def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Anadarko 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 26,
2010
TO OUR STOCKHOLDERS:
The 2010 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 18, 2010, 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 most
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 2009 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.
Your vote is important and we encourage you to vote even if you
are unable to attend the Annual Meeting. 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 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 18, 2010, at
8:00 a.m. (Central Daylight Time) to consider the following
proposals:
(1) elect three directors;
(2) ratify the appointment of KPMG LLP as the
Companys independent auditor for 2010;
(3) if presented, vote on two stockholder
proposals; and
(4) 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 23, 2010, 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 26, 2010
The Woodlands, Texas
Important
Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be Held on May 18, 2010:
The Proxy Statement and Annual Report for 2009 are available
at
http://bnymellon.mobular.net/bnymellon/apc.
TABLE OF
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P. O. Box 1330
Houston, Texas
77251-1330
PROXY
STATEMENT
ANNUAL MEETING OF
STOCKHOLDERS
May 18, 2010
GENERAL
INFORMATION
We are furnishing you this proxy statement in connection with
the solicitation of proxies by our Board of Directors (the
Board) to be voted at the Annual Meeting of Stockholders of
Anadarko Petroleum Corporation (Annual Meeting), a Delaware
corporation, sometimes referred to as the Company, Anadarko,
our, us or we. The Annual Meeting will be held on Tuesday,
May 18, 2010 at 8:00 a.m. (Central Daylight Time). The
proxy materials, including this proxy statement, proxy card or
voting instructions and our 2009 annual report are being
distributed and made available on or about April 2, 2010.
In accordance with rules and regulations adopted by the
U.S. Securities and Exchange Commission (SEC), we are
providing our stockholders access to our proxy materials on the
Internet. Accordingly, a Notice of Internet Availability of
Proxy Materials (Notice) will be mailed to most of our
stockholders on or about April 2, 2010. Stockholders will
have the ability to access the proxy materials on a web site
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 18, 2010, 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 23, 2010, 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 500,854,511 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, we are providing access to our
proxy materials over the Internet. As a result, we have sent to
most of our stockholders a Notice instead of a paper copy of the
proxy materials. The Notice contains instructions on how to
access the proxy materials over the Internet or to request a
paper copy. 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 receive
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 three directors;
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the ratification of KPMG LLP as our independent auditor for 2010;
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if presented, two stockholder proposals; and
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any other business properly coming before the Annual Meeting.
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How does
the Board recommend that I vote?
The Board recommends that you vote:
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FOR each of the nominees for director;
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FOR the ratification of KPMG LLP as our independent
auditor for 2010; and
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AGAINST the stockholder proposals, if presented.
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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
http://www.proxyvote.com,
the web site 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 17, 2010.
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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 17, 2010.
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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.
If mailed, your completed and signed proxy card must be received
by May 17, 2010.
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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
(for example, 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.
Can I
change my vote?
Yes. 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 prior proxy; or
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giving notice to the inspector of elections 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. The NYSE does not, however, allow brokers to
vote their customers stock held in street name on
non-routine matters unless they have received voting
instructions from their customers. In such cases, the
uninstructed shares for which the broker is unable to vote are
called broker non-votes.
What
routine matters will be voted on at the Annual
Meeting?
The ratification of the independent auditor is a routine matter
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 election of directors and the stockholder proposals, if
presented, are non-routine matters on which brokers are not
allowed to vote unless they have received voting instructions
from their customers. Due to recent rule changes by the NYSE,
your broker will no longer be allowed to vote your shares on the
election of directors without your specific instructions.
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 and broker non-votes 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
and broker non-votes will have the same effect as votes cast
against the proposal.
The approval of the stockholder proposals, 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 will have the same effect
as votes cast against the proposals. Broker
non-votes are not counted as a vote cast either for
or against the proposals.
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 persons 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 the preliminary voting results at the Annual
Meeting and disclose the final voting results in a current
report on
Form 8-K
filed with the SEC within four business days of the date of the
Annual
4
Meeting unless only preliminary voting results are available at
that time. To the extent necessary, we will file an amended
report on
Form 8-K
to disclose the final voting results within four business days
after the final voting results are known. You may access or
obtain a copy of these and other reports free of charge on the
Companys web site at
http://www.anadarko.com,
or by contacting our investor relations department at
investor@anadarko.com. Also, this
Form 8-K,
any amendments thereto and other reports filed by the Company
with the SEC are available to you over the Internet at the
SECs web site at
http://www.sec.gov.
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 at
http://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.
Who will
tabulate and certify the vote?
Broadridge Financial Solutions, Inc., an independent third
party, will tabulate and certify the vote, and will have a
representative to act as the independent inspector of elections
for the Annual Meeting.
If I want
to submit a stockholder proposal or nominate a director for the
2011 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
2011 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 3, 2010. 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, 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 17, 2011 and no earlier than the close of business
on January 18, 2011.
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 Investor Relations, Anadarko
Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands,
Texas
77380-1046
or via
e-mail at
investor@anadarko.com. Alternatively, stockholders can access
our Annual Report on
Form 10-K
on Anadarkos web site at
http://www.anadarko.com.
Also, our Annual Report on
Form 10-K
and other reports filed by the Company with the SEC are
available to you over the Internet at the SECs web site at
http://www.sec.gov.
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, but in such event will still receive separate proxies
for each account. 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 358016, Pittsburgh, PA
15252-8016.
6
ANADARKO
BOARD OF DIRECTORS
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ITEM 1
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ELECTION
OF DIRECTORS
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Although we have historically maintained a staggered, or
classified, Board for election purposes, in 2009, we amended our
Restated Certificate of Incorporation to declassify our Board.
These changes to our Restated Certificate of Incorporation
provide that the directors to be elected at the 2010 Annual
Meeting will be elected to serve a one-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 be elected
annually beginning at the 2012 Annual Meeting.
Under Delaware law, stockholders may only 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. Our Restated Certificate
of Incorporation also provides that any director or the entire
Board may be removed with or without cause at and after the 2012
Annual Meeting. Prior to that time, directors may be removed
only for cause.
At the 2010 Annual Meeting, the terms of three directors will
expire. Those three directors have been nominated and, if
elected at this Annual Meeting, will hold office until the
expiration of each of their one-year terms in 2011. All of the
director nominees listed below are current directors of the
Company.
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. The Board is not
aware of any reason why these nominees would not be able to
serve as directors of the Company.
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. 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. If a director fails to
receive a majority of votes cast and the Board accepts the
resignation tendered, then that director would cease to be a
director of Anadarko. Each of the nominees named below has
submitted an irrevocable letter of resignation that becomes
effective if he or she does not receive a majority of the votes
cast for his or her election and the Board decides to accept
such resignation.
As discussed in more detail on pages 17 and 18 of this
proxy statement, the Board considers several qualifications,
characteristics and other factors when evaluating individual
directors, as well as the composition of the Board as a whole.
As part of this process, the Board and its Nominating and
Corporate Governance Committee review the particular
experiences, qualifications, attributes or skills that caused
the Nominating and Corporate Governance Committee and the Board
to determine that the person should serve as a director of the
Company. The biographies of each of the nominees and continuing
directors below contain information regarding the persons
service as a director, business experience, director positions
held currently or at any time during the last five years, and
information regarding involvement in certain legal or
administrative proceedings, if applicable. They also highlight
the particular experiences, qualifications, attributes or skills
that caused the Nominating and Corporate Governance Committee
and the Board to conclude that the person should serve as a
director of the Company.
7
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 2011
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H. Paulett Eberhart
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Age: 56
Plano, Texas
Independent
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Biography/Qualifications
Ms. Eberhart is currently Chairman and Chief Executive Officer of HMS Ventures, a privately held business involved with the acquisition and management of real estate. She served as President and Chief Executive Officer of Invensys Process Systems, Inc. (Invensys), a process automation company, from January 2007 to January 2009. From 2003 until March 2004, Ms. Eberhart was President Americas of Electronic Data Systems Corporation (EDS), an information technology and business process outsourcing company. From 2002 to 2003, she was Senior Vice President 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. and eSilicon, a privately held semiconductor company. Ms. Eberhart has been a director of the Company since August 2004.
Ms. Eberhart brings a wealth of accounting and financial experience to the Board, as well as managerial, manufacturing and global experience, through her several years of service as an executive officer for both EDS and Invensys. Prior to serving as President Americas of EDS, Ms. Eberhart was the Senior Vice President EDS and President of EDS Solutions Consulting, a business with 40,000 people operating in 60 countries. She also held various other executive, operating and financial positions during her 26 years at EDS. She also gained significant experience through her service on the boards of other public companies and her involvement with various civic and charitable organizations.
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Public company directorships in the past five years
Advanced Micro Devices, Inc.
(2004 present)
Solectron Corporation (2005 2007)
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Preston M. Geren III
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Age: 58
Falls Church, Virginia
Independent
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Biography/Qualifications
In March 2010, Mr. Geren was appointed Senior Adviser and President-Elect of the Sid W. Richardson Foundation, to be effective April 2010. Mr. Geren retired as Secretary of the Army in September 2009, a position in which he had served since July 2007. Prior to that appointment, Mr. Geren served as Under Secretary of the Army from February 2006 until he was named Acting Secretary of the Army in March 2007. Mr. Geren served as Acting Secretary of the Air Force from July to November 2005. He joined the Department of Defense in September of 2001 to serve as Special Assistant to the Secretary of Defense with responsibilities in the areas of inter-agency initiatives, legislative affairs and special projects. Prior to joining the Department of Defense, he was an attorney and businessman in Ft. Worth, Texas. From 1989 until his retirement in 1997, Mr. Geren was a member of the U.S. Congress, representing the 12th Congressional District of Texas for four terms. In 1997, he was appointed to the Board of Directors of Union Pacific Resources Group, Inc. (UPR), where he served until UPR was acquired by Anadarko in 2000. He then served as a director of the Company from July 2000 until his resignation in July 2005 to accept an appointment as Acting Secretary of the U.S. Air Force.
Mr. Gerens several years of service as a member of the U.S. Congress and various positions within the Department of Defense have enabled Mr. Geren to bring to the Board a unique mix of political, legislative, international and regulatory knowledge and experience. In addition, Mr. Geren has gained significant managerial and executive experience through his position as Secretary of the Army in which he had final authority over budget, acquisition, environmental, contracting and personnel decisions. This position involved managing 1.5 million employees, a $140 billion budget and 15 million acres of land. He also brings to the Board leadership experience attained through his service on the boards of other public companies and involvement with various civic and charitable organizations.
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Public company directorships in the past five years
Cullen/Frost Bankers, Inc.
(2001 2005)
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8
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James T. Hackett
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Age: 56
Houston, Texas
Not Independent - Management
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Biography/Qualifications
Mr. Hackett was named Chief Executive Officer and a director of the Company in December 2003 and Chairman of the Board of the Company in January 2006. He also served as President from December 2003 to February 2010. 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 (Ocean). Mr. Hackett was President and Chief Executive Officer of Ocean 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. In addition to the above experience, Mr. Hackett has held leadership positions with Duke Energy, Pan Energy, NGC Corp., Burlington Resources and Amoco Oil Co.
In addition to his extensive experience as a senior energy industry executive, Mr. Hackett has over 33 years of financial, marketing and exploration and production engineering experience in the industry. Additionally, as Chairman of the Board of the Federal Reserve Bank of Dallas he has unique insights into global fiscal markets, monetary policy and banking operations. His service on the boards of directors of several other public companies provides him with a broad perspective on various corporate governance and other matters. He currently serves as Chairman of Americas Natural Gas Alliance and is a leading industry spokesperson on domestic energy policy matters. He also has significant involvement in various civic and charitable organizations.
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Public company directorships in the past five years
Fluor Corporation
(2001 present)
Halliburton Company (2008
present)
Temple-Inland, Inc. (2000
2008)
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Continuing
Directors with Terms Expiring in 2011
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John R. Butler, Jr.
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Age: 71
Houston, Texas
Independent
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Biography/Qualifications
Since 1976, Mr. Butler has been Chairman of J. R. Butler and Company, a reservoir engineering company located in Houston, Texas. Since October 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 October 1996.
As Chairman of a reservoir engineering company since 1976, Mr. Butler provides valuable insights to the Board from a managerial and entrepreneurial perspective and to the Boards Audit Committee regarding oil and gas reserves matters. His active involvement in the National Association of Corporate Directors, as well as his service on the boards of other public companies, also provides him with an expansive understanding of corporate governance issues.
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Public company directorships in the past five years
Breitburn Energy Partners L.P.
(2006 present)
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9
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Luke R. Corbett
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Age: 63
Edmond, Oklahoma
Not Independent
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Biography/Qualifications
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 board of OGE Energy Corporation. Mr. Corbett has been a director of the Company since August 2006.
Mr. Corbett brings invaluable perspective and industry-specific business acumen and managerial experience to the Board as the former Chairman and CEO of Kerr-McGee and as an industry veteran with decades of E&P technical experience. The knowledge and experience he has attained through his service on other public company boards also enables Mr. Corbett to provide a keen understanding of various corporate governance matters.
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Public company directorships in the past five years
OGE Energy Corporation
(1996 present)
BOK Financial Corporation
(1999 2005)
Kerr-McGee Corporation (1999
2006)
Noble Corporation (2001 2009)
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John R. Gordon
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Biography/Qualifications
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 April 1988.
Mr. Gordons role as President of Deltec Asset Management LLC (a registered investment company) since 1988 provides him with significant finance and banking experience (including in the energy industry) as well as considerable managerial expertise.
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Age: 61
New York, New York
Independent
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Public company directorships in the past five years
Deltec Asset Management LLC
(1988 present)
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10
Continuing
Directors with Terms Expiring in 2012
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Robert J. Allison, Jr.
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Age: 71
Houston, Texas
Not Independent
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Biography/Qualifications
Mr. Allison has been Chairman Emeritus of the Board of the Company since January 2006 and a director since June 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.
Mr. Allison has decades of E&P operations, international, government relations and managerial experience attained through his experience as the former President and Chief Executive Officer of the Company, as well as through his service on the boards of other public companies and involvement with various civic and charitable organizations. As an industry veteran, his prior engineering and E&P- related experience provides an invaluable perspective in the Boards oversight of the Companys execution of its long-term business strategy.
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Public company directorships in the past five years
Freeport-McMoRan
Copper & Gold Inc. (2001 present)
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Peter J. Fluor
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Age: 62
Houston, Texas
Independent
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Biography/Qualifications
Mr. Fluor has been Chairman and Chief Executive Officer 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 and as a director of Cameron International Corporation. Mr. Fluor has been a director of the Company since August 2007.
Mr. Fluor brings almost 40 years of E&P operations, E&P service, finance, banking and managerial experience to the Board as a result of his experience at Texas Crude Energy, Inc. (most recently as Chairman and Chief Executive Officer), as well as his service as a director of other public companies and involvement with various civic and charitable organizations.
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Public company directorships in the past five years
Fluor Corporation
(1984 present)
Cameron International Corporation
(2005 present)
Devon Energy Corporation
(2003 2007)
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11
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Paula Rosput Reynolds
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Age: 53
Seattle, Washington
Independent
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Biography/Qualifications
Ms. Reynolds has served as President and Chief Executive Officer of Preferwest, LLC, a business advisory group since October 2009. She served as Vice Chairman and Chief Restructuring Officer of American International Group Inc. (AIG), an insurance and financial services company located in New York, New York from October 2008 to September 2009. Prior to her appointment to that position, she served as President and Chief Executive Officer 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 Chief Executive Officer of AGL Resources Inc., a regional energy services holding company from August 2002 to December 2005. Ms. Reynolds also previously served as President and Chief Executive Officer of Houston-based Duke Energy North America, a subsidiary of Duke Energy, which operated power-generating facilities across the United States, and as Senior Vice President of Pacific Gas Transmission Company, which owned and operated a major natural gas pipeline in the Pacific Northwest. She is also a director of Delta Air Lines, Inc. Ms. Reynolds has been a director of the Company since August 2007.
Ms. Reynolds has significant finance, banking, government relations and managerial experience, most recently attained through her experience as Vice Chairman and Chief Restructuring Officer of AIG, as well as through her Chief Executive Officer and other senior executive officer roles at companies in both the insurance and energy sectors. In addition to her extensive energy and insurance experience, she has served as a director of several other public companies across a variety of industries, which brings to the Board a broad perspective on various business and corporate governance matters.
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Public company directorships in the past five years
Delta Air Lines, Inc. (2004
present)
AGL Resources Inc. (2000 2005)
Coca-Cola
Enterprises Inc. (2001 2007)
Safeco Corporation (2006 2008)
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12
CORPORATE
GOVERNANCE
Our Board recognizes that excellence in corporate governance is
essential in carrying out our responsibilities to our
stakeholders, including our stockholders, employees, customers,
communities, and creditors, as well as the environment. Our
Corporate Governance Guidelines, 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 majority voting standard
for directors in uncontested director elections, including the
election of our directors at the Annual Meeting, and are in the
process of declassifying our Board.
Each director that served on our Board during 2009 attended at
least 75% of the meetings of the Board and of each committee on
which he or she served. There were eight Board meetings and 21
Board committee meetings in 2009. In addition, all of the
directors, except for Mr. Geren who was elected in October
2009, attended the 2009 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.
Board
Leadership Structure
The Companys Board structure is currently designed to
ensure open communication between the Board and executive
management and to provide consistent and effective leadership of
both the Board and executive management. As part of this
approach, our Chief Executive Officer (CEO) also serves as
Chairman of the Board (Chairman), and works in concert with the
rest of our majority-independent Board and the independent Lead
Director to oversee the execution of the Companys strategy.
