pre14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Anadarko Petroleum
Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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P.O. Box 1330
Houston, Texas
77251-1330
March XX,
2009
TO OUR STOCKHOLDERS:
The 2009 Annual Meeting of Stockholders of Anadarko Petroleum
Corporation will be held at The Woodlands Waterway Marriott
Hotel and Convention Center, 1601 Lake Robbins Drive, The
Woodlands, Texas, 77380 on Tuesday, May 19, 2009, at
8:00 a.m. (Central Daylight Time).
The attached Notice of Annual Meeting of Stockholders and proxy
statement provide information concerning the matters to be
considered at the Annual Meeting. The Annual Meeting will cover
only the business contained in the proxy statement and will not
include a management presentation.
Pursuant to rules promulgated by the U.S. Securities and
Exchange Commission, we are also providing access to our proxy
materials over the Internet. As a result, we are mailing to many
of our stockholders a Notice of Internet Availability of Proxy
Materials (Notice) instead of a paper copy of this proxy
statement, a proxy card and our 2008 annual report. The Notice
contains instructions on how to access those documents over the
Internet, as well as instructions on how to request a paper copy
of our proxy materials. All stockholders who do not receive a
Notice should receive a paper copy of the proxy materials by
mail. We believe that the Notice process will allow us to
provide you with the information you need in a timelier manner,
will save us the cost of printing and mailing documents to you,
and will conserve natural resources.
We value your opinions and encourage you to participate in this
years Annual Meeting by voting your proxy. You may vote by
Internet or by telephone using the instructions on the Notice,
or, if you received a paper copy of the proxy card, by signing
and returning it in the envelope provided. You may also attend
and vote at the Annual Meeting.
Very truly yours,
JAMES T. HACKETT
Chairman of the Board, President and
Chief Executive Officer
P. O. Box 1330
Houston, Texas 77251-1330
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Anadarko Petroleum
Corporation will be held at The Woodlands Waterway Marriott
Hotel and Convention Center, 1601 Lake Robbins Drive, The
Woodlands, Texas, 77380 on Tuesday, May 19, 2009, at
8:00 a.m. (Central Daylight Time) to consider the following
proposals:
(1) elect four directors;
(2) ratify the appointment of KPMG LLP as the
Companys independent auditor for 2009;
(3) approve an amendment to the Companys Restated
Certificate of Incorporation, as amended, to provide for the
annual election of directors;
(4) if presented, vote on one stockholder proposal; and
(5) transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
If you are a record holder of common stock at the close of
business on March 25, 2009, the record date, then you are
entitled to receive notice of and to vote at the Annual Meeting.
Please take the time to vote by following the Internet or
telephone voting instructions provided. If you received a paper
copy of the proxy card, you may also vote by completing and
mailing the proxy card in the postage-prepaid envelope provided
for your convenience. You may also attend and vote at the Annual
Meeting. You may revoke your proxy at any time before the vote
is taken by following the instructions in this proxy statement.
As a stockholder, your vote is very important and the
Companys Board of Directors strongly encourages you to
exercise your right to vote.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Siddall
Vice President, Deputy General Counsel, and
Corporate Secretary
March XX, 2009
The Woodlands, Texas
Important
Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be Held on May 19, 2009:
The Proxy Statement and Annual Report for 2008 are available
at
http://bnymellon.mobular.net/bnymellon/apc.
TABLE OF
CONTENTS
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P. O. Box 1330
Houston, Texas
77251-1330
PROXY
STATEMENT
May 19, 2009
GENERAL
INFORMATION
We are furnishing you this proxy statement in connection with
the solicitation of proxies by our Board of Directors to be
voted at the Annual Meeting of Stockholders of Anadarko
Petroleum Corporation, sometimes referred to as the Company,
Anadarko, our, us or we. The Annual Meeting will be held on
Tuesday, May 19, 2009. The proxy materials, including this
proxy statement, proxy card or voting instructions and our 2008
annual report are being distributed and made available on or
about April XX, 2009.
In accordance with rules and regulations adopted by the
U.S. Securities and Exchange Commission (SEC), we have
elected to provide our stockholders access to our proxy
materials on the Internet. Accordingly, a Notice of Internet
Availability of Proxy Materials (Notice) was mailed to most of
our stockholders on or about April XX, 2009. Stockholders will
have the ability to access the proxy materials on a website
referred to in the Notice or request a printed set of the proxy
materials to be sent to them, by following the instructions in
the Notice.
The Notice also provides instructions on how to inform us to
send future proxy materials to you electronically by
e-mail or in
printed form by mail. If you choose to receive future proxy
materials by
e-mail, you
will receive an
e-mail next
year with instructions containing a link to those materials and
a link to the proxy voting site. Your election to receive proxy
materials by
e-mail or
printed form will remain in effect until you terminate it.
Choosing to receive future proxy materials by
e-mail will
allow us to provide you with the information you need in a
timelier manner, save us the cost of printing and mailing
documents to you, and conserve natural resources.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
Where and
when is the Annual Meeting?
The Annual Meeting will be at The Woodlands Waterway Marriott
Hotel and Convention Center, 1601 Lake Robbins Drive, The
Woodlands, Texas, 77380, on Tuesday, May 19, 2009, at
8:00 a.m. (Central Daylight Time).
Who may
vote?
You may vote if you were the record holder of Anadarko common
stock as of the close of business on March 25, 2009, the
record date for the Annual Meeting. Each share of Anadarko
common stock is entitled to one vote at the Annual Meeting. On
the record date, there were XXX,XXX,XXX shares of common stock
outstanding and entitled to vote at the Annual Meeting.
May I
attend the Annual Meeting?
Yes. Attendance is limited to stockholders of record as of the
record date for the Annual Meeting. Admission will be on a
first-come, first-served basis. You may be asked to present
valid picture identification, such as a drivers license or
passport. If your stock is held in the name of a bank, broker,
or other holder of record and you plan to attend the Annual
Meeting, you must present proof of your ownership of Company
stock, such as a current bank or brokerage account statement
reflecting ownership as of the record date for the Annual
Meeting, to be admitted. Cameras, recording devices, cell phones
and other electronic devices will not be permitted at the Annual
Meeting.
Why did I
receive a Notice in the mail regarding the Internet availability
of proxy materials this year instead of a full set of proxy
materials?
In connection with SEC rules that allow companies to furnish
their proxy materials over the Internet, we have sent to most of
our stockholders a Notice instead of a paper copy of the proxy
materials. Instructions on how to access the proxy materials
over the Internet or to request a paper copy may be found in the
Notice. In addition, stockholders may request to receive future
proxy materials in printed form by mail or electronically by
e-mail. A
stockholders election to receive proxy materials by mail
or e-mail
will remain in effect until the stockholder terminates it.
Why
didnt I receive a Notice in the mail regarding the
Internet availability of proxy materials?
Anadarko is providing certain stockholders, including those who
have previously requested to receive paper copies of the proxy
materials, with paper copies of the proxy materials instead of a
Notice. If you would like to reduce the costs incurred by
Anadarko in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual
reports electronically via
e-mail or
the Internet. To sign up for electronic delivery, please follow
the instructions provided with your proxy materials and on your
proxy card or voting instruction card to vote using the
Internet. When prompted, indicate that you agree to receive or
access stockholder communications electronically in the future.
Can I
vote my stock by filling out and returning the Notice?
No. The Notice will, however, provide instructions on how to
vote by Internet, by telephone, by requesting and returning a
paper proxy card, or by submitting a ballot in person at the
Annual Meeting.
How can I
access the proxy materials over the Internet?
Your Notice or proxy card will contain instructions on how to
view our proxy materials for the Annual Meeting on the Internet.
Our proxy materials are also available at
http://bnymellon.mobular.net/bnymellon/apc.
What am I
voting on?
You are voting on:
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the election of four directors;
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the ratification of KPMG LLP as our independent auditor for 2009;
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the amendment of the Companys Restated Certificate of
Incorporation, as amended, to provide for the annual election of
directors;
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if presented, one stockholder proposal; and
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any other business properly coming before the Annual Meeting.
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How does
the Board recommend that I vote?
The Board recommends that you vote:
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FOR each of the nominees for director;
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FOR the ratification of KPMG LLP as our independent
auditor for 2009;
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FOR the amendment of the Companys Restated
Certificate of Incorporation, as amended, to provide for the
annual election of directors; and
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AGAINST the stockholder proposal.
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Why
should I vote?
Your vote is very important regardless of the amount of stock
you hold. The Board strongly encourages you to exercise your
right to vote as a stockholder of the Company.
How do I
vote?
You may vote by any of the following four methods:
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Internet. Vote on the Internet at the website
for Internet voting. Simply follow the instructions on the
Notice, or if you received a proxy card by mail, follow the
instructions on the proxy card and you can confirm that your
vote has been properly recorded. If you vote on the Internet,
you can request electronic delivery of future proxy materials.
Internet voting facilities for stockholders of record will be
available 24 hours a day and will close at 11:59 p.m.
(EDT) on May 18, 2009.
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Telephone. Vote by telephone by following the
instructions on the Notice, or if you received a proxy card, by
following the instructions on the proxy card. Easy-to-follow
voice prompts allow you to vote your stock and confirm that your
vote has been properly recorded. Telephone voting facilities for
stockholders of record will be available 24 hours a day and
will close at 11:59 p.m. (EDT) on May 18, 2009.
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Mail. If you received a proxy card by mail,
vote by mail by completing, signing, dating and returning your
proxy card in the pre-addressed, postage-paid envelope provided.
If you vote by mail and your proxy card is returned unsigned,
then your vote cannot be counted. If you vote by mail and the
returned proxy card is signed without indicating how you want to
vote, then your proxy will be voted as recommended by the Board
of Directors. If mailed, your completed and signed proxy card
must be received by May 18, 2009.
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Meeting. You may attend and vote at the Annual
Meeting.
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The Board recommends that you vote using one of the first three
methods discussed above, as it is not practical for most
stockholders to attend and vote at the Annual Meeting. Using one
of the first three methods discussed above to vote will not
limit your right to vote at the Annual Meeting if you later
decide to attend in person. If your stock is held in street name
(e.g., held in the name of a bank, broker, or other
holder of record), you must obtain a proxy, executed in your
favor from your bank, broker or other holder of record to be
able to vote at the Annual Meeting.
If I vote
by telephone or Internet and received a proxy card in the mail,
do I need to return my proxy card?
No.
If I vote
by mail, telephone or Internet, may I still attend the Annual
Meeting?
Yes.
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Can I
change my vote?
If you are a stockholder of record, you may revoke your proxy at
any time before the voting polls are closed at the Annual
Meeting, by the following methods:
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voting at a later time by Internet or telephone;
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voting in person at the Annual Meeting;
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delivering to the Corporate Secretary of Anadarko a proxy with a
later date or a written revocation of your proxy; or
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giving notice to the inspector of election at the Annual Meeting.
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If you are a street name stockholder and you vote by proxy, you
may later revoke your proxy by informing the holder of record in
accordance with that entitys procedures.
How many
votes must be present to hold the Annual Meeting?
Your stock is counted as present at the Annual Meeting if you
attend the Annual Meeting and vote in person or if you properly
return a proxy by Internet, telephone or mail. In order for us
to hold our Annual Meeting, holders of a majority of our common
stock entitled to vote must be present in person or by proxy at
the Annual Meeting. This is referred to as a quorum. Abstentions
and broker non-votes will be counted as present for purposes of
determining a quorum.
What is a
broker non-vote?
The New York Stock Exchange (NYSE) permits brokers to vote their
customers stock held in street name on routine matters
when the brokers have not received voting instructions from
their customers. Brokers may not vote their customers
stock held in street name on non-routine matters unless they
have received voting instructions from their customers.
Non-voted stock on non-routine matters are called broker
non-votes.
What
routine matters will be voted on at the Annual
Meeting?
The election of directors and the ratification of the
independent auditor are routine matters on which brokers may
vote in their discretion on behalf of customers who have not
provided voting instructions.
What
non-routine matters will be voted on at the Annual
Meeting?
The proposal to amend the Companys Restated Certificate of
Incorporation and the stockholder proposal, if presented, are
non-routine matters on which brokers are not allowed to vote
unless they have received voting instructions from their
customers.
How many
votes are needed to approve each of the proposals?
The election of each director requires the affirmative vote of a
majority of the votes cast for such director. Under our By-Laws,
a majority of votes are cast for the election of a director if
the number of votes cast for the director exceeds
the number of votes cast against the director. For
this purpose, abstentions are not counted as a vote cast either
for or against the director.
The ratification of the independent auditor requires the
affirmative vote of a majority of the stock entitled to vote and
present in person or by proxy at the Annual Meeting. Abstentions
will have the same effect as votes cast against the
proposal.
The approval of the amendment to the Companys Restated
Certificate of Incorporation, as amended, to provide for the
annual election of directors requires the affirmative vote of
not less than 80% of the votes entitled to be cast by the
holders of all of the then outstanding shares as of the record
date. For this purpose, abstentions and broker non-votes will
have the same effect as votes cast against the
amendment.
4
The approval of the stockholder proposal, if presented, requires
the affirmative vote of a majority of the stock entitled to vote
and present in person or by proxy at the Annual Meeting. For
this purpose, abstentions and broker non-votes will have the
same effect as votes cast against the proposal.
Could
other matters be decided at the Annual Meeting?
We are not aware of any matters that will be considered at the
Annual Meeting other than those set forth in this proxy
statement. However, if any other matters arise at the Annual
Meeting, the person named in your proxy will vote in accordance
with their best judgment.
Where can
I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual
Meeting, and we will publish the final results in our quarterly
report on
Form 10-Q
for the second quarter of 2009. You may access or obtain a copy
of this and other reports free of charge on the Companys
website at www.anadarko.com, or by contacting our investor
relations department at investor@anadarko.com.
How can I
view the stockholder list?
A complete list of stockholders entitled to vote at the Annual
Meeting will be available for viewing during ordinary business
hours for a period of ten days before the Annual Meeting at our
offices at 1201 Lake Robbins Drive, The Woodlands, Texas
77380-1046.
Who pays
for the proxy solicitation related to the Annual
Meeting?
We do. In addition to sending you these materials or otherwise
providing you access to these materials, some of our directors
and officers as well as management and non-management employees
may contact you by telephone, mail,
e-mail or in
person. You may also be solicited by means of press releases
issued by Anadarko, postings on our web site (www.anadarko.com),
advertisements in periodicals, or other media forms. None of our
officers or employees will receive any extra compensation for
soliciting you. We have retained Morrow & Co., LLC,
470 West Ave., Stamford, CT 06902, to assist us in
soliciting your proxy for an estimated fee of $7,500, plus
reasonable out-of-pocket expenses. Morrow will ask brokers and
other custodians and nominees whether other persons are
beneficial owners of Anadarko common stock. If so, we will
supply them with additional copies of the proxy materials for
distribution to the beneficial owners. We will also reimburse
banks, nominees, fiduciaries, brokers and other custodians for
their costs of sending the proxy materials to the beneficial
owners of Anadarko common stock.
If I want
to submit a stockholder proposal or nominate a director for the
2010 Annual Meeting, when is that proposal or nomination
due?
If you are an eligible stockholder and want to submit a proposal
for possible inclusion in the proxy statement relating to the
2010 Annual Meeting, your proposal must be delivered to the
attention of our Corporate Secretary and must be received at our
1201 Lake Robbins Drive, The Woodlands, Texas
77380-1046
offices no later than December XX, 2009. We will only consider
proposals that meet the requirements of the applicable rules of
the SEC and our By-Laws. Similarly, if you wish to nominate an
individual for election to our Board of Directors, our By-Laws
provide that you must provide your nomination in writing to our
Corporate Secretary no later than the close of business on
February 18, 2010 and no earlier than the close of business
on January 19, 2010.
How can I
obtain a copy of the Annual Report on
Form 10-K?
Stockholders may request a free copy of our Annual Report on
Form 10-K
by submitting such request to the Corporate Secretary, Anadarko
Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands,
Texas
77380-1046.
Alternatively, stockholders can access our Annual Report on
Form 10-K
on Anadarkos website at www.anadarko.com.
5
Will I
get more than one copy of the proxy statement, annual report or
Notice if there are multiple stockholders at my
address?
In some cases, only one copy of this proxy statement, annual
report or Notice is being delivered to multiple stockholders
sharing an address unless we have received contrary instructions
from one or more of the stockholders. We will deliver promptly,
upon a written or oral request, a separate copy of this proxy
statement, annual report or Notice to a stockholder at a shared
address to which a single copy of the document was delivered.
Stockholders sharing an address may also submit requests for
delivery of a single copy of the proxy statement, annual report
or Notice. To request separate or single delivery of these
materials now or in the future, a stockholder may submit a
written request to the Corporate Secretary, Anadarko Petroleum
Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas
77380-1046
or a stockholder may make a request by calling the Corporate
Secretary at
(832) 636-1000,
or by contacting our transfer agent, BNY Mellon Shareowner
Services, at BNY Mellon Shareowner Services,
P.O. Box 358015, Pittsburgh, PA
15252-8015.
6
ANADARKO
BOARD OF DIRECTORS
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors of Anadarko is divided into three classes
of directors for purposes of election. One class of directors is
elected at each Annual Meeting of stockholders to serve for a
three-year term. All of the director nominees listed below are
current directors of the Company.
At the Annual Meeting, the terms of four directors will expire.
All four of the directors have been nominated and, if elected at
this Annual Meeting, will hold office until the expiration of
each of their terms in 2012. Those current directors not up for
election this year will continue in office for the remainder of
their terms. If the proposal to amend the Companys
Restated Certificate of Incorporation, as amended, to provide
for the annual election of directors is approved, all directors
will be elected annually beginning at the 2012 annual meeting.
If a nominee is unavailable for election, then the proxies will
be voted for the election of another nominee proposed by the
Board or, as an alternative, the Board may reduce the number of
directors to be elected at the Annual Meeting.
Our By-Laws provide for the election of directors by the
majority vote of stockholders in uncontested elections. This
means the number of votes cast for a nominees
election must exceed the number of votes cast
against such nominees election in order for
him or her to be elected to the Board of Directors. In addition,
each nominee is required to provide an irrevocable letter of
resignation that states that he or she will resign if that
director does not receive the required majority vote. In the
event a director fails to receive a majority of votes cast and
the Board of Directors accepts the resignation tendered, then
that director would cease to be a director of Anadarko. Each of
the nominees named below has submitted an irrevocable letter of
resignation that becomes effective in the event he or she does
not receive a majority of the votes cast for his or her election
and the Board of Directors decides to accept such resignation.
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF
THE NOMINEES LISTED BELOW.
Directors
Nominated this Year by the Board of Directors for Terms Expiring
in 2012
Robert J. Allison, Jr. (70)
Mr. Allison has been Chairman Emeritus of the Board of the
Company since January 2006 and a director since 1985. He was
Chairman of the Board from 1986 until December 2005, and served
as Chief Executive Officer of the Company from 1986 until
January 2002, and from March 2003 until December 2003.
Mr. Allison is also a director of Freeport-McMoRan
Copper & Gold Inc.
Peter J. Fluor (61) Mr. Fluor has been
Chairman and CEO of Texas Crude Energy, Inc., a private,
independent oil and gas exploration company located in Houston,
Texas, since 1990. He has been employed by Texas Crude Energy,
Inc. since 1972 and took over the responsibilities of President
in 1980. Mr. Fluor serves as lead director of Fluor
Corporation, is a director of Cameron International Corporation
and a director of The Welch Foundation. Mr. Fluor has been
a director of the Company since August 2007.
John W. Poduska, Sr. (71)
Mr. Poduska is a retired business executive. He was
Chairman of Advanced Visual Systems, Inc., a provider of
visualization software, from 1992 until 2002. Mr. Poduska
is a director of Novell, Inc. and Safeguard Scientific, Inc. He
was a director of Union Pacific Resources Group, Inc. from 1995
until 2000. Mr. Poduska has been a director of the Company
since 2000.
Paula Rosput Reynolds (52) Ms. Reynolds
is Vice Chairman and Chief Restructuring Officer of American
International Group Inc., an insurance and financial services
company located in New York, New York. Prior to her appointment
to this position in October 2008, she served as President and
CEO of Safeco Corporation (Safeco), a property and casualty
insurance company located in Seattle, Washington, until its
acquisition by Liberty Mutual Group in September 2008. Prior to
joining Safeco in January 2006, she served as Chairman,
President and CEO of AGL Resources Inc., a regional energy
services holding company from August 2002 to December 2005.
Ms. Reynolds also previously served as President and CEO of
Houston-based
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Duke Energy North America, a subsidiary of Duke Energy, which
operated power-generating facilities across the United States,
and as Senior Vice President of Pacific Gas Transmission
Company, which owned and operated a major natural gas pipeline
in the Pacific Northwest. She is also a director of Delta Air
Lines, Inc. Ms. Reynolds has been a director of the Company
since August 2007.
Continuing
Directors with Terms Expiring in 2010
Larry Barcus (71) Since January 2008,
Mr. Barcus has served as Vice Chairman of L.G. Barcus and
Sons, Inc., a general contractor, located in Kansas City, Kansas
with operations nationwide. He had previously served as Chairman
from 1990 to January 2008. He also served as Chairman of First
Community Bancshares and Chairman of First Community Bank, both
banking institutions, from 1995 to January 2007. Mr. Barcus
has been a director of the Company since 1986.
H. Paulett Eberhart (55) Ms. Eberhart is
an independent business consultant. She served as President and
Chief Executive Officer of Invensys Process Systems, a process
automation company, from January 2007 to January 2009. From 2003
until March 2004, Ms. Eberhart was President of Americas of
Electronic Data Systems Corporation (EDS), an information
technology and business process outsourcing company. From 2002
to 2003, she was Senior Vice President of EDS and President of
Solutions Consulting. She was also a member of the Executive
Operations Team and Investment Committee of EDS.
Ms. Eberhart was an employee of EDS from 1978 to 2004.
Ms. Eberhart is a Certified Public Accountant.
Ms. Eberhart also serves as a director of Advanced Micro
Devices, Inc. Ms. Eberhart has been a director of the
Company since August 2004.
James T. Hackett (55) Mr. Hackett was
named President and Chief Executive Officer and a director of
the Company in December 2003 and Chairman of the Board of the
Company in January 2006. Prior to joining the Company,
Mr. Hackett was the Chief Operating Officer of Devon Energy
Corporation (Devon) from April 2003 to December 2003, following
Devons merger with Ocean Energy, Inc. Mr. Hackett was
President and Chief Executive Officer of Ocean Energy, Inc. from
March 1999 to April 2003 and was Chairman of the Board from
January 2000 to April 2003. He currently serves as a director of
Fluor Corporation and Halliburton Company and serves as Chairman
of the Board of the Federal Reserve Bank of Dallas.
Continuing
Directors with Terms Expiring in 2011
John R. Butler, Jr. (70) Since 1976,
Mr. Butler has been Chairman of J. R. Butler and Company, a
reservoir engineering company located in Houston, Texas. Since
August 2006, Mr. Butler has served as a director of
BreitBurn Energy Partners L.P., a publicly-traded upstream
master limited partnership, and also serves as a director of the
Houston chapter of the National Association of Corporate
Directors. He is currently a member of the Society of Petroleum
Evaluation Engineers. Mr. Butler has been a director of the
Company since 1996.
