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:
|
|
|
o
|
|
Preliminary Proxy Statement |
o
|
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ
|
|
Definitive Proxy Statement |
o
|
|
Definitive Additional Materials |
o
|
|
Soliciting Material Pursuant to §240.14a-12 |
Apache 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):
|
|
|
þ
|
|
No fee required. |
o
|
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined): |
|
|
|
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
Fee paid previously with preliminary materials. |
|
|
|
o
|
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
APACHE
CORPORATION
One Post Oak Central
2000 Post Oak Boulevard, Suite 100
Houston, Texas
77056-4400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2010 annual meeting of stockholders of Apache Corporation, a
Delaware corporation, will be held on Thursday, May 6,
2010, at 10:00 a.m. (Houston time), at the Hilton Houston
Post Oak, 2001 Post Oak Boulevard, Houston, Texas, for the
following purposes:
|
|
|
|
1.
|
Election of three directors named in the attached proxy
statement to serve until the Companys annual meeting in
2013;
|
|
|
2.
|
Ratification of Ernst & Young LLP as the
Companys independent auditors for fiscal year
2010; and
|
|
|
3.
|
Transaction of any other business that may properly come before
the meeting or any adjournment thereof.
|
The board of directors recommends stockholders vote FOR the
election of directors and FOR ratification of the Companys
independent auditors.
Holders of record of the Companys common stock as of the
close of business on March 8, 2010 are entitled to notice
of, and to vote at, the annual meeting.
It is important that your shares are represented at the meeting.
We encourage you to designate the proxies named on the enclosed
proxy card to vote your shares on your behalf and per your
instructions. This action does not limit your right to vote in
person or to attend the meeting.
By order of the Board of Directors
APACHE CORPORATION
C. L. Peper
Corporate Secretary
Houston, Texas
March 31, 2010
Important
Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Stockholders to be held on May 6,
2010:
This
proxy statement, along with the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 and the 2009
Summary Annual Report, are available free of
charge on the Companys website at
http://www.apachecorp.com
Proxy
Statement Table of Contents
|
|
|
|
|
|
|
Page
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
11
|
|
|
|
|
14
|
|
|
|
|
17
|
|
|
|
|
18
|
|
|
|
|
20
|
|
|
|
|
23
|
|
|
|
|
24
|
|
|
|
|
25
|
|
|
|
|
26
|
|
|
|
|
29
|
|
|
|
|
45
|
|
|
|
|
46
|
|
|
|
|
53
|
|
|
|
|
55
|
|
|
|
|
56
|
|
|
|
|
57
|
|
|
|
|
58
|
|
|
|
|
60
|
|
|
|
|
61
|
|
|
|
|
63
|
|
|
|
|
64
|
|
|
|
|
65
|
|
|
|
Note: |
Throughout this proxy statement, references to the stock
split relate to the
two-for-one
stock split of Apache common stock distributed in shares of
common stock on January 14, 2004, to stockholders of record
on December 31, 2003, and references to the stock
dividends relate to the five-percent stock dividend on
Apache common stock distributed in shares of common stock on
April 2, 2003, to stockholders of record on March 12,
2003, and to the ten-percent stock dividend on Apache common
stock distributed in shares of common stock on January 21,
2002, to stockholders of record on December 31, 2001.
|
APACHE
CORPORATION
One Post Oak Central
2000 Post Oak Boulevard, Suite 100
Houston, Texas
77056-4400
March 31, 2010
PROXY
STATEMENT
General
This proxy statement contains information about the 2010 annual
meeting of stockholders of Apache Corporation. In this proxy
statement both Apache and the Company
refer to Apache Corporation. This proxy statement and the
enclosed proxy card are being mailed to you by the
Companys board of directors starting on or about
March 31, 2010.
Purpose
of the Annual Meeting
At the Companys annual meeting, stockholders will vote on
the election of directors, ratification of Ernst &
Young LLP as the Companys independent auditors, and on any
other business that properly comes before the meeting. As of the
date of this proxy statement, the Company is not aware of any
other business to come before the meeting. There are no rights
of appraisal or similar rights of dissenters arising from
matters to be acted on at the meeting.
Who Can
Vote
Only stockholders of record holding shares of Apache common
stock at the close of business on the record date, March 8,
2010, are entitled to receive notice of the annual meeting and
to vote the shares of Apache common stock they held on that
date. The Companys stock transfer books will not be
closed. A complete list of stockholders entitled to vote at the
annual meeting will be available for examination by any Apache
stockholder at 2000 Post Oak Boulevard, Suite 100, Houston,
Texas, for purposes relating to the annual meeting, during
normal business hours for a period of ten days before the
meeting.
As of February 28, 2010, there were 336,736,949 shares
of Apache common stock issued and outstanding. Holders of Apache
common stock are entitled to one vote per share and are not
allowed to cumulate votes in the election of directors. The
enclosed proxy card shows the number of shares that you are
entitled to vote.
On December 30, 2009, Apache elected to redeem all of its
outstanding 5.68% Cumulative Preferred Stock, Series B (the
Series B Preferred Stock) and all of its
Depositary Shares, each representing one-tenth of one share of
Series B Preferred Stock. As a result, on December 31,
2009, there were no outstanding shares of Series B
Preferred Stock. While the Depositary Shares were outstanding,
the holders were not entitled to any voting rights, except under
certain circumstances related to non-payment of dividends on the
Series B Preferred Stock. All dividend payments on the
Series B Preferred Stock have been made.
How to
Vote
If your shares of Apache common stock are held by a broker, bank
or other nominee (in street name), you will receive
instructions from them on how to vote your shares. If your
shares are held by a broker and you do not give the broker
specific instructions on how to vote your shares, your
1
shares will not be voted on any non-routine matters to be acted
upon at the annual meeting, including the election of directors.
If you hold shares of Apache common stock in your own name (as a
stockholder of record), you may give the Company
instructions on how your shares are to be voted by:
|
|
|
|
(1)
|
using the internet voting site or the toll-free telephone number
listed on the enclosed proxy card (specific directions for using
the internet and telephone voting systems are shown on the proxy
card); or
|
|
|
(2)
|
marking, signing, dating and returning the enclosed proxy card
in the postage-paid envelope provided.
|
When using internet or telephone voting, the voting systems will
verify that you are a stockholder through the use of a company
number for Apache and a unique control number for you. If
you vote by internet or telephone, please do not also mail the
enclosed proxy card.
Whichever method you use to transmit your instructions, your
shares of Apache common stock will be voted as you direct. If
you sign and return the enclosed proxy card or otherwise
designate the proxies named on the proxy card to vote on your
behalf, but do not specify how to vote your shares, they will be
voted FOR the election of the nominees for director and
FOR ratification of Ernst & Young LLP as the
Companys independent auditors. If other matters of
business not presently known are properly raised at the meeting,
the proxies will vote on the matters in accordance with their
best judgment.
Voting
401(k) Plan Shares
If you are an employee or former employee participating in the
Apache 401(k) Savings Plan and have shares of Apache common
stock credited to your plan account as of the record date, such
shares are shown on the enclosed proxy card and you have the
right to direct the plan trustee regarding how to vote those
shares. The trustee for the 401(k) plan is Fidelity Management
Trust Company.
The trustee will vote the shares in your plan account in
accordance with your instructions. If you do not send
instructions (by voting your shares as provided above under
How to Vote) or if your proxy card is not received
by May 4, 2010, the shares credited to your account will be
voted by the trustee in the same proportion as it votes shares
for which it did receive timely instructions.
Revoking
a Proxy
You may revoke a proxy before it is voted by submitting a new
proxy with a later date (by internet, telephone or mail), by
voting at the meeting, or by filing a written revocation with
Apaches corporate secretary. Your attendance at the annual
meeting alone will not automatically revoke your proxy.
Quorum
The presence at the annual meeting, in person or by proxy, of
the holders of a majority of the shares of Apache common stock
outstanding on the record date will constitute a quorum,
permitting the business of the meeting to be conducted.
Votes
Needed
Election of Directors. In December
2006, the Companys bylaws were amended to provide for the
election of directors by majority vote. Thus, the affirmative
vote of a majority of the votes cast at the
2
annual meeting is required for the election of directors. Only
votes FOR or WITHHELD count. Abstentions and broker non-votes
count for quorum purposes, but not for purposes of the election
of directors.
Other Business. The affirmative vote of
a majority of the votes cast at the annual meeting is also
required for ratification of Ernst & Young LLP as the
Companys independent auditors, and for approval of any
other business which may properly come before the meeting or any
adjournment thereof. Only votes FOR or AGAINST these proposals
count. Abstentions and broker non-votes count for quorum
purposes, but not for the voting on these proposals.
How the
Votes are Counted
Representatives of Wells Fargo Bank, N.A. will tabulate the
votes and act as inspectors of election. A properly signed proxy
marked to abstain with respect to the election of
one or more directors will be counted for quorum purposes but
not for voting purposes. An abstention does not have the effect
of a vote against the election of a director or for or against
the ratification of Ernst & Young LLP as the
Companys independent auditors.
If you hold your shares in street name through a
broker or other nominee, your broker or nominee may or may not
have discretionary authority to vote certain of your shares of
Apache common stock on a given matter. If your shares are held
by a broker and you do not give the broker specific instructions
on how to vote your shares, your shares will not be voted on any
non-routine matters to be acted upon at the annual meeting,
including the election of directors. However, the shares of
Apache common stock represented by such broker
non-votes will be counted for quorum purposes.
ELECTION
OF DIRECTORS
(ITEM NOS. 1-3 ON PROXY CARD)
The Companys certificate of incorporation provides that,
as near as numerically possible, one-third of the directors
shall be elected at each annual meeting of stockholders. Unless
directors earlier resign or are removed, their terms are for
three years, and continue thereafter until their successors are
elected and qualify as directors.
The present terms of directors Eugene C. Fiedorek, Patricia
Albjerg Graham, and F. H. Merelli will expire at the 2010 annual
meeting. Mr. Fiedorek, Dr. Graham, and
Mr. Merelli have been recommended by the Companys
Corporate Governance and Nominating Committee and nominated by
the board of directors for election by the stockholders to an
additional three-year term. If elected, Mr. Fiedorek,
Dr. Graham, and Mr. Merelli will serve beginning upon
election until the annual meeting of stockholders in 2013.
Unless otherwise instructed, all proxies will be voted in favor
of these nominees. If one or more of the nominees is unwilling
or unable to serve, the proxies will be voted only for the
remaining named nominees. Proxies cannot be voted for more than
three nominees. The board of directors knows of no nominee for
director who is unwilling or unable to serve.
The board of directors recommends that you vote FOR the
election of directors.
3
NOMINEES
FOR ELECTION AS DIRECTORS
Biographical information, including principal occupation and
business experience during the last five years, of each nominee
for director, is set forth below. Unless otherwise stated, the
principal occupation of each nominee has been the same for the
past five years. In addition, each nominees experience,
qualifications, attributes or skills to serve on our board are
discussed under the heading Qualifications of
Directors below.
EUGENE C. FIEDOREK, 78, a private investor, joined the
Companys board of directors in 1988. Formerly,
Mr. Fiedorek was a founder and managing director of EnCap
Investments L.C., a Dallas, Texas, energy investment banking
firm, from 1988 until March 1999, when EnCap was acquired by
El Paso Energy. Prior to founding EnCap, Mr. Fiedorek
was the managing director of the Energy Banking Group of First
RepublicBank Corp. in Dallas, Texas, from 1978 to 1988. At
Apache, he is a member of the Audit Committee.
PATRICIA ALBJERG GRAHAM, 74, joined the Companys
board of directors in September 2002. Dr. Graham is the
Charles Warren Professor of the History of Education, Emerita at
Harvard University. She joined the faculty of Harvard Graduate
School of Education in 1974 and served as its dean from 1982 to
1991. From 1991 to 2000, she served as president of the Spencer
Foundation, the nations leading funder of research into
educational improvement. Dr. Graham is a director of
Central European University, Smolny College of St. Petersburg
State University, Russia, and the Josiah Macy, Jr.
Foundation. Dr. Graham also serves as Chair of the Board of
Trustees of The Carnegie Foundation for the Advancement of
Teaching, having previously served on the Carnegie Board from
1984 through 1992. At Apache, she is a member of the Corporate
Governance and Nominating Committee.
F. H. MERELLI, 72, joined the Companys board
of directors in 1997. Mr. Merelli has served as chairman of
the board, chief executive officer, president, and a director of
Cimarex Energy Co., a Denver, Colorado, independent oil and gas
exploration and production company, since September 30,
2002, the date of Cimarexs acquisitions of Key Production
Company, Inc. and the exploration and production division of
Helmerich & Payne, Inc. He served as chairman of the
board and chief executive officer of Key from 1992 until October
2002, and as Keys president from 1992 to September 1999
and again from March 2002 to October 2002. Prior to joining Key,
Mr. Merelli served as Apaches president and chief
operating officer from 1988 to 1991. Prior to joining Apache, he
was president of Terra Resources, Inc., a Tulsa, Oklahoma, oil
and gas company from 1979 to 1988. At Apache, Mr. Merelli
is a member of the Audit Committee and the Executive Committee.
4
CONTINUING
DIRECTORS
Biographical information, including principal occupation and
business experience during the last five years, for each
continuing member of the board of directors whose term is not
expiring at the 2010 annual meeting, is set forth below. Unless
otherwise stated, the principal occupation of each director has
been the same for the past five years. In addition, each
directors experience, qualifications, attributes or skills
to serve on our board are discussed under the heading
Qualifications of Directors below.
|
|
|
|
|
|
|
Term
|
|
|
|
Expires
|
|
|
FREDERICK M. BOHEN, 72, joined the Companys board
of directors in 1981. Mr. Bohen has served The Rockefeller
University as senior advisor to the president since his
retirement in November 2005, as executive vice president from
February 2002 to November 2005, and as chief operating officer
from 1990 through September 1999. He was senior vice president
of Brown University from 1983 to 1990, and he served as vice
president of finance and operations at the University of
Minnesota from 1981 to 1983. Mr. Bohen was with the U.S.
Department of Health and Human Services as assistant secretary
for management and budget from 1977 to 1981. He is a director of
American Council of Learned Societies and a member of its
executive committee, a director of the Polish American Freedom
Foundation and chairman of its investment committee, and a
director of the TEAK Fellowship, a
not-for-profit
organization that mentors and assists gifted adolescent children
from disadvantaged circumstances. At Apache, he is chairman of
the Management Development and Compensation Committee and
chairman of the Stock Option Plan Committee.
|
|
|
2012
|
|
G. STEVEN FARRIS, 61, who joined the Companys board
of directors in 1994, was appointed chairman of the board on
January 15, 2009, and has served as chief executive officer
since May 2002. Mr. Farris also served the Company as
president and chief operating officer from May 1994 until
February 12, 2009, as senior vice president from 1991 to
1994, and as vice president exploration and
production from 1988 to 1991. Prior to joining Apache,
Mr. Farris was vice president of finance and business
development for Terra Resources, Inc., a Tulsa, Oklahoma oil and
gas company, from 1983 to 1988. He is co-chairman of the
U.S.-Egypt
Business Council, a member of the Board of Visitors of M.D.
Anderson Cancer Center, Houston, Texas, and is a founding member
and serves on the executive committee of Americas Natural
Gas Alliance (ANGA). At Apache, Mr. Farris is a
member of the Executive Committee.
|
|
|
2011
|
|
RANDOLPH M. FERLIC, 72, a private investor, joined the
Companys board of directors in 1986. Dr. Ferlic
retired in December 1993 from his practice as a thoracic and
cardiovascular surgeon. Dr. Ferlic is the founder of
Surgical Services of the Great Plains, P.C. and served as
its president from 1974 to 1993. He has been a Regent of the
University of Nebraska since November 2000, and was chairman of
its audit committee until March 2008, at which time he became,
and continues to serve as, vice chairman. Dr. Ferlic serves
as a director of the Nebraska Medical Center and chairman of its
audit committee, as well as commissioner for the Midwestern
Higher Education Compact. At Apache, he is chairman of the Audit
Committee and a member of the Executive Committee.
|
|
|
2011
|
|
5
|
|
|
|
|
|
|
Term
|
|
|
|
Expires
|
|
|
A. D. FRAZIER, JR., 65, joined the board of directors of
the Company in 1997. Mr. Frazier is a co-founder and vice
chairman of BOTH Holdings, LLC, and owner and chairman of
WolfCreek Broadcasting, Inc., Young Harris, Georgia. He has
served as chairman and chief executive officer of Danka Business
Systems PLC, St. Petersburg, Florida, since March 2006, and was
of Counsel with the law firm of Balch & Bingham LLP,
Atlanta, Georgia, from January 2005 to March 2006.
Mr. Frazier retired as a director, president, and chief
operating officer of Caremark Rx, Inc., a publicly-traded
pharmacy benefit management company, in March 2004, having
served in that role since August 2002. From March 2001 until
August 2002, he was chairman and chief executive officer of the
Chicago Stock Exchange. From October 2004 until its sale in
January 2007, he was a director and chairman of the board of
Gold Kist, Inc., Atlanta, Georgia, an integrated chicken
production, processing, and marketing company. At Apache,
Mr. Frazier is a member of the Management Development and
Compensation Committee and the Stock Option Plan Committee.
|
|
|
2011
|
|
JOHN A. KOCUR, 81, joined the Companys board of
directors in 1977. Mr. Kocur, who is retired from the
private practice of law, served as vice chairman of the
Companys board of directors from 1988 to 1991. At Apache,
he currently serves as chairman of the Executive Committee, a
member of the Corporate Governance and Nominating Committee, and
a member of the Management Development and Compensation
Committee.
|
|
|
2011
|
|
GEORGE D. LAWRENCE, 59, a private investor, joined the
Companys board of directors in May 1996. Mr. Lawrence
was president, chief executive officer and a director of The
Phoenix Resource Companies, Inc., a public oil and gas company,
from 1990 until May 1996, when Phoenix merged with Apache. At
Apache, he is a member of the Executive Committee and the
Management Development and Compensation Committee.
|
|
|
2012
|
|
RODMAN D. PATTON, 66, joined the Companys board of
directors in December 1999. Mr. Patton has nearly
30 years experience in oil and gas investment banking and
corporate finance activity, including serving as managing
director of the Merrill Lynch Energy Group from 1993 until April
1999. Previously, he was with The First Boston Corporation
(later Credit Suisse First Boston) and Eastman Dillon, Union
Securities (later Blyth Eastman Dillon). Mr. Patton is a
director of NuStar GP, LLC (formerly Valero GP, LLC),
San Antonio, Texas, and is chairman of its audit committee
and a member of its compensation committee. NuStar GP LLC is the
general partner of NuStar Energy LP (formerly Valero LP), owner
and operator of crude oil and refined products pipeline,
terminalling, and storage assets. At Apache, Mr. Patton is
a member of the Audit Committee.
|
|
|
2012
|
|
6
|
|
|
|
|
|
|
Term
|
|
|
|
Expires
|
|
|
CHARLES J. PITMAN, 67, joined the Companys board of
directors in May 2000. Mr. Pitman served as a non-executive
director and chairman of Urals Energy Public Company Limited, an
oil exploration and production company operating in Russia, from
September 2005 until January 2009, chairman of the board of
First Calgary Petroleums Ltd., an oil and gas exploration
company engaged in exploration and development activities in
Algeria, from June 2007 to March 2008, and was sole member of
Shaker Mountain Energy Associates LLC from September 1999 to
November 2007. He retired from BP Amoco plc in late 1999, having
served as regional president Middle
East/Caspian/Egypt/India. Prior to the merger of British
Petroleum and Amoco Corporation in 1998, Mr. Pitman held a
variety of executive positions at Amoco. At Apache,
Mr. Pitman is chairman of the Corporate Governance and
Nominating Committee.
|
|
|
2012
|
|
RETIREMENT
OF RAYMOND PLANK
On January 15, 2009, Mr. Raymond Plank retired as
chairman of the board and as a director and employee of the
Company. Mr. Plank founded the Company in 1954, and served
as chairman of the board since 1979, having been a director
since inception. He served as the Companys chief executive
officer from 1966 until May 2002, and as president from 1954 to
1979. For additional information regarding Mr. Planks
retirement, please see the Compensation Discussion and Analysis
section of this proxy statement.
7
QUALIFICATIONS
OF DIRECTORS
In selecting our directors and director nominees, the Corporate
Governance and Nominating (CG&N) Committee has
sought to create a board with a broad and balanced set of
skills, complimented by diversity of experience and expertise.
As is evidenced by the biographical information set forth above,
each director contributes his or her own unique background which
has led the CG&N Committee to conclude that the Company and
our stockholders will benefit from the directors service
on the Companys board. It is equally important that the
particular skill sets of each director complement the
experience, qualifications, attributes and skills of our board
of directors as a whole. In addition to the qualifications
described in the preceding biographical information, the
following is a discussion of the particular experience,
qualifications, attributes or skills of each director that led
our board to conclude that he or she will contribute to the
diversity of experience and expertise required for the effective
functioning of our board.
EUGENE C. FIEDOREK After working as a petroleum reservoir
engineer at Shell Oil Company and British American Oil Producing
Company for eight years, Mr. Fiedorek spent 37 years
in the oil and gas investment banking and banking industries. As
managing director of both EnCap Investments and the Energy
Banking Group of First RepublicBank, he gained extensive
experience in advising oil and gas companies on their capital
structure and strategic direction. Through these positions,
Mr. Fiedorek gained valuable experience in identifying,
assessing, and minimizing risk that can affect large oil and gas
companies. These positions also provided him with the financial
reporting expertise necessary for his role on Apaches
audit committee.
PATRICIA ALBJERG GRAHAM Prior to her appointment as dean
of Harvard Universitys Graduate School of Education in
1982, Dr. Graham served as dean of the Radcliffe Institute,
vice president for Institutional Planning for Radcliffe College,
and vice president of Radcliffe College. In 1977,
Dr. Graham, a leading historian of American education, left
her positions at Radcliffe College upon her appointment by
then-President Jimmy Carter to serve as the director of the
National Institute of Education, then the federal
governments education research agency, a position in which
she served until 1979. Throughout her career, Dr. Graham
has held a variety of leadership and policy-making roles in the
area of education. In her service as dean of Harvard Graduate
School of Education and vice president of Radcliffe College,
Dr. Graham was responsible for, among other things, the
management, structure, and
day-to-day
operations of these premiere educational institutions.
Dr. Graham also served on the board of Northwestern Mutual
Life Insurance Company from
1980-2005
and, for most of that period, she served on the management
compensation and public policy committee of the board.
F. H. MERELLI Mr. Merelli has spent more than
30 years in key executive and director positions in the oil
and gas industry. His extensive experience leading oil and gas
companies in the capacities of president, chief executive
officer, and chairman of the board has provided a wealth of
knowledge and understanding of the intricacies of the oil and
gas industry. Through these positions, Mr. Merelli has
gained valuable experience in identifying, assessing, and
managing risk that can affect large oil and gas companies,
including Apache. Although Mr. Merelli served as president
and chief operating officer of Apache for just three years, his
impact on the Company was considerable. Many of the management
and incentive systems that he and Mr. Farris put into place
upon his arrival at Apache 20 years ago remain in place
today, as do many of the management personnel they brought to
the Company.
8
FREDERICK M. BOHEN Throughout his career, Mr. Bohen
has held executive-level leadership roles and been responsible
for the finance and operations of large, complex organizations.
As senior vice-president of Brown University in the 1980s,
an Ivy League school and a premier university college, he was
responsible for all aspects of business operations, including
finance, budget, human resources, and facilities. As executive
vice-president and chief operating officer of the Rockefeller
University during the period
1990-2005,
Mr. Bohen was responsible for all aspects of the operations
of this world-renowned center for research and graduate training
in the biomedical sciences, including human resources, finance,
capital projects, facilities, and the management of an annual
operating budget exceeding $250 million. In these roles
over more than two decades, he was steadily involved in the
recruitment and retention of officer-level talent and the
development of related compensation policies and programs. With
broad leadership responsibility in these institutions for
finance over the same period, Mr. Bohen acquired the
experience and judgment useful in identifying, assessing and
minimizing financial and other risks and uncertainties in the
leadership and direction of complex organizations. He has also
served as a Director of Oppenheimer and Company; of the Student
Loan Marketing Association (Sallie Mae), where he
chaired the Boards compensation committee; of the College
Construction Loan Insurance Association (Connie
Lee); and of the Mexico Equity Income Fund, Inc.