Our By-Laws and Corporate Governance Guidelines currently permit
the roles of Chairman and CEO to be separate, and the Company
has at various points in its history maintained separate
Chairman and CEO positions. Such an approach can be useful when
transitioning a new CEO into the combined Chairman and CEO role,
and can also potentially provide a backstop to ensure that the
talent is available to fill the CEO role should a senior
management succession failure occur.
At this time, we believe that a combined Chairman and CEO role
is currently the most desirable approach for promoting long-term
shareholder value for several reasons:
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Promotes Unified Approach on Corporate Strategy Development
and Execution Maintaining a combined role
enables the Companys CEO to act as a bridge between
management and the Board, helping both to act with a common
purpose. This also fosters consensus-building and can help
prevent divergent views on strategy and tactical execution of a
Board-approved vision and strategy at the top levels within the
Company;
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Requires that CEO Recognize Importance of Good Corporate
Governance Maintaining a combined position
requires that the CEOs responsibilities include a mastery
of good corporate governance, a focus on broad stakeholder
interests, and an open channel of communication, all of which
enhance the CEOs credibility with the Board and require
the CEO to appreciate the vital importance of good governance
practices in executing the Companys strategy;
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Provides Clear Lines of Accountability A
combined position has the practical effect of simplifying the
accountability of the executive management team, therefore
reducing potential confusion and fractured leadership that could
result from reporting to two individuals as opposed to
one; and
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Provides Clear Roadmap for Shareholder/Stakeholder
Communications A combined position provides the
Companys stakeholders the opportunity to deal with one
versus several points of overall authority, which we believe
results in more efficient and effective communications with
stakeholders.
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13
While we recognize that there may be compelling arguments to
having an independent chairman under any circumstance, our
independent Lead Directors duties are already closely
aligned with the role of an independent, non-executive chairman.
As Lead Director, Mr. Gordons role is to assist the
Chairman and the remainder of the Board in assuring effective
corporate governance in managing the affairs of the Board and
the Company. Mr. Gordon works with our Chairman to approve
all meeting agendas, and presides at executive sessions of the
non-employee directors, which are held in conjunction with each
regularly scheduled quarterly meeting of the Board and at any
other meetings as requested by the directors. Mr. Gordon is
also a member of the Boards Executive Committee, providing
additional representation for the independent directors in any
actions considered by the Executive Committee between Board
meetings.
The
Boards Role in Risk Oversight
Our Board and management each have distinct roles in the
identification, assessment, oversight and management of
potential risks that could affect the Companys ability to
achieve its strategic and financial objectives. Our Corporate
Governance Guidelines provide that the Board shall assess major
risk factors relating to the Company and its performance, and
review measures to mitigate and address such risks. To
facilitate effective oversight, the Company has a standing risk
council that meets on at least a quarterly basis and reports to
the CEO, the Audit Committee and the full Board regarding
potential risks to the Company, as well as the Companys
strategy for managing those risks to an appropriate level. This
risk council is comprised primarily of the Companys
management executive committee together with other vice
presidents and managers representing cross-functional
disciplines. In addition, the risk council has two
subcommittees, the Enterprise Risk Management Committee (ERMC)
and the Financial Risk Management Committee (FRMC), that meet
regularly and report to the risk council. The ERMC focuses on
enterprise (or operational) risks and the FRMC focuses on
financial risks (including appropriate use of derivative
instruments). The Companys internal corporate audit group
also has access to all risk council and committee meetings to
provide additional perspective and insight regarding potential
risks facing the Company. We believe that this structure ensures
that our Board is fully aware of, and appropriately oversees,
the Companys significant risks.
Compensation
Committee Risk Assessment
With the assistance of its independent executive compensation
consultant, the Compensation Committee reviewed an internal risk
assessment of the Companys executive and non-executive
compensation programs. Based on such review, the Compensation
Committee believes that the Companys compensation program
does not encourage our executives or our non-executive employees
to take excessive risks, is aligned with stockholders best
interests and therefore is not reasonably likely to have a
material adverse effect on the Company.
In reaching its conclusions, the Compensation Committee noted
that Anadarkos compensation programs are designed to
support and reward appropriate risk taking and include:
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a proper balance of operating and financial performance measures;
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short-term and long-term performance periods;
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significant stock ownership requirements for executives;
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extended vesting schedules;
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clawback provisions for misconduct (as defined in the 2008
Omnibus Incentive Compensation Plan); and
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caps on incentive awards.
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The Compensation Committee believes that these factors encourage
all of our employees to focus on Anadarkos sustained
long-term performance.
14
Committees
of the Board
The Board has four standing committees: (i) the Audit
Committee, (ii) the Compensation Committee, (iii) the
Nominating and Corporate Governance Committee, and (iv) the
Executive Committee. 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 2009:
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Meetings
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Committees and
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Held in
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Membership
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Principal Functions and Structure
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2009
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AUDIT
H. Paulett Eberhart*
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Discusses the integrity of the Companys financial
statements with management, the independent auditor and internal
audit.
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9
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John R. Butler, Jr.
Paula Rosput Reynolds
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Reviews and discusses with management the internal controls,
financial reporting practices and major financial risk
exposures, and the steps management has taken to monitor and
control such exposures.
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Monitors the qualifications, independence and performance of the
Companys internal audit function and independent auditor,
and meets periodically with management, internal audit and the
independent auditor in separate executive sessions.
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Monitors the hotline and compliance with the business practices
and ethical standards of the Company, including the Code of
Business Conduct and Ethics.
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Approves the appointment, compensation, retention and oversight
of the work of the Companys independent auditor and
establishes guidelines for the retention of the independent
auditor for any permissible non-audit services.
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Oversees 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.
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Prepares the Audit Committee report, which is on page 27.
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COMPENSATION AND BENEFITS
Peter J. Fluor*
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Ensures that our compensation objectives and philosophy are
implemented through a compensation strategy that strategically
aligns the interests of our executives with those of our
stockholders.
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7
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Preston M. Geren III
John R. Gordon
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Approves and evaluates the Companys director and officer
compensation plans, policies and programs.
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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 29.
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Periodically reviews and discusses with its independent
compensation consultants and senior management its policy on
executive severance arrangements, and recommends any proposed
changes to the Board to the extent required by the Compensation
Committee charter.
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Reviews the Compensation Discussion and Analysis and other
relevant disclosures made in the proxy statement.
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Produces an annual Compensation Committee report, which is on
page 28.
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15
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The Board has determined that Ms. Eberhart qualifies as an
audit committee financial expert under the rules of
the SEC based upon her education and employment experience as
more fully detailed in Ms. Eberharts biography set
forth above. For information regarding Ms. Eberharts
independence, please see page 17. None of these committee
members serve on the audit committee of more than two other
public companies. |
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Meetings
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Committees and
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Held in
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Membership
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Principal Functions and Structure
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2009
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NOMINATING AND
CORPORATE
GOVERNANCE
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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.
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4
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Preston M. Geren III*
John R. Butler, Jr.
H. Paulett Eberhart
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Reviews the qualifications of existing Board members before they
are nominated for re-election to the Board.
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Peter J. Fluor
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Recommends members of the Board for committee membership.
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John R. Gordon
Paula Rosput Reynolds
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Proposes Corporate Governance Guidelines for the Company and
reviews them annually.
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Oversees the Companys compliance structure and programs.
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Develops an evaluation process for the Board and its committees.
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Oversees the emergency and expected CEO succession plans.
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Reviews and approves related-party transactions in accordance
with the Boards procedures.
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Reviews and investigates any reports to the Companys
anonymous reporting hotline regarding non-financial matters.
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EXECUTIVE
James T. Hackett* Robert J. Allison, Jr. H. Paulett Eberhart Peter J. Fluor Preston M. Geren III 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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1
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* |
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Committee Chairperson. |
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Serving in his capacity as Lead Director. |
Mr. Barcus, who served as one of our independent directors
during 2009, served on the Audit Committee and Nominating and
Corporate Governance Committee until his retirement from the
Board on November 12, 2009. Mr. Poduska, who served as
one of our independent directors during 2009, served on the
Compensation Committee and the Nominating and Corporate
Governance Committee until his retirement from the Board on
November 12, 2009.
Board of
Directors
Director
Independence
In accordance with NYSE rules, the Sarbanes-Oxley Act of 2002,
the Securities Exchange Act of 1934, as amended (Exchange Act),
and the rules and regulations 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.
16
Based on the standards contained in our Corporate Governance
Guidelines, and the recommendation by the Nominating and
Corporate Governance Committee, the Board 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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John R. Butler, Jr.
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Preston M. Geren III
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H. Paulett Eberhart
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John R. Gordon
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Peter J. Fluor
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Paula Rosput Reynolds
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In addition, the Board has affirmatively determined that:
(a) Mr. Hackett is not independent because he is the
CEO of the Company; (b) Mr. Corbett is not independent
(i) given his recent service as Chairman and CEO of
Kerr-McGee until Kerr-McGees merger with the Company in
August 2006, and (ii) because he continued to receive
benefits through August 2009 under his three-year
change-of-control
agreement with Kerr-McGee, which would warrant additional time
to assess independence due to the recent expiration of such
agreement; 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
continues 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. With
respect to Ms. Eberhart, the Board specifically considered
that Ms. Eberharts son was a non-executive employee
participating in the Companys summer intern program during
2009. The Board determined that this does not impact
Ms. Eberharts 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 2009, Anadarko paid Invensys approximately $112,500 in
connection with these services. This amount is less than 2% of
Invensyss consolidated gross revenues for its fiscal year
ended March 31, 2009. 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. 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 2009, Puget paid Anadarko
approximately $404,400 in connection with these purchases. This
amount is less than 2% of Pugets consolidated gross
revenues for its fiscal year ended December 31, 2009. 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 65 of this proxy statement.
Selection
of Directors
The Companys Corporate Governance Guidelines require that,
with respect to Board vacancies, the Nominating and Corporate
Governance Committee: (a) identify the personal
characteristics needed in a director nominee so that the Board
as a whole will possess such qualifications as more fully
identified below; (b) compile, through such means as the
Nominating and Corporate Governance Committee considers
appropriate, a list of potential director nominees thought to
possess the individual qualifications identified in the
Corporate Governance Guidelines, as well as any additional
specific qualifications the Board deems appropriate at the time;
(c) engage an outside consultant, as necessary, 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 Nominating and
Corporate Governance Committee, may consist of a single
individual) who may meet with the Chairman of the Board and such
other members of the Board
and/or
management as the Chairman of the Board may determine; and
17
(g) evaluate the nominees in relation to the culture of the
Company and the Board, which emphasizes independent thinking and
teamwork.
As stated in our Corporate Governance Guidelines, one of the
core competencies our Board has identified in assessing the
qualifications of the Board as a whole is a diversity of
experience, professional expertise and age. The Board recognizes
that such diversity is an important factor in board composition
and the Nominating and Corporate Governance Committee ensures
that such diversity considerations are discussed in connection
with each candidate for director. For the past several years,
our Board has reviewed on at least an annual basis a director
skillset chart set forth below that identifies characteristics
that the Board believes contribute to an effective and
well-functioning board and that the Board as a whole should
possess:
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other Board service (both prior and
current)
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oil and gas service company expertise
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current or former experience as CEO of a
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international experience
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public company
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government relations experience
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public company executive service (both
prior and current)
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marketing/commodity risk management
experience
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financial expertise
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manufacturing/operations experience
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exploration and production operations
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civic/charitable experience
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expertise
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The Nominating and Corporate Governance Committee considers
these and other factors and the extent to which such skillsets
can be represented when evaluating potential candidates for the
Board. Together, this diversity of skillsets, experiences and
personal backgrounds allows our directors to provide the
diversity of thought that is critical to the Boards
decision-making and oversight process.
Annual
Evaluations
The Board and each of the independent committees have conducted
self-evaluations related to their performance in 2009. The
performance evaluations were supervised by the Nominating and
Corporate Governance Committee and the results were 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 welcomes questions or comments about the Company and
its operations. Interested parties may contact the Board,
including the Lead Director, the non-management or independent
directors, 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
web site for the most current means of contacting our directors.
If you wish to request copies of any of our governance
documents, please see page 13 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 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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18
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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 economic interest in any security of the Company, including
any short interest, 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 stockholder and beneficial
owner, if any, 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 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; and
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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; and
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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.
|
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 of stockholders, 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.
19
Directors
Continuing Education
The Companys Director Education Policy encourages all
members of the Board 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 as
well as their responsibilities in their specific committee
assignments. The Director Education Policy provides that the
Company will reimburse directors for all costs associated with
attending any director education program.
Compensation
and Benefits Committee Interlocks and Insider
Participation
The Compensation Committee is made up of three independent
directors, Messrs. Fluor, Geren and Gordon.
Mr. Poduska, who was an independent director, served on
this committee until his retirement on November 12, 2009.
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 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 2009 as its outside
independent compensation consultant to assist in the annual
review of director compensation by providing benchmark
compensation data and recommendations for compensation program
design.
Retainer and Meeting Fees. The following is a
schedule of annual retainers and meeting fees for non-employee
directors in effect during 2009.
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Type of Fee
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Amount
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Annual Board Retainer
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$
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50,000
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Additional Annual Retainer to Chairperson of Audit Committee
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$
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25,000
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Additional Annual Retainer to Chairperson of Compensation
Committee and
Nominating and Corporate Governance Committee
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$
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15,000
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Additional Annual Retainer for Board Member Serving as Lead
Director
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$
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25,000
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Additional Annual Retainer to Audit Committee Members
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$
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6,000
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Additional Annual Retainer for Other Committee Members
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$
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3,000
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Fee for each Board Meeting Attended (plus expenses related to
attendance)
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$
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2,000
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Fee for each Board Committee Meeting Attended (plus expenses
related to attendance)
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$
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2,000
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Stock Plan for Non-employee
Directors. Stock-based awards made to
non-employee directors are made pursuant to the Anadarko
Petroleum Corporation 2008 Director Compensation Plan
(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
Companys Annual Meeting. For 2009, each non-employee
director, other than Mr. Geren, 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 awarded in 2009 will be
distributed to the director when he or she ceases to serve as a
director. Beginning with the 2010 annual deferred share awards,
directors may elect to receive these shares on a specific date
or when they leave the Board. The stock options vest one year
from the date of grant and expire ten years from the date of
grant. Upon re-election to the Board in October 2009,
Mr. Geren received a prorated annual equity grant for 2009.
The value of this award was targeted at approximately $125,000,
with 65% of the value delivered in deferred shares and 35%
delivered in stock options.
20
Non-employee directors may elect to receive their retainer and
meeting fees in cash, common stock, or deferred cash under the
Anadarko Deferred Compensation Program described below, or any
combination of the foregoing. Receipt of compensation in the
form of common stock provides non-employee directors the
opportunity to increase their personal ownership in the Company
and comply with the established director stock ownership
guidelines that require directors to hold stock equivalent to
five 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 interests of the
Companys stockholders. 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.
The Deferred Compensation Plan allows non-employee directors to
defer receipt of up to 100% of their retainers and meeting fees,
and to allocate the deferred amounts among a group of notional
accounts that mirror the gains
and/or
losses of various investment funds, including common stock of
the Company. The interest rate earned on the deferred amounts is
not above-market or preferential. In general, deferred amounts
are distributed to the participant upon cessation as a director
or at a specific date as elected by the participant. No
directors elected to defer compensation under the Deferred
Compensation Plan during 2009.
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 non-employee director with Personal Excess
Liability coverage and pays the annual premium on their behalf.
The Company maintains an Aid to Education Program under which
certain gifts by employees, officers, directors and retired
employees to qualified institutions of learning are matched on a
two-to-one
basis. The maximum contribution matched per donor, per calendar
year is $2,500, resulting in a maximum Company yearly match of
$5,000.