Luke R. Corbett (62) Mr. Corbett has
been a retired business executive since Kerr-McGee
Corporations (Kerr-McGee) merger with Anadarko in August
2006. He served as Chairman and Chief Executive Officer of
Kerr-McGee from 1999 until August 2006. Mr. Corbett had
been with Kerr-McGee since 1985 when he joined the
companys Exploration and Production Division as vice
president of geophysics. In subsequent years, he held a wide
array of senior executive positions with Kerr-McGee.
Mr. Corbett also serves on the boards of OGE Energy
Corporation and Noble Corporation. Mr. Corbett has been a
director of the Company since August 2006.
John R. Gordon (60) Mr. Gordon is Senior
Managing Director of Deltec Asset Management LLC, an investment
firm located in New York, New York. He was President of Deltec
Securities Corporation from 1988 until it was converted into
Deltec Asset Management LLC. Mr. Gordon has been a director
of the Company since 1988.
8
CORPORATE
GOVERNANCE
Our Board of Directors recognizes that excellence in corporate
governance is essential in carrying out its responsibilities to
our stakeholders, including our stockholders, employees,
customers, communities, creditors, and the environment. Our
Corporate Governance Guidelines, Corporate By-Laws, Code of
Business Conduct and Ethics, Code of Ethics for Senior Financial
Officers, and written charters for the Audit Committee, the
Compensation and Benefits Committee (Compensation Committee),
the Nominating and Corporate Governance Committee, all as
amended from time to time, can be found on the Companys
web site at
http://www.anadarko.com/About/Pages/Governance.aspx.
These documents provide the framework for our corporate
governance. Any of these documents will be furnished in print
free of charge to any stockholder who requests one or more of
them. You can submit such a request to the Corporate Secretary.
Furthermore, we have implemented the director majority voting
standard in uncontested director elections, including the
election of our directors at the Annual Meeting.
Each director that has served on our Board during 2008 has
attended at least 75 percent of the meetings of the Board
and of each committee on which he or she served, except for
Mr. Corbett who attended 71% of the Board meetings due in
part to an emergency surgery. There were seven Board meetings
and 22 Board committee meetings in 2008. In addition, all of the
directors attended the 2008 Annual Meeting of Stockholders.
Under the Companys Corporate Governance Guidelines,
directors are expected to attend regularly scheduled Board of
Director meetings and meetings of committees on which they
serve, as well as the Annual Meeting of Stockholders.
Committees
of the Board
The Board of Directors has four standing
committees: (i) the Audit Committee,
(ii) the Compensation and Benefits Committee,
(iii) the Nominating and Corporate Governance Committee,
and (iv) the Executive Committee. In addition, the Board of
Directors designates special committees from time to time to
address certain significant matters on behalf of the Board of
Directors. In August 2007, the Board designated a Master Limited
Partnership, or MLP, Special Committee to handle certain Board
matters related to the creation and initial public offering of
our midstream MLP, which occurred in May 2008. The MLP Special
Committee had a term of one year, which expired in August 2008.
James L. Bryan, who served as one of our independent directors
during 2008, also served on the Compensation and Benefits
Committee and the Nominating and Corporate Governance Committee
until his retirement from the Board of Directors on
December 31, 2008.
9
For each of the current committees of the Board, the table below
shows the current membership, the principal functions and the
number of meetings held in 2008:
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Meetings
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Held in
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Committee
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Members
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Principal Functions and Structure
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2008
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Audit
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H. Paulett Eberhart*
Larry Barcus
John R. Butler, Jr.
Paula R. Reynolds
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Discusses
with management, the independent auditor and internal audit the
integrity of the Companys financial statements.
Monitors
the internal controls, financial reporting practices and
significant enterprise risk exposures, and the methods by which
management controls such exposures.
Monitors
the qualifications, independence and performance of the
Companys internal audit function and independent
auditor.
Monitors
the hotline and compliance with the business practices and
ethical standards of the Company, including the Code of Business
Conduct and Ethics.
Approves
the appointment, retention and compensation of the
Companys independent auditor and establishes guidelines
for the performance of non-audit services by the independent
auditor.
Reviews
the work of the Companys independent reserve engineering
consultants, including meeting with the Companys reserves
administration group and the independent reserve engineering
consultants, as well as independently in executive session with
the independent reserve engineering consultants only.
Prepares
the Audit Committee report, which is on page 22.
Maintains
direct lines of communication with management, internal audit
and the independent auditor.
Members
are independent, non-employee directors, all of whom meet the
independence requirements of the NYSE, the Sarbanes-Oxley Act,
the Securities Exchange Act of 1934, as amended (Exchange Act),
and the rules and regulations adopted thereunder, and the
Companys Corporate Governance Guidelines and Audit
Committee
charter.
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8
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10
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Meetings
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Held in
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Committee
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Members
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Principal Functions and Structure
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2008
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Compensation
and Benefits
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John W. Poduska, Sr.*
Peter J. Fluor
John R. Gordon
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Translates
our compensation objectives and philosophy into a compensation
strategy that strategically aligns the interests of our
executives with those of our stockholders.
Approves
and evaluates the Companys director and executive officer
compensation plans, policies and programs.
Retains
compensation or other consultants to assist in the evaluation of
director or executive compensation and otherwise to aid the
Compensation Committee in meeting its responsibilities. For
additional information on the role of compensation consultants,
please see Compensation Discussion and Analysis
beginning on page 24.
Reviews
the disclosures made in the proxy statement.
Produces
an annual Compensation Committee report, which is on
page 23.
Approves
and evaluates (in conjunction with members of management from
time to time) broad-based incentive programs, qualified equity
plans and tax-qualified benefit plans to ensure that our
compensation objectives and philosophies are executed
consistently at all levels of the Company.
Members
are independent, non-employee directors.
The
Committee may form and delegate authority to subcommittees or
individual directors (including delegation to the Chief
Executive Officer with respect to determination of certain
compensation of officers who are not Section 16 Officers)
when it determines that such action is appropriate under the
circumstances.
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6
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11
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Meetings
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Held in
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Committee
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Members
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Principal Functions and Structure
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2008
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Nominating and
Corporate
Governance
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Larry Barcus*
John R. Butler, Jr.
H. Paulett Eberhart
Peter J. Fluor
John R. Gordon
John W. Poduska, Sr.
Paula R. Reynolds
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Recommends
nominees for director to the full Board and insures such
nominees possess the director qualifications set forth in the
Companys Corporate Governance Guidelines.
Reviews
the qualifications of existing Board members before they are
nominated for re-election to the Board.
Recommends
members of the Board for committee membership.
Proposes
Corporate Governance Guidelines for the Company and reviews them
annually.
Oversees
the Companys compliance structure and programs.
Develops
an evaluation process for the Board.
Oversees
the emergency and expected CEO succession plans.
Reviews
and approves related party transactions in accordance with the
Boards procedures.
Reviews
and investigates any reports to the Companys anonymous
reporting hotline regarding non-financial
matters.
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5
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Executive
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James T. Hackett*
Robert J. Allison, Jr.
John R. Butler, Jr.
John R. Gordon
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Acts
with the power and authority of the Board, in accordance with
the Companys By-Laws, in the management of the business
and affairs of the Company while the Board is not in session.
Approves
specific terms of financing or other transactions that have
previously been approved by the Board.
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2
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MLP
(Special Committee)
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Larry Barcus*
H. Paulett Eberhart
John R. Gordon
John W. Poduska, Sr.
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Provided
oversight on behalf of the Board, and reported periodically to
the Board as the Committee deemed appropriate, in connection
with the formation of our midstream MLP and initial public
offering of limited partner interests in the MLP.
This
Committee was comprised of the Lead Director and the
chairpersons of the Boards independent committees.
The
MLP Special Committee had a term of one year, which expired in
August 2008.
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* |
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Committee Chairperson. |
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The Board has determined that Ms. Eberhart qualifies as an
audit committee financial expert under the rules of
the SEC. None of the members serve on the audit committee of
more than two other public companies. |
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Serving in his capacity as Lead Director. |
12
Board of
Directors
Director
Independence
In accordance with NYSE rules, the Sarbanes-Oxley Act, the
Exchange Act and the rules of the SEC adopted thereunder, and
the Companys Corporate Governance Guidelines, the Board
must affirmatively determine the independence of each director
and director nominee in accordance with the Companys
director independence standards, which are contained in the
Companys Corporate Governance Guidelines found on the
Companys web site at
http://www.anadarko.com/About/Pages/Governance.aspx.
Based on the standards contained in our Corporate Governance
Guidelines, and the recommendation by the Nominating and
Corporate Governance Committee, the Board of Directors has
determined that each of the following non-employee directors are
independent and have no material relationship with the Company
that could impair such directors independence:
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Larry Barcus
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H. Paulett Eberhart
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John R. Butler, Jr.
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John W. Poduska, Sr.
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Peter J. Fluor
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Paula Rosput Reynolds
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John R. Gordon
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In addition, the Board has affirmatively determined that:
(a) Mr. Hackett is not independent because he is the
President and Chief Executive Officer of the Company;
(b) Mr. Corbett is not independent because of his
change of control agreement with Kerr-McGee Corporation, under
which he receives continuation of medical benefits through
August 2009; and (c) Mr. Allison is not independent
because he had been an executive officer of Anadarko for many
years and, as part of his retirement package, the Company will
continue to provide him use of the Companys aircraft,
office space, secretarial assistance and a monitored residential
security system during his lifetime.
With respect to Mr. Butler, the Board specifically
considered that Mr. Butlers
son-in-law
is a non-executive employee of the Company. The Board determined
that this does not impact Mr. Butlers independence.
With respect to Mr. Fluor, the Board specifically
considered that Mr. Fluors daughter is a
non-executive employee of the Company. The Board determined that
this does not impact Mr. Fluors independence.
Ms. Eberhart, a director of the Company, was President and
CEO of Invensys Process Systems, Inc. (Invensys) from January
2007 to January 2009. In 2008, Anadarko paid Invensys
approximately $151,000 in connection with these services. This
amount is less than 1% of Invensyss consolidated gross
revenues for its fiscal year ended March 31, 2008. The
Board specifically considered that Invensys and its affiliates
provide the Company with process automation services and
determined that those services do not impact
Ms. Eberharts independence. The Board also considered
that Ms. Reynolds is currently Vice Chairman and Chief
Restructuring Officer at American International Group Inc.
(AIG), with which the Company maintains certain insurance
policies. In 2008, the Company paid AIG an estimated
$1.7 million in premiums for various insurance policies
with an estimated aggregate limit of $185 million.
Ms. Reynolds received no salary or bonus from AIG in 2008,
and her current compensation is not tied in any respect to
business with the Company or its affiliates. Finally, the Board
specifically considered that Puget Sound Energy, Inc. (Puget)
and its affiliates engage in gas purchases with the Company and
its affiliates. Ms. Reynolds is married to Mr. Stephen
P. Reynolds, who currently serves as Chairman, President and CEO
of Puget. In 2008, Anadarko paid Puget approximately $448,000 in
connection with such gas purchases. This amount is less than 1%
of Pugets consolidated gross revenues for its fiscal year
ended December 31, 2008. The Board determined that these
relationships do not impact Ms. Reynolds independence.
For information regarding our policy on Transactions with
Related Persons, please see page 56 of this proxy statement.
Selection
of Directors
The Companys Corporate Governance Guidelines require that,
with respect to Board vacancies, the Nominating and Corporate
Governance Committee: (a) identify the personal
characteristics needed in a
13
director nominee so that the Board will possess the
qualifications of the Board as a whole as these qualifications
are set forth in the Corporate Governance Guidelines;
(b) compile, through such means as the Committee considers
appropriate, a list of potential director nominees thought to
possess the individual qualifications identified in the
Corporate Governance Guidelines; (c) may engage an outside
consultant to assist in the search for nominees and to conduct
background investigations on all nominees regardless of how
nominated; (d) review the resume of each nominee;
(e) conduct interviews with the nominees meeting the
desired set of qualifications; (f) following interviews,
compile a short list of nominees (which, at the discretion of
the Committee, may consist of a single individual) who may meet,
at a minimum, with the Chairman of the Board, the Chief
Executive Officer and the Chairperson of the Nominating and
Corporate Governance Committee
and/or the
Lead Director; and (g) evaluate the nominee(s) in relation
to the culture of the Company and the Board and its needs.
Annual
Evaluations
The Board and each of the independent committees have conducted
self-evaluations related to their performance in 2008. The
performance evaluations were supervised by the Nominating and
Corporate Governance Committee and discussed by the applicable
committee and the Board. The Board and each committee have
implemented any necessary changes as a result of these
evaluations.
Communication
with the Directors of the Company
The Board of Directors welcomes questions or comments about the
Company and its operations. Interested parties may contact the
Board of Directors, including the Lead Director or any
individual director, at nominating_governance@apcdirector.com or
at Anadarko Petroleum Corporation, Attn: Corporate Secretary,
1201 Lake Robbins Drive, The Woodlands, Texas,
77380-1046.
Any questions or comments will be kept confidential to the
extent reasonably possible, if requested. These procedures may
change from time to time, and you are encouraged to visit our
website for the most current means of contacting our directors.
If you wish to request copies of any of our governance
documents, please see page 9 of this proxy statement for
instructions on how to obtain them.
Stockholder
Participation in the Selection of Director
Nominees
The Nominating and Corporate Governance Committee did not
receive any names of individuals suggested for nomination to the
Companys Board of Directors by its stockholders during the
past year. However, the Board will consider individuals
identified by stockholders on the same basis as nominees
identified from other sources. To nominate a director, a
stockholder must follow the procedures described in the
Companys By-Laws, which require that the stockholder give
written notice to the Companys Corporate Secretary at the
Companys principal executive offices. The notice to the
Corporate Secretary must include the following:
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the name and address of the stockholder and beneficial owner, if
any, as they appear on the Companys books;
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the class or series and number of shares of the Company which
are, directly or indirectly owned (including through a
partnership) beneficially and of record by the stockholder and
such beneficial owner and any derivative instrument directly or
indirectly owned beneficially by such stockholder;
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any proxy, contract, arrangement, understanding, or relationship
pursuant to which such stockholder has a right to vote any
shares of any security of the Company;
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any short interest in any security of the Company and any rights
to dividends on the shares of the Company owned beneficially by
such stockholder that are separated or separable from the
underlying shares of the Company;
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any performance-related fees (other than an asset-based fee)
that such stockholder (including such stockholders
immediate family) is entitled to based on any increase or
decrease in the value of shares of the Company or derivative
instruments, if any, as of the date of such notice;
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a representation whether the stockholder or the beneficial
owner, if any, intends or is part of a group which intends to
deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of the
Companys outstanding capital stock required to elect the
nominee
and/or
otherwise to solicit proxies from stockholders in support of
such nomination;
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all information relating to such person that would be required
to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for
election of directors in a contested election pursuant to
Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder (including such persons
written consent to being named in the proxy statement as a
nominee and to serving as a director if elected);
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a description of all direct and indirect compensation and other
material monetary agreements, arrangements and understandings
during the past three years, and any other material
relationships, between or among such stockholder and beneficial
owner, if any, and their respective affiliates and associates
and each proposed nominee, and his or her respective affiliates
and associates;
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with respect to each nominee for election or reelection to the
Board of Directors a completed and signed questionnaire,
representation and agreement that the nominee is not and will
not become a party to:
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any agreement, arrangement or understanding as to how such
person, if elected as a director of the Company, will act or
vote on any issue or question that has not been disclosed to the
Company;
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any voting commitment that could limit or interfere with such
persons ability to comply, if elected as a director of the
Company, with such persons fiduciary duties under
applicable law;
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any agreement, arrangement or understanding with any person or
entity other than the Company with respect to any direct or
indirect compensation, reimbursement or indemnification in
connection with service or action as a director that has not
been disclosed.
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In addition, the nominee must be in compliance, if elected as a
director of the Company, and agree to continue to comply with
all applicable publicly disclosed corporate governance, conflict
of interest, confidentiality and stock ownership and trading
policies and guidelines of the Company.
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Any such other information as may reasonably be required by the
Company to determine the eligibility of such proposed nominee to
serve as an independent director of the Company or that could be
material to a reasonable stockholders understanding of the
independence, or lack thereof, of such nominee.
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Nominations must be received no earlier than the close of
business on the 120th day prior to, and no later than the
close of business on the 90th day prior to, the first
anniversary of our last Annual Meeting, or, if the nomination is
with respect to a special meeting, not earlier than the close of
business on the 120th day prior to, and no later than the
close of business on the 90th day prior to, such special
meeting. For more information on stockholder participation in
the selection of director nominees, please refer to that section
in our Corporate Governance Guidelines and our By-Laws, which
are posted on the Companys web site at
http://www.anadarko.com/About/Pages/Governance.aspx.
Directors
Continuing Education
The Companys Director Education Policy encourages all
members of the Board of Directors to attend director education
programs appropriate to their individual backgrounds to stay
abreast of developments in corporate governance and best
practices relevant to their contribution to the Board of
Directors as well as their responsibilities in their specific
committee assignments. The Director Education Policy provides
that the Company will reimburse the Board of Directors for all
costs associated with attending any director education program.
15
Lead
Director at the Non-Employee Directors Executive
Sessions
The Board of Directors has elected Mr. Gordon as its Lead
Director. As Lead Director, Mr. Gordons role is to
aid and assist the Chairman and the remainder of the Board of
Directors in assuring effective corporate governance in managing
the affairs of the Board of Directors and the Company.
Additionally, Mr. Gordon presides at executive sessions of
the non-employee directors. Executive sessions are held after
each regularly scheduled quarterly meeting of the Board of
Directors and at any other board meetings as requested by the
directors. Mr. Gordon is also a member of the Executive
Committee of the Board, providing additional representation for
the independent directors in any actions taken by the Executive
Committee between Board meetings.
Compensation
and Benefits Committee Interlocks and Insider
Participation
The Compensation Committee is made up of three independent,
non-employee directors, Messrs. Fluor, Gordon and Poduska.
Mr. Bryan, then an independent, non-employee director, also
served on this committee until his retirement on
December 31, 2008. None of our executive officers currently
serves, or in the past year has served, as a member of the board
of directors or compensation committee of any entity that has
one or more executive officers serving on our Board of Directors
or our Compensation Committee.
Director
Compensation
Non-employee directors receive a combination of cash and
stock-based compensation designed to attract and retain
qualified candidates to serve on the Board. In setting director
compensation, the Board considers the significant amount of time
that directors spend in fulfilling their duties to the Company
and its stockholders as well as the skill level required by the
Companys Board members. The Compensation Committee is
responsible for determining the type and amount of compensation
for non-employee directors. The Compensation Committee directly
retained Hewitt Associates LLC in 2008 as its independent
consultant to assist in the annual review of director
compensation by providing benchmark compensation data and
recommendations for program design.
Retainer and Meeting Fees. Non-employee
directors receive the following compensation related to
retainers and meeting fees:
(1) an annual retainer of $50,000;
(2) an annual committee membership retainer of $6,000 for
each director who serves on the Audit Committee;
(3) an annual committee membership retainer of $3,000 for
each committee on which the director serves (except for members
of the Audit Committee and the MLP Special Committee);
(4) an annual retainer of $15,000 for serving as the
chairperson of the Compensation Committee or the Nominating and
Corporate Governance Committee, an annual retainer of $25,000
for serving as Audit Committee chairperson, an annual retainer
of $25,000 for serving as Lead Director;
(5) a fee of $2,000 for each Board meeting attended, plus
expenses related to attendance; and
(6) a fee of $2,000 for each Board committee meeting
attended, plus expenses related to attendance.
Members of the MLP Special Committee received only meeting fees
and no other special retainer fees for their service on that
committee.
Stock Plan for Non-employee Directors. At the
2008 Annual Meeting, the stockholders approved the Anadarko
Petroleum Corporation 2008 Director Compensation Plan,
which replaced the 1998 Director Stock Plan. The
1998 Director Stock Plan has been terminated and no further
awards will be made under that plan. Stock-based awards made to
non-employee directors are made pursuant to the
2008 Director Compensation Plan. In addition to the
retainer and meeting fee compensation, non-employee directors
receive annual equity grants. Equity grants to non-employee
directors are automatically awarded each year on the date of the
16
Companys annual stockholder meeting. For 2008, each
non-employee director received an annual equity grant with a
value targeted at approximately $200,000, with 65% of the value
delivered in deferred shares and 35% delivered in stock options.
The deferred shares will be distributed to the director only
when he or she ceases to serve as a director. The stock options
vest one year from the date of grant and expire ten years from
the date of grant.
Non-employee directors may elect to receive their retainer and
meeting fees in cash, common stock, deferred common stock, or
deferred cash under the Deferred Compensation Program described
below, or any combination of the foregoing. Receipt of
compensation in the form of common stock or deferred common
stock provides non-employee directors the opportunity to
increase their personal ownership in the Company and comply with
the established director stock ownership guidelines that require
directors to hold stock equivalent to three times the annual
Board retainer. Directors have three years from the date of
their initial election to the Board to comply with the
guidelines. All non-employee directors currently exceed the
Companys stock ownership guidelines. This option also
provides the directors a method to invest in the Company as a
stockholder and aligns their interests with the stockholders of
the Company. The amount of stock issued to directors for payment
in lieu of their cash fees is determined at the end of the
quarter for which compensation is earned, and is calculated by
dividing the closing stock price of the Companys common
stock on the date of grant into the applicable fee for that
period.
Deferred Compensation Program for Non-employee
Directors. Non-employee directors are eligible to
participate in the Companys Deferred Compensation Plan,
which allows directors to defer receipt of up to 100% of their
Board and committee retainers
and/or Board
and committee meeting fees. The Deferred Compensation Plan
permits participants to allocate the deferred amounts among a
group of notional accounts that mirror the gains
and/or
losses of various investment funds. The interest rate earned on
the deferred amounts is not above-market or preferential. In
general, deferred amounts are distributed to the participant
upon termination or at a specific date as elected by the
participant. Mr. Fluor and Ms. Reynolds are the only
directors who elected to defer compensation during 2008.
Other Compensation. Non-employee directors are
covered under the Companys Accidental Death &
Dismemberment Plan and the Company pays the annual premium for
such coverage on behalf of each director. The Company also
provides each director with Personal Excess Liability coverage
and pays the annual premium on their behalf.
In November 2008, in consideration of Mr. Bryans
22 years of service to the Companys Board of
Directors, the Compensation Committee approved the accelerated
vesting of all of Mr. Bryans outstanding unvested
stock options effective with his retirement from the Board of
Directors on December 31, 2008, and determined that
Mr. Bryan would have 24 months from his retirement
date to exercise such vested stock options unless such stock
options expire earlier by their own terms. With this approval,
the vesting restrictions on 2,250 non-qualified stock options
awarded to Mr. Bryan on May 20, 2008 were accelerated
to December 31, 2008. These awards were originally subject
to a one-year vesting term and, under the provisions of his
award agreement, would have otherwise been forfeited by
Mr. Bryan upon his retirement from the Board.
