for the grant of an Option, either
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from time to time in the discretion of the Plan Administrator or
automatically upon the occurrence of specified events,
including, without limitation, the achievement of Performance
Goals or other performance measures, the satisfaction of an
event or condition within the control of the recipient of the
Option or within the control of others. The granting of an
Option shall take place when the Plan Administrator by
resolution, written consent or other appropriate action
determines to grant such an Option to a particular Participant
at the Option Price.
6.2 Special
Provisions Applicable to Incentive Stock Options
Each provision of the Plan and each Incentive Stock Option
granted thereunder shall be construed so that each such Option
shall qualify as an Incentive Stock Option, and any provision
thereof that cannot be so construed shall be disregarded, unless
the Participant agrees otherwise. Incentive Stock Options, in
addition to complying with the other provisions of the Plan
relating to Options generally, shall be subject to the following
conditions:
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|
(a)
|
Ten
Percent (10%) Stockholders
|
A Participant must not, immediately before an Incentive Stock
Option is granted to him or her, own stock representing more
than ten percent (10%) of the voting power or value of all
classes of stock of the Company or of a Subsidiary. This
requirement is waived if (i) the Option Price of the
Incentive Stock Option to be granted is at least one hundred ten
percent (110%) of the Fair Market Value of the stock subject to
the Option, determined at the time the Option is granted, and
(ii) the Option is not exercisable more than five
(5) years from the date the Option is granted.
To the extent that the aggregate Fair Market Value (determined
at the time of the grant of the option) of the stock with
respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year exceeds
One Hundred Thousand Dollars ($100,000), such Options shall be
treated as Nonqualified Options. In applying the limitation in
the preceding sentence in the case of multiple Option grants,
unless otherwise required by applicable law, Options which were
intended to be Incentive Stock Options shall be treated as
Nonqualified Options according to the order in which they were
granted such that the most recently granted Options are first
treated as Nonqualified Options.
Any other terms and conditions which the Plan Administrator
determines, upon advice of counsel, must be imposed for the
Option to be an Incentive Stock Option.
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(d)
|
Notice
of Disqualifying Disposition
|
If a Participant shall make any disposition of shares of Common
Stock issued pursuant to an Incentive Stock Option under the
circumstances described in Section 421(b) of the Code
(relating to disqualifying distributions), the Participant shall
notify the Company of such disposition within twenty
(20) days thereof.
6.3 Terms
of Options
Except as otherwise provided in Section 6.2, all Incentive
Stock Options and Nonqualified Options under the Plan shall be
granted subject to the following terms and conditions:
The Option Price shall be determined by the Plan Administrator
in any reasonable manner, but shall not be less than the Fair
Market Value of the Common Stock on the date the Option is
granted, except in the case of Options that are granted in
assumption of, or in substitution for, outstanding awards
previously
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granted by (i) a company acquired by the Company or a
Subsidiary, or (ii) a company with which the Company or a
Subsidiary combines.
Options shall be exercisable at such time and under such
conditions as set forth in the Award Agreement, but in no event
shall any stock option (whether a Nonqualified Option or an
Incentive Stock Option) be exercisable later than the tenth
(10th) anniversary of the date of its grant.
Common Stock covered by an Option may be purchased at one time
or in such installments over the option period as may be
provided in the Award Agreement. Any Common Stock not purchased
on an applicable installment date may be purchased thereafter at
any time prior to the expiration of the Option in accordance
with its terms. To the extent that the right to purchase Common
Stock has accrued thereunder, an Option may be exercised from
time to time by written notice to the Company setting forth the
amount of Common Stock with respect to which the Option is being
exercised.
The purchase price of Common Stock purchased under Options shall
be paid in full to the Company upon the exercise of the Option
by delivery of consideration equal to the product of the Option
Price and the Common Stock purchased (the Purchase
Price). Such consideration may be either (i) in cash
or (ii) at the discretion of the Plan Administrator, in
Common Stock (by either actual delivery of Common Stock or by
attestation presenting satisfactory proof of beneficial
ownership of such Common Stock) already owned by the
Participant, or any combination of cash and Common Stock. The
Fair Market Value of such Common Stock as delivered shall be
valued as of the day of exercise. The Plan Administrator can
determine that additional forms of payment will be permitted. To
the extent permitted by the Plan Administrator and applicable
laws and regulations (including, without limitation, federal tax
and securities laws, regulations and state corporate law), an
Option may also be exercised in a cashless exercise
by delivery of a properly executed exercise notice together with
irrevocable instructions to a broker approved by the Company to
promptly deliver to the Company sufficient proceeds to pay the
Purchase Price. A Participant shall have none of the rights of a
stockholder until the Common Stock is issued to the Participant.
The Plan Administrator may permit a Participant to pay all or a
portion of the Purchase Price by having Common Stock with a Fair
Market Value equal to all or a portion of the Purchase Price be
withheld from the shares issuable to the Participant upon the
exercise of the Option. The Fair Market Value of such Common
Stock as is withheld shall be determined as of the same day as
the exercise of the Option.
The Plan Administrator shall determine and reflect in the Award
Agreement, with respect to each Option, the nature and extent of
the restrictions, if any, to be imposed on the Common Stock
which may be purchased thereunder, including, without
limitation, restrictions on the transferability of such Common
Stock acquired through the exercise of such Options for such
periods as the Plan Administrator may determine and, further,
that in the event a Participants employment by the
Company, or a Subsidiary, terminates during the period in which
such Common Stock is nontransferable, the Participant shall be
required to sell such Common Stock back to the Company at such
prices as the Plan Administrator may specify. In addition, to
the extent permitted by applicable laws and regulations, the
Plan Administrator may require that a Participant who wants to
effectuate a cashless exercise of Options be
required to sell the Common Stock acquired in the associated
exercise to the Company, or in the open market through the use
of a broker selected by the Company, at such price and on such
terms as the Plan Administrator may determine at the time of
grant, or otherwise. Without limiting the foregoing, the Plan
Administrator may
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impose such restrictions, conditions or limitations as it
determines appropriate as to the timing and manner of any
resales by the Participant or other subsequent transfers by the
Participant of any Common Stock issued as a result of the
exercise of an Option, including without limitation
(i) restrictions under an insider trading policy,
(ii) restrictions designed to delay
and/or
coordinate the timing and manner of sales by one or more
Participants and (iii) restrictions as to the use of a
specified brokerage firm for such resales or other transfers.
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(f)
|
Transferability
of Options
|
Notwithstanding Section 17.1 and only as provided by the
Plan Administrator, Nonqualified Options may be transferred to a
Participants immediate family members, directly or
indirectly or by means of a trust, corporate entity or
partnership (a person who thus acquires this option by such
transfer, a Permitted Transferee). A transfer of a
Nonqualified Option may only be effected by the Company at the
request of the Participant and shall become effective upon the
Permitted Transferee agreeing to such terms as the Plan
Administrator may require and only when recorded in the
Companys record of outstanding Options. In the event an
Option is transferred as contemplated hereby, the Option may not
be subsequently transferred by the Permitted Transferee except a
transfer back to the Participant or by will or the laws of
descent and distribution. A transferred Option may be exercised
by a Permitted Transferee to the same extent as, and subject to
the same terms and conditions as, the Participant (except as
otherwise provided herein), as if no transfer had taken place.
As used herein, immediate family member shall mean,
with respect to any person, such persons child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
sister-in-law,
and shall include adoptive relationships. In the event of
exercise of a transferred Option by a Permitted Transferee, any
amounts due to (or to be withheld by) the Company upon exercise
of the Option shall be delivered by (or withheld from amounts
due to) the Participant, the Participants estate or the
Permitted Transferee, in the reasonable discretion of the
Company.
In addition, to the extent permitted by applicable law and Rule
16b-3, the
Plan Administrator may permit a recipient of a Nonqualified
Option to designate in writing during the Participants
lifetime a Beneficiary to receive and exercise the
Participants Nonqualified Options in the event of such
Participants death.
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(g)
|
Purchase
for Investment
|
The Plan Administrator shall have the right to require that each
Participant or other person who shall exercise an Option under
the Plan, and each person into whose name the Common Stock shall
be issued pursuant to the exercise of an Option, represent and
agree that any and all Common Stock purchased pursuant to such
Option is being purchased for investment only and not with a
view to the distribution or resale thereof and that such Common
Stock will not be sold except in accordance with such
restrictions or limitations as may be set forth in the Option or
by the Plan Administrator. This Section 6.3(g) shall be
inoperative during any period of time when the Company has
obtained all necessary or advisable approvals from governmental
agencies and has completed all necessary or advisable
registrations or other qualifications of the Common Stock as to
which Options may from time to time be granted as contemplated
in Section 16.
Except in connection with a Change in Capitalization or approval
of the Companys stockholders, the Option Price shall not
be reduced to less than the Fair Market Value on the date such
Stock Options were granted.
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SECTION 7
STOCK APPRECIATION RIGHTS
7.1 Grant
of Stock Appreciation Rights
Stock Appreciation Rights may be granted to eligible employees
in such number, and at such times during the term of the Plan as
the Plan Administrator shall determine, the Plan Administrator
taking into account the duties of the respective employees,
their present and potential contributions to the success of the
Company or a Subsidiary, and such other factors as the Plan
Administrator shall deem relevant in accomplishing the purposes
of the Plan. The Plan Administrator may grant a Stock
Appreciation Right or provide for the grant of a Stock
Appreciation Right, either from time to time in the discretion
of the Plan Administrator or automatically upon the occurrence
of specified events, including, without limitation, the
achievement of Performance Goals or other performance measures,
the satisfaction of an event or condition within the control of
the recipient of the Stock Appreciation Right or within the
control of others. The granting of a Stock Appreciation Right
shall take place when the Plan Administrator by resolution,
written consent or other appropriate action determines to grant
such a Stock Appreciation Right to a particular Participant at a
particular price. A Stock Appreciation Right may be granted
freestanding or in tandem or in combination with any other Award
under the Plan.
7.2 Exercise
of Stock Appreciation Rights
A Stock Appreciation Right may be exercised upon such terms and
conditions and for such term as the Plan Administrator shall
determine; provided, however, no Stock
Appreciation Right shall be exercisable later than the tenth
(10th) anniversary of the date of its grant. Upon exercise of a
Stock Appreciation Right, a Participant shall be entitled to
receive Common Stock with an aggregate Fair Market Value
determined by multiplying (i) the difference between the
Fair Market Value of a share of Common Stock on the date of
exercise of the Stock Appreciation Right over the price
determined by the Plan Administrator on the date of grant (which
price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the date of grant, except in the case
of Stock Appreciation Rights that are granted in assumption of,
or in substitution for, outstanding awards previously granted by
(x) a company acquired by the Company or a Subsidiary, or
(y) a company with which the Company or a Subsidiary
combines) times (ii) the number of shares of Common Stock
with respect to which the Stock Appreciation Right is exercised.
The value of any fractional shares shall be paid in cash.
7.3 Special
Provisions Applicable to Stock Appreciation Rights
Stock Appreciation Rights are subject to the following
restrictions:
(a) A Stock Appreciation Right granted in tandem with any
other Award under the Plan shall be exercisable at such time or
times as the Award to which it relates shall be exercisable, or
at such other times as the Plan Administrator may determine.
(b) The right of a Participant to exercise a Stock
Appreciation Right granted in tandem with any other Award under
the Plan shall be canceled if and to the extent the related
Award is exercised or canceled. To the extent that a Stock
Appreciation Right is exercised, the related Award shall be
deemed to have been surrendered unexercised and canceled.
(c) A holder of Stock Appreciation Rights shall have none
of the rights of a stockholder until the Common Stock, if any,
is issued to such holder pursuant to such holders exercise
of such rights.
(d) The acquisition of Common Stock pursuant to the
exercise of a Stock Appreciation Right shall be subject to the
same restrictions as would apply to the acquisition of Common
Stock acquired upon exercise of an Option, as set forth in
Section 6.3.
A-19
7.4 No
Repricing
Except in connection with a Change in Capitalization or approval
of the Companys stockholders, the price at which Stock
Appreciation Rights may be exercised shall not be reduced to
less than the Fair Market Value on the date such Stock
Appreciation Rights were granted.