21
Director
Compensation Table for 2009
The following table sets forth information concerning total
director compensation earned during the 2009 fiscal year by each
non-employee director:
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Change in
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Pension Value
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and Non-qualified
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Non-Equity
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Deferred
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Fees Earned or
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Paid in Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
|
Name
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($)
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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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70,000
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131,051
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62,803
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0
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0
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4,038
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267,892
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Larry Barcus(5)
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118,000
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131,051
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62,803
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0
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0
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60,921
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372,775
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John R. Butler, Jr.(6)
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103,000
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131,051
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62,803
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0
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|
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0
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4,038
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|
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300,892
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Luke R. Corbett(7)
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62,000
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131,051
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62,803
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|
|
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0
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|
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0
|
|
|
|
4,038
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|
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259,892
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H. Paulett Eberhart
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128,000
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131,051
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62,803
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|
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0
|
|
|
|
0
|
|
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4,038
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325,892
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Peter J. Fluor(8)
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96,025
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131,051
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62,803
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|
|
|
0
|
|
|
|
0
|
|
|
|
4,038
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293,917
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Preston M. Geren III(9)
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24,025
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81,725
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531,187
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0
|
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0
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2,843
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639,780
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John R. Gordon
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125,000
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131,051
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|
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62,803
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|
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|
0
|
|
|
|
0
|
|
|
|
4,038
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|
|
|
322,892
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John W. Poduska, Sr.(10)
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|
113,000
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|
|
|
131,051
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|
|
|
62,803
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|
|
|
0
|
|
|
|
0
|
|
|
|
62,073
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|
|
|
368,927
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|
Paula Rosput Reynolds
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|
|
101,000
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|
|
|
131,051
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|
|
|
62,803
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|
|
|
0
|
|
|
|
0
|
|
|
|
4,038
|
|
|
|
298,892
|
|
|
|
|
(1) |
|
The amounts included in this column represent the aggregate
grant date fair value of the awards made to non-employee
directors in 2009 computed in accordance with FASB ASC Topic
718. The value ultimately realized by the director may or may
not be equal to this 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, 2009. As of
December 31, 2009, each of the non-employee directors had
aggregate outstanding deferred stock as follows:
Mr. Allison 12,900 shares;
Mr. Barcus 0 shares;
Mr. Butler 18,818 shares;
Mr. Corbett 7,800 shares;
Ms. Eberhart 11,800 shares;
Mr. Fluor 9,471 shares;
Mr. Geren 1,250 shares;
Mr. Gordon 24,576 shares;
Mr. Poduska 0 shares; and
Ms. Reynolds 7,522 shares. |
|
(2) |
|
The amounts included in this column represent the aggregate
grant date fair value of the awards made to non-employee
directors in 2009 computed in accordance with FASB ASC Topic
718. The value ultimately realized by the director upon the
exercise of the stock option(s) may or may not be equal to this
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, 2009. As of
December 31, 2009, each of the non-employee directors had
aggregate outstanding stock options as follows:
Mr. Allison 28,700 vested and exercisable stock
options and 3,400 unvested stock options that vest May 19,
2010; Mr. Barcus 2,250 vested and exercisable
stock options; Mr. Butler 58,700 vested and
exercisable stock options and 3,400 unvested stock options that
vest May 19, 2010; Mr. Corbett 23,700
vested and exercisable stock options and 3,400 unvested stock
options that vest May 19, 2010;
Ms. Eberhart 33,700 vested and exercisable
stock options and 3,400 unvested stock options that vest
May 19, 2010; Mr. Fluor 2,250 vested and
exercisable stock options and 3,400 unvested stock options that
vest May 19, 2010; Mr. Geren 13,900
unvested stock options (which consist of 5,000 stock options
granted in 2003 that vested January 8, 2010, 7,500 stock
options granted in 2004 that vested January 25, 2010, and
1,400 stock options granted upon Mr. Gerens
re-election to the Board on October 6, 2009 that vest
October 6, 2010); Mr. Gordon 68,700 vested
and exercisable stock options and 3,400 unvested stock options
that vest May 19, 2010; Mr. Poduska 52,100
vested and exercisable stock options; and
Ms. Reynolds 2,250 vested and exercisable stock
options and 3,400 unvested stock options that vest May 19,
2010. With respect to the stock options awarded to
Mr. Geren in 2003 and 2004, those awards had been
previously reported in the Companys proxy statements in
2004 and 2005, respectively, and are reported again here because
of the additional expense computed in accordance with |
22
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|
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|
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FASB ASC Topic 718. See footnote (9) to this table for more
information about options previously awarded to Mr. Geren,
which were modified during 2009 upon his re-election to the
Board. |
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(3) |
|
For all non-employee directors, except for Messrs. Barcus,
Geren, and Poduska, the amounts included in this column include
annual premiums paid by the Company for each directors
benefit in the amount of $138 and $1,400, respectively, for
Accidental Death & Dismemberment coverage and Personal
Excess Liability coverage and a $2,500 donation made on their
behalf to a charity of their choice. For Mr. Barcus, the
amount includes $120 for Accidental Death &
Dismemberment coverage, $1,171 for Personal Excess Liability
coverage, $9,630 for the cost of a retirement gift and a $50,000
charitable contribution made on his behalf by the Company in
consideration of his 23 years of service to the
Companys Board. For Mr. Geren, the amount includes
$33 for Accidental Death & Dismemberment coverage,
$310 for Personal Excess Liability coverage, and a $2,500
donation made on his behalf to a charity of his choice. For
Mr. Poduska, the amount includes $120 for Accidental
Death & Dismemberment coverage, $1,171 for Personal
Excess Liability coverage, $10,782 for the cost of a retirement
gift and a $50,000 charitable contribution made on his behalf by
the Company in consideration of his 15 years of service to
the Companys Board. |
|
(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 65. |
|
(5) |
|
Mr. Barcus retired from the Board effective
November 12, 2009. |
|
(6) |
|
Mr. Butler elected to receive half of his retainer and
meeting fees in cash and half in common stock. |
|
(7) |
|
Under his
change-of-control
agreement with Kerr-McGee, Mr. Corbett received
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 deferred common stock, which was a deferral election
available to the Board for 2009 pursuant to the Director
Compensation Plan. |
|
(9) |
|
The amount in the Fees Earned or Paid in Cash column
for Mr. Geren represents the retainer and meeting fees
earned during 2009 beginning with his re-election to the Board
on October 6, 2009. $493,352 of the amount in the
Option Awards column represents the modification
expense (as reported in the following table), computed in
accordance with FASB ASC Topic 718, for stock options that were
awarded to Mr. Geren for service to the Board in 2003 and
2004 and subsequently tolled or suspended upon his departure
from the Board in July 2005. When Mr. Geren left the Board
in July 2005 to accept an appointment as Acting Secretary of the
U.S. Air Force, the Board approved the suspension of the vesting
period of Mr. Gerens unvested stock options. This
suspension was scheduled to terminate and the original terms of
the stock options reinstated only if Mr. Geren were
re-elected to the Board within five years of his date of
departure. In the event Mr. Geren was not re-elected to the
Board by the fifth anniversary of his date of departure, those
stock options would have been forfeited. Since Mr. Geren
was re-elected to the Board on October 6, 2009, the
suspension ended and the vesting period for his 12,500 stock
options (with a weighted average exercise price of $28.60)
recommenced, with all other terms and conditions of the original
stock option grants remaining the same. |
|
(10) |
|
Mr. Poduska retired from the Board effective
November 12, 2009. |
23
The following table contains the grant date fair value of stock
option and deferred stock awards made to each non-employee
director, as indicated, during 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
|
|
Exercise or
|
|
Value of Stock
|
|
|
|
|
|
|
|
|
Base Price of
|
|
and Option
|
|
|
Grant
|
|
Stock
|
|
Deferred
|
|
Option Awards
|
|
Awards
|
Directors
|
|
Date
|
|
Options (#)
|
|
Stock (#)
|
|
($/Sh)(1)
|
|
($)(2)
|
|
All Non-employee Directors, excluding Mr. Geren
|
|
|
May 19
|
|
|
|
|
|
|
|
2,900
|
|
|
|
|
|
|
|
131,051
|
|
All Non-employee Directors, excluding Mr. Geren
|
|
|
May 19
|
|
|
|
3,400
|
|
|
|
|
|
|
|
45.1900
|
|
|
|
62,803
|
|
Mr. Geren(3)
|
|
|
October 6
|
|
|
|
|
|
|
|
1,250
|
|
|
|
|
|
|
|
81,725
|
|
Mr. Geren(3)
|
|
|
October 6
|
|
|
|
1,400
|
|
|
|
|
|
|
|
65.3800
|
|
|
|
37,835
|
|
Mr. Geren(4)
|
|
|
October 6
|
|
|
|
5,000
|
|
|
|
|
|
|
|
21.4525
|
|
|
|
221,584
|
|
Mr. Geren(4)
|
|
|
October 6
|
|
|
|
7,500
|
|
|
|
|
|
|
|
33.3650
|
|
|
|
271,768
|
|
|
|
|
(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 2009 and
modified awards in 2009 computed in accordance with FASB ASC
Topic 718. 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 this 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, 2009. |
|
(3) |
|
The amounts included for Mr. Geren represent the equity
awards he received upon his re-election to the Board on
October 6, 2009. |
|
(4) |
|
The amount in the Grant Date Fair Value of Stock and
Option Awards column represents the modification expense,
computed in accordance with FASB ASC Topic 718, for stock
options that were awarded to Mr. Geren for service to the
Board in 2003 and 2004 and subsequently tolled or suspended upon
his departure from the Board in July 2005. When Mr. Geren
left the Board in July 2005 to accept an appointment as Acting
Secretary of the U.S. Air Force, the Board approved the
suspension of the vesting period of Mr. Gerens
unvested stock options. This suspension was scheduled to
terminate and the original terms of the stock options reinstated
only if Mr. Geren were re-elected to the Board within five
years of his date of departure. In the event Mr. Geren was
not re-elected to the Board by the fifth anniversary of his date
of departure, those stock options would have been forfeited.
Since Mr. Geren was re-elected to the Board on
October 6, 2009, the suspension ended and the vesting
period for his 12,500 stock options (with a weighted average
exercise price of $28.60) recommenced, with all other terms and
conditions of the original stock option grants remaining the
same. |
24
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information provided below summarizes the beneficial
ownership of our named executive officers, each of our
directors, all of our executive officers and directors as a
group and owners of more than five percent of our 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 the number and percentage of
Anadarko common stock beneficially owned by our named executive
officers, each of our directors and all of our executive
officers and directors as a group as of March 1, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
334,273
|
|
|
|
751,201
|
|
|
|
1,085,474
|
|
|
|
|
*
|
Robert G. Gwin
|
|
|
37,337
|
|
|
|
164,701
|
|
|
|
202,038
|
|
|
|
|
*
|
R. A. Walker
|
|
|
89,399
|
|
|
|
262,634
|
|
|
|
352,033
|
|
|
|
|
*
|
Charles A. Meloy
|
|
|
44,112
|
|
|
|
87,767
|
|
|
|
131,879
|
|
|
|
|
*
|
Robert P. Daniels
|
|
|
99,982
|
|
|
|
165,134
|
|
|
|
265,116
|
|
|
|
|
*
|
Robert J. Allison, Jr.
|
|
|
536,562
|
|
|
|
28,700
|
|
|
|
565,262
|
|
|
|
|
*
|
John R. Butler, Jr.
|
|
|
77,596
|
|
|
|
58,700
|
|
|
|
136,296
|
|
|
|
|
*
|
Luke R. Corbett
|
|
|
7,800
|
|
|
|
23,700
|
|
|
|
31,500
|
|
|
|
|
*
|
H. Paulett Eberhart
|
|
|
11,800
|
|
|
|
33,700
|
|
|
|
45,500
|
|
|
|
|
*
|
Peter J. Fluor
|
|
|
10,471
|
|
|
|
2,250
|
|
|
|
12,721
|
|
|
|
|
*
|
Preston M. Geren III
|
|
|
6,110
|
|
|
|
12,500
|
|
|
|
18,610
|
|
|
|
|
*
|
John R. Gordon(3)
|
|
|
170,636
|
|
|
|
68,700
|
|
|
|
239,336
|
|
|
|
|
*
|
Paula Rosput Reynolds
|
|
|
11,122
|
|
|
|
2,250
|
|
|
|
13,372
|
|
|
|
|
*
|
All directors and executive officers as a group (15 persons)
|
|
|
1,526,721
|
|
|
|
2,030,306
|
|
|
|
3,557,027
|
|
|
|
|
*
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Does not include shares of common stock that the directors or
executive officers of the Company have the right to acquire
within 60 days of March 1, 2010. 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. Those shares are
subject to shared voting power with the trustee under that plan
and receive dividend equivalents on such shares, but the
individuals do not have the power to dispose of, or direct the
disposition of, such shares until such shares are distributed to
them. 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 and are payable (after taxes are withheld) in the
form of Company common stock: Mr. Hackett, 178,766;
Mr. Gwin, 52,266; Mr. Walker, 59,632; Mr. Meloy,
55,799; and Mr. Daniels, 58,066. The terms associated with
these awards are described in more detail on page 39. |
|
(3) |
|
Includes 146,060 shares of common stock held in bank or
brokerage margin accounts or escrow accounts securing brokerage
accounts. |
25
Certain
Beneficial Owners
The following table shows the beneficial owners of more than
five percent of the Companys common stock as of
December 31, 2009 based on information available as of
February 16, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
|
Title of Class
|
|
Name and Address of Beneficial Owner
|
|
Ownership
|
|
Percent of Class
|
|
Common Stock
|
|
BlackRock Inc.
40 East 52nd Street
New York, NY 10022
|
|
|
33,922,294
|
(1)
|
|
|
6.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
FMR LLC
82 Devonshire Street
Boston, MA 02109
|
|
|
25,331,222
|
(2)
|
|
|
5.15
|
%
|
|
|
|
(1) |
|
Based upon its Schedule 13G filed January 29, 2010
with the SEC with respect to Company securities held as of
December 31, 2009, BlackRock Inc. has sole voting power as
to 33,922,294 shares of common stock and sole dispositive
power as to 33,922,294 shares of common stock. |
|
(2) |
|
Based upon its Schedule 13G filed February 16, 2010
with the SEC with respect to Company securities held as of
December 31, 2009, FMR LLC has sole voting power as to
7,042,434 shares of common stock and sole dispositive power
as to 25,331,222 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, 2009, except that in April 2009, a late
Form 4 was filed for Ms. Cathy Douglas, the
Companys Chief Accounting Officer, relating to the
disposition of 308 shares of Company common stock in March
2009.
26
AUDIT
COMMITTEE REPORT
The following report of the Audit Committee of the Company
shall not be deemed to be soliciting material or to
be filed with the Securities and Exchange
Commission, nor shall this report be incorporated by reference
into any filing made by the Company under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended.
The Audit Committee of the Board is responsible for independent,
objective oversight of the Companys accounting functions
and internal controls over financial reporting. The Audit
Committee is composed of three directors, each of whom is
independent as defined by the NYSE listing standards. The Audit
Committee operates under a written charter approved by the Board
of Directors which is available on the Companys web site
at
http://www.anadarko.com/About/Pages/Governance.aspx.
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
2009 and was appointed by the Audit Committee to serve in that
capacity for 2010 (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, 2009 audited consolidated
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), as amended.
The Audit Committee also received written disclosures and the
letter 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 referred to above,
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, 2009 filed with the SEC.
THE AUDIT COMMITTEE
H. Paulett Eberhart, Chairperson
John R. Butler, Jr.
Paula Rosput Reynolds
27
COMPENSATION
AND BENEFITS COMMITTEE REPORT
ON 2009 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
Peter J. Fluor, Chairman
Preston M. Geren III
John R. Gordon
28
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 2009.
|
Executive
Summary
In 2009, our executive leadership team led Anadarko to deliver
some of the strongest operational results and performance in the
Companys history. This performance, executed in the face
of significant market and global economic challenges impacting
the oil and gas industry, was driven by several factors,
including the following:
|
|
|
|
|
record sales volumes of 220 million BOE (barrels of oil
equivalent), which represent a 7% increase over 2008 sales
volumes, while spending about 35% less on near-term projects in
2009 than in 2008;
|
|
|
|
addition of 314 million BOE of proved reserves before price
revisions at a very competitive finding and development cost;
|
|
|
|
nine announced deepwater exploration discoveries and an overall
deepwater exploration success rate of 50%, which further
differentiate the value of Anadarkos portfolio from its
peers;
|
|
|
|
reduction of lease operating expense per BOE by more than 20%
year-over-year
through cost-savings initiatives and with an average 30%
improvement of
spud-to-spud
cycle times throughout our onshore operating areas;
|
|
|
|
advancement of three sanctioned mega projects toward first
production on time and within budget;
|
|
|
|
completion of two debt offerings generating net proceeds of
approximately $2.0 billion that were used to retire
near-term debt maturities; and
|
|
|
|
completion of a $1.3 billion equity offering.
|
In addition to these accomplishments, our focus on environmental
performance, safety and corporate citizenship was recognized by
various awards throughout 2009, and Anadarko was named the
Energy Company of the Year by Platts Global Energy
Awards, which acknowledges innovation, strategic vision,
financial results, customer care, operational excellence and
sustainability initiatives within our business.
These achievements were driven by the focused leadership of our
executive team and the capabilities and dedication of our
employees. As more fully described below, the Compensation
Committee regularly reviews its executive compensation
philosophy and programs to ensure that, collectively, they
provide appropriate incentives and rewards relative to the
business environment and Anadarkos
pay-for-performance
objectives. The Compensation Committee believes that the
programs that were in place during 2009 operated as the
Compensation Committee intended when it designed and implemented
the programs. As explained throughout this discussion, the
levels of incentive compensation awarded and paid for 2009 under
Anadarkos programs are directly tied to each
executives contributions towards the Companys
exceptional financial and operating performance, differentiating
exploration success, prudent management of capital spending, and
strong cost-containment efforts. For example, as a result of the
significant value created for our stockholders in 2009, our
relative total stockholder return performance for the two-year
period ending 2009 was in the top quartile of our peers;
accordingly, our executives earned 164% payout on their
performance units for this period. The annual incentive plan
performance score of 184% of target was achieved due to a
targeted focus on cost management and efficiency, strong
production sales volumes, substantial reserve growth and an
outstanding commitment to the safety of our employees. Our
executives were rewarded with bonuses under that plan that
29
reflect their contributions and leadership in achieving these
performance results. We attribute a meaningful portion of the
Companys achievements to the incentive programs that were
designed to reward for positive short-term and long-term
performance relative to our business objectives and to closely
align our executives interests with those of our
stockholders.
As demonstrated during 2009, uncertain times demand strong and
focused leadership. The Compensation Committee understands the
continuing challenges still facing our industry. It recognizes
the importance of continually monitoring the global business,
economic and political environments as well as trends and
developments within our industry that may impact our executive
compensation program. This focus will continue in 2010 to ensure
that the Companys programs remain competitively positioned
to attract and retain talented leaders and provide appropriate
incentive and reasonable rewards relative to the contributions
made by our executives and the performance achieved for our
stockholders.