17
Director
Compensation Table for 2008
The following table sets forth information concerning total
director compensation earned during the 2008 fiscal year by each
non-employee director:
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Change in
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Pension Value
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and Non-qualified
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Non-Equity
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Deferred
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Fees Earned or
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Paid in Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name
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($)
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($)(1)
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($)(2)
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($)
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($)
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($)(3)
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($)
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Robert J. Allison, Jr.(4)
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68,000
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129,509
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55,686
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0
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0
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1,524
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254,719
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Larry Barcus
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108,000
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129,509
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55,686
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0
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0
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1,524
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294,719
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James L. Bryan(5)
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90,000
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129,509
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24,844
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0
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0
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55,506
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299,859
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John R. Butler, Jr.(6)
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101,000
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129,509
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55,686
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0
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0
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1,524
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287,719
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Luke R. Corbett(7)
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60,000
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129,509
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55,686
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0
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0
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1,524
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246,719
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H. Paulett Eberhart
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122,000
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129,509
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55,686
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0
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0
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1,524
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308,719
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Peter J. Fluor(8)
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88,000
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129,509
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34,448
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0
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0
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1,524
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253,481
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John R. Gordon(9)
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117,000
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129,509
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55,686
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0
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0
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1,524
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303,719
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John W. Poduska, Sr.
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103,000
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129,509
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55,686
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0
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0
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1,524
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289,719
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Paula Rosput Reynolds(10)
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97,000
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129,509
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34,448
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0
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0
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1,524
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262,481
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|
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(1) |
|
The amounts included in the Stock Awards column
represent the compensation cost recognized by the Company in
2008 related to non-option awards to directors, computed in
accordance with SFAS No. 123(R). For a discussion of
valuation assumptions, see Note 12
Stock-Based Compensation of the Notes to Consolidated
Financial Statements included in our annual report under
Item 8 of the
Form 10-K
for the year ended December 31, 2008. As of
December 31, 2008, each of the non-employee directors had
aggregate outstanding deferred stock as follows:
Mr. Allison 10,000 shares of deferred
stock; Mr. Barcus 27,882 shares of
deferred stock; Mr. Bryan 0 shares of
deferred stock; Mr. Butler 15,918 shares
of deferred stock; Mr. Corbett
4,900 shares of deferred stock;
Ms. Eberhart 8,900 shares of deferred
stock; Mr. Fluor 4,622 shares of deferred
stock; Mr. Gordon 21,676 shares of
deferred stock; Mr. Poduska 11,760 shares
of deferred stock; and Ms. Reynolds
4,622 shares of deferred stock. |
|
(2) |
|
The amounts included in the Option Awards column
represent the compensation cost recognized by the Company in
2008 related to stock option awards to directors, computed in
accordance with SFAS No. 123(R). For a discussion of
valuation assumptions, see Note 12
Stock-Based Compensation of the Notes to Consolidated
Financial Statements included in our annual report under
Item 8 of the
Form 10-K
for the year ended December 31, 2008. As of
December 31, 2008, each of the non-employee directors had
aggregate outstanding stock options as follows:
Mr. Allison 26,450 vested and exercisable stock
options and 2,250 unvested stock options that vest May 20,
2009; Mr. Barcus 66,450 vested and exercisable
stock options and 2,250 unvested stock options that vest
May 20, 2009; Mr. Bryan 78,700 vested and
exercisable stock options; Mr. Butler 66,450
vested and exercisable stock options and 2,250 unvested stock
options that vest May 20, 2009;
Mr. Corbett 21,450 vested and exercisable stock
options and 2,250 unvested stock options that vest May 20,
2009; Ms. Eberhart 46,450 vested and
exercisable stock options and 2,250 unvested stock options that
vest May 20, 2009; Mr. Fluor 2,250
unvested stock options that vest May 20, 2009;
Mr. Gordon 76,450 vested and exercisable stock
options and 2,250 unvested stock options that vest May 20,
2009; Mr. Poduska 46,450 vested and exercisable
stock options and 2,250 unvested stock options that vest
May 20, 2009; and Ms. Reynolds 2,250
unvested stock options that vest May 20, 2009. |
|
(3) |
|
For all non-employee directors, the amounts included in the
All Other Compensation column include annual
premiums paid by the Company for each directors benefit in
the amount of $124 and $1,400, respectively, for Accidental
Death & Dismemberment coverage and Personal Excess
Liability coverage. Additionally, Mr. Bryans amount
includes the cost of a retirement gift and a $50,000 charitable |
18
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contribution made on his behalf by the Company in consideration
of his 22 years of service to the Companys Board of
Directors. |
|
(4) |
|
Certain ongoing benefits provided to Mr. Allison, which are
not part of his compensation for service as a director of the
Company, are discussed on page 56. |
|
(5) |
|
The amount included in Mr. Bryans Option
Awards column includes the SFAS No. 123(R)
modification expense of $3,606 related to the accelerated
vesting of his May 20, 2008 option award. This modification
expense represents the incremental fair value of the modified
award over the value of the award Mr. Bryan received on
May 20, 2008, measured immediately before the modification
on December 31, 2008. |
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(6) |
|
Mr. Butler elected to receive half of his fees in cash and
half in common stock. |
|
(7) |
|
Under his change of control agreement with Kerr-McGee
Corporation, Mr. Corbett receives continuation of medical
benefits through August 2009. These benefits are not part of his
compensation for service as a director of the Company. |
|
(8) |
|
Mr. Fluor deferred all of his retainer and meeting fees
into the Companys Deferred Compensation Plan. |
|
(9) |
|
Mr. Gordon elected to receive all of his director fees in
common stock. |
|
(10) |
|
Ms. Reynolds deferred $67,500 of her retainer and meeting
fees into the Companys Deferred Compensation Plan. |
The following table contains the grant date fair value of stock
option and deferred stock awards made to each non-employee
director, as indicated, during 2008.
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Grant Date Fair
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Exercise or
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Value of Stock
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Base Price of
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and Option
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Stock
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Deferred
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Option Awards
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Awards
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Directors
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Grant Date
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Options (#)
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Stock (#)
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($/Sh)(1)
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($)(2)
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All Non-Employee Directors
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May 20
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1,650
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129,509
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All Non-Employee Directors
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May 20
|
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2,250
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78.49
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55,883
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|
(1) |
|
Closing stock price on date of grant. |
|
(2) |
|
The amounts included in the Grant Date Fair Value of Stock
and Option Awards column represent the grant date fair
value of the awards made to non-employee directors in 2008
computed in accordance with SFAS No. 123(R). The value
ultimately realized by a director upon the actual vesting of the
award(s) or the exercise of the stock option(s) may or may not
be equal to the SFAS No. 123(R) determined value. For
a discussion of valuation assumptions, see
Note 12 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the
Form 10-K
for the year ended December 31, 2008. |
19
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information provided below summarizes the beneficial
ownership of executive officers and directors of the Company and
owners of more than 5% of outstanding common stock.
Beneficial ownership generally includes those shares
of common stock held by someone who has investment
and/or
voting authority of such shares or has the right to acquire such
common stock within 60 days. The ownership includes common
stock that is held directly and also stock held indirectly
through a relationship, a position as a trustee or under a
contract or understanding.
Directors
and Executive Officers
The following table sets forth, as of March 3, 2009, the
number and percentage of Anadarko common stock beneficially
owned by the directors and executive officers of the Company.
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|
|
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|
|
|
|
Amount and Nature of Beneficial Ownership
|
|
|
|
Number of Shares
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
of Common Stock
|
|
|
Acquirable
|
|
|
Total
|
|
|
|
|
|
|
Beneficially
|
|
|
Within
|
|
|
Beneficial
|
|
|
Percent
|
|
Name of Beneficial Owner
|
|
Owned(1)(2)
|
|
|
60 Days
|
|
|
Ownership
|
|
|
of Class
|
|
|
James T. Hackett
|
|
|
237,584
|
|
|
|
622,535
|
|
|
|
860,119
|
|
|
|
*
|
|
R. A. Walker
|
|
|
61,340
|
|
|
|
126,802
|
|
|
|
188,142
|
|
|
|
*
|
|
Karl F. Kurz
|
|
|
50,917
|
(3)
|
|
|
112,635
|
|
|
|
163,552
|
|
|
|
*
|
|
Charles A. Meloy
|
|
|
27,259
|
|
|
|
37,001
|
|
|
|
64,260
|
|
|
|
*
|
|
Robert K. Reeves
|
|
|
44,150
|
|
|
|
269,368
|
|
|
|
313,518
|
|
|
|
*
|
|
Robert J. Allison, Jr.
|
|
|
533,662
|
|
|
|
26,450
|
|
|
|
560,112
|
|
|
|
*
|
|
Larry Barcus
|
|
|
133,608
|
(4)
|
|
|
66,450
|
|
|
|
200,058
|
|
|
|
*
|
|
John R. Butler, Jr.
|
|
|
81,444
|
|
|
|
66,450
|
|
|
|
147,894
|
|
|
|
*
|
|
Luke R. Corbett
|
|
|
4,900
|
|
|
|
21,450
|
|
|
|
26,350
|
|
|
|
*
|
|
H. Paulett Eberhart
|
|
|
8,900
|
|
|
|
46,450
|
|
|
|
55,350
|
|
|
|
*
|
|
Peter J. Fluor
|
|
|
5,622
|
|
|
|
0
|
|
|
|
5,622
|
|
|
|
*
|
|
John R. Gordon
|
|
|
157,736
|
(3)
|
|
|
76,450
|
|
|
|
234,186
|
|
|
|
*
|
|
John W. Poduska, Sr.
|
|
|
41,076
|
|
|
|
46,450
|
|
|
|
87,526
|
|
|
|
*
|
|
Paula Rosput Reynolds
|
|
|
5,222
|
|
|
|
0
|
|
|
|
5,222
|
|
|
|
*
|
|
All directors and executive officers as a group,
(17 persons)
|
|
|
1,512,869
|
|
|
|
1,700,570
|
|
|
|
3,213,439
|
|
|
|
*
|
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Does not include shares of common stock which the directors or
executive officers of the Company have the right to acquire
within 60 days of March 3, 2009. This column does
include shares of common stock held in the Companys
Benefits Trust as a result of the director compensation and
deferral elections made in accordance with our benefit plans
described elsewhere in this proxy statement. These individuals
share voting power with the trustee under that plan and receive
dividend equivalents on such shares, but do not have the power
to dispose of, or direct the disposition of, such shares until
such shares are distributed. In addition, some shares of common
stock reflected in this column for certain individuals are
subject to restrictions. |
|
(2) |
|
Does not include the following number of restricted stock units,
which do not have voting rights but do receive dividend
equivalents: Mr. Hackett, 147,933; Mr. Walker, 43,533;
Mr. Kurz, 37,933; Mr. Meloy, 20,666; and
Mr. Reeves, 30,000. The terms associated with these awards
are described in more detail on page 33. |
|
(3) |
|
Includes shares held in bank or brokerage margin accounts or
escrow accounts securing brokerage accounts (Karl F. Kurz,
32,986 shares; and John R. Gordon, 136,060 shares). |
|
(4) |
|
Includes 105,726 shares of common stock pledged as
collateral on a $3,000,000 line of credit. |
20
Certain
Beneficial Owners
The following table shows the beneficial owner of more than five
percent of the Companys common stock as of
December 31, 2008 based on information available as of
February 13, 2009.
|
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|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
|
Title of Class
|
|
Name and Address of Beneficial Owner
|
|
Ownership
|
|
Percent of Class
|
|
Common Stock
|
|
ClearBridge Advisors, LLC
620 8th Avenue
New York, NY 10018
|
|
32,516,657(1)
|
|
7.08%
|
|
|
|
(1) |
|
Based upon its Schedule 13G filed February 13, 2009
with the SEC with respect to Company securities held as of
December 31, 2008, ClearBridge Advisors, LLC has sole
voting power as to 27,385,356 shares of common stock and
sole dispositive power as to 32,516,657 shares of common
stock. |
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Companys directors and executive officers, and persons who
own more than ten percent of a registered class of the
Companys equity securities, to file with the SEC and any
exchange or other system on which such securities are traded or
quoted, initial reports of ownership and reports of changes in
ownership of the Companys common stock and other equity
securities. Officers, directors and greater than ten percent
stockholders are required by the SECs regulations to
furnish the Company and any exchange or other system on which
such securities are traded or quoted with copies of all
Section 16(a) forms they filed with the SEC.
To the Companys knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, the Company
believes that all reporting obligations of the Companys
officers, directors and greater than ten percent stockholders
under Section 16(a) were satisfied during the year ended
December 31, 2008, except that (i) in February 2008, a
late Form 4 was filed for Robert P. Daniels relating to a
gift of 100 shares of Company common stock in August 2006,
and (ii) in December 2008, Mr. Corbett had six
transactions that were reported on one late Form 4 because
the securities transactions were conducted by a money manager
without Mr. Corbetts knowledge.
21
AUDIT
COMMITTEE REPORT
The following report of the Audit Committee of the Company
shall not be deemed to be soliciting material or to
be filed with the Securities and Exchange
Commission, nor shall this report be incorporated by reference
into any filing made by the Company under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended.
The Audit Committee of the Board is responsible for independent,
objective oversight of the Companys accounting functions
and internal controls over financial reporting. The Audit
Committee is composed of four directors, each of whom is
independent as defined by the NYSE listing standards. The Audit
Committee operates under a written charter approved by the Board
of Directors.
Management is responsible for the Companys internal
controls over financial reporting. The independent auditor is
responsible for performing an independent audit of the
Companys consolidated financial statements in accordance
with generally accepted auditing standards in the United States
of America and issuing a report thereon. The independent auditor
is also responsible for performing independent audits of the
Companys internal controls over financial reporting. The
Audit Committees responsibility is to monitor and oversee
these processes.
KPMG LLP served as the Companys independent auditor during
2008 and was appointed by the Audit Committee to serve in that
capacity for 2009 (and we are seeking ratification by the
Companys stockholders at this Annual meeting of such
appointment). KPMG LLP has served as the Companys
independent auditor since its initial public offering in 1986.
In connection with these responsibilities, the Audit Committee
met with management and the independent auditor to review and
discuss the December 31, 2008 financial statements and
matters related to Section 404 of the Sarbanes-Oxley Act of
2002. The Audit Committee also discussed with the independent
auditor the matters required by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
The Audit Committee also received written disclosures from the
independent auditor required by Public Company Accounting
Oversight Board Rule 3526 regarding the independent
auditors communications with the Audit Committee
concerning independence, and the Audit Committee discussed with
the independent auditor that firms independence.
Based upon the Audit Committees review and discussions
with management and the independent auditor, the Audit Committee
recommended that the Board of Directors include the audited
consolidated financial statements in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2008 filed with the SEC.
THE AUDIT COMMITTEE
H. Paulett Eberhart, Chairperson
Larry Barcus
John R. Butler, Jr.
Paula Rosput Reynolds
22
COMPENSATION
AND BENEFITS COMMITTEE REPORT
ON 2008 EXECUTIVE COMPENSATION
The Compensation Committee, the members of which are listed
below, is responsible for establishing and administering the
executive compensation programs of the Company. The Compensation
Committee of the Company has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy
statement.
THE COMPENSATION AND BENEFITS COMMITTEE
John W. Poduska, Sr., Chairman
Peter J. Fluor
John R. Gordon
23
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis focuses on the
following:
|
|
|
|
|
the principles on which our executive compensation program is
based;
|
|
|
|
how we make compensation decisions and determine the amount of
each element of compensation;
|
|
|
|
the elements of our total executive compensation program and the
reasons why we have chosen these elements; and
|
|
|
|
an analysis of the material compensation decisions made by the
Compensation Committee during 2008.
|
Executive
Summary
The Company delivered very strong operational and financial
performance for 2008, despite significant weather events (such
as hurricanes), third-party-related export pipeline issues,
unforeseen declines in commodity prices and the collapse of the
global capital markets. The first half of 2008 consisted of
record high commodity prices and a highly competitive market for
executive talent in the energy industry. During the last part of
the year and continuing into 2009, we have been faced with
commodity prices that are less than one-third of the highs found
in early 2008. However, the competition remains tight for
executives who possess the knowledge and leadership skills
necessary to guide us through these unprecedented times and
maximize value to our stockholders.
During this period, the Compensation Committee has continued to
review its executive compensation philosophy to ensure that it
provides appropriate incentive and reward in this environment
based upon its pay-for-performance objectives. As more fully
described below, the executive compensation programs that were
in place during 2008 operated as intended when initially
designed and implemented. For example, based on the relative
share price performance against peers, no payout was earned on
the performance units that vested at the end of 2008. In
addition, an annual incentive plan performance score of 174% of
target was achieved due to very strong operating performance,
including substantial reserve growth (before price revisions and
divestitures), good management of capital allocation, successful
cost inflation management, our aggressive response to production
challenges in the Gulf of Mexico, and an outstanding commitment
to the safety of our employees. Due to a disciplined debt
reduction effort and our operational successes, management has
strengthened the Companys position for the current
uncertain volatile industry concerns and enabled a focus on
future growth. We attribute a meaningful portion of this success
to the incentive programs that were designed to pay for
performance and to more closely align our executives
interests with those of our stockholders.
As the Company moves forward into 2009, the Compensation
Committee understands the uncertain environment and the
potential challenges that it creates with respect to executive
compensation. The Committee will continue to monitor trends and
developments to ensure that the Company provides the appropriate
executive compensation incentives and remains competitively
positioned for executive talent. The Committee believes that the
total compensation program does not encourage management to take
excessive risks and serves the stockholders best
interests: it features an appropriate balance of operating and
financial performance measures, short- and long-term performance
periods, significant stock ownership and extended vesting
schedules. In combination, we believe that these elements tie
our executives compensation to Anadarkos sustained
long-term performance.
How We
Make Compensation Decisions
Philosophy
The Compensation Committee believes that:
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executive interests should be aligned with stockholder interests;
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executive compensation should be structured to provide
appropriate incentive and reasonable reward for the
contributions made and performance achieved; and
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24
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a competitive compensation package must be provided to attract
and retain experienced, talented executives to ensure
Anadarkos success.
|
Design
Principles
In support of this philosophy, Anadarkos executive
compensation programs are designed to adhere to the following
principles:
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a majority of total executive compensation should be in the form
of equity-based compensation;
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a meaningful portion of total executive compensation should be
tied directly to the achievement of goals and objectives related
to Anadarkos targeted financial and operating performance;
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a significant component of performance-based compensation should
be tied to long-term relative performance measures that
emphasize an increase in stockholder value over time;
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performance-based compensation opportunities should not
encourage excessive risk taking that may compromise the
Companys value or its stockholders;
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executives should maintain significant levels of equity
ownership;
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to encourage retention, a substantial portion of compensation
should be forfeitable by the executive upon voluntary
termination;
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total compensation opportunities should be reflective of each
executive officers role, skills, experience level and
individual contribution to the organization; and
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our executives should be motivated to contribute as team members
to Anadarkos overall success, as opposed to merely
achieving specific individual objectives.
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Resources
and Other Considerations Used in the Compensation
Decision-Making Process
The Compensation Committee utilizes several different tools and
resources in reviewing elements of executive compensation and
making compensation decisions. These decisions, however, are not
purely formulaic and the Compensation Committee exercises
judgment and discretion in making them.
Compensation Consultant. The Compensation
Committee utilizes an independent executive compensation
consultant to review executive compensation and benefit
programs. In 2008, the Compensation Committee directly retained
Hewitt Associates LLC, or Hewitt, as its outside compensation
consultant. In this engagement, Hewitt reports directly and
exclusively to the Compensation Committee; however, at the
Compensation Committees direction, the consultant works
directly with management to review or prepare materials for the
Compensation Committees consideration. Hewitt attended all
six Compensation Committee meetings in 2008. The Compensation
Committee did not engage any consultant other than Hewitt during
2008 to provide executive compensation consulting services. The
Compensation Committees engagement of Hewitt included the
following services:
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providing relevant market data (including benchmarking, surveys,
trends and best practices information) as a background against
which the Compensation Committee could consider total executive
officer compensation elements and awards;
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advising the Compensation Committee on aligning compensation
programs with the interests of our stockholders; and
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attending and participating in Compensation Committee meetings
throughout the year as the Compensation Committee deemed
appropriate.
|
In 2008, Hewitt provided limited services to the Company not
related to executive or director compensation, including
employee communications and actuarial services. In early 2008,
we retained a firm other than Hewitt to provide actuarial
services in the United States on a go-forward basis and, in
January 2009, we retained a firm other than Hewitt to provide
the employee communications services on a go-forward basis.
25
Accordingly, Hewitt no longer performs any material services for
us in the United States outside the scope of its engagement with
the Compensation Committee; however, it provides actuarial
services for our United Kingdom pension program. As part of
Hewitts engagement agreement with the Compensation
Committee, any significant new engagement between us and Hewitt
is contingent upon notification to the Compensation Committee.
The Compensation Committee reviews the engagement of its
independent compensation consultant on an annual basis, and as
part of that process reviews a summary of all services provided
by Hewitt and related costs.
Benchmarking. During 2008, the Compensation
Committee conducted its annual benchmarking review of an
industry peer group to use as a reference point for assessing
competitive executive compensation data. This industry peer
group consists of select oil and gas industry peer companies
similar to us in size, scope and nature of business operations.
The Compensation Committee also reviewed data from a broader
group of companies, which consists of select companies from
diverse industries that are similar to us in size (based
primarily on annual revenues) but are not directly comparable to
us. This data is used for gaining a general understanding of
broader trends outside our industry, but is not used to
benchmark our total executive compensation.
Our current industry peer group consists of the following
companies:
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Apache Corporation
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Devon Energy Corporation
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Noble Energy, Inc.
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Chesapeake Energy Corporation
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EOG Resources, Inc.
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Occidental Petroleum Corporation
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Chevron Corporation
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Hess Corporation
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Pioneer Natural Resources Company
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ConocoPhillips
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Marathon Oil Corporation
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Plains Exploration & Production Company
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Within the oil and gas industry, there are a very limited number
of companies that closely resemble us in size, scope and nature
of business operations. Our industry peer group contains
companies in our industry that are both larger and smaller in
scope and that may operate in related business segments in the
industry in which we have no operations, such as refining. We
compete with these companies for talent and believe the selected
companies are currently the most appropriate with respect to
executive compensation benchmarking. The differences and
similarities between us and the companies in our industry peer
group are taken into consideration when referencing benchmarks
for executive compensation decisions. In 2008, Plains
Exploration & Production Company was added to the
industry peer group to replace EnCana Corporation, which had
announced earlier in the year that it intended to split into two
separate entities.
Tally Sheets. To provide the Compensation
Committee a single source for viewing the aggregate value of all
material elements of executive compensation, tally
sheets are created for each of our named executive
officers on an annual basis. The tally sheets provide a snapshot
of:
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current total annual compensation, including base salary, annual
cash incentives, equity compensation, benefits and perquisites;
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accumulated unvested equity award values and total stock
ownership levels; and
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estimated termination benefits for a variety of voluntary and
involuntary termination events, including change of control.
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The Compensation Committee does not assign a weighting to the
tally sheets in their overall decision-making process.
Role of CEO
and/or Other
Executive Officers in Determining Executive
Compensation. Our Chief Executive Officer,
Mr. Hackett, provides recommendations to the Compensation
Committee for each element of compensation for each of the
executive officers other than himself. In forming his
recommendations, he may seek input from other senior officers
about their direct reports. The Compensation Committee, with
input from Hewitt, determines each element of compensation for
Mr. Hackett and, with input from Hewitt and
Mr. Hackett, determines each element of compensation for
the other executive officers. At the Compensation
Committees request, our executive officers assess the
design of, and make recommendations related to, our compensation
and benefit programs, including recommendations related to the
appropriate financial and non-
26
financial performance measures used in our incentive programs.