G. STEVEN FARRIS Mr. Farris 27 years
experience in the oil and gas industry coupled with his
15 years of direct leadership at Apache provide him with
valuable insight not only into the oil and gas industry, but
also the unique
day-to-day
operations of Apache. Throughout his career, Mr. Farris has
held positions of increasing responsibility in the oil and gas
industry, culminating in his appointment as chief executive
officer of Apache in May 2002 and chairman of the board in
January 2009. Since being named as chief operating officer in
1994, Mr. Farris has been instrumental in growing the
Companys reserves by almost nine times to
2,367 million barrels of oil equivalent (MMboe)
and production to 600,000 barrels per day (b/d).
RANDOLPH M. FERLIC Dr. Ferlic has been involved in
research activities throughout his professional life, including
in-depth analysis of data, probabilities, and risks. For his
work as a cardiovascular and thoracic surgeon, Dr. Ferlic
was awarded Legend status by the Nebraska Medical
Center. In addition to founding Surgical Services of the Great
Plains, from 1974 until 1994, Dr. Ferlic served as the
corporations president, was responsible for and managed
its finances, and was trustee and manager of the
corporations employee benefit plans. Dr. Ferlic has
twice been publicly elected to the University of Nebraska Board
of Regents and has served on the boards audit committee
since 2000. He serves as a director and executive committee
member on the Nebraska Medical Center Board, a large hospital
system, and is chair of the audit committee. Dr. Ferlic was
appointed by both Democrat and Republican governors to serve the
past 20 years as a commissioner for the Midwestern Higher
Education Compact, a 12-state policy and business compact for
all educational activities in those states. He served as
treasurer of the Compact from
1997-2000.
His service to both the Compact and the Nebraska Board of
Regents has involved shaping policies that help craft strategic
and global views. Over the years, Dr. Ferlic has acquired
over 300,000 shares of the Companys common stock for
himself and his family, which further aligns him with
stockholder interests.
9
A. D. FRAZIER, JR. In addition to the many executive
positions noted in his biographical information above,
Mr. Frazier spent a large part of his career as an
executive in the investment banking industry. He served as the
chief executive officer of INVESCO, Inc., an affiliate of an
independent global investment management firm, from 1997 to
2000. Mr. Frazier also served as executive vice president,
North American Banking Group, of First Chicago Corporation and
First National Bank of Chicago from 1982 to 1991, where, among
other numerous industry specialties, he oversaw the Banks
Oil & Gas specialty, which provided him with an
intimate knowledge of the oil and gas industry. He also served
as the chief operating officer of the Atlanta Olympic Games
Committee from 1991 to October 1996. During his career,
Mr. Frazier has gathered extensive experience as an
executive responsible for the development, management, and
operation of a diverse group of businesses and organizations.
Through these executive and director positions, Mr. Frazier
gathered extensive experience in identifying, analyzing, and
managing risk across a wide range of industries.
JOHN A. KOCUR Mr. Kocur was employed by Apache in
various roles from the time that the Companys stock was
first listed on the New York Stock Exchange in 1969 until his
retirement in 1991. During his tenure, Mr. Kocur served
Apache in various roles of increasing responsibility, including
serving as its general counsel, culminating in his appointment
as the Companys president in 1979. Mr. Kocur, as
president and later as vice chairman, was instrumental in
overseeing Apaches growth from a small drilling program
company to a leading independent, international oil and gas
company. Mr. Kocurs unparalleled experience with and
understanding of the Companys history and objectives
provide invaluable insight into the Companys past,
current, and future operations and management.
GEORGE D. LAWRENCE Mr. Lawrence began his oil and
gas career with the predecessor to The Phoenix Resource
Companies, Inc. in 1985, holding management positions with
increasing responsibility, culminating in his appointment as
president, chief executive officer, and a director of Phoenix in
1990 until 1996, when the company merged with Apache. During his
tenure as chief executive officer of Phoenix, Mr. Lawrence
gained valuable experience in corporate leadership in all
aspects of business including finance, securities, operations,
strategy and risk. At Phoenix and its predecessor,
Mr. Lawrence was extensively involved in international
operations that were spread over every continent and he was
especially instrumental in leading Phoenixs operations in
Egypt, an area that remains at the core of Apaches
operations today. Prior to entering the oil and gas business,
Mr. Lawrence engaged in a diversified private practice of
law and also served five years at the United States Department
of Justice, his last position there being the Assistant Chief of
the Environmental Enforcement Section.
10
RODMAN D. PATTON For over 25 years prior to joining
Apaches board of directors, Mr. Patton held various
executive positions in the oil and gas investment banking
industry. As a managing director at Merrill Lynch, First Boston
(later Credit Suisse) and other investment banks,
Mr. Patton has extensive experience advising oil and gas
companies on capital structure, strategy and direction. He also
gained valuable experience in the assessment and management of
risk faced by oil and gas companies. As a former investment
banker and as chairman of NuStar GPs audit committee,
Mr. Patton has extensive financial reporting expertise,
which serves him well in his role as a member of Apaches
audit committee.
CHARLES J. PITMAN Having served in executive and director
capacities at numerous oil and gas companies, Mr. Pitman
has gained invaluable experience in and knowledge of the oil and
gas industry. During his
24-year
career at Amoco Corporation and BP Amoco plc, Mr. Pitman
served in a variety of leadership positions in the United States
and multiple international locations, principally in the Middle
East. Notably, Mr. Pitman served as president of Amoco
Egypt Oil Company from 1992 to 1996, president of Amoco Eurasia
Petroleum Company from 1997 to 1998, regional president BP Amoco
plc Middle East/Caspian/Egypt/India and head of new
business development Middle East/Caspian from
December 1998 until his retirement in 1999. Most recently,
Mr. Pitman has utilized his considerable experience in
international oil and gas by participating in oil and gas
ventures in Russia and Algeria. Prior to joining Amoco,
Mr. Pitman served in the United States Department of State
as a Foreign Service Officer and Attorney-Adviser.
DIRECTOR
INDEPENDENCE
During 2009 and the first two months of 2010, the board of
directors evaluated all business and charitable relationships
between the Company and the Companys non-employee
directors (all directors other than Mr. Farris and
Mr. Raymond Plank, who served as chairman of the board
until his retirement on January 15, 2009) and all
other relevant facts and circumstances. As a result of the
evaluation, the board of directors determined, as required by
the Companys Governance Principles, that each non-employee
director is an independent director as defined by the standards
for director independence established by applicable laws, rules,
and listing standards including, without limitation, the
standards for independent directors established by The New York
Stock Exchange, Inc. (NYSE), The NASDAQ National
Market (NASDAQ), and the Securities and Exchange
Commission (SEC).
Subject to some exceptions, these standards generally provide
that a non-employee director will not be independent if
(a) the director is, or in the past three years has been,
an employee of the Company; (b) the director or a member of
the directors immediate family is, or in the past three
years has been, an executive officer of the Company;
(c) the director or a member of the directors
immediate family has received more than $120,000 per year in
direct compensation from the Company other than for service as a
director (or for a family member, as a non-executive employee);
(d) the director or a member of the directors
immediate family is, or in the past three years has been,
employed in a professional capacity by Ernst & Young
LLP, the Companys independent registered public
accountants, or has worked for such firm in any capacity on the
Companys audit; (e) the director or a member of the
directors immediate family is, or in the past three years
has been, employed as an executive officer of a company where an
Apache executive officer serves on the compensation committee;
or (f) the director or a member of the directors
immediate family is an executive officer of a company that makes
payments to, or receives payments from, Apache in an amount
which, in any twelve-month period during the past three years,
exceeds the greater of $200,000 or two percent of the
consolidated gross revenues of the company receiving the payment.
11
Lead
Director
The Companys Governance Principles require that the
independent (non-employee) directors meet in executive session
at least twice each year and, in 2009, they met six times in
executive session. These executive sessions are chaired by a
lead director. Also included in the Companys Governance
Principles are the procedures by which a lead director is chosen
and the method established for communication of concerns to the
independent directors. The Companys Governance Principles
are available on the Companys website (www.apachecorp.com).
Reporting
of Concerns to Independent Directors
Anyone who has concerns about the Company may communicate those
concerns to the independent directors. Such communication should
be mailed to the Companys corporate secretary at 2000 Post
Oak Boulevard, Suite 100, Houston, Texas
77056-4400,
who will forward such communications to the independent
directors.
Board
Leadership Structure and Risk Oversight
Throughout much of Apaches history, the Company has
ascribed to the traditional U.S. board leadership
structure, under which our chief executive officer has also
served as the chairman of our board of directors. From 1969
until 2002, both of these positions were held by our founder,
Mr. Raymond Plank. However, upon Mr. Raymond
Planks retirement as chief executive officer of the
Company in 2002, Mr. Farris was appointed as the
Companys chief executive officer and Mr. Raymond
Plank remained as the Companys chairman of the board. Upon
Mr. Planks retirement as chairman of the board in
January 2009, Mr. Farris was appointed the Companys
chairman of the board, once again unifying the roles of chairman
and chief executive officer. As Apaches history
demonstrates, we believe it is important to maintain the
flexibility to have either a combined or a separated chair and
CEO structure as circumstances dictate. Each structure has
served us well in the past. Currently, as we transform the
Company following retirement of its founder, we believe that the
efficiencies created by a combined position work best especially
with our newly created lead director position assuring strong
board leadership. Our board regularly reviews all the aspects of
our governance profile, including this one, and will make
changes as circumstances warrant. This is the model that the
Company has utilized for much of its history and we believe that
it is the most effective way to lead the Company going forward.
The Companys Governance Principles state that in addition
to its general oversight of management, the board of directors
is responsible for a number of specific functions, including
assessing major risks facing the Company and reviewing options
for their mitigation. Our board of directors has four standing
independent committees with separate chairs Audit,
Management Development and Compensation, Executive, and
Corporate Governance and Nominating. Our Audit Committee is
primarily responsible for overseeing the Companys risk
management processes on behalf of the board. The Audit Committee
charter provides that the Audit Committee should assess and
manage the Companys exposure to risk, and discuss the
Companys major financial risk exposure and the steps
management has taken to monitor, control, and report such
exposures. In addition, the Audit Committee reports to the board
of directors, which also considers the Companys risk
profile. The Audit Committee and the board of directors focus on
the most significant risks facing the Company, and the
Companys risk management strategy and ensure that the
risks undertaken are consistent with the boards tolerance
for risk. While the board is responsible for setting, monitoring
and maintaining the Companys risk management policies and
practices, the Companys executive officers and members of
our management team are responsible for implementing and
overseeing our
day-to-day
12
risk management processes. The board has created a Risk
Management Committee composed of members of our management team.
The Risk Management Committee monitors and manages risks related
to, among other things, our commodity hedging activities and
foreign currency exchange exposure. The Company believes that
this division of responsibility is the most effective way to
monitor and control risk.
In addition to the oversight provided by our full board of
directors, Audit Committee, executive officers and members of
our management team, our independent (non-employee) directors
hold regularly scheduled executive sessions as often as they
deem appropriate, but in any event at least twice each year.
These executive sessions are chaired by a lead director, and
provide an additional avenue through which we monitor the
Companys risk exposure and policies regarding risk
management.
Risk
Considerations in Our Compensation Programs
Our MD&C Committee has discussed the concept of risk as it
relates to our compensation programs, and the MD&C
Committee does not believe our compensation programs encourage
excessive or inappropriate risk taking. The MD&C Committee,
with assistance of its independent compensation consultant,
arrived at this conclusion for the following reasons:
|
|
|
Our employees receive both fixed and variable compensation. The
fixed (salary) portion provides a steady income regardless of
the Companys stock performance. This allows executives to
focus on the Companys business without an excessive focus
on the Companys stock price performance.
|
|
|
The goals for the annual cash incentive bonus are set to avoid
overweighting any single goal that, if not achieved, would
result in a large percentage loss of compensation.
|
|
|
Our stock options and restricted stock units generally vest over
four years, which discourages short-term risk taking.
|
|
|
Our new equity ownership requirements encourage a long-term
perspective by our executives.
|
|
|
A substantial portion of our executives long-term equity
compensation is forfeited upon voluntary termination, which also
encourages our executives to maintain a long-term focus.
|
|
|
Our incentive programs have been in place for many years and we
have seen no evidence that they encourage excessive risk taking.
|
|
|
Essentially all of our employees participate in our compensation
programs regardless of business unit which encourages consistent
behavior across the Company.
|
13
STANDING
COMMITTEES AND MEETINGS
OF THE BOARD OF DIRECTORS
The board of directors has an Audit Committee, a Corporate
Governance and Nominating (CG&N) Committee, a
Management Development and Compensation (MD&C)
Committee and its subcommittee, the Stock Option Plan Committee,
and an Executive Committee. Actions taken by these committees
are reported to the board of directors at the next board
meeting. During 2009, each of the Companys directors
attended at least 75 percent of all meetings of the board
of directors and committees of which he or she was a member. All
of the directors attended the Companys 2009 annual meeting
of stockholders held on May 7, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 MEMBERSHIP ROSTER
|
Name
|
|
|
Board
|
|
|
Audit
|
|
|
CG&N
|
|
|
MD&C
|
|
|
Stock Option
|
|
|
Executive
|
Frederick M. Bohen
|
|
|
ü
|
|
|
|
|
|
|
|
|
ü**
|
|
|
ü**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven Farris
|
|
|
ü*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randolph M. Ferlic
|
|
|
ü
|
|
|
ü**
|
|
|
|
|
|
|
|
|
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eugene C. Fiedorek
|
|
|
ü
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. D. Frazier, Jr.
|
|
|
ü
|
|
|
|
|
|
|
|
|
ü
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia Albjerg Graham
|
|
|
ü
|
|
|
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Kocur
|
|
|
ü
|
|
|
|
|
|
ü
|
|
|
ü
|
|
|
|
|
|
ü**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George D. Lawrence
|
|
|
ü
|
|
|
|
|
|
|
|
|
ü
|
|
|
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. H. Merelli
|
|
|
ü
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodman D. Patton
|
|
|
ü
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles J. Pitman
|
|
|
ü
|
|
|
|
|
|
ü**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond Plank
|
|
|
ü*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ü***
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Meetings in 2009
|
|
|
10
|
|
|
9
|
|
|
5
|
|
|
9
|
|
|
4
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Raymond Plank served as chairman of the board until his
retirement on January 15, 2009. Thereafter, G. Steven
Farris succeeded Mr. Plank as chairman. |
|
** |
|
Committee Chairman |
|
*** |
|
Raymond Plank served as a member of the Executive Committee
until his retirement on January 15, 2009. |
Audit
Committee
The Audit Committee reviews, with the independent public
accountants and internal auditors of the Company, their
respective audit and review programs and procedures and the
scope and results of their audits. It also examines professional
services provided by the Companys independent public
accountants and evaluates their costs and related fees.
Additionally, the Audit Committee reviews the Companys
financial statements and the adequacy of the Companys
system of internal controls over financial reporting. The Audit
Committee is also tasked with assessing and managing the
Companys
14
exposure to risk. The Audit Committee makes recommendations to
the board of directors concerning the Companys independent
registered public accountants and their engagement or discharge.
During 2009 and the first two months of 2010, the board of
directors reviewed the composition of the Audit Committee
pursuant to the rules of the NYSE and NASDAQ governing audit
committees. Based on this review, the board of directors
confirmed that all members of the Audit Committee are
independent under the NYSE and NASDAQ rules. During
2000, the Audit Committee adopted a charter, which was approved
by the board of directors on May 4, 2000, and which
reflects the NYSEs rules and the regulations of the SEC.
On February 4, 2004, the Audit Committee adopted an amended
and restated charter, which was approved by the board of
directors on February 5, 2004. The Audit Committee charter
is available on the Companys website (www.apachecorp.com).
The board of directors has determined that all members of the
Audit Committee qualify as financial experts, as defined in
Item 407 of
Regulation S-K
under the Securities Act of 1933.
MD&C
Committee
The MD&C Committee reviews the Companys management
resources and structure and administers the Companys
compensation programs and retirement, stock purchase and similar
plans. Under the provisions of its charter, the MD&C
Committee may, at its discretion and if allowed by applicable
laws or regulations, delegate all or a portion of its duties and
responsibilities to a subcommittee of the MD&C Committee
composed of at least two members. During 2009 and the first two
months of 2010, the board of directors reviewed the composition
of the MD&C Committee pursuant to the rules of the NYSE and
NASDAQ governing compensation committees. Based on this review,
the board of directors confirmed that all members of the
MD&C Committee are independent under the NYSE
and NASDAQ rules. The MD&C Committee charter is available
on the Companys website (www.apachecorp.com).
Stock Option
Plan Committee
The MD&C Committee has one standing subcommittee, the Stock
Option Plan Committee, the two members of which are
outside directors as defined by applicable federal
tax law or regulations of the Internal Revenue Service. The
duties of the Stock Option Plan Committee include the award and
administration of option grants under the Companys stock
option plans, of grants under the executive restricted stock
plan, of stock unit grants under the deferred delivery plan, of
conditional grants under the share appreciation plans, and of
grants under the Companys 2007 Omnibus Equity Compensation
Plan.
CG&N
Committee
The duties of the CG&N Committee include recommending to
the board of directors the slate of director nominees submitted
to the stockholders for election at the annual meeting and
proposing qualified candidates to fill vacancies on the board of
directors. The CG&N Committee is also responsible for
developing corporate governance principles for the Company,
reviewing related party transactions, and overseeing the
evaluation of the board of directors. During 2009 and the first
two months of 2010, the board of directors reviewed the
composition of the CG&N Committee pursuant to the rules of
the NYSE and NASDAQ governing governance committees. Based on
this review, the board of directors confirmed that all members
of the CG&N Committee are independent under the
NYSE and NASDAQ rules. The CG&N Committee charter is
available on the Companys website (www.apachecorp.com).
15
The CG&N Committee considers director nominee
recommendations from executive officers of the Company,
independent members of the board and stockholders of the
Company, and from other interested parties. The CG&N
Committee may also retain an outside search firm to assist it in
finding appropriate nominee candidates. Stockholder
recommendations for director nominees received by Apaches
corporate secretary (at the address for submitting stockholder
proposals and nominations set forth under the heading
Future Stockholder Proposals and Director
Nominations) are forwarded to the CG&N Committee for
consideration.
Executive
Committee
The Executive Committee is vested with the authority to exercise
the full power of the board of directors, within established
policies, in the intervals between meetings of the board of
directors. In addition to the general authority vested in it,
the Executive Committee may be vested with specific power and
authority by resolution of the board of directors.
Committee
Charters
As noted above, you can access electronic copies of the charters
of the committees of the board of directors on the
Companys website (www.apachecorp.com). Also available on
the Companys website are our Governance Principles and our
Code of Business Conduct which meets the requirements of a code
of ethics under applicable SEC regulations and NYSE and NASDAQ
standards. You may request printed copies of any of these
documents by writing to Apaches corporate secretary at
2000 Post Oak Boulevard, Suite 100, Houston, Texas
77056-4400.
16
CRITERIA
FOR NEW BOARD MEMBERS
AND RE-ELECTION OF BOARD MEMBERS
The CG&N Committee considers the following criteria in
recommending new nominees or the re-election of directors to the
Companys board of directors and its committees:
|
|
|
Expertise and perspective needed to govern the business and
strengthen and support senior management for
example: strong financial expertise, knowledge of international
operations, or knowledge of the petroleum industry
and/or
related industries.
|
|
|
Sound business judgment and a sufficiently broad perspective to
make meaningful contributions.
|
|
|
Interest and enthusiasm in the Company and a commitment to
become involved in its future.
|
|
|
The time and energy to meet board of directors commitments.
|
|
|
Constructive participation in discussions, with the capacity to
quickly understand and evaluate complex and diverse issues.
|
|
|
Dedication to the highest ethical standards.
|
|
|
Supportive of management, but independent, objective, and
willing to question and challenge both openly and in private
exchanges.
|
|
|
An awareness of the dynamics of change and a willingness to
anticipate and explore opportunities.
|
All decisions to recommend the nomination of a new nominee for
election to the board of directors or for the re-election of a
director are within the sole discretion of the CG&N
Committee.
All director nominations are evaluated and made based solely on
Company and work-related factors and not with regard to
candidates or directors inclusion in any protected
class or group identified in the Companys
anti-discrimination policy.
The above criteria and guidelines, together with the section of
the Companys Governance Principles entitled
Qualifications of Board Members constitute the
policy of the CG&N Committee regarding the recommendation
of new nominees or the re-election of directors to the
Companys board of directors or its committees. The
Companys Governance Principles are available on the
Companys website (www.apachecorp.com).
Company policy precludes directors and employees from
discriminating against any protected group. Company policy also
precludes directors and employees from basing work-related
decisions on anything other than work-relevant criteria. The
Companys approach to diversity complements these policies
without conflicting with them; our status as a global company
makes the need for board diversity in all its aspects essential
to our business. Our criteria for board selection, summarized in
this section, operates as our diversity policy.
17
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees the Companys financial
reporting process on behalf of the board of directors. The
Companys management has the primary responsibility for the
financial statements, for maintaining effective internal
controls over financial reporting, and for assessing the
effectiveness of internal controls over financial reporting. In
fulfilling its oversight responsibilities, the Audit Committee
reviewed and discussed the audited consolidated financial
statements in the Annual Report on
Form 10-K
with Company management, including a discussion of the quality,
not just the acceptability, of the accounting principles; the
reasonableness of significant judgments; and the clarity of
disclosures in the financial statements.
The Audit Committee reviewed with the independent registered
public accounting firm, which is responsible for expressing an
opinion on the conformity of those audited consolidated
financial statements with U.S. generally accepted
accounting principles, its judgments as to the quality, not just
the acceptability, of the Companys accounting principles
and such other matters as are required to be discussed with the
Audit Committee by Statement on Auditing Standards No. 61,
Communication with Audit Committees (as amended), other
standards of the Public Company Accounting Oversight Board
(United States), rules of the Securities and Exchange
Commission, and other applicable regulations. In addition, the
Audit Committee has discussed with the independent registered
public accounting firm the firms independence from Company
management and the Company, including the matters in the letter
from the firm required by PCAOB Rule 3526, Communication
with Audit Committees Covering Independence, and considered
the compatibility of non-audit services with the independent
registered public accounting firms independence.
The Audit Committee also reviewed managements report on
its assessment of the effectiveness of the Companys
internal controls over financial reporting as well as the
independent registered public accounting firms report on
the effectiveness of the Companys internal controls over
financial reporting.
The Audit Committee discussed with the Companys internal
auditors and independent registered public accounting firm the
overall scope and plans for their respective audits. At each of
the four Audit Committee meetings held in person during 2009,
the Audit Committee met with the internal auditors and the
independent registered public accounting firm, with and without
management present, to discuss the results of their
examinations, their evaluations of the Companys internal
controls, including internal controls over financial reporting,
and the overall quality of the Companys financial
reporting.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the board of directors, and
the board has approved, that the audited consolidated financial
statements and managements assessment of the effectiveness
of the Companys internal controls over financial reporting
be included in the Annual Report on
Form 10-K
for the year ended December 31, 2009, filed by the Company
with the Securities and Exchange Commission.
18
The Audit Committee is governed by a charter, which is available
on the Companys website (www.apachecorp.com). The Audit
Committee held nine meetings during fiscal year 2009, including
the four in-person meetings referenced above. The Audit
Committee is comprised solely of independent directors as
defined by the New York Stock Exchange and the NASDAQ National
Market listing standards and
Rule 10A-3
of the Securities Exchange Act of 1934, as amended.
|
|
|
February 23, 2010
|
|
Members of the Audit Committee
Randolph M. Ferlic, Chairman Eugene C. Fiedorek F. H. Merelli Rodman D. Patton
|
19
DIRECTOR
COMPENSATION
Non-Employee
Directors Compensation Plan and Share Ownership
Requirement
During 2009, under the terms of the non-employee directors
compensation plan, non-employee directors received an annual
cash retainer of $150,000 (with no separate meeting attendance
fees or retainer payable in shares), and the chairman of each
committee received an additional annual cash retainer of $15,000
for chairing that committee.