How We
Make Compensation Decisions
Philosophy
Our compensation philosophy is reviewed and confirmed by the
Compensation Committee each year to ensure that it provides the
appropriate foundation and principles for governing our
executive compensation programs. The Compensation Committee
believes that:
|
|
|
|
|
executive interests should be aligned with stockholder interests;
|
|
|
|
executive compensation should be structured to provide
appropriate incentive and reasonable reward for the
contributions made and performance achieved; and
|
|
|
|
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, our executive compensation
programs are designed to adhere to the following principles:
|
|
|
|
|
a majority of total executive compensation should be in the form
of equity-based compensation;
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
performance-based compensation opportunities should not
encourage excessive risk taking that may compromise the
Companys value or its stockholders;
|
|
|
|
executives should maintain significant levels of equity
ownership;
|
|
|
|
to encourage retention, a substantial portion of compensation
should be forfeitable by the executive upon voluntary
termination;
|
|
|
|
total compensation opportunities should be reflective of each
executive officers role, skills, experience level and
individual contribution to the organization; and
|
|
|
|
our executives should be motivated to contribute as team members
to Anadarkos overall success, as opposed to merely
achieving specific individual objectives.
|
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.
30
Compensation Consultant. The Compensation
Committee utilizes an independent executive compensation
consultant to review executive compensation and benefit
programs. In 2009, the Compensation Committee directly retained
Hewitt Associates LLC, or Hewitt, as its outside independent
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 seven Compensation Committee meetings in 2009. The
Compensation Committee did not engage any consultant other than
Hewitt during 2009 to provide executive compensation consulting
services. The Compensation Committees engagement of Hewitt
included the following services:
|
|
|
|
|
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;
|
|
|
|
advising the Compensation Committee on aligning compensation
programs with the interests of our stockholders; and
|
|
|
|
attending and participating in Compensation Committee meetings
throughout the year as the Compensation Committee deemed
appropriate.
|
During 2009, Hewitt performed no material services for us in the
United States outside the scope of its engagement with the
Compensation Committee; however, Hewitt does provide 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.
The table below identifies the executive and non-executive
compensation consulting fees paid by us to Hewitt for services
provided during the fiscal year ended December 31, 2009:
|
|
|
|
|
|
|
2009
|
|
|
Executive Compensation Consulting Fees
|
|
$
|
478,475
|
|
Non-Executive Compensation Consulting Fees
|
|
|
648,534
|
|
|
|
|
|
|
Total
|
|
$
|
1,127,009
|
|
|
|
|
|
|
The non-executive compensation consulting fees include $621,828
in fees associated with the actuarial services for our United
Kingdom pension and insurance programs and $26,706 in fees
associated with our purchase of compensation surveys and market
data not related to executive compensation. Although the
decision to engage Hewitt for these services was made by
management and not approved by the Compensation Committee, the
Compensation Committee did consider all of the services provided
by Hewitt when engaging them as its independent consultant in
2009.
In February 2010, Hewitt spun off a portion of its executive
compensation practice into a separate, independent entity:
Meridian Compensation Partners, LLC. As part of the Compensation
Committees annual review and engagement of its executive
compensation consultant in May 2010, the Compensation Committee
will formally consider the impact, if any, that this change has
in establishing independence between the services performed for
the Compensation Committee and other services provided to the
Company.
Benchmarking. During 2009, 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.
Hewitt collects and analyzes the benchmark data using their
proprietary incentive valuation models and presents its analysis
to the Compensation Committee. 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
31
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:
|
|
|
|
|
Apache Corporation
|
|
Devon Energy Corporation
|
|
Noble Energy, Inc.
|
Chesapeake Energy Corporation
|
|
EOG Resources, Inc.
|
|
Occidental Petroleum Corporation
|
Chevron Corporation
|
|
Hess Corporation
|
|
Pioneer Natural Resources Company
|
ConocoPhillips
|
|
Marathon Oil Corporation
|
|
Plains Exploration & Production Company
|
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
size and 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.
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:
|
|
|
|
|
current total annual compensation, including base salary, annual
cash incentives, equity compensation, benefits and perquisites;
|
|
|
|
accumulated unvested equity award values and total stock
ownership levels; and
|
|
|
|
estimated termination benefits for a variety of voluntary and
involuntary termination events, including
change-of-control.
|
The Compensation Committee does not assign a specific weighting
to the tally sheets in their overall decision-making process,
but rather use the information provided in the tally sheets to
gain additional perspective and as a reference in the
decision-making process.
Role of CEO
and/or Other
Executive Officers in Determining Executive
Compensation. Our CEO, Mr. Hackett, provides
recommendations to the Compensation Committee for each element
of compensation for each of the named executive officers other
than himself. In forming his recommendations, he may seek input
from other senior officers about the employees who report to
each of them. 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 named executive officers. At the Compensation
Committees request, our executive officers assess the
design of, and make recommendations related to, our compensation
and benefit programs, including recommendations related to the
appropriate financial and non-financial performance measures
used in our incentive programs. Executive officers and others
may also attend Compensation Committee meetings when invited to
do so.
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 pay 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.
32
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
|
|
Position
|
|
Guideline
|
|
as of 12/31/2009
|
|
|
Chief Executive Officer
|
|
|
5 x base salary
|
|
|
|
Exceeds
|
|
Chief Operating Officer
|
|
|
3 x base salary
|
|
|
|
Exceeds
|
|
Senior Vice Presidents
|
|
|
2.5 x base salary
|
|
|
|
Exceeds
|
|
Vice Presidents
|
|
|
2 x base salary
|
|
|
|
Exceeds
|
(1)
|
|
|
|
(1) |
|
Currently, all of our executive officers either meet or exceed
their specified guidelines, with the exception of one newly
hired officer who has three years to comply. |
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 the Anadarko 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. In 2008, the Compensation Committee approved a
program to qualify our annual restricted stock awards (including
restricted shares and restricted stock units), beginning with
the 2009 grants, as performance-based compensation under IRC
Section 162(m).
In response to IRS Revenue Ruling
2008-13
which impacts a companys ability to qualify incentive
payments as performance-based compensation under IRC
Section 162(m) if such incentive payments are guaranteed
under certain severance situations (including involuntary
without cause and good reason terminations) and do not require
the achievement of actual performance goals, the Compensation
Committee approved the following changes to our compensation
programs:
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|
|
|
|
In the event of an involuntary without cause termination, if a
pro-rated annual incentive bonus is provided, such bonus will be
payable at the end of the performance period, based on actual
Company performance. This replaces the Companys prior
practice of paying a pro-rated annual incentive bonus, at
target, at the time of termination (subject to any IRC
Section 409A limitations); and
|
|
|
|
Beginning with the performance unit awards granted in 2009, in
the event of an involuntary without cause termination, the
payout will be determined at the end of the performance period,
based on actual Company performance. This reflects a change from
the performance unit awards granted prior to 2009 where payout,
in the event of an involuntary without cause termination, is
provided at target, at the time of termination (subject to any
IRC Section 409A limitations).
|
In addition to these changes, and at the request of the Company,
Mr. Hackett agreed to amend his employment agreement in
2009, as discussed on page 46, to ensure that
performance-based compensation elements (annual incentive bonus
and performance units) related to involuntary without cause and
good reason termination events (as those terms are defined in
his agreement) comply with this IRS Revenue Ruling related
33
to IRC Section 162(m). The Compensation Committee reviews
and considers the deductibility of our executive compensation
programs; 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 the best interest of the Company and our
stockholders. For these reasons, Mr. Hackett receives a
base salary above $1 million, and therefore the portion of
base salary in excess of $1 million is not deductible.
IRC Section 409A 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 be in compliance with all applicable
statutory and regulatory requirements to properly allow deferral.
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 FASB ASC Topic 718
(formerly referred to as SFAS No. 123(R)). FASB ASC
Topic 718 requires the recognition of expense for the fair value
of share-based payments.
Clawback Provision. Under the Omnibus Plan, if
the Company is required to prepare an accounting restatement as
a result of material noncompliance with applicable rules, 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 of financial statements containing such misstatement.
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.
34
The table below identifies each element of direct compensation
(both fixed and variable) and the
primary purpose for using each element. The level of each
element of direct compensation is generally benchmarked against
the 50th and 75th percentiles of our industry peer
group. 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 30.
|
|
|
Direct Compensation
Element
|
|
Primary Purposes
|
|
Fixed
|
|
|
Base Salary
|
|
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
|
|
|
Variable/Performance-Based
|
|
|
Annual Cash Incentives
|
|
Motivates and rewards executives for
achieving short-term Company objectives aligned with value
creation
|
|
|
Recognizes individual contributions to
Company performance
|
|
|
Restricted Stock/Restricted Stock Units
|
|
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
|
|
|
Stock Options
|
|
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
|
|
|
Performance Units
|
|
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
|
The charts below illustrate each of the fixed and variable
elements as a proportion of the named executive officers
total direct compensation and reflect the following: base
salaries that became effective in November 2009, as discussed on
page 36; target bonus opportunities effective for 2010, as
discussed on page 37; and the estimated grant date value
for the 2009 annual equity awards (excluding the value of
one-time awards), as discussed on page 39.
35
These charts indicate that over 85% of total direct compensation
is variable and over 75% is in the form of equity-based grant
values, with the CEO having approximately 93% of his
compensation as variable and 83% 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.
|
|
|
Indirect Compensation
Element
|
|
Primary Purposes
|
|
Retirement Benefits
|
|
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
|
|
|
Other Benefits (for example, health care, paid time off,
disability and life insurance) and Perquisites
|
|
Enhances employee welfare and financial
security
Provides a competitive package to
attract and retain executive officers, but does not constitute a
significant part of an executives compensation
|
|
|
Severance Benefits
|
|
Attracts and helps retain executive
officers in a volatile and consolidating industry
|
|
|
Provides transitional income following
an executive officers involuntary termination of
employment
|
The following is a discussion of each compensation element and
the specific actions taken by the Compensation Committee in 2009
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 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary as of
|
|
|
Salary Effective
|
|
|
|
|
Name
|
|
January 1, 2009
|
|
|
November 2009
|
|
|
Increase%
|
|
|
Mr. Hackett
|
|
$
|
1,567,500
|
|
|
$
|
1,567,500
|
|
|
|
0.0
|
%
|
Mr. Gwin
|
|
$
|
475,000
|
|
|
$
|
650,000
|
|
|
|
36.8
|
%
|
Mr. Walker
|
|
$
|
682,500
|
|
|
$
|
700,000
|
|
|
|
2.6
|
%
|
Mr. Meloy
|
|
$
|
575,000
|
|
|
$
|
575,000
|
|
|
|
0.0
|
%
|
Mr. Daniels
|
|
$
|
575,000
|
|
|
$
|
575,000
|
|
|
|
0.0
|
%
|
The base salaries for Messrs. Hackett, Meloy and Daniels
are positioned slightly above the 75th percentiles of our
industry peer group. The base salaries for Messrs. Gwin and
Walker fall between the 50th and 75th percentiles of
our industry peer group. Mr. Hackett did not receive a
salary increase in 2009 due in part
36
to the relative positioning of his salary compared to the
benchmark data and the Compensation Committees desire to
deliver any increase in his compensation through our long-term
incentive program. Mr. Gwins base salary was
increased from $475,000 to $575,000 in March 2009 in recognition
of his promotion to Chief Financial Officer (CFO) and to
$650,000 in November 2009 in order to position his base salary
at the market median of the benchmark study. Despite this
significant increase in base salary, Mr. Gwins base
salary is positioned at the market median based in part on his
experience and relatively recent appointment to the CFO role.
During 2009, Mr. Walkers base salary was increased
from $682,000 to $700,000 and is positioned at the market median
based on his relatively recent appointment to the Chief
Operating Officer role. Each of our peer companies structure
their operations and explorations groups differently (some by
geography, some by function), which results in varying levels of
leadership responsibility. While we consider the available
industry peer group benchmark data for Messrs. Meloys
and Daniels functional positions, we place a greater
emphasis on internal pay equity within our executive team in
determining their compensation levels. As a result of our
approach, the base salaries for Messrs. Meloy and Daniels
are positioned above the 75th percentile of our industry
peer group, however, we believe their salaries appropriately
reflect that each of them has over 25 years of experience
in the oil and gas industry and the value we place on their
technical knowledge and leadership within the Company.
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 May 2008. In February 2009, the
Compensation Committee established a baseline AIP performance
hurdle for the named executive officers of $1.6 billion of
Cash Flow from Operating Activities (Net cash provided by (used
in) operating activities) as calculated in the Consolidated
Statements of Cash Flows 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 2009 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 2009 are shown in
the table below. As part of its annual review of executive
compensation in 2009, the Compensation Committee made no changes
to the named executive officers bonus targets for 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum
|
|
|
Target
|
|
|
Maximum
|
|
|
|
Payout as a
|
|
|
Payout as a
|
|
|
Payout as a
|
|
Name
|
|
% of Salary
|
|
|
% of Salary
|
|
|
% of Salary
|
|
|
Mr. Hackett
|
|
|
0
|
%
|
|
|
130
|
%
|
|
|
260
|
%
|
Mr. Gwin
|
|
|
0
|
%
|
|
|
95
|
%
|
|
|
190
|
%
|
Mr. Walker
|
|
|
0
|
%
|
|
|
100
|
%
|
|
|
200
|
%
|
Mr. Meloy
|
|
|
0
|
%
|
|
|
95
|
%
|
|
|
190
|
%
|
Mr. Daniels
|
|
|
0
|
%
|
|
|
95
|
%
|
|
|
190
|
%
|
37
Mr. Gwins incentive target was increased from 90% to
95% in March 2009 in recognition of his appointment to the role
of CFO. Messrs. Meloys and Daniels target
bonuses were established based on internal equity factors as
previously discussed under the Base Salary section, which
positions their target opportunities above the
75th percentile of the benchmark data.
AIP Performance Score. In determining the
performance score under the Companys AIP for 2009, the
Compensation Committee approved the following internal
operational, financial and safety measures and weightings:
|
|
|
|
|
Operational Measures (Reserve Additions and Production
Volumes) The primary business objectives for an
exploration and production 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.
|
|
|
|
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.
|
|
|
|
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.
|
|
|
|
Cash Cost Management Factor This factor acts
as a potential multiplier on the AIP Performance Results for
2009 (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.
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative
|
|
|
|
|
|
AIP
|
|
|
AIP
|
|
|
Weighting
|
|
|
AIP Target
|
|
|
Performance
|
|
|
Performance
|
2009 AIP Performance
Goals
|
|
Factor
|
|
|
Performance
|
|
|
Results(2)
|
|
|
Score
|
|
Reserve Additions (before price revisions and divestitures),
MMBOE
|
|
|
25%
|
|
|
|
260
|
|
|
|
282
|
|
|
|
36%
|
|
Production Volumes, MMBOE
|
|
|
25%
|
|
|
|
210
|
|
|
|
220
|
|
|
|
68%
|
|
Capital Expenditures, $MM
|
|
|
20%
|
|
|
$
|
4,500
|
|
|
$
|
4,404
|
|
|
|
26%
|
|
EBITDAX/BOE, $
|
|
|
20%
|
|
|
$
|
21.50
|
|
|
$
|
21.57
|
|
|
|
20%
|
|
Total Recordable Incident Rate (Safety)
|
|
|
10%
|
|
|
|
0.77
|
|
|
|
0.62
|
|
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
167%
|
|
Cash Cost Management Factor(1)
|
|
|
£10%
Multiplier
|
|
|
$
|
10.40
|
|
|
$
|
8.56
|
|
|
|
x1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184%
|
|
|
|
|
(1) |
|
This factor is capped at a 10% multiplier and cannot cause the
total AIP Performance Score to exceed 200%. |
|
(2) |
|
The AIP Performance Results reflect the following adjustments as
approved by the Compensation Committee: (i) the exclusion
of approximately $657 million in revenue associated with
the reversal of the accrual |
38
|
|
|
|
|
related to the Deepwater Royalty Relief Act from EBITDAX since
it was not anticipated in establishing the EBITDAX/BOE goal; and
(ii) the exclusion of approximately $215 million
related to the Companys acquisition of its office
buildings in The Woodlands, Texas from the Capital Expenditures
goal because it was a separate financing activity rather than an
oil and gas investment activity. |
Individual Performance Adjustments. In
determining a named executive officers bonus payment, the
Compensation Committee may make an adjustment based on
individual performance. This adjustment allows the Compensation
Committee to recognize an individuals significant
contributions that may not be reflected in the overall AIP
performance score. The Compensation Committee did not make any
individual performance adjustments for the named executive
officers 2009 bonus payments in recognition of the team
effort exhibited by our senior management in driving the
Companys success.