SECTION 8
PERFORMANCE SHARES AND PERFORMANCE UNITS
8.1 Grant
of Performance Shares and Performance Units
Subject to the limitations in Section 5.2, Performance
Shares or Performance Units may be granted to eligible employees
at any time and from time to time as the Plan Administrator
shall determine. The Plan Administrator shall have complete
discretion in determining the number of Performance Shares or
Performance Units granted to each Participant and the terms and
conditions thereof, taking into account the duties of the
respective Participants, their present and potential
contributions to the success of the Company or a Subsidiary, and
such other factors as the Plan Administrator shall deem
appropriate. Performance Shares and Performance Units may be
granted alone or in combination with any other Award under the
Plan.
8.2 Value
of Performance Shares and Performance Units
The Plan Administrator shall establish Performance Goals for any
specified Performance Periods. Prior to each grant of
Performance Shares or Performance Units, the Plan Administrator
shall establish an initial amount of Common Stock for each
Performance Share and an initial value for each Performance Unit
granted to each Participant for that Performance Period. Prior
to each grant of Performance Shares or Performance Units, the
Plan Administrator also shall set the Performance Goals that
will be used to determine the extent to which the Participant
receives Common Stock for the Performance Shares or payment of
the value of the Performance Units awarded for such Performance
Period. With respect to each such Performance Goal utilized
during a Performance Period, the Plan Administrator may assign
percentages or other relative values to various levels of
performance which shall be applied to determine the extent to
which the Participant shall receive a payout of the number of
Performance Shares or value of Performance Units awarded.
8.3 Payment
of Performance Shares and Performance Units
After a Performance Period has ended, the holder of a
Performance Share or Performance Unit shall be entitled to
receive the value thereof as determined by the Plan
Administrator. The Plan Administrator shall make this
determination by first determining the extent to which the
Performance Goals set pursuant to Section 8.2 have been
met. The Plan Administrator shall then determine the applicable
percentage or other relative value to be applied to, and will
apply such percentage or other relative value to, the number of
Performance Shares or value of Performance Units to determine
the payout to be received by the Participant. In addition, with
respect to Performance Shares and Performance Units granted to
each Participant, no payout shall be made hereunder except upon
written certification by the Plan Administrator that the
applicable Performance Goals have been satisfied to a particular
extent.
8.4 Form
and Timing of Payment
The payment described in Section 8.3 shall be made in
Common Stock, or in cash, or partly in Common Stock and partly
in cash, at the discretion of the Plan Administrator and set
forth in the Award Agreement. The value of any fractional shares
shall be paid in cash. Payment shall be made in a lump sum or
installments as prescribed by the Plan Administrator or the
Award Agreement, as applicable, and consistent with
Section 409A. If Common Stock is to be converted into an
amount of cash on any date, or if an amount of cash is to be
converted into Common Stock on any date, such conversion shall
be done at the then-current Fair Market Value of the Common
Stock on such date.
A-20
SECTION 9
RESTRICTED STOCK
9.1 Grant
of Restricted Stock
Subject to the limitations in Section 5.2, Restricted Stock
may be granted to eligible employees in such number and at such
times during the term of the Plan as the Plan Administrator
shall determine, the Plan Administrator taking into account the
duties of the respective Participants, their present and
potential contributions to the success of the Company or a
Subsidiary, and such other factors as the Plan Administrator
shall deem relevant in accomplishing the purposes of the Plan.
The Plan Administrator may grant Restricted Stock or provide for
the grant of Restricted Stock, either from time to time in the
discretion of the Plan Administrator or automatically upon the
occurrence of specified events.
9.2 Restriction
Period
Except as permitted by the Plan Administrator and specified in
the Award Agreement, during a period following the date of
grant, as determined by the Plan Administrator, which in no
event shall be less than three (3) years with respect to
Restricted Stock subject to restrictions based upon time and one
(1) year with respect to Restricted Stock subject to
restrictions based upon the achievement of specific Performance
Goals or other performance measures (the Restriction
Period) the Restricted Stock shall be subject to
Section 17.1. During the Restriction Period, the Plan
Administrator shall evidence the restrictions on the shares of
Restricted Stock in such a manner as it determines is
appropriate (including, without limitation, (i) by means of
appropriate legends on shares of Restricted Stock that have been
certificated and (ii) by means of appropriate stop-transfer
orders on shares of Restricted Stock credited to book-entry
accounts).
9.3 Other
Restrictions
The Plan Administrator shall impose such other restrictions on
Restricted Stock granted pursuant to the Plan as it may deem
advisable, including Performance Goals or other performance
measures. The Plan Administrator may require, under such terms
and conditions as it deems appropriate or desirable, that the
certificates for Restricted Stock delivered under the Plan may
be held in custody by a bank or other institution, or that the
Company may itself hold such shares in custody until the
Restriction Period expires or until restrictions thereon
otherwise lapse, and may require, as a condition of any issuance
of Restricted Stock that the Participant shall have delivered a
stock power endorsed in blank relating to the shares of
Restricted Stock.
9.4 Voting
Rights; Dividends and Other Distributions
A Participant receiving a grant of Restricted Stock shall be
recorded as a stockholder of the Company. Each Participant who
receives a grant of Restricted Stock shall have all the rights
of a stockholder with respect to such shares (except as provided
in the restrictions on transferability), including the right to
vote the shares and receive dividends and other distributions
paid with respect to the underlying shares of Restricted Stock.
9.5 Issuance
of Shares; Settlement of Awards
When the restrictions imposed by Section 9.2 expire or
otherwise lapse with respect to one or more shares of Restricted
Stock, the Participant shall be obligated to return to the
Company any certificate(s) representing shares of Restricted
Stock (if applicable), and the Company shall deliver to the
Participant one (1) share of Common Stock (which may be
delivered in book-entry or certificated form) in satisfaction of
each share of Restricted Stock, which shares so delivered shall
not contain any legend. The delivery of shares pursuant to this
Section 9.5 shall be subject to any required share
withholding to satisfy tax withholding obligations pursuant to
Section 17.9. Any fractional shares subject to such
Restricted Stock shall be paid to the Participant in cash.
A-21
SECTION 10
RESTRICTED STOCK UNITS
10.1 Grant
of Restricted Stock Units
Subject to the limitations in Section 5.2, Restricted Stock
Units may be granted to eligible employees in such number and at
such times during the term of the Plan as the Plan Administrator
shall determine, the Plan Administrator taking into account the
duties of the respective Participants, their present and
potential contributions to the success of the Company or a
Subsidiary, and such other factors as the Plan Administrator
shall deem relevant in accomplishing the purposes of the Plan.
The Plan Administrator may grant Restricted Stock Units or
provide for the grant of Restricted Stock Units, either from
time to time in the discretion of the Plan Administrator or
automatically upon the occurrence of specified events.
10.2 Restriction
Period
Except as permitted by the Plan Administrator and specified in
the Award Agreement, during a period following the date of
grant, as determined by the Plan Administrator, which in no
event shall be less than three (3) years with respect to
Restricted Stock Units subject to restrictions based upon time
and one (1) year with respect to Restricted Stock Units
subject to restrictions based upon the achievement of specific
Performance Goals or other performance measures (the
Restriction Period) the Restricted Stock Units shall
be subject to Section 17.1.
10.3 Other
Restrictions
The Plan Administrator shall impose such other restrictions on
Restricted Stock Units granted pursuant to the Plan as it may
deem advisable, including the requirement that certain
pre-established Performance Goals be met. A Participant
receiving a grant of Restricted Stock Units shall not be
recorded as a stockholder of the Company and shall not acquire
any rights of a stockholder unless or until the Participant is
issued shares of Common Stock in settlement of such Restricted
Stock Units.
10.4 Dividend
Equivalents
The Plan Administrator may provide that Restricted Stock Units
awarded under the Plan shall be entitled to an amount per
Restricted Stock Unit equal in value to the cash dividend, if
any, paid per share of Common Stock on issued and outstanding
shares, on the dividend payment dates occurring during the
period between the date on which the Restricted Stock Units are
granted to the Participant and the date on which such Restricted
Stock Units are settled, cancelled, forfeited, waived,
surrendered or terminated under the Plan. Such paid amounts
called dividend equivalents shall be (i) paid
in cash or Common Stock or (ii) credited to the Participant
as additional Restricted Stock Units, or any combination
thereof, as the Plan Administrator shall determine. A Restricted
Stock Unit credited to a Participant as a dividend equivalent
shall vest and be settled at such time as the Restricted Stock
Unit to which it relates vests and is settled. In the event the
dividend equivalents are deferred, they shall be payable in
accordance with the requirements of Section 409A.
10.5 Issuance
of Shares; Settlement of Awards
When the restrictions imposed by Section 10.2 expire or
otherwise lapse with respect to one or more Restricted Stock
Units, Restricted Stock Units shall be settled (i) in cash
or (ii) by the delivery to the Participant of the number of
shares of Common Stock equal to the number of the
Participants Restricted Stock Units that are vested (less
any units or value withheld to satisfy applicable tax
withholding obligations), or any combination thereof, as the
Plan Administrator shall determine and in accordance with
Section 409A. The delivery of shares pursuant to this
Section 10.5 shall be subject to any required share
withholding to satisfy tax withholding obligations pursuant to
Section 17.9. Any fractional shares subject to such
Restricted Stock Units shall be paid to the Participant in cash.
A-22
SECTION 11
INCENTIVE AWARDS
11.1 Incentive
Awards
Prior to the beginning of each Performance Period, or not later
than ninety (90) days following the commencement of the
relevant fiscal year, the Plan Administrator shall establish
Performance Goals or other performance measures which must be
achieved for any Participant to receive an Incentive Award for
that Performance Period. The Performance Goals or other
performance measures may be based on any combination of
corporate and business unit Performance Goals or other
performance measures. The Plan Administrator may also establish
one or more Company-wide Performance Goals or other performance
measures which must be achieved for any Participant to receive
an Incentive Award for that Performance Period. Such Performance
Goals or other performance measures may include a threshold
level of performance below which no Incentive Award shall be
earned, target levels of performance at which specific Incentive
Awards will be earned, and a maximum level of performance at
which the maximum level of Incentive Awards will be earned. Each
Incentive Award shall specify the amount of cash and the amount
of any other Awards subject to such Incentive Award.
11.2 Performance
Goal Certification
An Incentive Award shall become payable to the extent provided
herein in the event that the Plan Administrator certifies in
writing prior to payment of the Incentive Award that the
Performance Goals or other performance measures selected for a
particular Performance Period have been attained. In no event
will an Incentive Award be payable under this Plan if the
threshold level of performance set for each Performance Goal or
other performance measure for the applicable Performance Period
is not attained.
11.3 Discretion
to Reduce Awards; Participants Performance
The Plan Administrator, in its sole and absolute discretion and
only prior to a Change of Control, may reduce the amount of any
Incentive Award otherwise payable to a Participant upon
attainment of any Performance Goal or other performance measure
for the applicable Performance Period. A Participants
individual performance must be satisfactory, regardless of the
Companys performance and the attainment of Performance
Goals or other performance measures, before he or she may be
paid an Incentive Award. In evaluating a Participants
performance, the Plan Administrator shall consider the
Performance Goals or other performance measures, the
Participants responsibilities and accomplishments, and
such other factors as it deems appropriate.
11.4 Required
Payment of Incentive Awards
The Plan Administrator shall make a determination as soon as
administratively possible after the information that is
necessary to make such a determination is available for a
particular Performance Period whether the Performance Goals or
other performance measures for the Performance Period have been
achieved and the amount of the Incentive Award for each
Participant. The Plan Administrator shall certify the foregoing
determinations in writing. In the absence of an election by the
Participant pursuant to Section 11.5 and Section 13,
the Incentive Award shall be paid as soon as practicable after
the end of the calendar year, but in no event later than March
15 following the end of the calendar year in which the foregoing
determinations have been made as follows:
(a) Participants shall receive their Incentive Awards in
any combination of cash
and/or other
Awards under the Plan as determined by the Plan Administrator.