During 2009, under the terms of the Companys non-employee
directors compensation plan, non-employee directors could
defer receipt of all or any portion of their cash retainers.
Deferred cash amounts accrue interest equal to the
Companys rate of return on its short-term marketable
securities. Once each year, participating directors may elect to
transfer all or a portion of their deferred cash amounts into
the form of shares of Apache common stock. After such election,
amounts deferred in the form of Apache common stock accrue
dividends as if the stock were issued and outstanding when such
dividends were payable. All deferred amounts, as well as accrued
interest and dividends, are maintained in a separate memorandum
account for each participating non-employee director. Amounts
are paid out in cash
and/or
shares of Apache common stock, as applicable, upon the
non-employee directors retirement or other termination of
his or her directorship, or on a specific date, in a lump sum or
in annual installments over a ten-year (or shorter) period. One
non-employee director deferred all of his cash retainer fees
during 2009.
In February 2007, the Company adopted a minimum share ownership
requirement for non-employee directors. Within three years of
the later of the requirements adoption or joining the
board, each non-employee director is required to directly own
shares
and/or share
equivalents totaling at least 7,000 shares of the
Companys common stock. As of the date of this proxy
statement, each non-employee director directly owned shares
and/or share
equivalents totaling more than 7,000 shares of the
Companys common stock. See beneficial ownership
information under the heading Securities Ownership and
Principal Holders below.
Non-Employee
Directors Restricted Stock Units Program
In August 2008, the Company established the Non-Employee
Directors Restricted Stock Units Program (the RSU
Program), pursuant to the Companys 2007 Omnibus
Equity Compensation Plan. Each year, all non-employee directors
are eligible to receive grants of restricted stock units
comparable in value to the initial 1,500 restricted stock units
awarded under the RSU Program in 2008. However, in keeping with
the voluntary base salary reductions taken during 2009 by the
Companys top four officers, the non-employee directors
elected to reduce the value of each directors 2009 grant
under the RSU Program to approximately $112,500.
Each non-employee director was awarded 1,294 restricted stock
units on August 14, 2009 under the RSU Program, with half
of the restricted stock units vesting thirty days after the
grant and the other half vesting on the one-year anniversary
date of the grant. Each restricted stock unit is equivalent to
one share of common stock. Except as noted below, any unvested
restricted stock units are forfeited at the time the
non-employee director ceases to be a member of the board. The
unvested portion of any award automatically vests upon death or
termination without cause (including retirement). Non-employee
directors are required to choose, at the time of each award,
whether such award will vest as 100 percent common stock or
a combination of 40 percent cash and 60 percent common
stock. Additionally, non-employee directors are entitled to
receive dividend equivalents, equal to dividends on the
Companys common stock, in cash on the unvested portions of
the restricted stock unit awards.
20
Equity
Compensation Plan for Non-Employee Directors
The Company established an equity compensation plan for
non-employee directors in February 1994, which is administered
by the MD&C Committee. The original expiration date for
this plan was July 1, 2009, with a maximum of
50,000 shares of common stock (115,500 shares after
adjustment for the stock dividends and stock split) for awards
granted during the term of the plan. However, in February 2007,
the plan was amended to provide that no new awards would be
granted subsequent to January 1, 2007, and no awards have
been made since that date. The plan continues in existence
solely for the purpose of governing still-outstanding awards
made prior to January 1, 2007.
Each non-employee director was awarded 1,000 restricted shares
of the Companys common stock every five years from
July 1, 1994 through July 1, 2000, with the shares
vesting at a rate of 200 shares annually. On May 3,
2001, the plan was amended to provide that on July 1, 2001
and on July 1 of each third year thereafter, each non-employee
director was awarded 1,000 restricted shares of common stock,
with one-third of the shares vesting annually. On
February 5, 2004, the plan was amended to adjust the awards
to 2,310 restricted shares of common stock (1,000 shares
adjusted for the stock dividends and stock split) for any awards
made on July 1, 2004 and thereafter.
Awards were made from shares of common stock held in the
Companys treasury and were automatic and
non-discretionary. All shares awarded under the plan have
vested, have full dividend and voting rights, and are not
eligible for sale while the non-employee director is still
serving as a member of the board.
Outside
Directors Retirement Plan
An unfunded retirement plan for non-employee directors was
established in December 1992. The plan is administered by the
MD&C Committee and pays retired non-employee directors
benefits equal to two thirds (2/3) of the annual retainer for a
period based on length of service. Payments are made on a
quarterly basis, for a maximum of ten years, and are paid from
the general assets of the Company. In the event of the
directors death prior to receipt of all benefits payable
under the plan, the remaining benefits are payable to the
directors surviving spouse or designated beneficiary until
the earlier of the termination of the payment period or the
death of the surviving spouse or designated beneficiary. During
2009, benefits were paid under this plan to one former director
who retired from the Companys board of directors in 2001.
21
Director
Compensation Table
The table below summarizes the compensation paid by the Company
to non-employee directors for the fiscal year ended
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
Awards
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
(2)
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
Name (1)(a)
|
|
|
($)(b)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
($)(f)
|
|
|
($)(g)
|
|
|
($)(h)
|
Frederick M. Bohen
|
|
|
|
165,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,264
|
|
|
|
|
436
|
|
|
|
|
280,162
|
|
Randolph M. Ferlic
|
|
|
|
165,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
436
|
|
|
|
|
277,898
|
|
Eugene C. Fiedorek
|
|
|
|
150,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
436
|
|
|
|
|
262,898
|
|
A.D. Frazier, Jr.
|
|
|
|
150,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
436
|
|
|
|
|
262,898
|
|
Patricia Albjerg Graham
|
|
|
|
150,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,999
|
|
|
|
|
436
|
|
|
|
|
267,897
|
|
John A. Kocur
|
|
|
|
165,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,026(3
|
)
|
|
|
|
298,488
|
|
George D. Lawrence
|
|
|
|
150,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,485
|
|
|
|
|
436
|
|
|
|
|
268,383
|
|
F. H.
Merelli
|
|
|
|
150,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
611
|
|
|
|
|
436
|
|
|
|
|
263,509
|
|
Rodman D. Patton
|
|
|
|
150,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,366
|
|
|
|
|
436
|
|
|
|
|
267,264
|
|
Charles J. Pitman
|
|
|
|
165,000
|
|
|
|
|
112,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93
|
|
|
|
|
436
|
|
|
|
|
277,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Employee directors do not receive
additional compensation for serving on the board of directors or
any committee of the board. Raymond Plank, the Companys
retired chairman, and G. Steven Farris, the Companys
chairman and chief executive officer, are not included in this
table as they were employees of the Company during part or all
of 2009. The compensation they received as employees of the
Company is shown in the Summary Compensation Table.
|
|
(2)
|
|
Grant date fair value of 1,294
restricted stock units granted to each non-employee director
based on the per share closing price of the Companys
common stock of $86.91 for August 14, 2009.
|
|
|
|
At year-end 2009, the aggregate
number of unvested, restricted stock units was 647 units
for each director.
|
|
|
|
None of the directors had
unvested, restricted Apache common stock at year-end 2009.
|
|
(3)
|
|
Includes life insurance, medical
and dental premiums of $11,830 and $8,760 reimbursed for the
taxes payable on income attributable to this benefit.
|
22
SECURITIES
OWNERSHIP AND PRINCIPAL HOLDERS
The following tables set forth, as of February 28, 2010,
the beneficial ownership of (i) each director or nominee
for director of the Company, (ii) the principal executive
officer, the principal financial officer, and the three other
most highly compensated executive officers who served as
officers of the Company during 2009, and (iii) all
directors and executive officers of the Company as a group. All
ownership information is based upon filings made by those
persons with the SEC and upon information provided to the
Company. (All share numbers in the table and footnotes have been
adjusted for the stock dividends and stock split.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
|
|
|
Nature of Beneficial
|
|
|
Percent of Class
|
Title of Class
|
|
|
Name of Beneficial
Owner
|
|
|
Ownership(1)
|
|
|
Outstanding
|
Common Stock, par value $0.625
|
|
|
Frederick M. Bohen
|
|
|
|
17,389
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven Farris
|
|
|
|
1,115,939
|
(5
|
)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randolph M. Ferlic
|
|
|
|
399,928
|
(2
|
)(7)(8)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eugene C. Fiedorek
|
|
|
|
42,087
|
(2
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. D. Frazier, Jr.
|
|
|
|
21,192
|
(2
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia Albjerg Graham
|
|
|
|
15,782
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Kocur
|
|
|
|
40,671
|
(2
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George D. Lawrence
|
|
|
|
39,636
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. H. Merelli
|
|
|
|
29,376
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodman D. Patton
|
|
|
|
31,341
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles J. Pitman
|
|
|
|
27,613
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank
|
|
|
|
422,539
|
(4
|
)(5)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum
|
|
|
|
161,859
|
(5
|
)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler
|
|
|
|
190,617
|
(4
|
)(5)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S. Bahorich
|
|
|
|
107,935
|
(5
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors, nominees, and executive officers as a group
(including the above name persons)
|
|
|
|
3,351,535
|
(4
|
)(5)(6)(7)
|
|
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Represents less than one percent
of outstanding shares of common stock.
|
|
(1)
|
|
All ownership is sole and direct
unless otherwise noted. Inclusion of any common shares not owned
directly shall not be construed as an admission of beneficial
ownership. Fractional shares have been rounded to the nearest
whole share.
|
|
(2)
|
|
Includes restricted common shares
awarded under the Companys Equity Compensation Plan for
Non-Employee Directors.
|
|
(3)
|
|
Includes the following common
share equivalents related to retainer fees deferred under the
Companys Non-Employee Directors Compensation Plan:
Mr. Bohen 2,528; Dr. Graham
8,372; Mr. Lawrence 9,187;
Mr. Merelli 1,044; Mr. Patton
8,533; and Mr. Pitman 155.
|
|
(4)
|
|
Includes the following common
stock equivalents held through the Companys Deferred
Delivery Plan: Mr. Roger Plank 22,503;
Mr. Eichler 26,238; and all directors and
executive officers as a group 90,636.
|
(footnotes continued on
following page)
23
|
|
|
(5)
|
|
Includes the following common
shares issuable upon the exercise of outstanding employee stock
options which are exercisable within 60 days:
Mr. Farris 245,202; Mr. Roger
Plank 59,978; Mr. Crum 16,525;
Mr. Eichler 39,159;
Mr. Bahorich 35,481; and all directors and
executive officers as a group 574,853.
|
|
(6)
|
|
Includes shares held by the
trustee of the Companys 401(k) Savings Plan and related
Non-Qualified Retirement/Savings Plan:
Mr. Farris 74,309; Mr. Roger
Plank 54,104; Mr. Crum 8,032;
Mr. Eichler 12,803; and all directors and
executive officers as a group 202,457.
|
|
(7)
|
|
Includes 647 restricted stock
units (each equivalent to one share of common stock) for each of
Apaches ten non-employee directors and includes the
following restricted stock units granted under the
Companys Executive Restricted Stock Plan, 2007 Omnibus
Equity Compensation Plan, and the 2005 Share Appreciation
Plan: Mr. Farris 201,663; Mr. Roger
Plank 92,640; Mr. Crum 89,120;
Mr. Eichler 88,448;
Mr. Bahorich 39,752; and all directors and
executive officers as a group 780,015.
|
|
(8)
|
|
Includes 13,860 common shares
owned directly by Ferlic Investments, Ltd. in which
Dr. Ferlic owns a 36-percent interest.
|
The following table sets forth the only person known to the
Company, as of February 28, 2010, to be the owner of more
than five percent of the outstanding shares of the
Companys common stock, according to reports filed with the
SEC:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
|
|
|
Nature of Beneficial
|
|
|
Percent of Class
|
Title of Class
|
|
|
Name and Address of Beneficial
Owner
|
|
|
Ownership
|
|
|
Outstanding
|
Common Stock par value $0.625
|
|
|
BlackRock, Inc.
40 East 52nd Street
New York, New York 10022
|
|
|
|
20,084,764*
|
|
|
|
5.97*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Per Schedule 13G, dated
January 20, 2010, filed with the SEC by BlackRock, Inc. on
January 29, 2010.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys directors and officers, as
well as beneficial owners of ten percent or more of the
Companys common stock, to report their holdings and
transactions in the Companys securities. Based on
information furnished to the Company and contained in reports
provided pursuant to Section 16(a), as well as written
representations that no other reports were required for 2009,
the Companys directors and officers timely filed all
reports required by Section 16(a), with the exception of a
late report filed by Roger B. Plank and a late report filed by
John A. Crum.
24
EQUITY
COMPENSATION PLAN INFORMATION
The following table summarizes information as of
December 31, 2009, relating to the Companys equity
compensation plans, under which grants of stock options,
restricted stock units, and other rights to acquire shares of
Apache common stock may be granted from time to time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
to be Issued
|
|
|
|
Weighted-Average
|
|
|
|
Future Issuance Under
|
|
|
|
|
Upon Exercise of
|
|
|
|
Exercise Price of
|
|
|
|
Equity Compensation Plans
|
|
|
|
|
Outstanding Options,
|
|
|
|
Outstanding Options,
|
|
|
|
(Excluding Securities
|
|
Plan Category
|
|
|
Warrants and Rights
|
|
|
|
Warrants and Rights
|
|
|
|
Reflected in Column (a))
|
|
Equity compensation plans approved by security
holders(1)(4)
|
|
|
|
9,934,907
|
|
|
|
$
|
75.73(3
|
)
|
|
|
|
6,883,923
|
|
|
Equity compensation plans not approved by security holders(2)(4)
|
|
|
|
789,667
|
|
|
|
$
|
36.05(3
|
)
|
|
|
|
606,442
|
|
|
Total
|
|
|
|
10,724,574
|
|
|
|
$
|
72.30(3
|
)
|
|
|
|
7,490,365
|
|
|
|
|
|
(1)
|
|
Includes the Companys 1998
Stock Option Plan, 2005 Stock Option Plan, 2005 Share
Appreciation Plan, and 2007 Omnibus Equity Compensation Plan
(including the 2008 Share Appreciation Program).
|
|
(2)
|
|
Includes the Companys 2000
Stock Option Plan, Executive Restricted Stock Plan, Non-Employee
Directors Compensation Plan, and Deferred Delivery Plan.
|
|
|
|
The Companys Deferred
Delivery Plan allows officers and certain key employees to defer
income from restricted stock units granted under the Executive
Restricted Stock Plan and the 2007 Omnibus Equity Compensation
Plan in the form of deferred units. Each deferred unit is
equivalent to one share of Apache common stock. Distributions
from the plan are made, at the election of the participant,
beginning five years from deferral or upon termination of
employment.
|
|
(3)
|
|
Weighted average exercise price of
outstanding stock options; excludes restricted stock units,
performance-based stock units, and deferred stock units.
|
|
(4)
|
|
See Note 7 of the Notes to
Consolidated Financial Statements included in the Companys
Form 10-K
for the year ended December 31, 2009, for the material
features of the 1998 Stock Option Plan, 2000 Stock Option Plan,
2005 Stock Option Plan, 2005 Share Appreciation Plan,
Executive Restricted Stock Plan, and 2007 Omnibus Equity
Compensation Plan (including the 2008 Share Appreciation
Program).
|
25
EXECUTIVE
OFFICERS OF THE COMPANY
Biographical information for the executive officers of the
Company is set forth below. Biographical information for G.
Steven Farris is set forth above under the caption
Continuing Directors.
MICHAEL S. BAHORICH, 53, was appointed executive vice
president and technology officer in February 2009, having
previously served as the Companys executive vice president
- exploration and production technology since May 2000, as vice
president - exploration and production technology since January
1999, as vice president - exploration technology since December
1997, and as chief geophysicist since 1996. From 1981 until
joining the Company in 1996, he held positions of increasing
responsibility at Amoco Corporation in Denver, Colorado and
Tulsa, Oklahoma. Mr. Bahorich is a member of the board of
trustees of the Houston Museum of Natural Science and serves on
advisory boards at Stanford University and Yale University.
JOHN R. BEDINGFIELD, 54, was appointed vice president -
worldwide exploration and new Ventures in November 2009. He
previously served as the Companys regional vice president
and managing director for the Australia region since May, 2009,
deputy managing director - exploration for the Australia region
since August 2005, region exploration manager for the Egypt
region from 2003 to 2005, geophysical manager for Egypt from
June 1999, and senior staff geophysicist since 1998. Prior to
joining the Company, Mr. Bedingfield was employed by Exxon
Corporation from 1982 to 1998 in a variety of U.S. domestic
and international assignments.
THOMAS P. CHAMBERS, 54, was appointed vice president -
planning and investor relations in March 2009, having previously
served and vice president - corporate planning since September
2001, and director of planning since March 1995. Prior to
joining the Company, Mr. Chambers was in the international
business development group at Pennzoil Exploration and
Production, having held a variety of mangement positions with
the BP plc group of companies from 1981 to 1992.
Mr. Chambers is a member of the Society of Petroleum
Engineers and serves on the advisory board of Houston Foundation
for Life.
JOHN A. CRUM, 57, was appointed co-chief operating
officer and president - North America in February 2009, and has
served as president of Apache Canada Ltd. since June 2007.
Mr. Crum served as the Companys executive vice
president - Canada from June 2007 to February 2009, as executive
vice president - Apache North Sea from April 2003 to June 2006,
as executive vice president - Eurasia and New Ventures from May
2000 to March 2003, and as regional vice president in Australia
from 1995 to 2000. Prior to joining the Company, he served in
executive and management roles with Aquila Energy Resources
Corporation, Pacific Enterprises Oil Company, and Southland
Royalty Company.
MATTHEW W. DUNDREA, 56, was appointed vice president and
treasurer in July 1997, having previously served as the
Companys treasurer since March 1996, and as assistant
treasurer since 1994. Prior to joining the Company, he held
positions of increasing responsibility at Union Texas Petroleum
Holding, Inc. from 1982 to 1994.
ROBERT J. DYE, 54, was appointed vice president -
corporate services in March 2009, leading the public affairs,
government affairs and corporate outreach, aviation, corporate
land, and information technology groups. He previously served as
vice president - investor relations since May 1997, and director
of investor relations since 1995. Prior to that, Mr. Dye
held positions of increasing responsibility in the corporate
planning area since joining the Company in 1992. Previously, he
held various positions with Phillips Petroleum Company, Texas
Eastern Exploration Company, and British Petroleum. Mr. Dye
serves on the advisory board for the School of Chemical,
Biological and Materials Engineering at the University of
Oklahoma.
26
RODNEY J. EICHLER, 60, was appointed co-chief operating
officer and president - International in February 2009. He
served as the Companys executive vice president - Egypt
from February 2003 to February 2009, as regional vice president
in Egypt since 1999, and as vice president of exploration and
production in Egypt since 1997. Prior to that, Mr. Eichler
served as regional vice president for the Western region in
Houston since 1996, and as regional exploration and development
manager for the Rocky Mountain region in Denver since 1993.
Prior to joining the Company, he was vice president-exploration
for Axem Resources, LLC in Denver, Colorado, from 1989 to 1993.
DAVID L. FRENCH, 40, was appointed vice president -
business development in January 2010, having previously served
as region production manager - west for Apache Canada in Calgary
since 2007. Mr. French held positions of production
engineering manager and director of purchasing, EH&S and
general services since joining Apache in 2005. Prior to joining
the Company, he served as an Associate Principle for
McKinsey & Co. and held engineering and planning
management roles in the Permian Basin for Amoco and Altura
Energy Ltd.
MARGERY M. HARRIS, 49, was appointed vice president -
human resources in September 2007. Prior to joining the Company,
she was consultant/principal of MMH Consulting Services, a
privately-held human resources consulting firm, from 2006 to
September 2007, executive vice president and senior vice
president - human resources with Texas Genco LLC, a wholesale
power generator, from 2005 to 2006, and senior vice president -
human resources and administration of Integrated Electrical
Services, Inc., from 2000 to 2005.
REBECCA A. HOYT, 45, was appointed vice president and
controller in November 2006, having previously served as
assistant controller since 2003. Prior to that, she held
positions of increasing responsibility within the accounting
area since joining the Company in 1993. Previously,
Ms. Hoyt was an audit manager with Arthur Andersen LLP, an
independent public accounting firm, from 1992 to 1993.
JON A. JEPPESEN, 62, was appointed executive vice
president in August 2009, having been senior vice president
since February 2003, regional vice president for the Gulf Coast
region since 2002, and regional vice president for the Offshore
region since 1996. He served as the Companys vice
president of exploration and development for North America from
1994 to 1996, and as exploration and development manager of the
Offshore region from 1993 to 1994. Prior to joining the Company,
Mr. Jeppesen was vice president of exploration and
development for Pacific Enterprises Oil Company, Dallas, Texas,
from 1989 to 1992.
P. ANTHONY LANNIE, 55, was appointed executive vice
president and general counsel in August 2009, having served as
senior vice president and general counsel since May 2004, and
vice president and general counsel since March 2003. Prior to
joining the Company, he was president of Kinder Morgan Power
Company, Houston, Texas, from 2000 through February 2003, and
president of Coral Energy Canada in 1999. Mr. Lannie was
senior vice president and general counsel of Coral Energy, an
affiliate of Shell Oil Company and Tejas Gas Corporation, from
1995 through 1999, and of Tejas Gas Corporation from 1994 until
its combination with Coral Energy in 1998.
JANINE J. MCARDLE, 49, was appointed vice president - oil
and gas marketing in November 2002. Prior to joining the
Company, she served as managing director for Aquila Europe Ltd
from November 2001 to October 2002, and held executive and
management positions with Aquila Energy Marketing from 1993 to
November 2001, including vice president - trading and vice
president - mergers and acquisitions. Previously, she was a
partner in Hesse Gas from 1991 to 1993, and was a member of the
board of directors of Intercontinental Exchange, the electronic
trading platform, from 2000 to October 2002.
27
AARON S. G. MERRICK, 47, was appointed vice president -
information technology in August 2009, having served as director
of information technology since March 2006. Prior to joining the
Company, he was president of Merrick Applied Consulting, Inc.
from July 2005 to March 2006, and owner of Aaron Merrick
Computer Consulting from 2002, consulting with Apache on the
development of its data warehouse. After prior service with the
Company from 1991 to 1994 as assistant director of gas flow
management, he was with
T-NETIX,
Inc., a specialized telecommunications company, from 1995 to
2000, where he served as vice president. From 1984 to 1990,
Mr. Merrick was with KPMG Peat Marwick, an independent
public accounting firm.
URBAN F. OBRIEN, 56, was appointed vice president -
governmental affairs in August 2009, having previously served as
director of governmental, regulatory and community affairs since
1992. Prior to joining the Company, Mr. Obrien served as
governmental affairs manager for Mitchell Energy, special
projects director for U.S. Representative Lloyd Bentsen,
and projects coordinator for U.S. Representative Michael A.
Andrews.
W. KREGG OLSON, 56, was appointed executive vice
president - corporate reservoir engineering in August 2009,
having been senior vice president - corporate reservoir
engineering since September 2007, and vice president -
corporate reservoir engineering since January 2004. Prior to
that, Mr. Olson served as director of technical services
from 1995 through 2003, and held positions of increasing
responsibility within corporate reservoir engineering since
joining the Company in 1992. Previously, he was associated with
Grace Petroleum Corporation.
CHERI L. PEPER, 56, was appointed corporate secretary of
the Company in May 1995, having previously served as assistant
secretary since 1992. Prior to joining the Company, she had been
assistant secretary for Panhandle Eastern Corporation
(subsequently PanEnergy Corp.) since 1988. Ms. Peper is a
certified public accountant and a director of MemberSource
Credit Union, formerly known as PT&T Federal Credit Union.
ROGER B. PLANK, 53, was appointed president in February
2009, and continues to serve as the Companys principal
financial officer. He served as the Companys executive
vice president and chief financial officer from May 2000 to
February 2009, and as vice president and chief financial officer
from July 1997 to May 2000. Since joining the Company in 1981,
Mr. Plank has also served as vice president - planning and
corporate development, vice president - corporate planning, and
vice president - corporate communications. The founder and
retired chairman of the Companys board of directors,
Raymond Plank, is his father. Mr. Plank is a past president
of Texas Independent Producers and Royalty Owners Association
(TIPRO), a large independent trade association. He is a director
of Parker Drilling Company, Houston, Texas, and chairman of its
audit committee.