Actual Bonuses Earned for 2009. The AIP awards
earned for 2009 and paid to each of the named executive officers
are shown in the table below and are reflected in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
|
|
|
Target Bonus
|
|
|
|
|
|
AIP
|
|
|
|
|
|
Individual
|
|
|
|
|
|
|
|
|
|
Earnings for
|
|
|
|
|
|
as% of Base
|
|
|
|
|
|
Performance
|
|
|
|
|
|
Performance
|
|
|
|
|
|
Actual Bonus
|
|
Name
|
|
2009
|
|
|
|
|
|
Salary
|
|
|
|
|
|
Score%
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Award ($)
|
|
|
Mr. Hackett(1)
|
|
$
|
1,567,500
|
|
|
|
X
|
|
|
|
130
|
%
|
|
|
X
|
|
|
|
184
|
%
|
|
|
+/-
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
3,749,460
|
|
Mr. Gwin
|
|
$
|
569,231
|
|
|
|
X
|
|
|
|
95
|
%
|
|
|
X
|
|
|
|
184
|
%
|
|
|
+/-
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
995,015
|
|
Mr. Walker
|
|
$
|
685,192
|
|
|
|
X
|
|
|
|
100
|
%
|
|
|
X
|
|
|
|
184
|
%
|
|
|
+/-
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
1,260,754
|
|
Mr. Meloy
|
|
$
|
575,000
|
|
|
|
X
|
|
|
|
95
|
%
|
|
|
X
|
|
|
|
184
|
%
|
|
|
+/-
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
1,005,100
|
|
Mr. Daniels
|
|
$
|
575,000
|
|
|
|
X
|
|
|
|
95
|
%
|
|
|
X
|
|
|
|
184
|
%
|
|
|
+/-
|
|
|
|
0
|
|
|
|
=
|
|
|
$
|
1,005,100
|
|
|
|
|
(1) |
|
$1,711,645 of Mr. Hacketts bonus was paid in shares
of Anadarko common stock under the Companys Omnibus Plan
and $2,037,815 was paid in cash. |
Equity
Compensation
The Compensation Committee makes equity-based awards under our
Omnibus Plan, which was approved by our stockholders in May
2008. Annual 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 named executive officers are made on the executive
officers first day of employment with us. Equity awards
for named executive officers made in connection with promotions
are approved by the Compensation Committee and the grant date is
generally effective the date of appointment.
Our annual awards consist of a combination of stock options,
time-based restricted stock units and performance unit awards.
The 2009 awards allocated the targeted equity award value
(calculated using Hewitts proprietary incentive valuation
models) for each named executive officer equally across all
three components, with the exception of
Messrs. Meloys and Daniels awards which were
structured slightly different to put a greater emphasis on
retention. This was a change from the 2008 awards, which
allocated 50% of the targeted equity award value to
non-qualified stock options, 20% to restricted stock units and
30% to performance units. The Compensation Committee approved
this change in allocation to provide a combination of
equity-based awards that is performance-based in absolute and
relative terms, while also encouraging retention. In addition,
the use of performance unit awards and restricted stock units
enables us to better manage our potential stock dilution. With
respect to the restricted stock units, the Compensation
Committee establishes an objective performance criteria for each
calendar year that must be achieved before the annual restricted
stock units are awarded to executives the following year. The
annual restricted stock unit awards made in November 2009 were
based on the Companys achievement of the 2008 performance
criteria ($2.5 billion of cash flow from continuing
operations for fiscal year 2008). Annual equity award values are
benchmarked against the 50th and 75th percentile
levels of similarly-awarded opportunities among the members of
our industry peer group.
39
Below is a summary of the typical 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 pro-rata annually 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 pro-rata annually 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
|
|
|
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 for our most recent awards 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 undergoes a change in corporate
capitalization or a corporate transaction (including, but not
limited to, a going-private transaction, bankruptcy,
liquidation, merger, consolidation, etc.) during the
performance period, the Compensation Committee shall undertake
an evaluation to determine whether such peer company will be
replaced. The Compensation Committee has approved Murphy Oil
Corporation, Nexen, Inc., and Chesapeake Energy Corporation as
replacement companies (in that order).
40
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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%)
|
|
No payout made
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Awards Made During 2009
The benchmarking analysis provided by Hewitt during 2009 showed
downward pressure on long-term incentive opportunities driven
primarily by share price declines, individual peer company share
usage limitations, the conservative business outlook at the time
of awards and the varying compensation philosophies of the peer
companies. Many of the award values included in the benchmark
data reflected awards made by our peers during the first quarter
of 2009, when economic and market conditions were uncertain. In
November 2009, when our awards were made, share prices had
rebounded significantly and the general economic and market
conditions had improved. Despite the deteriorating economic
conditions and lower commodity prices over the last year, we
made the decision to maintain our capital expenditure budget and
invest in three mega projects while many of our industry peers
elected to significantly decrease capital expenditure budgets
and delay many mega projects. In positioning certain awards
outside the 50th and 75th percentile levels of our
industry peer group, the Compensation Committee considered the
market trends and the Companys operating philosophy during
this economic downturn, combined with the Companys overall
performance in 2009 under the leadership of our named executive
officers.
On November 10, 2009, 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 51.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Target Number
|
|
|
Number of
|
|
Restricted Stock
|
|
of Performance
|
Name
|
|
Stock Options
|
|
Units
|
|
Units
|
|
Mr. Hackett
|
|
|
197,600
|
|
|
|
89,300
|
|
|
|
88,800
|
|
Mr. Gwin
|
|
|
47,200
|
|
|
|
21,400
|
|
|
|
21,200
|
|
Mr. Walker
|
|
|
72,700
|
|
|
|
32,900
|
|
|
|
32,700
|
|
Mr. Meloy
|
|
|
32,500
|
|
|
|
43,300
|
|
|
|
28,400
|
|
Mr. Daniels
|
|
|
32,500
|
|
|
|
43,300
|
|
|
|
28,400
|
|
Mr. Hacketts equity award is positioned slightly
above the 75th percentile of the benchmark data to
recognize his leadership in the Companys strong operating
performance, differentiated exploration success and exceptional
equity price performance in 2009, despite the significant market
and global economic challenges impacting the oil and gas
industry. Mr. Gwins equity award, which was held flat
to the aggregate equity value he received for the prior
12 months, is positioned above the 75th percentile to
reflect his significant contributions in managing the
Companys financial health, as evidenced by the
Companys completion of two debt offerings and an equity
offering in 2009, all of which were very well received by the
market. In addition to Mr. Gwins role as CFO, during
2009 he served as President and CEO of Western Gas Partners, LP,
Anadarkos publicly traded midstream master limited
partnership, which is an additional responsibility not accounted
for in the benchmark data. Mr. Walkers equity award,
which is positioned between the 50th and 75th percentile of the
benchmark data, reflects his increased responsibilities as Chief
41
Operating Officer and the strategic direction he provided in
achieving our strong business results. Messrs. Meloys
and Daniels award levels recognize the significant success
of the Companys operations and exploration programs during
2009, under their leadership. Each of their awards also includes
a one-time additional value of $2 million designed to
retain them in their leadership roles for the foreseeable
future. To emphasize retention, approximately 50% of their total
award was delivered in restricted stock units that will vest 10%
on the first and second anniversaries of the grant date and 80%
on the third anniversary of the grant date. As a result of these
factors, each of their equity awards is above the
75th percentile of the benchmark data.
Performance
Units Results for Performance Periods Ending in
2009
In February 2010, the Compensation Committee certified the
performance results for the 2007 transitional and 2007 annual
performance unit awards for specified executives with two-year
performance periods that ended December 31, 2009. Under the
provisions of these awards, the targeted performance units were
subject to our relative TSR performance against a defined TSR
peer group. For the performance period ending December 31,
2009, the Companys TSR performance ranked third relative
to the defined peer group. This ranking resulted in a 164%
payout as a percent of target. The following table lists the
target number of performance units awarded and actual
performance units earned by the named executive officers under
the provisions of these awards for the two-year performance
periods that ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Transitional Award
|
|
2007 Annual Award
|
|
|
|
|
Actual
|
|
|
|
Actual
|
|
|
Target
|
|
Performance Units
|
|
Target
|
|
Performance Units
|
Name
|
|
Performance Units
|
|
Earned
|
|
Performance Units
|
|
Earned
|
|
Mr. Hackett
|
|
|
38,100
|
|
|
|
62,484
|
|
|
|
43,750
|
|
|
|
71,750
|
|
Mr. Gwin
|
|
|
2,325
|
|
|
|
3,813
|
|
|
|
3,800
|
|
|
|
6,232
|
|
Mr. Walker
|
|
|
10,019
|
|
|
|
16,431
|
|
|
|
10,900
|
|
|
|
17,876
|
|
Mr. Meloy
|
|
|
4,650
|
|
|
|
7,626
|
|
|
|
6,100
|
|
|
|
10,004
|
|
Mr. Daniels
|
|
|
8,016
|
|
|
|
13,146
|
|
|
|
7,050
|
|
|
|
11,562
|
|
Retirement
Benefits
Our executive officers participate in the following retirement
and related plans:
Anadarko Employee Savings Plans. The Anadarko
Employee Savings Plan, or 401(k) Plan, is a tax-qualified
retirement savings plan that allows participating United States
employees to contribute up to 30% of eligible compensation, on a
before-tax basis or on an after-tax basis (via a Roth or
traditional after-tax contribution), 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.
Non-qualified plans are subject to creditor claims, unlike
qualified plans. 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.
42
Pension Plans. Anadarko provides funded,
tax-qualified retirement benefits for all United States
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 and Walker 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, which was provided
to account for certain retirement benefits from his prior
employer that were foregone when he was hired by Anadarko in
2003. The plan also provides for a one-time service credit of
eight years to Mr. Walker if he remains 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
Mr. Walker in 2007 to recognize that he was a mid-career
hire that we would like to retain for the remainder of his
career. Providing him additional service credits recognizes a
portion of his prior industry experience and service years which
directly benefit us and our stockholders. The accrued benefits
related to these special pension credits are discussed in the
Pension Benefits Table on page 57. 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 amended and restated employment
agreement, which was entered into in November 2009, 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 46 and in the Pension Benefits
Table on page 57.
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 United States based employees.
Certain employees, including the named executive officers, may
also participate in the Deferred Compensation Plan. This Plan
allows employees to voluntarily defer receipt of up to 75% of
their salary
and/or up to
100% of their AIP bonus payments and 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
(but not the 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 58.
Perquisites
We provide a limited number of perquisites to the named
executive officers. These perquisites are assessed annually by
the Compensation Committee 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 2009, financial counseling and tax preparation
benefits were reimbursed up to a maximum of $20,380 in the first
year of use and up to a maximum of $12,205 for each following
year. The estate planning services are made available
|
43
|
|
|
|
|
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.
|
|
|
|
Club Memberships We reimburse certain
executive officers for monthly dues and any additional business
expenses related to club memberships.
|
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Entertainment Events and Other We purchase
tickets to various sporting and entertainment events for
business purposes. We have also leased recreational facilities
for business purposes. If not used for business purposes, we may
make these tickets and facilities available to our employees,
including our executive officers, as a form of recognition and
reward for their efforts.
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CNG Vehicle To promote our business interests
and the use of natural gas as a clean alternative fuel, we have
provided Mr. Hackett the use of a Compressed Natural Gas
(CNG) vehicle. Mr. Hacketts personal use, including
commuting to work, is imputed and considered taxable income.
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As required by the Board, we provide limited 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 in
accordance with the IRC. Personal use includes his participation
on outside boards, which directly and indirectly benefits
Anadarko.
The values of the various perquisites provided are included in
the All Other Compensation column of the Summary
Compensation Table on page 49. Individual perquisite values
(or the incremental cost of a perquisite, as applicable) are
disclosed in the All Other Compensation Table and supporting
footnotes following the Summary Compensation Table on
page 49. We do not provide any tax
gross-ups on
these perquisites.
Severance
Benefits
The Company currently provides severance benefits described
below to its named executive officers. On a periodic basis, the
Compensation Committee, in consultation with Hewitt will review,
consider and adjust, as the Compensation Committee deems
necessary and appropriate, the provisions of severance and
change-of-control
benefits provided to executives. In connection with any such
review, the Compensation 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 Compensation 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 Compensation Committees executive compensation
philosophy.
In 2009, the Compensation Committee directed Hewitt to conduct
an analysis of senior executive severance benefit arrangements
within and outside of a
change-of-control
as provided by the industry peer group. The results of the study
reflected that our severance benefit arrangements are generally
competitive within our industry. The Compensation Committee
determined that it would continue to review the severance
benefits provided by our programs.
44
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 59) severance benefits for
our executive officers:
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a payment equal to 2 times the officers annual base salary
plus one years target bonus under our AIP;
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if provided, a pro-rata bonus under our AIP for the year of
termination, which will be payable at the end of the performance
period, based on actual Company performance score as certified
by the Compensation Committee;
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if not eligible for retirement, a special retirement benefit
enhancement equal to the present value at the officers
current age of the difference between the deferred vested
benefit and the subsidized early retirement benefit at
age 55;
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if applicable, the present value of retiree life insurance;
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a payment equal to the cost of providing financial planning
services for two years;
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the option to continue existing medical and dental coverage
levels at current active employee rates for up to 6 months.
After 6 months, we will pay the cost of COBRA until the
first to occur of (a) 18 months or (b) obtaining
comparable coverage as a result of employment with another
employer;
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the vesting of some or all unvested restricted stock, unvested
restricted stock units and stock options; and
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a payout, if any, of outstanding performance units will be made
at the end of the performance period based on actual Company
performance results.
|
Key Employee
Change-of-Control
Contracts. We have also entered into key employee
change-of-control
contracts with all of our executive officers, including the
named executive officers, with the exception of Mr. Hackett
whose
change-of-control
benefits are included in his employment agreement, which was
effective as of November 2009 and is described on page 46.
These key employee
change-of-control
contracts have an initial three-year term that is automatically
extended for one year upon each anniversary, unless either party
provides notice not to extend. If we experience a
change-of-control
(as defined on page 60) 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 59), death or disability), the executive officer
terminates for good reason (as defined on page 60) 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:
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earned but unpaid compensation;
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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.
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45
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 IRC
Section 4999. 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 and IRC Section 280G applies, the executive officer
must pay an additional 20% excise tax on certain amounts
received. The
gross-up
makes the executive officer whole by having the Company pay 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 2009, 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 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
At the request of the Company (and as discussed further on
page 33), Mr. Hackett entered into an amended and
restated employment agreement in November 2009 (2009 Agreement),
which replaced in its entirety Mr. Hacketts previous
Employment Agreement, dated December 11, 2006, as amended
(2006 Agreement). The primary purpose of the amendments to the
2006 Agreement was to ensure that performance-
46
based compensation elements (annual bonus and performance units)
related to certain termination events complied with
Section 162(m) of the IRC, including the 2008 Revenue
Ruling that impacts compensation tied to performance periods
beginning January 1, 2010. The amendment is intended to
comply with this Revenue Ruling and preserve meaningful cost
savings for the Company. Under the terms of the 2009 Agreement,
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 59 or termination for good reason (as defined on
page 60);
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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 59. 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 2009 Agreement amends the non-solicitation provision of the
2006 Agreement to eliminate the applicability of such provision
if (i) Mr. Hackett becomes entitled to the
Change-of-Control
Benefits (as defined in the 2009 Agreement) (x) because
Mr. Hacketts employment is terminated by expiration
of the term of the 2009 Agreement during a
Change-of-Control
Period (as defined in the 2009 Agreement) by reason of notice
from the Company of such termination, or (y) upon certain
terminations in a
Change-of-Control
Period or In Anticipation of a
Change-of-Control
(as defined in the 2009 Agreement), or
(ii) Mr. Hacketts employment with the Company is
terminated for any reason after December 3, 2010.
The agreement also provides that since Mr. Hackett remained
employed by us until December 3, 2008, he received a
special pension benefit, computed so that his total pension
benefits from us will equal those to which he would have been
entitled if his actual years of employment with us were doubled.
This service crediting provision was implemented when
Mr. Hackett was hired in order to compensate for projected
retirement benefits being forgone in leaving his former employer.
Mr. Meloy
Retention Agreement
Mr. Meloy was an officer of 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 entitled to receive under the
change-of-control
agreement he had with Kerr-McGee. Under the terms of his
retention agreement, Mr. Meloy received 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; and
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credit for five additional years in age and service towards his
pension benefits; these additional pension credits vested in
August 2009, three years from the closing date of the
acquisition.
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47
Because Mr. Meloy remained employed with the Company
through August 10, 2009, he received all of the benefits
mentioned above. Mr. Meloy will not receive any additional
benefits under the Retention Agreement.
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.
48
EXECUTIVE
COMPENSATION
Summary
Compensation Table for 2009
The following table summarizes the compensation of our CEO, CFO
and our three highest paid executive officers other than our CEO
and CFO for the fiscal year ended December 31, 2009:
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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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($)(1)
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($)(2)
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($)(3)
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($)(4)
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($)
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James T. Hackett(5)
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2009
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1,567,500
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0
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12,158,360
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5,293,585
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3,749,460
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(6)
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3,956,376
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741,496
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27,466,777
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Chairman, President and
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2008
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1,510,385
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0
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9,572,026
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7,121,658
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3,416,491
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1,643,878
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571,276
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23,835,714
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Chief Executive Officer
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2007
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1,415,385
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0
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15,490,355
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6,215,280
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2,962,400
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693,859
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572,368
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27,349,647
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Robert G. Gwin(7)
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Senior Vice President,
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2009
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569,231
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0
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3,952,953
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2,168,884
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995,015
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232,669
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132,190
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8,050,942
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Finance and Chief
Financial Officer
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R. A. Walker(8)
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2009
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685,192
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0
|
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4,478,274
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|
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1,947,589
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|
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1,260,754
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1,305,419
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200,287
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|
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9,877,515
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Chief Operating Officer
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2008
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655,000
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0
|
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3,064,814
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|
|
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2,276,392
|
|
|
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1,139,700
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|
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328,684
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|
|
|
180,995
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|
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7,645,585
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|
|
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2007
|
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544,231
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|
|
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0
|
|
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|
3,940,163
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|
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1,680,432
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744,780
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1,017,885
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|
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137,527
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8,065,018
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|
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Charles A. Meloy
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2009
|
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575,000
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|
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0
|
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|
|
4,853,076
|
|
|
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870,656
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|
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|
1,005,100
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4,139,783
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134,802
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|
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11,578,417
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Senior Vice President,
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2008
|
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553,846
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575,000
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(9)
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1,335,616
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|
|
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989,465
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|
|
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915,508
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|
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2,501,641
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|
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106,832
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6,977,908
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Worldwide Operations
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2007
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486,555
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575,000
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(9)
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2,036,443
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|
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|
642,093
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|
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|
744,186
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|
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|
1,416,457
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|
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|
105,228
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|
|
|
6,005,962
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Robert P. Daniels (10)
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Senior Vice President,
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2009
|
|
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|
575,000
|
|
|
|
0
|
|
|
|
4,853,076
|
|
|
|
870,656
|
|
|
|
1,005,100
|
|
|
|
1,529,833
|
|
|
|
122,461
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|
|
|
8,956,126
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|
Worldwide Exploration
|
|
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(1) |
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The amounts included in these columns represent the aggregate
grant date fair value of the awards made to named executives in
2009 computed in accordance with FASB ASC Topic 718. 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 this 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, 2009. The values in the
Stock Awards column represent the grant date fair
values for both restricted stock and performance unit awards.