(b) Because the Participant bears forfeiture, price
fluctuation, and other attendant risks during the Restriction
Period associated with Restricted Stock and Restricted Stock
Units, the Plan Administrator may determine, as set forth in the
Award Agreement, that Participants who are awarded Restricted
Stock or Restricted Stock Units as part of their Incentive Award
shall be awarded additional Restricted Stock or Restricted Stock
Units up to the amount of Restricted Stock or Restricted Stock
Units which a Participant
A-23
is awarded pursuant to Section 11.4(a). No additional
Restricted Stock or Restricted Stock Units are required to be
awarded pursuant to this Section 11.4(b).
11.5 Restricted
Stock Election
To the extent permitted by applicable law, in lieu of receiving
all or any portion of cash awarded as part of a
Participants Incentive Award pursuant to
Section 11.4(a), the Plan Administrator may determine, as
set forth in the Award Agreement, that Participants may elect to
receive Restricted Stock or Restricted Stock Units with a value
equal to the portion of the Incentive Award which the
Participant would otherwise have received in cash, but has
elected to receive in Restricted Stock or Restricted Stock Units
(Restricted Stock Election). Participants must make
their Restricted Stock Election at such time and in such a
manner as prescribed by the Plan Administrator and in accordance
with Section 409A of the Code. The Plan Administrator may
determine, if set forth in the Award Agreement, that each
Participant who makes the Restricted Stock Election shall be
awarded additional shares of Restricted Stock or Restricted
Stock Units granted pursuant to Section 11.4(b) up to the
amount of the Participants Restricted Stock Election.
Notwithstanding the foregoing, no additional Restricted Stock or
Restricted Stock Units are required to be awarded pursuant to
this Section 11.5.
SECTION 12
CASH AWARDS AND OTHER STOCK-BASED AWARDS
12.1 Grant
of Cash Awards
Subject to the terms and provisions of this Plan, the Plan
Administrator, at any time and from time to time, may grant cash
awards to Participants in such amounts and upon such terms,
including the achievement of Performance Goals or other specific
performance measures, as the Plan Administrator may determine
(each, a Cash Award).
12.2 Other
Stock-Based Awards
The Plan Administrator may grant other types of equity-based or
equity-related Awards not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted
shares of Common Stock) in such amounts and subject to such
terms and conditions, as the Plan Administrator shall determine
(each, an Other Stock-Based Award). Such Other
Stock-Based Awards may involve the transfer of Common Stock to
Participants, or payment in cash or otherwise of amounts based
on the value of Common Stock.
12.3 Value
of Cash Awards and Other Stock-Based Awards
Each Cash Award granted pursuant to this Section 12 shall
specify a payment amount or payment range as determined by the
Plan Administrator. Each Other Stock-Based Award shall be
expressed in terms of Common Stock or units based on Common
Stock, as determined by the Plan Administrator. The Plan
Administrator may establish performance measures applicable to
such Awards in its discretion. If the Plan Administrator
exercises its discretion to establish performance measures, the
number
and/or value
of such cash awards or Other Stock-Based Awards that will be
paid out to the Participant will depend on the extent to which
the performance measures are met.
12.4 Payment
of Cash Awards and Other Stock-Based Awards
Payment, if any, with respect to a Cash Award or an Other
Stock-Based Award shall be made in accordance with the terms of
the Award, in cash or Common Stock as the Plan Administrator
determines and in accordance with Section 409A so as not to
be treated as payment made pursuant to a nonqualified deferred
compensation plan. The value of any fractional shares shall be
paid in cash.
A-24
SECTION 13
DEFERRAL ELECTIONS
The Plan Administrator may, to the extent permitted by
applicable law, permit Participants to defer Awards under the
Plan. Any such deferrals shall be subject to such terms,
conditions and procedures that the Plan Administrator may
establish from time to time in its sole discretion and
consistent with the advance and subsequent deferral election
requirements of Section 409A.
SECTION 14
TERMINATION OF EMPLOYMENT
The Award Agreement applicable to each Award shall set forth the
effect of a termination of the Participants employment
upon such Award; provided, however, that, unless
explicitly set forth otherwise in an Award Agreement or as
determined by the Plan Administrator, (1) all of a
Participants unvested
and/or
unexercisable Awards shall automatically be forfeited upon
termination of the Participants employment for any reason,
and, as to Awards consisting of stock Options or Stock
Appreciation Rights, the Participant shall be permitted to
exercise the vested portion of the Option or Stock Appreciation
Right for at least three months following termination of his or
her employment, and (2) all of a Participants Awards
(whether vested or unvested, exercisable or unexercisable) shall
automatically be forfeited upon termination of the
Participants employment for Cause. Provisions relating to
the effect of a termination of employment upon an Award shall be
determined in the sole discretion of the Plan Administrator and
need not be uniform among all Awards or among all Participants.
Unless the Plan Administrator determines otherwise in accordance
with Section 409A, the transfer of employment of a
Participant as between the Company and a Subsidiary shall not
constitute a termination of employment. The Plan Administrator
shall have the discretion to determine the effect, if any, that
a sale or other disposition of a Participants Employer
will have on the Participants Awards.
SECTION 15
EFFECT OF A CHANGE OF CONTROL
Notwithstanding any other provision of the Plan to the contrary,
in the event of a Change of Control and as of the date such
Change of Control is determined to have occurred:
(a) Any Options and Stock Appreciation Rights outstanding
as of the date of the Change of Control, and which are not then
exercisable and vested, shall become fully exercisable and
vested.
(b) The restrictions applicable to any Restricted Stock or
Restricted Stock Unit Award as of the date of the Change of
Control which is not performance based shall lapse and such
Restricted Stock or Restricted Stock Unit shall become free of
all restrictions and become fully vested and transferable.
(c) Except as otherwise set forth in a Participants
Award Agreement, as of the date of the Change of Control, the
restrictions applicable to any Performance Share or Performance
Unit Award and any performance-based Restricted Stock or
Restricted Stock Unit Award granted pursuant to Sections 8,
9, or 10 shall become free of all restrictions and become fully
vested and transferable.
(d) Any restrictions applicable to Cash Awards and Other
Stock-Based Awards shall immediately lapse and become payable
within twenty (20) days.
In addition to the Boards authority set forth in
Sections 5.3, in order to maintain the Participants
rights in the event of any Change of Control, the Board, as
constituted before such Change of Control, is hereby authorized,
and has sole discretion, as to any Award, either at the time
such Award is made hereunder or any time thereafter, to take any
one or more of the following actions: (i) provide for the
purchase of any such Award for an amount of cash equal to the
amount that could have been attained upon the exercise of such
Award or realization of the Participants rights had such
Award been currently exercisable or payable, as long as such
purchase does not result in taxation to the Participant under
Section 409A; (ii) make such adjustment to any such
Award then outstanding as the Board deems appropriate to reflect
such Change of Control; or (iii) cause any such Award then
outstanding to be assumed, or new rights substituted therefore,
by the
A-25
acquiring or surviving corporation after such Change of Control.
The Board may, in its discretion, include such further
provisions and limitations in any Award Agreement, as it may
deem equitable and in the best interests of the Company.
SECTION 16
REGULATORY APPROVALS AND LISTING
The Company shall not be required to issue any certificate for
shares of Common Stock under the Plan prior to:
(a) obtaining any approval or ruling from the Securities
and Exchange Commission, the Internal Revenue Service or any
other governmental agency which the Company, in its sole
discretion, shall determine to be necessary or advisable;
(b) listing of such shares on any stock exchange on which
the Common Stock may then be listed; and
(c) completing any registration or other qualification of
such shares under any federal or state laws, rulings or
regulations of any governmental body which the Company, in its
sole discretion, shall determine to be necessary or advisable.
All certificates, or book-entry accounts, for shares of Common
Stock delivered under the Plan shall also be subject to such
stop-transfer orders and other restrictions as the Plan
Administrator may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange
Commission, any stock exchange upon which Common Stock is then
listed and any applicable federal or state securities laws, and
the Plan Administrator may cause a legend or legends to be
placed on any such certificates, or notations on such book-entry
accounts, to make appropriate reference to such restrictions.
The foregoing provisions of this paragraph shall not be
effective if and to the extent that the shares of Common Stock
delivered under the Plan are covered by an effective and current
registration statement under the Securities Act of 1933, as
amended, or if and so long as the Plan Administrator determines
that application of such provisions are no longer required or
desirable. In making such determination, the Plan Administrator
may rely upon an opinion of counsel for the Company. Without
limiting the foregoing, the Plan Administrator may impose such
restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resales by a
Participant or other subsequent transfers by a Participant of
any shares of Common Stock issued under this Plan, including
without limitation (i) restrictions under an insider
trading policy, (ii) restrictions designed to delay
and/or
coordinate the timing and manner of sales by one or more
Participants and (iii) restrictions as to the use of a
specified brokerage firm for such resales or other transfers.
SECTION 17
GENERAL PROVISIONS
17.1 Forfeiture
Events and Nontransferability
(a) If the Company is required to prepare an accounting
restatement due to the material noncompliance of the Company, as
a result of misconduct, with any financial reporting requirement
under the securities laws, and if a Participant knowingly
engaged in the misconduct, was grossly negligent with respect to
such misconduct, or knowingly or grossly negligently failed to
prevent the misconduct (whether or not the Participant is one of
the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002), the Plan
Administrator may determine that such Participant shall
reimburse the Company the amount of any payment in settlement of
an Award earned or accrued during the twelve-month period
following the first public issuance or filing with the United
States Securities and Exchange Commission (whichever first
occurred) of the financial document embodying such financial
reporting requirement.
(b) The Plan Administrator may specify in an Award
Agreement or otherwise that a Participants rights,
payments, and benefits with respect to an Award shall be subject
to reduction, cancellation, forfeiture, or
A-26
recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance
conditions of an Award. Such events may include, without
limitation, termination of employment for Cause, violation of
material policies that may apply to the Participant, breach of
noncompetition, confidentiality, or other restrictive covenants
that may apply to the Participant, or other conduct by the
Participant that is detrimental to the business or reputation of
the Company or a Subsidiary.
(c) Unless otherwise provided in the Plan, the right of a
Participant or Beneficiary to the payment of any Award granted
under the Plan and the rights and privileges conferred thereby
shall not be subject to execution, attachment or similar process
and may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than
by will or by the applicable laws of descent and distribution
unless the Participant has received the Plan
Administrators prior written consent. Except as otherwise
provided for under the Plan, if any Participant attempts to
transfer, assign, pledge, hypothecate or otherwise dispose of
any Award under the Plan or of any right or privilege conferred
thereby, contrary to the provisions of the Plan or such Award,
or suffers the sale or levy or any attachment or similar process
upon the rights and privileges conferred hereby, all affected
Awards held by such Participant shall be immediately forfeited.
17.2 No
Individual Rights
Nothing contained in the Plan, or in any Award granted pursuant
to the Plan, shall confer upon any employee any right with
respect to continuance of employment by the Company or a
Subsidiary, nor interfere in any way with the right of the
Company or a Subsidiary to terminate the employment of such
employee at any time with or without assigning any reason
therefor.
17.3 Other
Compensation
Unless determined otherwise by the Plan Administrator or
required by contractual obligations, the grant, vesting or
payment of Awards under the Plan shall not be considered as part
of a Participants salary or used for the calculation of
any other pay, allowance, pension or other benefit unless
otherwise permitted by other benefit plans provided by the
Company or a Subsidiary, or required by law or by contractual
obligations of the Company or a Subsidiary.
17.4 Leaves
of Absence
Leaves of absence for such periods and purposes conforming to
the personnel policy of the Company, or of a Subsidiary, as
applicable, shall not be deemed terminations or interruptions of
employment, unless a Participant commences a leave of absence
from which he or she is not expected to return to active
employment with the Company or a Subsidiary. The foregoing
notwithstanding, with respect to Incentive Stock Options,
employment shall not be deemed to continue beyond the first
ninety (90) days of such leave unless the
Participants reemployment rights are guaranteed by statute
or contract. With respect to any Participant who, after the date
an Award is granted under this Plan, ceases to be employed by
the Company or a Subsidiary on a full-time basis but remains
employed on a part-time basis, the Plan Administrator may make
appropriate adjustments, as determined in its sole discretion,
as to the number of shares issuable under, the vesting schedule
of, or the amount payable under any unvested Awards held by such
Participant.
17.5 Transfers
In the event a Participant is transferred from the Company to a
Subsidiary, or vice versa, or is promoted or given
different responsibilities, Awards granted to the Participant
prior to such date shall not be affected.