JON W. SAUER, 49, was appointed vice president - tax in
May 2001, having previously served as director of tax since
March 1997, and as manager of tax from August 1992 to March
1997. Prior to joining the Company, Mr. Sauer was tax
manager with Swift Energy Company, Houston, Texas, from 1989 to
1992, and a manager in the tax practice of Arthur
Andersen & Co., an independent public accounting firm,
from 1983 to 1989. Mr. Sauer currently serves as chairman
of the American Exploration & Production Council
(formerly Domestic Petroleum Council) tax committee.
SARAH B. TESLIK, 56, was appointed senior vice president
- policy and governance in October 2006. Prior to joining the
Company, she was chief executive officer of the Certified
Financial Planner Board of Standards, Inc. from November 2004 to
October 2006, and executive director of the Council of
Institutional Investors from July 1988 to October 2004.
28
COMPENSATION
DISCUSSION AND ANALYSIS
OVERVIEW
Summary
Two thousand nine was a pivotal year for Apache. G. Steven
Farris was elected as the Companys new chairman of the
board. The global economic downturn created challenges and
opportunities. Energy markets and the global political landscape
changed substantially. Despite the many challenges, the Company
met nearly all of its corporate goals and strategic objectives
for the year.
Two thousand nine was also an important year for compensation
policies at Apache. Apaches board of directors approved
the following new approaches to compensation within its existing
shareholder-approved compensation plans: graduated multi-year
equity holding requirements for officers, new
hold-until-retirement-or-departure equity mandates for all
officers, and new peer-measured total shareholder return
metrics. In addition, Apaches CEO and the other members of
the office of the chief executive voluntarily reduced their own
pay during 2009 and took smaller stock option and restricted
stock grants than in previous years to demonstrate team
leadership in the handling of the Companys business during
the global economic downturn.
But many of Apaches most important approaches to
compensation did not change in 2009. The Company continued to
award equity-based pay to substantially all employees - a
practice it started before most other companies. As always, the
Company did not engage in pay practices such as the re-pricing
of options and the back-dating of option grants. Apaches
board continued to rely on the advice of independent consultants
hired directly by the board.
Management
On January 15, 2009, Apaches board of directors
unanimously elected G. Steven Farris, Apaches then chief
executive officer, president and chief operating officer, to
succeed Mr. Raymond Plank who retired as chairman of the
board on the same date. Mr. Farris continues to serve as
chairman and chief executive officer of Apache.
On February 12, 2009, Mr. Farris created an office of
the chief executive and promoted three key executives to it.
Roger B. Plank, formerly executive vice president and chief
financial officer, became president. John A. Crum, formerly
executive vice president, Canada, became co-chief operating
officer and president - North America. Rodney J. Eichler,
formerly executive vice president, Egypt, became co-chief
operating officer and president - International. Each of these
executives reports to Mr. Farris who, as part of this
transition, resigned his positions as president and chief
operating officer. Mr. Farris and Mr. Roger Plank
continue to serve as the Companys principal executive
officer and principal financial officer, respectively.
Board of
Directors
Apaches board of directors initiated, oversaw, or managed
a number of major governance actions and decisions in 2009. The
board seamlessly navigated the transition associated with the
retirement of the Companys founder, one of the most
difficult issues a board ever faces. It adopted a lead director
policy, placed auditor ratification on the proxy, adopted a
director resignation policy, responded directly to external
stockholder communications, and agreed on new initiatives for
director education and outreach. The boards new approaches
to compensation described here reflect its belief that a
companys compensation risk and reward profile needs to
evolve as a company grows in years, size, and complexity.
29
The following compensation discussion and analysis outlines the
processes, elements, and decisions regarding 2009 compensation
for Messrs. G. Steven Farris, Roger B. Plank, John A. Crum,
Rodney J. Eichler, Michael S. Bahorich, and Raymond
Plank (the Named Executive Officers).
EXECUTIVE
COMPENSATION DECISION MAKING PROCESSES
Board of
Directors
Apaches board of directors oversees and authorizes the
compensation of the chairman and chief executive officer (its
principal executive officer), the president (its principal
financial officer) and other executive officers.
Management
Development and Compensation Committee
The board of directors delegates to the MD&C Committee,
pursuant to a written charter adopted by the board and posted on
the Companys website at www.apachecorp.com, responsibility
for recommending executive officer compensation for its review
and approval. Each of the four members of the MD&C
Committee meet the independence requirements contained in the
New York Stock Exchange and NASDAQ listing standards described
under Standing Committees and Meetings of the Board of
Directors.
The MD&C Committee is responsible for the oversight and
administration of the Companys base, annual incentive,
long-term compensation, and benefit programs for executive
officers. The MD&C Committees key compensation
responsibilities are:
|
|
|
To review the Companys executive compensation programs to
determine whether such programs are properly achieving their
intended purposes and do not contain provisions or by their
nature promote adverse risks or risk taking that could be
detrimental in their operations to the Company or its
shareholders.
|
|
|
To review and recommend to the board of directors
(i) compensation programs for the executive officers of the
Company and (ii) broad based long-term compensation
programs for both executive and non-executive employees of the
Company.
|
|
|
To review and approve corporate goals and objectives relevant to
the incentive compensation of the Companys executive
officers.
|
|
|
To make recommendations to the board of directors for approval
of the total compensation of the chairman and chief executive
officer.
|
|
|
To make recommendations to the board of directors regarding
incentive and equity compensation for executive officers other
than the chairman and chief executive officer.
|
Consultants
The MD&C Committee has board authorization to engage
independent compensation consultants to assist it in its work.
In 2009, the MD&C Committee used the services of two
independent compensation consulting firms, Pearl
Meyer & Partners and Longnecker and Associates
(collectively Consultants). The Consultants do not
provide any services to the Company other than executive
compensation-related services. All services provided by the
Consultants are at the request and under the direction of the
MD&C Committee.
30
Senior
Executives
The chairman and chief executive officer provides compensation
recommendations and evaluations for executives other than
himself to the MD&C Committee. The MD&C Committee is
authorized by the board to obtain information from and work
directly with any member of the senior executive team in
fulfilling its responsibilities. The Companys vice
president of human resources (VPHR) prepares
information and materials for the chairman and chief executive
officer and the MD&C Committee for the exercise of their
distinct, but interrelated compensation responsibilities.
EXECUTIVE
COMPENSATION
Compensation
Philosophy
The Companys continued success depends on attracting,
directing, motivating, and retaining top talent, including a
first-rate senior management team. The MD&C Committee
believes that executive compensation programs play an important
role in achieving these goals. Its programs are therefore
designed:
|
|
|
to attract, retain, motivate, and reward executive officers who
are capable of leading Apache in a complex, competitive, and
changing industry;
|
|
|
to align the interests of our executive officers with those of
our stockholders;
|
|
|
to pay for performance, whereby a majority of an executive
officers total compensation is a function of performance
results;
|
|
|
to ensure that performance-based compensation does not encourage
excessive risk taking; and
|
|
|
to increase retention by requiring forfeiture of a substantial
portion of an executive officers compensation upon
voluntarily termination of employment.
|
Use of
Data
The board of directors believes that both data and judgment play
important roles in the design and implementation of optimal
compensation programs. The MD&C Committee, Consultants, and
senior executives consider a number of types of internal and
external data in making both individual and plan-level
compensation decisions. In each section of this report dealing
with an individual element of compensation, data relevant to
that element is discussed.
Peer group data plays an important role in our compensation
decision making. For its 2009 compensation analysis, the
MD&C Committee considered a peer group that is comprised of
companies that we predominantly compete with for executive
talent. The companies in this group for the large part have
North American
and/or
natural gas businesses and have been identified based on
relevant comparable financial factors such as revenue, market
capital, net income, and total assets. Our peer list for 2009
(the 2009 Compensation Peer Group) was as follows:
|
|
|
Anadarko Petroleum Corporation;
|
|
|
Chesapeake Energy Corporation;
|
|
|
Devon Energy Corporation;
|
|
|
EOG Resources, Inc.;
|
|
|
Hess Corporation;
|
|
|
Murphy Oil Corporation;
|
|
|
Noble Energy, Inc.; and
|
|
|
XTO Energy Inc.
|
31
Companies in other industries, from whom Apache is unlikely to
hire executives and to whom it is unlikely to lose them, are not
included in this list. As our competitors for executive talent
expand in future years, the list of companies above may be
expanded also. Furthermore, as explained below, for 2010, the
MD&C Committee will use a broader peer group for the
Companys Total Shareholder Return Program for the
comparison of the Companys total shareholder return to
evaluate performance.
In addition to the 2009 Compensation Peer Group data, the
MD&C Committee uses the latest available data provided by
the Consultants from published energy-sector survey sources and
from published, general industry size-based surveys to assist in
their benchmarking. For its compensation benchmarking, the
MD&C Committee equally weights the comparable position data
from our 2009 Compensation Peer Group and the blend of
applicable survey data.
Use of
Judgment
The board of directors and the MD&C Committee believe that
the application of their collective experiences and judgment is
as important to excellence in compensation as the use of data
and formulae, and the Companys compensation policies and
practices as described here reflect this belief.
However, the MD&C Committee and the board believe that
over-reliance on data can give a false illusion of precision.
Market data provide an important tool for analysis and
decision-making. Consequently, the MD&C Committee and the
board also give consideration and emphasis to an
individuals personal contributions to the organization, as
well as his or her skill sets, qualifications and experience. We
also value and seek to reward performance that develops talent
within the Company, embraces the sense of urgency that
distinguishes the Company, and demonstrates the qualities of
imagination and drive that enable an Apache officer to resolve
longer-term challenges, or important new issues. These and
similar qualities and attributes are not easily correlated to
typical compensation data, but also deserve and are given
consideration and weight in reaching compensation decisions.
Four Key
Compensation Elements
The MD&C Committee determines total compensation based on a
review of the 2009 Compensation Peer Group data, consistent with
our overall compensation philosophy and its judgment. The four
key elements of our compensation program are:
|
|
|
Base salary;
|
|
|
Annual cash incentive bonus;
|
|
|
Long-term compensation; and
|
|
|
Benefits.
|
We generally target base salaries to fall between the
50th and 75th percentile of the latest available
compensation data. Annual and long term incentive plans are
initially targeted as a function of base salaries and are
designed to produce total compensation between the 50th and
75th percentile of the latest available compensation data.
The following is a discussion of each compensation element and
the actions taken by the MD&C Committee and the board in
2009.
32
Base
Salary
The board of directors believes that a competitive base salary
is essential to our ability to compete in the energy
sectors executive labor market. To establish base salary
ranges, the MD&C Committee analyzes the compensation for
each executive officer position by:
|
|
|
Examining the scope of the job, the nature and complexity of the
responsibilities, the training, knowledge, and experience
required to perform the job, the recruiting challenges and
opportunities associated with each position, the risks and
opportunities associated with hiring at the higher and lower
ranges of the position skill sets, the expected autonomy of the
job, and, for current executives, the company-specific
experience, seniority, performance and compatibility.
|
|
|
Ranking the executive positions on the basis of these factors to
establish a logical relationship among them. The chairman and
chief executive officer has the broadest range of
responsibilities and receives the highest base salary.
|
|
|
Developing base salary bands for the Named Executive Officers
using equally weighted comparable position and market survey
data as the 50th percentile and targeting salaries to fall
in the 50th to 75th percentile range, consistent with
our philosophy as stated above.
|
|
|
Utilizing energy-industry and company-size-relevant general
surveys to establish salary ranges for other executives.
|
Once base salaries are established, the MD&C Committee
reviews them on a periodic basis (typically, 12 to
18 months). Base salary reviews may occur more or less
frequently depending on Company and market conditions and
individual performance.
Chairman
and Chief Executive Officer
Mr. Farris began 2009 with a base salary of $1,500,000. As
part of Apaches initiative to reduce expenses and preserve
capital during the global economic downturn, Mr. Farris
proposed and took a temporary
10 percent salary reduction to $1,350,000 starting on
April 1, 2009, and continuing through the end of 2009. This
reduction did not affect Mr. Farris non-salary
compensation and benefits. Mr. Farris 2009 base
salary earnings were slightly above the 75th percentile of
latest available compensation data.
On November 19, 2009, the board of directors voted to
increase Mr. Farriss base salary to $1,750,000
effective January 1, 2010. The MD&C Committee made
this recommendation, which the board unanimously accepted, based
on its review of Mr. Farris successful management of
the Company in 2009 and an analysis of data demonstrating that
Mr. Farris total compensation was lower than that of
his counterparts at peer companies after taking into
consideration the relative performance of the peer companies to
that of Apaches.
Other
Named Executive Officers
To make base-salary adjustment decisions for Named Executive
Officers other than the chairman and chief executive officer,
the MD&C Committee begins with input from the chairman and
chief executive officer concerning the individual performance of
each executive and his input concerning the optimal application
of the data and policies used (and summarized above) to
establish salary ranges more generally. The MD&C Committee
reviews this information and additionally analyzes how the base
salary and contemplated adjustments for each Named Executive
Officer fit with latest available compensation data, Company
performance, market conditions, and internal pay parity
considerations.
33
On February 12, 2009, in connection with their appointments
to new positions in the office of the chief executive, the base
salary of each of Messrs. Roger Plank, Crum, and Eichler
was increased to $625,000 from $575,000, $420,000 and $390,000,
respectively, which is between the 25th and
50th percentile of the latest available compensation data.
In February 2009, in connection with his appointment as
executive vice president and technology officer,
Mr. Bahorichs salary was increased from $380,000 to
$450,000. Subsequently, on November 19, 2009,
Mr. Bahorichs annual salary was increased to
$500,000, which is slightly above the 75th percentile of
the latest available compensation data.
Beginning on May 8, 2009, each of Messrs. Roger Plank,
Crum, and Eichler, following the same action by the chairman and
chief executive officer, proposed and took a 10 percent
temporary salary reduction as part of the Companys overall
approach to management of the global economic downturn. This
resulted in decreases in base salary for each from $625,000 to
$562,500. These salary reductions did not impact non-salary
compensation and benefits and they remained in effect throughout
the remainder of 2009.
The 2009 base salaries for each of the Named Executive Officers
(except Mr. Raymond Plank who retired on January 15,
2009, and earned $62,500 through that date) are summarized in
this chart:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Effective
|
|
|
|
|
|
Salary at
|
|
|
|
Salary as of
|
|
|
February 12,
|
|
|
Salary Effective
|
|
|
December 31,
|
Name
|
|
|
January 1, 2009
|
|
|
2009
|
|
|
April/May 2009
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Farris
|
|
|
$
|
1,500,000
|
|
|
|
$
|
1,500,000
|
|
|
|
$
|
1,350,000
|
|
|
|
$
|
1,350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Roger Plank
|
|
|
$
|
575,000
|
|
|
|
$
|
625,000
|
|
|
|
$
|
562,500
|
|
|
|
$
|
562,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Crum
|
|
|
$
|
420,000
|
|
|
|
$
|
625,000
|
|
|
|
$
|
562,500
|
|
|
|
$
|
562,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Eichler
|
|
|
$
|
390,000
|
|
|
|
$
|
625,000
|
|
|
|
$
|
562,500
|
|
|
|
$
|
562,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Bahorich
|
|
|
$
|
380,000
|
|
|
|
$
|
450,000
|
|
|
|
$
|
450,000
|
|
|
|
$
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective January 1, 2010, in connection with the MD&C
Committees evaluation of the named executive officers
performance during 2009, the annual salary of each of
Messrs. Roger Plank, Crum and Eichler was restored to its
pre-reduction level of $625,000.
Annual
Cash Incentive Bonus
General
The Companys executive officers are eligible to earn an
annual cash incentive bonus tied to a combination of each
officers achievement of job-specific goals and the
Companys achievement of a variety of financial,
operational, and strategic objectives.
Corporate
Performance
For our corporate incentive plan, the MD&C Committee
weights equally the achievement of our Corporate Goals and our
strategic objectives in its evaluation of the annual incentive
award for the Named Executive Officers.
Apaches 2009 Corporate Goals were: production growth of
over eight percent, reserve growth sufficient to replace
production, annual earnings of at least $0.6 billion,
annual cash flow of at least
34
$3.6 billion, and reduction of direct lifting costs per
barrel of oil equivalent (BOE) by at least
10 percent from 2008 levels of $9.76. In 2009:
|
|
|
production increased over nine percent as the result of the
restoration of production at Varanus Island above pre-June 2008
incident levels, restoration of hurricane volumes in the Gulf of
Mexico (GOM), production
start-up at
the Geauxpher discovery in the GOM, successful drilling programs
in the North Sea and Egypt, and the start of production at two
new gas plants in Egypts Western desert.
|
|
|
Apache replaced 101 percent of production including
92 percent through drilling. However, proved reserves
declined just over one percent as the result of reserve
revisions, primarily related to price.
|
|
|
Apache reported a net loss of $292 million driven in large
part by a first quarter loss due to a substantial non-cash
after-tax reduction in the carrying value of oil and gas
properties as required by the full-cost method of accounting.
The reduction in carrying value was a result of deterioration in
North American gas prices. However, Apaches adjusted
earnings for the year, before such non-cash reduction and
certain other items that impact the comparability of operating
results, totaled $1.9 billion.
|
|
|
Cash flow was $4.99 billion.
|
|
|
Direct lifting costs per BOE were $7.81, which was approximately
20 percent below our 2008 level of $9.76.
|
Other
Performance Measures for Annual Cash Incentive Bonus
The MD&C Committee believes that annual cash incentive
bonuses are most effective when they are carefully tailored to
job responsibilities of individual executives. The MD&C
committee utilizes separate plans with unique objectives, and a
substantial amount of individual judgment in setting annual cash
incentive bonuses. Officers with regional responsibilities
participate in plans tied to their regions production,
revenue, costs, and other results; while corporate-level
officers participate in plans tied to corporate-wide results.
Chairman
and Chief Executive Officer
Experience
and Responsibilities
Mr. Farris became chief executive officer in May 2002 and
chairman of the board in January 2009. His leadership
responsibilities include developing sustainable global
strategies, recommending and implementing the Companys
capital-expenditure programs, developing and maintaining sound
business relationships with many of the worlds major
energy companies, developing and maintaining good relationships
with the stockholder, investment, and policy-making communities,
guiding and developing senior management, and overseeing the
Companys major business and staff units.
Mr. Farris direct reports include each of the other
Named Executive Officers, executive vice president and general
counsel, executive vice president of corporate reservoir
engineering, vice president of human resources, vice president
of worldwide exploration and new ventures, and director of
strategic planning.
2009
Annual Cash Incentive Bonus
The MD&C Committee used an analysis specific to the
position of chairman and chief executive to establish the 2009
annual incentive cash bonus for Mr. Farris. Because of the
responsibilities of this office, the MD&C Committee placed
somewhat greater weight when setting Mr. Farriss
annual cash
35
incentive bonus, compared to the bonus-setting for other Named
Executive Officers, on: the scope of Mr. Farriss
responsibilities, his leadership in the overwhelmingly
successful management team reorganization during 2009, his
imposition of fiscal discipline through curtailed capital
expenditure during the global economic downturn, the long-term
realization of the Companys strategic goals, the
Companys multi-year comprehensive performance, the
position and strength of the Company relative to peers, the
success of the management of the global economic downturn, and
the level of annual earnings, cash flow and direct lifting
costs. The MD&C Committee did not assign specific weights
to these factors when setting Mr. Farris annual cash
incentive bonus. The annual incentive bonus for our chairman and
chief executive officer was targeted at 100 percent of 2009
earnings.
On February 11, 2010, the Board, pursuant to the
recommendation of the MD&C Committee, awarded
Mr. Farris an annual incentive bonus for 2009 of
$2,500,000, which was 180 percent of his target.
Mr. Farris 2009 annual cash incentive bonus falls
between the 50th and 75th percentile of the latest
available compensation data.
Other
Named Executive Officers
Experience
and Responsibilities
Messrs. Roger Plank, Crum, Eichler, and Bahorich have
served Apache for a combined 73 years. During this period,
each of them has made significant contributions to the Company.
Mr. Roger Plank has been instrumental in managing the
financial health of the Company, including management of complex
financial matters related to the expansion of the Company into a
global enterprise. The scope of his responsibilities has
continued to grow as the Company has grown and as the number of
legal and financial jurisdictions in which the Company operates
has multiplied. Mr. Crum has overseen numerous of our
Companys international operations including spearheading
our Australia region, increasing the performance of our North
Sea properties, and, most recently, leading our Canadian
operations. Our Canada region comprises 22 percent of the
Companys estimated proved reserves, which makes it the
second largest region in the Company. Mr. Eichler led our
Egypt region for more than 12 years and has been integral
to the growth and development of that region. Due to growth
during those 12 years, Egypt has become the country with
the Companys single largest acreage position and immense
resource potential. In 2009, Egypt contributed approximately
26 percent of the Companys total production.
Mr. Bahorich has led the advancement of the Companys
exploration and production technology which has contributed to
consistent growth in the Companys productions and reserves.
2009
Annual Cash Incentive Bonuses
To establish annual cash incentive bonuses for the other Named
Executive Officers, the MD&C Committee considered the
Companys achievement of financial, operational, and
strategic objectives and each executives individual
performance. Thus the 2009 annual incentive bonus for each Named
Executive Officer was comprised of a corporate performance
element and an individual performance element.
For Messrs. Roger Plank, Crum, and Eichler, the MD&C
Committee targeted eligible bonuses under this plan for 2009 at
(i) 75 percent of their earnings from January 1,
2009, until February 12, 2009 (the period prior to their
appointment to the office of the chief executive), and
(ii) 100 percent of their earnings from
February 13, 2009, through December 31, 2009. The
MD&C Committee targeted eligible bonus for
Mr. Bahorich under this plan for 2009 at 75 percent of
2009 earnings. The annual cash incentive program requires that
participants must be employed on the date of payout in order to
receive such award.
36
For the corporate performance element, each Corporate Goal
represented between approximately zero and ten percent of an
officers annual incentive bonus. For each Corporate Goal,
the executive officers could be awarded full credit if the
Company achieved the goal, partial credit if the Company
exceeded results from the prior year but failed to meet the
goal, and extra credit if the Company over-achieved the goal due
to the extraordinary nature of these achievements. Each basic
strategic objective represented between approximately zero and
six and one-half percent of the officers annual incentive
bonus. If the Company overachieved one or more of the basic
objectives, or if it achieved one or more of the important
objectives, the executive officers could be awarded additional
credit due to the importance of these achievements. The
MD&C Committee has discretion in determining the relative
success of the strategic objectives.
After its evaluation, the MD&C Committee determined that
the Company achieved 86 percent of our Corporate Goals in
2009. The MD&C Committee also determined that the Company
achieved 100 percent of our strategic objectives. As a
result, the Companys total aggregate achievement of our
Corporate Goals and strategic objectives was 93.1 percent,
comprised of 43.1 percent for our Corporate Goals and
50.0 percent for our strategic objectives.
In the case of each of Messrs. Roger Plank, Crum, and
Eichler, the chairman and chief executive officer qualitatively
assessed the performance of their respective groups under the
control of such executive officer in 2009, considering 2009
results for various categories, including exploration,
production, and drilling. The chairman and chief executive
officer made recommendations to the MD&C Committee as to
the appropriate credit that should be given for regional
achievements. In the case of Mr. Bahorich, the chairman and
chief executive officer evaluated the enhancement of the
Companys exploration and production technology and the
implementation of this technology in the Companys various
regions.
The individual performance component was based on the individual
achievement of each executive, as determined by the chairman and
chief executive officer and recommended by him to the MD&C
Committee. The leadership and management skills of the executive
were evaluated. A variety of qualitative and quantitative goals
and performance results were taken into account, such as job
responsibility, job complexity, and successful performance of an
executive officers business units. There was no attempt to
quantify, rank, or otherwise assign relative weights to the
factors considered. The chairman and chief executive officer
conducted an overall analysis of these factors and considered
the totality of the information available to him.