The performance unit awards are subject to market conditions and
have been valued based on the probable outcome of the market
conditions as of the grant date. |
|
(2) |
|
The amounts in this column reflect the cash bonus awards for
2009 that were determined by the Compensation Committee and paid
out in February 2010 pursuant to the Companys AIP. These
awards are discussed in further detail beginning on
page 37. See also footnote (6) to this table. |
|
(3) |
|
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. |
|
(4) |
|
The amounts shown in this column for each named executive
officer are described further in the All Other Compensation
Table below. |
|
(5) |
|
Effective February 15, 2010, Mr. Hackett will serve as
the Chairman and Chief Executive Officer of the Company as a
result of the appointment of Mr. Walker to the position of
President and Chief Operating Officer. |
|
(6) |
|
Mr. Hackett was awarded a bonus of $3,749,460 under the
Companys AIP, of which $1,711,645 was paid in shares of
Anadarko common stock under the Companys Omnibus Plan and
$2,037,815 was paid in cash. The cash portion was capped at 100%
of target and the excess was paid in shares. |
49
|
|
|
(7) |
|
Effective March 1, 2009, Robert G. Gwin was appointed
Senior Vice President, Finance and Chief Financial Officer
replacing Mr. Walker who was appointed Chief Operating
Officer of the Company. Compensation information for 2007 and
2008 is not reflected for Mr. Gwin because he was not a
named executive officer for those years. |
|
(8) |
|
Effective March 1, 2009, Mr. Walker was appointed
Chief Operating Officer of the Company. Prior to this
appointment, he served as the Senior Vice President, Finance and
Chief Financial Officer. Effective February 15, 2010,
Mr. Walker will serve as President and Chief Operating
Officer of the Company. There were no changes to
Mr. Walkers current compensation as a result of this
appointment. |
|
(9) |
|
The $575,000 reflected in the Bonus column for
Mr. Meloy in 2008 and 2007 is a cash retention bonus paid
to him as part of his retention agreement entered into on
August 10, 2006. The details of this agreement are
discussed beginning on page 47. |
|
(10) |
|
Compensation information for 2007 and 2008 is not reflected for
Mr. Daniels because he was not a named executive officer
for those years. |
All Other
Compensation Table for 2009
The following table describes each component of the All
Other Compensation column for the fiscal year ended
December 31, 2009 in the Summary Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Company to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
|
and Savings
|
|
Club
|
|
Financial/
|
|
Excess
|
|
|
|
|
|
|
|
|
Use of
|
|
Restoration
|
|
Membership
|
|
Tax/Estate
|
|
Liability
|
|
Tax
|
|
|
|
|
|
|
Aircraft
|
|
Plan
|
|
Dues
|
|
Planning
|
|
Insurance
|
|
Benefit
|
|
Other
|
|
Total
|
Name
|
|
($)(1)
|
|
($)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
($)
|
|
($)(3)
|
|
($)
|
|
James T. Hackett(4)
|
|
|
434,669
|
|
|
|
299,040
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
6,387
|
|
|
|
741,496
|
|
Robert G. Gwin
|
|
|
27,360
|
|
|
|
69,457
|
|
|
|
10,313
|
|
|
|
23,660
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
132,190
|
|
R. A. Walker
|
|
|
80,834
|
|
|
|
109,494
|
|
|
|
8,559
|
|
|
|
0
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
200,287
|
|
Charles A. Meloy
|
|
|
3,240
|
|
|
|
89,430
|
|
|
|
28,527
|
|
|
|
12,205
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
134,802
|
|
Robert P. Daniels
|
|
|
10,230
|
|
|
|
89,430
|
|
|
|
9,196
|
|
|
|
12,205
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
122,461
|
|
|
|
|
(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. |
|
(2) |
|
We have included the payment of club membership fees on behalf
of Messrs. Gwin, Walker, Meloy and Daniels. For those clubs not
used exclusively for business, the entire amount has been
included, although we believe that only a portion of this cost
represents a perquisite. |
|
(3) |
|
The amount reflected in this column for Mr. Hackett
represents the limited incremental cost of maintenance of the
security system at his primary residence (as required by the
Board) and his use of a Company-provided CNG vehicle. The CNG
vehicle is being used by Mr. Hackett to promote the
Companys business interests and the use of natural gas as
a clean alternative fuel. He is imputed income for any personal
use of the car, including expenses for commuting to work. The
value of personal use of the CNG vehicle is based on the
aggregate incremental cost including cost of fuel provided by
the Company, lease payments and maintenance expenses. |
|
(4) |
|
The Companys security policy requires the CEO 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. |
50
Grants of
Plan-Based Awards in 2009
The following table sets forth information concerning annual
incentive awards, stock options, restricted stock units and
performance units granted during 2009 to each of the named
executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Number of
|
|
Exercise or
|
|
Fair Value
|
|
|
|
|
Estimated Future Payouts Under Non-
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Securities
|
|
Base Price
|
|
of Stock
|
|
|
|
|
Equity Incentive Plan Awards(1)
|
|
Equity Incentive Plan Awards(2)
|
|
Shares of
|
|
Underlying
|
|
of Option
|
|
and Option
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock or
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Units (#)(3)
|
|
(#)(4)
|
|
($/Sh)
|
|
($)(5)
|
|
James T. Hackett
|
|
|
|
|
|
|
0
|
|
|
|
2,037,750
|
|
|
|
4,075,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,600
|
|
|
|
65.44
|
|
|
|
5,293,585
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,300
|
|
|
|
|
|
|
|
|
|
|
|
5,843,792
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,976
|
|
|
|
88,800
|
|
|
|
177,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,314,568
|
|
Robert G. Gwin
|
|
|
|
|
|
|
0
|
|
|
|
540,769
|
|
|
|
1,081,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2009
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,200
|
|
|
|
34.95
|
|
|
|
904,424
|
|
|
|
|
3/1/2009
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,900
|
|
|
|
|
|
|
|
|
|
|
|
1,045,005
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,200
|
|
|
|
65.44
|
|
|
|
1,264,460
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,400
|
|
|
|
|
|
|
|
|
|
|
|
1,400,416
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,724
|
|
|
|
21,200
|
|
|
|
42,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,507,532
|
|
R. A. Walker
|
|
|
|
|
|
|
0
|
|
|
|
685,192
|
|
|
|
1,370,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,700
|
|
|
|
65.44
|
|
|
|
1,947,589
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,900
|
|
|
|
|
|
|
|
|
|
|
|
2,152,976
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,829
|
|
|
|
32,700
|
|
|
|
65,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,325,298
|
|
Charles A. Meloy
|
|
|
|
|
|
|
0
|
|
|
|
546,250
|
|
|
|
1,092,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
65.44
|
|
|
|
870,656
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,300
|
|
|
|
|
|
|
|
|
|
|
|
2,833,552
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,668
|
|
|
|
28,400
|
|
|
|
56,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,019,524
|
|
Robert P. Daniels
|
|
|
|
|
|
|
0
|
|
|
|
546,250
|
|
|
|
1,092,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
65.44
|
|
|
|
870,656
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,300
|
|
|
|
|
|
|
|
|
|
|
|
2,833,552
|
|
|
|
|
11/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,668
|
|
|
|
28,400
|
|
|
|
56,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,019,524
|
|
|
|
|
(1) |
|
Reflects estimated future cash payouts under the Companys
AIP based on actual base salaries earned in 2009. If threshold
levels of performance are not met, then the payout can be zero.
Actual bonus payouts under the AIP for 2009 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, which are subject to market conditions
as defined in FASB ASC Topic 718. 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
cash. The threshold value represents the lowest earned amount
based on the payout scale described on page 40, although
the minimum payout is zero. |
|
(3) |
|
Reflects the number of restricted stock units awarded in 2009.
Messrs. Hacketts, Gwins and Walkers
awards vest pro-rata annually over three years, beginning with
the first anniversary of the grant date.
Messrs. Meloys and Daniels awards vest 10% on
the first and second anniversaries of the grant date and 80% on
the third anniversary of the grant date. Executive officers
receive dividend equivalents on the units, but do not have
voting rights. |
|
(4) |
|
Reflects the number of stock options awarded in 2009. These
options vest pro-rata annually 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 this column represent the aggregate
grant date fair value of the awards made to named executives in
2009 computed in accordance with FASB ASC Topic 718. 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 this 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, 2009. |
|
(6) |
|
The March 1, 2009 awards for Mr. Gwin represent
promotional awards granted upon his appointment as Chief
Financial Officer. |
51
Outstanding
Equity Awards at Fiscal Year-End 2009
The following table reflects outstanding stock option awards
classified as exercisable and unexercisable as of
December 31, 2009 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 $62.42 a share (the closing stock price of the Companys
stock on December 31, 2009).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock/Units
|
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
Number of
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
Unearned
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
Shares,
|
|
Units or
|
|
|
Option Awards(1)
|
|
Units of
|
|
Stock
|
|
Units or
|
|
Other
|
|
|
Number of Securities
|
|
Option
|
|
Option
|
|
Stock That
|
|
That Have
|
|
Other Rights
|
|
Rights
|
|
|
Underlying Unexercised Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Not Vested
|
|
That Have
|
|
That Have
|
Name
|
|
Exercisable (#)
|
|
Unexercisable (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
($)
|
|
Not Vested (#)
|
|
Not Vested ($)
|
|
James T. Hackett
|
|
|
80,000
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
27,466
|
|
|
|
1,714,428
|
|
|
|
134,234
|
(4)
|
|
|
8,378,886
|
|
|
|
|
191,000
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
62,000
|
|
|
|
3,870,040
|
|
|
|
43,750
|
|
|
|
2,730,875
|
|
|
|
|
81,867
|
|
|
|
40,933
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
89,300
|
|
|
|
5,574,106
|
|
|
|
140,600
|
|
|
|
8,776,252
|
|
|
|
|
166,667
|
|
|
|
83,333
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
88,800
|
|
|
|
5,542,896
|
|
|
|
|
190,734
|
|
|
|
381,466
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
197,600
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Gwin
|
|
|
13,500
|
|
|
|
13,500
|
|
|
|
50.6900
|
|
|
|
1/16/2013
|
|
|
|
4,250
|
|
|
|
265,285
|
|
|
|
10,045
|
(4)
|
|
|
627,009
|
|
|
|
|
19,100
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
2,400
|
|
|
|
149,808
|
|
|
|
3,800
|
|
|
|
237,196
|
|
|
|
|
27,334
|
|
|
|
13,666
|
|
|
|
40.5100
|
|
|
|
1/10/2014
|
|
|
|
8,533
|
|
|
|
532,630
|
|
|
|
19,300
|
|
|
|
1,204,706
|
|
|
|
|
14,467
|
|
|
|
7,233
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
29,900
|
|
|
|
1,866,358
|
|
|
|
21,200
|
|
|
|
1,323,304
|
|
|
|
|
7,434
|
|
|
|
14,866
|
|
|
|
64.6900
|
|
|
|
3/12/2015
|
|
|
|
21,400
|
|
|
|
1,335,788
|
|
|
|
|
|
|
|
|
|
|
|
|
26,200
|
|
|
|
52,400
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
13,333
|
(6)
|
|
|
666,650
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
66,200
|
|
|
|
34.9500
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
47,200
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,667
|
(5)
|
|
|
13,333
|
(5)
|
|
|
50.0000
|
|
|
|
4/2/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Walker
|
|
|
50,000
|
|
|
|
0
|
|
|
|
45.8000
|
|
|
|
9/6/2012
|
|
|
|
6,866
|
|
|
|
428,576
|
|
|
|
34,307
|
(4)
|
|
|
2,141,443
|
|
|
|
|
22,800
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
19,866
|
|
|
|
1,240,036
|
|
|
|
10,900
|
|
|
|
680,378
|
|
|
|
|
46,400
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
32,900
|
|
|
|
2,053,618
|
|
|
|
45,000
|
|
|
|
2,808,900
|
|
|
|
|
27,334
|
|
|
|
13,666
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
32,700
|
|
|
|
2,041,134
|
|
|
|
|
41,467
|
|
|
|
20,733
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,967
|
|
|
|
121,933
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
72,700
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles A. Meloy
|
|
|
38,200
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
3,833
|
|
|
|
239,256
|
|
|
|
17,630
|
(4)
|
|
|
1,100,465
|
|
|
|
|
23,067
|
|
|
|
11,533
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
8,666
|
|
|
|
540,932
|
|
|
|
6,100
|
|
|
|
380,762
|
|
|
|
|
26,500
|
|
|
|
53,000
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
43,300
|
|
|
|
2,702,786
|
|
|
|
19,600
|
|
|
|
1,223,432
|
|
|
|
|
0
|
|
|
|
32,500
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
28,400
|
|
|
|
1,772,728
|
|
Robert P. Daniels
|
|
|
32,000
|
|
|
|
0
|
|
|
|
21.4525
|
|
|
|
10/30/2010
|
|
|
|
2,100
|
|
|
|
131,082
|
|
|
|
24,708
|
(4)
|
|
|
1,542,273
|
|
|
|
|
18,600
|
|
|
|
0
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
4,433
|
|
|
|
276,708
|
|
|
|
7,050
|
|
|
|
440,061
|
|
|
|
|
17,800
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
10,333
|
|
|
|
644,986
|
|
|
|
23,500
|
|
|
|
1,466,870
|
|
|
|
|
38,200
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
43,300
|
|
|
|
2,702,786
|
|
|
|
28,400
|
|
|
|
1,772,728
|
|
|
|
|
26,734
|
|
|
|
13,366
|
|
|
|
59.8700
|
|
|
|
11/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,800
|
|
|
|
63,600
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
32,500
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
|
|
|
(1) |
|
The table below shows the vesting dates for the respective
unexercisable stock options listed in the above Outstanding
Equity Awards Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Date
|
|
Mr. Hackett
|
|
|
Mr. Gwin
|
|
|
Mr. Walker
|
|
|
Mr. Meloy
|
|
|
Mr. Daniels
|
|
|
1/10/2010
|
|
|
40,933
|
|
|
|
13,666
|
|
|
|
13,666
|
|
|
|
|
|
|
|
|
|
1/16/2010
|
|
|
|
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
|
|
|
22,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/12/2010
|
|
|
|
|
|
|
7,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2010
|
|
|
190,733
|
|
|
|
26,200
|
|
|
|
60,967
|
|
|
|
26,500
|
|
|
|
31,800
|
|
11/6/2010
|
|
|
83,333
|
|
|
|
7,233
|
|
|
|
20,733
|
|
|
|
11,533
|
|
|
|
13,366
|
|
11/10/2010
|
|
|
65,867
|
|
|
|
15,734
|
|
|
|
24,234
|
|
|
|
10,834
|
|
|
|
10,834
|
|
3/1/2011
|
|
|
|
|
|
|
22,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/12/2011
|
|
|
|
|
|
|
7,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2011
|
|
|
190,733
|
|
|
|
26,200
|
|
|
|
60,966
|
|
|
|
26,500
|
|
|
|
31,800
|
|
11/10/2011
|
|
|
65,866
|
|
|
|
15,733
|
|
|
|
24,233
|
|
|
|
10,833
|
|
|
|
10,833
|
|
3/1/2012
|
|
|
|
|
|
|
22,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2012
|
|
|
65,867
|
|
|
|
15,733
|
|
|
|
24,233
|
|
|
|
10,833
|
|
|
|
10,833
|
|
|
|
|
(2) |
|
The table below shows the vesting dates for the respective
restricted stock shares and units listed in the above
Outstanding Equity Awards Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Date
|
|
Mr. Hackett
|
|
|
Mr. Gwin
|
|
|
Mr. Walker
|
|
|
Mr. Meloy
|
|
|
Mr. Daniels
|
|
|
1/10/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,100
|
|
1/16/2010
|
|
|
|
|
|
|
4,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
|
|
|
9,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2010
|
|
|
29,767
|
|
|
|
7,134
|
|
|
|
10,967
|
|
|
|
4,330
|
|
|
|
4,330
|
|
12/1/2010
|
|
|
31,000
|
|
|
|
4,267
|
|
|
|
9,933
|
|
|
|
4,333
|
|
|
|
5,167
|
|
12/3/2010
|
|
|
27,466
|
|
|
|
2,400
|
|
|
|
6,866
|
|
|
|
3,833
|
|
|
|
4,433
|
|
3/1/2011
|
|
|
|
|
|
|
9,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2011
|
|
|
29,766
|
|
|
|
7,133
|
|
|
|
10,966
|
|
|
|
4,330
|
|
|
|
4,330
|
|
12/1/2011
|
|
|
31,000
|
|
|
|
4,266
|
|
|
|
9,933
|
|
|
|
4,333
|
|
|
|
5,166
|
|
3/1/2012
|
|
|
|
|
|
|
9,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2012
|
|
|
29,767
|
|
|
|
7,133
|
|
|
|
10,967
|
|
|
|
34,640
|
|
|
|
34,640
|
|
|
|
|
(3) |
|
The table below shows the performance periods for the respective
performance units listed in the above Outstanding Equity Awards
Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Period
|
|
Mr. Hackett
|
|
|
Mr. Gwin
|
|
|
Mr. Walker
|
|
|
Mr. Meloy
|
|
|
Mr. Daniels
|
|
|
1/1/2008 to 12/31/2009
|
|
|
134,234
|
|
|
|
10,045
|
|
|
|
34,307
|
|
|
|
17,630
|
|
|
|
24,708
|
|
1/1/2008 to 12/31/2010
|
|
|
43,750
|
|
|
|
3,800
|
|
|
|
10,900
|
|
|
|
6,100
|
|
|
|
7,050
|
|
1/1/2009 to 12/31/2010
|
|
|
70,300
|
|
|
|
9,650
|
|
|
|
22,500
|
|
|
|
9,800
|
|
|
|
11,750
|
|
1/1/2009 to 12/31/2011
|
|
|
70,300
|
|
|
|
9,650
|
|
|
|
22,500
|
|
|
|
9,800
|
|
|
|
11,750
|
|
1/1/2010 to 12/31/2011
|
|
|
44,400
|
|
|
|
10,600
|
|
|
|
16,350
|
|
|
|
14,200
|
|
|
|
14,200
|
|
1/1/2010 to 12/31/2012
|
|
|
44,400
|
|
|
|
10,600
|
|
|
|
16,350
|
|
|
|
14,200
|
|
|
|
14,200
|
|
|
|
|
(4) |
|
These values represent the number of performance units earned
for the performance period ending December 31, 2009. The
Companys TSR performance ranked third relative to the
defined peer group, which resulted in a 164% payout as a percent
of target. Payments of these awards were made in February 2010
after the Compensation Committees certification of the
performance results. These awards are discussed in further
detail beginning on page 39. |
|
(5) |
|
This award represents a grant of unit appreciation rights under
the Western Gas Holdings, LLC Amended and Restated Equity
Incentive Plan. The unexercisable unit appreciation rights vest
as follows: 6,667 on April 2, 2010 and 6,666 on
April 2, 2011. For additional discussion of the unit
appreciation rights, please |
53
|
|
|
|
|
see Western Gas Holdings, LLC Amended and Restated Equity
Incentive Plan under Item 11 of Western Gas Partners,
LPs
Form 10-K
for the year ended December 31, 2009. |
|
(6) |
|
This award represents a grant of unit value rights under the
Western Gas Holdings, LLC Amended and Restated Equity Incentive
Plan. The market value for this award is calculated based on the
maximum per unit value specified under the award agreement of
$50.00. The unit value rights vest as follows: 6,667 on
April 2, 2010 and 6,666 on April 2, 2011. For
additional discussion of the unit value rights, please see
Western Gas Holdings, LLC Amended and Restated Equity
Incentive Plan under Item 11 of Western Gas Partners,
LPs Form
10-K for the
year ended December 31, 2009. |
Option
Exercises and Stock Vested in 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
|
|
Number of Shares
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
Acquired on
|
|
Value Realized on
|
Name
|
|
Exercise (#)
|
|
Exercise ($)(1)
|
|
Vesting (#)(2)
|
|
Vesting ($)(1)
|
|
James T. Hackett(3)
|
|
|
250,000
|
|
|
|
10,113,125
|
|
|
|
77,967
|
|
|
|
4,728,508
|
|
Robert G. Gwin
|
|
|
0
|
|
|
|
0
|
|
|
|
12,883
|
|
|
|
684,178
|
|
R. A. Walker
|
|
|
0
|
|
|
|
0
|
|
|
|
33,067
|
|
|
|
1,939,992
|
|
Charles A. Meloy
|
|
|
0
|
|
|
|
0
|
|
|
|
12,100
|
|
|
|
733,361
|
|
Robert P. Daniels
|
|
|
0
|
|
|
|
0
|
|
|
|
15,633
|
|
|
|
905,714
|
|
|
|
|
(1) |
|
The value realized reflects the taxable value to the named
executive officer as of the date of the option exercise, vesting
of restricted stock or vesting of restricted stock units. 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 whether and when 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 2009. |
|
(3) |
|
Mr. Hackett exercised stock options scheduled to expire in
2010. |
Pension
Benefits for 2009
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 certain 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
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.