Executive officers may also attend meetings at the invitation of
the Compensation Committee.
Other Considerations. In addition to the above
resources, the Compensation Committee considers other factors
when making compensation decisions, such as individual
experience, individual performance, internal equity, development
and/or
succession status, and other individual or organizational
circumstances. With respect to equity-based awards, the
Compensation Committee also considers the cost of such awards,
the impact on dilution, and the relative value of each element
comprising total target executive compensation.
Stock Ownership Guidelines. We have maintained
stock ownership guidelines for executive officers since 1993
with the goal of promoting equity ownership and aligning our
executive officers interests with our stockholders.
Generally, these guidelines must be met within three years after
becoming subject to them. The ownership guidelines are currently
established at the following minimum levels:
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Ownership Status
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Position
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Guideline
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as of 12/31/2008
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Chief Executive Officer
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5 x base salary
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Exceeds
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Chief Operating Officer
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3 x base salary
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Exceeds
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Senior Vice Presidents
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2.5 x base salary
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Exceeds
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Vice Presidents
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2 x base salary
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Exceeds
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(1)
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(1) |
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All but one vice president, who was hired in 2008, exceed the
required stock ownership guidelines. |
The Compensation Committee reviews the stock ownership levels
annually. In determining stock ownership levels, we include:
shares of common stock held directly by the executive; shares of
common stock held indirectly through our Employee Savings Plan;
unvested restricted stock; unvested restricted stock units; and
the target number of outstanding performance units that are
structured to pay in shares of common stock. Outstanding
unexercised stock options are not included. In addition, the
Company has a policy that prohibits directors, officers or
employees from engaging in short sales, transactions involving
stock options or restricted stock, or other derivative-type
transactions relating to our stock.
Regulatory Requirements. Together with the
Compensation Committee, we carefully review and take into
account current tax, accounting and securities regulations as
they relate to the design of our compensation programs and
related decisions.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, or the IRC, limits a companys ability to deduct
compensation paid in excess of $1 million during any fiscal
year to each of certain named executive officers, unless the
compensation is performance-based as defined under
federal tax laws. Stock options, performance units and cash
awards granted under our 2008 Omnibus Incentive Compensation
Plan (Omnibus Plan) and our 1999 Stock Incentive Plan satisfy
the performance-based requirements and, as such, are fully
deductible. Because Mr. Hacketts base salary is above
$1 million, the portion of base salary in excess of
$1 million is not deductible. Grants of restricted stock
unit awards made in 2008 are not considered performance-based
and the value of those awards is generally subject to the
deductibility limitations under Section 162(m). In March
2008, the Compensation Committee approved a plan to qualify 2009
restricted stock and restricted stock unit grants as
performance-based compensation under
Section 162(m). The Compensation Committee is committed to
providing compensation that qualifies as performance-based and
is fully deductible. However, the Compensation Committee
believes it is important to provide compensation that is not
fully deductible when necessary to retain and motivate certain
executive officers and when it is in our best interest and the
best interest of our stockholders.
Section 409A of the IRC provides that all amounts deferred
under a non-qualified deferred compensation plan are currently
included in gross income, to the extent not subject to a
substantial risk of forfeiture and not previously included in
gross income, unless certain requirements are met. We have
designed or amended our plans and programs to either be exempt
from Section 409A or, if subject to Section 409A, to
be in compliance with applicable regulations to properly allow
deferral.
27
SFAS No. 123(R) requires the recognition of expense
for the fair value of share-based payments. The statement became
effective for us beginning January 1, 2006. We had
previously adopted the fair value method of accounting for
share-based payments effective January 1, 2003, using the
modified prospective method described in
SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure
an amendment of FASB Statement No. 123. Awards of stock
options, performance units, restricted shares and restricted
stock units under our Omnibus Plan and 1999 Stock Incentive Plan
are accounted for under SFAS No. 123(R). The adoption
of SFAS No. 123(R) did not have a material impact on
our results of operations or financial position.
Clawback Provision. Under the Omnibus Plan,
which covers our annual incentive program awards and our
equity-based awards, if the Company is required to prepare an
accounting restatement as a result of material noncompliance,
the Plan Administrator may determine that a Participant (as
defined in the plan) who is deemed to have knowingly engaged in
or failed to prevent misconduct giving rise to such a
restatement will be required to reimburse the Company an amount
equal to any Award (as defined in the plan) earned or accrued
during the
12-month
period following the first public issuance or filing with the
SEC.
Elements
of Total Executive Compensation
Our total executive compensation program includes both direct
and indirect compensation, the elements of which are described
in the tables below. We believe that a majority of executive
compensation should be performance-based; however, we do not
have a specific formula that dictates the overall weighting of
each element as a part of total compensation. The Compensation
Committee determines total compensation based on a review of
competitive compensation data, consistency with our overall
compensation philosophy and its judgment as a committee.
28
The table below identifies each element of direct compensation
and the primary purpose for using each element. The level of
each element of direct compensation (both fixed and
variable) is generally targeted between the
50th and 75th percentiles of our industry peer group,
unless otherwise specified. When making decisions on each of
these elements, the Compensation Committee takes into
consideration the multiple factors discussed above in the
How We Make Compensation Decisions section beginning
on page 24.
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Direct Compensation
Element
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Primary Purposes
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Fixed
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Base Salary
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Provides
a fixed level of income to compensate executives for their level
of responsibility, relative expertise and experience, and in
some cases their potential for advancement
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Variable/Performance-Based
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Annual Cash Incentives
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Motivates and rewards executives for achieving short-term Company objectives aligned with value creation
Recognizes individual contributions to Company performance
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Restricted Stock/Restricted Stock Units
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Aligns the interests of executives with our stockholders by emphasizing long-term share ownership and stock price appreciation
Provides a forfeitable ownership stake to encourage executive retention
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Stock Options
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Aligns the interests of executives with our stockholders by rewarding long-term growth in our stock value
Provides a forfeitable ownership stake to encourage executive retention
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Performance Units
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Recognizes how the Company performs relative to its industry peers under common external market conditions
Motivates and rewards the achievement of long-term strategic Company objectives
Provides a forfeitable long-term incentive to encourage executive retention
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The charts below illustrate each of the fixed and variable
elements as a proportion of the total amount of the named
executive officers total direct compensation. Base salary
information is based on salaries that became effective in
November 2008, as discussed on page 30, target bonus
opportunities effective for 2009, as discussed on page 31,
and the estimated grant date value for the 2008 annual equity
awards, as discussed on page 33.
29
The previous charts indicate that over 85% of total direct
compensation is variable and at least 75% is in the form of
equity-based grant values, with the CEO having approximately 82%
of his compensation in the form of equity-based compensation.
The table below identifies each element of indirect compensation
and the primary purpose for using each element. The value of
each element of indirect compensation is generally structured to
be competitive within our industry.
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Indirect Compensation
Element
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Primary Purposes
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Retirement Benefits
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Provides a competitive means for executives to build financial security
Attracts talented executives and rewards them for extended service
Offers secure and tax-advantaged vehicles for executives to save effectively for retirement
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Other Benefits (e.g., health care, paid time off,
disability and life insurance) and Perquisites
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Enhances employee welfare and financial security
Provides a competitive package to attract and retain executive officers
Perquisites do not constitute a significant part of executive compensation
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Severance Benefits
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Attracts and helps retain executive officers in a volatile and consolidating industry
Provides transitional income following an executive officers involuntary termination of employment
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The following is a discussion of each compensation element and
the specific actions taken by the Compensation Committee in 2008
related to each element. Each of these elements is reviewed on
an annual basis, and may be reviewed at the time of a promotion,
other change in responsibilities, other significant corporate
events or a material change in market conditions. The same
design principles and factors are applied in a consistent manner
to all named executive officers. Material differences in the
amount of compensation awarded to each of the named executive
officers generally reflect the differences in the individual
responsibility and experience of each officer and the
differences in the amounts of compensation paid to officers in
comparable positions in our industry peer group. For example,
our CEOs compensation is significantly higher than the
compensation of the other named executive officers. This
difference in compensation reflects that our industry peer group
benchmark data is substantially higher for the CEO role than for
the other named executive officer positions, reflecting the
higher degree of responsibility and scrutiny the CEO position
entails for the image, strategic direction, financial condition,
and operating results of the Company.
Base
Salary
The table below reflects the base salaries that were approved by
the Compensation Committee in 2008:
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Salary as of
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Salary Effective
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Name
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January 1, 2008
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November 2008
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Increase%
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Mr. Hackett
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$
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1,500,000
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$
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1,567,500
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4.5
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%
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Mr. Walker
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$
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650,000
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$
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682,500
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5.0
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%
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Mr. Kurz
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$
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650,000
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$
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682,500
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5.0
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%
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Mr. Meloy
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$
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550,000
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$
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575,000
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4.5
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%
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Mr. Reeves
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$
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500,000
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$
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525,000
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5.0
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%
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30
The base salaries for the named executive officers fall within
the targeted range (between 50th and 75th percentiles
of our industry peer group).
Annual
Cash Incentives (Bonuses)
Our executive officers participate in the annual incentive
program, or AIP, which is part of our Omnibus Plan that was
approved by our stockholders in 2008. In February 2008, the
Compensation Committee established a baseline AIP performance
hurdle for the named executive officers of $2.5 billion of
cash flow from continuing operations for the fiscal year. If
this performance hurdle is not achieved, the named executive
officers earn no AIP bonuses. If the performance hurdle is met,
the bonus pool is funded at the maximum bonus opportunity level
for each named executive officer. The Compensation Committee may
apply negative discretion in determining actual awards, taking
into consideration our actual performance against corporate
annual performance goals (as discussed below), each individual
officers performance and contributions, and other factors
as deemed appropriate by the Compensation Committee. The AIP
bonus pool was fully funded for the 2008 performance year based
on our exceeding the established performance hurdle.
If the initial performance hurdle is met, the Compensation
Committee uses the following formula as a guideline for
determining individual bonus payments:
Individual Target Bonus
Opportunities. Individual target bonus
opportunities, set as a percentage of base salary, are generally
established to provide bonus opportunities between the
50th and 75th percentile levels of our industry peer
group. Executive officers may earn from 0% up to 200% of their
individual bonus target. The bonus targets for 2008 are shown in
the table below. As part of its annual review of executive
compensation in 2008, the Compensation Committee made no changes
to the named executive officers bonus targets for 2009.
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Minimum
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Target
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Maximum
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Payout as a
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Payout as a
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Payout as a
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Name
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% of Salary
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% of Salary
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% of Salary
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Mr. Hackett
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0
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%
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130
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%
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260
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%
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Mr. Walker
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0
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%
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100
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%
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200
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%
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Mr. Kurz
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0
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%
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100
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%
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200
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%
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Mr. Meloy
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0
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%
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95
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%
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190
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%
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Mr. Reeves
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0
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%
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90
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%
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180
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%
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AIP Performance Score. In determining the
performance score under the Companys AIP for 2008, the
Compensation Committee approved the following internal
operational, financial and safety measures and weightings:
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Operational Measures (Reserve Additions and Production
Volumes) The primary business objectives for an
exploration company are to find and produce reserves. Including
specific operational goals on reserve additions (before price
revisions and divestitures) and production volumes provides a
direct line of sight for our operations personnel and gives them
a direct stake in our operational successes.
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Financial Measures (Capital Expenditures and EBITDAX/Barrel
of Oil Equivalent (BOE)) These financial
measures focus on financial discipline and encourage employees
to manage costs relative to gross margins and the commodity
price environment. For AIP purposes, EBITDAX is defined as
operating income before interest, taxes, depreciation, depletion
and amortization, exploration expenses, and unrealized gains
(losses) on derivatives and excludes the gains (losses) on the
sale of properties.
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31
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Safety The health and safety of our employees
is very important to us and critical to our success.
Accordingly, we include among our performance metrics a target
total recordable incident rate per 100 employees so that
employees are focused on maintaining a safe work environment.
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Cash Cost Management Factor This factor acts
as a potential multiplier on the AIP Performance Results for
2008 (as calculated below) and is intended to encourage
employees to focus on efficiencies that impact controllable cash
costs. The cash cost management factor is calculated as oil and
gas lease operating expense plus general and administrative
expense divided by total sales volumes.
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In both approving performance goals and measuring the
Companys performance against those goals, the Compensation
Committee may use its discretion in determining the extent to
which such goals or results properly reflect the Companys
achievement of overall business objectives, including any
material changes in the Companys operations or business
objectives during the course of a given year. The table below
reflects both the target and performance results against the
target for each measure under the AIP:
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Relative
|
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AIP
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AIP
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Weighting
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AIP Target
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Performance
|
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Performance
|
2008 AIP Performance
Goals
|
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Factor
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Performance
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Results
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Score
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|
Reserve Additions (before price revisions and divestitures),
MMBOE
|
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25
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%
|
|
|
260
|
|
|
|
290
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52%
|
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Production Volumes, MMBOE
|
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25
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%
|
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|
209
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|
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|
206
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18%
|
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Capital Expenditures, $MM
|
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|
20
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%
|
|
$
|
5,100
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$
|
5,232
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15%
|
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EBITDAX/BOE, $
|
|
|
20
|
%
|
|
$
|
33.50
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$
|
43.97
|
|
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|
72%
|
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Total Recordable Incident Rate (Safety)
|
|
|
10
|
%
|
|
|
0.89
|
|
|
|
0.77
|
|
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total
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100
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%
|
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174%
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Cash Cost Management Factor(1)
|
|
Up to 10% Multiplier
|
|
|
|
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No effect
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(1) |
|
This factor is capped at a 10% multiplier and cannot cause the
total AIP Performance Score to exceed 200%. |
Individual Performance Adjustments. In
determining a named executive officers bonus payment, the
Compensation Committee may make an adjustment based on
individual performance. This adjustment allows the Compensation
Committee to recognize an individuals significant
contributions that may not be reflected in the overall AIP
performance score. The Compensation Committee did not make any
individual performance adjustments for the named executive
officers 2008 bonus payments in recognition of the team
effort exhibited by our senior management in driving the
Companys success.
The AIP awards earned for 2008 and paid to each of the named
executive officers are shown in the table below and are
reflected in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
|
Target Bonus
|
|
|
|
AIP
|
|
|
|
Individual
|
|
|
|
|
|
|
Earnings for
|
|
|
|
as% of Base
|
|
|
|
Performance
|
|
|
|
Performance
|
|
|
|
Actual Bonus
|
Name
|
|
2008
|
|
|
|
Salary
|
|
|
|
Score%
|
|
|
|
Adjustments
|
|
|
|
Award ($)
|
|
Mr. Hackett(1)
|
|
$
|
1,510,385
|
|
|
|
X
|
|
|
|
130
|
%
|
|
|
X
|
|
|
|
174
|
%
|
|
|
+/−
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
3,416,491
|
|
Mr. Walker
|
|
$
|
655,000
|
|
|
|
X
|
|
|
|
100
|
%
|
|
|
X
|
|
|
|
174
|
%
|
|
|
+/−
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
1,139,700
|
|
Mr. Kurz
|
|
$
|
655,000
|
|
|
|
X
|
|
|
|
100
|
%
|
|
|
X
|
|
|
|
174
|
%
|
|
|
+/−
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
1,139,700
|
|
Mr. Meloy
|
|
$
|
553,846
|
|
|
|
X
|
|
|
|
95
|
%
|
|
|
X
|
|
|
|
174
|
%
|
|
|
+/−
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
915,508
|
|
Mr. Reeves
|
|
$
|
503,846
|
|
|
|
X
|
|
|
|
90
|
%
|
|
|
X
|
|
|
|
174
|
%
|
|
|
+/−
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
789,023
|
|
|
|
|
(1) |
|
Mr. Hackett elected to use approximately one-third of his
AIP award for 2008 performance to purchase 18,000 shares of
Anadarko common stock in the open market on February 19,
2009. This purchase was a voluntary, open market transaction
made as an indication of Mr. Hacketts confidence in
the Companys stock value. |
32
Equity
Compensation
The Compensation Committee makes equity-based awards under our
Omnibus Plan, which was approved by our stockholders in May
2008. Equity-based awards for named executive officers are
typically made at the regularly scheduled meeting of the
Compensation Committee each November. Equity awards for
newly-hired executive officers are made on the executive
officers first day of employment with us. Equity awards
made in connection with promotions or in recognition of
achievements are approved by the Compensation Committee and the
grant date is generally the date of approval.
Our annual awards consist of a combination of stock options,
time-based restricted stock units and performance unit awards.
The 2008 awards allocated 50% of grant-date value to
non-qualified stock options, 20% to restricted stock units and
30% to performance units. This was a change from the 2007
awards, which allocated value equally across all three
components. The Compensation Committee approved this change in
allocation to emphasize a focus on share price appreciation, and
to motivate senior management with increased upside potential
and greater downside risk. In addition, the use of performance
unit awards and restricted stock units enables us to better
manage our potential stock dilution. Annual equity award values
are generally positioned between the 50th and
75th percentile levels of similarly-awarded opportunities
among the members of our industry peer group.
Below is a summary of the provisions of each of the equity award
types:
|
|
|
|
|
Equity Award Type
|
|
Provisions
|
|
Stock Options
|
|
|
|
The term of the grant does not exceed seven years
|
|
|
|
|
The exercise price is not less than the market price on the date
of grant
|
|
|
|
|
Repricing of options to a lower exercise price is prohibited,
unless approved by stockholders
|
|
|
|
|
Options typically vest equally over three years, beginning with
the first anniversary of the date of grant
|
|
|
|
|
Generally, an executive officer will forfeit any unvested stock
options if the executive terminates voluntarily or is terminated
for cause prior to the vesting date
|
|
|
Restricted Stock Units
|
|
|
|
Typically vest equally over three years, beginning with the
first anniversary of the date of grant
|
|
|
|
|
Executive officers receive dividend equivalents on the units,
but do not have voting rights
|
|
|
|
|
Generally, an executive officer will forfeit any unvested
restricted stock units if the executive terminates voluntarily
or is terminated for cause prior to the vesting date
|
|
|
|
|
Executive officers have the ability to defer restricted stock
unit awards
|
|
|
Performance Units
|
|
|
|
Are earned based on the Companys relative total
stockholder return, or TSR, performance against a specified peer
group
|
|
|
|
|
Each performance unit is denominated in shares of our stock,
with payout based on performance over a specified performance
period
|
|
|
|
|
Awards are paid in either shares or cash, as determined by the
Compensation Committee at the time of grant
|
|
|
|
|
Executive officers are awarded a target award, with actual
payout ranging from 0% to 200% of the target award
|
|
|
|
|
Executive officers do not have voting rights with respect to,
and no dividends are paid on, these awards
|
|
|
|
|
Generally, an executive officer will forfeit any unvested
performance units if the executive terminates voluntarily or is
terminated for cause prior to the end of the performance period
|
|
|
|
|
Executive officers have the ability to defer performance unit
awards
|
|
|
33
The following table reflects the payout scale for the current
annual performance unit program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final TSR Ranking
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
6
|
|
7
|
|
8
|
|
9
|
|
10
|
|
11
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout as% of Target
|
|
200%
|
|
182%
|
|
164%
|
|
146%
|
|
128%
|
|
110%
|
|
92%
|
|
72%
|
|
54%
|
|
0%
|
|
0%
|
|
0%
|
The TSR measure provides an external comparison of our
performance against an industry peer group. The industry peer
group is listed in the table below.
|
|
|
|
|
Apache Corporation
|
|
EOG Resources, Inc.
|
|
Occidental Petroleum Corporation
|
Chevron Corporation
|
|
Hess Corporation
|
|
Pioneer Natural Resources Company
|
ConocoPhillips
|
|
Marathon Oil Corporation
|
|
Plains Exploration & Production Company
|
Devon Energy Corporation
|
|
Noble Energy, Inc.
|
|
|
If any of these peer companies ceases to exist during the
performance period, the Compensation Committee has approved
Chesapeake Energy Corporation and XTO Energy, Inc. as
replacement companies (in that order).
Below is an example of how the performance unit payout scale
works, assuming an executive officer received a target award of
20,000 performance units.
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
Relative TSR
|
|
|
|
|
|
|
|
|
|
|
|
Units for
|
|
Ranking for
|
|
|
|
|
|
|
|
|
|
|
|
Each
|
|
the
|
|
|
|
|
|
|
Total Target
|
|
|
Performance
|
|
Performance
|
|
Performance
|
|
Payout
|
|
Actual Payout
|
|
Timing of
|
Award
|
|
|
Period
|
|
Period
|
|
Period
|
|
%
|
|
Earned
|
|
Payout
|
|
20,000
performance
units
|
|
|
50% tied to a two-year performance period
|
|
10,000
(20,000 x 50)%
|
|
|
3rd
|
|
|
164%
|
|
16,400 units
(10,000 x 164)%
|
|
Paid after end of two-year performance period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50% tied to a three-year performance period
|
|
10,000
(20,000 x 50)%
|
|
|
10th
|
|
|
0%
|
|
0 units
(10,000 x 0)%
|
|
Paid after end of three-year performance period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Awards Made During 2008
On November 4, 2008, the Compensation Committee approved
the following annual long-term incentive awards. These awards
are included in the Grants of Plan-Based Awards Table on
page 43.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Target Number
|
|
|
|
Number of
|
|
|
Restricted Stock
|
|
|
of Performance
|
|
Name
|
|
Stock Options
|
|
|
Units
|
|
|
Units
|
|
|
Mr. Hackett
|
|
|
572,200
|
|
|
|
93,000
|
|
|
|
140,600
|
|
Mr. Walker
|
|
|
182,900
|
|
|
|
29,800
|
|
|
|
45,000
|
|
Mr. Kurz
|
|
|
144,700
|
|
|
|
23,600
|
|
|
|
35,600
|
|
Mr. Meloy
|
|
|
79,500
|
|
|
|
13,000
|
|
|
|
19,600
|
|
Mr. Reeves
|
|
|
115,300
|
|
|
|
18,800
|
|
|
|
28,400
|
|
Performance
Units Results for Performance Periods Ending in
2008
In February 2009, the Compensation Committee certified the
performance results for the 2008 transitional performance unit
awards for specified executives with a one-year performance
period that ended December 31, 2008. Under the provisions
of this award, the targeted performance units were subject to
our relative TSR performance against a defined TSR peer group.
The following table lists the target number of performance
34
units awarded and actual performance units earned by the named
executive officers under the provisions of the 2008 transitional
performance unit awards for the one-year performance period that
ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
|
Target
|
|
|
Performance Units
|
|
Name
|
|
Performance Units
|
|
|
Earned
|
|
|
Mr. Hackett
|
|
|
38,100
|
|
|
|
0
|
|
Mr. Walker
|
|
|
10,018
|
|
|
|
0
|
|
Mr. Kurz
|
|
|
7,719
|
|
|
|
0
|
|
Mr. Meloy
|
|
|
4,650
|
|
|
|
0
|
|
Mr. Reeves
|
|
|
7,188
|
|
|
|
0
|
|
Retirement
Benefits
Our executive officers participate in the following retirement
and related plans.