Based on the foregoing, including the Companys 2009
corporate performance and in light of the compensation
decision-making processes and policies described above,
including recommendations by our chairman and chief executive
officer and consideration of the performance of the applicable
Company regions, each of Messrs. Roger Plank, Crum and
Eichler was awarded a cash annual incentive bonus for 2009 of
approximately 93 percent of their respective 2009 earnings
(approximately 95 percent of their targets).
Mr. Bahorich was awarded a cash annual incentive bonus for
2009 of approximately 69 percent of his 2009 earnings
(92 percent of his target).
The Named Executive Officers annual cash incentive bonus
awards are reflected in the Summary Compensation
Table.
Long-Term
Compensation
The board of directors and the MD&C Committee believe that
long-term equity-based incentives align the interests of
executive officers and employees with those of the
Companys stockholders. The
37
board and MD&C Committee also believe that long-term
incentives play an important role in overall Company
compensation.
Company-Wide
Long-Term Compensation
Board and MD&C Committee actions in 2009 reflect these
values. Long-term, equity-based incentives are regularly made
available to nearly all Company employees to ensure an
ownership, entrepreneurial ethic company-wide.
Stock
Ownership Requirements
In addition to the stock ownership requirements for our board of
directors adopted in February 2007, in November 2009, the
MD&C Committee adopted a two-part stock ownership policy
for the Companys officers. These stock ownership
requirements more closely align the interests of officers with
the Companys stockholders. Officers are expected to be in
compliance with these requirements within three years of the
later of the date the requirements became effective or the date
each officer is appointed to his or her particular office. All
of the Named Executive Officers currently employed at Apache
already meet these requirements.
The first part of the stock ownership policy sets a common stock
ownership amount equal to a multiple of the officers base
salary, measured against the value of the officers
discretionary holdings, based on the average per share closing
price of Apache stock for the previous year. The ownership
requirements are:
|
|
|
|
Position
|
|
|
Requirement
|
Chief Executive Officer
|
|
|
5x Base Salary
|
Presidents and Co-Chief Operating Officers
|
|
|
3x Base Salary
|
Executive Vice Presidents and Senior Vice Presidents
|
|
|
2.5x Base Salary
|
Vice Presidents and Regional Vice Presidents
|
|
|
2x Base Salary
|
|
|
|
|
Hold
Until Retirement Requirements
The second part of the new stock ownership policy provides that
each officer, on a going forward basis, hold at least
15 percent of all restricted and performance shares he or
she receives, net of tax withholding, until such officer retires
or otherwise terminates employment with Apache. In determining
stock ownership levels, Apache includes: shares purchased in the
open market; vested shares in qualified and non-qualified plans;
shares obtained through stock option exercises that the officer
continues to hold; the vested portion of restricted stock units
(RSUs) and restricted stock; shares beneficially
owned in a trust or partnership, by a spouse
and/or minor
child; and shares held in the Companys deferred delivery
plan. Unearned performance shares and unvested RSUs or shares of
restricted stock are not counted toward meeting the requirements.
Equity-Based
Long-Term Compensation
The Company grants a combination of RSUs, stock options, and
periodic conditional grants of performance shares targeted to
fall at the 50th percentile of the latest available
compensation data for long-term incentive amounts. In 2009, the
stock option and RSU grants made to the Named Executive Officers
were reduced to levels lower than in previous years to reflect
the risk sharing expected of our senior executives during a
global economic downturn.
38
Restricted
Stock Units
The RSUs awarded to our Named Executive Officers typically are
proportionate to each Named Executive Officers base
salary, vest ratably over four years, upon vesting allow each
grantee to receive one share of common stock for each RSU, and
are forfeited by the executive if they are unvested and the
executive voluntarily terminates or is terminated for cause
prior to the vesting date.
In 2009, the Company granted 416,700 RSUs to the Companys
executive officers as a group (including the Companys
chairman and chief executive officer) under the Companys
2007 Omnibus Equity Compensation Plan, which was approved by the
Companys stockholders in May 2007 (the Omnibus
Plan). As reflected in the Grants of Plan Based
Awards Table, the Company granted an aggregate of 263,100
restricted stock units to the Named Executive Officers, which
included promotional grants of 62,500 RSUs to each of
Messrs. Roger Plank, Crum, and Eichler in February 2009,
and 20,000 RSUs to Mr. Bahorich in November 2009. The
promotional grants vest over five years. See footnote
(2) to the Grants of Plan Based Awards Table.
Stock
Options
In 2009, the Companys executive officers also received
stock option grants under the Omnibus Plan. Generally, our stock
options:
|
|
|
are granted to substantially all of our employees, including our
Named Executive Officers;
|
|
|
benefit the Named Executive Officers only if stockholders also
benefit from appreciating stock prices;
|
|
|
are granted to the Named Executive Officers in proportion to
their base salary;
|
|
|
become exercisable ratably over a four-year period;
|
|
|
have an exercise price equal to the closing price of the
Companys common stock on the date of grant and expire
10 years after grant; and
|
|
|
allow for accelerated vesting upon a change of control.
|
The grants of stock options made in 2009 to the Named Executive
Officers are reflected in the Grants of Plan Based Awards
Table. In 2009, all of the Named Executive Officers
received stock option grants based on 33 percent of their
base salary at the time of grant. The award was significantly
lower than prior years and was reflective of the board of
directors desire to recognize the global economic downturn
in 2009.
In 2009, the MD&C Committee approved the following
equity-based long-term incentive awards. Additional detail on
these awards is provided in the Grants of Plan Based
Awards Table.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Restricted Stock
Units
|
|
|
|
Stock Options
|
|
Mr. Farris
|
|
|
|
21,800
|
|
|
|
|
21,800
|
|
Mr. Roger Plank
|
|
|
|
71,600
|
|
|
|
|
9,100
|
|
Mr. Crum
|
|
|
|
71,600
|
|
|
|
|
9,100
|
|
Mr. Eichler
|
|
|
|
71,600
|
|
|
|
|
9,100
|
|
Mr. Bahorich
|
|
|
|
26,500
|
|
|
|
|
6,500
|
|
Total
|
|
|
|
263,100
|
|
|
|
|
55,600
|
|
|
|
|
|
|
|
|
|
|
|
|
39
Performance
Shares
The Company also awards periodic conditional performance shares.
In 2009, no performance shares were awarded to our Named
Executive Officers. In November 2009, the 2010 Performance
Program was established to be effective for 2010 and beyond.
Although our 2008 Share Appreciation Program continues in
existence, no further grants will be made under that program
after December 31, 2009. Both programs are described below.
2010
Performance Program
The Board concluded that a strengthening of our long-term
compensation program was necessary to realign overall
compensation to remain competitive with our 2009 Compensation
Peer Group. Therefore, in November 2009, under the existing
Omnibus Plan, the board of directors approved and authorized the
Stock Option Plan Committee to implement the Total Shareholder
Return (TSR) Program. The TSR Program is part of an
annual performance-based incentive compensation program whereby
each year the Stock Option Plan Committee will authorize a
conditional grant of performance shares in the form of RSUs to
substantially all management and professional employees,
including each named executive officer, based on a target
percentage of the grantees annual base salary determined
immediately prior to the beginning of a three-year performance
period.
The number of RSUs actually received at the end of the
performance period will depend on a peer company comparison of
total shareholder return. The peer companies will be determined
at the commencement of each performance period. The peer
companies (2010 Performance Peer Group) for the 2010
Performance Program are:
|
|
|
Anadarko Petroleum Corporation
|
|
BP plc
|
Chesapeake Energy Corporation
|
|
Chevron Corporation
|
ConocoPhillips Company
|
|
Devon Energy Corporation
|
EnCana Corporation
|
|
Eni SpA
|
EOG Resources, Inc.
|
|
Exxon Mobil Corporation
|
Hess Corporation
|
|
Marathon Oil Corporation
|
Murphy Oil Corporation
|
|
Newfield Exploration Company
|
Noble Energy Inc.
|
|
Occidental Petroleum Corporation
|
Royal Dutch Shell plc
|
|
XTO Energy Inc.*
|
|
|
|
*
|
|
unless and until it merges with
Exxon Mobil Corporation.
|
While we intend to continue to benchmark against the companies
in the 2009 Compensation Peer Group for our executive
compensation in 2010, we chose this expanded list of peer
companies for the 2010 Performance Program for the following
reasons:
|
|
|
Comparison: The larger 2010 Performance Peer
Group will provide a more appropriate basis for judging our
corporate performance than the more narrowly focused 2009
Compensation Peer Group. The 2009 Compensation Peer Group
consists in large part of companies whose principal business is
North American
and/or
natural gas, and is our predominant competition for executive
talent. As Apache has global operations with approximately
50 percent being outside the United States and
approximately 50 percent of our production in crude oil, it
is desirable to develop a larger, more diversified peer group to
properly benchmark our corporate performance. The expanded 2010
Performance Peer Group adds many companies we compete against
internationally.
|
40
|
|
|
The risks and opportunities faced by this larger group as a
whole more closely match those of Apache than does the less
diversified 2009 Compensation Peer Group.
|
|
|
|
Continuation: We determined that, because it
is not unusual for one or two companies in our peer group to
cease to exist during a given three-year performance period,
through merger or otherwise, the expanded group would provide
more stability and longevity to the TSR Program.
|
|
|
Statistical Validity: Based upon input from
our Consultants, we determined that the expanded list gave more
statistical validity to the TSR Program.
|
The TSR for Apache and each of the 2010 Performance Program peer
companies is determined by dividing (i) the sum of the
cumulative amount of the companys dividends for the
performance period (assuming
same-day
reinvestment into the companys common stock on the
ex-dividend date) and the average per share closing price of the
companys stock for the 60 trading days at the end of the
performance period minus the average per share closing price of
the companys stock for the 60 trading days preceding the
beginning of the performance period; by (ii) the average
per share closing price of the companys stock for the 60
trading days preceding the beginning of the performance period.
Pursuant to the 2010 Performance Program, effective
January 15, 2010, essentially all professional and
management employees, including the Named Executive Officers,
were granted the right to receive RSUs, the number of which will
be determined based on the Companys TSR as compared to the
peer group listed above. At the conclusion of the initial
three-year performance period on December 31, 2012, a
calculation of TSR performance will be made and the
Companys performance will be directly ranked within the
2010 Performance Peer Group, resulting in the application of a
factor to the target RSUs to derive the adjusted number of RSUs
awarded. The following table reflects the factor that will be
applied to the target RSUs depending on the Companys TSR
rank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR Rank
|
|
|
|
1-4
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
9
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
14-19
|
|
Payout Multiple
|
|
|
|
2.50
|
|
|
|
|
2.30
|
|
|
|
|
2.00
|
|
|
|
|
1.60
|
|
|
|
|
1.00
|
|
|
|
|
0.90
|
|
|
|
|
0.80
|
|
|
|
|
0.70
|
|
|
|
|
0.60
|
|
|
|
|
0.50
|
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If the Companys TSR ranks from 1 to 13, vesting will begin
on December 31, 2012, with 50 percent of the adjusted
number of RSUs vesting immediately, 25 percent vesting as
of December 31, 2013, and 25 percent vesting as of
December 31, 2014. Employees must be employed during the
entire performance period and on the date of vesting. Newly
eligible employees will enter at the beginning of the next
available performance period.
Because the TSR Program performance awards granted in January
2010 will not begin to vest until the end of the three-year
performance period, the Stock Option Plan Committee, based on
its review of a report prepared by a Consultant, granted
one-time bridge awards in RSUs to certain employees on
January 15, 2010, including the Named Executive Officers
except Mr. Farris, that will vest over 24 months. The
MD&C Committee determined and Mr. Farris agreed that
in light of the RSU grant to Mr. Farris in May 2008, it was
appropriate for him to forego the bridge award. The bridge award
amounts were based on a number of factors including a comparison
of compensation levels at peer companies and the
responsibilities of the grantees position. The RSUs
granted pursuant to the bridge award will vest as follows:
one-third immediately, one-third as of January 15, 2011,
and one-third as of January 15, 2012.
The MD&C Committee believes that the periodic grant of
performance shares, otherwise known as conditional grants,
provides an effective retentive element of performance-based
compensation. The periodic grant of performance shares
complements and reinforces the overall compensation program.
41
2008 Share
Appreciation Program
On May 7, 2008, pursuant to the Omnibus Plan, the Company
established the 2008 Share Appreciation Program. In 2008,
estimated one-time conditional grants of 2,773,000 shares
of Company common stock were made to substantially all full-time
employees, and certain part-time employees of the Company under
the 2008 Share Appreciation Program.
The primary purpose of the 2008 Share Appreciation Program,
like the Companys prior share appreciation plans, is to
provide incentives to our employees to work toward significant
increases in stockholder value. The conditional grants will vest
only upon attainment of an initial price threshold of $162 per
share of Company common stock prior to year-end 2010 and a final
price threshold of $216 per share prior to year-end 2012.
Achievement of the $216 price threshold would represent
approximately $36 billion of growth in market value for the
currently outstanding shares of the Companys common stock,
since attainment of the prior stock appreciation plan price
threshold under the 2005 Share Appreciation Plan in
February 2008. If achieved, the conditional grants to our
employees would have an estimated total value of approximately
two percent of such projected growth in market capitalization.
Consistent with prior share appreciation plans, more than
90 percent of the incentives under the 2008 Share
Appreciation Program would be paid to non-executive employees if
either one or both of the thresholds is achieved. In November
2009, the 2008 Share Appreciation Program was amended to
provide that employees hired after December 31, 2009 would
not be eligible for grants under the 2008 Share
Appreciation Program.
Also in 2009, the Company continued to issue vested installments
under the 2005 Share Appreciation Plan. In February 2005,
the Company established the 2005 Share Appreciation Plan,
which was approved by the Companys stockholders in May
2005. The 2005 Share Appreciation Plan served the same
purpose as the 2008 Share Appreciation Program and operated
in a similar manner.
Benefits
General
Executive Policies
Apache executive officers are eligible for a limited number of
benefits as part of the total compensation provided to maintain
a basic level of market competitiveness. This includes an annual
physical examination and 50 percent of health club
memberships, cash-value-based variable universal insurance,
enhanced long-term disability coverage, and continued
contributions to a deferred compensation plan once limits are
reached in qualified retirement plans.
Use of
Company Property
The Companys operations are spread around the globe in
locations that include ones with a variety of physical and
geo-political risks. Therefore, for both business-efficiency and
security reasons the board of directors requires the chairman
and chief executive officer to use the Companys aircraft
for all air travel.
During 2009, pursuant to the terms of the Restated
Employment and Consulting Agreement described more fully
below, the Company provided the retired chairman with an office,
apartment, car, driver, and up to 60 hours of aircraft
usage.
More details on the above benefits are presented under All
Other Compensation following the Summary
Compensation Table.
42
Retired
Chairman
Experience
and Responsibilities
Mr. Raymond Plank retired as chairman of the board on
January 15, 2009. Prior to his retirement, he complemented
and advised the chief executive officer and his direct reports
and participated in developing the Companys strategies,
capital allocation, cost controls, and corporate direction. The
board of directors believes that Mr. Raymond Planks
past service as chairman and his continued consulting
relationship afford the Company a competitive advantage.
2009
Compensation
Through January 15, 2009, Mr. Raymond Plank earned
$62,500 in salary. For 2009, Mr. Raymond Plank did not
receive an annual incentive bonus or any long-term incentives.
Mr. Raymond Planks employment agreement is discussed
below and more details on his benefits are presented under
All Other Compensation following the Summary
Compensation Table.
Restated
Employment and Consulting Agreement
On January 15, 2009, the Company and Mr. Raymond Plank
entered into an amendment and restatement (the New
Agreement) of his employment agreement dated
December 5, 1990, as previously amended (the Old
Agreement). Pursuant to the New Agreement,
Mr. Raymond Plank agreed to provide consulting services to
the Company for the remainder of his life, as he had agreed to
do under the Old Agreement.
Under the New Agreement, the Company paid Mr. Raymond Plank
a one-time lump sum payment of $13,576,323 in lieu of the
Companys obligation under the Old Agreement to pay him
annual compensation for the remainder of his life, in exchange
for his consulting services, equal to 50 percent of his
annual rate of compensation at the time of his retirement as an
officer. The amount was determined by the MD&C Committee as
the discounted present value of the amounts that were expected
to be payable to Mr. Raymond Plank for consulting services
under the Old Agreement. Since the Company had not determined
the officers annual cash incentive bonus amounts for 2008
at the time the New Agreement was signed, current compensation
was calculated using Mr. Raymond Planks 2008 base
salary and his average annual incentive bonus for the years
2005 2007. In addition, the calculation gave credit
to the May 2008 stock option grant that Mr. Raymond Plank
declined.
The Company also paid Mr. Raymond Plank $6,285,819 in
exchange for his unvested stock options, share appreciation plan
grants, and restricted stock units, all of which were cancelled.
This payment (i) was consistent with payments of the same
nature the Company has made to other departing or retiring
senior officers from time to time and (ii) was based on the
closing price of the Companys common stock for the day the
Companys outside directors met and formulated terms for
presentation to Mr. Raymond Plank. The amount paid in
respect of RSUs and share appreciation plan grants was the
product of such closing price multiplied by the total number of
shares covered by such units. The amount paid in respect of
unvested stock options (with exercise prices less than such
closing price) was the excess of (i) the aggregate number
of shares covered by such unvested stock options multiplied by
such closing price, over (ii) the aggregate exercise price
of such unvested stock options.
Mr. Raymond Plank was also paid $5,400,000 as a
founders achievement and performance award for his
extraordinary contributions to the Company over his
54 years of service, guiding it from a small company with
initial capital of $250,000 to an international oil and gas
company with an enterprise value of approximately
$30 billion at year-end 2008. In determining that this
payment was
43
reasonable, the board considered the nature and value of
Mr. Raymond Planks contributions over time and data
collected by an independent executive-compensation consulting
firm, which showed that Mr. Raymond Plank had received
significantly less aggregate compensation over the past five
years than the compensation paid to chief executive officers of
peer companies.
The New Agreement also awarded Mr. Raymond Plank an annual
incentive bonus for 2008 of $500,000, which was determined and
paid in February 2009, in accordance with the usual practices
and procedures of the MD&C Committee and the board.
In support of the consulting services he is providing during the
initial two-year period, the Company is providing
Mr. Raymond Plank with Houston office space and secretarial
support through December 31, 2010, plus continued use of a
Houston apartment and access to a Company car and driver through
that date, consistent with arrangements prior to his retirement.
The Company also provided him with up to 60 hours per year
of aircraft usage in 2009 and 2010. Consistent with the Old
Agreement, under the New Agreement, the Company will pay
$750,000 to Mr. Raymond Planks designee or estate
upon his death and will provide him health, dental and vision
benefits during the remainder of his life. In addition,
Mr. Raymond Plank agreed not to engage in or have a
financial interest in any business that competes with Apache,
subject to de minimis exceptions, and he executed a
waiver and release of any potential compensation or other claims
he may have had against the Company.
TAX
LEGISLATION RELATED TO COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as
amended, imposes a limit, with certain exceptions, on the amount
that a publicly held corporation may deduct in any tax year
commencing on or after January 1, 1994, for the
compensation paid or accrued with respect to its chief executive
officer and its three highest compensated officers for the year
(other than the principal executive officer or the principal
financial officer). The MD&C Committee continues to review
the Companys compensation plans based upon these
regulations and, from time to time, determines what further
actions or changes to the Companys compensation plans, if
any, would be appropriate. It is the intention of the MD&C
Committee to receive stockholder approval for all future
stock-based compensation plans so that they may qualify for the
performance-based compensation exemption.
The Companys 1998 Stock Option Plan, 2005 Stock Option
Plan, 2005 Share Appreciation Plan, and 2007 Omnibus Equity
Compensation Plan (including the 2008 Share Appreciation
Program) were approved by the Companys stockholders and
grants made under such plans qualify as
performance-based under the regulations. The
Companys existing incentive compensation plans, special
achievement bonuses, Executive Restricted Stock Plan, and 2000
Stock Option Plan do not meet the requirements of the
regulations, as the stockholder approvals necessary for
exemption were not sought. However, these plans operate
similarly to prior or other existing plans and are designed to
reward the contribution and performance of employees and to
provide a meaningful incentive for achieving the Companys
goals, which in turn enhances stockholder value. No further
grants can be made under the Companys 1998, 2000 and 2005
Stock Option Plans, Executive Restricted Stock Plan, and the
2008 Share Appreciation Program. While the MD&C
Committee cannot predict with certainty how the Companys
compensation policies may be further impacted by this
limitation, it is anticipated that executive compensation paid
or accrued pursuant to the Companys compensation plans
that have not met the requirements of the regulations will not
result in any material loss of tax deductions in the foreseeable
future.
Internal Revenue Code section 409A requires
nonqualified deferred compensation plans to meet
requirements in order to avoid acceleration of the
recipients federal income taxation of the deferred
44
compensation. The Internal Revenue Service issued final
regulations in April 2007 regarding the application of
Section 409A, which were generally effective
January 1, 2009. Prior to effectiveness, companies were
expected to comply in good faith with the statute,
taking note of the interim guidance issued by the Internal
Revenue Service. The Company amended several of its benefit
plans in order for them to be exempt from Section 409A,
while the Company continues to provide benefits through several
plans that remain subject to Section 409A. The terms of
these plans were amended in 2008, as necessary, to meet the
requirements of the final regulations.