|
54
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 2009 that
may be considered in calculating benefits under the APC
Retirement Plan is $245,000 due to the annual IRC limitation.
Compensation in excess of $245,000 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.
Currently, Mr. Hackett is the only named executive officer
eligible for early retirement under the APC Retirement Plans.
Early retirement benefits are calculated using the formula
described above, however, the value is multiplied by an early
retirement factor as follows:
|
|
|
|
|
Age
|
|
Early Retirement Factor
|
|
62 and older
|
|
|
100
|
%
|
61
|
|
|
97
|
%
|
60
|
|
|
94
|
%
|
59
|
|
|
91
|
%
|
58
|
|
|
88
|
%
|
57
|
|
|
85
|
%
|
56
|
|
|
82
|
%
|
55
|
|
|
79
|
%
|
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
certain 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 2009 that
may be considered in calculating benefits under the KMG
Retirement Plan is $245,000 due to the annual IRC limitation.
Compensation in excess of $245,000 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
|
55
|
|
|
|
|
0.5% x (average compensation covered compensation) x
years of service prior to March 1, 1999 (limited to
35 years).
|
Part B:
|
|
|
|
|
1.667% x average compensation x years of service on or after
March 1, 1999 (limited to 30 years); plus
|
|
|
|
0.75% x average compensation x years of service on or after
March 1, 1999 in excess of 30 years; less
|
|
|
|
1% x primary social security benefit x years of service on or
after March 1, 1999 as of age 65 (limited to
30 years) x (years of service on or after March 1,
1999 divided by years of service on or after March 1, 1999
at age 65).
|
Covered compensation is the average (without indexing) of the
Social Security taxable wage base during the
35-year
period ending with the last day of the year in which an
individual reaches Social Security retirement age. Benefits are
calculated based on a normal retirement age of 65; however,
employees may receive a reduced benefit as early as age 52.
Employees may choose to receive their benefits under several
different forms provided under the KMG Retirement Plan.
Employees receive their benefits from the KMG Restoration Plan
in the form of a lump-sum payment.
Currently Mr. Meloy is eligible for early retirement under
the KMG Restoration Plan because of the additional years of age
and service credited to him under his retention agreement
described on page 47. Early retirement benefits under the
KMG Retirement Plans are calculated using the formula described
above, however, the value is multiplied by an early retirement
reduction factor as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Formula
|
|
Second Formula
|
|
|
Percentage of Normal
|
|
Percentage of Normal
|
|
|
Retirement Age Benefit Payable
|
|
Retirement Age Benefit Payable
|
Age Benefit
|
|
(Age Reductions for Benefits Earned
|
|
(Age Reductions for Benefits
|
Payments Start
|
|
Before March 1, 1999)
|
|
Earned On or After March 1, 1999)
|
|
|
Part A
|
|
Part B
|
|
|
|
65
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
64
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
63
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
62
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
61
|
|
|
100
|
%
|
|
|
95
|
%
|
|
|
100
|
%
|
60
|
|
|
100
|
%
|
|
|
90
|
%
|
|
|
100
|
%
|
59
|
|
|
95
|
%
|
|
|
85
|
%
|
|
|
95
|
%
|
58
|
|
|
90
|
%
|
|
|
80
|
%
|
|
|
90
|
%
|
57
|
|
|
85
|
%
|
|
|
75
|
%
|
|
|
85
|
%
|
56
|
|
|
80
|
%
|
|
|
67.5
|
%
|
|
|
80
|
%
|
55
|
|
|
75
|
%
|
|
|
60
|
%
|
|
|
75
|
%
|
54
|
|
|
70
|
%
|
|
|
55
|
%
|
|
|
70
|
%
|
53
|
|
|
65
|
%
|
|
|
50
|
%
|
|
|
65
|
%
|
52
|
|
|
60
|
%
|
|
|
45
|
%
|
|
|
60
|
%
|
The present values provided in the table below are based on the
pension benefits accrued through December 31, 2009,
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, 2009 is 5.5% for the APC Retirement Plan, 5.0%
for the APC Retirement Restoration Plan and KMG Retirement Plan,
and 4.75% for the KMG Restoration Plan, 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 set at 100 basis
56
points less than the discount rate for all Plans except for the
KMG Restoration Plan, which is set at 120 basis points less
than the discount rate.
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present Value of
|
|
Payments
|
|
|
|
|
Years of
|
|
Accumulated
|
|
During
|
|
|
|
|
Credited Service
|
|
Benefit
|
|
2009
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
($)
|
|
James T. Hackett(1)
|
|
APC Retirement Plan
|
|
|
6.000
|
|
|
|
221,813
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
12.000
|
|
|
|
9,192,849
|
|
|
|
0
|
|
Robert G. Gwin
|
|
APC Retirement Plan
|
|
|
4.000
|
|
|
|
88,657
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
4.000
|
|
|
|
274,736
|
|
|
|
0
|
|
R. A. Walker(2)
|
|
APC Retirement Plan
|
|
|
4.000
|
|
|
|
125,012
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
12.000
|
|
|
|
2,586,468
|
|
|
|
0
|
|
Charles A. Meloy(3)
|
|
KMG Retirement Plan
|
|
|
27.583
|
|
|
|
974,682
|
|
|
|
0
|
|
|
|
KMG Restoration Plan
|
|
|
32.583
|
|
|
|
9,445,524
|
|
|
|
0
|
|
Robert P. Daniels
|
|
APC Retirement Plan
|
|
|
24.000
|
|
|
|
674,718
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
24.000
|
|
|
|
3,563,784
|
|
|
|
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 2009 Agreement, which
was originally effective as of December 2003 and reflected
future retirement benefits forfeited with his prior employer.
Mr. Hackett vested in these additional pension service
credits on December 3, 2008. |
|
(2) |
|
Mr. Walker will be provided additional pension service
credits under the APC Retirement Restoration Plan if he remains
employed until age 55. These additional pension service
credits were provided in November 2007 to recognize that he was
a mid-career hire that we would like to retain for the remainder
of his career. Providing him additional service credits
recognizes a portion of his 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, 2009. However, as of
December 31, 2009, Mr. Walker has 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, 2009 excluding the effect of the
additional pension service credit is $770,822, for a total
pension value of $895,834. |
|
(3) |
|
The value of Mr. Meloys KMG Retirement Restoration
Plan benefit includes the effect of the additional pension
service credit provided under his retention agreement, which was
entered into in August 2006. Mr. Meloy vested in these
additional pension service credits on August 10, 2009. The
additional pension service credit was included in his retention
agreement to compensate him for certain severance benefits he
was otherwise entitled to receive under the
change-of-control
agreement he had with Kerr-McGee. |
57
Non-Qualified
Deferred Compensation for 2009
The Company maintains a Deferred Compensation Plan for certain
employees, including the named executive officers. Under this
Plan, certain employees may voluntarily defer receipt of up to
75% of their salary
and/or up to
100% of their AIP payments, and 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.
Beginning in 2007, executive officers were given the opportunity
to make voluntary deferral elections for their annual restricted
stock unit and performance unit awards granted under the
Companys 1999 Stock Incentive Plan and Omnibus Plan. Any
earnings and/ or losses attributable to the deferred shares are
based on the performance of the Companys stock over the
deferral period. In general, deferred awards are distributed to
the participant upon termination or at a specific date as
elected by the participant. The Company does not subsidize or
match any deferrals of compensation into these plans. As of
December 31, 2009, there were no vested deferred awards for
the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Company
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate Balance
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings/Losses
|
|
Withdrawals/
|
|
at End of
|
|
|
2009
|
|
2009
|
|
in 2009
|
|
Distributions
|
|
2009
|
Name
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
James T. Hackett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
284,340
|
|
|
|
281,859
|
|
|
|
0
|
|
|
|
1,165,516
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
2008 Omnibus Incentive Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Robert G. Gwin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
54,757
|
|
|
|
28,420
|
|
|
|
0
|
|
|
|
119,469
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
2008 Omnibus Incentive Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
R. A. Walker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
97,244
|
|
|
|
61,026
|
|
|
|
0
|
|
|
|
273,934
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
2008 Omnibus Incentive Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Charles A. Meloy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
84,873
|
|
|
|
66,214
|
|
|
|
0
|
|
|
|
267,702
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
2008 Omnibus Incentive Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Company
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate Balance
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings/Losses
|
|
Withdrawals/
|
|
at End of
|
|
|
2009
|
|
2009
|
|
in 2009
|
|
Distributions
|
|
2009
|
Name
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
Robert P. Daniels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
366,203
|
|
|
|
0
|
|
|
|
413,957
|
|
|
|
0
|
|
|
|
1,264,921
|
|
Savings Restoration Plan
|
|
|
0
|
|
|
|
74,730
|
|
|
|
53,771
|
|
|
|
0
|
|
|
|
388,977
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
2008 Omnibus Incentive Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(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 2009. |
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, 2009 termination date, and, where
applicable, using the closing price of our common stock of
$62.42 (as reported on the NYSE as of December 31, 2009).
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
|
59
|
|
|
|
|
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;
|
|
|
|
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.
60
Additional details of the post-termination arrangements can be
found in the Compensation Discussion and Analysis beginning on
page 44.
Involuntary
For Cause or Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
Retirement Restoration Plan Benefits(1)
|
|
$
|
11,390,258
|
|
|
$
|
229,886
|
|
|
$
|
621,308
|
|
|
$
|
13,236,180
|
|
|
$
|
2,903,252
|
|
Non-qualified Deferred Compensation(2)
|
|
$
|
1,165,516
|
|
|
$
|
119,469
|
|
|
$
|
273,934
|
|
|
$
|
267,702
|
|
|
$
|
1,653,898
|
|
Health and Welfare Benefits(3)
|
|
$
|
116,224
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Total
|
|
$
|
12,671,998
|
|
|
$
|
349,355
|
|
|
$
|
895,242
|
|
|
$
|
13,503,882
|
|
|
$
|
4,557,150
|
|
|
|
|
(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. |
|
(3) |
|
Mr. Hacketts value represents the lump-sum value of
subsidized retiree medical benefits. |
Involuntary
Not For Cause Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
Cash Severance(1)
|
|
$
|
10,815,750
|
|
|
$
|
1,917,500
|
|
|
$
|
2,100,000
|
|
|
$
|
1,696,250
|
|
|
$
|
1,696,250
|
|
Pro-rata AIP Bonus for 2009(2)
|
|
$
|
3,749,460
|
|
|
$
|
995,015
|
|
|
$
|
1,260,754
|
|
|
$
|
1,005,100
|
|
|
$
|
1,005,100
|
|
Accelerated Equity Compensation(3)
|
|
$
|
39,365,644
|
|
|
$
|
11,530,497
|
|
|
$
|
12,811,730
|
|
|
$
|
8,333,025
|
|
|
$
|
9,201,768
|
|
Retirement Restoration Plan Benefits(4)
|
|
$
|
17,233,852
|
|
|
$
|
424,757
|
|
|
$
|
1,062,980
|
|
|
$
|
15,743,813
|
|
|
$
|
5,046,279
|
|
Non-qualified Deferred Compensation(5)
|
|
$
|
1,165,516
|
|
|
$
|
119,469
|
|
|
$
|
273,934
|
|
|
$
|
267,702
|
|
|
$
|
1,653,898
|
|
Health and Welfare Benefits(6)
|
|
$
|
195,733
|
|
|
$
|
46,841
|
|
|
$
|
68,702
|
|
|
$
|
60,555
|
|
|
$
|
327,897
|
|
Financial Counseling(7)
|
|
$
|
|
|
|
$
|
25,888
|
|
|
$
|
25,888
|
|
|
$
|
25,888
|
|
|
$
|
25,888
|
|
Total
|
|
$
|
72,525,955
|
|
|
$
|
15,059,967
|
|
|
$
|
17,603,988
|
|
|
$
|
27,132,333
|
|
|
$
|
18,957,080
|
|
|
|
|
(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) |
|
Payment, if provided, will be paid at the end of the performance
period based on actual performance. The values in the table are
based on the actual bonuses awarded under the Companys
2009 AIP as discussed on page 37. |
|
(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, 2009. In the event of an
involuntary termination, performance units would be paid out
after the end of the applicable performance periods based on
actual performance. Mr. Gwins value includes his
unvested unit value rights and unit appreciation rights under
the Western Gas Holdings, LLC Amended and Restated Equity
Incentive Plan. The value of his unvested unit value rights is
calculated based on the maximum per unit value specified under
the award agreement of $50.00. The value of his unvested unit
appreciation rights is based on the per unit value effective on
December 31, 2009 of $67.00. |
|
(4) |
|
For all named executive officers except for Mr. Hackett,
who is already eligible for early retirement, 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 |
61
|
|
|
|
|
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 FASB ASC Topic 715, Compensation
Retirement Benefits. Mr. Daniels 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. Daniels. |
|
(7) |
|
Values assume financial counseling services continue for two
years after termination. Mr. Hackett does not currently use
this Company-provided service and therefore benefits are not
assumed to be extended to him after termination. |
Change-of-Control:
Involuntary Termination or Voluntary For Good
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
Cash Severance(1)
|
|
$
|
10,815,750
|
|
|
$
|
3,591,325
|
|
|
$
|
5,335,130
|
|
|
$
|
4,322,473
|
|
|
$
|
4,322,473
|
|
Pro-rata AIP Bonus for 2009(2)
|
|
$
|
2,037,750
|
|
|
$
|
588,388
|
|
|
$
|
1,139,700
|
|
|
$
|
915,508
|
|
|
$
|
915,508
|
|
Accelerated Equity Compensation(3)
|
|
$
|
39,365,644
|
|
|
$
|
11,530,497
|
|
|
$
|
12,811,730
|
|
|
$
|
8,333,025
|
|
|
$
|
9,201,768
|
|
Retirement Restoration Plan Benefits(4)
|
|
$
|
18,672,288
|
|
|
$
|
1,282,390
|
|
|
$
|
4,331,669
|
|
|
$
|
15,743,813
|
|
|
$
|
6,675,723
|
|
Non-qualified Deferred Compensation(5)
|
|
$
|
2,062,634
|
|
|
$
|
342,379
|
|
|
$
|
605,080
|
|
|
$
|
535,993
|
|
|
$
|
1,922,189
|
|
Health and Welfare Benefits(6)
|
|
$
|
273,318
|
|
|
$
|
70,690
|
|
|
$
|
174,482
|
|
|
$
|
91,767
|
|
|
$
|
360,063
|
|
Outplacement Assistance
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
Financial Counseling(7)
|
|
$
|
|
|
|
$
|
39,613
|
|
|
$
|
39,613
|
|
|
$
|
39,613
|
|
|
$
|
39,613
|
|
Excise Tax and
Gross-up(8)
|
|
$
|
14,355,043
|
|
|
$
|
4,061,380
|
|
|
$
|
7,260,161
|
|
|
$
|
4,872,239
|
|
|
$
|
5,351,862
|
|
Total
|
|
$
|
87,612,427
|
|
|
$
|
21,536,662
|
|
|
$
|
31,727,565
|
|
|
$
|
34,884,431
|
|
|
$
|
28,819,199
|
|
|
|
|
(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, 2009; 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, 2009.