17.6 Unfunded
Obligations
Any amounts (deferred or otherwise) to be paid to Participants
pursuant to the Plan are unfunded obligations. Neither the
Company nor any Subsidiary is required to segregate any monies
from its general funds, to create any trusts or to make any
special deposits with respect to this obligation. The Plan
Administrator, in its sole discretion, may direct the Company to
share with a Subsidiary the costs of a portion
A-27
of the Incentive Awards paid to Participants who are executives
of those companies. Beneficial ownership of any investments,
including trust investments which the Company may make to
fulfill this obligation, shall at all times remain in the
Company. Any investments and the creation or maintenance of any
trust or any Participant account shall not create or constitute
a trust or a fiduciary relationship between the Plan
Administrator, the Company or any Subsidiary and a Participant,
or otherwise create any vested or beneficial interest in any
Participant or the Participants Beneficiary or the
Participants creditors in any assets of the Company or a
Subsidiary whatsoever. The Participants shall have no claim
against the Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect
to the Plan.
17.7 Beneficiaries
The designation of a Beneficiary shall be on a form provided by
the Company, executed by the Participant (with the consent of
the Participants spouse, if required by the Company for
reasons of community property or otherwise), and delivered to a
designated representative of the Company. A Participant may
change his or her Beneficiary designation at any time. A
designation by a Participant under any predecessor plans shall
remain in effect under the Plan unless such designation is
revoked or changed under the Plan. If no Beneficiary is
designated, if the designation is ineffective, or if the
Beneficiary dies before the balance of a Participants
benefit is paid, the balance shall be paid to the
Participants spouse, or if there is no surviving spouse,
to the Participants lineal descendants, pro rata, or if
there is no surviving spouse or any lineal descendant, to the
Participants estate. Notwithstanding the foregoing,
however, a Participants Beneficiary shall be determined
under applicable state law if such state law does not recognize
Beneficiary designations under plans of this sort and is not
preempted by laws which recognize the provisions of this
Section 17.7.
17.8 Governing
Law
The Plan shall be construed and governed in accordance with the
laws of the State of Texas.
17.9 Satisfaction
of Tax Obligations
Appropriate provision shall be made for all taxes required to be
withheld in connection with the exercise, grant, vesting or
other taxable event of Awards under the applicable laws and
regulations of any governmental authority, whether federal,
state or local and whether domestic or foreign, including,
without limitation, the required withholding of a sufficient
amount of Common Stock otherwise issuable to a Participant to
satisfy the said required minimum tax withholding obligations.
To the extent provided by the Plan Administrator, a Participant
is permitted to deliver Common Stock (including shares acquired
pursuant to the exercise of an Option or Stock Appreciation
Right other than the Option or Stock Appreciation Right
currently being exercised, to the extent permitted by applicable
regulations) for payment of withholding taxes on the exercise of
an Option or Stock Appreciation Right, upon the grant or vesting
of Restricted Stock or Restricted Stock Units or upon the payout
of Performance Shares, Performance Units or Incentive Awards.
Common Stock may be required to be withheld from the shares
issuable to the Participant upon the exercise of an Option or
Stock Appreciation Right, upon the vesting of Restricted Stock
or Restricted Stock Units or upon the payout of Performance
Shares or Performance Units to satisfy such minimum required tax
withholding obligations. The Fair Market Value of Common Stock
as delivered pursuant to this Section 17.9 shall be
determined as of the day of release, and shall be calculated in
accordance with Section 2.16.
Any Participant who makes a Section 83(b) election under
the Code shall, within ten (10) days of making such
election, notify the Company in writing of such election and
shall provide the Company or such Participants Employer
with a copy of such election form filed with the Internal
Revenue Service.
A Participant is solely responsible for obtaining, or failing to
obtain, tax advice with respect to participation in the Plan
prior to the Participants (i) entering into any
transaction under or with respect to the Plan,
(ii) designating or choosing the times of distributions
under the Plan, or (iii) disposing of any Common Stock
issued under the Plan.
A-28
17.10 Participants
in Foreign Jurisdictions
The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or
desirable to comply with provisions of the laws of any countries
in which the Company or any Subsidiary may operate to ensure the
viability of the benefits from Awards granted to Participants
employed in such countries, to meet the requirements of local
laws that permit the Plan to operate in a qualified or
tax-efficient manner, to comply with applicable foreign laws and
to meet the objectives of the Plan.
SECTION 18
REGULATORY COMPLIANCE
18.1 Rule 16b-3
of the Exchange Act and Section 162(m) of the
Code
The Companys intention is that, so long as any of the
Companys equity securities are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, the Plan shall
comply in all respects with the rules of any exchange on which
the Common Stock is traded and with
Rule 16b-3.
In addition, it is the Companys intention that, as to
Covered Employees, unless otherwise indicated in an Award
Agreement, stock Options, Stock Appreciation Rights, Performance
Shares, Performance Units and Incentive Awards shall qualify as
performance-based compensation under Section 162(m). If any
Plan provision is determined not to be in compliance with the
foregoing intentions, that provision shall be deemed modified as
necessary to meet the requirements of any such exchange,
Rule 16b-3
and Section 162(m).
18.2 Section 409A
of the Code
The Plan is intended to be administered, operated and construed
in compliance with Section 409A and any guidance issued
thereunder. Notwithstanding this or any other provision of the
Plan to the contrary, the Board may amend the Plan in any
manner, or take any other action, that either of them
determines, in its sole discretion, is necessary, appropriate or
advisable to cause the Plan to comply with Section 409A and
any guidance issued thereunder. Any such action, once taken,
shall be deemed to be effective from the earliest date necessary
to avoid a violation of Section 409A and shall be final,
binding and conclusive on all Participants and other individuals
having or claiming any right or interest under the Plan.
Notwithstanding the provisions of the Plan or any Award
Agreement, no payment pursuant to an Award that is subject to
Section 409A shall be made to a Participant as a result of
such Participants separation from service
(within the meaning of such phrase in Section 409A), within
the six-month period following such separation from service (or,
if earlier, the date of death of the employee), if the
Participant is a Specified Employee. For purposes of the
previous sentence the term Specified Employee is
defined in Section 409A and the authoritative guidance
thereunder.
SECTION 19
ESTABLISHMENT AND TERM OF PLAN
The Plan was adopted by the Board of Directors on
February 12, 2008, and is subject to approval by the
Companys stockholders. If approved by the stockholders,
this Plan will replace the Prior Plans, and no further Awards
will be made under the Prior Plans. This Plan shall become
effective on the Effective Date, and shall remain in effect,
subject to the right of the Board of Directors to terminate the
Plan at any time pursuant to Section 20, until all Common
Stock subject to it shall have been purchased or acquired
according to the provisions herein. However, in no event may an
Award be granted under the Plan on or after the tenth (10th)
anniversary of the Effective Date. After this Plan is
terminated, no future Awards may be granted pursuant to the
Plan, but Awards previously granted shall remain outstanding in
accordance with their applicable terms and conditions and this
Plans terms and conditions.
A-29
SECTION 20
AMENDMENT, TERMINATION OR DISCONTINUANCE OF THE PLAN
20.1 Amendment
of Plan
Subject to the Board of Directors, the Plan Administrator may
from time to time make such amendments to the Plan as it may
deem proper and in the best interest of the Company, including,
without limitation, any amendment necessary to ensure that the
Company may obtain any regulatory approval referred to in
Section 16; provided, however, that
(a) to the extent required by applicable law, regulation or
stock exchange rule, stockholder approval shall be required, and
(b) except as otherwise provided in the Plan, no change in
any Award previously granted under the Plan may be made without
the consent of the Participant if such change would impair the
right of the Participant under the Award to acquire or retain
Common Stock or cash that the Participant may have acquired as a
result of the Plan.
20.2 Termination
or Suspension of Plan
The Board of Directors may at any time suspend the operation of
or terminate the Plan with respect to any Common Stock or rights
which are not at that time subject to any Award outstanding
under the Plan.
20.3 Code
Section 162(m) Approval
If so determined by the Plan Administrator, the provisions of
the Plan relating to Incentive Awards (or any other Award
subject to Code Section 162(m)) shall be disclosed to, and
reapproved by, the Companys stockholders no later than the
first stockholder meeting that occurs in the fifth year
following the year in which the Effective Date occurs in order
for Incentive Awards (and other Awards subject to Code
Section 162(m)) granted after such time to be exempt from
the deduction limitations of Code Section 162(m).
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed effective as of [May, , 2008].
ANADARKO PETROLEUM CORPORATION
Robert G. Gwin
Senior Vice President
A-30
APPENDIX B
ANADARKO
PETROLEUM CORPORATION
2008 DIRECTOR COMPENSATION PLAN
Effective as of [May , 2008]
B-1
TABLE OF
CONTENTS
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SECTION 1 PURPOSE
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B-4
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1.1
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PURPOSE
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B-4
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SECTION 2 DEFINITIONS
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B-4
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2.1
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AWARD
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B-4
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2.2
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AWARD AGREEMENT
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B-4
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2.3
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BENEFICIARY
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B-4
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2.4
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BOARD
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B-4
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2.5
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CASH DEFERRAL
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B-4
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2.6
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CHANGE IN CAPITALIZATION
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B-4
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2.7
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CHANGE OF CONTROL
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B-5
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2.8
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CODE
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B-6
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2.9
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COMMITTEE
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B-6
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2.10
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COMMON STOCK
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B-6
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2.11
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COMMON STOCK DEFERRAL
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B-6
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2.12
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COMPANY
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B-6
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2.13
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COMPENSATION
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B-6
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2.14
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CONVERSION PREMIUM
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B-6
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2.15
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EFFECTIVE DATE
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B-6
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2.16
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ELIGIBLE DIRECTOR
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B-6
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2.17
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EXCHANGE ACT
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B-6
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2.18
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FAIR MARKET VALUE
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B-6
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2.19
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FULL VALUE AWARD
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B-7
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2.20
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MEMORANDUM DEFERRED ACCOUNT
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B-7
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2.21
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OPTION PRICE
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B-7
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2.22
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OTHER STOCK-BASED AWARD
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B-7
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2.23
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PARTICIPANT
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B-7
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2.24
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PAYMENT DATE
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B-7
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2.25
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PERMANENT DISABILITY
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B-7
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2.26
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PERMITTED TRANSFEREE
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B-7
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2.27
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PLAN
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B-7
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2.28
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PLAN QUARTER
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B-7
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2.29
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PURCHASE PRICE
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B-7
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2.30
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RESTRICTED STOCK
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B-7
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2.31
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RESTRICTED STOCK UNITS
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B-7
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2.32
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RESTRICTION PERIOD
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B-7
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2.33
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RULE 16B-3
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B-8
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2.34
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SECTION 409A
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B-8
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2.35
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STOCK APPRECIATION RIGHT
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B-8
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2.36
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STOCK OPTION
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B-8
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SECTION 3 ADMINISTRATION
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B-8
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3.1
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COMMITTEE
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B-8
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3.2
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INDEMNIFICATION OF COMMITTEE
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B-8
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SECTION 4 PARTICIPATION
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B-8
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4.1
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PARTICIPANTS
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B-8
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SECTION 5 SHARES AVAILABLE FOR THE PLAN
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B-9
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5.1
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MAXIMUM NUMBER OF SHARES
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B-9
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5.2
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ADJUSTMENT IN AUTHORIZED SHARES
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B-9
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SECTION 6 STOCK OPTIONS
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B-9
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6.1
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GRANT OF STOCK OPTIONS
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B-9
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6.2
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TERMS OF STOCK OPTIONS
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B-10
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SECTION 7 STOCK APPRECIATION RIGHTS
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B-12
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B-2
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7.1
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GRANT OF STOCK APPRECIATION RIGHTS
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B-12
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7.2
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EXERCISE OF STOCK APPRECIATION RIGHTS
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B-12
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7.3
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SPECIAL PROVISIONS APPLICABLE TO STOCK APPRECIATION RIGHTS
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B-12
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7.4
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NO REPRICING
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B-13
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SECTION 8 RESTRICTED STOCK
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B-13
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8.1
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GRANT OF RESTRICTED STOCK
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B-13
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8.2
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RESTRICTION PERIOD
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B-13
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8.3
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VOTING RIGHTS; DIVIDENDS AND OTHER DISTRIBUTIONS
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B-13
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8.4
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ISSUANCE OF SHARES; SETTLEMENT OF AWARDS
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B-13
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SECTION 9 RESTRICTED STOCK UNITS
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B-14
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9.1
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GRANT OF RESTRICTED STOCK UNITS
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B-14
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9.2
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RESTRICTION PERIOD
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B-14
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9.3
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OTHER RESTRICTIONS
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B-14
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9.4
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DIVIDEND EQUIVALENTS
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B-14
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9.5
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ISSUANCE OF SHARES; SETTLEMENT OF AWARDS
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B-14
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SECTION 10 OTHER STOCK-BASED AWARDS
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B-14
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SECTION 11 COMPENSATION
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B-15
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11.1
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AMOUNT OF COMPENSATION
|
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B-15
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11.2
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COMPENSATION ELECTION
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B-15
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SECTION 12 DEFERRED COMPENSATION
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B-15
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12.1
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DEFERRED CASH
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B-15
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12.2
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DEFERRED COMMON STOCK
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B-15
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12.3
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MEMORANDUM DEFERRED ACCOUNT
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B-16
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SECTION 13 CESSATION OF SERVICE
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B-16
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SECTION 14 EFFECT OF A CHANGE OF CONTROL
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B-16
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SECTION 15 PAYMENT OF DEFERRED COMPENSATION
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B-17
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15.1
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PAYMENT OF DEFERRED CASH
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B-17
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15.2
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PAYMENT OF DEFERRED COMMON STOCK
|
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B-17
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15.3
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ACCELERATION OF PAYMENT OF DEFERRED CASH AND DEFERRED COMMON
STOCK
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B-17
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SECTION 16 GENERAL PROVISIONS
|
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B-18
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16.1
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ISSUANCE OF COMMON STOCK
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B-18
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16.2
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UNFUNDED OBLIGATION
|
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B-18
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16.3
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BENEFICIARY
|
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B-19
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16.4
|
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PERMANENT DISABILITY
|
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B-19
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16.5
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INCAPACITY OF PARTICIPANT OR BENEFICIARY
|
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B-19
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16.6
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NONASSIGNMENT
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B-19
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16.7
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TERMINATION AND AMENDMENT
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B-20
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16.8
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APPLICABLE LAW
|
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B-20
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16.9
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EFFECTIVE DATE AND TERM OF THE PLAN
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B-20
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16.10
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COMPLIANCE WITH SECTION 16(B) OF THE EXCHANGE ACT
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B-20
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16.11
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SECTION 409A
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B-20
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B-3
ANADARKO
PETROLEUM CORPORATION
2008 DIRECTOR COMPENSATION PLAN
SECTION 1
PURPOSE
1.1 Purpose
The purpose of the Anadarko Petroleum Corporation
2008 Director Compensation Plan (the Plan) is
to provide a compensation program for non-employee Directors of
Anadarko Petroleum Corporation (the Company) that
will attract and retain experienced and knowledgeable
non-employees to serve as members of the Companys Board of
Directors. The Plan provides for (i) the payment of an
annual retainer, meeting fees (if any), committee assignment
fees (if any), and other Board of Director retainer fees in the
form of cash, deferred cash, Common Stock, or deferred shares of
Common Stock or any combination of the foregoing; and
(ii) the award of Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units and Other Stock-Based
Awards.