MANAGEMENT
DEVELOPMENT AND COMPENSATION COMMITTEE REPORT
The Management Development and Compensation Committee of the
board of directors of Apache Corporation reviewed and discussed
with Company management the Compensation Discussion and Analysis
set forth above, and based upon such review and discussion,
recommended to the board of directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
|
|
|
March 4, 2010
|
|
Members of the Management Development and Compensation Committee
|
|
|
|
|
|
Frederick M. Bohen, Chairman
A. D. Frazier, Jr.
John A. Kocur
George D. Lawrence
|
45
SUMMARY
COMPENSATION TABLE
The table below summarizes the compensation for the individuals
listed below for all services rendered to the Company and its
subsidiaries during fiscal years 2009, 2008 and 2007. The
persons included in this table are the Companys principal
executive officer, principal financial officer, and the three
other most highly compensated executive officers (the
Named Executive Officers) who served as executive
officers of the Company during 2009. Also included is an
additional executive officer for whom disclosure would be
required but for the fact that he was no longer serving as an
executive officer at the end of the fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
Option
|
|
|
|
Plan
|
|
|
|
Compensation
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
Bonus(3)
|
|
|
|
Awards(4)
|
|
|
|
Awards(4)
|
|
|
|
Compensation(5)
|
|
|
|
Earnings(6)
|
|
|
|
Compensation(7)
|
|
|
|
Total
|
|
Name and Principal Position(a)
|
|
|
Year(b)
|
|
|
|
($)(c)
|
|
|
|
($)(d)
|
|
|
|
($)(e)
|
|
|
|
($)(f)
|
|
|
|
($)(g)
|
|
|
|
($)(h)
|
|
|
|
($)(i)
|
|
|
|
($)(j)
|
|
G. Steven Farris (1)(2)
|
|
|
|
2009
|
|
|
|
|
1,387,500
|
|
|
|
|
|
|
|
|
|
1,799,590
|
|
|
|
|
647,242
|
|
|
|
|
2,500,000
|
|
|
|
|
670,077
|
|
|
|
|
685,104
|
|
|
|
|
7,689,513
|
|
Chairman and
|
|
|
|
2008
|
|
|
|
|
1,493,750
|
|
|
|
|
|
|
|
|
|
36,440,754
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
(593,003
|
)
|
|
|
|
686,519
|
|
|
|
|
38,528,020
|
|
Chief Executive Officer
|
|
|
|
2007
|
|
|
|
|
1,437,500
|
|
|
|
|
|
|
|
|
|
1,517,103
|
|
|
|
|
1,362,474
|
|
|
|
|
1,900,000
|
|
|
|
|
976,446
|
|
|
|
|
472,511
|
|
|
|
|
7,666,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank (2)
|
|
|
|
2009
|
|
|
|
|
578,598
|
|
|
|
|
|
|
|
|
|
5,320,580
|
|
|
|
|
270,179
|
|
|
|
|
525,000
|
|
|
|
|
927,705
|
|
|
|
|
151,160
|
|
|
|
|
7,773,222
|
|
President
|
|
|
|
2008
|
|
|
|
|
560,000
|
|
|
|
|
|
|
|
|
|
1,288,498
|
|
|
|
|
283,471
|
|
|
|
|
213,780
|
|
|
|
|
(1,052,656
|
)
|
|
|
|
194,364
|
|
|
|
|
1,487,457
|
|
|
|
|
|
2007
|
|
|
|
|
521,875
|
|
|
|
|
|
|
|
|
|
520,359
|
|
|
|
|
313,742
|
|
|
|
|
508,840
|
|
|
|
|
683,385
|
|
|
|
|
169,741
|
|
|
|
|
2,717,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum (2)
|
|
|
|
2009
|
|
|
|
|
561,145
|
|
|
|
|
50,000
|
|
|
|
|
5,320,580
|
|
|
|
|
270,179
|
|
|
|
|
525,000
|
|
|
|
|
291,309
|
|
|
|
|
207,926
|
|
|
|
|
7,226,139
|
|
Co-Chief Operating Officer and
|
|
|
|
2008
|
|
|
|
|
420,000
|
|
|
|
|
|
|
|
|
|
1,006,936
|
|
|
|
|
222,530
|
|
|
|
|
160,335
|
|
|
|
|
(245,388
|
)
|
|
|
|
1,771,878
|
(8)
|
|
|
|
3,336,291
|
|
President North America
|
|
|
|
2007
|
|
|
|
|
390,833
|
|
|
|
|
50,000
|
|
|
|
|
403,095
|
|
|
|
|
241,340
|
|
|
|
|
381,095
|
|
|
|
|
1,053,804
|
|
|
|
|
112,068
|
|
|
|
|
2,632,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler (2)
|
|
|
|
2009
|
|
|
|
|
557,722
|
|
|
|
|
|
|
|
|
|
5,320,580
|
|
|
|
|
270,179
|
|
|
|
|
525,000
|
|
|
|
|
783,529
|
|
|
|
|
256,050
|
|
|
|
|
7,713,060
|
|
Co-Chief Operating Officer and
|
|
|
|
2008
|
|
|
|
|
390,000
|
|
|
|
|
|
|
|
|
|
942,003
|
|
|
|
|
206,635
|
|
|
|
|
148,882
|
|
|
|
|
(967,864
|
)
|
|
|
|
568,189
|
|
|
|
|
1,287,845
|
|
President International
|
|
|
|
2007
|
|
|
|
|
360,833
|
|
|
|
|
|
|
|
|
|
373,779
|
|
|
|
|
221,594
|
|
|
|
|
351,806
|
|
|
|
|
173,785
|
|
|
|
|
703,819
|
|
|
|
|
2,185,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S. Bahorich (10)
|
|
|
|
2009
|
|
|
|
|
447,288
|
|
|
|
|
|
|
|
|
|
2,531,575
|
|
|
|
|
192,985
|
|
|
|
|
310,000
|
|
|
|
|
5,367
|
|
|
|
|
103,413
|
|
|
|
|
3,590,628
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond Plank (1)
|
|
|
|
2009
|
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,223
|
|
|
|
|
25,728,265
|
(9)
|
|
|
|
25,808,988
|
|
Retired Chairman of the Board
|
|
|
|
2008
|
|
|
|
|
1,493,750
|
|
|
|
|
|
|
|
|
|
3,593,629
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
62,756
|
|
|
|
|
449,293
|
|
|
|
|
6,099,428
|
|
|
|
|
|
2007
|
|
|
|
|
1,437,500
|
|
|
|
|
|
|
|
|
|
1,517,103
|
|
|
|
|
|
|
|
|
|
1,900,000
|
|
|
|
|
68,714
|
|
|
|
|
283,212
|
|
|
|
|
5,206,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
On January 15, 2009, Raymond
Plank retired as chairman of the board, a director, and an
employee of the Company. G. Steven Farris, then the
Companys president, chief executive officer, and chief
operating officer, succeeded Raymond Plank as chairman.
|
|
(2)
|
|
Effective February 12, 2009,
Roger B. Plank was appointed president (previously, he served as
executive vice president and chief financial officer), John A.
Crum was appointed co-chief operating officer and
president North America (previously, he served as
executive vice president Canada), and Rodney J.
Eichler was appointed co-chief operating officer and
president International (previously, he served as
executive vice president Egypt). In connection with
these appointments, Mr. Farris, the Companys chairman
and chief executive officer, resigned from his positions as the
Companys president and chief operating officer, effective
February 12, 2009. Mr. Farris continues as the
Companys principal executive officer, and Mr. Roger
Plank continues as the Companys principal financial
officer.
|
|
(3)
|
|
Mr. Crum received payments in
2007 and 2009 in connection with his transition to and from
Canada. Otherwise, the Named Executive Officers were not
entitled to receive payments that would be characterized as
bonus payments. See footnote (5) for payments under the
Companys incentive compensation plan.
|
|
(4)
|
|
Value of stock awards and option
awards made during the fiscal year based upon aggregate grant
date fair value, determined in accordance with applicable
financial accounting standards. The discussion of the
assumptions used in calculating these values can be found in the
footnotes to the Grants of Plan Based Awards Table below and in
Note 7 of the Notes to Consolidated Financial Statements
included in the Companys
Form 10-K
for the year ended December 31, 2009. The value of these
stock awards and option awards is expensed ratably over the term
of the award.
|
(footnotes continued on
following page)
46
|
|
|
(5)
|
|
Amounts reflected under column
(g) are paid pursuant to the Companys incentive
compensation plan as described under Annual Cash Incentive
Bonus in the Compensation Discussion and Analysis.
Mr. Farris requested that his 2008 incentive compensation
(after deferrals and required tax withholding) be paid in shares
of the Companys common stock. As a result,
4,722 shares of common stock were issued to Mr. Farris.
|
|
(6)
|
|
See Non-Qualified Deferred
Compensation Table below.
|
|
(7)
|
|
For additional information on All
Other Compensation, see discussion, table, and footnotes below.
|
|
(8)
|
|
See footnote (h) under the
All Other Compensation table below.
|
|
(9)
|
|
See footnote (g) under the
All Other Compensation table below.
|
|
(10)
|
|
Mr. Bahorich was not a Named
Executive Officer for fiscal years 2008 and 2007.
|
47
All Other
Compensation
Officers participate in two qualified retirement plans. The
401(k) Savings Plan provides a match up to the first six percent
of base pay and incentive bonus. The Money Purchase Retirement
Plan provides an annual six percent company contribution into
the same investment choices as the 401(k) plan with the
exception of Company stock. Additionally, officers can elect to
participate in the Non-Qualified Retirement Savings Plan to
defer beyond the limits in the 401(k) plan and continue Company
contributions which exceed the limits in the qualified plans.
The investment choices mirror those in the qualified retirement
plans. The Deferred Delivery Plan allows officers the ability to
defer income in the form of deferred units from the vesting of
restricted stock units under the Companys Executive
Restricted Stock Plan and 2007 Omnibus Equity Compensation Plan.
The contributions into both non-qualified plans are reported in
the Non-Qualified Deferred Compensation Table. The Company does
not have a defined benefit plan for U.S. employees.
Apache provides U.S. employees with two times their base
salary under group term life insurance. Executives receive the
first $50,000 of coverage under the same group term life
insurance plan, and the remaining amount to bring them up to two
times salary is provided in the form of whole life insurance
policies, with the exception of Raymond Plank.
During 2009, the board required G. Steven Farris to use the
Companys aircraft for all air travel for security reasons
and to facilitate efficient business travel. Even though the
Company considers these costs a necessary business expense
rather than a perquisite for Mr. Farris, in line with SEC
guidance, the following table includes the amounts attributable
to each Named Executive Officers personal aircraft usage,
including trips for Company-supported charitable interests.
Beginning in fiscal 2009, these executives are no longer
reimbursed for the taxes on the income attributable to the
personal use of corporate aircraft. The methodology for the
valuation of non-integral use of corporate aircraft for
disclosure in the Summary Compensation Table, in compliance with
SEC guidance, calculates the incremental cost to the Company for
personal use of the aircraft based on the cost of fuel and oil
per hour of flight; trip-related inspections, repairs and
maintenance; crew travel expenses; on-board catering;
trip-related flight planning services; landing, parking, and
hanger fees; supplies; passenger ground transportation; and
other variable costs. Additionally, the value of trips
attributable to philanthropic interests was included, even
though they are seen as contributing to the goodwill of the
Company. In addition, Standard Industry Fare Level
(SIFL) tables, published by the Internal Revenue
Service, are used to determine the amount of compensation income
that is imputed to the executive for tax purposes for personal
use of corporate aircraft.
As detailed in the following table under Benefits, during 2009,
the Company provided Raymond Plank with an apartment, car, and
driver. Mr. Plank was reimbursed for the taxes on the
income attributable to these benefits. Mr. Plank was also
provided with up to 60 hours of aircraft usage and certain
specified benefits as are described more fully above under
Retired Chairman.
In addition to the benefits for which all employees are
eligible, the Company also covers the cost of an annual physical
and pays 50 percent of health club memberships and the full
cost of enhanced long-term disability coverage for some officers.
The Company provides various forms of compensation related to
expatriate assignment that differ according to location and term
of assignment, including: foreign service premium, foreign
assignment tax equalization, location pay, housing and
utilities, home leave and travel, goods and services allowance,
relocation expense, and tax return preparation. These items have
been broken out separately in the following table under Foreign
Assignment Allowances to reflect the amounts that pertain to
Mr. Crum and Mr. Eichler. Mr. Crum was executive
vice president Canada from July 2007 to February
2009. Mr. Eichler, as executive vice president
Egypt, resided in Egypt during 2007, 2008, and January to June
2009.
48
The following table provides a detailed breakdown of the amounts
for fiscal years 2009, 2008, and 2007 under All Other
Compensation in the Summary Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven
|
|
|
|
Roger B.
|
|
|
|
John A.
|
|
|
|
Rodney J.
|
|
|
|
Michael S.
|
|
|
|
Raymond
|
|
Benefits
|
|
|
Year
|
|
|
|
Farris
|
|
|
|
Plank
|
|
|
|
Crum
|
|
|
|
Eichler
|
|
|
|
Bahorich
|
|
|
|
Plank
|
|
Company Contributions Retirement Plans
|
|
|
|
2009
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
|
|
2008
|
|
|
|
$
|
27,600
|
|
|
|
$
|
27,600
|
|
|
|
$
|
27,600
|
|
|
|
$
|
27,600
|
|
|
|
|
n/a
|
|
|
|
$
|
27,600
|
|
|
|
|
|
2007
|
|
|
|
$
|
27,000
|
|
|
|
$
|
27,000
|
|
|
|
$
|
27,000
|
|
|
|
$
|
27,000
|
|
|
|
|
n/a
|
|
|
|
$
|
27,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Contributions
|
|
|
|
2009
|
|
|
|
$
|
197,100
|
|
|
|
$
|
65,685
|
|
|
|
$
|
57,178
|
|
|
|
$
|
55,392
|
|
|
|
$
|
41,568
|
|
|
|
$
|
41,050
|
|
Non-Qualified Plan
|
|
|
|
2008
|
|
|
|
$
|
379,050
|
|
|
|
$
|
100,661
|
|
|
|
$
|
68,531
|
|
|
|
$
|
61,417
|
|
|
|
|
n/a
|
|
|
|
$
|
196,525
|
|
|
|
|
|
2007
|
|
|
|
$
|
277,500
|
|
|
|
$
|
77,577
|
|
|
|
$
|
51,196
|
|
|
|
$
|
45,496
|
|
|
|
|
n/a
|
|
|
|
$
|
145,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Premiums or Annuity Fees
|
|
|
|
2009
|
|
|
|
$
|
144,670
|
|
|
|
$
|
22,590
|
|
|
|
$
|
33,789
|
|
|
|
$
|
18,800
|
|
|
|
$
|
15,809
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
114,733
|
|
|
|
$
|
15,932
|
|
|
|
$
|
17,035
|
|
|
|
$
|
18,800
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
76,256
|
|
|
|
$
|
12,169
|
|
|
|
$
|
13,247
|
|
|
|
$
|
18,800
|
|
|
|
|
n/a
|
|
|
|
$
|
1,200
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursement for Taxes on Life
|
|
|
|
2009
|
|
|
|
$
|
82,978
|
|
|
|
$
|
12,957
|
|
|
|
$
|
19,380
|
|
|
|
$
|
13,309
|
|
|
|
$
|
9,067
|
|
|
|
$
|
|
|
Insurance Premiums or Annuity Fees
|
|
|
|
2008
|
|
|
|
$
|
65,807
|
|
|
|
$
|
9,138
|
|
|
|
$
|
9,771
|
|
|
|
$
|
13,309
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
43,738
|
|
|
|
$
|
6,980
|
|
|
|
$
|
7,598
|
|
|
|
$
|
13,309
|
|
|
|
|
n/a
|
|
|
|
$
|
688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Company Property
|
|
|
|
2009
|
|
|
|
$
|
12,985
|
(b)
|
|
|
$
|
12,380
|
(b)
|
|
|
$
|
|
|
|
|
$
|
2,533
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
70,577
|
(d)
|
|
|
$
|
24,978
|
(d)
|
|
|
$
|
|
|
|
|
$
|
6,600
|
|
|
|
|
n/a
|
|
|
|
$
|
152,532
|
(c)
|
|
|
|
|
2007
|
|
|
|
$
|
24,936
|
(f)
|
|
|
$
|
25,830
|
(f)
|
|
|
$
|
|
|
|
|
$
|
6,600
|
|
|
|
|
n/a
|
|
|
|
$
|
76,449
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursement for Taxes on Use
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
34
|
|
|
|
$
|
|
|
|
|
$
|
|
|
of Company Property
|
|
|
|
2008
|
|
|
|
$
|
20,781
|
|
|
|
$
|
12,234
|
|
|
|
$
|
|
|
|
|
$
|
88
|
|
|
|
|
n/a
|
|
|
|
$
|
72,636
|
|
|
|
|
|
2007
|
|
|
|
$
|
11,371
|
|
|
|
$
|
12,722
|
|
|
|
$
|
|
|
|
|
$
|
88
|
|
|
|
|
n/a
|
|
|
|
$
|
32,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Long-Term Disability
|
|
|
|
2009
|
|
|
|
$
|
7,971
|
|
|
|
$
|
6,571
|
|
|
|
$
|
2,856
|
|
|
|
$
|
2,682
|
|
|
|
$
|
5,213
|
|
|
|
$
|
|
|
Coverage and Annual Physicals
|
|
|
|
2008
|
|
|
|
$
|
7,971
|
|
|
|
$
|
3,821
|
|
|
|
$
|
2,856
|
|
|
|
$
|
2,682
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
10,276
|
|
|
|
$
|
6,029
|
|
|
|
$
|
5,356
|
|
|
|
$
|
2,682
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursement for Taxes on
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
1,577
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
1,577
|
|
|
|
$
|
|
|
Annual Physicals
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
1,434
|
|
|
|
$
|
1,434
|
|
|
|
$
|
1,434
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Club Memberships (50%)
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
779
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
570
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
484
|
|
|
|
$
|
700
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Equivalents Paid on Unvested
|
|
|
|
2009
|
|
|
|
$
|
210,000
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
Restricted Stock Units
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments and Services in Connection
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
25,515,858
|
(g)
|
with Retirement Agreement
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursement for Taxes on Payments
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
141,957
|
|
and Services in Connection with
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
Retirement Agreement
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Benefits 2009
|
|
|
|
|
|
|
|
$
|
685,104
|
|
|
|
$
|
151,160
|
|
|
|
$
|
142,603
|
|
|
|
$
|
122,150
|
|
|
|
$
|
103,413
|
|
|
|
$
|
25,728,265
|
|
Subtotal Benefits 2008
|
|
|
|
|
|
|
|
$
|
686,519
|
|
|
|
$
|
194,364
|
|
|
|
$
|
126,363
|
|
|
|
$
|
130,496
|
|
|
|
|
n/a
|
|
|
|
$
|
449,293
|
|
Subtotal Benefits 2007
|
|
|
|
|
|
|
|
$
|
472,511
|
|
|
|
$
|
169,741
|
|
|
|
$
|
106,315
|
|
|
|
$
|
114,675
|
|
|
|
|
n/a
|
|
|
|
$
|
283,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Table continued on following
page)
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven
|
|
|
|
Roger B.
|
|
|
|
John A.
|
|
|
|
Rodney J.
|
|
|
|
Michael S.
|
|
|
|
Raymond
|
|
Foreign Assignment Allowances
|
|
|
Year
|
|
|
|
Farris
|
|
|
|
Plank
|
|
|
|
Crum
|
|
|
|
Eichler
|
|
|
|
Bahorich
|
|
|
|
Plank
|
|
Foreign Service Premium
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
7,500
|
|
|
|
$
|
14,625
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
63,000
|
|
|
|
$
|
58,500
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
29,750
|
|
|
|
$
|
54,125
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes Related to Foreign
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
(8,441
|
)(h)
|
|
|
$
|
24,877
|
(i)
|
|
|
$
|
|
|
|
|
$
|
|
|
Assignment
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
1,484,704
|
(h)
|
|
|
$
|
169,990
|
(i)
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
(143,342
|
)(h)
|
|
|
$
|
355,055
|
(i)
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location Pay
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
19,500
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
78,000
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
72,166
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Housing, Utilities, and Parking
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
25,670
|
|
|
|
$
|
31,500
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
46,470
|
|
|
|
$
|
53,030
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
63,683
|
|
|
|
$
|
47,093
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Leave and Travel
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
60,686
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
55,540
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goods and Services Allowance
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
4,844
|
|
|
|
$
|
6,182
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
50,591
|
|
|
|
$
|
16,737
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
22,383
|
|
|
|
$
|
4,415
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relocation Allowance and
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
35,000
|
|
|
|
$
|
36,466
|
|
|
|
$
|
|
|
|
|
$
|
|
|
Expenses
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
32,529
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Return Preparation
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
750
|
|
|
|
$
|
750
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
750
|
|
|
|
$
|
750
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
2007
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
750
|
|
|
|
$
|
750
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Foreign Assignment
Allowances 2009
|
|
|
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
65,323
|
|
|
|
$
|
133,900
|
|
|
|
$
|
|
|
|
|
$
|
|
|
Subtotal Foreign Assignment
Allowances 2008
|
|
|
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
1,645,515
|
|
|
|
$
|
437,693
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
Subtotal Foreign Assignment
Allowances 2007
|
|
|
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
5,753
|
|
|
|
$
|
589,144
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total All Other Compensation 2009
|
|
|
|
|
|
|
|
$
|
685,104
|
|
|
|
$
|
151,160
|
|
|
|
$
|
207,926
|
|
|
|
$
|
256,050
|
|
|
|
$
|
103,413
|
|
|
|
$
|
25,728,265
|
|
Total All Other Compensation 2008
|
|
|
|
|
|
|
|
$
|
686,519
|
|
|
|
$
|
194,364
|
|
|
|
$
|
1,771,878
|
|
|
|
$
|
568,189
|
|
|
|
|
n/a
|
|
|
|
$
|
449,293
|
|
Total All Other Compensation 2007
|
|
|
|
|
|
|
|
$
|
472,511
|
|
|
|
$
|
169,741
|
|
|
|
$
|
112,068
|
|
|
|
$
|
703,819
|
|
|
|
|
n/a
|
|
|
|
$
|
283,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For Raymond Plank, annuity fee
related to the
20-year
annuity purchased in exchange for surrendering life insurance
coverage.
|
|
(b)
|
|
These amounts for 2009 are for use
of corporate aircraft. For G. Steven Farris and Roger B. Plank,
the amounts include $7,719 and $5,688, respectively, related to
Company - supported charitable interests.
|
|
(c)
|
|
For Raymond Plank, this amount for
2008 includes $51,128 for use of Company-owned apartment,
$52,743 for Company-provided car and driver, and $48,661 for use
of corporate aircraft of which $9,742 was related to
Company-supported charitable interests.
|
|
(d)
|
|
These amounts for 2008 are for use
of corporate aircraft. For G. Steven Farris and Roger B. Plank,
the amounts include $27,946 and $3,648, respectively, related to
Company-supported charitable interests.
|
|
(e)
|
|
For Raymond Plank, this amount for
2007 includes $40,447 for use of Company-owned apartment, $5,158
for Company-provided car and driver, and $30,844 for use of
corporate aircraft of which $10,220 was related to
Company-supported charitable interests.
|
|
(f)
|
|
These amounts for 2007 are for use
of corporate aircraft. For Roger B. Plank, the amount includes
$3,650 related to Company-supported charitable interests.
|
(footnotes continued on
following page)
50
|
|
|
(g)
|
|
On January 15, 2009, Raymond
Plank retired as chairman of the board and an employee of the
Company and as a director of the Company. Also on
January 15, 2009, Mr. Plank entered into an amendment
and restatement (the New Agreement) of his
employment agreement dated December 5, 1990, as previously
amended (the Old Agreement). As was the case under
the Old Agreement, Mr. Plank agreed to provide consulting
services to the Company for the remainder of his life. Under the
New Agreement, the Company paid Mr. Plank a one-time lump
sum cash payment of $13,576,323 in lieu of its obligation under
the Old Agreement to pay him annual compensation for the
remainder of his life, in exchange for his consulting services,
equal to 50 percent of his annual rate of compensation at
the time of his retirement as an officer. The Company also paid
Mr. Plank $6,285,819 in exchange for his unvested stock
options, share appreciation plan grants and restricted stock
units, all of which were cancelled, and $5,400,000 as a
founders achievement and performance award for his
extraordinary contributions to the Company over his
54 years of service. These three payments are included in
All Other Compensation for 2009. Consistent with the Old
Agreement, the Company will pay $750,000 to
Mr. Planks designee or estate upon his death and will
provide him health, dental and vision benefits during the
remainder of his life.
|
|
|
|
In support of the consulting
services he is to provide during the initial two-year period,
the Company will provide Mr. Plank with Houston office
space and secretarial support through December 31, 2010,
plus continued use of a Houston apartment and access to a
Company car and driver through that date, consistent with
arrangements prior to his retirement. The Company will also
provide him up to 60 hours per year of aircraft usage in
2009 and 2010. The value of these items for 2009 is $251,285 and
is included in All Other Compensation. The value is comprised of
$50,307 in apartment expenses, $69,946 in office space, $95,466
in secretarial support, $10,069 in driver expenses, $1,605 in
Company car expenses, and $26,322 in aircraft expenses, of which
$6,216 was related to Company-supported charitable interests.
For 2010, the value of these items is expected to be comparable
to 2009.
|
|
|
|
In addition, Mr. Plank agreed
not to engage in or have a financial interest in any business
that is competitive to the business of the Company, subject to
de minimis exceptions, and he executed a waiver and release of
any potential compensation or other claims he may have against
the Company. Mr. Planks New Agreement is discussed in
more detail above in the Compensation Discussion and Analysis
section under Retired Chairman.
|
|
(h)
|
|
Executives assigned to foreign
countries typically incur a change in their overall tax
liability because most of the components of assignment
compensation that are provided in addition to base salary are
taxable in the U.S. and in the foreign country. Therefore, the
Companys expatriate assignment policy provides that it
will be responsible for any additional foreign or U.S. taxes due
as a direct result of the international assignment and the
executive remains financially responsible for the tax which
he/she would have incurred if he/she had continued to live and
work in the U.S. Therefore, the Company withheld
from Mr. Crums compensation an amount equivalent to
the taxes that would have been due had he remained in the U.S.
Those funds were used to help pay taxes due in the U.S. and in
Canada during the period of his foreign assignment. The Company
paid taxes due in excess of Mr. Crums withholding
that were incurred as a result of his foreign assignment.
|
|
|
|
During the fiscal year ended
December 31, 2009, the Company paid U.S. $65,737 in
Canadian foreign taxes on Mr. Crums behalf to the
Canada Revenue Agency (CRA) in connection with his
foreign assignment earnings through February 12, 2009,
after which Mr. Crum returned to the United States. The
Company anticipates that, based on prior experience, the CRA
will refund an amount equal to 60 percent or approximately
U.S. $39,442 of the U.S. $65,737 of Canadian tax paid by the
Company. Therefore, among other items, the 2009 amount includes
40 percent or approximately U.S. $26,295 of the Canadian
tax paid by the Company on Mr. Crums behalf in 2009.
|
|
|
|
During the fiscal year ended
December 31, 2008, the Company paid U.S. $2.58 million
in Canadian foreign taxes on Mr. Crums behalf to the
CRA in connection with his 2008 foreign assignment earnings
including compensation reflected in the Option Exercises and
Stock Vested Table. Pursuant to the Companys expatriate
assignment policy, Mr. Crum is required to remit to the
Company all host country tax refunds he receives related to
taxes paid by the Company on his behalf. The Company has
calculated that the CRA will refund approximately U.S.