Employee Savings Plans. The Anadarko Employee
Savings Plan, or 401(k) Plan, is a tax-qualified retirement
savings plan that allows participating U.S. employees to
contribute up to 30% of eligible compensation, on a before-tax
basis or on an after-tax basis (via a Roth or supplementally),
into their 401(k) Plan accounts. Eligible compensation for named
executive officers includes base salary and certain annual
incentive payments. Under the 401(k) Plan, we match an amount
equal to one dollar for each dollar contributed by participants
up to six percent of their total eligible compensation. This
plan is subject to applicable Internal Revenue Service, or IRS,
limitations regarding contributions under this plan. Due to IRS
limitations that restrict the amount of benefits payable under
tax-qualified plans, we also sponsor a non-qualified Savings
Restoration Plan. The Savings Restoration Plan accrues a benefit
substantially equal to the amount that, in the absence of any
IRS limitations, would have been allocated to an employees
account as a matching contribution under the 401(k) Plan. The
Savings Restoration Plan permits participants to allocate the
matching contributions among a group of notional accounts that
mirror the gains
and/or
losses of various investment funds provided in the 401(k) Plan.
Notional earnings are credited to their account based on the
market rate of return provided by the investment funds.
Amounts deferred, if any, under the 401(k) Plan and the Savings
Restoration Plan by the named executive officers are included,
respectively, in the Salary and Non-Equity
Incentive Plan Compensation columns of the Summary
Compensation Table. Our matching contributions allocated to the
named executive officers under the 401(k) Plan and the Savings
Restoration Plan are included in the All Other
Compensation column of the Summary Compensation Table.
Pension Plans. Anadarko provides funded,
tax-qualified retirement benefits for all U.S. employees.
Due to IRS limitations that restrict the amount of benefits
payable under tax-qualified plans, we also sponsor non-qualified
restoration plans that cover the named executive officers and
certain other employees. The pension plans do not require
contributions by employees and an employee becomes vested in his
or her benefit at the completion of three years of service as
defined in the pension plans. Compensation covered by the
pension plans for the participants includes base salary and
certain annual incentive payments. The amount of compensation
that may be considered in calculating benefits under the pension
plans is limited by IRS regulations.
Messrs. Hackett, Walker and Reeves have certain
supplemental retirement benefits under our non-qualified
Retirement Restoration Plan. The Retirement Restoration Plan
provides that Mr. Hackett will receive a special service
credit to be applied towards his eligibility for our retiree
medical and dental benefit programs. This benefit will accrue in
a manner similar to the special pension crediting in
Mr. Hacketts employment agreement. The plan also
provides for a one-time service credit of eight years and five
years to Messrs. Walker and Reeves, respectively, if they
each remain employed by us until the age of 55. This service
credit will be considered applicable service towards our
retirement benefit programs, including pension and retiree
medical and dental benefits. These supplemental retirement
benefits were provided to Messrs. Walker and Reeves in 2007
to recognize that they were both mid-career hires that we would
like to retain for the remainder of their careers. Providing
them additional service credits recognizes a portion of their
prior industry experience and service years which directly
benefits us and our stockholders. The accrued benefits related
to these special
35
pension credits are discussed in the Pension Benefits Table on
page 48. The Compensation Committee does not intend to
grant any additional pension credits to our executive officers
at this time.
Messrs. Hackett and Meloy are both eligible to receive
supplemental pension benefits upon meeting certain employment
conditions under the terms, respectively, of
Mr. Hacketts employment agreement, which was
originally entered into when he joined the Company in December
2003, and Mr. Meloys retention agreement, which was
entered into in August 2006 in connection with the closing of
the Kerr-McGee acquisition. Details of these arrangements,
including the accrued benefits for each of the named executive
officers, are discussed further in the Employment
Agreements section beginning on page 39 and in the
Pension Benefits Table on page 48.
Other
Benefits
In addition to the retirement benefits discussed above, we also
provide other benefits such as medical, dental, vision, flexible
spending accounts, paid time off, payments for certain
relocation costs, disability coverage and life insurance to each
named executive officer. These benefits are also provided to all
other eligible U.S. based employees.
We also maintain a Deferred Compensation Plan for directors and
certain employees, including the named executive officers. The
Deferred Compensation Plan allows employees to voluntarily defer
receipt of up to 75% of their salary
and/or up to
100% of their AIP bonus payments. The Deferred Compensation Plan
permits participants to allocate the deferred amounts among a
group of notional accounts that mirror the gains
and/or
losses of various investment funds provided in the 401(k) Plan
(except not for a Company stock fund). In general, deferred
amounts are distributed to the participant upon termination or
at a specific date as elected by the participant. We do not
subsidize or match these deferred amounts. Details regarding
participation in the plan by the named executive officers can be
found in the Non-qualified Deferred Compensation Table on
page 50.
Perquisites
We provide a limited number of perquisites to the named
executive officers. These perquisites are assessed annually as
part of the total competitive review and include:
|
|
|
|
|
Financial Counseling, Tax Preparation and Estate Planning
Executive officers are eligible to receive
reimbursement for eligible expenses up to a specified annual
maximum. For 2008, the financial counseling and tax preparation
benefits were limited to $19,590 in the first year of use and
$11,730 for each following year, although actual costs may be
less. The estate planning services are made available to
executive officers on an as-needed basis and the services have
typically been utilized once every three years. All expenses
related to financial counseling, tax preparation and estate
planning are considered taxable income to the executive officer.
Mr. Hackett has voluntarily declined to utilize the
financial planning, tax preparation and estate planning
perquisites offered by us.
|
|
|
|
Executive Physical Program Executive officers
are eligible to receive reimbursement for an annual physical
exam.
|
|
|
|
Personal Excess Liability Insurance We pay an
annual premium to maintain excess liability coverage on behalf
of each officer. The annual premium is imputed and considered
taxable income to the officer.
|
|
|
|
Personal Use of Company Aircraft We maintain
aircraft for business travel purposes. Officers may, from time
to time, utilize such aircraft for personal travel. When so
utilized, the compensation related to such personal use is
imputed and considered taxable income to the executive officer
as required by applicable statutes and regulations.
|
|
|
|
Country Club Membership We reimburse
executive officers for monthly dues and any additional business
expenses.
|
|
|
|
Entertainment Events and Other We purchase
tickets to various sporting and entertainment events for
business purposes. We have also leased recreational facilities
for business purposes. If not used for
|
36
|
|
|
|
|
business purposes, we may make these tickets and facilities
available to our employees, including our executive officers, as
a form of recognition and reward for their efforts.
|
As required by the Board, we provide security services for
Mr. Hackett at his home. Pursuant to our security policy,
we also require Mr. Hackett to use our aircraft for
personal use as well as business travel. Any time
Mr. Hackett uses our aircraft for personal use, although it
is understood that he engages in business activities while in
flight, compensation is imputed to Mr. Hackett for that use
and for any passengers that accompany Mr. Hackett. Personal
use includes his participation on outside boards, which directly
and indirectly benefits Anadarko.
Our incremental cost of the various perquisites provided is
included in the All Other Compensation column of the
Summary Compensation Table on page 41. Individual
perquisite values are disclosed in the All Other Compensation
Table and supporting footnotes following the Summary
Compensation Table on page 42. We do not provide any tax
gross-ups on
these perquisites.
Severance
Benefits
The Company currently provides the below severance benefits to
its named executive officers. On a periodic basis, the
Committee, in consultation with its independent executive
compensation advisor, will review, consider and adjust, as the
Committee deems necessary and appropriate, the provisions of
severance and change-of-control benefits provided to executives.
In connection with any such review, the Committee will determine
whether and to what extent severance benefits should be
promised, the appropriateness of tax
gross-ups in
a severance or change-of-control context, and the appropriate
level of compensation payable in a severance or
change-of-control context. The Committee will take into
consideration other arrangements that may exist for an executive
so as to ensure that the entire compensation package is
consistent with the Committees executive compensation
philosophy.
Officer Severance Plan. Our named executive
officers are eligible for benefits under the Officer Severance
Plan. Benefits provided under this plan may vary depending upon
the executive officers level within the organization and
years of service with us and are made at the discretion of the
Compensation Committee. Executive officers receiving benefits
under the Officer Severance Plan are required to execute an
agreement releasing us from any and all claims from any and all
kinds of actions arising from the executive officers
employment with us or the termination of such employment. In
practice, we have typically provided the following involuntary
termination (as defined on page 51) severance benefits for
our executive officers:
|
|
|
|
|
a payment equal to 2 times the officers annual base salary;
|
|
|
|
a payment equal to one years target bonus under our AIP;
|
|
|
|
a pro rata bonus under our AIP for the year of termination;
|
|
|
|
if not eligible for retirement, a special retirement benefit
enhancement equal to the present value at the officers
current age of the difference between the deferred vested
benefit and the subsidized early retirement benefit at
age 55;
|
|
|
|
if applicable, the present value of retiree life insurance;
|
|
|
|
a payment equal to the cost of providing financial planning
services for two years;
|
|
|
|
the option to continue existing medical and dental coverage
levels at current active employee rates for up to 6 months.
After 6 months, we will pay the cost of COBRA until the
first to occur of (a) 18 months or (b) obtaining
comparable coverage as a result of employment with another
employer;
|
|
|
|
the vesting of some or all unvested restricted stock, unvested
restricted stock units and stock options; and
|
|
|
|
the vesting and payout of some or all outstanding performance
units at target level.
|
Key Employee Change of Control Contracts. We
have also entered into key employee change of control contracts
with all of our executive officers, including the named
executive officers, with the exception of
37
Mr. Hackett whose change of control benefits are included
in his employment agreement, which was originally effective as
of December 2003 and is described on page 39. These key
employee change of control contracts have an initial three-year
term that is automatically extended for one year upon each
anniversary, unless we provide notice not to extend. If we
experience a change of control (as defined on page 51
during the term of the executive officers contract, then
the contract becomes operative for a fixed three-year period.
These contracts generally provide that the executive
officers terms of employment (including position, work
location, compensation and benefits) will not be adversely
changed during the three-year period after a change of control.
If we (or any successor in interest) terminate the executive
officers employment (other than for cause (as defined on
page 51, death or disability), the executive officer
terminates for good reason (as defined on page 52 during
such three-year period, or upon certain terminations prior to a
change of control or in connection with or in anticipation of a
change of control, the named executive officer is generally
entitled to receive the following payment and benefits:
|
|
|
|
|
earned but unpaid compensation;
|
|
|
|
2.9 times the executive officers base salary plus AIP
bonus (based on historic AIP bonuses);
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our matching contributions that would have been made had the
executive officer continued to participate in the Savings Plans
for up to an additional three years;
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the value of any investments credited to the executive officer
under the Savings Restoration Plan; and
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the present value of the accrued retirement benefit under the
Companys retirement and pension plans and the additional
retirement benefits, including retiree medical, which the
executive would have received had the executive officer
continued service for up to an additional three years.
|
In addition, the change of control contracts provide for a
continuation of various medical, dental, disability and life
insurance benefits and financial counseling for a period of up
to three years. The contracts also provide for outplacement
services and the payment of all legal fees and expenses incurred
by the executive officer in enforcing any right or benefit
provided by the change of control contract. The executive will
also be entitled to receive a payment in an amount sufficient to
make the executive whole for any excise tax on excess parachute
payments imposed under Section 4999 of the IRC. These
provisions, in addition to attracting and retaining executive
officers, also allow these officers to realize the full value of
the intended benefit awarded under these contracts. If an
executive officer loses his or her job following a change of
control event that meets certain IRS criteria, the executive
officer must pay an additional 20% excise tax simply for
collecting the pay that is due. The
gross-up
makes the executive officer whole by the Company paying the 20%
excise tax amount and the additional income taxes generated by
such payment. The Company does not pay the executives
normal income taxes.
As a condition to receipt of change of control benefits, the
executive officer must remain employed by us and provide
services commensurate with his or her position until the
executive is terminated pursuant to the provisions of the
contract. The executive officer must also agree to retain in
confidence any and all confidential information known to him or
her concerning us and our business so long as the information is
not otherwise publicly disclosed. In 2008, no amounts were paid
under the change of control contracts.
Change of Control Equity Plans. In
addition to the change of control benefits discussed above, our
equity plans provide that upon a change of control of Anadarko:
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outstanding options and stock appreciation rights that are not
vested and exercisable become fully vested and exercisable;
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the restrictions on any outstanding restricted stock and
restricted stock units lapse; and
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if any performance unit awards or performance-based restricted
stock or restricted stock unit awards are outstanding, they
become fully vested and the performance goals are deemed to be
earned at target.
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We believe this single-trigger treatment in our
stock plans is appropriate because it ensures that continuing
employees are treated the same as terminated employees, and is
particularly appropriate for
38
performance-based equity given the potential difficulty of
replicating or meeting the performance goals after the change of
control.
Director
and Officer Indemnification Agreements
We have entered into indemnification agreements with our
directors and certain executive officers, in part to enable us
to attract and retain qualified directors and executive
officers. These agreements require us, among other things, to
indemnify such persons against certain liabilities that may
arise by reason of their status or service as directors or
officers, to advance their expenses for proceedings for which
they may be indemnified and to cover such person under any
directors and officers liability insurance policy
that we may maintain from time to time. These agreements are
intended to provide indemnification rights to the fullest extent
permitted under applicable Delaware law and are in addition to
any other rights our directors and executive officers may have
under our Restated Certificate of Incorporation, By-Laws and
applicable law.
Employment
Agreements
We have entered into an employment agreement with
Mr. Hackett and a retention agreement with Mr. Meloy.
Both agreements are discussed below.
Mr. Hackett
Employment Agreement
Under the terms of Mr. Hacketts employment agreement,
which was originally effective as of December 2003, he receives
a minimum annual base salary (currently $1,567,500), and is
eligible for an annual incentive cash bonus at a target of not
less than 130% of annual base salary with a maximum annual
incentive cash bonus of 260% of base salary. This agreement also
outlines certain payments and benefits to be paid to
Mr. Hackett under various termination scenarios, including:
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a without cause (involuntary) termination (as defined on
page 51 or termination for good reason (as defined on
page 52);
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a without cause (involuntary) termination or termination for
good reason within three years after a change of control, or
termination in anticipation of a change of control;
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termination for death or disability; and
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voluntary termination (other than for good reason).
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The above scenarios are discussed in more detail beginning on
page 51 of this proxy statement. We will provide a
gross-up
payment to Mr. Hackett to the extent any of the above
payments become subject to the federal excise tax relating to
excess parachute payments. Pre-change of control severance
benefits are conditioned upon the execution of a mutual release
between us and Mr. Hackett.
Mr. Hackett is also subject to covenants regarding
confidentiality, non-competition and non-solicitation. The
non-competition obligation applies for one year following
Mr. Hacketts termination of employment with us if
Mr. Hackett voluntarily terminates his employment with us
(other than for good reason) on or before December 3, 2010.
The agreement also provides that if Mr. Hackett remains
employed by us until at least December 3, 2008, he will
receive a special pension benefit, computed so that his total
pension benefits from us will equal those to which he would have
been entitled if his actual years of employment with us were
doubled. This service crediting provision was implemented when
Mr. Hackett was hired in order to compensate for projected
retirement benefits being forgone in leaving his former
employer. On December 3, 2008, Mr. Hackett became
vested in this special pension benefit.
Mr. Meloy
Retention Agreement
Mr. Meloy was an officer for Kerr-McGee at the time of its
acquisition by us in August 2006. As a result of our desire to
retain him as an executive officer, we entered into a retention
agreement with him at that time. The retention benefits were
intended to compensate him for certain severance benefits he was
otherwise
39
entitled to receive under the change of control agreement he had
with Kerr-McGee. Under the terms of his retention agreement,
Mr. Meloy receives the following benefits:
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cash payment equal to $1,150,000, 50% of which was paid in
August 2007, one year from the closing date of the acquisition
and 50% of which was paid in August 2008, two years from the
closing date of the acquisition;
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25,000 shares of restricted stock, 50% of which vested one
year from the closing date of the acquisition and 50% of which
vested two years from the closing date of the acquisition;
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if he stays employed with us for three years from the closing
date of the acquisition, he will receive credit for five
additional years in age and service towards his pension
benefits; and
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if he is involuntarily terminated without cause or terminates by
reason of death or disability prior to three years from the
closing date of the acquisition, he will receive age and service
credit to age 52.
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If Mr. Meloy were to voluntarily terminate or be terminated
for cause prior to the designated vesting dates, he would
forfeit any unvested or unpaid retention benefits.
The above descriptions of Mr. Hacketts employment
agreement and Mr. Meloys retention agreement are not
a full summary of all of the terms and conditions of these
agreements and are qualified in their entirety by the full text
of the agreements, which are on file with the SEC.
Conclusion
We believe the design of our total executive compensation
program aligns the interests of our executive officers with
those of our stockholders and provides executive officers with
the necessary motivation to maximize the long-term operational
and financial performance of the Company, while using sound
financial controls and high standards of integrity. The programs
currently offered have been critical elements in the successful
hiring of several executives and have been equally effective in
retaining executive officers during a period of strong
competitive demand and a shortage of talented executives within
the oil and gas exploration and production industry. We believe
that the quality of our executive compensation program will
continue to be reflected in positive operational, financial and
stock price performance. We also believe that total compensation
for each executive officer should be, and is, commensurate with
the execution of specified short-term and long-term operational,
financial and strategic objectives.
40
EXECUTIVE
COMPENSATION
Summary
Compensation Table For 2008
The following table summarizes the compensation of our Chief
Executive Officer, Chief Financial Officer and our three highest
paid executive officers other than our CEO and CFO for the
fiscal year ended December 31, 2008.
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Change in
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Pension Value
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and
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Non-qualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)(1)
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($)(2)
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($)(3)
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($)(4)
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($)(5)
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($)
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James T. Hackett
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Chairman, President and
Chief Executive Officer
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2008
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1,510,385
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0
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10,430,684
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3,764,163
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3,416,491
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(7)
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1,643,878
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571,276
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21,336,877
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2007
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1,415,385
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0
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6,198,884
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3,155,045
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2,962,400
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693,859
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572,368
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14,997,941
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2006
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1,316,667
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160,860
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(6)
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5,252,940
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1,592,237
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1,882,834
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2,633,633
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595,295
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13,434,466
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R. A. Walker(8)
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Senior Vice President, Finance and Chief Financial Officer
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2008
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655,000
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0
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3,216,870
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1,196,311
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1,139,700
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328,684
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180,995
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6,717,560
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2007
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544,231
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0
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1,413,378
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757,314
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744,780
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1,017,885
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137,527
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4,615,115
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2006
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466,667
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0
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1,189,283
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308,691
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535,500
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59,493
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334,118
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2,893,752
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Karl F. Kurz(8)
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Chief Operating Officer
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2008
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655,000
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(9)
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0
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2,454,494
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936,068
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1,139,700
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407,166
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126,785
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5,719,213
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2007
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538,462
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0
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1,094,540
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810,201
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866,923
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149,259
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80,517
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3,539,902
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2006
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410,417
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0
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992,798
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458,923
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404,823
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125,726
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92,091
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2,484,778
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Charles A. Meloy
Senior Vice President,
Worldwide Operations
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2008
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553,846
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575,000
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(10)
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1,758,084
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462,299
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915,508
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2,501,641
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106,832
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6,873,210
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2007
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486,555
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575,000
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(10)
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1,082,205
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228,056
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744,186
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1,416,457
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105,228
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4,637,687
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Robert K. Reeves
Senior Vice President, General Counsel and Chief Administrative
Officer
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2008
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503,846
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0
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2,019,689
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901,266
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789,023
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328,178
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127,972
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4,669,974
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2007
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449,231
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0
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871,180
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928,539
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614,772
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603,245
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81,555
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3,548,522
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|
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2006
|
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423,333
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|
|
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0
|
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|
1,008,172
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549,750
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|
|
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485,775
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93,904
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89,414
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2,650,348
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(1) |
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The amounts in this column reflect the compensation cost
recognized by the Company for the fiscal year ended
December 31, 2008, in accordance with
SFAS No. 123(R) for non-option stock awards granted
pursuant to the Omnibus Plan and the 1999 Stock Incentive Plan
and includes amounts from awards granted in and prior to 2008.
For a discussion of valuation assumptions, see
Note 5 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the
Form 10-K
for the year ended December 31, 2006,
Note 6 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the
Form 10-K
for the year ended December 31, 2007, and
Note 12 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the Form
10-K for the
year ended December 31, 2008. For information regarding the
non-option stock awards granted to the named executives in 2008,
please see the Grants of Plan-Based Awards Table. |
|
(2) |
|
The amounts in this column reflect the compensation cost
recognized by the Company for the fiscal year ended
December 31, 2008, in accordance with
SFAS No. 123(R) for option awards granted pursuant to
the Omnibus Plan and the 1999 Stock Incentive Plan and may
include amounts from option awards granted in and prior to 2008.