Mr. Gwins value includes his unvested unit value
rights and unit appreciation rights under the Western Gas
Holdings, LLC Amended and Restated Equity Incentive Plan. The
value of his unvested unit value rights is calculated based on
the maximum per unit value specified under the award agreement
of $50.00. The value of his unvested unit appreciation rights is
based on the per unit value effective on December 31, 2009
of $67.00. |
|
(4) |
|
For all named executive officers, except for Mr. Hackett,
who is already eligible for early retirement, 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, |
62
|
|
|
|
|
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 and Walkers values
also include the lump-sum value of subsidized retiree medical
benefits. All amounts are present values determined in
accordance with FASB ASC Topic 715, Compensation
Retirement Benefits. Mr. Daniels 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. Daniels. |
|
(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 IRC
Section 4999. |
Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
Cash Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Pro-rata AIP Bonus for 2009(1)
|
|
$
|
2,037,750
|
|
|
$
|
540,769
|
|
|
$
|
685,192
|
|
|
$
|
546,250
|
|
|
$
|
546,250
|
|
Accelerated Equity Compensation(2)
|
|
$
|
39,365,644
|
|
|
$
|
11,530,497
|
|
|
$
|
12,811,730
|
|
|
$
|
8,333,025
|
|
|
$
|
9,201,768
|
|
Retirement Restoration Plan Benefits(3)
|
|
$
|
11,390,258
|
|
|
$
|
229,886
|
|
|
$
|
621,308
|
|
|
$
|
13,236,180
|
|
|
$
|
2,903,252
|
|
Non-qualified Deferred Compensation(4)
|
|
$
|
1,165,516
|
|
|
$
|
119,469
|
|
|
$
|
273,934
|
|
|
$
|
267,702
|
|
|
$
|
1,653,898
|
|
Health and Welfare Benefits(5)
|
|
$
|
1,340,312
|
|
|
$
|
403,060
|
|
|
$
|
403,480
|
|
|
$
|
351,239
|
|
|
$
|
345,138
|
|
Total
|
|
$
|
55,299,480
|
|
|
$
|
12,823,681
|
|
|
$
|
14,795,644
|
|
|
$
|
22,734,396
|
|
|
$
|
14,650,306
|
|
|
|
|
(1) |
|
Represents payment of a pro-rata target AIP bonus based on
target bonus percentages effective for the 2009 AIP and eligible
earnings as of December 31, 2009. |
|
(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, 2009.
Mr. Gwins value includes his unvested unit value
rights and unit appreciation rights under the Western Gas
Holdings, LLC Amended and Restated Equity Incentive Plan. The
value of his unvested unit value rights is calculated based on
the maximum per unit value specified under the award agreement
of $50.00. The value of his unvested unit appreciation rights is
based on the per unit value effective on December 31, 2009
of $67.00. |
|
(3) |
|
Reflects the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits. |
|
(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 FASB
ASC Topic 715, Compensation Retirement Benefits.
Mr. Hacketts value also includes the lump-sum value
of subsidized retiree medical benefits. |
63
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
Cash Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Pro-rata AIP Bonus for 2009(1)
|
|
$
|
2,037,750
|
|
|
$
|
540,769
|
|
|
$
|
685,192
|
|
|
$
|
546,250
|
|
|
$
|
546,250
|
|
Accelerated Equity Compensation(2)
|
|
$
|
39,365,644
|
|
|
$
|
11,530,497
|
|
|
$
|
12,811,730
|
|
|
$
|
8,333,025
|
|
|
$
|
9,201,768
|
|
Retirement Restoration Plan Benefits(3)
|
|
$
|
11,390,258
|
|
|
$
|
229,886
|
|
|
$
|
621,308
|
|
|
$
|
13,236,180
|
|
|
$
|
2,903,252
|
|
Non-qualified Deferred Compensation(4)
|
|
$
|
1,165,516
|
|
|
$
|
119,469
|
|
|
$
|
273,934
|
|
|
$
|
267,702
|
|
|
$
|
1,653,898
|
|
Life Insurance Proceeds(5)
|
|
$
|
7,622,125
|
|
|
$
|
2,045,633
|
|
|
$
|
2,202,990
|
|
|
$
|
1,809,599
|
|
|
$
|
1,809,599
|
|
Total
|
|
$
|
61,581,293
|
|
|
$
|
14,466,254
|
|
|
$
|
16,595,154
|
|
|
$
|
24,192,756
|
|
|
$
|
16,114,767
|
|
|
|
|
(1) |
|
Represents payment of a pro-rata target AIP bonus based on
target bonus percentages effective for the 2009 AIP and eligible
earnings as of December 31, 2009. |
|
(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, 2009.
Mr. Gwins value includes his unvested unit value
rights and unit appreciation rights under the Western Gas
Holdings, LLC Amended and Restated Equity Incentive Plan. The
value of his unvested unit value rights is calculated based on
the maximum per unit value specified under the award agreement
of $50.00. The value of his unvested unit appreciation rights is
based on the per unit value effective on December 31, 2009
of $67.00. |
|
(3) |
|
Includes the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits. |
|
(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 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. |
64
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 written 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
meetings.
In addition to those matters described above, the Nominating and
Corporate Governance Committee has approved in advance the
following categories of related-person transactions: the rates
and terms involved in such transactions where the Companys
standard rates and terms for such transactions apply, the hiring
of a related person (including immediate family members) as an
employee of the Company (but not an officer), provided that
total compensation (meaning base salary, annual incentive bonus
and other amounts to be reported on a
W-2) does
not exceed $120,000.
Mr. Butlers,
son-in-law,
Scott Prince, is a non-executive employee of the Company in the
Supply Chain Management department and has worked for the
Company since 2001. Mr. Princes total
W-2
compensation for 2009 was greater than $120,000 but less than
$300,000. The Nominating and Corporate Governance Committee has
reviewed and approved this transaction in accordance with the
Companys policy on transactions with related persons.
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. In connection with prior service as an
executive of Anadarko, the Company also purchased supplemental
life insurance policies for Mr. Allison in 1998 and 2000.
|
|
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 2010. The Board, 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 2010. If
the stockholders do not ratify the appointment of KPMG LLP, the
Audit Committee will make the final determination of the
independent auditor for 2010.
65
INDEPENDENT
AUDITOR
KPMG LLP, an independent registered public accounting firm,
served as the Companys independent auditor during 2009.
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 2009
and 2008 and for other services provided by KPMG LLP.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
5,600,000
|
|
|
$
|
5,935,000
|
|
Audit-related Fees
|
|
|
1,369,000
|
|
|
|
1,759,000
|
|
Tax Fees
|
|
|
230,000
|
|
|
|
1,039,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,199,000
|
|
|
$
|
8,733,000
|
|
|
|
|
|
|
|
|
|
|
Audit fees are primarily for the audit of the Companys
consolidated financial statements included in the
Form 10-K,
including the audit of the effectiveness of the Companys
internal controls over financial reporting, and the reviews of
the Companys financial statements included in the
Forms 10-Q.
KPMG LLP also served as the independent auditor of Western Gas
Partners, LP (WES) and fees for the audit of WESs annual
consolidated financial statements for 2009 and 2008 were
$915,000 and $640,000, respectively, which are not included in
the table above.
Audit-related fees are primarily for the audits of the
Companys benefit plans, other audits, consents, comfort
letters and certain financial accounting consultation. For 2008,
approximately $679,000 of the audit-related fees reflected above
are associated with the formation and audit of WES and its
predecessor prior to its initial public offering in 2008.
Audit-related fees related to WES for 2009 and 2008 were
$289,000 and $270,000, respectively, which are not included in
the table above.
Tax fees are primarily for tax planning compliance and services
including approximately $93,000 and $551,000 in 2009 and 2008,
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 2009, 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.
66
ITEM 3
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 Fire Department Pension Fund and the New York
City Board of Education Retirement System, 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
or expression 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.
Board
of Directors Statement Regarding Proposal
The board
of directors recommends a vote AGAINST the above
stockholder proposal for the following reasons:
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
67
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/Corp%20Gov/codeethics_web.html.
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.
ITEM 4
IF PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER PROPOSAL
REGARDING AN AMENDMENT TO THE COMPANYS BY-LAWS TO PROVIDE
FOR REIMBURSEMENT OF EXPENSES FOR DIRECTOR NOMINEES
AFSCME Employees Pension Plan, located at
1625 L Street, NW, Washington, DC
20036-5687,
telephone
(202) 775-8142,
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.
RESOLVED, that pursuant to section 109 of the Delaware
General Corporation Law and Article II, section 12.5
of the bylaws of Anadarko Petroleum, stockholders of Anadarko
Petroleum hereby amend the Bylaws to add the following
Section 2.13 to Article II:
The board of directors shall, consistent with its
fiduciary duties, cause the corporation to reimburse a
stockholder or group of stockholders (together, the
Nominator) for reasonable expenses
(Expenses) incurred in connection with nominating
one or more candidates in a contested election of directors to
the corporations board of directors, including, without
limitation, printing, mailing, legal, solicitation, travel,
advertising and public relations expenses, so long as
(a) the election of fewer than 50% of the directors to be
elected is contested in the election, (b) one or more
candidates nominated by the Nominator are elected to the
corporations board of directors, (c) stockholders are
not permitted to cumulate their votes for directors, and
(d) the election occurred, and the Expenses were incurred,
after this bylaws adoption. The amount paid to a Nominator
under this bylaw in respect of a contested election shall not
exceed the amount expended by the corporation in connection with
such election.
SUPPORTING
STATEMENT
In our opinion, the power of stockholders to elect directors is
the most important mechanism for ensuring that corporations are
managed in stockholders interests. Some corporate law
scholars posit that this power is supposed to act as a safety
valve that justifies giving the board substantial discretion to
manage the corporations business and affairs.
The safety valve is ineffective, however, unless there is a
meaningful threat of director replacement. We do not believe
such a threat currently exists at most U.S. public
companies. Harvard Law School professor Lucian Bebchuk has
estimated that there were only about 80 contested elections at
U.S. public companies from 1996 through 2002 that did not
seek to change control of the corporation.
The unavailability of reimbursement for director election
campaign expenses for so-called short
slates slates of director candidates that
would not comprise a majority of the board, if
elected contributes to the scarcity of such
contests. (Because the board approves payment of such expenses,
as a practical matter they are reimbursed only when a majority
of directors have been elected in a contest.) The proposed bylaw
would provide reimbursement for reasonable expenses incurred in
successful short slate efforts -- but not contests
aimed at changing control by ousting a majority or more of the
board with success defined as the election of at
least one member of the short slate.
68
The bylaw would also cap reimbursable expenses at the amount
expended by the company on the contested election. We believe
that the amount spent by a dissident stockholder or group will
rarely exceed the amount spent by the company, but the cap
ensures that the availability of reimbursement does not create
an incentive for wasteful spending.
We urge stockholders to vote for this proposal.
Board
of Directors Statement Regarding Proposal
The board
of directors recommends a vote AGAINST the above
stockholder proposal for the following reasons:
Currently, the Board may cause the Company to reimburse a
stockholder or group of stockholders for reasonable expenses
incurred in connection with a candidate successfully being
elected to serve on the Board. The Board owes the stockholders a
fiduciary duty to act in good faith and with a duty of care with
respect to any action or decision they discharge. The use of the
word shall in the Proposal could frustrate the
Boards ability to exercise some of its fiduciary duties if
it was required to compel the Company to reimburse certain
expenses even if the Board did not feel that the
candidates election was in the best interest of the
Companys stockholders. The chilling effect of potentially
forcing directors to compromise the fiduciary duties imposed on
them by the Delaware General Corporation Law could result in a
desire of currently qualified directors to resign
and/or
future difficulty in attracting or retaining qualified
candidates.
The Board has defined procedures related to stockholder
participation in the selection of director nominees which can be
found beginning on page 18 of this proxy statement. This
process gives stockholders an opportunity to recommend director
candidates to the Board and have their qualifications properly
reviewed by the Nominating and Corporate Governance Committee.
However, candidates nominated by individual stockholders are not
bound by the same fiduciary duties to the Company and its
stockholders and are not subject to the director qualification
standards described in the relevant sections of this proxy
statement. The Board believes that individual stockholders may
desire to pursue their own personal interests, which may not be
in the Companys or its stockholders best interests.
Adopting the Proposal will require the Company to fund a proxy
contest of opposition candidates, regardless of whether those
candidates are qualified to serve as directors or whether those
candidates are committed to the long-term best interest of all
of the Companys stockholders. This could result in a
polarized Board and frustrate the Boards efforts to
effectively oversee the execution of the Companys
long-term strategy. The Board believes that this would not
represent good corporate governance and would do little to
further the Companys long-term interests.
The safety valve argument in the Proposal does not
take into account that the Companys directors are elected
based on a majority vote standard and that the
Company amended its restated certificate of incorporation in
2009 to declassify its Board. Beginning in 2012, each director
will stand for stockholder election or reelection every year and
must receive a majority of the votes cast to be elected. The
effect of this change means that each director will face a
meaningful threat of replacement every year.
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: March 26, 2010
The Woodlands, Texas
See
enclosed proxy card please vote
promptly
69
1201 LAKE ROBBINS DRIVE
THE WOODLANDS, TX 77380
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 Daylight Time the day before the
cut-off date or meeting date. Have your proxy card in
hand when you access the web site and follow the
instructions to obtain your records and to create an
electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
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 proxy materials electronically in future
years.
VOTE
BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 p.m. Eastern Daylight
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:
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M20655-P93035
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KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY |
ANADARKO PETROLEUM CORPORATION
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THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. |
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Vote on Directors |
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1.
|
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Election of Directors
|
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For
|
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Against
|
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Abstain
|
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Nominees: |
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1a. H. Paulett Eberhart
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o |
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o |
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o |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 3 AND 4.
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For
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Against
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Abstain
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1b. Preston M. Geren III
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o |
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3. Stockholder Proposal - Amendment to
Non-Discrimination
Policy.
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o |
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o |
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1c. James T. Hackett
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4. Stockholder Proposal - Amendment to By-Laws: Reimbursement
of Proxy Expenses.
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Vote on Proposals |
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The shares represented by this proxy, when properly executed, will
be voted in the manner directed herein by the undersigned stockholder(s). If no direction
is made, this proxy will be voted FOR items 1
and 2, and AGAINST items 3 and 4. If any other
matters come properly before the meeting, or if
cumulative voting is required, the person named in
this proxy will vote in their discretion. |
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2.
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Ratification of appointment of KPMG LLP as
independent auditors.
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o |
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o |
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o |
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For address changes and/or comments, please check this box and write
them on the back where indicated.
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o |
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Each signatory to this proxy acknowledges receipt from Anadarko
Petroleum Corporation, prior to execution of this proxy, of a notice
of Annual Meeting of Stockholders and a proxy statement dated
March 26,
2010. |
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Please indicate if you plan to attend this meeting.
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Yes
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No
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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.
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Signature
[PLEASE SIGN WITHIN BOX] |
Date
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Signature
(Joint Owners) |
Date |
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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
ê FOLD AND DETACH HERE ê
M20656-P93035
ANADARKO PETROLEUM CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
May 18, 2010
The undersigned hereby appoint(s) James T. Hackett, Robert G. Gwin 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 a.m., Central Daylight Time, on May 18, 2010, 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 WILL 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 AND IN THE PROXYHOLDERS DISCRETION ON ANY OTHER MATTER
PRESENTED AT THE MEETING OR ANY ADJOURNMENT THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)