$0.83 million of the U.S. $2.58 million of Canadian
tax paid by the Company. Therefore, the 2008 amount includes
payments by the Company of Canadian tax on Mr. Crums
behalf in 2008 net of the refund, or U.S.
$1.75 million. Also pursuant to the Companys policy,
in 2009, Mr. Crum received and remitted to the Company a
$0.34 million refund from the U.S. Internal Revenue Service
(IRS) related to U.S. taxes, which is included in
the 2008 amount.
|
(footnotes continued on
following page)
51
|
|
|
|
|
During the fiscal year ended
December 31, 2007, the Company paid approximately U.S.
$1.43 million in Canadian foreign taxes on
Mr. Crums behalf to the CRA in connection with his
2007 foreign assignment earnings. In June 2009, the CRA refunded
U.S. $0.79 million of this tax to Mr. Crum, which
Mr. Crum remitted to the Company. The 2007 amount includes
payments by the Company of Canadian tax on Mr. Crums
behalf in 2007 net of the refund. Also pursuant to the
Companys expatriate assignment policy, in 2009,
Mr. Crum received and remitted to the Company a
$0.58 million refund from the IRS related to U.S. taxes,
which is included in the 2007 amount.
|
|
(i)
|
|
Executives assigned to foreign
countries typically incur a change in their overall tax
liability because most of the components of assignment
compensation that are provided in addition to base salary are
taxable in the U.S. and in the foreign country. Therefore, the
Companys expatriate assignment policy provides that it
will be responsible for any additional foreign or U.S. taxes due
as a direct result of the international assignment and the
executive remains financially responsible for the tax which
he/she would have incurred if he/she had continued to live and
work in the U.S. Therefore, the Company withheld
from Mr. Eichlers compensation an amount equivalent
to the taxes that would have been due had he remained in the
U.S. Those funds were used to help pay taxes due in the U.S. and
in Egypt during the period of his foreign assignment. The
Company paid taxes due in excess of Mr. Eichlers
withholding that were incurred as a result of his foreign
assignment.
|
52
GRANTS OF
PLAN BASED AWARDS TABLE
The table below provides supplemental information relating to
the Companys grants of stock options and restricted stock
units during fiscal year 2009 to the Named Executive Officers.
There were no stock appreciation rights granted during fiscal
year 2009. Also included, in compliance with SEC rules on
disclosure of executive compensation, is information relating to
the estimated grant date fair value of the grants. For stock
options, the estimated fair value is based upon principles of
the Black-Scholes option pricing model. The Black-Scholes model
utilizes numerous arbitrary assumptions about financial
variables such as interest rates, stock price volatility and
future dividend yield. Neither the values reflected in the table
nor the assumptions utilized in arriving at the values should be
considered indicative of future stock performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible
|
|
|
Payouts Under
|
|
|
Stock
|
|
|
All Other Option
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Payouts Under
|
|
|
Equity Incentive Plan
|
|
|
Awards: Number
|
|
|
Awards: Number
|
|
|
Exercise or Base
|
|
|
Fair
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
Awards
|
|
|
of Shares of
|
|
|
of Securities
|
|
|
Price of
|
|
|
Value of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards ($/Sh)
|
|
|
Awards ($)
|
Name (a)
|
|
|
Date (b)
|
|
|
($)(c)
|
|
|
($)(1)(d)
|
|
|
($)(e)
|
|
|
(#)(f)
|
|
|
(#)(g)
|
|
|
(#)(h)
|
|
|
(#)(2)(i)
|
|
|
(#)(3)(j)
|
|
|
(4)(k)
|
|
|
(2)(5)(l)
|
G. Steven Farris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,387,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,799,590
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,800
|
|
|
|
|
82.55
|
|
|
|
|
647,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
562,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,569,375
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
751,205
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
82.55
|
|
|
|
|
270,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
545,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,569,375
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
751,205
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
82.55
|
|
|
|
|
270,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
541,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,569,375
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
751,205
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
82.55
|
|
|
|
|
270,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S. Bahorich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
335,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
536,575
|
|
|
|
|
|
05/06/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500
|
|
|
|
|
82.55
|
|
|
|
|
192,985
|
|
|
|
|
|
11/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,995,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects estimated possible
payouts under the Companys annual incentive compensation
plans. The estimated amounts are calculated based on the
applicable annual bonus target and base salary for each Named
Executive Officer in effect for the 2009 measurement period. The
Companys annual incentive compensation plans do not
contain thresholds or maximums. Actual incentive bonus awards
granted for 2009 are reflected in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table.
|
|
(2)
|
|
This column reflects the number of
restricted stock units granted under the terms of the 2007
Omnibus Equity Compensation Plan. The grant date fair value of
these awards is based on a closing price of the Companys
common stock on the date of grant. Except as discussed below,
such restricted stock units vest ratably over four years and no
dividends are paid on such units until vested.
|
|
|
|
On February 12, 2009,
Mr. Roger Plank, Mr. Crum, and Mr. Eichler were
each granted 62,500 restricted stock units. The closing price of
the Companys common stock on February 12, 2009, was
$73.11 per share. The restricted stock units will vest 12,500 on
April 1, 2010, and the remaining 50,000 will vest ratably
on the anniversary of the grant in 2011, 2012, 2013, and 2014.
Upon vesting, Apache will issue one share of common stock for
each restricted stock unit, and 7,500 out of each
12,500 shares will not be eligible for sale by the grantee
until such time as he retires as an officer or otherwise
terminates employment with the Company. Each grantee could elect
to defer receipt of all or part of the vested shares and was
granted dividend equivalent payments on the unvested restricted
stock units equivalent to cash dividends on the Companys
common stock.
|
(footnotes continued on
following page)
53
|
|
|
|
|
On November 18, 2009,
Mr. Bahorich was granted 20,000 restricted stock units. The
closing price of the Companys common stock on
November 18, 2009, was $99.75 per share. The restricted
stock units will vest 4,000 on December 31, 2010, and the
remaining 16,000 will vest ratably on the anniversary of the
grant in 2011, 2012, 2013, and 2014. Upon vesting Apache will
issue one share of common stock for each restricted stock unit,
and 2,400 out of each 4,000 shares will not be eligible for
sale by Mr. Bahorich until such time as he retires as an
officer or otherwise terminates employment with the Company.
Mr. Bahorich could elect to defer receipt of all or part of
the vested shares and was granted dividend equivalent payments
on the unvested restricted stock units equivalent to cash
dividends on the Companys common stock.
|
|
(3)
|
|
This column sets forth the number
of shares of the Companys common stock subject to options
granted under the terms of the 2007 Omnibus Equity Compensation
Plan. The options granted under the terms of the 2007 Omnibus
Equity Compensation Plan are generally nontransferable and
become exercisable ratably over four years. The options were
granted for a term of ten years, subject to earlier termination
in specific circumstances related to termination of employment,
and are not intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code. The exercise
price and any withholding tax requirements may be paid by cash
and/or delivery or attestation of already-owned shares of the
Companys common stock. The Companys stock option
plans, including the 2007 Omnibus Equity Compensation Plan, are
administered by the Stock Option Plan Committee of Apaches
board of directors.
|
|
|
|
Options granted under the 2007
Omnibus Equity Compensation Plan are subject to appropriate
adjustment in the event of reorganization, stock split, stock
dividend, combination of shares, merger, consolidation or other
recapitalization of the Company. If there is a change in control
of the Company, all outstanding options become automatically
vested so as to make all such options fully vested and
exercisable as of the date of such change of control. A change
in control occurs when a person, partnership or corporation
acting in concert, or any or all of them, acquires more than
20 percent of the Companys outstanding voting
securities. A change in control shall not occur if, prior to the
acquisition of more than 20 percent of the Companys
voting securities, such persons, partnerships or corporations
are solicited to do so by the Companys board of directors.
|
|
(4)
|
|
The exercise price is the closing
price per share of the Companys common stock on the date
of grant, as reported on The New York Exchange, Inc. Composite
Transactions Reporting System.
|
|
(5)
|
|
The grant date present value is
based on the Black-Scholes option pricing model adapted for use
in calculating the fair value of executive stock options, using
the following assumptions for the grants made May 6, 2009:
volatility 38.73 percent; risk free rate of
return 2.06 percent; dividend yield
0.73 percent; and expected option life
5.5 years. There were no adjustments made to the model for
non-transferability or risk of forfeiture. The actual value, if
any, an executive may realize will depend on the excess of the
market price over the exercise price on the date the option is
exercised. There is no assurance the value realized by an
executive will be at or near the value estimated by the
Black-Scholes model.
|
54
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END TABLE
The table below provides supplemental information relating to
the stock-based awards held by the Named Executive Officers at
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Plan Awards:
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Plan Awards:
|
|
|
Market or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Market Value
|
|
|
Number of
|
|
|
Payout Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
of Shares
|
|
|
Unearned Shares,
|
|
|
Unearned Shares,
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
or Units of
|
|
|
Units or Other
|
|
|
Units or Other
|
|
|
|
Options
|
|
|
Options
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Stock That Have
|
|
|
Rights That Have
|
|
|
Rights That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Unearned Options
|
|
|
Price
|
|
|
Date
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
Name (a)
|
|
|
(#)(b)
|
|
|
(#)(c)
|
|
|
(#)(d)
|
|
|
($)(e)
|
|
|
(f)
|
|
|
(#)(g)
|
|
|
(1)($)(h)
|
|
|
(#)(i)
|
|
|
($)(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven Farris
|
|
|
|
29,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49.7100
|
|
|
|
|
05/03/2010
|
|
|
|
|
4,700
|
(3)
|
|
|
|
484,899
|
|
|
|
|
3,703
|
(2)
|
|
|
|
382,039
|
(1)
|
|
|
|
|
79,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49.7100
|
|
|
|
|
05/02/2011
|
|
|
|
|
10,350
|
(4)
|
|
|
|
1,067,810
|
|
|
|
|
11,110
|
(5)
|
|
|
|
1,146,219
|
(1)
|
|
|
|
|
63,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.7300
|
|
|
|
|
05/05/2015
|
|
|
|
|
200,000
|
(9)
|
|
|
|
20,634,000
|
|
|
|
|
9,260
|
(7)
|
|
|
|
|
(7)
|
|
|
|
|
42,225
|
|
|
|
|
14,075
|
(3)
|
|
|
|
|
|
|
|
|
71.8800
|
|
|
|
|
05/03/2016
|
|
|
|
|
21,800
|
(11)
|
|
|
|
2,249,106
|
|
|
|
|
13,890
|
(8)
|
|
|
|
|
(8)
|
|
|
|
|
31,050
|
|
|
|
|
31,050
|
(6)
|
|
|
|
|
|
|
|
|
74.1000
|
|
|
|
|
05/02/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,800
|
(13)
|
|
|
|
|
|
|
|
|
82.5500
|
|
|
|
|
05/06/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank
|
|
|
|
26,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51.1400
|
|
|
|
|
05/02/2011
|
|
|
|
|
1,650
|
(3)
|
|
|
|
170,231
|
|
|
|
|
1,465
|
(2)
|
|
|
|
151,144
|
(1)
|
|
|
|
|
11,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51.1400
|
|
|
|
|
05/03/2010
|
|
|
|
|
3,550
|
(4)
|
|
|
|
366,254
|
|
|
|
|
4,400
|
(5)
|
|
|
|
453,948
|
(1)
|
|
|
|
|
7,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.7300
|
|
|
|
|
05/05/2015
|
|
|
|
|
3,375
|
(10)
|
|
|
|
348,199
|
|
|
|
|
3,310
|
(7)
|
|
|
|
|
(7)
|
|
|
|
|
4,950
|
|
|
|
|
1,650
|
(3)
|
|
|
|
|
|
|
|
|
71.8800
|
|
|
|
|
05/03/2016
|
|
|
|
|
62,500
|
(12)
|
|
|
|
6,448,125
|
|
|
|
|
4,960
|
(8)
|
|
|
|
|
(8)
|
|
|
|
|
7,150
|
|
|
|
|
7,150
|
(6)
|
|
|
|
|
|
|
|
|
74.1000
|
|
|
|
|
05/02/2017
|
|
|
|
|
9,100
|
(11)
|
|
|
|
938,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
(13)
|
|
|
|
|
|
|
|
|
82.5500
|
|
|
|
|
05/06/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,229
|
|
|
|
|
6,688
|
(10)
|
|
|
|
|
|
|
|
|
135.8300
|
|
|
|
|
05/07/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum
|
|
|
|
5,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.7300
|
|
|
|
|
05/05/2015
|
|
|
|
|
1,225
|
(3)
|
|
|
|
126,383
|
|
|
|
|
1,080
|
(2)
|
|
|
|
111,424
|
(1)
|
|
|
|
|
3,675
|
|
|
|
|
1,225
|
(3)
|
|
|
|
|
|
|
|
|
71.8800
|
|
|
|
|
05/03/2016
|
|
|
|
|
2,750
|
(4)
|
|
|
|
283,718
|
|
|
|
|
3,240
|
(5)
|
|
|
|
334,271
|
(1)
|
|
|
|
|
5,500
|
|
|
|
|
5,500
|
(6)
|
|
|
|
|
|
|
|
|
74.1000
|
|
|
|
|
05/02/2017
|
|
|
|
|
2,625
|
(10)
|
|
|
|
270,821
|
|
|
|
|
2,600
|
(7)
|
|
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
9,100
|
(13)
|
|
|
|
|
|
|
|
|
82.5500
|
|
|
|
|
05/06/2019
|
|
|
|
|
62,500
|
(12)
|
|
|
|
6,448,125
|
|
|
|
|
3,890
|
(8)
|
|
|
|
|
(8)
|
|
|
|
|
1,750
|
|
|
|
|
5,250
|
(10)
|
|
|
|
|
|
|
|
|
135.8300
|
|
|
|
|
05/07/2018
|
|
|
|
|
9,100
|
(11)
|
|
|
|
938,847
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler
|
|
|
|
22,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.1083
|
|
|
|
|
05/02/2011
|
|
|
|
|
1,150
|
(3)
|
|
|
|
118,646
|
|
|
|
|
1,018
|
(2)
|
|
|
|
105,027
|
(1)
|
|
|
|
|
1,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55.6200
|
|
|
|
|
05/03/2010
|
|
|
|
|
2,550
|
(4)
|
|
|
|
263,084
|
|
|
|
|
3,055
|
(5)
|
|
|
|
315,184
|
(1)
|
|
|
|
|
5,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.7300
|
|
|
|
|
05/05/2015
|
|
|
|
|
2,475
|
(10)
|
|
|
|
255,346
|
|
|
|
|
2,410
|
(7)
|
|
|
|
|
(7)
|
|
|
|
|
3,450
|
|
|
|
|
1,150
|
(3)
|
|
|
|
|
|
|
|
|
71.8800
|
|
|
|
|
05/03/2016
|
|
|
|
|
62,500
|
(12)
|
|
|
|
6,448,125
|
|
|
|
|
3,620
|
(8)
|
|
|
|
|
(8)
|
|
|
|
|
5,050
|
|
|
|
|
5,050
|
(6)
|
|
|
|
|
|
|
|
|
74.1000
|
|
|
|
|
05/02/2017
|
|
|
|
|
9,100
|
(11)
|
|
|
|
938,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
(13)
|
|
|
|
|
|
|
|
|
82.5500
|
|
|
|
|
05/06/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,625
|
|
|
|
|
4,875
|
(10)
|
|
|
|
|
|
|
|
|
135.8300
|
|
|
|
|
05/07/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S. Bahorich
|
|
|
|
19,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.1083
|
|
|
|
|
05/02/2011
|
|
|
|
|
1,150
|
(3)
|
|
|
|
118,646
|
|
|
|
|
958
|
(2)
|
|
|
|
98,837
|
(1)
|
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.7300
|
|
|
|
|
05/05/2015
|
|
|
|
|
2,550
|
(4)
|
|
|
|
263,084
|
|
|
|
|
2,870
|
(5)
|
|
|
|
296,098
|
(1)
|
|
|
|
|
3,450
|
|
|
|
|
1,150
|
(3)
|
|
|
|
|
|
|
|
|
71.8800
|
|
|
|
|
05/03/2016
|
|
|
|
|
2,400
|
(10)
|
|
|
|
247,608
|
|
|
|
|
2,350
|
(7)
|
|
|
|
|
(7)
|
|
|
|
|
5,150
|
|
|
|
|
5,150
|
(6)
|
|
|
|
|
|
|
|
|
74.1000
|
|
|
|
|
05/02/2017
|
|
|
|
|
6,500
|
(11)
|
|
|
|
670,605
|
|
|
|
|
3,520
|
(8)
|
|
|
|
|
(8)
|
|
|
|
|
|
|
|
|
|
6,500
|
(13)
|
|
|
|
|
|
|
|
|
82.5500
|
|
|
|
|
05/06/2019
|
|
|
|
|
20,000
|
(14)
|
|
|
|
2,063,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,583
|
|
|
|
|
4,750
|
(10)
|
|
|
|
|
|
|
|
|
135.8300
|
|
|
|
|
05/07/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based on the per share closing
price of the Commons common stock of $103.17 for
December 31, 2009.
|
(2)
|
|
Vests on 06/14/2010.
|
(3)
|
|
Vests on 05/03/2010.
|
(4)
|
|
Vests ratably on 05/01/2010 and
05/01/2011.
|
(5)
|
|
Vests ratably on 03/01/2010 and
03/01/2011.
|
(6)
|
|
Vests ratably on 05/02/2010 and
05/02/2011.
|
(7)
|
|
Vests only if $162 price threshold
attained prior to 12/31/2010; no payout value unless vesting
occurs.
|
(8)
|
|
Vests only if $216 price threshold
attained prior to 12/31/2012; no payout value unless vesting
occurs.
|
(9)
|
|
Vests ratably on 01/04/2010,
01/03/2011, 01/02/2012 and 01/02/2013.
|
(10)
|
|
Vests ratably on 05/07/2010,
05/07/2011 and 05/07/2012.
|
(11)
|
|
Vests ratably on 06/01/2010,
05/06/11, 05/06/2012 and 05/06/2013.
|
(12)
|
|
Vests ratably on 04/01/2010,
02/12/2011, 02/12/2012, 02/11/2013 and 02/11/2014.
|
(13)
|
|
Vests ratably on 05/06/2010,
05/06/2011, 05/06/2012 and 05/06/2013.
|
(14)
|
|
Vests ratably on 12/31/2010,
11/18/2011, 11/19/2012, 11/18/2013 and 11/18/2014.
|
55
OPTION
EXERCISES AND STOCK VESTED TABLE
The table below provides supplemental information relating to
the value realized upon the exercise of stock options and upon
the vesting of restricted stock units and conditional grants
during fiscal year 2009, by each Named Executive Officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
Name (a)
|
|
|
(#)(b)
|
|
|
($)(c)
|
|
|
(#)(1)(d)
|
|
|
($)(1)(e)
|
|
G. Steven Farris
|
|
|
|
75,500
|
|
|
|
|
4,831,244
|
|
|
|
|
74,507
|
(2)
|
|
|
|
5,385,553
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank
|
|
|
|
63,972
|
|
|
|
|
4,858,147
|
|
|
|
|
10,165
|
|
|
|
|
770,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,600
|
|
|
|
|
576,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler
|
|
|
|
33,155
|
|
|
|
|
2,295,311
|
|
|
|
|
7,145
|
(3)
|
|
|
|
541,780
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S. Bahorich
|
|
|
|
46,293
|
|
|
|
|
2,772,437
|
|
|
|
|
6,992
|
|
|
|
|
531,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond Plank
|
|
|
|
186,814
|
|
|
|
|
2,352,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects restricted stock units
vested under the terms of the Executive Restricted Stock Plan
and 2007 Omnibus Equity Compensation Plan, and conditional
grants vested under the 2005 Share Appreciation Plan.
|
|
(2)
|
|
On May 8, 2008, G. Steven
Farris was granted 250,000 restricted stock units. The closing
price of the Companys common stock on May 8, 2008,
was $138.18 per share. On July 1, 2009, 50,000 of the
restricted stock units vested, resulting in compensation of
$3,554,500.
|
|
|
|
The remaining 200,000 restricted
stock units will vest ratably on the first business day of each
of 2010, 2011, 2012, and 2013. Upon vesting, Apache will issue
one share of common stock for each restricted stock unit, and
30,000 out of each 50,000 shares will not be eligible for
sale by Mr. Farris until such time as he retires as chief
executive officer or otherwise terminates employment with the
Company. Mr. Farris could elect to defer receipt of all or
part of the vested shares and was granted dividend equivalent
payments on the unvested restricted stock units equivalent to
cash dividends on the Companys common stock.
|
|
(3)
|
|
For Mr. Eichler, includes
compensation of $365,859 related to the vesting of
4,600 shares that was deferred under the terms of
Apaches Deferred Delivery Plan.
|
56
NON-QUALIFIED
DEFERRED COMPENSATION TABLE
The table below provides supplemental information relating to
compensation deferred during fiscal year 2009 under the terms of
the Non-Qualified Retirement/Savings Plan
and/or the
Deferred Delivery Plan by the Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Balance
|
|
|
|
|
|
|
in
|
|
|
in
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
at Last
|
|
|
|
|
|
|
Last FY
|
|
|
Last FY
|
|
|
Last FY
|
|
|
Distributions
|
|
|
FYE
|
Name (a)
|
|
|
|
|
|
($)(b)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
($)(f)
|
G. Steven Farris
|
|
|
(1)
|
|
|
|
91,250
|
|
|
|
|
197,100
|
|
|
|
|
670,077
|
(3)
|
|
|
|
0
|
|
|
|
|
6,779,797
|
|
|
|
|
(2)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank
|
|
|
(1)
|
|
|
|
85,912
|
|
|
|
|
65,685
|
|
|
|
|
914,282
|
(3)
|
|
|
|
0
|
|
|
|
|
3,520,032
|
|
|
|
|
(2)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
13,423
|
|
|
|
|
457,236
|
|
|
|
|
2,318,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum
|
|
|
(1)
|
|
|
|
26,189
|
|
|
|
|
57,178
|
|
|
|
|
291,309
|
(4)
|
|
|
|
2,239,150
|
|
|
|
|
1,751,306
|
|
|
|
|
(2)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler
|
|
|
(1)
|
|
|
|
368,522
|
|
|
|
|
55,392
|
|
|
|
|
767,896
|
(3)
|
|
|
|
0
|
|
|
|
|
3,717,694
|
|
|
|
|
(2)
|
|
|
|
365,859
|
|
|
|
|
0
|
|
|
|
|
15,633
|
|
|
|
|
437,785
|
|
|
|
|
2,703,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S. Bahorich
|
|
|
(1)
|
|
|
|
13,484
|
|
|
|
|
41,568
|
|
|
|
|
5,367
|
(3)
|
|
|
|
275,592
|
|
|
|
|
571,067
|
|
|
|
|
(2)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond Plank
|
|
|
(1)
|
|
|
|
0
|
|
|
|
|
41,050
|
|
|
|
|
103
|
|
|
|
|
197,228
|
|
|
|
|
0
|
|
|
|
|
(2)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,120
|
|
|
|
|
6,083,271
|
|
|
|
|
0
|
|
|
|
|
|
(1)
|
|
Non-Qualified Retirement/Savings
Plan see discussion under All Other
Compensation above. The amounts in column (c) are
included in the Summary Compensation Table under All Other
Compensation.
|
|
(2)
|
|
Deferred Delivery Plan
see discussion under All Other Compensation above
and footnote (2) to the table under Equity
Compensation Plan Information above.