For a discussion of valuation assumptions, see
Note 5 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the
Form 10-K
for the year ended December 31, 2006,
Note 6 Stock-Based Compensation of the
Notes to Consolidated Financial Statements included in our
annual report under Item 8 of the Form
10-K for the
year ended December 31, 2007, and
Note 12 Stock-Based Compensation of the
Notes to |
41
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Consolidated Financial Statements included in our annual report
under Item 8 of the
Form 10-K
for the year ended December 31, 2008. For information
regarding the option awards granted to the named executives in
2008, please see the Grants of Plan-Based Awards Table. |
|
(3) |
|
The amounts in this column reflect the cash bonus awards for
2008 that were determined by the Compensation Committee and paid
out in February 2009 pursuant to the Companys AIP. These
awards are discussed in further detail beginning on page 31. |
|
(4) |
|
The amounts in this column reflect the actuarial increase in the
present value of the named executive officers benefits
under the Companys Retirement Plan and Retirement
Restoration Plan determined by using interest rate and mortality
rate assumptions consistent with those used in the
Companys financial statements and includes amounts that
the named executive officer may not currently be entitled to
receive because such amounts are not vested. The Companys
Deferred Compensation Plan does not provide for above-market or
preferential earnings so no such amounts are included. |
|
(5) |
|
The amounts shown in this column for each named executive
officer are described further in the All Other Compensation
Table below. |
|
(6) |
|
The amount reflected in the Bonus column for
Mr. Hackett in 2006 is the value of a special bonus in the
form of 3,000 shares of Company stock. |
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(7) |
|
Mr. Hackett elected to use approximately one-third of his
annual incentive bonus for 2008 performance to purchase
18,000 shares of Anadarko common stock in the open market
on February 19, 2009. This purchase was a voluntary, open
market transaction made as an indication of
Mr. Hacketts confidence in the Companys stock
value. |
|
(8) |
|
Effective March 1, 2009, Mr. Walker was appointed
Chief Operating Officer of the Company, replacing Mr. Kurz
who was named Senior Vice President pending his departure from
the Company in March 2009. Also effective March 1, 2009,
Robert G. Gwin was appointed Senior Vice President, Finance and
Chief Financial Officer. |
|
(9) |
|
Mr. Kurz deferred $65,500 of his 2008 base salary pursuant
to the Deferred Compensation Plan. |
|
(10) |
|
The $575,000 reflected in the Bonus column for
Mr. Meloy in 2008 and 2007 is a cash retention bonus paid
to him as part of his retention agreement entered into on
August 10, 2006. The details of this agreement are
discussed beginning on page 39. Compensation information
for 2006 is not reflected for Mr. Meloy because he was not
a named executive officer for the corresponding year. |
All Other
Compensation Table
The following table describes each component of the All
Other Compensation column in the Summary Compensation
Table:
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Payments by
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the Company to
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Employee
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401(k) Plan
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Personal
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and Savings
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Club
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Financial/
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Excess
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Use of
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Restoration
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Membership
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Tax/Estate
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Liability
|
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Tax
|
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Aircraft
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Plan
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Dues
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Planning
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Insurance
|
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Benefit
|
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Other
|
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Total
|
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Name
|
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($)(1)
|
|
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($)
|
|
|
($)
|
|
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($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
James T. Hackett(3)
|
|
|
296,860
|
|
|
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268,367
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|
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|
0
|
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|
|
0
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
4,649
|
|
|
|
571,276
|
|
R. A. Walker
|
|
|
82,060
|
|
|
|
83,987
|
|
|
|
9,860
|
|
|
|
1,988
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
1,700
|
|
|
|
180,995
|
|
Karl F. Kurz
|
|
|
20,640
|
|
|
|
91,315
|
|
|
|
0
|
|
|
|
11,730
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
1,700
|
|
|
|
126,785
|
|
Charles A. Meloy(4)
|
|
|
0
|
|
|
|
77,882
|
|
|
|
3,848
|
|
|
|
14,690
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
9,012
|
|
|
|
106,832
|
|
Robert K. Reeves
|
|
|
46,290
|
|
|
|
67,117
|
|
|
|
7,015
|
|
|
|
4,450
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
1,700
|
|
|
|
127,972
|
|
|
|
|
(1) |
|
The value of personal aircraft use is based on the
Companys aggregate incremental direct operating costs,
including cost of fuel, maintenance, landing and ramp fees, and
other miscellaneous trip-related variable costs. Because the
Companys aircraft are used predominantly for business
purposes, fixed costs, which do not change based on use of the
aircraft, are excluded. |
42
|
|
|
(2) |
|
The amount reflected in this column for Mr. Hackett
represents the cost of maintenance of the security system at his
primary residence (as required by the Board). For
Mr. Meloy, this amount represents a closing gift related to
the Kerr-McGee and Western acquisitions that was not received
until 2008 and, for the other named executive officers, the
amounts shown in this column represent closing gifts related to
the initial public offering of Western Gas Partners, LP. |
|
(3) |
|
The Companys security policy requires the Chief Executive
Officer to use Company aircraft for personal use as well as
business travel. The value of travel to board meetings for
companies other than Anadarko and civic organizations for which
Mr. Hackett serves as a director is considered personal use
and is included in the amount reported above. Any time
Mr. Hackett uses our aircraft for personal use, although it
is understood that he engages in business activities while in
flight, compensation is imputed to Mr. Hackett for that use
and for any passengers who accompany Mr. Hackett. Personal
use includes his participation on outside boards, which directly
and indirectly benefits Anadarko. |
|
(4) |
|
The amount reflected in the Financial/Tax/Estate
Planning column for Mr. Meloy includes the costs of
services provided in 2007, but not billed until 2008. |
Grants of
Plan-Based Awards in 2008
The following table sets forth information concerning annual
incentive awards, stock options, restricted stock units and
performance units granted during 2008 to each of the named
executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-
|
|
|
Estimated Future Payouts Under
|
|
|
Number of
|
|
|
Number of
|
|
|
Base Price
|
|
|
Fair Value
|
|
|
|
|
|
|
Equity Incentive Plan Awards(1)
|
|
|
Equity Incentive Plan Awards(2)
|
|
|
Shares of
|
|
|
Securities
|
|
|
of Option
|
|
|
of Stock
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Awards
|
|
|
and Option
|
|
Name
|
|
Grant Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
Units (#)(3)
|
|
|
Options (#)(4)
|
|
|
($/Sh)
|
|
|
Awards ($)(5)
|
|
|
James T. Hackett
|
|
|
|
|
|
|
0
|
|
|
|
1,950,000
|
|
|
|
3,900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
572,200
|
|
|
|
35.18
|
|
|
|
7,121,658
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,000
|
|
|
|
|
|
|
|
|
|
|
|
3,271,740
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,962
|
|
|
|
140,600
|
|
|
|
281,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,300,286
|
|
R.A. Walker
|
|
|
|
|
|
|
0
|
|
|
|
650,000
|
|
|
|
1,300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
182,900
|
|
|
|
35.18
|
|
|
|
2,276,392
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,800
|
|
|
|
|
|
|
|
|
|
|
|
1,048,364
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,150
|
|
|
|
45,000
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,016,450
|
|
Karl F. Kurz
|
|
|
|
|
|
|
0
|
|
|
|
650,000
|
|
|
|
1,300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,700
|
|
|
|
35.18
|
|
|
|
1,800,951
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,600
|
|
|
|
|
|
|
|
|
|
|
|
830,248
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,612
|
|
|
|
35,600
|
|
|
|
71,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,595,236
|
|
Charles A. Meloy
|
|
|
|
|
|
|
0
|
|
|
|
522,500
|
|
|
|
1,045,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,500
|
|
|
|
35.18
|
|
|
|
989,465
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
|
457,340
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,292
|
|
|
|
19,600
|
|
|
|
39,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
878,276
|
|
Robert K. Reeves
|
|
|
|
|
|
|
0
|
|
|
|
450,000
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,300
|
|
|
|
35.18
|
|
|
|
1,435,035
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,800
|
|
|
|
|
|
|
|
|
|
|
|
661,384
|
|
|
|
|
11/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,668
|
|
|
|
28,400
|
|
|
|
56,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,272,604
|
|
|
|
|
(1) |
|
Reflects estimated future cash payouts under the Companys
AIP. The estimated amounts are calculated based on the
applicable annual bonus target and base salary for each named
executive officer in effect for the 2008 measurement period. If
threshold levels of performance are not met, then the payout can
be zero. Actual bonus payouts under the AIP for 2008 are based
on actual base salaries earned in 2008 and are reflected in the
Non-Equity Incentive Plan Compensation column of the Summary
Compensation Table. |
|
(2) |
|
Reflects the estimated future payout under the Companys
performance unit awards. Executives may earn from 0% to 200% of
the targeted award based on the Companys relative TSR
performance over a specified performance period. Fifty percent
of this award is tied to a two-year performance period and the
remaining fifty percent is tied to a three-year performance
period. If earned, the awards are to be paid in |
43
|
|
|
|
|
cash. The threshold value represents the lowest earned amount
based on the payout scale described on page 34, although
the minimum payout is zero. |
|
(3) |
|
Reflects the number of restricted stock units awarded in 2008.
For accounting purposes, the 2008 annual restricted stock unit
awards have a grant date of November 4, 2008. This date is
based on the date the Compensation Committee approved the award
and the date the terms of the awards were communicated to the
participants. The effective grant date for participants is
December 1, 2008. The awards vest equally over three years,
beginning with the first anniversary of the participant grant
date. Executive officers receive dividend equivalents on the
units, but do not have voting rights. |
|
(4) |
|
Reflects the number of stock options each named executive
officer was awarded in 2008. These options vest equally over
three years, beginning with the first anniversary of the date of
grant and have a term of seven years. |
|
(5) |
|
The amounts included in the Grant Date Fair Value of Stock and
Option Awards column represent the grant date fair value of the
awards made to named executives in 2008 computed in accordance
with SFAS No. 123(R). The value ultimately realized by
the executive upon the actual vesting of the award(s) or the
exercise of the stock option(s) may or may not be equal to the
SFAS No. 123(R) determined value. For a discussion of
valuation assumptions, see Note 12
Stock-Based Compensation of the Notes to Consolidated
Financial Statements included in our annual report under
Item 8 of the
Form 10-K
for the year ended December 31, 2008. |
44
Outstanding
Equity Awards at Fiscal Year-End 2008
The following table reflects outstanding stock option awards
classified as exercisable and unexercisable as of
December 31, 2008 for each of the named executives. The
table also reflects unvested and unearned stock awards (both
time-based and performance-contingent) assuming a market value
of $38.55 a share (the closing stock price of the Companys
stock on December 31, 2008).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock/Units
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares,
|
|
Units or
|
|
|
Option Awards(1)
|
|
Units of
|
|
Units of
|
|
Units or
|
|
Other
|
|
|
Number of Securities
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
Other Rights
|
|
Rights
|
|
|
Underlying Unexercised Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have
|
Name
|
|
Exercisable (#)
|
|
Unexercisable (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Not Vested (#)
|
|
Not Vested ($)
|
|
James T. Hackett
|
|
|
250,000
|
|
|
|
0
|
|
|
|
23.3175
|
|
|
|
12/3/2013
|
|
|
|
19,500
|
|
|
|
751,725
|
|
|
|
87,500
|
|
|
|
3,373,125
|
|
|
|
|
80,000
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
54,933
|
|
|
|
2,117,667
|
|
|
|
38,100
|
|
|
|
1,468,755
|
|
|
|
|
127,334
|
|
|
|
63,666
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
93,000
|
|
|
|
3,585,150
|
|
|
|
140,600
|
|
|
|
5,420,130
|
|
|
|
|
40,934
|
|
|
|
81,866
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,334
|
|
|
|
166,666
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
572,200
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Walker
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
45.8000
|
|
|
|
9/6/2012
|
|
|
|
11,500
|
|
|
|
443,325
|
|
|
|
21,800
|
|
|
|
840,390
|
|
|
|
|
22,800
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
4,766
|
|
|
|
183,729
|
|
|
|
10,019
|
|
|
|
386,232
|
|
|
|
|
30,934
|
|
|
|
15,466
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
13,733
|
|
|
|
529,407
|
|
|
|
45,000
|
|
|
|
1,734,750
|
|
|
|
|
13,667
|
|
|
|
27,333
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
29,800
|
|
|
|
1,148,790
|
|
|
|
|
|
|
|
|
|
|
|
|
20,734
|
|
|
|
41,466
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
182,900
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karl F. Kurz
|
|
|
14,000
|
|
|
|
0
|
|
|
|
22.4750
|
|
|
|
10/31/2009
|
|
|
|
3,933
|
|
|
|
151,617
|
|
|
|
22,800
|
|
|
|
878,940
|
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
14,333
|
|
|
|
552,537
|
|
|
|
7,719
|
|
|
|
297,567
|
|
|
|
|
16,200
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
23,600
|
|
|
|
909,780
|
|
|
|
35,600
|
|
|
|
1,372,380
|
|
|
|
|
25,467
|
|
|
|
12,733
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,667
|
|
|
|
27,333
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,634
|
|
|
|
43,266
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
144,700
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles A. Meloy
|
|
|
25,467
|
|
|
|
12,733
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
3,933
|
|
|
|
151,617
|
|
|
|
12,200
|
|
|
|
470,310
|
|
|
|
|
11,534
|
|
|
|
23,066
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
7,666
|
|
|
|
295,524
|
|
|
|
4,650
|
|
|
|
179,258
|
|
|
|
|
0
|
|
|
|
79,500
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
13,000
|
|
|
|
501,150
|
|
|
|
19,600
|
|
|
|
755,580
|
|
Robert K. Reeves
|
|
|
170,000
|
|
|
|
0
|
|
|
|
26.6000
|
|
|
|
3/22/2011
|
|
|
|
3,633
|
|
|
|
140,052
|
|
|
|
17,800
|
|
|
|
686,190
|
|
|
|
|
16,600
|
|
|
|
0
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
11,200
|
|
|
|
431,760
|
|
|
|
7,188
|
|
|
|
277,097
|
|
|
|
|
14,800
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
18,800
|
|
|
|
724,740
|
|
|
|
28,400
|
|
|
|
1,094,820
|
|
|
|
|
23,667
|
|
|
|
11,833
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,667
|
|
|
|
27,333
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,967
|
|
|
|
33,933
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
115,300
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The table below shows the vesting dates for the respective
unexercisable stock options listed in the above Outstanding
Equity Awards Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/10/2009
|
|
|
9/6/2009
|
|
|
11/4/2009
|
|
|
11/6/2009
|
|
|
12/4/2009
|
|
|
1/10/2010
|
|
|
11/4/2010
|
|
|
11/6/2010
|
|
|
11/4/2011
|
|
|
James T. Hackett
|
|
|
40,933
|
|
|
|
|
|
|
|
190,734
|
|
|
|
83,333
|
|
|
|
63,666
|
|
|
|
40,933
|
|
|
|
190,733
|
|
|
|
83,333
|
|
|
|
190,733
|
|
R. A. Walker
|
|
|
13,667
|
|
|
|
25,000
|
|
|
|
60,967
|
|
|
|
20,733
|
|
|
|
15,466
|
|
|
|
13,666
|
|
|
|
60,967
|
|
|
|
20,733
|
|
|
|
60,966
|
|
Karl F. Kurz
|
|
|
13,667
|
|
|
|
|
|
|
|
48,234
|
|
|
|
21,633
|
|
|
|
12,733
|
|
|
|
13,666
|
|
|
|
48,233
|
|
|
|
21,633
|
|
|
|
48,233
|
|
Charles A. Meloy
|
|
|
|
|
|
|
|
|
|
|
26,500
|
|
|
|
11,533
|
|
|
|
12,733
|
|
|
|
|
|
|
|
26,500
|
|
|
|
11,533
|
|
|
|
26,500
|
|
Robert K. Reeves
|
|
|
13,667
|
|
|
|
|
|
|
|
38,434
|
|
|
|
16,967
|
|
|
|
11,833
|
|
|
|
13,666
|
|
|
|
38,433
|
|
|
|
16,966
|
|
|
|
38,433
|
|
45
|
|
|
(2) |
|
The table below shows the vesting dates for the respective
restricted stock shares and units listed in the above
Outstanding Equity Awards Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/6/2009
|
|
|
12/1/2009
|
|
|
12/3/2009
|
|
|
12/4/2009
|
|
|
12/1/2010
|
|
|
12/3/2010
|
|
|
12/1/2011
|
|
|
James T. Hackett
|
|
|
|
|
|
|
31,000
|
|
|
|
27,467
|
|
|
|
19,500
|
|
|
|
31,000
|
|
|
|
27,466
|
|
|
|
31,000
|
|
R. A. Walker
|
|
|
11,500
|
|
|
|
9,934
|
|
|
|
6,867
|
|
|
|
4,766
|
|
|
|
9,933
|
|
|
|
6,866
|
|
|
|
9,933
|
|
Karl F. Kurz
|
|
|
|
|
|
|
7,867
|
|
|
|
7,167
|
|
|
|
3,933
|
|
|
|
7,867
|
|
|
|
7,166
|
|
|
|
7,866
|
|
Charles A. Meloy
|
|
|
|
|
|
|
4,334
|
|
|
|
3,833
|
|
|
|
3,933
|
|
|
|
4,333
|
|
|
|
3,833
|
|
|
|
4,333
|
|
Robert K. Reeves
|
|
|
|
|
|
|
6,267
|
|
|
|
5,600
|
|
|
|
3,633
|
|
|
|
6,267
|
|
|
|
5,600
|
|
|
|
6,266
|
|
|
|
|
(3) |
|
The table below shows the performance periods for the respective
performance units listed in the above Outstanding Equity Awards
Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/2008 to 12/31/2009
|
|
|
1/1/2008 to 12/31/2010
|
|
|
1/1/2009 to 12/31/2010
|
|
|
1/1/2009 to 12/31/2011
|
|
|
James T. Hackett
|
|
|
81,850
|
|
|
|
43,750
|
|
|
|
70,300
|
|
|
|
70,300
|
|
R. A. Walker
|
|
|
20,919
|
|
|
|
10,900
|
|
|
|
22,500
|
|
|
|
22,500
|
|
Karl F. Kurz
|
|
|
19,119
|
|
|
|
11,400
|
|
|
|
17,800
|
|
|
|
17,800
|
|
Charles A. Meloy
|
|
|
10,750
|
|
|
|
6,100
|
|
|
|
9,800
|
|
|
|
9,800
|
|
Robert K. Reeves
|
|
|
16,088
|
|
|
|
8,900
|
|
|
|
14,200
|
|
|
|
14,200
|
|
Option
Exercises and Stock Vested in 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise ($)(1)
|
|
|
Vesting (#)(2)
|
|
|
Vesting ($)(1)
|
|
|
James T. Hackett
|
|
|
0
|
|
|
|
0
|
|
|
|
66,967
|
|
|
|
2,424,954
|
|
R. A. Walker
|
|
|
0
|
|
|
|
0
|
|
|
|
28,534
|
|
|
|
1,287,983
|
|
Karl F. Kurz
|
|
|
0
|
|
|
|
0
|
|
|
|
38,900
|
|
|
|
2,377,654
|
|
Charles A. Meloy
|
|
|
0
|
|
|
|
0
|
|
|
|
20,267
|
|
|
|
945,667
|
|
Robert K. Reeves
|
|
|
0
|
|
|
|
0
|
|
|
|
12,766
|
|
|
|
462,342
|
|
|
|
|
(1) |
|
The Value Realized reflects the taxable value to the named
executive officer as of the date of the option exercise or
vesting of restricted stock. The actual value ultimately
realized by the named executive officer may be more or less than
the Value Realized calculated in the above table depending on
the timing in which the named executive officer held or sold the
stock associated with the exercise or vesting occurrence. |
|
(2) |
|
Shares acquired on vesting include restricted stock shares or
units whose restrictions lapsed during 2008. |
Pension
Benefits for 2008
The Company maintains the Anadarko Retirement Plan, or the APC
Retirement Plan, and the Kerr-McGee Corporation Retirement Plan,
or the KMG Retirement Plan, both of which are funded
tax-qualified defined benefit pension plans. In addition, the
Company maintains the Anadarko Retirement Restoration Plan, or
the APC Retirement Restoration Plan, and the Kerr-McGee Benefits
Restoration Plan, or the KMG Restoration Plan, both of which are
unfunded, non-qualified pension benefit plans that are designed
to provide for supplementary pension benefits due to limitations
imposed by the IRC that restrict the amount of benefits payable
under tax-qualified plans.
APC Retirement Plan and APC Retirement Restoration Plan,
collectively the APC Retirement Plans. The APC
Retirement Plan covers all United States-based Anadarko
employees, except for legacy Kerr-McGee employees. The APC
Retirement Restoration Plan covers all United States-based
Anadarko employees, except for legacy Kerr-McGee employees, who
are affected by certain IRC limitations. For those employees
hired prior to January 1, 2007, which includes all of the
named executive officers except Mr. Meloy (who is a
46
participant in the KMG Retirement Plan), benefits under these
plans are based upon the employees years of service and
the greater of either:
|
|
|
|
|
the annual average of the employees highest compensation
over three consecutive calendar years out of the last
10 years of employment with the Company; or
|
|
|
|
the annual average compensation over the last 36 consecutive
months of employment with the Company.
|
The APC Retirement Plans do not require contributions by
employees and an employee becomes vested in his or her benefit
at the completion of three years of service. Compensation
covered by the APC Retirement Plans includes base salary and
payments under the AIP. The amount of compensation for 2008 that
may be considered in calculating benefits under the APC
Retirement Plan is $230,000 due to the annual IRC limitation.
Compensation in excess of $230,000 is recognized in determining
benefits payable under the APC Retirement Restoration Plan.
For employees hired prior to January 1, 2007, benefits
under the APC Retirement Plans are calculated as a
life-only annuity (meaning that benefits end upon
the participants death) and are equal to the sum of:
|
|
|
|
|
1.4% x average compensation x years of service with the Company;
plus
|
|
|
|
0.4% x (average compensation − covered compensation)
x years of service with the Company (limited to 35 years).
|
Covered compensation is the average (without indexing) of the
Social Security taxable wage base during the
35-year
period ending with the last day of the year in which an
individual reaches Social Security retirement age. Benefits are
calculated based on a normal retirement age of 65, however,
employees may receive a reduced benefit as early as age 55.
Employees may choose to receive their benefits under several
different forms provided under the APC Retirement Plan.
Employees receive their benefits from the APC Retirement
Restoration Plan in the form of a lump-sum payment.
KMG Retirement Plan and KMG Restoration Plan, collectively
the KMG Retirement Plans. The KMG Retirement Plan
covers all United States-based, legacy Kerr-McGee employees who
have not incurred a break in service of greater than one year
since the acquisition date. The KMG Restoration Plan covers all
legacy Kerr-McGee United States-based employees that are
affected by the IRC limitations. Benefits under these plans are
based upon the employees years of service and the average
monthly earnings during the 36 highest paid consecutive months
of the last 120 months of employment.
The KMG Retirement Plans do not require contributions by
employees and an employee becomes vested in his or her benefit
at the completion of three years of service. Compensation
covered by the KMG Retirement Plans includes base salary and
payments under the AIP. The amount of compensation for 2008 that
may be considered in calculating benefits under the KMG
Retirement Plan is $230,000 due to the annual IRC limitation.
Compensation in excess of $230,000 is recognized in determining
benefits payable under the KMG Restoration Plan.
Benefits under the KMG Retirement Plans are calculated as a
life-only annuity for single participants, and a joint and 50%
contingent annuity for married participants who are eligible for
retirement. Benefits under this plan are equal to the sum of
Part A and Part B:
Part A:
|
|
|
|
|
1.1% x average compensation x years of service prior to
March 1, 1999; plus
|
|
|
|
0.5% x (average compensation − covered compensation)
x years of service prior to March 1, 1999 (limited to
35 years).
|
Part B:
|
|
|
|
|
1.667% x average compensation x years of service on or after
March 1, 1999 (limited to 30 years); plus
|
|
|
|
0.75% x average compensation x years of service on or after
March 1, 1999 in excess of 30 years; less
|
47
|
|
|
|
|
1% x primary social security benefit x years of service on or
after March 1, 1999 as of age 65 (limited to
30 years) x (years of service on or after March 1,
1999 divided by years of service on or after March 1, 1999
at age 65).
|
Covered compensation is the average (without indexing) of the
Social Security taxable wage base during the
35-year
period ending with the last day of the year in which an
individual reaches Social Security retirement age. Benefits are
calculated based on a normal retirement age of 65; however,
employees may receive a reduced benefit as early as age 52.
Employees may choose to receive their benefits under several
different forms provided under the KMG Retirement Plan.
Employees receive their benefits from the KMG Restoration Plan
in the form of a lump-sum payment.
The present values provided in the table below are based on the
pension benefits accrued through December 31, 2008,
assuming that such benefit is paid in the same form as reflected
in the accounting valuation. The benefits are assumed to
commence at the plans earliest unreduced retirement age,
which is age 62 for the APC Retirement Plans and
age 60 for the KMG Retirement Plans. All pre-retirement
decrements such as pre-retirement mortality and terminations
have been ignored for the purposes of these calculations. The
interest rate used for discounting payments back to
December 31, 2008 is 6%, consistent with the weighted
average discount rate used in the accounting valuation. The
interest rate used for converting the benefit to a lump-sum form
of payment is 5.0%. The assumed annuity purchase rate for the
KMG Restoration Plan is 4.8%.