SECTION 2
DEFINITIONS
Unless otherwise required by the context, the following terms
when used in the Plan shall have the meanings set forth in this
Section 2:
2.1 Award
Any Stock Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit or any Other Stock-Based Award, in each
case payable in cash or in shares of Common Stock as may be
designated by the Committee.
2.2 Award
Agreement
The written agreement setting forth the terms and conditions
applicable to an Award granted under the Plan (which, in the
discretion of the Committee, need not be countersigned by a
Participant). The Committee may, in its discretion, provide for
the use of electronic, internet or other non-paper Award
Agreements.
2.3 Beneficiary
The person or persons designated by a Participant pursuant to
Section 16.3 of this Plan to whom payments (either in cash
or shares of Common Stock) are to be paid pursuant to the terms
of this Plan in the event of the Participants death.
2.4 Board
The Board of Directors of the Company.
2.5 Cash
Deferral
Any Compensation deferred by a Participant in the form of cash.
2.6 Change
in Capitalization
Any increase or reduction in the number of shares of Common
Stock, any change (including, without limitation, in the case of
a spin-off, dividend or other distribution in respect of shares,
a change in value) in the shares of Common Stock or any exchange
of shares of Common Stock for a different number or kind of
shares of Common Stock or other securities of the Company or
another corporation, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization,
spin-off,
split-up,
issuance of warrants, rights or debentures, stock dividend,
stock split or reverse stock split, extraordinary cash dividend,
property dividend, combination or exchange of shares, repurchase
of shares, change in corporate structure or otherwise.
B-4
2.7 Change
of Control
The occurrence of any of the following after the Effective Date:
(a) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
Person) acquires beneficial ownership (within the
meaning of
Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either
(A) the then outstanding shares of Common Stock of the
Company (the Outstanding Company Common Stock) or
(B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the Outstanding Company Voting
Securities); provided, however, that for purposes
of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any
acquisition pursuant to a transaction which complies with
clauses (A), (B), and (C) of this Section 2.7(c); or
(b) individuals who, as of the Effective Date of the Plan,
constitute the Board (the Incumbent Board) cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a
director subsequent to the effective date of the Plan whose
election, or nomination for election by the Companys
stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board; or
(c) consummation by the Company of a reorganization, merger
or consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition of assets of another entity (a Business
Combination), in each case, unless, following such
Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of
Common Stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the
Companys assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no person (excluding
any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of Common Stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(d) approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, with respect to an Award that is
(i) subject to Section 409A and (ii) a Change of
Control would accelerate the timing of payment thereunder, the
term Change of Control shall mean a change in the
ownership or effective control of the Company, or in the
ownership of a substantial portion of the assets of the Company
as defined in Section 409A and the authoritative guidance
issued
B-5
thereunder, but only to the extent inconsistent with the above
definition, and only to the minimum extent necessary to comply
with Section 409A as determined by the Committee.
2.8 Code
The Internal Revenue Code of 1986, as amended and in effect from
time to time, and the temporary or final regulations of the
Secretary of the U.S. Treasury adopted pursuant to the Code.
2.9 Committee
A committee consisting of two or more Eligible Directors, as
designated by the Board. In the absence of a specific Board
designation to the contrary, the committee shall consist of the
same members of the Boards Compensation and Benefits
Committee.
2.10 Common
Stock
The Common Stock of the Company, $0.10 par value per share,
or such other class of shares or other securities as may be
applicable pursuant to the provisions of Section 5.
2.11 Common
Stock Deferral
Any Compensation deferred by a Participant in the form of Common
Stock.
2.12 Company
As defined in Section 1.
2.13 Compensation
The cash value of a Participants annual retainer, meeting
fees (if any), committee assignment fees (if any) and other
Board retainer fees related to a Participants service on
the Board.
2.14 Conversion
Premium
As defined in Section 12.2(a).
2.15 Effective
Date
The effective date of the Plan is [May 20, 2008], the date
on which it was approved by the stockholders of the Company.
2.16 Eligible
Director
Each member of the Board, who is not an employee of the Company
or any of its subsidiaries.
2.17 Exchange
Act
The Securities and Exchange Act of 1934, as amended, and rules
promulgated thereunder.
2.18 Fair
Market Value
As of any given date, the closing sales price at which Common
Stock is sold on such date as reported in the NYSE-Composite
Transactions by The Wall Street Journal or any other
comparable service the Committee may determine is reliable for
such date, or if no Common Stock was traded on such date, on the
next preceding day on which Common Stock was so traded. If the
Fair Market Value of the Common Stock cannot be determined
pursuant to the preceding provisions, the Fair Market
Value of the Common Stock shall be determined by the
Committee in such a manner as it deems appropriate, consistent
with the requirements of Section 409A.
B-6
2.19 Full
Value Award
An Award other than of Stock Options or Stock Appreciation
Rights, which is settled by the issuance of Common Stock.
2.20 Memorandum
Deferred Account
As defined in Section 12.3.
2.21 Option
Price
The price per share of Common Stock at which a Stock Option is
exercisable.
2.22 Other
Stock-Based Award
As defined in Section 10.
2.23 Participant
Each Eligible Director of the Board to whom Awards are granted
or Compensation is paid under the Plan.
2.24 Payment
Date
As defined in Section 11.1.
2.25 Permanent
Disability
As defined in Section 16.4.
2.26 Permitted
Transferee
As defined in Section 6.2(f).
2.27 Plan
As defined in Section 1.
2.28 Plan
Quarter
Each calendar quarter.
2.29 Purchase
Price
As defined in Section 6.2(d).
2.30 Restricted
Stock
Common Stock granted under the Plan that is subject to the
requirements of Section 8 and such other restrictions as
the Board or the Committee deems appropriate.
2.31 Restricted
Stock Units
An award granted under the Plan representing a right to receive
a payment (either in cash or Common Stock) equal to the value of
a share of Common Stock.
2.32 Restriction
Period
As defined in Sections 8.2 and 9.2.
B-7
2.33 Rule 16b-3
Rule 16b-3
of the General Rules and Regulations under the Exchange Act.
2.34 Section 409A
Section 409A of the Code, and regulations promulgated
thereunder.
2.35 Stock
Appreciation Right
Any right granted under Section 7.
2.36 Stock
Option
A stock option which is not intended to meet the requirements of
an incentive stock option as defined in Section 422 of the
Code.
SECTION 3
ADMINISTRATION
3.1 Committee
Subject to Section 16.7, the Plan shall be administered by
the Committee. The Committee shall interpret the Plan, shall
prescribe, amend and rescind rules relating to it from time to
time as it deems proper and in the best interests of the
Company, and shall take any other action necessary for the
administration of the Plan. Any decision or interpretation
adopted by the Committee shall be final and conclusive and shall
be binding upon all Participants. The Committee may rely on
officers, employees or other agents of the Company to handle the
day-to-day administrative matters of the Plan.
3.2 Indemnification
of Committee
Each member of the Committee, while serving as such, shall be
entitled, in good faith, to rely or act upon any advice of the
Companys independent auditors, counsel or consultants
hired by the Committee, or other agents assisting in the
administration of the Plan. The Committee and any officers or
employees of the Company acting at the direction or on behalf of
the Company shall not be personally liable for any action or
determination taken or made, or not taken or made, in good faith
with respect to the Plan, and shall, to the extent permitted by
law, be fully indemnified and protected under the Companys
restated certificate of incorporation or by-laws with respect to
any such action or determination.
SECTION 4
PARTICIPATION
4.1 Participants
Each person who is an Eligible Director of the Company on the
Effective Date of the Plan shall become a Participant in the
Plan on the Effective Date. Thereafter, each Eligible Director
of the Company shall become a Participant immediately upon
election to the Board.
B-8
SECTION 5
SHARES AVAILABLE FOR THE PLAN
5.1 Maximum
Number of Shares
(a) Share
Authorization
Subject to adjustment as provided in Section 5.2, the
maximum number of shares of Common Stock available for grant to
Participants under this Plan on or after the Effective Date
shall be 1,500,000 shares.
(b) Limit
on Full Value Awards Flexible Share
Pool
To the extent that a share of Common Stock is issued pursuant to
the grant or exercise of a Full Value Award, it shall reduce the
share authorization by 2.27 shares of Common Stock; and to
the extent that a share of Common Stock is issued pursuant to
the grant or exercise of an Award other than a Full Value Award,
it shall reduce the share authorization by one (1) share of
Common Stock.
(c) Share
Usage
Shares of Common Stock covered by an Award shall only be counted
as used to the extent they are actually issued. Any shares of
Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation, or otherwise without the issuance of
such shares of Common Stock, are settled in cash in lieu of
shares of Common Stock, or are exchanged with the
Committees permission, prior to the issuance of shares of
Common Stock, for Awards not involving shares of Common Stock,
shall be available again for grant under this Plan. However, the
full number of Stock Appreciation Rights granted that are to be
settled by the issuance of shares of Common Stock shall be
counted against the number of shares of Common Stock available
for award under the Plan, regardless of the number of shares of
Common Stock actually issued upon settlement of such Stock
Appreciation Rights. Furthermore, any shares of Common Stock
withheld to satisfy tax withholding obligations on an Award
issued under the Plan, shares of Common Stock tendered to pay
the exercise price of an Award under the Plan, and shares of
Common Stock repurchased on the open market with the proceeds of
an Option exercise will no longer be eligible to be again
available for grant under this Plan. The shares of Common Stock
available for issuance under this Plan may be authorized and
unissued shares of Common Stock or treasury shares of Common
Stock.