|
|
(3)
|
|
Includes unrealized gains in the
Non-Qualified Retirement/Savings Plan as follows:
Mr. Farris $629,371; Mr. Roger
Plank $888,557; Mr. Eichler
$674,164; and Mr. Bahorich $925.
|
|
(4)
|
|
Includes unrealized loss in the
Non-Qualified Retirement/Savings Plan of $252,018 for
Mr. Crum.
|
57
EMPLOYMENT
CONTRACTS AND TERMINATION OF
EMPLOYMENT AND
CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into certain agreements and maintains
certain plans that will require the Company to provide
compensation to Named Executive Officers of the Company in the
event of a termination of employment or a change in control of
the Company. The amount of compensation payable to each Named
Executive Officer in each situation is listed in the following
table for fiscal year 2009, assuming termination had occurred on
December 31, 2009. As discussed previously, Raymond Plank
retired on January 15, 2009 (for additional information,
see footnote (g) on page 51).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Change of
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
For Cause
|
|
|
|
without
|
|
|
|
Control
|
|
|
|
|
|
|
|
Name
|
|
|
Termination
|
|
|
|
Termination
|
|
|
|
Cause
|
|
|
|
Termination (5)
|
|
|
|
Death
|
|
|
|
G. Steven Farris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Contract (1)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
6,075,000
|
|
|
|
$
|
6,075,000
|
|
|
|
$
|
0
|
|
|
|
Income Continuance Plan
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
7,775,000
|
|
|
|
|
N/A
|
|
|
|
Benefits Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
16,694
|
|
|
|
$
|
23,383
|
|
|
|
$
|
927
|
|
|
|
Life
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
289,544
|
|
|
|
$
|
0
|
|
|
|
Unvested & Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units (2)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
25,964,073
|
|
|
|
$
|
5,330,073
|
|
|
|
Stock Options
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
1,792,546
|
|
|
|
$
|
1,792,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
6,091,694
|
|
|
|
$
|
41,919,546
|
|
|
|
$
|
7,123,546
|
|
|
|
|
Roger B. Plank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Continuance Plan
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
2,207,196
|
|
|
|
$
|
0
|
|
|
|
Benefits Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
34,498
|
|
|
|
$
|
0
|
|
|
|
Life
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
45,384
|
|
|
|
$
|
0
|
|
|
|
Unvested & Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units (3)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
8,876,748
|
|
|
|
$
|
2,428,623
|
|
|
|
Stock Options
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
447,121
|
|
|
|
$
|
447,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
(6)
|
|
|
$
|
11,610,947
|
|
|
|
$
|
2,875,744
|
|
|
|
|
John A. Crum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Continuance Plan
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
2,172,290
|
|
|
|
$
|
0
|
|
|
|
Benefits Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
34,498
|
|
|
|
$
|
0
|
|
|
|
Life
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
67,782
|
|
|
|
$
|
0
|
|
|
|
Unvested & Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units (3)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
8,513,589
|
|
|
|
$
|
2,065,464
|
|
|
|
Stock Options
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
385,857
|
|
|
|
$
|
385,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
(6)
|
|
|
$
|
11,174,016
|
|
|
|
$
|
2,451,321
|
|
|
|
|
Rodney J. Eichler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Continuance Plan
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
2,165,444
|
|
|
|
$
|
0
|
|
|
|
Benefits Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
29,150
|
|
|
|
$
|
0
|
|
|
|
Life
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
37,804
|
|
|
|
$
|
0
|
|
|
|
Unvested & Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units (3)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
8,444,259
|
|
|
|
$
|
1,996,134
|
|
|
|
Stock Options
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
370,429
|
|
|
|
$
|
370,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
(6)
|
|
|
$
|
11,047,086
|
|
|
|
$
|
2,366,563
|
|
|
|
|
Michael S. Bahorich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Continuance Plan
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
1,514,576
|
|
|
|
$
|
0
|
|
|
|
Benefits Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
35,080
|
|
|
|
$
|
0
|
|
|
|
Life
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
31,822
|
|
|
|
$
|
0
|
|
|
|
Unvested & Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units (4)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
3,758,278
|
|
|
|
$
|
1,694,878
|
|
|
|
Stock Options
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
319,724
|
|
|
|
$
|
319,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
(6)
|
|
|
$
|
5,659,480
|
|
|
|
$
|
2,014,602
|
|
|
|
|
(See footnotes on following
page)
58
|
|
|
(1)
|
|
Mr. Farris serves the Company
pursuant to an employment agreement, dated June 6, 1988,
under which his base salary as of year-end 2009 is $1,350,000.
The agreement has an undefined term and may be terminated by
either the Company or Mr. Farris on 30 days advance
written notice. If Mr. Farris employment is
terminated without cause (as defined in the
employment agreement), or if he terminates his employment within
30 days of a reduction in his salary without a
proportionate reduction in the salaries of all other Company
executives, Mr. Farris will receive, for 36 months
thereafter, (a) an amount equal to his base salary as it
existed 60 days prior to termination and
(b) 50 percent of the maximum amount for which he
qualified under the Companys incentive compensation plan,
calculated on his base compensation as it existed 60 days
prior to termination. In the event of Mr. Farris
death during the
36-month
period, the amounts described above shall be paid to his heirs
or estate in addition to continuing individual dependent
benefits for 60 days. These rights and obligations would be
the same if a termination in either of these circumstances were
to follow a change of control. Mr. Farris has agreed not to
render service to any of the Companys competitors for the
term of his employment or, unless he is terminated without
cause, for 36 months thereafter.
|
|
(2)
|
|
On May 8, 2008,
Mr. Farris was granted 250,000 restricted stock units. The
restricted stock units vested 50,000 on July 1, 2009, and
50,000 on January 4, 2010. The remaining 150,000 restricted
stock units will vest ratably on the first business day of each
of 2011, 2012, and 2013. Upon vesting, Apache will issue one
share of common stock for each restricted stock unit, and 30,000
out of each 50,000 shares will not be eligible for sale by
Mr. Farris until such time as he retires as chief executive
officer or otherwise terminates employment with the Company. If,
after June 7, 2009, Mr. Farris is terminated by the
Company without cause and not by reason of becoming disabled or
if Mr. Farris terminates his employment for good reason,
then all restricted stock units shall vest and the above
restrictions shall lapse.
|
|
(3)
|
|
On February 12, 2009,
Messrs. Roger Plank, Crum, and Eichler were each granted
62,500 restricted stock units. The restricted stock units will
vest 12,500 on April 1, 2010, and the remaining 50,000 will
vest ratably on the anniversary of the grant in 2011, 2012,
2013, and 2014. Upon vesting, Apache will issue one share of
common stock for each restricted stock unit, and 7,500 out of
each 12,500 shares will not be eligible for sale by the
executive until such time as he retires or terminates employment
with the Company. If, after March 11, 2010, the executive
is terminated by the Company without cause and not by reason of
becoming disabled or if he terminates employment for good
reason, then all restricted stock units shall vest and the above
restrictions shall lapse.
|
|
(4)
|
|
On November 18, 2009,
Mr. Bahorich was granted 20,000 restricted stock units. The
restricted stock units will vest 4,000 on December 31,
2010, and the remaining 16,000 will vest ratably on the
anniversary of the grant in 2011, 2012, 2013, and 2014. Upon
vesting, Apache will issue one share of common stock for each
restricted stock unit, and 2,400 out of each 4,000 shares
will not be eligible for sale by Mr. Bahorich until such
time as he retires or otherwise terminates employment with the
Company. If, on or before December 18, 2010,
Mr. Bahorich is terminated by the Company without cause and
not by reason of becoming disabled or if Mr. Bahorich
terminates his employment for good reason, then all unvested
restricted stock units shall be cancelled. If, after
December 17, 2010, Mr. Bahorich is terminated by the
Company without cause and not by reason of becoming disabled or
if Mr. Bahorich terminates his employment for good reason,
then all restricted stock units shall vest and the above
restrictions shall lapse.
|
|
(5)
|
|
In addition to the foregoing, the
Company has established an income continuance plan. The plan
provides that all officers of the Company, including the Named
Executive Officers, and all employees who have either reached
the age of 40, served the Company for more than ten years, or
have been designated for participation based upon special skills
or experience, will receive monthly payments approximating their
monthly income and continued health and life benefits from the
Company for up to two years, if their employment is terminated
as a result of a change in control of the Company
(as defined in the plan).
|
|
(6)
|
|
Although there is no written or
unwritten contracts, agreements, plans, arrangements, or
obligations in place for termination without cause, the Company
has, from time to time, paid executive level positions up to two
times base salary and benefits continuation for two years.
Decisions by the Company to pay termination benefits, and in
what amounts, are determined on an individual case basis and not
as a matter of policy.
|
59
Payments
Made Upon Death or Disability
In the event of death for Mr. Farris, Mr. Roger Plank,
Mr. Crum, Mr. Eichler, or Mr. Bahorich in
addition to the benefits listed in the preceding table, payments
will also be made under the Companys life insurance plan.
In the event of disability, these executive officers would
benefit under the Companys disability insurance plan.
COMPENSATION
COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Frederick M. Bohen, John A. Kocur, A. D. Frazier, Jr., and
George D. Lawrence served on the Management Development and
Compensation (MD&C) Committee of the
Companys board of directors for all of 2009.
Mr. Kocur, a member of the MD&C Committee since
September 1991 and a director of the Company since 1977, retired
as an executive officer in June 1991. Pursuant to the terms of
an employment agreement in place at the time of his retirement,
Mr. Kocur receives health, dental and vision benefits.
Mr. Lawrence, a member of the MD&C Committee since May
1997, is the former president and chief executive officer of The
Phoenix Resource Companies, Inc. (Phoenix).
Mr. Lawrence joined the Companys board of directors
in May 1996, in conjunction with the Companys acquisition
of Phoenix by a merger on May 20, 1996, through which
Phoenix became a wholly owned subsidiary of Apache. Pursuant to
the terms of his employment agreement with Phoenix,
Mr. Lawrence received medical and dental benefits through
December 1997. Since that time, he has purchased medical and
dental coverage through the Company at full cost.
60
CERTAIN
BUSINESS RELATIONSHIPS AND TRANSACTIONS
The Companys board of directors has adopted a Code of
Business Conduct which prohibits conflicts of interest between
any director, officer or employee and the Company. The Code of
Business Conduct requires directors, officers and employees to
inform the Company of any transaction that involves related
parties and that may give rise to a conflict of interest.
Pursuant to its charter, the CG&N Committee reviews related
party transactions on an ongoing basis to prevent conflicts of
interest. The CG&N Committee reviews a transaction in light
of the affiliations of the director, officer or employee and the
affiliations of such persons immediate family.
Transactions are presented to the CG&N Committee for
approval before they are entered into or, if this is not
possible, for ratification after the transaction has occurred.
If the CG&N Committee finds that a conflict of interest
exists, then it will determine the appropriate remedial action,
if any. The CG&N Committee approves or ratifies a
transaction if it determines that the transaction is consistent
with the best interests of the Company. The determination of the
CG&N Committee is documented in the committees
minutes. The board of directors reviews transactions to
determine whether a transaction impairs the independence of a
director and such determination is documented in the
boards minutes. The Code of Business Conduct and the
CG&N Committee charter are available on the Companys
website (www.apachecorp.com).
Oil and
Gas Activities
F. H. Merelli, a member of Apaches board of
directors, is chairman of the board, chief executive officer and
president of Cimarex Energy Co. (Cimarex). In the
ordinary course of business, Cimarex paid to Apache during 2009
approximately $6,096,000 for Cimarexs proportionate share
of drilling and workover costs, mineral interests, and routine
expenses relating to oil and gas wells in which Cimarex owns
interests and of which Apache is the operator. Cimarex was paid
approximately $3,795,000 directly by Apache or related entities
for its proportionate share of revenues from wells in which
Cimarex owns an interest and of which Apache is the operator.
Apache paid to Cimarex approximately $926,000 during 2009 for
Apaches proportionate share of drilling and workover
costs, mineral interests, and routine expenses relating to oil
and gas wells in which Apache owns interests and Cimarex is the
operator. Apache was paid approximately $1,995,000 directly by
Cimarex for its proportionate share of revenues from wells in
which Apache owns an interest and of which Cimarex is operator.
These transactions were not material to Apache or Cimarex.
Philanthropic
Activities
Since the Company was incorporated in 1954, Apache and its
employees have been committed to giving back to their
communities, with special emphasis on the arts, education and
the environment. To fulfill this commitment, Apache initiated
the following non-profits: Springboard Educating the
Future, which funds and builds schools for girls in Egypts
rural villages; and Ucross Foundation, which provides artists
with opportunities to pursue their creative work in a unique
Wyoming setting and engages in conservation and holistic
ranching programs.
During 2009, Apache and its subsidiaries made donations of
$114,000 in cash, property, and services to
Springboard Educating the Future
(Springboard), a
U.S.-based
non-profit organization initiated by Apache. With financial and
operational support from Apache, its employees, officers and
directors, generous individuals, and other corporations,
Springboard has funded and constructed 200 schools for Egyptian
girls who otherwise would not have educational opportunities in
the rural villages where they reside. Apache launched this
effort as part of its commitment to improving living standards
in Egypt, one of the Companys core operating regions. At
the request of Apache, Rodney J. Eichler, an officer of the
Company, served as the non-paid president and a director of
Springboard until June
61
2009. At that time, he resigned as president and was appointed
as the non-paid, non-executive chairman.
Apache and several of its officers and directors established the
Ucross Foundation in 1981 as a non-profit organization whose
primary objectives include the preservation of historic
buildings, pursuit of holistic ranching practices and
conservation, and the maintenance of an
artists-in-residence
program for writers and other artists. Since that time, the
artists-in-residence
program has provided a venue for more than 1,300 artists,
writers, and composers, including winners of the Pulitzer Prize,
the Tony Award, the National Book Award in poetry, and the
Whiting Writing Awards. In 2005, the Ucross Foundation decided
to focus its energies and financial resources on the
artists-in-residence
program. Apache and its subsidiaries made donations of $21,000
in cash, property, and services to Ucross Foundation in 2009.
Apache subsidiaries also paid $168,000 to Ucross Foundation
during 2009 for the lease of land and other services. To help
ensure the continuity of Ucross Foundation and its charitable
purposes, in February 2004, Apaches board of directors
approved a conditional charitable contribution of
$10 million to be made to Ucross Foundation in the event of
a change of control of Apache, as defined in its income
continuance plan. Until July 3, 2009, George D. Lawrence, a
director of Apache, also served as the non-paid, non-executive
chairman of the board of trustees of Ucross Foundation.
62
RATIFICATION
OF INDEPENDENT AUDITORS
(ITEM NO. 4 ON PROXY CARD)
The Audit Committee has appointed Ernst & Young LLP,
an independent registered public accounting firm, to audit the
Companys financial statements for 2010. We are asking the
stockholders to ratify that appointment.
The board of directors recommends that you vote FOR the
ratification of Ernst & Young as the Companys
independent auditors for 2010.
INDEPENDENT
AUDITORS
Policy
for Approval of Audit, Audit-Related and Permitted Non-Audit
Services
All audit, audit-related, and tax services were pre-approved by
the Audit Committee, which concluded that the provision of such
services by Ernst & Young LLP was compatible with that
firms independence in the conduct of its auditing
functions. The Audit Committees Audit and Non-Audit
Services Pre-Approval Policy provides for pre-approval of
specifically described audit, audit-related, tax services, and
permissible non-audit services. The policy authorizes the Audit
Committee to delegate its pre-approval authority to one or more
of its members.
Auditor
Fees and Services
Ernst & Young served as the Companys independent
auditors for the fiscal year 2009. Representatives of
Ernst & Young will be present at the annual meeting
and will have an opportunity to make a statement, if they desire
to do so, and to respond to appropriate questions regarding
Apache business.
Ernst & Youngs audit report on Apaches
consolidated financial statements as of and for the fiscal year
ended December 31, 2009, did not contain any adverse
opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty or audit scope; however, it was
modified for the adoption of new accounting principles.
During Apaches most recent fiscal year ended
December 31, 2009, and through the filing date of this
proxy statement, there were no disagreements with
Ernst & Young on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope
or procedure, which disagreements, if not resolved to
Ernst & Youngs satisfaction, would have caused
Ernst & Young to make reference to the subject matter
of the disagreement in connection with their report. During this
period, there were no reportable events, as described in
Item 304(a)(1)(v) of
Regulation S-K.
During 2009 and 2008, Ernst & Young provided various
services to Apache. The aggregate fees for each of the following
types of services are set forth below:
|
|
|
|
|
|
|
|
|
|
|
Amounts (in thousands)
|
Description
|
|
2009
|
|
2008
|
Audit Services (1)
|
|
$
|
4,644
|
|
|
$
|
5,361
|
|
|
|
|
|
|
|
|
|
|
Audit-Related Services (2)
|
|
$
|
240
|
|
|
$
|
264
|
|
|
|
|
|
|
|
|
|
|
Tax Services (3)
|
|
$
|
501
|
|
|
$
|
388
|
|
|
|
|
|
|
|
|
|
|
All Other Services (4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
(See footnotes on following
page)
63
|
|
|
(1)
|
|
Audit Services include the annual
financial statement audit (including required quarterly
reviews), subsidiary audits, and other procedures required to be
performed by the independent auditor to be able to form an
opinion on the Companys consolidated financial statements.
These other procedures include information systems and
procedural reviews and testing performed in order to understand
and place reliance on the systems of internal controls, and
consultations relating to the audit or quarterly reviews.
|
|
(2)
|
|
Audit-Related Services are
assurance and related services that are reasonably related to
the performance of the audit or review of the Companys
financial statements or that are traditionally performed by the
independent auditor. Audit-related services include, among other
things, due diligence services pertaining to potential business
acquisitions/dispositions; accounting consultations related to
accounting, financial reporting or disclosure matters not
classified as Audit Services, assistance with
understanding and implementing new accounting and financial
reporting guidance from rulemaking authorities; financial audits
of employee benefit plans; agreed upon or expanded audit
procedures related to accounting and/or billing records required
to respond to or comply with financial, accounting or regulatory
reporting matters; and assistance with internal controls,
reporting requirements.
|
|
(3)
|
|
Tax Services include tax return
preparation assistance, tax planning, tax-related and
structuring-related consultation, and tax-related acquisition
due diligence.
|
|
(4)
|
|
All Other Services are fees for
products and services other than those in the three categories
above.
|
The Audit Committee of the Companys board of directors
reviews summaries of the services provided by Ernst &
Young and the related fees. The Audit Committee has taken into
consideration whether the provision of non-audit services by
Ernst & Young is compatible with maintaining auditor
independence.
FUTURE
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders are entitled to submit proposals on matters
appropriate for stockholder action consistent with regulations
of the SEC and the Companys bylaws.
In order for such proposal to be properly brought before next
years annual meeting, written notice of the proposal that
complies with the Companys bylaws must be received by the
Companys corporate secretary (at the address below) not
less than 120 days prior to the meeting, which is expected
to be held in May 2011. Nominations of persons for election to
the board of directors at the 2011 annual meeting likewise must
be given in writing, comply with the Companys bylaws, and
be received by the Companys corporate secretary not less
than 120 days prior to the meeting, which is expected to be
held in May 2011.
In addition to the foregoing, should a stockholder wish to have
a proposal appear in the Companys proxy statement for next
years annual meeting, under the regulations of the SEC, it
must be received by the Companys corporate secretary at
2000 Post Oak Boulevard, Suite 100, Houston, Texas
77056-4400
on or before November 30, 2010.
64
SOLICITATION
OF PROXIES
Solicitation of proxies for use at the annual meeting may be
made in person or by mail or telephone, by directors, officers
and regular employees of the Company. These persons will receive
no special compensation for any solicitation activities. The
Company has requested banking institutions, brokerage firms,
custodians, trustees, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares of the
Companys common stock for whom they are record holder, and
the Company will, upon request, reimburse reasonable forwarding
expenses. The Company has retained Georgeson Inc. to assist in
soliciting proxies from brokers, bank nominees, and other
institutional holders for a fee not to exceed $13,000 plus
expenses. All costs of the solicitation will be borne by the
Company.
By order of the Board of Directors
APACHE CORPORATION
C. L. Peper
Corporate Secretary
NOTE: Stockholders are requested to promptly vote their
shares using one of the methods explained on pages 1 and 2 of
this proxy statement.
65
NOTICE OF ANNUAL
MEETING
OF STOCKHOLDERS
MAY 6, 2010
AND PROXY STATEMENT
One Post Oak Central
2000 Post Oak Boulevard,
Suite 100
Houston, Texas
77056-4400
Printed
on recycled paper
00069842
APACHE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 6, 2010
10:00 a.m.
Hilton Houston Post Oak
2001 Post Oak Boulevard
Houston, Texas
Important Notice Regarding Internet Availability of Proxy Materials for this Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at
http://www.apachecorp.com/Investors/Annual_meeting.aspx
APACHE CORPORATION 2010 PROXY
This proxy is solicited on behalf of the board of directors
for use at the Annual Meeting on May 6, 2010
By signing this proxy, you revoke all prior proxies and appoint Randolph M. Ferlic, A. D. Frazier,
Jr., and George D. Lawrence as Proxies, with full power of substitution, and authorize them to
represent the undersigned at the annual meeting of stockholders to be held May 6, 2010, or any
adjournment thereof, and to vote all the shares of common stock of Apache Corporation held of
record by the undersigned on March 8, 2010.
This Proxy, when properly executed, will be voted in the manner directed by the undersigned
stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND
FOR RATIFICATION OF AUDITORS.
For participants in the Apache 401(k) Savings Plan, this proxy, when properly executed, will be
voted in the manner directed by the undersigned. If no direction is given, if the card is not
signed, or if the card is not received by May 4, 2010, the shares credited to your account will be
voted in proportion to directions received by Fidelity, the plan trustee.
Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week
Your internet or telephone vote authorizes the Named Proxies to vote your shares in
the
same manner as if you marked, signed and returned your proxy card.
Internet and telephone voting are QUICK, EASY and IMMEDIATE.
|
|
|
|
|
INTERNET
|
|
PHONE
|
|
MAIL |
|
|
|
|
|
www.eproxy.com/apa
|
|
1-800-560-1965 |
|
|
Use the Internet to vote your proxy
until 12:00 noon (central time) on
May 5, 2010.
Please have available your proxy card
and the last 4-digits of your U.S.
Social Security Number or the Tax
Identification Number for this account.
Follow the simple instructions
provided.
|
|
Use a touch-tone telephone to
vote your proxy until
12:00 noon (central time) on
May 5, 2010.
Please have available your proxy card
and the last 4-digits of your U.S.
Social Security Number or the Tax
Identification Number for this account.
Follow the simple instructions
provided.
|
|
Mark, sign and date your proxy
card and return it in the
postage-paid envelope provided. |
If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPANY #
|
|
|
|
Address Change? Mark box, sign, and Indicate changes below: |
o |
|
|
TO VOTE BY INTERNET OR TELEPHONE,
SEE REVERSE SIDE OF THIS PROXY CARD. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
òPlease fold here - Do not separate
ò
The Board of The Directors Recommends a Vote FOR Items 1 through 4.
|
|
|
|
|
|
|
|
|
Items 1-3.
|
|
Election of directors: |
|
|
|
|
|
|
|
|
|
01 Eugene C. Fiedorek
|
|
o For
|
|
o Against
|
|
o Abstain |
|
|
02 Patricia Albjerg Graham
|
|
o For
|
|
o Against
|
|
o Abstain |
|
|
03 F. H. Merelli
|
|
o For
|
|
o Against
|
|
o Abstain |
Item 4.
|
|
Ratification of Ernst & Young as Apaches independent auditors
|
|
o For
|
|
o Against
|
|
o Abstain |
Item 5. |
|
The Proxies are authorized to vote in their best judgment upon such other business as may properly come before the
meeting or any adjournment thereof. |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR ITEMS 1 THROUGH 4.
|
|
|
|
|
|
Date
|
|
Signature(s) in Box |
|
|
|
|
Please sign exactly as your name(s) appears on
Proxy. If held in joint tenancy, all persons should
sign. Trustees, administrators, etc. should include
title and authority. Corporations should provide
full name of corporation and title of authorized
officer signing the Proxy. |
|
|
|
|
|
|
|
|
|
|
|