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present Value of
|
|
Payments
|
|
|
|
|
Years of
|
|
Accumulated
|
|
During
|
|
|
|
|
Credited Service
|
|
Benefit
|
|
2008
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
($)
|
|
James T. Hackett(1)
|
|
APC Retirement Plan
|
|
|
5.000
|
|
|
|
155,694
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
10.000
|
|
|
|
5,302,592
|
|
|
|
0
|
|
R. A. Walker(2)
|
|
APC Retirement Plan
|
|
|
3.000
|
|
|
|
77,884
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
11.000
|
|
|
|
1,328,177
|
|
|
|
0
|
|
Karl F. Kurz
|
|
APC Retirement Plan
|
|
|
8.000
|
|
|
|
161,965
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
8.000
|
|
|
|
685,758
|
|
|
|
0
|
|
Charles A. Meloy(3)
|
|
KMG Retirement Plan
|
|
|
26.583
|
|
|
|
696,678
|
|
|
|
0
|
|
|
|
KMG Restoration Plan
|
|
|
31.583
|
|
|
|
5,583,745
|
|
|
|
0
|
|
Robert K. Reeves(2)
|
|
APC Retirement Plan
|
|
|
5.000
|
|
|
|
123,654
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
10.000
|
|
|
|
1,024,175
|
|
|
|
0
|
|
|
|
|
(1) |
|
The value of Mr. Hacketts APC Retirement Restoration
Plan benefit in the table includes the effect of the additional
pension service credit provided under his employment agreement,
which was originally effective as of December 2003.
Mr. Hackett vested in these additional pension service
credits on December 3, 2008. |
|
(2) |
|
Messrs. Walker and Reeves will be provided additional
pension service credits under the APC Retirement Restoration
Plan if they remain employed until age 55. These additional
pension service credits were provided in November 2007 to
recognize that they were both mid-career hires that we would
like to retain for the remainder of their careers. Providing
them additional service credits recognizes a portion of their
prior industry and service years, which directly benefits us and
our stockholders. The value reflected in the APC Retirement
Restoration Plan amount includes the effect of this additional
pension credit, assuming its application as of December 31,
2008. However, as of December 31, 2008, Messrs. Walker
and Reeves have not yet earned the right to this additional
pension service credit. The value of Mr. Walkers APC
Retirement Restoration Plan benefit as of December 31, 2008
excluding the effect of the additional pension service credit is
$305,587, for a total pension value of $383,471. The value of
Mr. Reeves APC Retirement Restoration Plan benefit as
of December 31, 2008 excluding the effect of the additional
pension service credit is $450,260, for a total pension value of
$573,914. |
|
(3) |
|
Mr. Meloy has a retention agreement, which was entered into
in August 2006, that will provide him with an additional pension
service credit under the KMG Restoration Plan if he remains
employed with the Company through August 10, 2009. The
additional pension service credit was included in his retention |
48
|
|
|
|
|
agreement to compensate him for certain severance benefits he
was otherwise entitled to receive under the change of control
agreement he had with Kerr-McGee. The value reflected in the KMG
Restoration Plan amount includes the effect of this additional
pension credit assuming its application as of December 31,
2008. However, as of December 31, 2008, Mr. Meloy has
not yet earned the right to this additional pension service
credit. Mr. Meloys KMG Restoration Plan value as of
December 31, 2008, excluding the effect of the additional
pension service credit is $4,718,065, for a total pension value
of $5,414,743. |
49
Non-qualified
Deferred Compensation for 2008
The Company maintains a Deferred Compensation Plan for directors
and certain employees, including the named executive officers.
The Deferred Compensation Plan allows certain employees to
voluntarily defer receipt of up to 75% of their salary
and/or up to
100% of their AIP payments. The Deferred Compensation Plan
allows directors to defer receipt of up to 100% of their board
and committee retainers
and/or board
and committee meeting fees. The Deferred Compensation Plan
permits participants to allocate the deferred amounts among a
group of notional accounts that mirror the gains
and/or
losses of various investment funds. The notional accounts do not
provide for above-market or preferential earnings. In general,
deferred amounts are distributed to the participant upon
termination or at a specific date as elected by the participant
or as required by the Plan. The Company does not subsidize or
match any deferrals of compensation into this plan.
The Company has a Savings Restoration Plan that accrues a
benefit substantially equal to the amount that, in the absence
of certain IRC limitations, would have been allocated to a named
executive officers account as Company matching
contributions under the 401(k) Plan. The Savings Restoration
Plan permits participants to allocate the deferred amounts among
a group of notional accounts that mirror the gains
and/or
losses of various investment funds provided in the 401(k) Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Company
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate Balance
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings/Losses
|
|
Withdrawals/
|
|
at End of
|
|
|
2008
|
|
2008
|
|
in 2008
|
|
Distributions
|
|
2008
|
Name
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
James T. Hackett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
254,567
|
|
|
|
(267,809
|
)
|
|
|
0
|
|
|
|
595,757
|
|
R. A. Walker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
72,487
|
|
|
|
(34,450
|
)
|
|
|
0
|
|
|
|
114,120
|
|
Karl F. Kurz(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
195,538
|
|
|
|
0
|
|
|
|
(148,477
|
)
|
|
|
0
|
|
|
|
465,834
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
77,515
|
|
|
|
(37,401
|
)
|
|
|
0
|
|
|
|
191,267
|
|
Charles A. Meloy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
73,805
|
|
|
|
(50,028
|
)
|
|
|
0
|
|
|
|
115,308
|
|
Robert K. Reeves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
53,317
|
|
|
|
(24,191
|
)
|
|
|
0
|
|
|
|
155,945
|
|
|
|
|
(1) |
|
Company contributions in the Savings Restoration Plan are
reported in the Summary Compensation Table for each of the named
executive officers under the All Other Compensation column for
the fiscal year 2008. |
|
(2) |
|
Mr. Kurzs contributions in the Deferred Compensation
Plan include $65,500 of his 2008 base salary reported in the
Summary Compensation Table under the Salary column for the
fiscal year 2008 and $130,038 of his 2007 bonus earned in 2007
but paid in 2008 that is reported in the Summary Compensation
Table under the Non-Equity Incentive Plan Compensation column
for the fiscal year 2007. |
50
Potential
Payments Upon Termination or Change of Control
The following tables reflect potential payments to our named
executive officers under existing contracts, agreements, plans
or arrangements, whether written or unwritten, for various
scenarios involving a change of control or termination of
employment of each named executive officer, assuming a
December 31, 2008 termination date, and, where applicable,
using the closing price of our common stock of $38.55 (as
reported on the NYSE as of December 31, 2008). As of
December 31, 2008, none of our executive officers were
eligible for retirement; accordingly, no table is included for
this event.
The following are general definitions that apply to the
termination scenarios detailed below. These definitions have
been summarized and are qualified in their entirety by the full
text of the applicable plans or agreements to which our named
executive officers are parties.
Involuntary Termination is generally defined as any
termination that does not result from the following termination
events:
|
|
|
|
|
resignation;
|
|
|
|
retirement;
|
|
|
|
for cause;
|
|
|
|
death;
|
|
|
|
qualifying disability;
|
|
|
|
extended leave of absence;
|
|
|
|
continued failure to perform duties or responsibilities;
|
|
|
|
a termination in connection with any corporate sale transaction
where continued employment is available; or
|
|
|
|
a termination if the employee is eligible to receive benefits
from a Key Employee Change of Control Contract.
|
For Cause is generally defined as:
|
|
|
|
|
the willful and continued failure of the executive to perform
substantially the executives duties with the Company or
one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness) or material
breach of any material provision in an employment agreement (if
applicable), after written demand for substantial performance is
delivered to the executive by the Board or the CEO of the
Company which specifically identifies the manner in which the
Board or CEO believes that the executive has not substantially
performed the executives duties; or
|
|
|
|
the willful engaging by the executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious
to the Company.
|
A Change of Control is generally defined as any one
of the following occurrences:
|
|
|
|
|
any individual, entity or group acquires beneficial ownership of
20% or more of either the outstanding shares of our common stock
or our combined voting power;
|
|
|
|
individuals who constitute the Board (as of the date of either a
given change of control contract or an award agreement under our
equity plans, as applicable) cease to constitute a majority of
the Board, provided that an individual whose election or
nomination as a director is approved by a vote of at least a
majority of the directors as of the date of either the change of
control contract or an award agreement under our equity plans,
as applicable, will be deemed a member of the incumbent Board;
|
51
|
|
|
|
|
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of our assets or the
acquisition of assets of another entity, unless following the
business combination:
|
|
|
|
|
|
all or substantially all of the beneficial owners of our
outstanding common stock prior to the business combination own
more than 60% of the outstanding common stock of the corporation
resulting from the business combination;
|
|
|
|
no person, entity or group owns 20% or more of the outstanding
voting securities of the corporation resulting from the business
combination; and
|
|
|
|
at least a majority of the board of the corporation resulting
from the business combination were members of our Board prior to
the business combination; or
|
|
|
|
|
|
approval by our stockholders of our complete liquidation or
dissolution.
|
Good Reason is generally defined as any one of the
following occurrences within three years of a Change of Control:
|
|
|
|
|
diminution in Executives position, authority, duties or
responsibilities that were effective immediately prior to the
Change of Control, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
|
|
|
|
any failure by the Company to provide compensation to the
Executive at levels that were effective immediately prior to the
Change of Control, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
|
|
|
|
any material change in the location, as defined in the
applicable agreement, where the Executive was employed
immediately preceding the Change of Control, or the Company
requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to
the Change of Control;
|
|
|
|
any termination by the Executive for any reason during the
30-day
period immediately following the first anniversary of a Change
of Control;
|
|
|
|
any purported termination by the Company of the Executives
employment otherwise than as expressly permitted in their Change
of Control or Employment Agreement; or
|
|
|
|
any failure by the Company to require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to assume the terms provided in the Executives
Change of Control or Employment Agreement.
|
Disability is generally defined as the absence of
the Executive from the Executives duties with the Company
on a full-time basis for 180 business days as a result of
incapacity due to mental or physical illness which is determined
to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the
Executives legal representative.
Additional details of the post-termination arrangements can be
found in the Compensation Discussion and Analysis beginning on
page 37.
Involuntary
For Cause or Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Retirement Restoration Plan Benefits(1)
|
|
$
|
4,903,456
|
|
|
$
|
294,634
|
|
|
$
|
702,989
|
|
|
$
|
3,315,255
|
|
|
$
|
439,301
|
|
Non-qualified Deferred Compensation(2)
|
|
$
|
595,757
|
|
|
$
|
114,120
|
|
|
$
|
657,101
|
|
|
$
|
115,308
|
|
|
$
|
155,945
|
|
Total
|
|
$
|
5,499,213
|
|
|
$
|
408,754
|
|
|
$
|
1,360,090
|
|
|
$
|
3,430,563
|
|
|
$
|
595,246
|
|
52
|
|
|
(1) |
|
Reflects the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits. |
|
(2) |
|
Reflects the combined vested balances in the non-qualified
Savings Restoration Plan and Deferred Compensation Plan. |
Involuntary
Not For Cause Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance(1)
|
|
$
|
10,815,750
|
|
|
$
|
2,047,500
|
|
|
$
|
2,047,500
|
|
|
$
|
1,696,250
|
|
|
$
|
1,522,500
|
|
Pro-rata AIP Bonus for 2008(2)
|
|
$
|
2,037,750
|
|
|
$
|
655,000
|
|
|
$
|
655,000
|
|
|
$
|
526,154
|
|
|
$
|
453,462
|
|
Accelerated Equity Compensation(3)
|
|
$
|
18,644,866
|
|
|
$
|
5,882,997
|
|
|
$
|
4,650,461
|
|
|
$
|
2,621,354
|
|
|
$
|
3,743,221
|
|
Retirement Restoration Plan Benefits(4)
|
|
$
|
7,931,915
|
|
|
$
|
522,542
|
|
|
$
|
1,248,892
|
|
|
$
|
8,102,556
|
|
|
$
|
786,144
|
|
Non-qualified Deferred Compensation(5)
|
|
$
|
595,757
|
|
|
$
|
114,120
|
|
|
$
|
657,101
|
|
|
$
|
115,308
|
|
|
$
|
155,945
|
|
Health and Welfare Benefits(6)
|
|
$
|
210,304
|
|
|
$
|
68,320
|
|
|
$
|
300,032
|
|
|
$
|
56,185
|
|
|
$
|
62,012
|
|
Financial Counseling(7)
|
|
$
|
|
|
|
$
|
24,898
|
|
|
$
|
24,898
|
|
|
$
|
24,898
|
|
|
$
|
24,898
|
|
Total
|
|
$
|
40,236,342
|
|
|
$
|
9,315,377
|
|
|
$
|
9,583,884
|
|
|
$
|
13,142,705
|
|
|
$
|
6,748,182
|
|
|
|
|
(1) |
|
Mr. Hacketts value assumes three times his base
salary plus target AIP bonus; all other named executive officer
values assume two times base salary plus one times AIP target
bonus. |
|
(2) |
|
Mr. Hacketts value assumes payment of a pro-rata
bonus based on the target bonus percentage and base salary in
effect as of December 31, 2008; all other named executive
officer values assume a pro-rata AIP bonus based on target bonus
percentages effective for the 2008 AIP and eligible earnings as
of December 31, 2008. |
|
(3) |
|
Reflects the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock and units, all as of December 31,
2008. |
|
(4) |
|
For all named executive officers except for Mr. Hackett,
the values include a special retirement benefit enhancement that
is equivalent to the additional supplemental pension benefits
that would have accrued assuming they were eligible for
subsidized early retirement benefits. Values exclude vested
amounts payable under the qualified plans available to all
employees. All values include special pension credits, if
applicable, provided through an employment agreement, retention
agreement, the APC Retirement Restoration Plan or the KMG
Restoration Plan. |
|
(5) |
|
Reflects the combined vested balances in the non-qualified
Savings Restoration Plan and Deferred Compensation Plan. |
|
(6) |
|
Mr. Hacketts value represents 18 months of
health and welfare benefit coverage and the lump-sum value of
subsidized retiree medical benefits; all other named executive
officer values represent 24 months of health and welfare
benefit coverage. All amounts are present values determined in
accordance with SFAS No. 106
Employers Accounting for Postretirement Benefits other
than Pensions. Mr. Kurzs value also includes the
present value of a retiree death benefit in the Management Life
Insurance Plan, or MLIP. The MLIP provides for a retiree death
benefit equal to one times final base salary. This retiree death
benefit is only applicable to participants who were employed by
the Company on June 30, 2003. Therefore, this benefit is
only applicable to Mr. Kurz. |
|
(7) |
|
Values assume financial counseling services continue for two
years after termination. Mr. Hackett does not currently use
this Company-provided service and therefore benefits are not
assumed to be extended to him after termination. |
53
Change
of Control: Involuntary Termination or Voluntary For Good
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance(1)
|
|
$
|
10,815,750
|
|
|
$
|
4,139,112
|
|
|
$
|
4,493,327
|
|
|
$
|
3,825,639
|
|
|
$
|
3,305,339
|
|
Pro-rata AIP Bonus for 2008(2)
|
|
$
|
2,037,750
|
|
|
$
|
744,780
|
|
|
$
|
866,923
|
|
|
$
|
744,186
|
|
|
$
|
614,772
|
|
Accelerated Equity Compensation(3)
|
|
$
|
18,644,866
|
|
|
$
|
5,882,997
|
|
|
$
|
4,650,461
|
|
|
$
|
2,621,354
|
|
|
$
|
3,743,221
|
|
Retirement Restoration Plan Benefits(4)
|
|
$
|
14,743,203
|
|
|
$
|
2,971,383
|
|
|
$
|
2,539,613
|
|
|
$
|
8,102,556
|
|
|
$
|
1,945,575
|
|
Non-qualified Deferred Compensation(5)
|
|
$
|
1,411,139
|
|
|
$
|
371,031
|
|
|
$
|
935,997
|
|
|
$
|
352,761
|
|
|
$
|
361,104
|
|
Health and Welfare Benefits(6)
|
|
$
|
306,624
|
|
|
$
|
211,540
|
|
|
$
|
329,797
|
|
|
$
|
85,018
|
|
|
$
|
201,650
|
|
Outplacement Assistance
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
Financial Counseling(7)
|
|
$
|
|
|
|
$
|
38,099
|
|
|
$
|
38,099
|
|
|
$
|
38,099
|
|
|
$
|
38,099
|
|
Excise Tax and
Gross-up(8)
|
|
$
|
11,956,076
|
|
|
$
|
4,676,472
|
|
|
$
|
3,965,659
|
|
|
$
|
4,240,354
|
|
|
$
|
3,238,835
|
|
Total
|
|
$
|
59,945,408
|
|
|
$
|
19,065,414
|
|
|
$
|
17,849,876
|
|
|
$
|
20,039,967
|
|
|
$
|
13,478,595
|
|
|
|
|
(1) |
|
Mr. Hacketts value assumes three times his base
salary plus target AIP bonus; all other named executive officer
values assume 2.9 times the sum of base salary plus the highest
AIP bonus paid in the past three years. |
|
(2) |
|
Mr. Hacketts value assumes payment of pro-rata AIP
bonus based on the target AIP bonus percentage and base salary
in effect as of December 31, 2008; all other named
executive officer values assume the full-year equivalent of the
highest annual AIP bonus the officer received over the past
three years. |
|
(3) |
|
Includes the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock and units, all as of December 31,
2008. |
|
(4) |
|
The values include a special retirement benefit enhancement that
is equivalent to the additional supplemental pension benefits
that would have accrued assuming the named executive officers
were eligible for subsidized early retirement benefits. Values
exclude vested amounts payable under the qualified plans
available to all employees. All values include special pension
credits, provided through an employment agreement, retention
agreement, the APC Retirement Restoration Plan, the KMG
Restoration Plan or change of control agreement. |
|
(5) |
|
Includes the combined balances in the non-qualified Savings
Restoration Plan and Deferred Compensation Plan plus an
additional three years of employer contributions into the
Savings Restoration Plan based on each officers current
contribution rate to the Plan. |
|
(6) |
|
Values represent 36 months of health and welfare benefit
coverage. Messrs. Hacketts, Walkers and
Reeves values also include the lump-sum value of
subsidized retiree medical benefits. All amounts are present
values determined in accordance with
SFAS No. 106 Employers Accounting
for Postretirement Benefits other than Pensions.
Mr. Kurzs value also includes the present value of a
retiree death benefit in the MLIP. The MLIP provides for a
retiree death benefit equal to one times final base salary. This
retiree death benefit is only applicable to participants who
were employed by the Company on June 30, 2003. Therefore,
this benefit is only applicable to Mr. Kurz. |
|
(7) |
|
Values assume financial counseling services continue for three
years after termination. Mr. Hackett does not currently use
this Company-provided service and therefore benefits are not
assumed to be extended to him after termination. |
|
(8) |
|
Values estimate the total payment required to make each
executive whole for the 20% excise tax imposed by
Section 280G of the IRC. |
54
Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Pro-rata AIP Bonus for 2008(1)
|
|
$
|
1,963,500
|
|
|
$
|
655,000
|
|
|
$
|
655,000
|
|
|
$
|
526,154
|
|
|
$
|
453,462
|
|
Accelerated Equity Compensation(2)
|
|
$
|
18,644,866
|
|
|
$
|
5,882,997
|
|
|
$
|
4,650,461
|
|
|
$
|
2,621,354
|
|
|
$
|
3,743,221
|
|
Retirement Restoration Plan Benefits(3)
|
|
$
|
4,903,456
|
|
|
$
|
294,634
|
|
|
$
|
702,989
|
|
|
$
|
8,146,714
|
|
|
$
|
439,301
|
|
Non-qualified Deferred Compensation(4)
|
|
$
|
595,757
|
|
|
$
|
114,120
|
|
|
$
|
657,101
|
|
|
$
|
115,308
|
|
|
$
|
155,945
|
|
Health and Welfare Benefits(5)
|
|
$
|
1,366,523
|
|
|
$
|
391,901
|
|
|
$
|
407,842
|
|
|
$
|
342,585
|
|
|
$
|
305,581
|
|
Total
|
|
$
|
27,474,102
|
|
|
$
|
7,338,652
|
|
|
$
|
7,073,393
|
|
|
$
|
11,752,115
|
|
|
$
|
5,097,510
|
|
|
|
|
(1) |
|
Represents payment of a pro-rata target AIP bonus based on
target bonus percentages effective for the 2008 AIP and eligible
earnings as of December 31, 2008. |
|
(2) |
|
Reflects the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock and units, all as of December 31,
2008. |
|
(3) |
|
Reflects the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits.
Mr. Meloys value includes the special pension credits
provided through his retention agreement. |
|
(4) |
|
Reflects the combined vested balances in the non-qualified
Savings Restoration Plan and Deferred Compensation Plan. |
|
(5) |
|
Reflects the continuation of additional death benefit coverage
provided to officers of the Company until age 65. All
amounts are present values determined in accordance with
SFAS No. 106 Employers Accounting
for Postretirement Benefits other than Pensions.
Mr. Hacketts value also includes the lump-sum value
of subsidized retiree medical benefits. |
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
|
Mr. Walker
|
|
|
Mr. Kurz
|
|
|
Mr. Meloy
|
|
|
Mr. Reeves
|
|
|
Cash Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Pro-rata AIP Bonus for 2008(1)
|
|
$
|
1,963,500
|
|
|
$
|
655,000
|
|
|
$
|
655,000
|
|
|
$
|
526,154
|
|
|
$
|
453,462
|
|
Accelerated Equity Compensation(2)
|
|
$
|
18,644,866
|
|
|
$
|
5,882,997
|
|
|
$
|
4,650,461
|
|
|
$
|
2,621,354
|
|
|
$
|
3,743,221
|
|
Retirement Restoration Plan Benefits(3)
|
|
$
|
4,903,456
|
|
|
$
|
294,634
|
|
|
$
|
702,989
|
|
|
$
|
8,146,714
|
|
|
$
|
439,301
|
|
Non-qualified Deferred Compensation(4)
|
|
$
|
595,757
|
|
|
$
|
114,120
|
|
|
$
|
657,101
|
|
|
$
|
115,308
|
|
|
$
|
155,945
|
|
Life Insurance Proceeds(5)
|
|
$
|
7,616,947
|
|
|
$
|
2,147,915
|
|
|
$
|
2,147,915
|
|
|
$
|
1,809,599
|
|
|
$
|
1,652,242
|
|
Total
|
|
$
|
33,724,526
|
|
|
$
|
9,094,666
|
|
|
$
|
8,813,466
|
|
|
$
|
13,219,129
|
|
|
$
|
6,444,171
|
|
|
|
|
(1) |
|
Represents payment of a pro-rata target AIP bonus based on
target AIP bonus percentages effective for the 2008 AIP and
eligible earnings as of December 31, 2008. |
|
(2) |
|
Includes the in-the-money value of unvested stock options, the
target value of unvested performance units, and the value of
unvested restricted stock and units, all as of December 31,
2008. |
|
(3) |
|
Includes the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits.
Mr. Meloys value includes the special pension credits
provided through his retention agreement. |
|
(4) |
|
Includes the combined vested balances in the non-qualified
Savings Restoration Plan and Deferred Compensation Plan. |
|
(5) |
|
Includes amounts payable under additional death benefits
provided to officers and other key employees of the company.
These liabilities are not insured, but are self-funded by the
Company. Proceeds are not exempt from federal taxes; values
shown include an additional tax
gross-up
amount to equate benefits with |
55
|
|
|
|
|
nontaxable life insurance proceeds. Values exclude death benefit
proceeds from programs available to all employees.