5.2 Adjustment
in Authorized Shares
In the event of recapitalization, stock split, stock dividend,
exchange of shares, merger, reorganization, change in corporate
structure or shares of the Company or similar event, the Board
shall make such adjustments, if any, as it determines are
appropriate and equitable to (i) the number of shares
authorized for issuance under the Plan, (ii) the number of
shares allocated under the Common Stock Deferral, and
(iii) the number of shares of Common Stock which is subject
to outstanding Awards granted under the Plan and the Option
Price, if applicable. In the case of an equity
restructuring (within the meaning of the Financial
Standards Board Statement of Financial Accounting Standards
No. 123 (revised 2004), the Board shall make an equitable
or appropriate adjustment to outstanding Awards to reflect such
equity restructuring. Any such adjustment shall be final,
binding and conclusive on all persons claiming any right or
interest under the Plan. No adjustments made under this
Section 5 shall be made if such adjustment would result in
adverse taxation to the Participant under Section 409A.
SECTION 6
STOCK OPTIONS
6.1 Grant
of Stock Options
(a) Stock Options may be granted to Eligible Directors in
such number, and at such times during the term of the Plan as
the Committee may determine, and as evidenced by an Award
Agreement. The granting of
B-9
a Stock Option shall take place when the Committee by
resolution, written consent or other appropriate action
determines to grant such a Stock Option to a particular
Participant on a particular date for which the Fair Market Value
shall be used for the Option Price.
6.2 Terms
of Stock Options
All Stock Options under the Plan shall be granted subject to the
following terms and conditions, as specifically set out in the
Award Agreement:
(a) Option
Price
The Option Price shall be determined by the Committee in any
reasonable manner, but shall not be less than the Fair Market
Value of the Common Stock on the date the Stock Option is
granted, except in the case of Stock Options that are granted in
assumption of, or in substitution for, outstanding Awards
previously granted by (i) a company acquired by the Company
or a subsidiary, or (ii) a company with which the Company
or a subsidiary combines.
(b) Duration
of Stock Options
Stock Options shall be exercisable at such time and under such
conditions as set forth in the Award Agreement, but in no event
shall any Stock Option be exercisable later than the tenth
(10th) anniversary of the date of its grant.
(c) Exercise
of Stock Options
Shares of Common Stock covered by a Stock Option may be
purchased at one time or in such installments over the term of
the Stock Option, as may be provided in the Award Agreement. Any
shares not purchased on an applicable installment date may be
purchased thereafter at any time prior to the expiration of the
Stock Option in accordance with its terms. To the extent that
the right to purchase shares has accrued thereunder, Stock
Options may be exercised from time to time by written notice to
the Company setting forth the number of shares with respect to
which the Stock Option is being exercised.
(d) Payment
The Purchase Price of shares purchased under Stock Options shall
be paid in full to the Company upon the exercise of the Stock
Option by delivery of consideration equal to the product of the
Option Price and the number of shares of Common Stock purchased
(the Purchase Price). Such consideration may be
either (i) in cash or (ii) at the discretion of the
Committee, in Common Stock (by either actual delivery of Common
Stock or by attestation presenting satisfactory proof of
beneficial ownership of such Common Stock) already owned by the
Participant, or any combination of cash and Common Stock. The
Fair Market Value of such Common Stock as delivered shall be
valued as of the day of exercise. The Committee can determine
that additional forms of payment will be permitted. To the
extent permitted by the Committee and applicable laws and
regulations (including, without limitation, federal tax and
securities laws, regulations and state corporate law), an option
may also be exercised in a cashless exercise by
delivery of a properly executed exercise notice together with
irrevocable instructions to a broker approved by the Company to
promptly deliver to the Company sufficient proceeds to pay the
Purchase Price. A Participant shall have none of the rights of a
stockholder until the shares of Common Stock are issued to the
Participant.
The Committee may permit a Participant to pay all or a portion
of the Purchase Price by having shares of Common Stock with a
Fair Market Value equal to all or a portion of the Purchase
Price be withheld from the shares issuable to the Participant
upon the exercise of the Stock Option. The Fair Market Value of
such Common Stock as is withheld shall be determined as of the
same day as the exercise of the Stock Option.
B-10
(e) Restrictions
The Committee shall determine and reflect in the Award
Agreement, with respect to each Stock Option, the nature and
extent of the restrictions, if any, to be imposed on the shares
of Common Stock which may be purchased thereunder, including,
without limitation, restrictions on the transferability of such
shares acquired through the exercise of such Stock Options for
such periods as the Committee may determine and, further, that
in the event of a Participants cessation from service as a
member of the Board during the time period in which such Common
Stock is nontransferable, the Participant shall be required to
sell such Common Stock back to the Company at such prices as the
Committee may specify. In addition, to the extent permitted by
applicable laws and regulations, the Committee may require that
a Participant who wants to effectuate a cashless
exercise of Stock Options be required to sell the shares of
Common Stock acquired in the associated exercise to the Company,
or in the open market through the use of a broker selected by
the Company, at such price and on such terms as the Committee
may determine at the time of grant, or otherwise. Without
limiting the foregoing, the Committee may impose such
restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resales by the
Participant or other subsequent transfers by the Participant of
any shares issued as a result of the exercise of a Stock Option,
including without limitation (i) restrictions under an
insider trading policy, (ii) restrictions designed to delay
and/or
coordinate the timing and manner of sales by one or more
Participants and (iii) restrictions as to the use of a
specified brokerage firm for such resales or other transfers.
(f) Transferability
of Stock Options
Notwithstanding Section 16.6, and only as provided by the
Committee, Stock Options may be transferred to a
Participants immediate family members, directly or
indirectly or by means of a trust, corporate entity or
partnership (a person who thus acquires Stock Options by such
transfer, a Permitted Transferee). A transfer of a
Stock Option may only be effected by the Company at the request
of the Participant and shall become effective upon the Permitted
Transferee agreeing to such terms as the Committee may require
and only when recorded in the Companys record of
outstanding Stock Options. In the event a Stock Option is
transferred as contemplated hereby, the Stock Option may not be
subsequently transferred by the Permitted Transferee except a
transfer back to the Participant or by will or the laws of
descent and distribution. A transferred Stock Option may be
exercised by a Permitted Transferee to the same extent as, and
subject to the same terms and conditions as, the Participant
(except as otherwise provided herein), as if no transfer had
taken place. As used herein, immediate family member
shall mean, with respect to any person, such persons
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
sister-in-law,
and shall include adoptive relationships. In the event of
exercise of a transferred Stock Option by a Permitted
Transferee, any amounts due to (or to be withheld by) the
Company upon exercise of the option shall be delivered by (or
withheld from amounts due to) the Participant, the
Participants estate or the Permitted Transferee, in the
reasonable discretion of the Company.
In addition, to the extent permitted by applicable law and Rule
16b-3, and
notwithstanding Section 16.6, the Committee may permit a
recipient of a Stock Option to designate in writing during the
Participants lifetime a Beneficiary to receive and
exercise the Participants Stock Options in the event of
such Participants death.
(g) Purchase
for Investment
The Committee shall have the right to require that each
Participant or other person who shall exercise a Stock Option
under the Plan, and each person into whose name shares of Common
Stock shall be issued pursuant to the exercise of a Stock
Option, represent and agree that any and all shares of Common
Stock purchased pursuant to such Stock Option are being
purchased for investment only and not with a view to the
distribution or resale thereof and that such shares will not be
sold except in accordance with such restrictions or limitations
as may be set forth in the Stock Option or by the Committee.
This Section 6.2(g) shall be inoperative during any period
of time when the Company has obtained all necessary or advisable
approvals from governmental agencies and has completed all
necessary or advisable registrations or other qualifications
B-11
of shares of Common Stock as to which Stock Options may from
time to time be granted as contemplated in Section 16.
(h) No
Repricing
Except in connection with a Change in Capitalization or approval
of the Companys stockholders, the Option Price shall not
be reduced to less than the Fair Market Value on the date such
Stock Options were granted.
SECTION 7
STOCK APPRECIATION RIGHTS
7.1 Grant
of Stock Appreciation Rights
Stock Appreciation Rights may be granted to Eligible Directors
in such number, and at such times during the term of the Plan as
the Committee shall determine, and as evidenced by the Award
Agreement. The Committee may grant a Stock Appreciation Right or
provide for the grant of a Stock Appreciation Right, either from
time to time in the discretion of the Committee or automatically
upon the occurrence of specified events. The granting of a Stock
Appreciation Right shall take place when the Committee by
resolution, written consent or other appropriate action
determines to grant such a Stock Appreciation Right to a
particular Participant at a particular price. A Stock
Appreciation Right may be granted freestanding or in tandem or
in combination with any other Award under the Plan.
7.2 Exercise
of Stock Appreciation Rights
A Stock Appreciation Right may be exercised upon such terms and
conditions and for such term as the Committee shall determine;
provided, however, no Stock Appreciation Right
shall be exercisable later than the tenth (10th) anniversary of
the date of its grant. Upon exercise of a Stock Appreciation
Right, a Participant shall be entitled to receive Common Stock
with an aggregate Fair Market Value determined by multiplying
(i) the difference between the Fair Market Value of a share
of Common Stock on the date of exercise of the Stock
Appreciation Right over the price determined by the Committee on
the date of grant (which price shall not be less than 100% of
the Fair Market Value of a share of Common Stock on the date of
grant, except in the case of Stock Appreciation Rights that are
granted in assumption of, or in substitution for, outstanding
awards previously granted by (x) a company acquired by the
Company or a subsidiary, or (y) a company with which the
Company or a subsidiary combines) multiplied by (ii) the
number of shares of Common Stock with respect to which the Stock
Appreciation Right is exercised. The value of any fractional
shares shall be paid in cash.
7.3 Special
Provisions Applicable to Stock Appreciation Rights
Stock Appreciation Rights are subject to the following
restrictions:
(a) A Stock Appreciation Right granted in tandem with any
other Award under the Plan shall be exercisable at such time or
times as the Award to which it relates shall be exercisable, or
at such other times as the Committee may determine.
(b) The right of a Participant to exercise a Stock
Appreciation Right granted in tandem with any other Award under
the Plan shall be canceled if and to the extent the related
Award is exercised or canceled. To the extent that a Stock
Appreciation Right is exercised, the related Award shall be
deemed to have been surrendered unexercised and canceled.
(c) A holder of Stock Appreciation Rights shall have none
of the rights of a stockholder until the Common Stock, if any,
is issued to such holder pursuant to such holders exercise
of such rights.
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(d) The acquisition of Common Stock pursuant to the
exercise of a Stock Appreciation Right shall be subject to the
same restrictions as would apply to the acquisition of Common
Stock acquired upon exercise of a Stock Option, as set forth in
Section 6.2.
7.4 No
Repricing
Except in connection with a Change in Capitalization or approval
of the Companys stockholders, the price at which Stock
Appreciation Rights may be exercised shall not be reduced to
less than the Fair Market Value on the date such Stock
Appreciation Rights were granted.
SECTION 8
RESTRICTED STOCK
8.1 Grant
of Restricted Stock
Restricted Stock may be granted to Participants in such number
and at such times during the term of the Plan as the Committee
shall determine and as evidenced by an Award Agreement. The
granting of Restricted Stock shall take place when the Committee
by resolution, written consent or other appropriate action
determines to grant such Restricted Stock to a particular
Participant.
8.2 Restriction
Period
Except as otherwise provided in this Plan, determined by the
Committee or specified in the Award Agreement, Restricted Stock
shall be subject to a time vesting period of no less than one
(1) year from the date of grant (the Restriction
Period). During the Restriction Period, the Restricted
Stock is subject to Section 16.6. During the Restriction
Period, the Committee shall evidence the restrictions on the
shares of Restricted Stock in such a manner as it determines is
appropriate (including, without limitation, (i) by means of
appropriate legends on shares of Restricted Stock that have been
certificated and (ii) by means of appropriate stop-transfer
orders on shares of Restricted Stock credited to book-entry
accounts).
