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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Earliest Event Reported: November 6, 2007
Commission File No. 1-8968
ANADARKO PETROLEUM CORPORATION
1201 Lake Robbins Drive, The Woodlands, Texas 77380-1046
(832) 636-1000
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Incorporated in the
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Employer Identification |
State of Delaware
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No. 76-0146568 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 5.02(e) Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers; Compensatory Arrangements of Certain Officers
(a) As part of its annual review of executive compensation, on November 6, 2007, the Compensation
and Benefits Committee (the Committee) of the Board of Directors of Anadarko Petroleum
Corporation (the Company) approved changes in base salary
(effective November 4, 2007) and bonus targets (applicable to the
2008 Annual Incentive Plan) for the following named executive officers: James T. Hackett,
Chairman, President and CEO, received an increase in base salary from $1,400,000 to $1,500,000 and
his bonus target remained the same; Karl F. Kurz, Chief Operating Officer, received an increase in
base salary from $525,000 to $650,000 and his bonus target remained the same; R.A. Walker, Senior
Vice President, Finance and Chief Financial Officer, received an increase in base salary from
$525,000 to $650,000 and his bonus target was increased from 85% to
100% of base salary; Robert K. Reeves, Senior
Vice President, General Counsel and Chief Administrative Officer, received an increase in base
salary from $440,000 to $500,000 and his bonus target was increased from 85% to 90% of base salary. Actual
bonuses paid, if any, can range from 0 to 200% of individual bonus targets depending upon the
Companys level of achievement of specified performance metrics set by the Committee as well as
individual performance.
The above named executive officers also received stock options, restricted stock units, and
performance units under the Companys 1999 Stock Incentive Plan (the SIP). The restricted stock
unit grants (RSUs) will be effective December 3, 2007, and will vest pro rata over a period of
three years commencing on the first anniversary of the grant, so long as the officer is (and has
continuously been) employed by the Company on the vesting date. On each vesting date, the vested
RSUs will be converted into an after-tax number of shares of Anadarko common stock based on the
closing price of a share of Anadarko common stock on the vesting date. All unvested RSUs and
unpaid dividend equivalents are forfeited in the case of voluntary termination (including
retirement) or termination for cause. All unvested RSUs will vest and unpaid dividend equivalents
will be paid upon death, disability, involuntary termination without cause, or a change of control
event (as defined in the SIP). Dividend equivalents will be paid on unvested RSUs. The form of
agreement related to the restricted stock unit grants is attached as Exhibit 10.1 to this Current
Report on Form 8-K.
A more detailed description of the performance unit awards is in paragraph (c) below.
The forms of agreement related to the stock option and performance unit grants, which (together
with the SIP) summarize the material terms and conditions related to such awards, have either been
previously filed with the Commission or are contained in the exhibits attached to this Current
Report on Form 8-K.
(b) On November 6, 2007, the Committee approved certain amendments to the Companys Retirement
Restoration Plan (the Plan). Certain of the amendments were made in order to bring the Plan into
compliance with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended, as well as to update certain
administrative provisions under the Plan.
In addition to these amendments, the Plan was amended to provide for certain other supplemental
benefits. Under the terms of the amended Plan, additional supplemental benefits otherwise payable
pursuant to employment agreements or other Company plans or programs may become payable under the
terms of the Plan, provided that such
supplemental benefits are set forth on a schedule to the amended Plan and do not duplicate any
other supplemental benefits under the Plan.
In connection with this Plan amendment, certain supplemental retirement benefits were approved for
Messrs. Hackett, Walker and Reeves. The Plan now provides for a one-time service credit of eight
years and five years to Messrs. Walker and Reeves, respectively, if Messrs. Walker and Reeves each
remain employed by the Company until the age of 55. This service credit will be considered
applicable service towards the Companys retirement benefit programs (including pension and retiree
medical and dental benefits). The Plan also now provides that Mr. Hackett will receive a special
service credit to be applied towards his eligibility for the Companys retiree medical and dental
benefits. The value of the retiree medical and dental benefit will be provided to Messrs. Hackett,
Walker and Reeves through a lump sum payment by the Company upon termination of their employment
with the Company. However, the lump sum payment for such benefits will not be made to Messrs.