Mr. Hacketts value also includes the lump-sum value
of subsidized retiree medical benefits. |
TRANSACTIONS
WITH RELATED PERSONS
The Company recognizes that related person transactions can
present potential or actual conflicts of interest and it is the
Companys preference that related person transactions are
avoided as a general matter. However, the Company also
recognizes that there are situations, including certain
transactions negotiated on an arms length basis, where
related person transactions may be in, or may not be
inconsistent with, the best interest of the Company and our
stockholders. Therefore, the Company has procedures for the
approval, ratification and review of ongoing related person
transactions. Either the Boards Nominating and Corporate
Governance Committee or the full Board (as determined by the
Nominating and Corporate Governance Committee) will review,
ratify or approve, as necessary, any related person transactions
prior to the transaction being entered into, or ratify any
related person transactions that have not been previously
approved, in which a director, five percent owner, executive
officer or immediate family member of any such person has a
material interest, and which the transaction is in an amount in
excess of $120,000, either individually or in the aggregate of
several transactions during any calendar year. This review
typically occurs in connection with regularly scheduled Board of
Directors meetings.
Ongoing
Benefits
In 2004, the Company and Mr. Allison entered into an
agreement that replaced the Memorandum of Understanding dated
October 26, 2000 between the Company and Mr. Allison.
The 2004 agreement was effective as of Mr. Allisons
retirement from the Company in December 2003 and provides that
during Mr. Allisons lifetime, he has the use of the
Companys aircraft, or an alternative aircraft, for up to
200 hours annually. If the Company no longer maintains an
aircraft, the Company will provide to him an annual payment
sufficient to allow him to secure comparable aircraft usage. In
addition, the agreement provides that the Company will furnish
Mr. Allison, during his lifetime, office space, secretarial
assistance, office utilities and a monitored security system for
his personal residence.
|
|
ITEM 2
|
RATIFICATION
OF THE APPOINTMENT OF THE INDEPENDENT AUDITOR
|
The Audit Committee has appointed KPMG LLP, an independent
registered public accounting firm, to audit the Companys
financial statements for 2009. The Board of Directors, at the
request of the Audit Committee, is asking you to ratify that
appointment.
THE BOARD RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF KPMG LLP TO AUDIT THE
COMPANYS FINANCIAL STATEMENTS FOR 2009. If the
stockholders do not ratify the appointment of KPMG LLP, the
Audit Committee will make the final determination of the
independent auditor for 2009.
56
INDEPENDENT
AUDITOR
KPMG LLP, an independent registered public accounting firm,
served as the Companys independent auditor during 2008.
Representatives of KPMG LLP will be present at the meeting to
make a statement, if they desire to do so, and to respond to
appropriate questions from stockholders.
The following table presents fees for the audits of the
Companys annual consolidated financial statements for 2008
and 2007 and for other services provided by KPMG LLP.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit Fees
|
|
$
|
5,935,000
|
|
|
$
|
7,965,000
|
|
Audit-Related Fees
|
|
|
1,759,000
|
|
|
|
3,206,000
|
|
Tax Fees
|
|
|
1,039,000
|
|
|
|
242,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,733,000
|
|
|
$
|
11,413,000
|
|
|
|
|
|
|
|
|
|
|
Audit fees are primarily for the audit of the Companys
consolidated financial statements, including the audit of the
effectiveness of the Companys internal controls over
financial reporting and the reviews of the Companys
financial statements included in the
Form 10-Qs.
During 2007, the Company incurred approximately $1,125,000
related to the Companys change in accounting principle
from full cost to successful efforts.
Audit-related fees are primarily for the audits of the
Companys benefit plans, other audits, consents, comfort
letters and certain financial accounting consultation. During
2007, the Company incurred approximately $1,595,000 of
audit-related fees associated with properties divested by the
Company. This amount is included in the table above and is
reimbursable by the purchasers of the properties. For 2008 and
2007, approximately $679,000 and $938,000, respectively, of the
audit-related fees are associated with the formation and audit
of Western Gas Partners, LP (WES) and its predecessor prior to
its initial public offering in 2008. KPMG LLP also served as the
independent auditor of WES and fees for the audit of WES
annual consolidated financial statements for 2008 were $910,000
which are not included in the table above.
Tax fees are primarily for tax planning compliance and services
including approximately $551,000 and $234,000 in 2008 and 2007,
respectively, for services related to individual income tax
services for Company employees in connection with foreign
assignments. The Audit Committee has concluded that the
provision of tax services is compatible with maintaining KPMG
LLPs independence.
The Audit Committee adopted a Pre-Approval Policy with respect
to services which may be performed by KPMG LLP. This policy
lists specific audit, audit-related, and tax services as well as
any other services that KPMG LLP is authorized to perform and
sets out specific dollar limits for each specific service, which
may not be exceeded without additional Audit Committee
authorization. The Audit Committee receives quarterly reports on
the status of expenditures pursuant to that Pre-Approval Policy.
The Audit Committee reviews the policy at least annually in
order to approve services and limits for the current year. Any
service that is not clearly enumerated in the policy must
receive specific pre-approval by the Audit Committee or by its
Chairperson, to whom such authority has been conditionally
delegated, prior to engagement. During 2008, no fees for
services outside the scope of audit, review, or attestation that
exceed the waiver provisions of 17 CFR 210.2-01(c)(7)(i)(C)
were approved by the Audit Committee.
57
ITEM 3
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED,
TO PROVIDE FOR ANNUAL ELECTION OF DIRECTORS
Our Board of Directors is currently divided into three classes,
each elected for a three-year term. This classified structure
has been in place since the Company went public in 1986. Since
that time, the Board has believed that this structure would
promote continuity and stability of strategy, oversight and
policies and provide negotiating leverage to the Board in a
potential takeover situation.
At last years annual meeting, Mr. Gerald R. Armstrong
presented a stockholder proposal urging the Board to take the
necessary steps to eliminate classification of the Board and to
provide that all of the directors be elected annually. The
proposal urged that the declassification be effected in a manner
that would not affect the unexpired terms of the
previously-elected directors.
Last year, in response to Mr. Armstrongs proposal and
supporting arguments for declassifying the Board structure, the
Board opposed that proposal and set forth the advantages of
having a classified Board structure (which included
strengthening independence of non-employee directors and
enhancement of the Boards ability to develop and execute
long-term strategic planning by providing stability, continuity
and experience) so the stockholders could consider the various
view points on the issue. That non-binding proposal was approved
by our stockholders, receiving 85.9% of the votes cast.
After careful deliberation by the Nominating and Corporate
Governance Committee and the full Board, and taking into account
the level of support for the proposal at last years annual
meeting, the Board has approved the proposed amendment to the
Companys Restated Certificate of Incorporation, as
amended, to eliminate the classified Board structure and provide
for the annual election of all directors.
Article SEVENTH of the Companys Restated Certificate
of Incorporation, as amended, currently provides that the Board
of Directors shall be divided into three classes as nearly equal
in number as possible with members of each class serving for
three-year terms. If this proposal is approved, all directors
will be elected annually beginning at the 2012 Annual Meeting.
The directors to be elected at the 2009 Annual Meeting will be
elected to serve a full three-year term. The directors to be
elected at the 2010 Annual Meeting will be elected to serve a
two-year term; the directors to be elected at the 2011 Annual
Meeting will be elected to serve a one-year term; and all
directors will stand for election at the 2012 Annual Meeting.
The proposed amendment also eliminates from the Restated
Certificate of Incorporation, as amended, the minimum and
maximum size of the Board and permits the Board to establish
these from time to time.
Under Delaware law, stockholders may remove directors of
corporations with classified boards for cause. However, in
Delaware, directors of corporations without classified boards
may be removed with or without cause. In conjunction with the
proposal to declassify our Board, the Company is also proposing
to amend Article SEVENTH of the Companys Restated
Certificate of Incorporation, as amended, to provide that any
director or the entire Board may be removed with or without
cause at and after the 2012 annual meeting. Prior to such time,
removal of any director or the entire Board will continue to
require cause.
The above amendments are being voted on by the Companys
stockholders as a single proposal rather than as separate
proposals because they are intertwined as a matter of law. Under
Delaware law, corporations without a classified board may not
limit the ability of stockholders to remove directors without
cause. Thus, if the amendment to provide for annual election of
directors were to receive the requisite stockholder approval but
a separate proposal to remove the limitation on stockholders to
remove directors without cause did not, the Companys
Restated Certificate of Incorporation, as amended, would contain
a provision contrary to Delaware law.
The Companys Restated Certificate of Incorporation, as
amended, requires the affirmative vote of at least 80% of the
outstanding shares entitled to vote in order to approve this
proposal. If this proposal is approved, the proposed amendments
will become effective upon filing of an appropriate certificate
with the Secretary of State of the State of Delaware and the
Board will also amend the Companys By-Laws to conform to
the new Board structure.
58
The text of Article SEVENTH as it is proposed (and
reflecting changes from the current Article SEVENTH) to be
amended is attached to this proxy statement as Appendix A.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE
AMENDMENT TO THE COMPANYS RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED.
ITEM 4
IF PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER
PROPOSAL REGARDING AN AMENDMENT TO THE COMPANYS
NON-DISCRIMINATION POLICY TO INCLUDE SEXUAL ORIENTATION AND
GENDER IDENTITY
The New York City Employees Retirement System, together
with other related funds, located at 1 Centre Street, New York,
NY
10007-2341,
telephone
(212) 669-2651,
is the beneficial owner of more than $2,000 worth of the
Companys common stock, and has notified the Company that
it intends to present the following resolution at the meeting
for action by the stockholders.
SEXUAL
ORIENTATION NON-DISCRIMINATION POLICY
Whereas: Anadarko Petroleum Corporation, does
not explicitly prohibit discrimination based on sexual
orientation and gender identity in its written employment policy;
Over 88% of the Fortune 500 companies have adopted written
nondiscrimination policies prohibiting harassment and
discrimination on the basis of sexual orientation, as have more
than 98% of Fortune 100 companies, according to the Human
Rights Campaign; over 30% now prohibit discrimination based on
gender identity;
We believe that corporations that prohibit discrimination on the
basis of sexual orientation and gender identity have a
competitive advantage in recruiting and retaining employees from
the widest talent pool;
According to a June, 2008 survey by Harris Interactive and
Witeck-Combs, 65% of gay and lesbian workers in the United
States reported facing some form of job discrimination related
to sexual orientation; an earlier survey found that almost one
out of every 10 gay or lesbian adults also reported that they
had been fired or dismissed unfairly from a previous job, or
pressured to quit a job because of their sexual orientation;
Twenty states, the District of Columbia and more than
160 cities and counties, have laws prohibiting employment
discrimination based on sexual orientation; 12 states and
the District of Columbia have laws prohibiting employment
discrimination based on sexual orientation and gender identity;
Minneapolis, San Francisco, Seattle and Los Angeles have
adopted legislation restricting business with companies that do
not guarantee equal treatment for gay and lesbian employees;
Our company has operations in, and makes sales to institutions
in states and cities that prohibit discrimination on the basis
of sexual orientation;
National public opinion polls consistently find more than three
quarters of the American people support equal rights in the
workplace for gay men, lesbians and bisexuals; for example, in a
Gallup poll conducted in May, 2007, 89% of respondents favored
equal opportunity in employment for gays and lesbians;
Resolved: The Shareholders request that
Anadarko Petroleum Corporation amend its written equal
employment opportunity policy to explicitly prohibit
discrimination based on sexual orientation and gender identity
and to substantially implement the policy.
Supporting Statement: Employment
discrimination on the basis of sexual orientation and gender
identity diminishes employee morale and productivity. Because
state and local laws are inconsistent with respect to employment
discrimination, our company would benefit from a consistent,
corporate wide policy to enhance efforts to prevent
discrimination, resolve complaints internally, and ensure a
respectful and supportive atmosphere for all employees. Anadarko
Petroleum Corporation will enhance its competitive edge by
joining the growing ranks of companies guaranteeing equal
opportunity for all employees.
59
Board
of Directors Statement Regarding Proposal
Anadarko Petroleum Corporation is proud of its commitment to a
diverse and harassment-free workplace. The Company has
historically had a de facto policy prohibiting
discrimination on the basis of sexual orientation, and in
February 2008 we updated our written policy to reflect this
principle. Our policy specifically prohibits discrimination on
the basis of race, ethnicity, national origin, color, gender,
sexual orientation, age, citizenship, veterans status,
marital status, disability or any other legally-protected
status. You can view our entire Code of Business Conduct and
Ethics at
http://www.anadarko.com/SiteCollectionDocuments/PDF/CodeBusinessConductEthics2005.pdf.
Our corporate values also require our employees to act with the
highest ethical standards, respect diversity in thought,
practice and culture, and never to tolerate intimidation. We
believe that our current policies adequately reflect our strong
commitment to non-discrimination, and that we have already
substantially implemented the principles reflected in the above
proposal. We therefore believe that there is no need to adopt
this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Siddall
Vice President, Deputy General Counsel, and
Corporate Secretary
Dated: April XX, 2009
The Woodlands, Texas
See
enclosed proxy card please vote
promptly
Appendix A
Amendment to Restated Certificate of Incorporation
60
Appendix A
Amendment
to Restated
Certificate of Incorporation
of
Anadarko Petroleum Corporation
SEVENTH.
1.
The business and affairs of the Corporation shall
be managed by or under the direction of a Board of
Directors
consisting of not less than six nor more than
fifteen directors, the
exact.
The authorized
number of directors
toshall
be
determined from time to time by resolution adopted by
affirmative vote of a majority of the entire Board of
Directors.
The directors shall be divided into three
classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors
constituting the entire Board of Directors. At a special meeting
of stockholders held on August 27, 1986, Class I
directors were elected for a term ending at the 1987 Annual
Meeting of Stockholders, Class II directors were elected
for a term ending at the 1988 Annual Meeting of Stockholders and
Class III directors were elected for a term ending at the
1989 Annual Meeting of Stockholders, in each case effective as
of the date of
filing
Subject to the special right, if any, of the holders of any
series of Preferred Stock or any other class or series of stock
as set forth in this Restated Certificate of Incorporation, to
elect directors:
From
the effective date
of this
Restated
Certificate of
Incorporation with the Secretary
of State of the State of Delaware. At
eachAmendment
until the election of directors at the 2010
Annual
Meeting of Stockholders
beginning in 1987, successors to
the class of directors whose term expires at that Annual Meeting
shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of
directors in
,
pursuant to Section 141(d) of the General Corporation Law
of the State of Delaware, the Board of Directors shall be
divided into three classes of directors, Class I,
Class II and Class III (
each class as nearly
equal
as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in
such class shall hold office for a term that shall coincide with
the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent
director. A director shall hold office until the Annual Meeting
for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to prior
death, resignation,
retirementin
number as possible), with the directors in Class I having a
term expiring at the 2011 Annual Meeting, the directors in
Class II having a term expiring at the 2012 Annual Meeting
and the directors in Class III having a term expiring at
the 2010 Annual Meeting.
Commencing
with the election of directors at the 2010 Annual Meeting of
Stockholders, pursuant to Section 141(d) of the General
Corporation Law of the State of Delaware, the Board shall be
divided into two classes of directors, Class I and
Class II, with the directors in Class I having a term
that expires at the 2011 Annual Meeting and the directors in
Class II having a term that expires at the 2012 Annual
Meeting. The directors who, immediately prior to the 2010 Annual
Meeting, were members of Class III (and whose terms expire
at the 2010 Annual Meeting) shall be elected to Class I;
the Class I directors who, immediately prior to the 2010
Annual Meeting, were members of Class I and whose terms
were scheduled to expire at the 2011 Annual Meeting shall be
assigned by the Board of Directors to Class I; and the
directors who, immediately prior to the 2010 Annual Meeting,
were members of Class II and whose terms were scheduled to
expire at the 2012 Annual Meeting shall be assigned by the Board
of Directors to Class II.
Commencing
with the election of directors at the 2011 Annual Meeting of
Stockholders, pursuant to Section 141(d) of the General
Corporation Law of the State of Delaware, the Board shall be
divided into one class of directors, Class II, with the
directors in Class II having a term that expires at the
2012 Annual Meeting. The successors of the directors who,
immediately prior to the 2011 Annual Meeting of Stockholders,
were members of Class I (and whose terms expire at the 2011
Annual Meeting) shall be elected to Class II for a term
that expires at the 2012 Annual Meeting, and the directors who,
immediately prior to the 2011 Annual Meeting, were members of
Class II and whose
A-1
terms
were scheduled to expire at the 2012 Annual Meeting shall be
assigned by the Board of Directors to Class II for a term
expiring at the 2012 Annual Meeting.
From
and after the election of directors at the 2012 Annual Meeting
of Stockholders, the Board shall cease to be classified as
provided in Section 141(d) of the General Corporation Law
of the State of Delaware, and the directors elected at the 2012
Annual Meeting (and each Annual Meeting thereafter) shall be
elected for a term expiring at the next Annual Meeting.
Each
director elected at any Annual Meeting shall hold office until
such directors successor shall have been duly elected and
qualified, subject to such directors earlier death,
resignation
, disqualification or removal
from
office. Any vacancy on the Board of Directors that results from
an.
Newly
created directorships resulting from any
increase in
the number of directors
may be filled by a majority of
the Board of Directors then in office, provided that a quorum is
present, and any other vacancy occurring on the Board of
Directors may be filled by a majority of
theor
any vacancy on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be
filled solely by the affirmative vote of a majority of the
remaining
directors then in office, even
ifthough
less
than a
quorum
of the Board of Directors
, or by a sole remaining
director. Any
director elected to fill a vacancy not
resulting from an
increase
director elected in accordance with the preceding sentence shall
hold office (a) if, at the time of such directors
election, the Board of Directors is classified pursuant to
Article SEVENTH of this Restated Certificate of
Incorporation, for the remainder of the full term of the class
of directors in which the new directorship or vacancy was
created or (b) if, at the time of such directors
election, the Board of Directors has ceased to be classified
pursuant to Article SEVENTH, Section 1(d) of this
Restated Certificate of Incorporation, for a term expiring at
the next Annual Meeting of Stockholders, and in each case until
such directors successor shall have been duly elected and
qualified. No decrease
in the number of directors
shall have the same remaining term as that of his
predecessor. Subject to the
rightsconstituting
the Board of Directors shall shorten the term of any incumbent
director.
Subject
to the special right, if any,
of the holders of any
series of Preferred Stock
then outstanding, any
director, or the entire Board of Directors, may be removed from
office at any time, but only for
cause.or
any other class or series of stock to elect directors,
(a) prior to the time at which the Board ceases to be
classified pursuant to Article SEVENTH, Section 1(d)
of this Restated Certificate of Incorporation, directors may be
removed only for cause and (b) from and after the time at
which the Board ceases to be classified pursuant to
Article SEVENTH, Section 1(d) of this Restated
Certificate of Incorporation, any director or the entire Board
may be removed with or without cause, provided that any removal
pursuant to clause (a) or (b) shall require the
affirmative vote of the holders of a majority of the voting
power of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors.
A-2
*** Exercise Your Right to Vote ***
IMPORTANT NOTICE Regarding the Availability of Proxy Materials
Meeting Information ANADARKO PETROLEUMMeeting Type:Annual
CORPORATIONFor holders as of: 03/25/09
Date: 05/19/09 Time: 8:00 A.M., CDT
Location: The Woodlands Waterway Marriott Hotel and Convention Center 1601 Lake Robbins Drive The Woodlands, Texas, 77380
You are receiving this communication because you hold shares in the company named above.
1201 LAKE ROBBINS DRIVEThis is not a ballot. You cannot use this notice to vote THE WOODLANDS, TX 77380these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side).
We encourage you to access and review all of the important information contained in the proxy materials before voting.
See the reverse side of this notice to obtain R1ADR1proxy materials and voting instructions. |
Before You Vote
How to Access the Proxy Materials
Proxy Materials Available to VIEW or RECEIVE:
NOTICE AND PROXY STATEMENTANNUAL REPORT
How to View Online:
Have the 12-Digit Control Number available (located on the following page) and visit: www.proxyvote.com.
How to Request and Receive a PAPER or E-MAIL Copy:
If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request:
1)BY INTERNET:www.proxyvote.com
2)BYTELEPHONE: 1-800-579-1639
3)BY E-MAIL*:sendmaterial@proxyvote.com
*If requesting materials by e-mail, please send a blank e-mail with the 12-Digit Control Number (located on the following page) in the subject line.
Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. To facilitate timely delivery, please make the request as instructed above on or before 5/5/09.
How To Vote
Please Choose One of the Following Voting Methods
Vote In Person: Many stockholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares.
Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the 12-Digit Control Number available R1ADR2and follow the instructions.
Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. |
Voting Items
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
1.Election of Directors
Nominees:
1a) Robert J. Allison, Jr.
THE BOARD OF DIRECTORS RECOMMENDS 1b) Peter J. FluorA VOTE AGAINST ITEM 4.
4. Stockholder Proposal Amendment 1c) John W. Poduska, Sr.to Non-Discrimination Policy.
1d) Paula Rosput Reynolds
2.Ratification of appointment of KPMG LLP as independent auditors.
3.Approval of Amendment to Restated Certificate of Incorporation, as amended.
R1ADR3 |
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE
VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site 1201 LAKE ROBBINS DRIVEand follow the instructions to obtain your records and to create an electronic voting instruction form.
THE WOODLANDS, TX 77380
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by Anadarko Petroleum Corporation in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in the future.
VOTE BY PHONE 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Anadarko Petroleum Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:ANADR1KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
ANADARKO PETROLEUM CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
Vote on Directors
1.Election of Directors
For Against Abstain Nominees:
1a) Robert J. Allison, Jr.0 0 0
1b) Peter J. Fluor0 0 0 THE BOARD OF DIRECTORS RECOMMENDS A For Against Abstain VOTE AGAINST ITEM 4.
1c) John W. Poduska, Sr.0 0 0 4. Stockholder Proposal Amendment to 0 0 0 Non-Discrimination Policy.
1d) Paula Rosput Reynolds0 0 0 The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s).
If no direction is made, this proxy will be voted FOR items 1, 2, and Vote on Proposals 3, and AGAINST item 4. If any other matters come properly before the meeting, or if cumulative voting is required, the person named in this
2.Ratification of appointment of KPMG LLP as 0 0 0 proxy will vote in their discretion. independent auditors.
3.Approval of Amendment to Restated 0 0 0 Each signatory to this proxy acknowledges receipt from Anadarko Certificate of Incorporation, as amended.Petroleum Corporation prior to execution of this proxy of a notice of Annual Meeting of Stockholders and a proxy statement dated April [ ], 2009.
For address changes and/or comments, please check this box and0 write them on the back where indicatedYes No Please indicate if you plan to attend this meeting.0 0
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at:
http://bnymellon.mobular.net/bnymellon/apc
AFOLD AND DETACH HERE A
ANADARKO PETROLEUM CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
May 19, 2009
The undersigned hereby appoint(s) James T. Hackett, R.A. Walker and Robert K. Reeves, and each of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and vote, as designated on the reverse side of this proxy, all of the shares of Common Stock of Anadarko Petroleum Corporation that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at 8:00 am, Central Daylight Time, on May 19, 2009, at The Woodlands Waterway Marriott
Hotel and Convention Center and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WIL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND AS RECOMMENDED BY THE BOARD OF DIRECTORS FOR EACH PROPOSAL.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
Address Changes/Comments:
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) |