8.3 Voting
Rights; Dividends and Other Distributions
A Participant receiving a grant of Restricted Stock shall be
recorded as a stockholder of the Company. Each Participant who
receives a grant of Restricted Stock shall have all the rights
of a stockholder with respect to such shares (except as provided
in the restrictions on transferability), including the right to
vote the shares and receive dividends and other distributions
paid with respect to the underlying shares of Restricted Stock;
provided, however, that no Participant awarded
Restricted Stock shall have any right as a stockholder with
respect to any shares subject to the Participants
Restricted Stock grant prior to the date of issuance to the
Participant of a certificate or certificates, or the
establishment of a book-entry account, for such shares.
8.4 Issuance
of Shares; Settlement of Awards
When the restrictions imposed by Section 8.2 expire or
otherwise lapse with respect to one or more shares of Restricted
Stock, the Company shall deliver to the Participant one
(1) share of Common Stock in satisfaction of each share of
Restricted Stock, which shares so delivered shall not contain
any legend. Such delivery of shares may be in the form of either
a physical stock certificate or certificates or the
establishment of a book-entry account on behalf of such
Participant. Any fractional shares subject to such Restricted
Stock shall be paid to the Participant in cash.
B-13
SECTION 9
RESTRICTED STOCK UNITS
9.1 Grant
of Restricted Stock Units
Restricted Stock Units may be granted to Participants in such
number and at such times during the term of the Plan as the
Committee shall determine and as evidenced by an Award
Agreement. The granting of Restricted Stock Units shall take
place when the Committee by resolution, written consent or other
appropriate action determines to grant such Restricted Stock
Units to a particular Participant.
9.2 Restriction
Period
Except as otherwise provided in this Plan, determined by the
Committee or specified in the Award Agreement, Restricted Stock
Units shall be subject to a time vesting period of no less than
one (1) year from the date of grant (the Restriction
Period). During the Restriction Period, the Restricted
Stock Units are subject to Section 16.6.
9.3 Other
Restrictions
The Committee may impose such other restrictions on Restricted
Stock Units granted pursuant to the Plan as it deems necessary
or appropriate. A Participant receiving a grant of Restricted
Stock Units shall not be recorded as a stockholder of the
Company and shall not acquire any rights of a stockholder unless
or until the Participant is issued shares of Common Stock in
settlement of such Restricted Stock Units.
9.4 Dividend
Equivalents
The Board or the Committee may provide that Restricted Stock
Units awarded under the Plan shall be entitled to an amount per
Restricted Stock Unit equal in value to the cash dividend, if
any, paid per share of Common Stock on issued and outstanding
shares, on the dividend payment dates occurring during the
period between the date on which the Restricted Stock Units are
granted to the Participant and the date on which such Restricted
Stock Units are settled, cancelled, forfeited, waived,
surrendered or terminated under the Plan. Such paid amounts
called dividend equivalents shall be (i) paid
in cash or Common Stock or (ii) credited to the Participant
as additional Restricted Stock Units, or any combination
thereof, as the Board or the Committee, as appropriate, shall
determine. A Restricted Stock Unit credited to a Participant as
a dividend equivalent shall vest and be settled at such time as
the Restricted Stock Unit to which it relates vests and is
settled.
9.5 Issuance
of Shares; Settlement of Awards
When the restrictions imposed by Sections 9.2 and 9.3
expire or otherwise lapse with respect to one or more Restricted
Stock Units, Restricted Stock Units shall be settled (i) in
cash or (ii) by the delivery to the Participant of the
number of shares of Common Stock equal to the number of the
Participants Restricted Stock Units that are vested, or
any combination thereof, as set forth in the Award Agreement.
Any fractional shares subject to such Restricted Stock Units
shall be paid to the Participant in cash.
SECTION 10
OTHER STOCK-BASED AWARDS
The Board or Committee is hereby authorized to grant to an
Eligible Director an Other Stock-Based Award, which
shall consist of a right (i) which is not an Award or right
described in Sections 6, 7, 8 or 9 and (ii) which is
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Common Stock
(including without limitation, securities convertible into
Common Stock), as are deemed by the Board or Committee to be
consistent with the purposes of the Plan; provided, that any
such rights must comply, with applicable law. Subject to the
terms of the Plan and any applicable Award
B-14
Agreement, the Board or Committee shall determine the terms and
conditions of any such Other Stock-Based Award, including but
not limited to dividend equivalents.
SECTION 11
COMPENSATION
11.1 Amount
of Compensation
Each Participants Compensation shall be determined by the
Committee and shall be paid, unless deferred pursuant to
Section 12, within thirty (30) day after the end of
each Plan Quarter in which it is earned (the Payment
Date). The Committee, if necessary, may determine prior to
the beginning of the applicable Plan Quarter for which
Compensation is to be paid whether payment of Compensation shall
be made at a date later than the Payment Date.
11.2 Compensation
Election
(a) By December 31 of a calendar year, or at such later
time as may be provided by Section 409A, each Participant
may elect to receive his or her Compensation for the following
year in the form of cash, deferred cash, Common Stock, deferred
Common Stock or any combination of the foregoing, by submitting
a written notice to the Company in the manner prescribed by the
Committee. In the case of a newly-elected Eligible Director,
such election may be made within thirty (30) days of the
Directors election to the Board with respect to
Compensation for services performed during the portion of the
applicable calendar year that is subsequent to the election. Any
combination of the alternatives may be elected, provided the
aggregate of the alternatives elected may not exceed one hundred
percent (100%) of the Participants Compensation, except as
provided in Section 12.2(a). Unless otherwise provided
under the terms of the Compensation, if no election is received
by the Company, the Participant shall be deemed to have made an
election to receive his or her Compensation in undeferred cash.
An election under this Section 11.2 shall be irrevocable
and shall apply to the Compensation earned during the calendar
year for which the election is effective.
(b) Notwithstanding any other provision to the contrary,
deferred cash elections are only available pursuant to this Plan
if an Eligible Director is not otherwise eligible to participate
in one of the Companys other deferred compensation plans
or programs with respect to their cash Compensation.
SECTION 12
DEFERRED COMPENSATION
12.1 Deferred
Cash
If a Participant elects pursuant to Section 11.2 to make a
Cash Deferral, such Cash Deferral shall be recorded in a
Memorandum Deferred Account as of the date the Compensation
otherwise would have been paid.
12.2 Deferred
Common Stock
(a) If a Participant elects pursuant to Section 11.2
to have all or a specified percentage of his or her cash
Compensation deferred in Common Stock, then an amount shall be
recorded in a Memorandum Deferred Account, in the form of shares
of Common Stock, as determined in subsection (b) below, as
of the date the Compensation otherwise would have been paid. The
Common Stock Deferral credited to the Participants
Memorandum Deferred Account in such case shall be equal to the
amount actually deferred plus a premium (the Conversion
Premium). The Conversion Premium shall be a percentage of
the Compensation actually deferred as determined by the
Committee.
(b) The number of shares of Common Stock credited to a
Participants Memorandum Deferred Account shall equal the
Common Stock Deferral divided by the Fair Market Value of the
Common Stock on the applicable Payment Date.
B-15
(c) Subject to Section 16.1, each Participant who
elects deferred Common Stock shall, once the shares of Common
Stock have been credited to his or her Memorandum Deferred
Account, receive dividend equivalents and other distributions on
such shares, subject to applicable laws. The Board or Committee
may determine that dividend equivalents and other distributions
shall be paid in cash on a current basis or reinvested promptly
in additional shares of Common Stock and such additional shares
shall be credited to the Memorandum Deferred Account.
(d) The deferred Common Stock balance in the Memorandum
Deferred Account shall be payable to the Participant in Common
Stock.
12.3 Memorandum
Deferred Account
The Company shall establish a ledger account (the
Memorandum Deferred Account) for each Participant
for the purpose of recording the Companys obligation to
pay the Compensation as provided in Sections 15.1 and 15.2.
(a) The Committee shall determine the rate of interest or
earnings/losses credited to the Memorandum Deferred Account
periodically and in so doing may take into account such factors
it deems appropriate.
(b) The Company shall promptly credit each
Participants Memorandum Deferred Account with the number
of shares of Common Stock calculated in accordance with
Section 12.2(b) and (c).
SECTION 13
CESSATION OF SERVICE
The Award Agreement applicable to each Award shall set forth the
effect of a Participants cessation of service as a member
of the Board. However, unless explicitly set forth otherwise in
an Award Agreement to the contrary, all of a Participants
unvested
and/or
unexercisable Awards shall automatically be forfeited when a
Participants ceases to serve as a director of the Board;
provided that such Participant shall be permitted to exercise
the vested portion of any Stock Options for at least three
months following such cessation date. Upon a Participants
cessation of service as a member of the Board, Compensation
attributed to the Plan Quarter during which cessation occurred
shall be earned by the Participant in an amount equal to the
meeting fees earned and a pro rata amount for the quarterly
retainer and shall be paid or deferred pursuant to a valid
election for the year during which such cessation has occurred.
The Committee may, when it finds that a waiver would be in the
best interests of the Company, waive in whole or in part any or
all remaining restrictions with respect to such
Participants Awards. Unrestricted Shares, evidenced in
such manner as the Committee shall deem appropriate, shall be
issued to the holder of Restricted Stock, Restricted Stock Units
or Other-Stock Based Awards, as applicable, promptly after the
applicable restrictions have lapsed or otherwise been satisfied.
SECTION 14
EFFECT OF A CHANGE OF CONTROL
In the event of a Change of Control:
(a) all Stock Options and Stock Appreciation Rights then
held by the Participant shall become fully vested
and/or
exercisable;
(b) the Restriction Periods applicable to all shares of
Restricted Stock and all Restricted Stock Units then held by the
Participant shall immediately lapse; and
(c) all Stock-Based Awards, Cash Deferrals and Common Stock
Deferrals under this Plan (irrespective of payment elections at
the time of such deferrals) shall be paid to a Participant (or
his or her Beneficiary in the case of his or her death) within
thirty (30) days after the date of the Change of Control,
or at such later time as may be required to enable the Eligible
Director to avoid liability under Section 16(b) of the
Exchange Act.
B-16
Notwithstanding Sections 14(b) and (c) above, no such
Awards shall be paid to a Participant who continues to serve as
a member of the Board of the Company or upon the board of
directors of the Companys successor, until such time said
Awards would otherwise be paid.
SECTION 15
PAYMENT OF DEFERRED COMPENSATION
15.1 Payment
of Deferred Cash
When a Participant ceases to be a member of the Board, the
Company shall pay to the Participant (or the Participants
Beneficiary in the case of the Participants death) an
amount equal to the deferred cash balance of his or her
Memorandum Deferred Account, plus interest (at a rate determined
pursuant to Section 12.3) on the outstanding deferred cash
account balance to the date of distribution, as follows:
(a) a lump sum cash payment (payable within 30 days),
(b) a lump sum cash payment made at a date certain in the
future as determined at the time the deferral election is made
pursuant to Section 11.2, or
(c) in periodic installments over a period of years as
determined at the time the deferral election is made under
Section 11.2.
Payment of deferred cash shall be made or, in the case of
installments over a period of years, shall begin to be made, in
the month following the date on which a Participant ceases to be
a member of the Board.
15.2 Payment
of Deferred Common Stock
When a Participant ceases to be a member of the Board, the
Company shall distribute Common Stock to the Participant (or the
Participants Beneficiary in the case of the
Participants death) in an amount equal to the number of
whole shares of Common Stock in a Participants Memorandum
Deferred Account, as follows:
(a) a lump sum distribution (payable within 30 days),
(b) a lump sum cash payment made at a date certain in the
future as determined at the time the deferral election is made
pursuant to Section 11.2, or
(c) in annual installments over a period of years as
determined at the time the deferral election is made under
Section 11.2.
Any fractional shares of Common Stock held in the
Participants account shall be paid to the Participant (or
the Participants Beneficiary in the case of the
Participants death) in a lump sum cash payment based on
the Common Stocks Fair Market Value on the day preceding
the date of such payment.