Walker and Reeves if, at the time of termination of employment, (1) such individual has not reached
the age of 55, (2) the Company no longer provides subsidized retiree medical and dental benefits,
or (3) such individual has accrued ten actual years of service with the Company (as such individual
would have satisfied the eligibility requirements for the current subsidized retiree medical and
dental benefits in normal course under the Companys retiree medical plan). Such payment will not
be made to Mr. Hackett if (1) the Company no longer provides subsidized retiree medical and dental
benefits, (2) if he has accrued ten actual years of service with the Company (as he would have
satisfied the eligibility requirements for the current subsidized retiree medical and dental
benefits in normal course under the Companys retiree medical plan), or (3) if he voluntarily
resigns or is terminated for cause prior to attaining the age of 55 (which will occur on February
3, 2009). The current estimated projected value of the supplemental pension benefit is
approximately $1.75 million for Mr. Walker and approximately $800,000 for Mr. Reeves. The present
value of the lump sum payment for the retiree medical and dental benefit for each individual is
currently estimated to be between approximately $60,000-$71,000 for retiree-only coverage,
$130,000-$155,000 for retiree plus spouse coverage, and $170,000-$195,000 for retiree plus family
coverage.
The size of the equity awards that would have otherwise been granted to Messrs. Walker and Reeves,
had the supplemental benefits not been provided, was reduced by approximately 50% of the current
estimated value of the supplemental pension benefit. These benefits will also be coordinated with
such individuals Key Employee Change of Control Agreement or Mr. Hacketts employment agreement,
as applicable, to ensure no duplication of benefits under this arrangement.
A copy of the Plan, as amended and restated, is attached to this Current Report on Form 8-K as
Exhibit 10.2.
(c) On November 6, 2007, the Committee adopted a form of performance unit (PU) agreement under
the SIP. All executive officers have been awarded PUs pursuant to the PU agreement. The new PU
agreement provides that the Companys relative total shareholder return (TSR) is the performance
metric that will determine the number, if any, PUs that will vest during the performance period
(ranging from one to three years). The Companys peer group is the same as that used in previous PU
awards.
The Committee has cancelled, without value and subject to approval by participants, all outstanding
PU awards that have performance periods ending after December 31, 2007 and have performance metrics
of both reserve replacement efficiency, an industry-specific metric that helps assess returns on
invested capital, and TSR. The named executive officers have agreed to the cancellation of these
prior PU grants.
Under the PU agreement, a participant may earn from 0 to 200% of the target PUs granted based upon
the Companys relative TSR ranking compared to the peer group. Each PU unit represents the value of
one share of the Companys common stock. PUs earned for a given performance period will only be
issued, unless deferred, to a participant following the Committees review and certification of the
actual performance results for the applicable performance period.
A participant will receive the target number of PUs in the event of death, disability, change of
control, or involuntary termination (as such terms are used in the agreement). If a participant
retires before the end of a performance period, and the performance goals for such performance
period are met, the participant will receive a pro rata portion of the PUs based on the number of
months of employment completed during the performance period. If a participant terminates for any
other reason, the PU award will be forfeited.
The forms of cancellation of outstanding awards and new PU unit awards are attached to this Current
Report on Form 8-K as Exhibits 10.3, 10.4, 10.5 and 10.6, respectively.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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10.1 |
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Form of Restricted Stock Unit Award Letter. |
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10.2 |
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Anadarko Retirement Restoration Plan, as amended and restated. |
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10.3 |
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Form of Amendment to Performance Unit Agreement dated December 6, 2005. |
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10.4 |
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Form of Amendment to Performance Unit Agreement dated December 11, 2006. |
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10.5 |
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Form of Agreement for Performance Unit Award (covering 2008-2009 performance
periods). |
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10.6 |
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Form of Agreement for Performance Unit Award (covering 2008-2010 performance
periods). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized officer.
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ANADARKO PETROLEUM CORPORATION
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(Registrant) |
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November 13, 2007
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By:
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/s/ Robert K. Reeves |
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Robert K. Reeves |
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Senior Vice President, General Counsel,
and Chief Administrative Officer |
EXHIBIT INDEX
Exhibit Number |
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Description |
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10.1 |
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Form of Restricted Stock Unit Award Letter. |
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10.2 |
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Anadarko Retirement Restoration Plan, as amended and restated. |
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10.3 |
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Form of Amendment to Performance Unit Agreement dated December 6, 2005. |
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10.4 |
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Form of Amendment to Performance Unit Agreement dated December 11, 2006. |
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10.5 |
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Form of Agreement for Performance Unit Award (covering 2008-2009 performance
periods). |
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10.6 |
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Form of Agreement for Performance Unit Award (covering 2008-2010 performance
periods). |