Payment of deferred Common Stock shall be made or, in the case
of installments over a period of years, shall begin to be made,
in the month following the date on which a Participant ceases to
be a member of the Board, or such later date as may be necessary
to comply with Section 16(b) of the Exchange Act.
15.3 Acceleration
of Payment of Deferred Cash and Deferred Common Stock
(a) In the event of a Participants death or Permanent
Disability, notwithstanding the Participants elections
made with respect to form of distribution under
Section 15.1 and 15.2, the balance of the
Participants Memorandum Deferred Account shall be
distributed in full as soon as practicable (but in no event
later than thirty (30) days) following the
Participants death or Permanent Disability.
(b) Subject to Section 409A, in case of an
unforeseeable emergency, a Participant may request a
distribution from the Participants Memorandum Deferred
Account earlier than the date to which it was deferred.
B-17
For purposes of this Section 15.3(b), an
unforeseeable emergency shall be limited to a severe
financial hardship to the Participant resulting from an illness
or accident of the Participant, the Participants spouse,
or a dependent (as defined in Section 152(a) of the Code)
of the Participant, loss of the Participants property due
to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control
of the Participant. The circumstances that will constitute an
unforeseeable emergency will depend upon the facts of each case,
but, in any case, amounts distributed with respect to an
unforeseeable emergency may not exceed amounts necessary to
satisfy such emergency, plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution, after
taking into account the extent to which such hardship is or may
be relieved: (i) through reimbursement or compensation by
insurance or otherwise or (ii) by liquidation of the
Participants assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship.
The Committee shall consider any requests for payment on the
basis of an unforeseeable emergency under this
Section 15.3(b) on a uniform and nondiscriminatory basis
and in accordance with the standards of interpretation described
in Section 457 of the Code and the regulations thereunder.
SECTION 16
GENERAL PROVISIONS
16.1 Issuance
of Common Stock
The Company shall not be required to issue any certificate for
shares of Common Stock under the Plan prior to:
(a) obtaining any approval or ruling from the Securities
and Exchange Commission, the Internal Revenue Service or any
other governmental agency which the Company, in its sole
discretion, shall determine to be necessary or advisable;
(b) listing of such shares on any stock exchange on which
the Common Stock may then be listed; and
(c) completing any registration or other qualification of
such shares under any federal or state laws, rulings or
regulations of any governmental body which the Company, in its
sole discretion, shall determine to be necessary or advisable.
All certificates, or book-entry accounts, for shares of Common
Stock delivered under the Plan shall also be subject to such
stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any
stock exchange upon which Common Stock is then listed and any
applicable federal or state securities laws, and the Committee
may cause a legend or legends to be placed on any such
certificates, or notations on such book-entry accounts, to make
appropriate reference to such restrictions. The foregoing
provisions of this paragraph shall not be effective if and to
the extent that the shares of Common Stock delivered under the
Plan are covered by an effective and current registration
statement under the Securities Act of 1933, as amended, or if
and so long as the Committee determines that application of such
provisions are no longer required or desirable. In making such
determination, the Committee may rely upon an opinion of counsel
for the Company. Without limiting the foregoing, the Committee
may impose such restrictions, conditions or limitations as it
determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by a
Participant of any shares issued under this Plan, including
without limitation (i) restrictions under an insider
trading policy, (ii) restrictions designed to delay
and/or
coordinate the timing and manner of sales by one or more
Participants and (iii) restrictions as to the use of a
specified brokerage firm for such resales or other transfers.
16.2 Unfunded
Obligation
Any amounts (deferred or otherwise) to be paid to Participants
pursuant to the Plan are unfunded obligations. The Company is
not required to segregate any monies from its general funds, to
create any trusts or to make any special deposits with respect
to this obligation. Beneficial ownership of any investments,
B-18
including trust investments which the Company may make to
fulfill this obligation, shall at all times remain in the
Company. Any investments and the creation or maintenance of any
trust or any Participant account shall not create or constitute
a trust or a fiduciary relationship between the Committee or the
Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participants
Beneficiary or the Participants creditors in any assets of
the Company whatsoever. The Participants shall have no claim
against the Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect
to the Plan.
16.3 Beneficiary
The designation of a Beneficiary shall be on a form provided by
the Company, executed by the Participant (with the consent of
the Participants spouse, if required by the Company for
reasons of community property or otherwise), and delivered to a
designated representative of the Company. A Participant may
change his or her Beneficiary designation at any time. A
designation by a Participant under a predecessor plan shall
remain in effect under this Plan unless it is revoked or changed
under this Plan. If no Beneficiary is designated, if the
designation is ineffective, or in the event the Beneficiary dies
before the balance of the Memorandum Deferred Account is paid,
the balance shall be paid to the Participants spouse, or
if there is no surviving spouse, to his or her lineal
descendants, pro rata, or if there is no surviving spouse or
lineal descendants, to the Participants legal
representatives, the Participants estate or the person or
persons to whom the deceaseds rights under the Plan shall
have passed by will or the laws of descent and distribution
(unless the Committee for a given year has designated investment
in an annuity, in which case the payment options selected by the
Participant with respect thereto shall govern).
16.4 Permanent
Disability
A Participant shall be deemed to have become Permanently
Disabled if the Participant (i) is unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, or
(ii) is, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than
twelve (12) months, receiving income replacement benefits
for a period of not less than three (3) months under an
accident and health plan of the Company.
16.5 Incapacity
of Participant or Beneficiary
If the Committee finds that any Participant or Beneficiary to
whom a payment is payable under the Plan is unable to care for
his or her affairs because of illness or accident or is under a
legal disability, any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal representative),
at the discretion of the Committee, may be paid to the spouse,
child, parent, brother or sister of such Participant or
Beneficiary or to any person whom the Committee has determined
has incurred expense for such Participant or Beneficiary. Any
such payment shall be a complete discharge of the obligations of
the Company under the provisions of the Plan.
16.6 Nonassignment
Unless otherwise provided in the Plan, the right of a
Participant or Beneficiary to the payment of any Award granted
under the Plan and the rights and privileges conferred thereby
shall not be subject to execution, attachment or similar process
and may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than
by will or by the applicable laws of descent and distribution
unless the Participant has received the Companys prior
written consent. Except as otherwise provided for under the
Plan, if any Participant attempts to transfer, assign, pledge,
hypothecate or otherwise dispose of any Award under the Plan or
of any right or privilege conferred thereby, contrary to the
provisions of the Plan or such Award, or suffers the sale or
levy or any attachment or similar process upon the rights and
privileges conferred hereby, all affected Awards held by such
Participant shall be immediately forfeited.
B-19
16.7 Termination
and Amendment
Except as otherwise determined by the Board, the Committee may
from time to time make such amendments to the Plan as it may
deem proper and in the best interest of the Company, including,
but not limited to, any amendment necessary to ensure that the
Company may obtain any regulatory approval referred to above;
provided, however, that to the extent required by applicable
law, regulation or stock exchange rule, stockholder approval
shall be required. Subject to Section 409A, the Board may
at any time suspend the operation of or terminate the Plan. No
amendment, suspension or termination may impair the right of a
Participant or the Participants designated Beneficiary to
receive benefits accrued prior to the effective date of such
amendment, suspension or termination.
16.8 Applicable
Law
The Plan shall be construed and governed in accordance with the
laws of the State of Texas.
16.9 Effective
Date and Term of the Plan
The Plan was adopted by the Board on February 12, 2008, and
is subject to approval by the Companys stockholders. If
approved by the stockholders, this Plan will replace the
1998 Director Stock Plan (as amended) and no further awards
will be made under that plan. This Plan shall become effective
on the Effective Date, and shall remain in effect, subject to
the right of the Board to terminate the Plan at any time
pursuant to Section 16.7, until the date immediately
preceding the tenth (10th) anniversary of the Effective Date of
the Plan. No Awards shall be granted under this Plan after such
date.
16.10 Compliance
With Section 16(b) of the Exchange Act
The Companys intention is that, so long as any of the
Companys equity securities are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, with respect to
awards of Common Stock, the Plan shall comply in all respects
with any exemption pursuant to Section 16(b) promulgated
under Section 16 of the Exchange Act. If any Plan provision
is later found not to be in compliance with such exemptions
available pursuant to Section 16(b) of the Exchange Act,
that provision shall be deemed modified as necessary to meet the
requirements of Section 16(b).
16.11 Section 409A
The Plan is intended to be administered, operated and construed
in compliance with Section 409A and any guidance issued
thereunder. Notwithstanding this or any other provision of the
Plan to the contrary, the Board and the Committee may amend the
Plan in any manner, or take any other action, that either of
them determines, in its sole discretion, is necessary,
appropriate or advisable to cause the Plan to comply with
Section 409A and any guidance issued thereunder. Any such
action, once taken, shall be deemed to be effective from the
earliest date necessary to avoid a violation of
Section 409A and shall be final, binding and conclusive on
all Participants and other individuals having or claiming any
right or interest under the Plan. With respect to any Award
granted under the Plan that is subject to Section 409A,
cessation of service or ceasing to be a member
of the Board shall mean the Eligible Directors
separation from service, as defined in
Section 1.409A-1(h)
of the Final Treasury Regulations promulgated under
Section 409A, including the default presumptions thereunder.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed effective as of [May , 2008].
ANADARKO PETROLEUM CORPORATION
James T. Hackett
Chairman, President and Chief Executive Officer
B-20
SHAREHOLDER
SERVICES
1201 LAKE ROBBINS DRIVE
THE WOODLANDS, TX 77380
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ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, BOTH
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VOTE BY PHONE 1-800-690-6903
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Anadarko Petroleum
Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
ANADARKO PETROLEUM CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ITEMS 1, 2, 3 AND 4 AND AGAINST ITEMS
5 AND 6.
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ELECTION OF DIRECTORS |
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01) John R. Butler, Jr.
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02) Luke R. Corbett |
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03) John R. Gordon |
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Vote on Proposals |
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2. |
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RATIFICATION OF APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS |
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o |
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o |
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o |
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3. |
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APPROVAL OF 2008 OMNIBUS INCENTIVE COMPENSATION PLAN |
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o |
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o |
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4. |
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APPROVAL OF 2008 DIRECTOR COMPENSATION PLAN |
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o |
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o |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 5 AND 6. |
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5. |
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STOCKHOLDER PROPOSAL DECLASSIFICATION OF BOARD |
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o |
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o |
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6. |
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STOCKHOLDER PROPOSAL AMENDMENT TO NON-DISCRIMINATION POLICY |
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The shares represented by this proxy when properly executed will be voted in the
manner directed herein by the undersigned
Stockholder(s). If no direction is made, this proxy will be voted FOR items 1, 2, 3 and 4
and AGAINST items 5 and 6. If any other
matters properly come before the meeting, or if cumulative voting is required, the person
named in this proxy will vote in their discretion.
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For address changes and/or comments, please check this box and write them on the back where indicated.
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Yes
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No |
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Please indicate if you plan to attend this meeting.
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o
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o |
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Each
signatory to this proxy acknowledges receipt from Anadarko Petroleum
prior to execution of this proxy a notice of Annual Meeting of
Stockholders and a Proxy Statement dated April 4, 2008. |
Please sign your name exactly as it appears hereon.
When signing as attorney, executor, administrator,
trustee or guardian, please add your title as such.
When signing as joint tenants, all parties in the joint
tenancy must sign. If a signer is a corporation, please
sign in full corporate name by duly authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
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Important
Notice Regarding Internet Availability of Proxy Materials for the
Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at:
http://bnymellon.mobular.net/bnymellon/apc
ANADARKO PETROLEUM CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS
MAY 20, 2008
The undersigned hereby appoint(s) James T. Hackett, R.A. Walker and Robert K. Reeves, and each
of them, as proxies, each
with the power to appoint his substitute, and hereby authorizes them to represent and to vote,
as designated on the reverse side of
this ballot, all of the shares of Common Stock of Anadarko Petroleum Corporation that the
undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held at 8:00 am, Central Daylight Time on May 20, 2008, at The
Woodlands Resort and Conference
Center, and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO SUCH
DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE
REVERSE SIDE
FOR THE BOARD OF DIRECTORS AND FOR EACH PROPOSAL.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE