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 25,
2011
TO OUR STOCKHOLDERS:
The 2011 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 17, 2011, 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 2010 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 17, 2011, at
8:00 a.m. (Central Daylight Time) to consider the following
proposals:
(1) elect seven directors;
(2) ratify the appointment of KPMG LLP as the
Companys independent auditor for 2011;
(3) an advisory vote on the Companys named executive
officer compensation;
(4) an advisory vote on the frequency of future advisory
votes on the Companys named executive officer compensation;
(5) if presented, vote on stockholder proposals set forth
on pages 73 through 80 in the accompanying proxy
statement; and
(6) transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
If you are a record holder of common stock at the close of
business on March 22, 2011, 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 25, 2011
The Woodlands, Texas
Important
Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be Held on May 17, 2011:
The Proxy Statement and Annual Report for 2010 are available
at
http://bnymellon.mobular.net/bnymellon/apc
TABLE OF
CONTENTS
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P. O. Box 1330
Houston, Texas
77251-1330
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 17, 2011
GENERAL
INFORMATION
We are furnishing you this proxy statement in connection with
the solicitation of proxies by our Board of Directors (Board) to
be voted at the 2011 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 17, 2011 at
8:00 a.m. (Central Daylight Time). The proxy materials,
including this proxy statement, proxy card or voting
instructions and our 2010 annual report are being distributed
and made available on or about April 1, 2011.
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 1, 2011. 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 held at The Woodlands Waterway
Marriott Hotel and Convention Center, 1601 Lake Robbins Drive,
The Woodlands, Texas, 77380, on Tuesday, May 17, 2011, 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 22, 2011, 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 503,145,133 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 cannot be used during 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 accordance 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 and how 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?
We are providing certain stockholders, including those who have
previously requested to receive paper copies of the proxy
materials, with paper copies of the proxy materials instead of a
Notice. If you would like to reduce the costs incurred by
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 seven directors;
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the ratification of KPMG LLP as our independent auditor for 2011;
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an advisory vote on our named executive officer (NEO)
compensation;
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an advisory vote on the frequency of future advisory votes on
our NEO compensation;
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if presented, the stockholder proposals set forth on
pages 73 through 80; 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 2011;
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FOR the approval, on an advisory basis, of our NEO
compensation;
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FOR the approval, on an advisory basis, of a triennial
advisory vote on our NEO compensation; and
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AGAINST the stockholder proposals, if presented.
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What is
the effect of an advisory vote?
Because your votes with respect to approval of our NEO
compensation and the frequency of future advisory votes on the
approval of our NEO compensation are advisory, they will not be
binding upon the Board. However, our Compensation and Benefits
Committee and the Board will take the outcomes of the votes into
account when considering future executive compensation
arrangements of our NEOs and when determining the frequency of
future advisory votes on the approval of NEO compensation that
the Board will adopt, respectively.
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.
(Eastern Daylight Time) on May 16, 2011.
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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. (Eastern Daylight Time) on
May 16, 2011.
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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 16, 2011.
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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.
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If I vote
by telephone or Internet and received a proxy card in the mail,
do I need to return my proxy card?
No.
If I vote
by mail, telephone or Internet, may I still attend the Annual
Meeting?
Yes.
Can I
change my vote?
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 the only 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, an advisory vote on our NEO
compensation, an advisory vote on the frequency of future
advisory votes on our NEO compensation 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 any of these non-routine matters without your specific
instructions.
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How many
votes are needed to approve each of the proposals or, with
respect to advisory votes, to be considered the recommendation
of the stockholders?
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.
Our NEO compensation will be considered approved by our
stockholders in an advisory manner upon 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
proposal. Broker non-votes are not counted as a vote cast either
for or against the proposal.
The frequency of future advisory votes on our NEO compensation
receiving the greatest number of votes (every three, two or one
years) will be considered the frequency recommended by
stockholders in an advisory manner. For this purpose,
abstentions and broker non-votes are not counted as a vote cast
for any of a three, two or one year frequency.
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 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. Additionally, we will
file an amended report on
Form 8-K
no later than 150 calendar days after the Annual Meeting, but in
no event later than October 4, 2011, disclosing the
frequency of future advisory votes on our NEO compensation
adopted by the Board. 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 of record 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
5
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 $8,500, plus
reasonable
out-of-pocket
expenses. Morrow ensures that brokers, custodians and nominees
will supply 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
2012 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
2012 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, 2011. 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, 2012 and no earlier than the close of business
on January 18, 2012.
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.
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 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 2011 Annual Meeting, the terms of six directors will
expire. Those six incumbent 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 2012. In addition,
General Chilton has been nominated for election at this Annual
Meeting, and if elected, will hold office until the expiration
of his one-year term in 2012. If General Chilton is elected, the
number of directors shall be increased from nine to ten.
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 the director 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
incumbent 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 six incumbent director
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. If General Chilton
does not receive a majority of the votes cast for his election,
he will not be elected to the Board.
As discussed in more detail on page 17 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 beginning on the next page contain information
regarding the persons experience and 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.
Nominees
for Director Nominated this Year by the Board of Directors for
Terms Expiring in 2012
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John R. Butler, Jr.
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Age: 72
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 the general partner of BreitBurn Energy Partners L.P.
(BreitBurn), a publicly traded upstream master limited
partnership, and was named Chairman of the Board of the general
partner of BreitBurn in April 2010. He also serves as a director
of the Houston chapter of the National Association of Corporate
Directors. Mr. Butler 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 current and previous 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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Kevin P. Chilton
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Age: 56
Colorado Springs, Colorado
Independent
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Biography/Qualifications
General Chilton retired as Commander of the United States Strategic Command, Offutt Air Force Base, Nebraska in February 2011, where he was responsible for the plans and operations for all U.S. forces conducting strategic deterrence and Department of Defense space and cyberspace operations. General Chilton served in the United States Air Force (USAF) for more than 34 years in a wide variety of assignments including pilot, test pilot, instructor and astronaut, while earning numerous major awards and decorations.
General Chiltons service as Deputy Program Manager of Operations, International Space Program and Director of Politico-Military Affairs, Asia-Pacific and Middle East, Joint Staff, the Pentagon, provides him with an invaluable blend of political, legislative, international and regulatory knowledge and experience. He also gained valuable managerial, financial and executive experience with his involvement in preparing the USAF five-year budget/program for several years.
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Luke R. Corbett
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Age: 64
Edmond, Oklahoma
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 (CEO) 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 Corp.
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 technical experience in the exploration and
production (E&P) industry. 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 Corp.
(1996 present)
Kerr-McGee Corporation (1999
2006)
Noble Corporation (2001 2009)
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H. Paulett Eberhart
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Age: 57
Philadelphia, Pennsylvania
Independent
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Biography/Qualifications
Ms. Eberhart was named the President and Chief Executive
Officer of CDI Corp., a corporation which provides engineering
and information technology outsourcing and professional staffing
services to its customers, in January 2011. From 2009 until
January 2011, Ms. Eberhart was Chairman and Chief Executive
Officer of HMS Ventures, a privately held business involved with
technology services and 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 CDI Corp. 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 numerous years of service as
an executive officer for both EDS and Invensys. 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)
Fluor Corporation (2010 2011)
CDI Corp. (2011 present)
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Preston M. Geren III
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Age: 59
Falls Church, Virginia
Independent
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Biography/Qualifications
Mr. Geren has served as Senior Adviser and President-Elect of the Sid W. Richardson Foundation since 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 2005 to November 2005. He joined the Department of Defense in September 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. Geren has been a director of the Company since October 2009.
Mr. Gerens several years of service as a member of the U.S. Congress and various positions within the Department of Defense, such as Secretary of the Army, have enabled Mr. Geren to bring to the Board a unique mix of executive, political, legislative, international and regulatory knowledge and experience. He also brings to the Board leadership experience attained through his previous service on the boards of other public companies and involvement with various civic and charitable organizations.
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John R. Gordon
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Age: 62
New York, New York
Independent
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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 Senior Managing Director 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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Public company directorships in the past five years
Deltec Asset Management LLC
(1988 present)
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James T. Hackett
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Age: 57
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 of the Company 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, Halliburton
Company and The Welch Foundation. 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 34 years of
financial, marketing and exploration and production engineering
experience in the industry. Additionally, as former 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
Temple-Inland, Inc.
(2000 2008)
Fluor Corporation (2001
present)
Halliburton Company (2008
present)
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Continuing
Directors with Terms Expiring in 2012
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Robert J. Allison, Jr.
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Age: 72
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: 63
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)
Devon Energy Corporation (2003
2007)
Cameron International Corporation (2005
present)
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Paula Rosput Reynolds
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Age: 54
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
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. Effective April 1, 2011, Ms. Reynolds will
become a director of BAE Systems plc. 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
Coca-Cola Enterprises Inc.
(2001 2007)
Delta Air Lines, Inc. (2004
present)
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),
and 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 will have
completely declassified our Board by the 2012 Annual Meeting of
Stockholders.
Each director that served on our Board during 2010 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 28
Board committee meetings in 2010. In addition, all of the
incumbent directors attended the 2010 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
stockholder 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, thereby
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 Stockholder/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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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 (i) executive sessions
of the non-employee directors, which are held in conjunction
with each regularly scheduled quarterly meeting of the Board,
(ii) executive sessions of the independent directors, which
are held at least once a year, and (iii) 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
The Boards role in the identification, assessment,
oversight and management of potential risks that could affect
the Companys ability to achieve its strategic, operational
and financial objectives consists of (i) reviewing and
discussing the Companys risk framework and risk management
policies, (ii) facilitating appropriate coordination among
the Boards committees with respect to oversight of risk
management by delegating oversight of significant financial and
compensation risks to the Audit Committee and Compensation
Committee, respectively, and (iii) periodically meeting
with members of management, including the Companys
internal standing Risk Council, to identify, review and assess
the major risk exposures and steps taken to monitor, mitigate,
report and respond to such exposures.
Board Committees. The Audit Committee is
responsible for oversight of the Companys significant
financial risk exposures and periodically reviews and discusses
with members of management those financial risk exposures and
the steps being taken to monitor and mitigate such exposures.
With the assistance of the Compensation Committees
independent executive compensation consultant, the Compensation
Committee is responsible for the oversight of the annual
internal risk assessment of the Companys compensation
programs.
Internal Risk Council. In order to facilitate
oversight of potential risk exposures to the Company that have
not been specifically delegated to any Board committee, the
Board periodically meets with members of the Companys
internal Risk Council to review and assess the Companys
risk-management process and to discuss significant risk
exposures. Members of management comprise the Companys
Risk Council and provide periodic reports to the CEO, the Audit
Committee and the full Board regarding the Companys risk
profile and risk management strategies. In addition, the
Companys internal audit function provides additional
perspective and insight regarding potential risks facing the
Company.
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 and the outcomes of such assessment. Based
on such review, the Compensation Committee believes that the
Companys compensation programs (i) do not motivate
our executives or our non-executive employees to take excessive
risks, (ii) are aligned with stockholders best
interests and (iii) are not reasonably likely to have a
material adverse effect on the Company. Anadarkos
compensation programs are designed to support and reward
appropriate risk taking and include the following:
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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 the Companys employees to focus on Anadarkos
sustained long-term performance.
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 2010:
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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
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2010
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AUDIT
H. Paulett Eberhart* John R. Butler, Jr.
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Discusses the integrity of the Companys accounting
policies, internal controls, financial reporting practices and
the financial statements with management, the independent
auditor and internal audit.
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Paula Rosput Reynolds
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Reviews and discusses with management significant financial risk
exposures, and the steps management has taken to monitor and
mitigate 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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Establishes and maintains procedures for the submission,
receipt, retention and treatment of complaints and concerns
received by the Company regarding accounting, internal controls
or auditing matters, including those complaints and concerns
received through the confidential anonymous Anadarko Hotline.
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Monitors compliance with legal and regulatory requirements and
the business practices and ethical standards of the Company.
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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 services.
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Oversees the work of the Companys independent reserve
engineering consultant, including meeting with the
Companys internal reserve engineers and the independent
reserve engineering consultant, and meets with the independent
reserve engineering consultant in executive session.
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Prepares the Audit Committee report, which is on page 26.
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None of these committee members serve on the audit committee of
more than two other public companies. |
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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. |
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* |
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Committee Chairperson. |
15
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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
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2010
|
COMPENSATION AND BENEFITS
Peter J. Fluor* Preston M. Geren III John R. Gordon
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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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9
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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 28.
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Annually reviews the Companys internal process for assessing the risk associated with the Companys compensation programs and the outcomes of such assessment.
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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 27.
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NOMINATING AND CORPORATE GOVERNANCE
Preston M. Geren III* John R. Butler, Jr. Luke R. Corbett** H. Paulett Eberhart Peter J. Fluor John R. Gordon Paula Rosput Reynolds
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Recommends nominees for director to the full Board and ensures
such nominees possess the director qualifications set forth in
the Companys Corporate Governance Guidelines.
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4
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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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Recommends members of the Board for committee membership.
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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 and oversees 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 confidential
anonymous Anadarko Hotline regarding significant non-financial
matters.
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* |
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Committee Chairperson. |
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** |
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Mr. Corbett was appointed to the Nominating and Corporate
Governance Committee in February 2011. |
16
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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
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2010
|
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.
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3
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Approves specific terms of financing or
other transactions that have previously been approved by the
Board.
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* |
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Committee Chairperson. |
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** |
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Serving in his capacity as Lead Director. |
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.
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 director nominees are
independent and have no material relationship with the Company
that could impair such nominees independence:
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John R. Butler, Jr.
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Peter J. Fluor
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Kevin P. Chilton
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Preston M. Geren III
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Luke R. Corbett
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John R. Gordon
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H. Paulett Eberhart
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Paula Rosput Reynolds
|
In addition, the Board has affirmatively determined that
(a) Mr. Hackett is not independent because he is the
CEO of the Company; and (b) 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
was a non-executive employee of the Company who worked for the
Company from 2001 to July 2010. The Board determined that this
does not impact Mr. Butlers independence.
For information regarding our policy on Transactions with
Related Persons, please see page 69 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 (or a subcommittee thereof)
(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
17
search for qualified nominees; (d) review the background,
character, experience and temperament of each potential nominee;
(e) conduct interviews, and, if appropriate recommend that
other members of the Board
and/or
management interview such potential nominee; and
(f) evaluate each potential nominee 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, perspective 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 the following:
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other Board service (both prior and current)
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exploration and production operations expertise
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current or former experience as CEO of a
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oil and gas service company expertise
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public company
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international business experience
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public company executive service (both
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government relations experience
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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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banking/finance expertise
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civic/charitable experience
|
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. Based upon the joint
recommendation of an incumbent non-employee director and the
Chairman of the Board, the Nominating and Corporate Governance
Committee considered one or more of the foregoing factors in its
(and the Boards) consideration and nomination of General
Chilton for election at the Annual Meeting.
Annual
Evaluations
The Board and each of the independent committees have conducted
self-evaluations related to their performance in 2010. 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-employee 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 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-
18
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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|
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|
|
the name and address of the stockholder and beneficial owner, if
any, as they appear on the Companys books;
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|
the class or series and number of shares of the Company which
are, directly or indirectly owned (including through a
partnership) beneficially and of record by the stockholder and
such beneficial owner and any derivative instrument directly or
indirectly owned beneficially by such stockholder;
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|
|
any proxy, contract, arrangement, understanding, or relationship
pursuant to which such stockholder has a right to vote any
shares of any security of the Company;
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
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
the following:
|
|
|
|
|
|
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;
|
|
|
|
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
|
|
|
|
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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|
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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.
|
19
Generally, 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 of
stockholders, not earlier than the close of business on the
120th day prior to, and no later than the close of business
on the 90th day prior to, such special meeting. For more
information on stockholder participation in the selection of
director nominees, please refer to that section in our Corporate
Governance Guidelines and our By-Laws, which are posted on the
Companys web site at
http://www.anadarko.com/About/Pages/Governance.aspx.
Directors
Continuing Education
The Companys Director Education Policy encourages all
members of the Board 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. None of our
executive officers currently serve, or in the past year have
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. Mr. Hackett
does not receive any compensation for his service as a director.
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
as its outside independent compensation consultant to assist in
the 2010 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 2010 and payable on a quarterly basis:
|
|
|
|
|
Type of Fee
|
|
Amount
|
|
|
Annual Board Retainer
|
|
$
|
50,000
|
|
Additional Annual Retainer to Chairperson of Audit Committee
|
|
$
|
25,000
|
|
Additional Annual Retainer to Chairperson of Compensation
Committee and of Nominating and Corporate Governance Committee
|
|
$
|
15,000
|
|
Additional Annual Retainer for Board Member Serving as Lead
Director
|
|
$
|
25,000
|
|
Additional Annual Retainer to Audit Committee Members
|
|
$
|
6,000
|
|
Additional Annual Retainer for Other Committee Members
|
|
$
|
3,000
|
|
Fee for each Board Meeting Attended (plus expenses related to
attendance)
|
|
$
|
2,000
|
|
Fee for each Board Committee Meeting Attended (plus expenses
related to attendance)
|
|
$
|
2,000
|
|
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 2010, each non-employee
director received an annual equity grant with a value targeted
at approximately $225,000, with 100% of the value delivered in
deferred shares. Directors may
20
elect to receive these shares on a specific date, but not
earlier than one year from the date of grant, or when they leave
the Board.
Non-employee directors may elect to receive their retainer and
meeting fees in cash, common stock, or deferred cash under the
Anadarko Deferred Compensation Plan 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
seven 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
election 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 Plan 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 leaving the Board or at
a specific date as elected by the participant. Mr. Fluor
and Ms. Reynolds are the only directors who elected to
defer compensation during 2010.
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
$5,000.
21
Director
Compensation Table for 2010
The following table sets forth information concerning total
director compensation earned during the 2010 fiscal year by each
non-employee director:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Non-qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
Fees Earned or
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
Paid in Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
($)(3)
|
|
($)
|
|
Robert J. Allison, Jr.(4)
|
|
|
72,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
301,076
|
|
John R. Butler, Jr.(5)
|
|
|
105,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
334,076
|
|
Luke R. Corbett
|
|
|
62,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
291,076
|
|
H. Paulett Eberhart
|
|
|
138,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
367,076
|
|
Peter J. Fluor(6)
|
|
|
119,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
348,076
|
|
Preston M. Geren III
|
|
|
117,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
346,076
|
|
John R. Gordon
|
|
|
129,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
358,076
|
|
Paula Rosput Reynolds(7)
|
|
|
107,000
|
|
|
|
225,021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,055
|
|
|
|
336,076
|
|
|
|
|
(1) |
|
The amounts included in this column represent the aggregate
grant date fair value of the awards made to non-employee
directors in 2010 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 13
Share-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, 2010. As of
December 31, 2010, each of the non-employee directors had
aggregate outstanding deferred shares as follows:
Mr. Allison 16,777 shares;
Mr. Butler 22,695 shares;
Mr. Corbett 11,677 shares;
Ms. Eberhart 15,677 shares;
Mr. Fluor 13,348 shares;
Mr. Geren 5,127 shares;
Mr. Gordon 28,453 shares; and
Ms. Reynolds 11,399 shares. |
|
(2) |
|
The non-employee directors did not receive any stock option
awards in 2010; however, as of December 31, 2010, each of
the non-employee directors had aggregate outstanding vested and
exercisable stock options as follows:
Mr. Allison 32,100 options;
Mr. Butler 42,100 options;
Mr. Corbett 27,100 options;
Ms. Eberhart 24,600 options;
Mr. Fluor 5,650 options;
Mr. Geren 13,900 options;
Mr. Gordon 62,100 options; and
Ms. Reynolds 5,650 options. |
|
(3) |
|
The amounts in this column include annual premiums paid by the
Company for each directors benefit in the amount of $155
and $1,400, respectively, for Accidental Death &
Dismemberment coverage and Personal Excess Liability coverage
and a $2,500 donation made on their behalf to a charity of their
choice. |
|
(4) |
|
Certain ongoing benefits provided to Mr. Allison, which are
not part of his compensation for service as a director of the
Company, are discussed on page 69. |
|
(5) |
|
Mr. Butler elected to receive half of his retainer and
meeting fees in cash and half in common stock. |
|
(6) |
|
Mr. Fluor deferred all of his retainer and meeting fees
into the Companys Deferred Compensation Plan. |
|
(7) |
|
Ms. Reynolds deferred half of her retainer and meeting fees
into the Companys Deferred Compensation Plan. |
22
The following table contains the grant date fair value of
deferred stock awards made to each non-employee director during
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
Value of Stock
|
|
|
Grant
|
|
Deferred
|
|
Awards
|
Directors
|
|
Date
|
|
Stock (#)
|
|
($)(1)
|
|
All Non-Employee Directors
|
|
|
May 18
|
|
|
|
3,877
|
|
|
|
225,021
|
|
|
|
|
(1) |
|
The amounts included in the Grant Date Fair Value of Stock
Awards column represent the grant date fair value of the
awards made to non-employee directors in 2010 computed in
accordance with FASB ASC Topic 718. The value ultimately
realized by a director upon the actual vesting of the award(s)
may or may not be equal to this determined value. For a
discussion of valuation assumptions, see
Note 13 Share-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, 2010. |
23
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information provided below summarizes the beneficial
ownership of our NEOs, each of our directors and director
nominees, all of our directors, director nominees and executive
officers 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,
Director Nominees and Executive Officers
The following table sets forth the number and percentage of
Anadarko common stock beneficially owned by our NEOs, each of
our directors and director nominees, and all of our executive
officers, directors and director nominees as a group as of
March 5, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
319,111
|
|
|
|
506,600
|
|
|
|
825,711
|
|
|
|
*
|
|
Robert G. Gwin
|
|
|
12,327
|
|
|
|
243,367
|
|
|
|
255,694
|
|
|
|
*
|
|
R. A. Walker
|
|
|
87,025
|
|
|
|
368,568
|
|
|
|
455,593
|
|
|
|
*
|
|
Charles A. Meloy
|
|
|
56,662
|
|
|
|
136,634
|
|
|
|
193,296
|
|
|
|
*
|
|
Robert P. Daniels(3)
|
|
|
36,159
|
|
|
|
66,595
|
|
|
|
102,754
|
|
|
|
*
|
|
Robert J. Allison, Jr.
|
|
|
286,025
|
|
|
|
32,100
|
|
|
|
318,125
|
|
|
|
*
|
|
John R. Butler, Jr.
|
|
|
82,002
|
|
|
|
37,100
|
|
|
|
119,102
|
|
|
|
*
|
|
Kevin P. Chilton
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
Luke R. Corbett
|
|
|
11,677
|
|
|
|
27,100
|
|
|
|
38,777
|
|
|
|
*
|
|
H. Paulett Eberhart
|
|
|
15,677
|
|
|
|
24,600
|
|
|
|
40,277
|
|
|
|
*
|
|
Peter J. Fluor
|
|
|
14,348
|
|
|
|
5,650
|
|
|
|
19,998
|
|
|
|
*
|
|
Preston M. Geren III
|
|
|
9,987
|
|
|
|
13,900
|
|
|
|
23,887
|
|
|
|
*
|
|
John R. Gordon
|
|
|
184,513
|
|
|
|
62,100
|
|
|
|
246,613
|
|
|
|
*
|
|
Paula Rosput Reynolds
|
|
|
14,999
|
|
|
|
5,650
|
|
|
|
20,649
|
|
|
|
*
|
|
All directors, director nominees and executive officers as a
group (16 persons)
|
|
|
1,236,679
|
|
|
|
1,808,440
|
|
|
|
3,045,119
|
|
|
|
*
|
|
|
|
|
* |
|
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 5, 2011. 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 Trust
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 |
24
|
|
|
|
|
stock: Mr. Hackett, 170,104; Mr. Gwin, 51,458;
Mr. Walker, 67,914; Mr. Meloy, 63,863; and
Mr. Daniels, 80,484. The terms associated with these awards
are described in more detail on page 39. |
|
(3) |
|
In December 2010, Mr. Daniels transferred
46,463 shares of Company common stock, employee stock
options to purchase 94,470 shares of Company common stock
and 4,681 employee restricted stock units of Company common
stock to his ex-wife pursuant to a divorce decree. Consequently,
Mr. Daniels does not report shares of Company common stock
or stock options that have been assigned to his ex-wife and in
which he has no beneficial interest. |
Certain
Beneficial Owners
The following table shows the beneficial owners of more than
five percent of the Companys common stock as of
December 31, 2010 based on information available as of
February 14, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
Percent of
|
Title of Class
|
|
Name and Address of Beneficial
Owner
|
|
Ownership
|
|
Class
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
BlackRock Inc.
40 East 52nd Street
New York, NY 10022
|
|
|
35,797,946
|
(1)
|
|
|
7.22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Wellington Management Company, LLP
280 Congress Street
Boston, MA 02210
|
|
|
27,552,569
|
(2)
|
|
|
5.56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
FMR LLC
82 Devonshire Street
Boston, MA 02109
|
|
|
27,253,435
|
(3)
|
|
|
5.49
|
%
|
|
|
|
(1) |
|
Based upon its Schedule 13G/A filed February 2, 2011,
with the SEC with respect to Company securities held as of
December 31, 2010, BlackRock Inc. has sole voting power as
to 35,797,946 shares of common stock and sole dispositive
power as to 35,797,946 shares of common stock. |
|
(2) |
|
Based upon its Schedule 13G filed February 14, 2011,
with the SEC with respect to Company securities held as of
December 31, 2010, Wellington Management Company, LLP has
shared voting power as to 12,983,409 shares of common stock
and shared dispositive power as to 27,552,569 shares of
common stock. |
|
(3) |
|
Based upon its Schedule 13G/A filed February 14, 2011,
with the SEC with respect to Company securities held as of
December 31, 2010, FMR LLC has sole voting power as to
5,094,400 shares of common stock and sole dispositive power
as to 27,253,435 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, 2010.
25
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
2010 and was appointed by the Audit Committee to serve in that
capacity for 2011 (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, 2010 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, 2010 filed with the SEC.
THE AUDIT COMMITTEE
H. Paulett Eberhart, Chairperson
John R. Butler, Jr.
Paula Rosput Reynolds
26
COMPENSATION
AND BENEFITS COMMITTEE REPORT
ON 2010 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
27
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis focuses on the
following:
|
|
|
|
|
how our executive compensation program aligns with our business
strategy, focuses on long-term value creation for our
stockholders and delivers competitive pay relative to our
performance;
|
|
|
|
the philosophy and principles on which our executive
compensation program is based;
|
|
|
|
our
pay-for-performance
approach, including the elements of our total executive
compensation program and the reasons why we have chosen each
element;
|
|
|
|
how we make compensation decisions and determine the amount of
each element of compensation; and
|
|
|
|
an analysis of the material compensation decisions made by the
Compensation Committee for 2010 performance.
|
Executive
Summary
Anadarko was able to achieve or to exceed each of its key
operational objectives for 2010 during a year that presented
unprecedented challenges for the Company, its employees and its
stakeholders. This performance, which continues to generate
competitive returns and advance our longer-term growth
objectives, was driven by several factors, including the
following:
|
|
|
|
|
an increase in sales volumes by approximately 7% over 2009,
which included a 13% increase in liquids, and represents
year-over-year
growth for the second consecutive year;
|
|
|
|
the addition of 359 million barrels of oil equivalent (BOE)
of proved reserves, including the effects of price revisions and
divestitures, which equates to replacing 153% of production;
|
|
|
|
continued offshore exploration and appraisal drilling success
with an approximate 75% success rate;
|
|
|
|
the achievement of first oil at the Jubilee field offshore Ghana
in a record 3.5 years following discovery;
|
|
|
|
a total stockholder return of 22% for 2010; and
|
|
|
|
strengthening of the Companys balance sheet by refinancing
$3.0 billion of its 2011 and 2012 scheduled maturities with
longer-term debt and replacing its $1.3 billion revolving
credit facility maturing in 2013 with a five-year
$5.0 billion senior secured revolving credit facility,
which enhanced the Companys liquidity.
|
Further, the Company achieved these results while spending
approximately $200 million less capital than originally
projected for the year. Anadarko was also recognized with
several awards during 2010 for these results as well as for its
focus on environmental stewardship, health and safety and
corporate citizenship, including the following:
|
|
|
|
|
2010 District Safe Award for Excellence (SAFE) from the Minerals
Management Service (now known as the Bureau of Ocean Energy,
Regulation and Enforcement);
|
|
|
|
Earth Day Award Utah Division of Oil, Gas and Mining;
|
|
|
|
Interstate Oil & Gas Compact Commission
Chairmans Stewardship Award;
|
|
|
|
Number 1 Large Company in the Houston
Chronicles 2010 survey of the best places to work in
Houston; and
|
|
|
|
Executive of the Year (Jim Hackett)
Oil & Gas Investor Magazine.
|
(A complete listing of all of the Companys awards and
recognitions can be found under the Corporate
Responsibility section of our website at
www.anadarko.com.)
28
All of the achievements set forth on the previous page reflect
the focused leadership of our executive team and the
capabilities and dedication of our employees and were made in
the midst of several challenges impacting the Company and the
energy industry, including the Deepwater Horizon events,
continued global and domestic economic uncertainty, low natural
gas prices and an uncertain political and regulatory environment.
As more fully described on the following pages, our executive
compensation program operated as designed for 2010, delivering
competitive pay relative to our performance. Under our Annual
Incentive Program, we achieved a performance score of 146% for
2010 due to our record sales volumes and growth, outstanding
exploration success, strategic capital allocation management,
successful cost inflation management, and commitment to the
health and safety of our employees for the year. The annual
bonus awarded to each of our NEOs reflects both the
Companys performance and their individual achievements.
Our long-term incentive program (to which the substantial
majority of our NEOs compensation is tied) is designed to
emphasize stock price performance and the creation of value
benefiting all of our stockholders. As a result of
Anadarkos relative stock performance ranking against
specified industry peer companies for the two-year and
three-year performance periods ending December 31, 2010,
our NEOs achieved above-target level payouts under the executive
performance unit award program.
During 2010, the Compensation Committee undertook a
comprehensive review and assessment of the various design
features of the Companys executive compensation and
benefits programs to confirm that such programs are
competitively structured, are aligned with our short and
long-term strategic goals and reflect a strong
pay-for-performance
orientation. Following the Deepwater Horizon events (Anadarko
owns a 25% non-operating leasehold interest in the Macondo
lease), the Compensation Committee considered various retention
challenges in addition to the Companys operational and
financial performance to ensure that the Company retained a
strong and focused executive leadership team. The compensation
actions taken with respect to 2010 reflect the Compensation
Committees adherence to its established executive
compensation philosophy and principles, and a strong
pay-for-performance
orientation.
Below are the key actions and decisions made regarding the
Companys executive compensation program review in 2010 and
early 2011, as approved by the Compensation Committee with
counsel from its independent compensation consultant:
|
|
|
|
|
held base salaries for Messrs. Hackett, Daniels and Meloy
at current levels (for the second year in a row) and increased
the base salaries for Messrs. Gwin and Walker for
competitive reasons;
|
|
|
|
reduced or maintained the value of the 2010 annual long-term
incentive awards for each of the NEOs relative to the value of
the annual long-term incentive awards made for 2009;
|
|
|
|
made performance-based incentive bonus awards to NEOs to
recognize both Company and individual performance for 2010 and,
beginning with the 2011 plan year, established maximum caps of
275% for each performance metric under the Annual Incentive
Program, (in addition to the existing overall program cap of
200%);
|
|
|
|
increased the stock ownership requirements for our CEO from five
times base salary to six times base salary and for our
non-employee directors from five times annual retainer to seven
times annual retainer;
|
|
|
|
reduced the level of executive severance benefits provided in
the event of an involuntary not for cause termination, outside
of a
change-of-control,
by eliminating: (1) the special retirement benefit
enhancement, except for in special cases as approved by the
Compensation Committee; and (2) the post-termination
financial planning benefits;
|
|
|
|
reduced the level of post-change-of-control severance benefits
for prospective senior executives by: (1) eliminating the
modified single trigger provision and replacing it with a double
trigger provision; (2) reducing the protection period from
three years to two years; (3) eliminating the excise tax
gross-up
provision and replacing it with a
best-of-net
approach; and (4) eliminating post-termination financial
planning benefits;
|
29
|
|
|
|
|
executed a special retention agreement with Mr. Meloy,
providing for his continued leadership of the Companys
worldwide operations, to ensure that the Company is able to
successfully execute on its business strategy in light of
ongoing regulatory challenges in the Gulf of Mexico; and
|
|
|
|
awarded Mr. Daniels a special restricted stock grant to
recognize his leadership for the Companys exceptional
exploration achievements in 2010.
|
As demonstrated during 2010, significant operational, regulatory
and legal challenges have required that our executive management
team remains disciplined and provides strong, focused
leadership. The tragic Deepwater Horizon events, and the
regulatory uncertainty that followed, created challenges for
many deepwater operators. The Companys reaction to these
unfortunate events demonstrated the depth and flexibility of our
portfolio, as we effectively reallocated capital, strengthened
our balance sheet and enhanced liquidity in a manner that
enabled us to exceed our corporate operating objectives for the
year. The Compensation Committee understands the continuing
challenges still facing the Company and our industry as a whole
and recognizes the role the Compensation Committee plays in
maintaining an executive management team capable of the
discipline and leadership necessary to guide the Company through
these challenges in the best manner for our stockholders. The
actions taken by the Compensation Committee for 2010 were
designed to ensure stability of our executive management team in
light of these challenges and to continue aligning a significant
portion of executive compensation to long-term stockholder value
by further emphasizing
pay-for-performance.
The Compensation Committee has adopted an executive compensation
philosophy and designed an executive compensation program that
positions a significant majority of each NEOs compensation
opportunity to be earned over the long-term (e.g., multi-year),
while at the same time avoiding the encouragement of unnecessary
or excessive risk-taking. The Compensation Committees
focus in 2011 will continue to ensure that the Companys
executive compensation program remains competitively positioned
to attract and retain talented leaders and provides appropriate
incentive and reasonable rewards relative to the contributions
made by our executives and the performance achieved for our
stockholders. The Company and the Compensation Committee
recognize the importance of our stockholders opportunity
to an advisory
say-on-pay
vote as a means of expressing views regarding the compensation
practices and programs for our NEOs. The Compensation Committee
believes that maintaining a consistent compensation
philosophy which reflects a significant focus on
long-term compensation in addition to a program that
may be adjusted, as appropriate, to address industry trends and
developments as well as evolving executive compensation
practices, will provide our stockholders the most value through
the alignment of their interests with a consistent, talented
executive team.
Our
Executive Compensation Philosophy and Guiding
Principles
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 long-term 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.
|
30
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;
|
|
|
|
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.
|
Paying
for Performance
We believe that long-term performance is the most important
measure of our success and we manage our operations and business
for the long-term benefit of our stockholders. Accordingly, our
executive compensation program is weighted toward variable, or
At-Risk, pay components with the heaviest emphasis
placed on incentives that are dependent upon longer-term
corporate performance and stock price appreciation. These
long-term incentives, designed to motivate and reward our
executive officers for maximizing long-term stockholder value,
include stock options, restricted stock units and performance
units and typically comprise more than 75% of each NEOs
annual total compensation.
Our executive compensation program includes both direct and
indirect compensation elements (which are outlined 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.
31
Direct
Compensation Elements
The level of each element of direct compensation (both
fixed and variable) 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 in the How We Make
Compensation Decisions section beginning on page 34.
|
|
|
|
|
Direct Compensation
Element
|
|
Primary Purposes
|
|
Fixed Pay
|
|
|
|
|
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 or At-Risk Pay (mix of annual and long-term
compensation opportunity)
|
Annual Incentive Program
|
|
|
|
Motivates and rewards executives for achieving annual Company
objectives aligned with value creation
|
|
|
|
|
Recognizes individual contributions to Company performance
|
|
|
Restricted Stock Units
|
|
|
|
Aligns the interests of executives with stockholders by
emphasizing long-term share ownership and stock appreciation
|
|
|
|
|
Provides a forfeitable ownership stake to encourage executive
retention
|
|
|
Stock Options
|
|
|
|
Aligns the interests of executives with 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 proportion of total direct compensation that each of the
fixed and At-Risk elements represent are illustrated in the
charts below and reflect the following: base salaries that
became effective November 2010, as discussed on page 36;
target bonus opportunities effective for 2011, as discussed on
page 37; and the estimated grant date value for the 2010
annual equity awards (excluding the value of any one-time
awards), as discussed on page 41.
|
|
|
|
|
|
Percent
of total direct compensation At-Risk: 91%
Percent of total direct compensation that is
Long-Term:
79%
|
|
Percent
of total direct compensation At-Risk: 88%
Percent of total direct compensation that is
Long-Term:
76%
|
These charts highlight the significant portion of total direct
compensation that is At-Risk and the Companys emphasis on
long-term equity-based incentives. Any value ultimately realized
for the long-term equity-based awards is directly tied to
Anadarkos absolute and relative stock price performance.
The actions taken by our Compensation Committee for 2010 and the
compensation earned by our NEOs in 2010 emphasize our focus on
and alignment with long-term performance.
32
This pay-for-performance alignment is further illustrated by the
graph below which compares the three-year cumulative total
return to our stockholders relative to the cumulative total
return of the industry peer group that we use for executive
compensation benchmarking as well as the S&P 500 Index. The
information contained in the graph below is furnished and not
filed, and is not incorporated by reference into any document
that incorporates this proxy statement by reference. The
companies included in the industry peer group are: Apache
Corporation; Chesapeake Energy Corporation; Chevron Corporation;
ConocoPhillips; Devon Energy Corporation; EOG Resources, Inc.;
Hess Corporation; Marathon Oil Corporation; Noble Energy, Inc.;
Occidental Petroleum Corporation; Pioneer Natural Resources
Company; and Plains Exploration & Production Company.
COMPARISON
OF 3 YEAR CUMULATIVE TOTAL RETURN
Among Anadarko Petroleum Corporation, the S&P 500 Index
and an Industry Peer Group
An investment of $100 (with reinvestment of all dividends) is
assumed to have been made in the Companys common stock, in
the S&P 500 Index and in the industry peer group on
December 31, 2007 and its relative performance is tracked
through December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended December 31
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
Anadarko Petroleum Corporation
|
|
$
|
100.00
|
|
|
$
|
59.08
|
|
|
$
|
96.41
|
|
|
$
|
118.37
|
|
S&P 500 Index
|
|
|
100.00
|
|
|
|
63.00
|
|
|
|
79.67
|
|
|
|
91.67
|
|
Industry Peer 50th Percentile
|
|
|
100.00
|
|
|
|
61.36
|
|
|
|
86.23
|
|
|
|
97.58
|
|
Industry Peer 75th Percentile
|
|
|
100.00
|
|
|
|
74.56
|
|
|
|
97.89
|
|
|
|
112.09
|
|
33
Indirect
Compensation Elements
In addition to direct compensation elements, the Company also
provides certain benefits and perquisites (considered
indirect compensation elements) that are considered
typical within our industry and necessary to attract and retain
executive talent. 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 executive 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
|
|
|
How We
Make Compensation Decisions
The Compensation Committee utilizes several different tools and
resources in reviewing elements of executive compensation and
making compensation decisions. These decisions, however, are not
purely formulaic and the Compensation Committee exercises
judgment and discretion in making them.
Compensation Consultant. The Compensation
Committee utilizes an independent executive compensation
consultant to review executive compensation and benefit
programs. Initially, in 2010, the Compensation Committee
directly retained Hewitt Associates LLC, or Hewitt, as its
outside independent compensation consultant. On October 1,
2010, the Compensation Committee then retained Meridian
Compensation Partners, LLC, or Meridian, as its outside
independent executive compensation consultant upon
Meridians separation from Hewitt. In these engagements,
the consultants reported directly and exclusively to the
Compensation Committee; however, at the Compensation
Committees direction, the consultants worked directly with
management to review or prepare materials for the Compensation
Committees consideration. The consultant engaged at the
time of the applicable meeting attended each of the nine
Compensation Committee meetings in 2010. The Compensation
Committee did not engage any consultant other than Hewitt or
Meridian during 2010 to provide executive compensation
consulting services. The Compensation Committees
engagement of its compensation consultant 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.
|
34
During 2010, 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. During 2010,
Meridian performed no services for us outside the scope of its
engagement with the Compensation Committee. As part of the
consultants engagement agreement with the Compensation
Committee, any significant new engagement between us and the
consultant is contingent upon notification to the Compensation
Committee. The Compensation Committee reviews the engagement of
its independent executive compensation consultant on an annual
basis, and as part of that process reviews a summary of all
services provided by the consultant 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, 2010:
|
|
|
|
|
|
|
2010
|
|
|
Executive Compensation Consulting Fees
|
|
$
|
339,445
|
|
Non-Executive Compensation Consulting Fees
|
|
|
689,901
|
|
|
|
|
|
|
Total
|
|
$
|
1,029,346
|
|
|
|
|
|
|
The non-executive compensation consulting fees include $660,798
in fees associated with the actuarial services for our United
Kingdom pension and insurance programs and $29,103 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 non-executive compensation
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 2010.
Benchmarking. During 2010, 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,
approved by the Compensation Committee, which are similar to us
in size, scope and nature of business operations. The
Compensation Committees consultant 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 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 2010 industry peer group consisted 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.
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 NEOs 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 its consultant,
determines each element of compensation for Mr. Hackett
and, with input from its consultant and Mr. Hackett,
determines each element of compensation for the other NEOs. At
the Compensation Committees
35
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. The Compensation Committee is under no
obligation to utilize these recommendations. Executive officers
and others may also attend Compensation Committee meetings when
invited to do so.
Tally Sheets. To enhance the analytical data
used by the Compensation Committee to evaluate our NEO
compensation and to provide the Compensation Committee a single
source for viewing the aggregate value of all material elements
of executive compensation, we have incorporated tally
sheets into the Compensation Committees annual
executive compensation review. 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 uses the information provided in the tally sheets to
gain additional perspective and as a reference in the
decision-making process.
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.
2010
Compensation Actions
The following is a discussion of each compensation element and
the specific actions taken by the Compensation Committee in 2010
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 NEOs. Material differences in the amount of compensation
awarded to each of the NEOs 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 higher than the compensation of
the other NEOs. This difference in compensation reflects that
our industry peer group benchmark data is substantially higher
for the CEO role than for the other NEO 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 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary as of
|
|
Salary Effective
|
|
|
Name
|
|
January 1, 2010
|
|
November 2010
|
|
Increase%
|
|
Mr. Hackett
|
|
$
|
1,567,500
|
|
|
$
|
1,567,500
|
|
|
|
0.0
|
%
|
Mr. Gwin
|
|
$
|
650,000
|
|
|
$
|
715,000
|
|
|
|
10.0
|
%
|
Mr. Walker
|
|
$
|
700,000
|
|
|
$
|
735,000
|
|
|
|
5.0
|
%
|
Mr. Meloy
|
|
$
|
575,000
|
|
|
$
|
575,000
|
|
|
|
0.0
|
%
|
Mr. Daniels
|
|
$
|
575,000
|
|
|
$
|
575,000
|
|
|
|
0.0
|
%
|
Messrs. Hackett, Meloy and Daniels did not receive
increases in their base salaries (which were last increased in
November 2008) due to the relative positioning of their
salaries against the industry peer group
36
benchmark comparisons. The base salaries for
Messrs. Hackett and Meloy are positioned at approximately
the 75th percentile of the industry peer group, and the base
salary for Mr. Daniels is above the 75th percentile. Each
of our peer companies structure its 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 this approach, we have chosen to
compensate Messrs. Meloy and Daniels at the same base
salary levels. We believe the salaries for Messrs. Meloy
and Daniels appropriately reflect more than 25 years of
experience that each executive has in the oil and gas industry
and the value we place on their technical knowledge and
leadership within the Company. Mr. Walker received a
five-percent base salary increase to recognize his expanded role
as President. This increase positions his salary between the
50th and 75th percentile of the industry peer group.
Mr. Gwin received a ten-percent increase to position his
salary at approximately the 75th percentile of the industry peer
group and to recognize his increasing contributions and valuable
leadership on the executive team.
Performance-Based
Annual Cash Incentives (Bonuses)
Our executive officers participate in the Annual Incentive
Program, or AIP, which is part of our 2008 Omnibus Incentive
Compensation Plan (Omnibus Plan) that was approved by our
stockholders in May 2008. In February 2010, the Compensation
Committee established a baseline AIP performance hurdle for the
NEOs of $2.0 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
NEOs earn no AIP bonuses for the year. If the performance hurdle
is met, the bonus pool is funded at the maximum bonus
opportunity level for each NEO. 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, but the
Compensation Committee does not have the discretion to increase
bonuses above funded amounts. The AIP bonus pool was fully
funded for the 2010 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. Messrs. Meloys and Daniels target
bonuses were established based on internal equity factors as
previously discussed under the Base Salary section, which
position their target opportunities above the
75th percentile of the benchmark data. Executive officers
may earn from 0% up to 200% of their individual bonus target.
The bonus targets for 2010 are shown in the table below. As part
of its annual review of executive compensation in 2010, the
Compensation Committee made no changes to the NEOs bonus
targets for 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
AIP Performance Score. In determining the
performance score under the Companys AIP for 2010, 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/BOE is calculated
as earnings before interest, taxes, depreciation, depletion,
amortization, impairments and exploration expenses divided by
sales volumes for the year. It excludes results from financial
instruments, gains/losses on sales of assets and other
income/expense items.
|
|
|
|
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
2010 (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 the 2010 target and the 2010 performance results
against the target for each measure under the AIP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative
|
|
|
|
AIP
|
|
AIP
|
|
|
Weighting
|
|
AIP Target
|
|
Performance
|
|
Performance
|
2010 AIP Performance
Goals
|
|
Factor
|
|
Performance
|
|
Results(1)
|
|
Score
|
|
Reserve Additions (before price revisions and divestitures),
MMBOE
|
|
|
25%
|
|
|
|
310
|
|
|
|
329
|
|
|
|
33%
|
|
Production Volumes, MMBOE
|
|
|
25%
|
|
|
|
231
|
|
|
|
235
|
|
|
|
35%
|
|
Capital Expenditures, $MM
|
|
|
20%
|
|
|
$
|
5,600
|
|
|
$
|
5,238
|
|
|
|
29%
|
|
EBITDAX/BOE, $
|
|
|
20%
|
|
|
$
|
25.88
|
|
|
$
|
28.43
|
|
|
|
25%
|
|
Total Recordable Incident Rate (Safety)
|
|
|
10%
|
|
|
|
0.70
|
|
|
|
0.69
|
|
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
133%
|
|
Cash Cost Management Factor(2)
|
|
|
£10%
Multiplier
|
|
|
$
|
9.30
|
|
|
$
|
8.40
|
|
|
|
x1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146%
|
|
|
|
|
(1) |
|
The Compensation Committee did not make any adjustments to any
of the measured 2010 AIP performance results or overall
calculated 2010 AIP performance score. |
|
(2) |
|
This factor is capped at a 10% multiplier and cannot cause the
total AIP performance score to exceed 200%. |
Individual Performance Adjustments. In
determining an NEOs bonus payment, the Compensation
Committee may make an adjustment based on individual
performance. This adjustment allows the
38
Compensation Committee to recognize an individuals
significant contributions that may not be reflected in the
overall AIP performance score.
In determining 2010 bonus awards for the NEOs, the Compensation
Committee considered the Companys overall performance
results for the year which included record sales volumes,
above-target reserve growth, industry-leading exploration
results and strong stock performance. The Compensation Committee
also considered the executive leadership that was exhibited to
achieve this performance in the midst of numerous challenges
impacting the Company and the energy industry, including the
Deepwater Horizon events, continued global and domestic economic
uncertainty, low natural gas prices and an uncertain political
and regulatory environment. Although the Company delivered
strong performance during 2010 in the midst of these challenges,
Messrs. Hackett and Walker each requested that their
individual AIP awards not exceed the Companys AIP
performance score. This request was a reflection of their belief
that, to the extent the Compensation Committee determined to
make individual awards greater than the Companys AIP
performance score, the other NEOs should be given credit for
their extraordinary accomplishments during 2010. In light of the
foregoing requests and based upon the Compensation
Committees overall assessment of Company and individual
NEO performance, the Compensation Committee determined that it
was appropriate to award bonuses to Messrs. Hackett and
Walker equal to the Companys overall 146% AIP performance
score. The Compensation Committee awarded bonuses of 175% of
target to Messrs. Gwin, Meloy and Daniels, which included
individual performance-based adjustments, relative to the
Companys AIP performance score, to recognize their
leadership and individual contributions in their respective
areas as more fully described below:
|
|
|
|
|
For Mr. Gwin in recognition of his efforts in strengthening
the Companys balance sheet by refinancing
$3.0 billion of its 2011 and 2012 scheduled maturities with
longer-term debt and replacing its $1.3 billion revolving
credit facility maturing in 2013 with a five-year
$5.0 billion senior secured revolving credit facility,
which enhanced the Companys liquidity. The award for
Mr. Gwin also recognizes his critical role in representing
the Companys interests surrounding the Deepwater Horizon
events.
|
|
|
|
For Mr. Meloy in recognition of the Companys
record-setting production and sales volumes and solid execution
of the Companys evaluation and development activities
while avoiding the distractions to execution that might have
occurred following the Deepwater Horizon events. Under his
leadership, the Companys
year-over-year
operating achievements continue to add differentiating value for
Anadarko stockholders.
|
|
|
|
For Mr. Daniels in recognition of the Companys
outstanding exploration success in 2010 that created significant
growth potential and a strong catalyst for longer-term equity
performance. This success was achieved despite being constrained
for more than six months from any exploration drilling in the
Gulf of Mexico.
|
Actual Bonuses Earned for 2010. The AIP awards
earned for 2010 and paid to each of the NEOs are shown in the
table below and are reflected in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
|
Target Bonus
|
|
|
|
AIP
|
|
|
|
Individual
|
|
|
|
|
|
|
|
|
Earnings for
|
|
|
|
as% of Base
|
|
|
|
Performance
|
|
|
|
Performance
|
|
|
|
Actual Bonus
|
|
Actual Bonus
|
Name
|
|
2010
|
|
|
|
Salary
|
|
|
|
Score
|
|
|
|
Adjustments
|
|
|
|
Award ($)
|
|
Award (%)
|
|
Mr. Hackett
|
|
$
|
1,567,500
|
|
|
|
X
|
|
|
|
130
|
%
|
|
|
X
|
|
|
|
146
|
%
|
|
|
+
|
|
|
$
|
0
|
|
|
|
=
|
|
|
$
|
2,975,115
|
|
|
|
146
|
%
|
Mr. Gwin
|
|
$
|
657,500
|
|
|
|
X
|
|
|
|
95
|
%
|
|
|
X
|
|
|
|
146
|
%
|
|
|
+
|
|
|
$
|
181,141
|
|
|
|
=
|
|
|
$
|
1,093,094
|
|
|
|
175
|
%
|
Mr. Walker
|
|
$
|
704,039
|
|
|
|
X
|
|
|
|
100
|
%
|
|
|
X
|
|
|
|
146
|
%
|
|
|
+
|
|
|
$
|
0
|
|
|
|
=
|
|
|
$
|
1,027,896
|
|
|
|
146
|
%
|
Mr. Meloy
|
|
$
|
575,000
|
|
|
|
X
|
|
|
|
95
|
%
|
|
|
X
|
|
|
|
146
|
%
|
|
|
+
|
|
|
$
|
158,412
|
|
|
|
=
|
|
|
$
|
955,937
|
|
|
|
175
|
%
|
Mr. Daniels
|
|
$
|
575,000
|
|
|
|
X
|
|
|
|
95
|
%
|
|
|
X
|
|
|
|
146
|
%
|
|
|
+
|
|
|
$
|
158,412
|
|
|
|
=
|
|
|
$
|
955,937
|
|
|
|
175
|
%
|
Equity
Compensation
The Compensation Committee makes equity-based awards under our
Omnibus Plan. Annual equity-based awards for NEOs are typically
made at the regularly scheduled meeting of the Compensation
Committee each
39
November. Equity awards for newly hired NEOs are made on the
executive officers first day of employment with us. Equity
awards for NEOs 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 are determined based on a targeted dollar
value and consist of a combination of stock options, time-based
restricted stock units and performance unit awards. The 2010
targeted equity award value (calculated using Meridians
proprietary incentive valuation models) was allocated 40% in
non-qualified stock options, 35% in restricted stock units, and
25% in performance units. This allocation provides a combination
of equity-based awards that is performance-based in absolute and
relative terms, while also encouraging retention. In addition,
the use of performance unit awards and restricted stock units
enables us to better manage our 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 restricted stock
units are awarded to executives the following year. The
restricted stock unit awards made in November 2010 were based on
the Companys achievement of the 2009 performance criteria
($1.6 billion of cash flow from continuing operations for
fiscal year 2009).
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
|
|
|
|
Performance units are earned based on the Companys
relative total stockholder return (TSR) performance against a
specified peer group
|
|
|
|
|
Each performance unit is denominated as an equivalent of one
share 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 dividend equivalents 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
|
|
|
40
Performance
Unit Program
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 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 pre-approved Murphy Oil
Corporation, Nexen, Inc., and Chesapeake Energy Corporation as
replacement companies (in that order).
Below is an example of how the performance unit payout scale
works, assuming an executive officer received a target award of
20,000 performance units.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
Relative TSR
|
|
|
|
|
|
|
|
|
|
|
|
Units for
|
|
Ranking for
|
|
|
|
|
|
|
|
|
|
|
|
Each
|
|
the
|
|
|
|
Number of
|
|
|
Total Target
|
|
|
Performance
|
|
Performance
|
|
Performance
|
|
Payout
|
|
Performance Units
|
|
Timing of
|
Award
|
|
|
Period
|
|
Period
|
|
Period
|
|
%
|
|
Earned(1)
|
|
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 after end of
three-year
performance period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Each performance unit earned has a value equal to the closing
price of one share of our common stock on the date the
Compensation Committee certifies the performance results for the
respective performance period. |
Equity
Awards Made During 2010
On November 9, 2010, 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 54.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Target Number
|
|
|
Number of
|
|
Restricted Stock
|
|
of Performance
|
Name
|
|
Stock Options
|
|
Units
|
|
Units
|
|
Mr. Hackett
|
|
|
188,044
|
|
|
|
79,571
|
|
|
|
56,837
|
|
Mr. Gwin
|
|
|
54,256
|
|
|
|
22,959
|
|
|
|
16,399
|
|
Mr. Walker
|
|
|
85,189
|
|
|
|
36,048
|
|
|
|
25,749
|
|
Mr. Meloy
|
|
|
48,586
|
|
|
|
20,560
|
|
|
|
14,686
|
|
Mr. Daniels
|
|
|
48,586
|
|
|
|
20,560
|
|
|
|
14,686
|
|
41
In determining these annual awards, the Compensation Committee
considered the following factors:
|
|
|
|
|
competitive benchmarking data, which reflected an overall flat
to downward value of long-term incentive awards at the 50th and
75th percentile levels, respectively;
|
|
|
|
each executives contribution to the successful execution
of the Companys strategic goals for the year;
|
|
|
|
the leadership and actions demonstrated by the executive team to
protect the Companys and stockholders interests in
response to the complex business challenges arising from the
Deepwater Horizon events; and
|
|
|
|
the importance of retaining and engaging this executive team for
the execution of the Companys long-term strategy.
|
Based on these considerations, the Compensation Committee
determined that for the NEOs (other than Mr. Hackett), it
was appropriate to hold the 2010 annual award values flat
relative to their 2009 award values. Influenced by the downward
pressure in the competitive benchmarking data at the CEO level
and the relative TSR performance at the time of the award, the
Compensation Committee approved a 2010 equity award for
Mr. Hackett that was approximately 20% less than his 2009
award. These actions position the NEOs annual awards in
the top quartile of the benchmarking data.
In addition to Mr. Daniels annual award discussed
above, the Compensation Committee awarded him a special grant of
15,788 restricted stock units, targeted at approximately
$1,000,000, to recognize his leadership for the Companys
exceptional exploration achievements in 2010. This award is
subject to pro-rata vesting over the next three years, beginning
one year from the date of grant.
Performance
Units Results for Performance Periods Ending in
2010
In February 2011, the Compensation Committee certified the
performance results for the 2007 and 2008 annual performance
unit awards with three-year and two-year performance periods
that ended December 31, 2010. Under the provisions of these
awards, the targeted performance units were subject to our
relative TSR performance against a defined TSR peer group. TSR
performance is based on the difference between (1) the
average closing stock price for the 30 trading days preceding
the beginning of the performance period, and (2) the
average closing stock price for the last 30 trading days of the
performance period, plus dividends paid for the performance
period, and further adjusted for any other distributions or
stock splits, where applicable.
For the three-year performance period beginning January 1,
2008 and ending December 31, 2010, the Companys TSR
performance ranked sixth relative to the defined peer group. The
defined TSR peer group for the three-year performance period
included: Apache Corporation; ConocoPhillips; Devon Energy
Corporation; EnCana Corporation; EOG Resources, Inc.; Hess
Corporation; Marathon Oil Corporation; Noble Energy, Inc.;
Occidental Petroleum Corporation; Pioneer Natural Resources
Company and Talisman Energy, Inc. This ranking resulted in a
110% payout as a percent of target.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final TSR Ranking
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR
|
|
|
79.9%
|
|
|
34.7%
|
|
|
16.2%
|
|
|
14.1%
|
|
|
13.7%
|
|
|
13.3%
|
|
|
7.2%
|
|
|
8.1%
|
|
|
12.7%
|
|
|
13.9%
|
|
|
14.5%
|
|
|
34.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout as % of Target
|
|
|
200%
|
|
|
182%
|
|
|
164%
|
|
|
146%
|
|
|
128%
|
|
|
110%
|
|
|
92%
|
|
|
72%
|
|
|
54%
|
|
|
0%
|
|
|
0%
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
For the two-year performance period beginning January 1,
2009 and ending December 31, 2010, the Companys TSR
performance ranked second relative to the defined peer group.
The defined TSR peer group for the two-year performance period
included: Apache Corporation; Chevron Corporation;
ConocoPhillips; Devon Energy Corporation; EOG Resources, Inc.;
Hess Corporation; Marathon Oil Corporation; Noble Energy, Inc.;
Occidental Petroleum Corporation; Pioneer Natural Resources
Company and Plains Exploration & Production Company.
This ranking resulted in a 182% payout as a percent of target.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final TSR Ranking
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR
|
|
|
380.1%
|
|
|
86.4%
|
|
|
83.1%
|
|
|
80.0%
|
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|
61.6%
|
|
|
56.8%
|
|
|
50.3%
|
|
|
44.4%
|
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|
36.8%
|
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|
28.7%
|
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|
24.4%
|
|
|
11.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
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|
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|
|
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|
Payout as % of Target
|
|
|
200%
|
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|
182%
|
|
|
164%
|
|
|
146%
|
|
|
128%
|
|
|
110%
|
|
|
92%
|
|
|
72%
|
|
|
54%
|
|
|
0%
|
|
|
0%
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
|
|
|
The following tables list the number of performance units
awarded at minimum, target, and maximum levels and the actual
number of performance units earned by the NEOs under the
provisions of these awards for the three-year and two-year
performance periods that ended December 31, 2010:
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|
|
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|
|
|
|
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|
|
|
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|
2007 Annual Award
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|
|
|
|
|
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|
|
Actual #
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|
|
Minimum #
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|
Target #
|
|
Maximum #
|
|
Performance Units
|
Name
|
|
Performance Units
|
|
Performance Units
|
|
Performance Units
|
|
Earned
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|
Mr. Hackett
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|
0
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|
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|
43,750
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|
|
|
87,500
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|
48,125
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|
Mr. Gwin
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|
0
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|
3,800
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|
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|
7,600
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|
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|
4,180
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|
Mr. Walker
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|
0
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|
10,900
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|
|
|
21,800
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|
|
|
11,990
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|
Mr. Meloy
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|
|
0
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|
6,100
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|
|
|
12,200
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|
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|
6,710
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|
Mr. Daniels
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0
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|
7,050
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|
14,100
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|
7,755
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|
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|
|
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|
|
|
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|
2008 Annual Award
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|
|
|
|
|
|
|
|
Actual #
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|
|
Minimum #
|
|
Target #
|
|
Maximum #
|
|
Performance Units
|
Name
|
|
Performance Units
|
|
Performance Units
|
|
Performance Units
|
|
Earned
|
|
Mr. Hackett
|
|
|
0
|
|
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|
70,300
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|
|
|
140,600
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|
|
|
127,946
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|
Mr. Gwin
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|
|
0
|
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|
9,650
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|
19,300
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|
|
|
17,563
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|
Mr. Walker
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|
0
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|
22,500
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|
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|
45,000
|
|
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|
40,950
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|
Mr. Meloy
|
|
|
0
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|
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|
9,800
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|
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|
19,600
|
|
|
|
17,836
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|
Mr. Daniels
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|
|
0
|
|
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|
11,750
|
|
|
|
23,500
|
|
|
|
21,385
|
|
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 NEOs includes base salary
and AIP bonus payments. Under the 401(k) Plan, we match an
amount equal to one dollar for each dollar contributed by
participants up to six percent of their total eligible
compensation. This plan is subject to applicable Internal
Revenue Service, or IRS, limitations regarding contributions
under this plan. Due to IRS limitations that restrict the amount
of benefits payable under tax-qualified plans, we also sponsor a
non-qualified Savings Restoration Plan. The Savings Restoration
Plan accrues a benefit substantially equal to the amount that,
in the absence of any IRS limitations, would have been allocated
to an employees account as a matching contribution under
the 401(k) Plan. The Savings Restoration Plan permits
participants to allocate the matching contributions among a
group of notional accounts that mirror the gains
and/or
losses of various investment funds provided in the 401(k) Plan
(but excluding the Company stock fund). Notional earnings are
credited to their account based on the market rate of return
provided by the investment funds.
43
Amounts deferred, if any, under the 401(k) Plan and the Savings
Restoration Plan (collectively, the Savings Plans) by the NEOs
are included, respectively, in the Salary and
Non-Equity Incentive Plan Compensation columns of
the Summary Compensation Table. Our matching contributions
allocated to the NEOs under the 401(k) Plan and the Savings
Restoration Plan are included in the All Other
Compensation column of the Summary Compensation Table.
Pension Plans. Anadarko provides funded,
tax-qualified retirement benefits for all 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 NEOs 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 AIP bonus payments.
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 60. 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 (2009
Employment Agreement), and Mr. Meloys retention
agreement, which was entered into in August 2006 in connection
with the closing of the Kerr-McGee acquisition (2006 Retention
Agreement). Details of Mr. Hacketts 2009 Employment
Agreement are discussed further in the Employment Agreements
section beginning on page 48. The details of
Mr. Meloys 2006 Retention Agreement, including the
accrued benefits for each of the NEOs, are discussed further in
the Pension Benefits Table on page 60.
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
NEO. These benefits are also provided to all other eligible
United States based employees. Certain employees, including the
NEOs are eligible for participation in the Companys
Management Life Insurance Plan, which provides an additional
life insurance benefit of two times base salary.
We also maintain a Deferred Compensation Plan for certain
employees, including the NEOs. 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 excluding 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 NEOs can be found in the
Non-Qualified Deferred Compensation Table on page 61.
44
Perquisites
We provide a limited number of perquisites to the NEOs. These
perquisites are assessed annually by the Compensation Committee
as part of the total competitive review and include the
following:
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Financial Counseling, Tax Preparation and Estate Planning
Executive officers are eligible to receive
reimbursement for eligible expenses up to a specified annual
maximum. For 2010, financial counseling and tax preparation
benefits were reimbursed up to a maximum of $21,195 in the first
year of use and up to a maximum of $12,690 for each following
year. The estate planning services are made available to
executive officers on an as-needed basis and the services have
typically been utilized once every three years. All expenses
related to financial counseling, tax preparation and estate
planning are considered taxable income to the executive officer.
Mr. Hackett has voluntarily declined to utilize the
financial planning, tax preparation and estate planning
perquisites offered by us.
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|
Executive Physical Program Executive officers
are eligible to receive reimbursement for an annual physical
exam.
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|
|
|
Personal Excess Liability Insurance We pay an
annual premium to maintain excess liability coverage on behalf
of each officer. The annual premium is imputed and considered
taxable income to the officer.
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Personal Use of 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.
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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.
|
As required by the Board, we provide secondary monitoring of
Mr. Hacketts existing home security system. 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 Internal Revenue Code of 1986, as
amended, or 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 52. 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 53. We do not provide any tax
gross-ups on
these perquisites.
Severance
Benefits
Post-termination and
change-of-control
severance benefits are typical within our industry and the
Company currently provides the severance benefits described
below to its NEOs. We believe these plans are necessary to
attract and retain executive talent, provide continuity of
management in the event of an actual or threatened
change-of-control
and provide executive officers with the security to make
decisions that are in the best long-term interest of the
stockholders. On a periodic basis, the Compensation Committee,
in consultation
45
with its executive compensation consultant, 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 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.
Officer Severance Plan. Our NEOs 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 2010, the Compensation Committee, following a comprehensive
review of executive severance benefits and in consultation with
its executive compensation consultant, reduced the level of
executive severance benefits following an involuntary not for
cause termination (as defined on page 63) by eliminating:
(1) the special retirement benefit enhancement, except for
in special cases as may be approved by the Compensation
Committee; and (2) the post-termination financial planning
benefits. As a result, the typical severance benefits that may
be provided for our executive officers following the occurrence
of such an involuntary termination event include:
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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 as certified by the
Compensation Committee;
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|
if applicable, the present value of retiree life insurance;
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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 that will be
made at the end of the performance period based on actual
Company performance results.
|
Key Employee
Change-of-Control
Contracts. We have entered into key employee
change-of-control
contracts with all of our executive officers, including the
NEOs, 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 48.
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 63) 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 63), death or disability), the executive officer
terminates for Good Reason (as defined on page 63) 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 NEO is generally entitled to receive the following payment
and benefits:
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earned but unpaid compensation;
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46
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2.9 times the executive officers base salary plus AIP
bonus (based on highest AIP bonuses paid over the last three
years);
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the present value of the investments credited to the executive
officer under the Savings Plans and the additional 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; and
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the present value of the accrued retirement benefit under the
Companys retirement and pension plans and the additional
retirement benefits, including retiree medical, which the
executive would have received had the executive officer
continued service for up to an additional three years.
|
In addition, the
change-of-control
contracts provide for a continuation of various medical, dental,
disability and life insurance benefits and financial counseling
for a period of up to three years. The contracts also provide
for outplacement services and the payment of all legal fees and
expenses incurred by the executive officer in enforcing any
right or benefit provided by the
change-of-control
contract. The executive will also be entitled to receive a
payment in an amount sufficient to make the executive whole for
any excise tax on excess parachute payments imposed under IRC
Section 4999. 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 2010, no amounts were paid
under the
change-of-control
contracts.
As part of the comprehensive review of executive severance
benefits conducted over the past year, and in consultation with
its executive compensation consultant, the Compensation
Committee confirmed that it was appropriate to honor and
preserve the existing provisions of the
change-of-control
contracts that have been executed with the Companys
current executive officers, including the NEOs. The Compensation
Committee further recognizes that good governance practices with
respect to executive compensation require certain prospective
changes to our programs. In February 2011, the Compensation
Committee approved the following changes to the
change-of-control
severance benefits provisions, on a prospective basis, for newly
appointed
and/or newly
hired senior executives who are not otherwise subject to an
existing agreement:
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eliminated as a definition of Good Reason the modified single
trigger provision that allowed an executive to terminate for any
reason during the
30-day
period immediately following the first anniversary of a
change-of-control
and receive severance benefits and replaced it with a double
trigger provision;
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reduced the severance protection period from three years to two
years following the effective date of a
change-of-control;
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eliminated post-termination financial planning benefits; and
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eliminated the tax
gross-up
provision that obligates the Company to pay an additional amount
to a senior executive if his or her benefits are subject to the
tax imposed on excess parachute payments by IRC
Section 4999 and replaced it with a provision that requires
the Company either (1) to reduce the amount of certain
severance benefits otherwise payable so that such severance
benefits will not be subject to the tax imposed by IRC
Section 4999, or alternatively (2) to pay the full
amount of severance benefits to the senior executive (but with
no tax
gross-up),
whichever produces the better after-tax result for the senior
executive (often referred to as the best-of-net approach).
|
Change-of-Control
Equity Plans. In addition to the
change-of-control
benefits discussed above, our equity plans provide the following
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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47
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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.
|
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, Mr. Hackett entered into the
2009 Employment Agreement, which replaced in its entirety
Mr. Hacketts previous Employment Agreement dated
December 11, 2006, as amended (2006 Employment Agreement).
The primary purpose of the amendments to the 2006 Employment
Agreement was to ensure that performance-based compensation
elements (annual bonus and performance units) related to certain
termination events complied with IRC Section 162(m),
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 Employment Agreement, Mr. Hackett
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 the following:
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a without cause (involuntary) termination (as defined on
page 63 or termination for Good Reason (as defined on
page 63);
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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).
|
The above scenarios are discussed in more detail beginning on
page 63. 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.
The 2009 Employment Agreement also provides that since
Mr. Hackett remained employed by us through
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 forgone in
leaving his former employer.
48
Mr. Meloy
Retention Agreement
In August 2010, the Company entered into a retention agreement
(2010 Retention Agreement) with Mr. Meloy to retain his
continued services and leadership to the Company for the next
two years. The Compensation Committee determined that retaining
him is necessary to ensure that the Company is able to
successfully execute on its business strategy in light of
ongoing events in the Gulf of Mexico. Under the terms of the
agreement, Mr. Meloy received a one-time cash retention
payment of $5,000,000, less applicable taxes, and must remain
with the Company through August 2, 2012, in order to
realize the full value of the retention payment. If
Mr. Meloy resigns (including retirement) from the Company
without Good Reason (as defined in the 2010 Retention Agreement)
or is determined by the Board of Directors to be terminable by
the Company for Cause (as defined in the 2010 Retention
Agreement) at any time prior to August 2, 2012, he is
required to repay to the Company a portion of the cash retention
payment, as set forth in terms of the 2010 Retention Agreement.
In the event of Mr. Meloys death, permanent and total
disability, or involuntary termination by the Company without
Cause, he shall not be required to return any portion of the
retention payment. However, if he is entitled to receive any
severance payment during the retention period, there shall be a
direct offset of any severance payment by the remaining
retention payment subject to being repaid during the retention
period, as set forth in the 2010 Retention Agreement.
Mr. Meloy shall continue to be subject to confidentiality
and non-solicitation provisions following a termination of
employment, as provided in the 2010 Retention Agreement.
The above descriptions of Mr. Hacketts employment
agreement and Mr. Meloys 2010 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.
Continuous
Improvement in Compensation Practices
Over the years, we have implemented new as well as maintained
long-standing practices that we believe contribute to good
governance. These practices include:
Compensation Risk Assessment Process. We have
a formalized process used to evaluate risks associated with our
compensation programs. As described under the Compensation
Committee Risk Assessment section on page 14, the
Compensation Committee completed a formal review of the
assessments conducted jointly by its independent executive
compensation consultant and management relating to compensation
risk. The Compensation Committee believes that our compensation
policies and practices for 2010 do not create risks that are
reasonably likely to have a material adverse effect on the
Company.
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 12/31/2010
|
|
Chief Executive Officer
|
|
|
6 x base salary
|
(1)
|
|
|
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
|
(2)
|
|
|
|
(1) |
|
Our CEO ownership guidelines were increased from five times base
salary to six times base salary in February 2011. |
|
(2) |
|
Currently, all of our executive officers either meet or exceed
their specified guidelines, with the exception of one officer
who is still within the three year compliance period. |
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
49
common stock. Outstanding unexercised stock options are not
included. Because of our robust ownership levels, we do not
maintain separate holding requirements for our equity awards.
Prohibited Equity Transactions. We maintain a
policy that prohibits all non-employee directors and employees
of the Company, including NEOs, from engaging in any short-term,
speculative securities transactions, including engaging in short
sales, buying or selling put or call options, and trading in
options (other than those employee stock options granted by the
Company). Additionally, any equity awards granted to such
individuals may not be transferred, sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, or disposed of
to the extent that such awards are then subject to restrictions.
In addition, all employees of the Company, including the NEOs
and directors of the Company, are subject to the Companys
Insider Trading Policy.
Clawback Provision. Our Omnibus Plan, which
was approved by our stockholders in May 2008, includes a
recoupment or 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.
Elimination of Tax
Gross-ups on
Perquisites. We eliminated all tax
gross-ups on
executive perquisites in 2009, except where such
gross-ups
are considered a normal benefit under the Companys
standard relocation program available to all employees.
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.
IRC Section 162(m) limits a companys ability to
deduct compensation paid in excess of $1 million during any
fiscal year to each of certain NEOs, unless the compensation is
performance-based as defined under federal tax laws.
Stock options, performance units and cash awards granted under
our Omnibus Plan and our 1999 Stock Incentive Plan satisfy the
performance-based requirements and, as such, are designed to be
fully deductible. In 2008, the Compensation Committee approved a
program to qualify our restricted stock awards (including
restricted shares and restricted stock units), beginning with
the 2009 grants, as performance-based compensation under 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. In
addition, during 2010, Mr. Meloy received a one-time cash
retention payment of $5 million pursuant to the 2010
Retention Agreement, which is not considered performance-based
compensation under IRC Section 162(m). All other awards
made during 2010 were designed to be performance-based under IRC
Section 162(m).
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.
The benefits payable under non-qualified plans for our officers
and directors are unsecured obligations to pay. These benefits
may be secured under the Companys Benefits Trust, which
are subject to the claims of the general creditors of the
Company.
50
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- and long-term operational,
financial and strategic objectives.
51
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table summarizes the compensation for the fiscal
years ended December 31, 2010, 2009, and 2008 for our CEO,
Chief Financial Officer (CFO) and our three highest paid
executive officers other than our CEO and CFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
Name and Principal
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)
|
|
James T. Hackett(5)
|
|
|
2010
|
|
|
|
1,567,500
|
|
|
|
0
|
|
|
|
9,246,818
|
|
|
|
4,257,091
|
|
|
|
2,975,115
|
|
|
|
5,530,662
|
|
|
|
751,524
|
|
|
|
24,328,710
|
|
Chairman and Chief
|
|
|
2009
|
|
|
|
1,567,500
|
|
|
|
0
|
|
|
|
12,158,360
|
|
|
|
5,293,585
|
|
|
|
3,749,460
|
|
|
|
3,956,376
|
|
|
|
741,496
|
|
|
|
27,466,777
|
|
Executive Officer
|
|
|
2008
|
|
|
|
1,510,385
|
|
|
|
0
|
|
|
|
9,572,026
|
|
|
|
7,121,658
|
|
|
|
3,416,491
|
|
|
|
1,643,878
|
|
|
|
571,276
|
|
|
|
23,835,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Gwin(6)
|
|
|
2010
|
|
|
|
657,500
|
|
|
|
0
|
|
|
|
2,667,995
|
|
|
|
1,228,291
|
|
|
|
1,093,094
|
|
|
|
468,084
|
|
|
|
156,650
|
|
|
|
6,271,614
|
|
Senior Vice President,
|
|
|
2009
|
|
|
|
569,231
|
|
|
|
0
|
|
|
|
3,952,953
|
|
|
|
2,168,884
|
|
|
|
995,015
|
|
|
|
232,669
|
|
|
|
132,190
|
|
|
|
8,050,942
|
|
Finance and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Walker(7)
|
|
|
2010
|
|
|
|
704,039
|
|
|
|
0
|
|
|
|
4,189,092
|
|
|
|
1,928,577
|
|
|
|
1,027,896
|
|
|
|
1,541,374
|
|
|
|
253,540
|
|
|
|
9,644,518
|
|
President and Chief
|
|
|
2009
|
|
|
|
685,192
|
|
|
|
0
|
|
|
|
4,478,274
|
|
|
|
1,947,589
|
|
|
|
1,260,754
|
|
|
|
1,305,419
|
|
|
|
200,287
|
|
|
|
9,877,515
|
|
Operating Officer
|
|
|
2008
|
|
|
|
655,000
|
|
|
|
0
|
|
|
|
3,064,814
|
|
|
|
2,276,392
|
|
|
|
1,139,700
|
|
|
|
328,684
|
|
|
|
180,995
|
|
|
|
7,645,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles A. Meloy
|
|
|
2010
|
|
|
|
575,000
|
|
|
|
5,000,000
|
(8)
|
|
|
2,389,254
|
|
|
|
1,099,929
|
|
|
|
955,937
|
|
|
|
3,307,281
|
|
|
|
129,251
|
|
|
|
13,456,652
|
|
Senior Vice President,
|
|
|
2009
|
|
|
|
575,000
|
|
|
|
0
|
|
|
|
4,853,076
|
|
|
|
870,656
|
|
|
|
1,005,100
|
|
|
|
5,455,686
|
(9)
|
|
|
134,802
|
|
|
|
12,894,320
|
|
Worldwide Operations
|
|
|
2008
|
|
|
|
553,846
|
|
|
|
575,000
|
(10)
|
|
|
1,335,616
|
|
|
|
989,465
|
|
|
|
915,508
|
|
|
|
3,740,448
|
(9)
|
|
|
106,832
|
|
|
|
8,216,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert P. Daniels(11)
|
|
|
2010
|
|
|
|
575,000
|
|
|
|
0
|
|
|
|
3,389,266
|
|
|
|
1,099,929
|
|
|
|
955,937
|
|
|
|
2,007,439
|
|
|
|
134,735
|
|
|
|
8,162,306
|
|
Senior Vice President,
|
|
|
2009
|
|
|
|
575,000
|
|
|
|
0
|
|
|
|
4,853,076
|
|
|
|
870,656
|
|
|
|
1,005,100
|
|
|
|
1,529,833
|
|
|
|
122,461
|
|
|
|
8,956,126
|
|
Worldwide Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts included in these columns represent the aggregate
grant date fair value of the awards made to NEOs in 2010
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 13
Share-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, 2010. 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
2010 that were determined by the Compensation Committee and paid
out in February 2011 pursuant to the Companys AIP. These
awards are discussed in further detail beginning on page 37. |
|
(3) |
|
The amounts in this column reflect the actuarial increase in the
present value of the NEOs 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 NEO 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 NEO are described
further in the All Other Compensation Table on the following
page. |
|
(5) |
|
Effective February 15, 2010, Mr. Hackett was named
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) |
|
Compensation information for 2008 is not reflected for
Mr. Gwin because he was not an NEO for 2008. |
|
(7) |
|
Effective February 15, 2010, Mr. Walker was named
President and Chief Operating Officer of the Company. |
52
|
|
|
(8) |
|
The $5,000,000 reflected in the Bonus column for
Mr. Meloy in 2010 is a cash retention bonus paid to him as
part of his 2010 Retention Agreement entered into on
August 2, 2010. The details of this agreement are discussed
beginning on page 49. |
|
(9) |
|
The 2009 and 2008 values in the Change in Pension Value
and Non-Qualified Deferred Compensation Earnings column
have been restated to reflect Mr. Meloys eligibility
to receive unreduced retirement benefits at age 55 under
the KMG Retirement Plan and KMG Restoration Plan as a result of
the vesting of additional pension credits in August 2009
pursuant to his 2006 Retention Agreement. The 2009 and 2008
values in the Companys 2010 proxy statement were
calculated based on the unreduced retirement age of 60 under the
KMG Retirement Plan and KMG Restoration Plan. |
|
(10) |
|
The $575,000 reflected in the Bonus column for
Mr. Meloy in 2008 is a cash retention bonus paid to him as
part of his retention agreement entered into on August 10,
2006, but which is no longer effective following our entry with
Mr. Meloy into his 2010 Retention Agreement. |
|
(11) |
|
Compensation information for 2008 is not reflected for
Mr. Daniels because he was not an NEO for 2008. |
All Other
Compensation Table for 2010
The following table describes each component of the All
Other Compensation column for the fiscal year ended
December 31, 2010 in the Summary Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Company to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
|
and Savings
|
|
Club
|
|
Financial/
|
|
Excess
|
|
|
|
|
|
|
|
|
Use of
|
|
Restoration
|
|
Membership
|
|
Tax/Estate
|
|
Liability
|
|
Tax
|
|
|
|
|
|
|
Aircraft
|
|
Plan
|
|
Dues
|
|
Planning
|
|
Insurance
|
|
Benefit
|
|
Other
|
|
Total
|
Name
|
|
($)(1)
|
|
($)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
($)
|
|
($)(3)
|
|
($)
|
|
James T. Hackett(4)
|
|
|
421,841
|
|
|
|
319,018
|
|
|
|
830
|
|
|
|
0
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
8,435
|
|
|
|
751,524
|
|
|
Robert G. Gwin
|
|
|
29,457
|
|
|
|
99,151
|
|
|
|
13,952
|
|
|
|
12,690
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
156,650
|
|
|
R. A. Walker
|
|
|
131,455
|
|
|
|
117,887
|
|
|
|
2,798
|
|
|
|
0
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
253,540
|
|
|
Charles A. Meloy
|
|
|
6,471
|
|
|
|
94,806
|
|
|
|
13,884
|
|
|
|
12,690
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
129,251
|
|
|
Robert P. Daniels
|
|
|
14,321
|
|
|
|
94,806
|
|
|
|
11,518
|
|
|
|
12,690
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
0
|
|
|
|
134,735
|
|
|
|
|
|
(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) |
|
The Company pays annual membership fees of $830 to a business
club that is used by Mr. Hackett during business travel.
Because Mr. Hackett used this club while traveling for an
outside board meeting, which we consider personal use, the
entire annual membership fees are disclosed. We have also
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 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. |
53
Grants of
Plan-Based Awards in 2010
The following table sets forth information concerning annual
incentive awards, stock options, restricted stock units and
performance units granted during 2010 to each of the NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
188,044
|
|
|
|
63.34
|
|
|
|
4,257,091
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,571
|
|
|
|
|
|
|
|
|
|
|
|
5,040,027
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,346
|
|
|
|
56,837
|
|
|
|
113,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,206,791
|
|
|
|
Robert G. Gwin
|
|
|
|
|
|
|
0
|
|
|
|
624,625
|
|
|
|
1,249,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,256
|
|
|
|
63.34
|
|
|
|
1,228,291
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,959
|
|
|
|
|
|
|
|
|
|
|
|
1,454,223
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,428
|
|
|
|
16,399
|
|
|
|
32,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,213,772
|
|
|
|
R. A. Walker
|
|
|
|
|
|
|
0
|
|
|
|
704,039
|
|
|
|
1,408,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,189
|
|
|
|
63.34
|
|
|
|
1,928,577
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,048
|
|
|
|
|
|
|
|
|
|
|
|
2,283,280
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,952
|
|
|
|
25,749
|
|
|
|
51,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,905,812
|
|
|
|
Charles A. Meloy
|
|
|
|
|
|
|
0
|
|
|
|
546,250
|
|
|
|
1,092,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,586
|
|
|
|
63.34
|
|
|
|
1,099,929
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,560
|
|
|
|
|
|
|
|
|
|
|
|
1,302,270
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,965
|
|
|
|
14,686
|
|
|
|
29,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,086,984
|
|
|
|
Robert P. Daniels
|
|
|
|
|
|
|
0
|
|
|
|
546,250
|
|
|
|
1,092,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,586
|
|
|
|
63.34
|
|
|
|
1,099,929
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,560
|
|
|
|
|
|
|
|
|
|
|
|
1,302,270
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,965
|
|
|
|
14,686
|
|
|
|
29,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,086,984
|
|
|
|
|
11/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,788
|
|
|
|
|
|
|
|
|
|
|
|
1,000,012
|
|
|
|
|
|
|
(1) |
|
The amounts included in these columns reflect estimated future
cash payouts under the Companys AIP based on actual base
salaries earned in 2010. If threshold levels of performance are
not met, then the payout can be zero. Actual bonus payouts under
the AIP for 2010 are reflected in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table. |
|
(2) |
|
The amounts included in these columns reflect 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 41, although the minimum payout is zero. |
|
(3) |
|
The amounts included in this column reflect the number of
restricted stock units awarded in 2010. These awards vest
pro-rata annually over three years, beginning with the first
anniversary of the grant date. Executive officers receive
dividend equivalents on the units, but do not have voting
rights. As described on page 42, Mr. Daniels was
awarded a special grant of 15,788 restricted stock units by the
Compensation Committee. |
|
(4) |
|
The amounts included in this column reflect the number of stock
options awarded in 2010. 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 NEOs in 2010
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 13
Share-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, 2010. |
54
Outstanding
Equity Awards at Fiscal Year-End 2010
The following table reflects outstanding stock option awards
classified as exercisable and unexercisable as of
December 31, 2010 for each of the NEOs. The table also
reflects unvested and unearned stock awards (both time-based and
performance-contingent) assuming a market value of $76.16 a
share (the closing stock price of the Companys stock on
December 31, 2010).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock/Units
|
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
Number of
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
Unearned
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
Shares,
|
|
Units or
|
|
|
Option Awards(1)
|
|
Units of
|
|
Stock
|
|
Units or
|
|
Other
|
|
|
Number of Securities
|
|
Option
|
|
Option
|
|
Stock That
|
|
That Have
|
|
Other Rights
|
|
Rights
|
|
|
Underlying Unexercised Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Not Vested
|
|
That Have
|
|
That Have
|
Name
|
|
Exercisable (#)
|
|
Unexercisable (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
($)
|
|
Not Vested (#)
|
|
Not Vested ($)
|
|
James T. Hackett
|
|
|
250,000
|
|
|
|
0
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
31,000
|
|
|
|
2,360,960
|
|
|
|
48,125
|
|
|
|
3,665,200
|
|
|
|
|
190,733
|
|
|
|
190,733
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
59,533
|
|
|
|
4,534,033
|
|
|
|
255,892
|
|
|
|
19,488,735
|
|
|
|
|
65,867
|
|
|
|
131,733
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
79,571
|
|
|
|
6,060,127
|
|
|
|
47,952
|
|
|
|
3,652,024
|
|
|
|
|
0
|
|
|
|
188,044
|
|
|
|
63.3400
|
|
|
|
11/9/2017
|
|
|
|
|
|
|
|
|
|
|
|
56,837
|
|
|
|
4,328,706
|
|
|
|
Robert G. Gwin
|
|
|
27,000
|
|
|
|
0
|
|
|
|
50.6900
|
|
|
|
1/16/2013
|
|
|
|
4,266
|
|
|
|
324,899
|
|
|
|
4,180
|
|
|
|
318,349
|
|
|
|
|
19,100
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
19,933
|
|
|
|
1,518,097
|
|
|
|
35,126
|
|
|
|
2,675,196
|
|
|
|
|
41,000
|
|
|
|
0
|
|
|
|
40.5100
|
|
|
|
1/10/2014
|
|
|
|
14,266
|
|
|
|
1,086,499
|
|
|
|
11,448
|
|
|
|
871,880
|
|
|
|
|
21,700
|
|
|
|
0
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
22,959
|
|
|
|
1,748,577
|
|
|
|
16,399
|
|
|
|
1,248,948
|
|
|
|
|
14,867
|
|
|
|
7,433
|
|
|
|
64.6900
|
|
|
|
3/12/2015
|
|
|
|
6,667
|
(5)
|
|
|
333,350
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
52,400
|
|
|
|
26,200
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,067
|
|
|
|
44,133
|
|
|
|
34.9500
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,734
|
|
|
|
31,466
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
54,256
|
|
|
|
63.3400
|
|
|
|
11/9/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,333
|
(4)
|
|
|
6,667
|
(4)
|
|
|
50.0000
|
|
|
|
4/2/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. A. Walker
|
|
|
50,000
|
|
|
|
0
|
|
|
|
45.8000
|
|
|
|
9/6/2012
|
|
|
|
9,933
|
|
|
|
756,497
|
|
|
|
11,990
|
|
|
|
913,158
|
|
|
|
|
22,800
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
21,933
|
|
|
|
1,670,417
|
|
|
|
81,900
|
|
|
|
6,237,504
|
|
|
|
|
46,400
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
36,048
|
|
|
|
2,745,416
|
|
|
|
17,658
|
|
|
|
1,344,833
|
|
|
|
|
41,000
|
|
|
|
0
|
|
|
|
48.9000
|
|
|
|
1/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
25,749
|
|
|
|
1,961,044
|
|
|
|
|
62,200
|
|
|
|
0
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,934
|
|
|
|
60,966
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,234
|
|
|
|
48,466
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
85,189
|
|
|
|
63.3400
|
|
|
|
11/9/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles A. Meloy
|
|
|
38,200
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
4,333
|
|
|
|
330,001
|
|
|
|
6,710
|
|
|
|
511,034
|
|
|
|
|
34,600
|
|
|
|
0
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
38,970
|
|
|
|
2,967,955
|
|
|
|
35,672
|
|
|
|
2,716,780
|
|
|
|
|
53,000
|
|
|
|
26,500
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
20,560
|
|
|
|
1,565,850
|
|
|
|
15,336
|
|
|
|
1,167,990
|
|
|
|
|
10,834
|
|
|
|
21,666
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
14,686
|
|
|
|
1,118,486
|
|
|
|
|
0
|
|
|
|
48,586
|
|
|
|
63.3400
|
|
|
|
11/9/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert P. Daniels
|
|
|
9,300
|
|
|
|
0
|
|
|
|
33.3650
|
|
|
|
11/16/2011
|
|
|
|
5,166
|
|
|
|
393,443
|
|
|
|
7,755
|
|
|
|
590,621
|
|
|
|
|
8,900
|
|
|
|
0
|
|
|
|
43.5550
|
|
|
|
11/15/2012
|
|
|
|
38,970
|
|
|
|
2,967,955
|
|
|
|
42,770
|
|
|
|
3,257,363
|
|
|
|
|
19,100
|
|
|
|
0
|
|
|
|
48.6900
|
|
|
|
12/4/2013
|
|
|
|
20,560
|
|
|
|
1,565,850
|
|
|
|
15,336
|
|
|
|
1,167,990
|
|
|
|
|
40,100
|
|
|
|
0
|
|
|
|
59.8700
|
|
|
|
11/6/2014
|
|
|
|
15,788
|
|
|
|
1,202,414
|
|
|
|
14,686
|
|
|
|
1,118,486
|
|
|
|
|
63,600
|
|
|
|
31,800
|
|
|
|
35.1800
|
|
|
|
11/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,834
|
|
|
|
21,666
|
|
|
|
65.4400
|
|
|
|
11/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
48,586
|
|
|
|
63.3400
|
|
|
|
11/9/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
|
|
|
(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
|
|
3/1/2011
|
|
|
|
|
|
|
22,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/12/2011
|
|
|
|
|
|
|
7,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4/2011
|
|
|
190,733
|
|
|
|
26,200
|
|
|
|
60,966
|
|
|
|
26,500
|
|
|
|
31,800
|
|
11/9/2011
|
|
|
62,682
|
|
|
|
18,086
|
|
|
|
28,397
|
|
|
|
16,196
|
|
|
|
16,196
|
|
11/10/2011
|
|
|
65,866
|
|
|
|
15,733
|
|
|
|
24,233
|
|
|
|
10,833
|
|
|
|
10,833
|
|
3/1/2012
|
|
|
|
|
|
|
22,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2012
|
|
|
62,681
|
|
|
|
18,085
|
|
|
|
28,396
|
|
|
|
16,195
|
|
|
|
16,195
|
|
11/10/2012
|
|
|
65,867
|
|
|
|
15,733
|
|
|
|
24,233
|
|
|
|
10,833
|
|
|
|
10,833
|
|
11/9/2013
|
|
|
62,681
|
|
|
|
18,085
|
|
|
|
28,396
|
|
|
|
16,195
|
|
|
|
16,195
|
|
|
|
|
(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
|
|
3/1/2011
|
|
|
|
|
|
|
9,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2011
|
|
|
26,524
|
|
|
|
7,653
|
|
|
|
12,016
|
|
|
|
6,854
|
|
|
|
12,117
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/9/2012
|
|
|
26,523
|
|
|
|
7,653
|
|
|
|
12,016
|
|
|
|
6,853
|
|
|
|
12,115
|
|
11/10/2012
|
|
|
29,767
|
|
|
|
7,133
|
|
|
|
10,967
|
|
|
|
34,640
|
|
|
|
34,640
|
|
11/9/2013
|
|
|
26,524
|
|
|
|
7,653
|
|
|
|
12,016
|
|
|
|
6,853
|
|
|
|
12,116
|
|
|
|
|
(3) |
|
The table below shows the performance periods for the respective
performance units listed in the above Outstanding Equity Awards
Table. The number of outstanding units disclosed is calculated
based on our performance to date for each award. The estimated
payout percentages reflect our relative performance ranking as
of December 31, 2010 and are not necessarily indicative of
what the payout percent earned will be at the end of the
performance period. For awards that were granted in 2010 with
performance periods beginning in 2011, target payout has been
assumed. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance to
|
|
|
|
|
|
|
|
|
|
|
Performance Period
|
|
Date Payout %
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
1/1/2008 to 12/31/2010
|
|
|
110
|
%
|
|
|
48,125
|
|
|
|
4,180
|
|
|
|
11,990
|
|
|
|
6,710
|
|
|
|
7,755
|
|
1/1/2009 to 12/31/2010
|
|
|
182
|
%
|
|
|
127,946
|
|
|
|
17,563
|
|
|
|
40,950
|
|
|
|
17,836
|
|
|
|
21,385
|
|
1/1/2009 to 12/31/2011
|
|
|
182
|
%
|
|
|
127,946
|
|
|
|
17,563
|
|
|
|
40,950
|
|
|
|
17,836
|
|
|
|
21,385
|
|
1/1/2010 to 12/31/2011
|
|
|
54
|
%
|
|
|
23,976
|
|
|
|
5,724
|
|
|
|
8,829
|
|
|
|
7,668
|
|
|
|
7,668
|
|
1/1/2010 to 12/31/2012
|
|
|
54
|
%
|
|
|
23,976
|
|
|
|
5,724
|
|
|
|
8,829
|
|
|
|
7,668
|
|
|
|
7,668
|
|
1/1/2011 to 12/31/2012
|
|
|
100
|
%
|
|
|
28,418
|
|
|
|
8,199
|
|
|
|
12,874
|
|
|
|
7,343
|
|
|
|
7,343
|
|
1/1/2011 to 12/31/2013
|
|
|
100
|
%
|
|
|
28,419
|
|
|
|
8,200
|
|
|
|
12,875
|
|
|
|
7,343
|
|
|
|
7,343
|
|
|
|
|
(4) |
|
This award represents a grant of unit appreciation rights under
the Western Gas Holdings, LLC Amended and Restated Equity
Incentive Plan for Mr. Gwins service to our
subsidiary. The unexercisable unit appreciation rights vest
April 2, 2011. For additional discussion of the unit
appreciation 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, 2010, which shall not be
incorporated by reference into this proxy statement. |
|
(5) |
|
This award represents a grant of unit value rights under the
Western Gas Holdings, LLC Amended and Restated Equity Incentive
Plan for Mr. Gwins service to our subsidiary. The
market value for this award is calculated based on the maximum
per unit value specified under the award agreement of $50.00.
The unit value rights vest on April 2, 2011. For additional
discussion of the unit value rights, please see Western Gas
Holdings, LLC Amended and Restated Equity Incentive Plan
under Item 11 of Western Gas Partners, LPs
Form 10-K
for the year ended December 31, 2010, which shall not be
incorporated by reference into this proxy statement. |
56
Option
Exercises and Stock Vested in 2010
The following table provides information about the value
realized by the NEOs on option award exercises, vesting of
restricted stock shares and units and performance unit award
payouts during 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
|
|
Number of Shares
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
Acquired on
|
|
Value Realized on
|
Name
|
|
Exercise (#)
|
|
Exercise ($)(1)
|
|
Vesting (#)(2)
|
|
Vesting ($)(1)(3)
|
|
James T. Hackett
|
|
|
584,534
|
|
|
|
17,233,518
|
|
|
|
248,671
|
|
|
|
16,414,664
|
|
|
|
Robert G. Gwin
|
|
|
0
|
|
|
|
0
|
|
|
|
38,063
|
|
|
|
2,558,601
|
|
|
|
R. A. Walker
|
|
|
0
|
|
|
|
0
|
|
|
|
62,073
|
|
|
|
4,102,645
|
|
|
|
Charles A. Meloy
|
|
|
0
|
|
|
|
0
|
|
|
|
30,126
|
|
|
|
1,991,818
|
|
|
|
Robert P. Daniels
|
|
|
69,300
|
|
|
|
2,500,815
|
|
|
|
40,738
|
|
|
|
2,692,554
|
|
|
|
|
|
|
(1) |
|
The value realized reflects the taxable value to the NEO as of
the date of the option exercise, vesting of restricted stock,
vesting of restricted stock units, or payment of performance
unit awards. The actual value ultimately realized by the NEO may
be more or less than the value realized calculated in the above
table depending on whether and when the NEO held or sold the
stock associated with the exercise or vesting occurrence. |
|
(2) |
|
Shares acquired on vesting include restricted stock shares or
units and performance unit awards paid in shares for which
restrictions lapsed during 2010. |
|
(3) |
|
Mr. Hacketts value includes 26,204 shares,
issued in 2010 as settlement for a portion of his 2009 AIP
award. The shares were valued at $1,711,645 and previously
reported in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table for
2009. Mr. Hacketts value also includes
71,750 shares earned and deferred under his 2007 annual
performance share award for the performance period ending
December 31, 2009. Mr. Hackett elected in 2007 to
defer receipt of any shares earned under this award until the
earlier of November 28, 2013 or separation from service.
The value of these shares on the date of deferral
(February 15, 2010, the date the Compensation Committee
certified the results of the performance period) was $4,686,710
based on the closing stock price of $65.32. |
Pension
Benefits for 2010
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
NEOs 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
(1) 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
(2) the annual average compensation over the last 36
consecutive months of employment with the Company.
The APC Retirement Plans do not require contributions by
employees and an employee becomes vested in his or her benefit
at the completion of three years of service. Compensation
covered by the APC Retirement Plans includes base salary and
payments under the AIP. The maximum amount of compensation for
2010 that may be considered in calculating benefits under the
APC Retirement Plan is $245,000 due to the annual IRC
57
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 the
following:
|
|
|
|
|
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 early retirement 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 NEO 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 date
Kerr-McGee
was acquired by Anadarko. 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 maximum amount of compensation for
2010 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.
58
Benefits under the KMG Retirement Plans are calculated as a
life-only annuity for single participants, and a
joint and 50% contingent annuity for married participants who
are eligible for retirement. Benefits under this plan are equal
to the sum of Part A and Part B:
Part A:
|
|
|
|
|
1.1% x average compensation x years of service prior to
March 1, 1999; plus
|
|
|
|
0.5% x (average compensation covered compensation) x
years of service prior to March 1, 1999 (limited to
35 years).
|
Part B:
|
|
|
|
|
1.667% x average compensation x years of service on or after
March 1, 1999 (limited to 30 years); plus
|
|
|
|
0.75% x average compensation x years of service on or after
March 1, 1999 in excess of 30 years; less
|
|
|
|
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 early retirement 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 2006 Retention Agreement.
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 Reductions for Benefits Earned
|
|
(Age Reductions for Benefits
|
Age Benefit
|
|
Before March 1, 1999)
|
|
Earned On or After March 1, 1999)
|
Payments Start
|
|
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
|
%
|
59
The present values provided in the table below are based on the
pension benefits accrued through December 31, 2010,
assuming that such benefit is paid in the same form as reflected
in the accounting valuation. The benefits are assumed to
commence at the specified plans earliest unreduced
retirement age, which is age 62 for those NEOs under the
APC Retirement Plans and age 55 for Mr. Meloy under
the KMG Retirement Plans pursuant to his 2006 Retention
Agreement. 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, 2010 is 5.0% for the APC
Retirement Plan, 4.25% for the APC Retirement Restoration Plan,
4.5% for the KMG Retirement Plan, and 4.25% 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 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
|
|
2010
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
($)
|
|
James T. Hackett(1)
|
|
APC Retirement Plan
|
|
|
7.000
|
|
|
|
302,673
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
14.000
|
|
|
|
14,642,651
|
|
|
|
0
|
|
|
|
Robert G. Gwin
|
|
APC Retirement Plan
|
|
|
5.000
|
|
|
|
135,503
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
5.000
|
|
|
|
695,974
|
|
|
|
0
|
|
|
|
R. A. Walker(2)
|
|
APC Retirement Plan
|
|
|
5.000
|
|
|
|
185,427
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
13.000
|
|
|
|
4,067,427
|
|
|
|
0
|
|
|
|
Charles A. Meloy(3)
|
|
KMG Retirement Plan
|
|
|
28.583
|
|
|
|
1,246,171
|
|
|
|
0
|
|
|
|
KMG Restoration Plan
|
|
|
33.583
|
|
|
|
16,835,834
|
|
|
|
0
|
|
|
|
Robert P. Daniels
|
|
APC Retirement Plan
|
|
|
25.000
|
|
|
|
841,705
|
|
|
|
0
|
|
|
|
APC Retirement Restoration Plan
|
|
|
25.000
|
|
|
|
5,404,236
|
|
|
|
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 Employment
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 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, 2010. However, as of
December 31, 2010, 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, 2010 excluding the effect of the
additional pension service credit is $1,433,964, for a total
pension value of $1,619,391. |
|
(3) |
|
The value of Mr. Meloys KMG Retirement Restoration
Plan benefit includes the effect of the additional pension
service credit provided under his 2006 Retention Agreement.
Mr. Meloy vested in these additional pension service
credits on August 10, 2009. The additional pension service
credit was included in the 2006 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. |
60
Non-Qualified
Deferred Compensation for 2010
The Company maintains a Deferred Compensation Plan for certain
employees, including the NEOs. 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. The Company does not match these
deferred amounts. In general, deferred amounts are distributed
to the participant upon separation from service or at a specific
date as elected by the participant. At the time deferral
elections are made, participants also elect to receive their
distributions in either lump-sum or annual installments not
exceeding 15 years.
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 an
NEOs account as Company matching contributions under the
401(k) Plan. In general, deferred amounts are distributed to the
participant in lump-sum upon separation from service.
Both the Deferred Compensation Plan and the Savings Restoration
Plan permit 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
(but excluding the Company stock fund). These notional accounts
do not provide for above-market or preferential earnings. Each
participant directs investments of the individual accounts set
up for the participant under the plans and may make changes in
the investments as often as daily. Since each executive chooses
the investment vehicle or vehicles (including a selection of
funds ranging from fixed income to emerging markets, as well as
other equity, debt and mixed investment strategies in between)
and may change their allocations from time to time, the return
on the investment will depend on how well the underlying
investment fund performed during the time the executive chose it
as an investment vehicle. The aggregate performance of such
investment is reflected in the Aggregate Earnings/Losses
in 2010 column.
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, subsequently, the
Omnibus Plan. Any earnings
and/or
losses attributable to the deferred shares otherwise payable
under these awards are based on the performance of the
Companys stock over the deferral period. In general,
deferred awards are distributed to the participant, in the form
of Company common stock, 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Company
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate Balance
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings/Losses
|
|
Withdrawals/
|
|
at End of
|
|
|
2010
|
|
2010
|
|
in 2010
|
|
Distributions
|
|
2010
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
James T. Hackett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan(1)
|
|
|
0
|
|
|
|
304,318
|
|
|
|
195,088
|
|
|
|
0
|
|
|
|
1,664,922
|
|
1999 Stock Incentive Plan(2)
|
|
|
4,686,710
|
|
|
|
0
|
|
|
|
777,770
|
|
|
|
0
|
|
|
|
5,464,480
|
|
Omnibus Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
Robert G. Gwin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan(1)
|
|
|
0
|
|
|
|
84,451
|
|
|
|
46,198
|
|
|
|
0
|
|
|
|
250,118
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Omnibus Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
R. A. Walker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan(1)
|
|
|
0
|
|
|
|
105,637
|
|
|
|
45,152
|
|
|
|
0
|
|
|
|
424,723
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Omnibus Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Company
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate Balance
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings/Losses
|
|
Withdrawals/
|
|
at End of
|
|
|
2010
|
|
2010
|
|
in 2010
|
|
Distributions
|
|
2010
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Charles A. Meloy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Savings Restoration Plan(1)
|
|
|
0
|
|
|
|
89,498
|
|
|
|
48,274
|
|
|
|
0
|
|
|
|
405,474
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Omnibus Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
Robert P. Daniels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
184,078
|
|
|
|
0
|
|
|
|
1,448,999
|
|
Savings Restoration Plan(1)
|
|
|
0
|
|
|
|
80,106
|
|
|
|
41,511
|
|
|
|
0
|
|
|
|
510,593
|
|
1999 Stock Incentive Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Omnibus 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 NEOs
under the All Other Compensation column for the
fiscal year 2010. The Savings Restoration Plan Aggregate Balance
includes amounts reported in the All Other
Compensation column of the Summary Compensation Table for
2010 as well as amounts previously reported in prior Summary
Compensation Tables, to the extent the executive was an NEO for
that fiscal year. The amounts currently or previously reported
in the Summary Compensation Table for each NEO, are as follows:
Mr. Hackett $1,211,149;
Mr. Gwin $139,208; Mr. Walker
$351,202; Mr. Meloy $299,377; and
Mr. Daniels $154,836. |
|
(2) |
|
Mr. Hackett elected in 2007 to defer receipt of any shares
earned under his 2007 annual performance share award. In
accordance with his election, 71,750 shares earned for the
performance period ending December 31, 2009 were deferred
until the earlier of November 28, 2013 or separation from
service. The value of these shares on the date of deferral
(February 15, 2010, the date the Committee certified the
results of the performance period) was $4,686,710 based on the
closing stock price of $65.32. The value of these shares on
December 31, 2010 was $5,464,480 based on the closing stock
price of $76.16. |
62
Potential
Payments Upon Termination or
Change-of-Control
The following tables reflect potential payments to our NEOs
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 NEO, assuming a
December 31, 2010 termination date, and, where applicable,
using the closing price of our common stock of $76.16 (as
reported on the NYSE as of December 31, 2010).
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 NEOs 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 following:
|
|
|
|
|
the willful and continued failure of the executive to perform
substantially the executives duties with the Company or
one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness) or material
breach of any material provision in an employment agreement (if
applicable), after written demand for substantial performance is
delivered to the executive by the Board or the CEO of the
Company which specifically identifies the manner in which the
Board or CEO believes that the executive has not substantially
performed the executives duties; or
|
|
|
|
the willful engaging by the executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious
to the Company.
|
A
Change-of-Control
is generally defined as any one of the following occurrences:
|
|
|
|
|
any individual, entity or group acquires beneficial ownership of
20% or more of either the outstanding shares of our common stock
or our combined voting power;
|
|
|
|
individuals who constitute the Board (as of the date of either a
given
change-of-control
contract or an award agreement under our equity plans, as
applicable) cease to constitute a majority of the Board,
provided that an individual whose election or nomination as a
director is approved by a vote of at least a majority of the
directors as of the date of either the
change-of-control
contract or an award agreement under our equity plans, as
applicable, will be deemed a member of the incumbent Board;
|
|
|
|
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 the executives position, authority, duties
or responsibilities that were effective immediately prior to the
Change-of-Control,
excluding for this purpose an isolated, insubstantial and
|
63
|
|
|
|
|
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.
|
In February 2011, the Compensation Committee eliminated on a
prospective basis the Good Reason provision allowing
an executive to terminate for any reason during the
30-day
period immediately following the first anniversary of a
Change-of-Control
for all new
Change-of-Control
contracts executed with any newly appointed
and/or newly
hired senior executives who are not otherwise subject to an
existing 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 that is determined
to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the executive or the
executives legal representative.
Additional details of the post-termination arrangements can be
found in the Compensation Discussion and Analysis beginning on
page 45.
Involuntary
For Cause or Voluntary Termination (Including
Retirement)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett(1)
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy(1)
|
|
Mr. Daniels
|
|
Retirement Restoration Plan Benefits(2)
|
|
$
|
16,446,642
|
|
|
$
|
539,360
|
|
|
$
|
1,092,900
|
|
|
$
|
16,112,160
|
|
|
$
|
4,136,079
|
|
Non-qualified Deferred Compensation(3)
|
|
$
|
7,129,402
|
|
|
$
|
250,118
|
|
|
$
|
424,723
|
|
|
$
|
405,474
|
|
|
$
|
1,959,592
|
|
Pro-rata Portion of Performance Unit Awards(4)
|
|
$
|
8,017,922
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,392,256
|
|
|
$
|
|
|
Health and Welfare Benefits(5)
|
|
$
|
100,993
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Repayment of Retention Payment(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(5,000,000
|
)
|
|
$
|
|
|
Total
|
|
$
|
31,694,959
|
|
|
$
|
789,478
|
|
|
$
|
1,517,623
|
|
|
$
|
12,909,890
|
|
|
$
|
6,095,671
|
|
|
|
|
(1) |
|
Messrs. Hackett and Meloy are currently the only NEOs
eligible for retirement. |
|
(2) |
|
Reflects the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits. |
|
(3) |
|
Reflects the combined vested balances in the non-qualified
Savings Restoration Plan and Deferred Compensation Plan.
Mr. Hacketts value includes the shares he earned and
deferred under the 1999 Stock |
64
|
|
|
|
|
Incentive Plan in settlement for his 2007 annual performance
share award for the performance period ending December 31,
2009. |
|
(4) |
|
Under the terms of the performance unit agreements, retirement
eligible participants receive a prorated payout, paid after the
end of the performance period, based on actual performance and
the number of months worked during the performance period.
Messrs. Hacketts and Meloys values reflect an
estimated payout based on performance to date through
December 31, 2010, which is not indicative of the actual
payout they will receive at the end of the performance period
based on actual performance. No values have been reported for
the other NEOs as they are not retirement eligible. |
|
(5) |
|
Mr. Hacketts value represents the lump-sum value of
vested subsidized retiree medical benefits. |
|
(6) |
|
Pursuant to the terms of Mr. Meloys 2010 Retention
Agreement and described on page 49, in the event he
voluntarily resigns (including retirement) or is terminated for
cause through December 31, 2010, he is required to repay
100% of his retention payment, or $5,000,000. |
Involuntary
Not For Cause Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
Cash Severance(1)
|
|
$
|
10,815,750
|
|
|
$
|
2,109,250
|
|
|
$
|
2,205,000
|
|
|
$
|
|
|
|
$
|
1,696,250
|
|
Pro-rata AIP Bonus for 2010(2)
|
|
$
|
2,975,115
|
|
|
$
|
1,093,094
|
|
|
$
|
1,027,896
|
|
|
$
|
955,937
|
|
|
$
|
955,937
|
|
Accelerated Equity Compensation(3)
|
|
$
|
37,929,039
|
|
|
$
|
12,977,759
|
|
|
$
|
14,301,873
|
|
|
$
|
9,837,752
|
|
|
$
|
11,469,313
|
|
Retirement Restoration Plan Benefits(4)
|
|
$
|
23,658,198
|
|
|
$
|
539,360
|
|
|
$
|
1,092,900
|
|
|
$
|
19,156,280
|
|
|
$
|
4,136,079
|
|
Non-qualified Deferred Compensation(5)
|
|
$
|
7,129,402
|
|
|
$
|
250,118
|
|
|
$
|
424,723
|
|
|
$
|
405,474
|
|
|
$
|
1,959,592
|
|
Health and Welfare Benefits(6)
|
|
$
|
172,519
|
|
|
$
|
44,322
|
|
|
$
|
67,417
|
|
|
$
|
41,212
|
|
|
$
|
324,532
|
|
Total
|
|
$
|
82,680,023
|
|
|
$
|
17,013,903
|
|
|
$
|
19,119,809
|
|
|
$
|
30,396,655
|
|
|
$
|
20,541,703
|
|
|
|
|
(1) |
|
Mr. Hacketts value assumes three times his base
salary plus target AIP bonus; all other NEO values assume two
times base salary plus one times AIP target bonus. Pursuant to
Mr. Meloys 2010 Retention Agreement and described on
page 49, if his employment is terminated under an
involuntary not for cause scenario through December 31,
2010, then his retention payment of $5,000,000 shall be applied
as on offset against the amount of severance pay owed by the
Company. As a result, Mr. Meloys retention payment
reduced his cash severance amount to $0. |
|
(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
2010 AIP as discussed on page 39. |
|
(3) |
|
Reflects the
in-the-money
value of unvested stock options, the estimated current value of
unvested performance units and the value of unvested restricted
stock shares and restricted stock units, under Anadarko equity
plans, all as of December 31, 2010. In the event of an
involuntary termination, unvested performance units granted
prior to 2009 would be paid at target upon termination and all
other unvested performance units would be paid after the end of
the applicable performance periods based on actual performance.
For performance units payable based on actual performance,
current values reflect performance to date estimates as of
December 31, 2010. 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 for his service to our subsidiary. 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, 2010
of $215.00. |
|
(4) |
|
Reflects the lump-sum present value of vested benefits related
to the Companys supplemental pension benefits. Values
exclude vested amounts payable under the qualified plans
available to all employees. All values include special pension
credits, if applicable, provided through an employment
agreement, retention agreement, the APC Retirement Restoration
Plan or the KMG Restoration Plan. On a
case-by-case
basis, the Compensation Committee may approve a special
retirement benefit enhancement that is equivalent to |
65
|
|
|
|
|
the additional supplemental pension benefits that would have
accrued assuming they were eligible for subsidized early
retirement benefits. Messrs. Hackett and Meloy are not
eligible for this supplemental benefit because they are
currently eligible for early retirement. If the Compensation
Committee were to have approved this special benefit for the
other NEOs, the incremental value as of December 31, 2010
to the retirement restoration plan benefits disclosed above
would have been as follows: Mr. Gwin $380,172;
Mr. Walker $693,424; and
Mr. Daniels $2,734,492. |
|
(5) |
|
Reflects the combined vested balances in the non-qualified
Savings Restoration Plan and Deferred Compensation Plan.
Mr. Hacketts value includes the shares he earned and
deferred under the 1999 Stock Incentive Plan in settlement for
his 2007 annual performance share award for the performance
period ending December 31, 2009. |
|
(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 NEO values
represent 24 months of health and welfare benefit coverage.
All amounts are present values determined in accordance with
FASB ASC Topic 715. 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. |
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
|
|
|
$
|
4,959,044
|
|
|
$
|
5,787,687
|
|
|
$
|
|
|
|
$
|
4,582,290
|
|
Pro-rata AIP Bonus for 2010(2)
|
|
$
|
2,037,750
|
|
|
$
|
995,015
|
|
|
$
|
1,260,754
|
|
|
$
|
1,005,100
|
|
|
$
|
1,005,100
|
|
Accelerated Equity Compensation(3)
|
|
$
|
41,040,023
|
|
|
$
|
13,720,472
|
|
|
$
|
15,447,471
|
|
|
$
|
10,832,706
|
|
|
$
|
12,464,267
|
|
Retirement Restoration Plan Benefits(4)
|
|
$
|
23,636,357
|
|
|
$
|
2,260,821
|
|
|
$
|
5,384,096
|
|
|
$
|
19,156,280
|
|
|
$
|
8,144,268
|
|
Non-qualified Deferred Compensation(5)
|
|
$
|
8,086,455
|
|
|
$
|
557,921
|
|
|
$
|
783,959
|
|
|
$
|
689,892
|
|
|
$
|
2,244,010
|
|
Health and Welfare Benefits(6)
|
|
$
|
242,035
|
|
|
$
|
70,357
|
|
|
$
|
193,733
|
|
|
$
|
61,524
|
|
|
$
|
346,012
|
|
Outplacement Assistance
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
Financial Counseling(7)
|
|
$
|
|
|
|
$
|
41,190
|
|
|
$
|
41,190
|
|
|
$
|
41,190
|
|
|
$
|
41,190
|
|
Excise Tax and
Gross-up(8)
|
|
$
|
13,252,887
|
|
|
$
|
5,449,468
|
|
|
$
|
8,069,428
|
|
|
$
|
3,424,670
|
|
|
$
|
6,045,231
|
|
Total
|
|
$
|
99,141,257
|
|
|
$
|
28,084,288
|
|
|
$
|
36,998,318
|
|
|
$
|
35,241,362
|
|
|
$
|
34,902,368
|
|
|
|
|
(1) |
|
Mr. Hacketts value assumes three times his base
salary plus target AIP bonus; all other NEO values assume 2.9
times the sum of base salary plus the highest AIP bonus paid in
the past three years. Pursuant to Mr. Meloys 2010
Retention Agreement and described on page 49, if his
employment is terminated because of either an involuntary
termination or voluntary for Good Reason termination in a
change-of-control
scenario through December 31, 2010, then his retention
payment of $5,000,000 shall be applied as an offset against the
amount of severance pay owed by the Company. As a result,
Mr. Meloys retention payment reduced his cash
severance amount to $0. |
|
(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, 2010; all other NEO 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, 2010.
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 for his
service to our subsidiary. 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, 2010 of $215.00. |
66
|
|
|
(4) |
|
For all NEOs, 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 NEOs were eligible for subsidized early retirement
benefits. Values exclude vested amounts payable under the
qualified plans available to all employees. All values include
special pension credits, provided through an employment
agreement, retention agreement, the APC Retirement Restoration
Plan, the KMG Restoration Plan or
change-of-control
agreement. |
|
(5) |
|
Includes the combined balances in the non-qualified Savings
Restoration Plan and Deferred Compensation Plan plus an
additional three years of employer contributions into the
Savings Restoration Plan based on each officers current
contribution rate to the Plan. Mr. Hacketts value
includes the shares he earned and deferred under the 1999 Stock
Incentive Plan in settlement for his 2007 annual performance
share award for the performance period ending December 31,
2009. |
|
(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. 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 2010(1)
|
|
$
|
2,037,750
|
|
|
$
|
624,625
|
|
|
$
|
704,039
|
|
|
$
|
546,250
|
|
|
$
|
546,250
|
|
Accelerated Equity Compensation(2)
|
|
$
|
41,040,023
|
|
|
$
|
13,720,472
|
|
|
$
|
15,447,471
|
|
|
$
|
10,832,706
|
|
|
$
|
12,464,267
|
|
Retirement Restoration Plan Benefits(3)
|
|
$
|
16,446,642
|
|
|
$
|
539,360
|
|
|
$
|
1,092,900
|
|
|
$
|
16,112,160
|
|
|
$
|
4,136,079
|
|
Non-qualified Deferred Compensation(4)
|
|
$
|
7,129,402
|
|
|
$
|
250,118
|
|
|
$
|
424,723
|
|
|
$
|
405,474
|
|
|
$
|
1,959,592
|
|
Health and Welfare Benefits(5)
|
|
$
|
1,266,246
|
|
|
$
|
450,541
|
|
|
$
|
416,147
|
|
|
$
|
352,178
|
|
|
$
|
343,502
|
|
Total
|
|
$
|
67,920,063
|
|
|
$
|
15,585,116
|
|
|
$
|
18,085,280
|
|
|
$
|
28,248,768
|
|
|
$
|
19,449,690
|
|
|
|
|
(1) |
|
Represents payment of a pro-rata target AIP bonus based on
target bonus percentages effective for the 2010 AIP and eligible
earnings as of December 31, 2010. |
|
(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, 2010.
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 for his
service to our subsidiary. 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, 2010 of $215.00. |
|
(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.
Mr. Hacketts value includes the shares he earned and
deferred under the 1999 Stock Incentive Plan in settlement for
his 2007 annual performance share award for the performance
period ending December 31, 2009. |
67
|
|
|
(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. Mr. Hacketts value also includes the
lump-sum value of vested subsidized retiree medical benefits. |
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hackett
|
|
Mr. Gwin
|
|
Mr. Walker
|
|
Mr. Meloy
|
|
Mr. Daniels
|
|
Cash Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Pro-rata AIP Bonus for 2010(1)
|
|
$
|
2,037,750
|
|
|
$
|
624,625
|
|
|
$
|
704,039
|
|
|
$
|
546,250
|
|
|
$
|
546,250
|
|
Accelerated Equity Compensation(2)
|
|
$
|
41,040,023
|
|
|
$
|
13,720,472
|
|
|
$
|
15,447,471
|
|
|
$
|
10,832,706
|
|
|
$
|
12,464,267
|
|
Retirement Restoration Plan Benefits(3)
|
|
$
|
16,446,642
|
|
|
$
|
539,360
|
|
|
$
|
1,092,900
|
|
|
$
|
16,112,160
|
|
|
$
|
4,136,079
|
|
Non-qualified Deferred Compensation(4)
|
|
$
|
7,129,402
|
|
|
$
|
250,118
|
|
|
$
|
424,723
|
|
|
$
|
405,474
|
|
|
$
|
1,959,592
|
|
Life Insurance Proceeds(5)
|
|
$
|
7,606,894
|
|
|
$
|
2,250,197
|
|
|
$
|
2,313,139
|
|
|
$
|
1,809,599
|
|
|
$
|
1,809,599
|
|
Total
|
|
$
|
74,260,711
|
|
|
$
|
17,384,772
|
|
|
$
|
19,982,272
|
|
|
$
|
29,706,189
|
|
|
$
|
20,915,787
|
|
|
|
|
(1) |
|
Represents payment of a pro-rata target AIP bonus based on
target bonus percentages effective for the 2010 AIP and eligible
earnings as of December 31, 2010. |
|
(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, 2010.
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 for his
service to our subsidiary. 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, 2010 of $215.00. |
|
(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.
Mr. Hacketts value includes the shares he earned and
deferred under the 1999 Stock Incentive Plan in settlement for
his 2007 annual performance share award for the performance
period ending December 31, 2009. |
|
(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 vested subsidized retiree medical
benefits. |
68
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 annual 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, was a non-executive employee of the Company in the
Supply Chain Management department who worked for the Company
from 2001 to July 2010. Mr. Princes total
W-2 compensation
for 2010 was greater than $120,000 but less than $300,000. The
Nominating and Corporate Governance Committee has reviewed and
approved his employment arrangement in accordance with the
Companys policy on transactions with related persons.
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.
69
|
|
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 2011. 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 2011. If the
stockholders do not ratify the appointment of KPMG LLP, the
Audit Committee will make the final determination of the
independent auditor for 2011.
INDEPENDENT
AUDITOR
KPMG LLP, an independent registered public accounting firm,
served as the Companys independent auditor during 2010.
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 2010
and 2009 and for other services provided by KPMG LLP.
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit Fees
|
|
$
|
5,535,000
|
|
|
$
|
5,600,000
|
|
Audit-related Fees
|
|
|
947,000
|
|
|
|
1,369,000
|
|
Tax Fees
|
|
|
605,000
|
|
|
|
230,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,087,000
|
|
|
$
|
7,199,000
|
|
|
|
|
|
|
|
|
|
|
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 2010 and 2009 were
$920,000 and $915,000, 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.
Audit-related fees related to WES for 2010 and 2009 were
$640,000 and $289,000, respectively, which are not included in
the table above.
Tax fees are primarily for tax planning compliance and services
including approximately $5,000 and $93,000 in 2010 and 2009,
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 2010, 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.
70
ITEM 3
ADVISORY VOTE ON THE COMPANYS NAMED EXECUTIVE OFFICER
COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (Act) enables our stockholders to vote to approve, on an
advisory basis, the compensation of the Companys NEOs, as
disclosed in this proxy statement pursuant to the SECs
compensation disclosure rules.
As described in detail under the heading Compensation
Discussion and Analysis, our executive compensation
program aligns with our business strategy, focuses on long-term
value creation for our stockholders and delivers pay relative to
our performance, which will attract and retain experienced,
talented executives to ensure the Companys success. Please
read the Compensation Discussion and Analysis
beginning on page 28 for additional details about our
executive compensation program, including information about the
compensation of our NEOs during 2010.
During 2010, the Compensation Committee undertook a
comprehensive review and assessment of the various design
features of the Companys executive compensation and
benefits programs to confirm that such programs are
competitively structured, are aligned with our short and
long-term strategic goals and reflect a strong
pay-for-performance
orientation. Following the Deepwater Horizon events (Anadarko
owns a 25% non-operating leasehold interest in the Macondo
lease), the Compensation Committee considered various retention
challenges in addition to the Companys operational and
financial performance to ensure that the Company retained a
strong and focused executive leadership team. The compensation
actions taken with respect to 2010 reflect the Compensation
Committees adherence to its established executive
compensation philosophy and principles, and a strong
pay-for-performance
orientation.
Below are the key actions and decisions made regarding the
Companys executive compensation program review in 2010 and
early 2011, as approved by the Compensation Committee with
counsel from its independent compensation consultant:
|
|
|
|
|
held base salaries for Messrs. Hackett, Daniels and Meloy
at current levels (for the second year in a row) and increased
the base salaries for Messrs. Gwin and Walker for
competitive reasons;
|
|
|
|
reduced or maintained the value of the 2010 annual long-term
incentive awards for each of the NEOs relative to the value of
the annual long-term incentive awards made for 2009;
|
|
|
|
made performance-based incentive bonus awards to NEOs to
recognize both Company and individual performance for 2010 and,
beginning with the 2011 plan year, established maximum caps of
275% for each performance metric under the Annual Incentive
Program, (in addition to the existing overall program cap of
200%);
|
|
|
|
increased the stock ownership requirements for our CEO from five
times base salary to six times base salary and for our
non-employee directors from five times annual retainer to seven
times annual retainer;
|
|
|
|
reduced the level of executive severance benefits provided in
the event of an involuntary not for cause termination, outside
of a
change-of-control,
by eliminating: (1) the special retirement benefit
enhancement, except for in special cases as approved by the
Compensation Committee; and (2) the post-termination
financial planning benefits;
|
|
|
|
reduced the level of post-change-of-control severance benefits
for prospective senior executives by: (1) eliminating the
modified single trigger provision and replacing it with a double
trigger provision; (2) reducing the protection period from
three years to two years; (3) eliminating the full excise
tax gross-up
provision and replacing it with a
best-of-net
approach; and (4) eliminating the post-termination
financial planning benefits;
|
|
|
|
executed a special retention agreement with Mr. Meloy,
providing for his continued leadership of the Companys
worldwide operations, to ensure that the Company is able to
successfully execute on its business strategy in light of
ongoing regulatory challenges in the Gulf of Mexico; and
|
71
|
|
|
|
|
awarded Mr. Daniels a special restricted stock grant to
recognize his leadership for the Companys exceptional
exploration achievements in 2010.
|
After careful consideration of this Item 3, the Board has
determined that the Companys NEO compensation aligns with
our business strategy, focuses on long-term value creation for
our stockholders and delivers competitive pay relative to our
performance, and therefore the Board recommends that you vote
FOR the approval, on an advisory basis, of the
Companys NEO compensation as disclosed pursuant to the
SECs compensation disclosure rules (which disclosure shall
include the Compensation Discussion and Analysis, the Summary
Compensation Table, and the related tables and disclosure in
this proxy statement).
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPANYS NAMED
EXECUTIVE OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY
STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF
THE SECURITIES AND EXCHANGE COMMISSION.
ITEM 4 ADVISORY
VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE
COMPANYS NAMED EXECUTIVE OFFICER COMPENSATION
The Act enables our stockholders to indicate how frequently we
should seek an advisory vote on the compensation of the NEOs, as
disclosed pursuant to the SECs compensation disclosure
rules, such as Item 3 included in this proxy statement. By
voting on this Item 4, stockholders may indicate whether
the advisory vote should occur every three years, every two
years or every year, or abstain on this matter.
After careful consideration of this Item 4, the Board has
determined that an advisory vote on executive compensation that
occurs every three years (a triennial vote) is the most
appropriate alternative for the Company, as described further
below.
Setting a three-year period for holding this stockholder vote
will provide a clear, simple and effective means for us to
obtain information on investor sentiment about our executive
compensation philosophy and react thereto. As further discussed
in the Compensation Discussion and Analysis
Our Executive Compensation Philosophy and Guiding
Principles and Paying for
Performance, we seek to maintain a consistent compensation
program based on certain core compensation principles, including
long-term relative performance measures that emphasize an
increase in stockholder value over time. A triennial vote would
closely align stockholder feedback with the multi-year
performance measurement cycle we use to reward long-term
performance while at the same time afford our stockholders an
effective means of providing feedback on the application of our
consistent core compensation principles. Additionally, as we
seek to avoid significant deviation in our compensation programs
year to year, in part to ensure retention of talented executive
team members, we believe our stockholders are not subject to the
type of risks associated with fluctuating executive compensation
that is cause for more frequent stockholder review. Furthermore,
we believe a triennial vote represents the most effective
timeframe for us to respond to stockholder feedback and provides
us with sufficient time to engage with stockholders to
understand and respond to the vote results and develop and
implement any adjustments to our executive compensation program.
The Board is aware of and took into account views that some have
expressed in support of conducting an annual advisory vote on
executive compensation. We are aware that some stockholders
believe that annual advisory votes will enhance or reinforce
accountability. However, we have in the past been, and will in
the future continue to be, proactively engaged with our
stockholders on a number of topics and in a number of forums.
Thus, we view the advisory vote on executive compensation as an
additional, but not exclusive, opportunity for our stockholders
to communicate with us regarding their views on the
Companys executive compensation programs. In addition,
because our executive compensation programs have typically not
changed materially from
year-to-year
and are designed to foster long-term performance, we are
concerned that an annual advisory vote on executive compensation
could lead to a short-term perspective inappropriately bearing
on our executive compensation programs. Furthermore, we grant
awards with multi-year performance and service periods to
encourage our NEOs to focus on long-term performance, and
believe a triennial vote allows our executive compensation
programs to be evaluated over a similar time frame and in
relation to our long-term performance. Finally, although we
believe that holding an advisory vote on executive compensation
every
72
three years will reflect the right balance of considerations in
the normal course, we will periodically reassess that view and
can provide for an advisory vote on executive compensation on a
more frequent basis if changes in our executive compensation
programs or other circumstances suggest that such a vote would
be appropriate.
This advisory vote on the frequency of future advisory votes on
executive compensation is non-binding on the Board.
Notwithstanding the Boards recommendation and the outcome
of the stockholder vote, the Board may in the future decide to
conduct advisory votes on alternative bases and may vary its
practice based on factors such as discussions with stockholders
and the adoption of material changes to our executive
compensation programs. The Board will disclose its position on
the frequency of future advisory votes on executive compensation
as part of our Corporate Governance Guidelines on our website at
www.anadarko.com.
The vote with regard to Item 4 will determine the schedule
on which future
say-on-pay
proposals like Item 3 are presented to stockholders. You
may cast your vote on your preferred voting frequency by
choosing the option of three years, two years, one year or
abstain from voting when you vote in response to this
Item 4.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR A FREQUENCY
OF THREE YEARS FOR FUTURE ADVISORY VOTES ON THE
COMPANYS NAMED EXECUTIVE OFFICER COMPENSATION.
ITEM 5 IF
PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER PROPOSAL
REGARDING AN AMENDMENT TO THE COMPANYS NON-DISCRIMINATION
POLICY TO INCLUDE 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,
are the beneficial owners of more than $2,000 worth of the
Companys common stock, and have notified the Company that
they intend to present the following resolution at the meeting
for action by the stockholders.
GENDER
IDENTITY NON-DISCRIMINATION POLICY
Whereas, Anadarko Petroleum Corporation does not
explicitly prohibit discrimination based on gender identity in
its Code of Business Conduct and Ethics;
According to the Human Rights Campaign, over 30% of Fortune
100 companies now prohibit discrimination based on gender
identity;
Increasingly, companies are amending their employment policies
to prohibit discrimination based on gender identity. Some recent
examples include: Bob-Ton Stores; Flowserve Corporation; Nalco
Company; Atmos Energy Corporation; Autoliv, Inc.; Community
Health Systems; Core-Mark Holding Company; FMC Technologies
Inc.; Genworth Financial; Hertz Global Holdings; Jacobs
Engineering Group; Western Union; and World Fuel Services;
Whereas, a significant number of states and local
governments also prohibit workplace discrimination based on
gender identity. For example, the District of Columbia;
Baltimore City; Montgomery County; California, Colorado, Hawaii,
Illinois, Iowa, Maine, Minnesota, New Jersey, New Mexico, New
York City, Oregon, Rhode Island, Vermont and Washington have
gender identity discrimination statues on their books. And even
in states without specific statues, courts have sometimes
interpreted other antidiscrimination statues, like those
protecting individuals based on their gender, to include gender
identity;
Whereas, the New York City Human Rights Law, which is
Title 8 of the Administrative Code of the City of New York,
makes it clear that gender identity is protected under the law,
more specifically it is a protected classification under
employment discrimination;
Whereas, the jobs web site of the U.S. federal
government includes language that explicitly bans employment
discrimination based on gender identity;
73
Whereas, as long-term investors, we believe that
corporations that prohibit workplace discrimination, including
discrimination on the basis of gender identity, have a
competitive advantage in recruiting and retaining employees from
the widest talent pool, and reduce exposure to related legal and
reputational risks;
Our company has significantly increased the size and scope of
its midstream business through acquisition, and at the end of
2009, had systems located throughout major onshore producing
basins in seven states, including two, Colorado and New Mexico,
that prohibit workplace discrimination based on gender identity;
Resolved: The shareholders request that
Anadarko Petroleum Corporation amend its Code of Business and
Ethics to explicitly prohibit discrimination based on gender
identity or expression, and to substantially implement the
policy.
Supporting Statement: Employment
discrimination on the basis of 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. We believe that Anadarko Petroleum
Corporation would 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 workplace free from discrimination and harassment. The
Companys Code of Business Conduct and Ethics (available at
http://www.anadarko.com/SiteCollectionDocuments/PDF/Corp%20Gov/codeethics_web.html)
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. 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. The morale and productivity level of our
employees is extremely high as evidenced by the Houston
Chronicles designation of the Company as being
Houstons Top Workplace in 2010 (Large
Company). As a result, we believe that our current
policies adequately reflect our strong commitment to
non-discrimination. We therefore believe that there is no need
to adopt this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
ITEM 6 IF
PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER PROPOSAL
RECOMMENDING ADOPTION OF A POLICY PROVIDING THAT THE CHAIRMAN OF
THE BOARD BE AN INDEPENDENT DIRECTOR
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 stockholders of Anadarko
Petroleum Corporation (Anadarko or the
Company) ask the Board of Directors to adopt a
policy that the Boards Chairman be an independent director
according to the definition set forth in the New York Stock
Exchange listing standards, unless Anadarko stock ceases being
listed there and is listed on another exchange, at which point,
that exchanges standard of independence should apply. If
the Board determines that a Chairman who was independent when he
or she was selected is no longer independent, the Board shall
promptly select a new Chairman who satisfies this independence
requirement. Compliance with this requirement may be excused if
no director who qualifies as independent is elected by
shareholders or if no independent director is willing to serve
as Chairman. This independence requirement shall apply
prospectively so as not to violate any Company contractual
obligation at the time this resolution is adopted.
74
SUPPORTING
STATEMENT
Anadarkos CEO, James Hackett, also serves as chairman of
the Companys board of directors. As Intel former chairman
Andrew Grove stated, The separation of the two jobs goes
to the heart of the conception of a corporation. Is a company a
sandbox for the CEO, or is the CEO an employee? If hes an
employee, he needs a boss, and that boss is the board. The
chairman runs the board. How can the CEO be his own boss?
In our view, an independent board chair provides a better
balance of power between the CEO and the board and supports
strong, independent board leadership and functioning. The
primary duty of a board of directors is to oversee the
management of a company on behalf of its shareowners. But if a
CEO also serves as chair, we believe this presents a conflict of
interest that can result in excessive management influence on
the board and weaken the boards oversight of management.
In March 2009, the Chairmens Forum, a group of more than
50 current and former board chairman, directors, chief
executives, investors and governance experts hosted by
Yales Millstein Center, endorsed the voluntary adoption of
independent, non-executive chairmen of the board, finding that
[t]he independent chair curbs conflicts of interest,
promotes oversight of risk, manages the relationship between the
board and CEO, serves as a conduit for regular communication
with shareowners, and is a logical next step in the development
of an independent board. (Chairing the Board: The Case
for Independent Leadership in Corporate North America, Yale
Millstein Center, 2009).
An independent chairman is standard best practice at companies
in the United Kingdom, Australia, Brazil, Canada, Germany, the
Netherlands, and South Africa (McKinsey Quarterly 2004 Number
2, p 44). We believe that independent board leadership would
be particularly constructive at Anadarko, where Mr. Hackett
ranked 332 out of 338 CEOs in Chief Executive
magazines 2010 ranking of economic value creation.
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:
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
stockholder value for several reasons:
|
|
|
|
|
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;
|
|
|
|
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
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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 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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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.
Our Lead Directors 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.
Our Lead Director works with our Chairman to approve all meeting
agendas, and presides at (i) executive sessions of the
non-employee directors, which are held in conjunction with each
regularly scheduled quarterly meeting of the Board,
(ii) executive sessions of the independent directors, which
are held at least once a year, and (iii) any other meetings
as requested by the directors. Our Lead Director 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 BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
ITEM 7 IF
PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER PROPOSAL
RECOMMENDING ADOPTION OF A POLICY RELATING TO ACCELERATED
VESTING OF EXECUTIVE OFFICER EQUITY AWARDS UPON A TERMINATION OR
A CHANGE OF CONTROL
The Amalgamated Banks LongView Large Cap 500 Index Fund,
located at 275 Seventh Avenue, New York, NY 1001, telephone
(212) 255-6200,
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: The shareholders hereby ask the
board of directors of Anadarko Petroleum Corporation (the
Company) to adopt a policy that if a senior
executive is terminated or there is a change of control of the
Company, there shall be no acceleration in the vesting of any
future equity award to a senior executive, provided that any
unvested award may vest on a pro rata basis as of the
termination date; to the extent any such unvested awards are
based on performance, the performance goals must have been met.
This policy shall not affect any legal obligations that may
exist at the time of adoption of the requested policy, but would
affect any extensions, modifications of continuations or any
such existing legal obligations.
SUPPORTING
STATEMENT
Under various executive compensation agreements, the
Companys senior executives may receive severance awards if
they are involuntarily terminated without cause or if they are
terminated under certain circumstances after a change in control
of the Company.
We support the concept of performance-based equity awards to
senior executives to the extent that such awards are tailored to
align the interests of senior executives with the interests of
shareholders. We also believe that severance payments may be
appropriate in some circumstances as well.
We are concerned, however, that the Companys current
practices may permit accelerated vesting of unearned equity
awards upon termination at levels that have nothing to do with
performance.
Last years proxy summarizes Anadarkos exposure to
unvested equity awards if a senior executive is terminated.
Following a change in control, an involuntary termination or a
voluntary termination for good
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reason would have accelerated $39.3 million worth of
unearned equity for Mr. Hackett, the Chairman and CEO,
using the stock price on December 31, 2009. Even without a
change in control, he would have been entitled to the same
acceleration after an involuntary,
not-for-cause
termination. Estimated acceleration for other senior executives
upon termination would have ranged from $8.3 to
$12.8 million apiece.
We note too that Anadarkos definition of a change in
control is somewhat expansive and can occur with only a 20%
ownership change.
We believe that it is important to retain the link between
senior executive pay and the Companys performance, and one
way to achieve that goal is to prevent possible windfalls that
an executive has not earned. We therefore propose that Anadarko
limit acceleration of equity awards following termination or a
change in control and allow equity awards to vest only on a
pro rata basis as of the date of any triggering event; to
the extent that any such awards are performance-based, the
performance goals must have been met before the date that an
award is triggered.
The approach that we recommend is not unique. In 2010 Occidental
Petroleum, one of Anadarkos industry peers, adopted such a
policy for senior executives with respect to a
change-in-control
event.
We urge you 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:
The Compensation Committee believes the current structure of the
Companys executive compensation program is in the best
interest of the Company and its stockholders and consistent with
the compensation practices of our industry peer group.
Provisions in the Companys executive compensation program
providing for the accelerated vesting of executive officer
equity awards if a senior executive is terminated or upon a
change of control are appropriate and effective to further the
objectives of our executive compensation program by aligning the
interests of our executive officers with the interests of our
stockholders. A significant portion of each executives
annual target total compensation opportunity (more than 75%) is
delivered in the form of long-term equity awards and considered
At-Risk compensation. Awards are structured in a combination of
equity-based awards (stock options, time-based restricted stock
units and performance unit awards) that encourages retention.
Non-qualified stock options and restricted stock units are
subject to a three-year vesting period and performance units are
subject to two and three year performance periods, with payout
based on the Companys total shareholder return relative to
our industry peer group. In addition to providing a retention
component to our compensation program, the Company believes that
placing a significant percentage of compensation opportunity at
risk over extended vesting periods incentivizes executive
officers to have a long-term perspective, focus on long-term
stock price performance and create long-term value for the
Company and our stockholders.
Contractual agreements and benefit plans for the benefit of key
employees in the face of a change of control event (such as a
merger, reorganization or tender offer) allow the Companys
executive management to remain objective and focused on
protecting stockholders interests and maximizing
stockholder value during a potential change of control event.
These arrangements may also enable our executive management to
avoid distractions and potential personal conflicts of interest
that could otherwise arise when the Board is considering a
potential change of control transaction, thus permitting a
continued focus of business operations and reducing the risk of
executive management turnover and keeping executive
managements objective input available to the Board during
any such transaction.
In addition, the Companys stockholders are free to sell
their stock at the time of a change of control and thereby
realize, in full, the value created at the time of the
transaction. The Board believes that the value created at the
time of a change of control transaction should be attributed, at
least in part, to the efforts and talents of the Companys
executive officers. As previously mentioned, the Companys
philosophy is to position the majority of annual compensation in
the form of At-Risk, long-term equity awards for the purpose of
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incentivizing executive officers to have a long-term
perspective, focus on long-term stock price performance and
create long-term value for the Company and our stockholders. The
Board believes that accelerating the vesting of executive
officer equity awards upon a change of control is appropriate
given the design of the Companys current executive
compensation program because it provides executive officers with
the opportunity to realize the full value of their equity awards
and participate with the Companys stockholders in the
value created as a result of the change of control transaction.
Adoption of the proposal could disadvantage the Company from a
competitive standpoint, thus jeopardizing our long-term
performance and ability to create and deliver maximum value to
our stockholders. A majority of our peers do not have a policy
eliminating the accelerated vesting of equity if a senior
executive is terminated or upon a change of control. Our
executive compensation program is designed to attract, motivate
and retain a highly qualified executive management team and
appropriately reward executive officers for their contribution
to the achievement of our short-term and long-term goals and the
creation and enhancement of stockholder value. Unless the
prohibition urged by the proposal is implemented by our
competitors for executive officer talent, the Board believes
that the proposal could significantly disadvantage us from a
competitive standpoint.
Further, the Board also believes that implementation of this
proposal, as proposed, is impractical as it lacks specificity
relative to critical terms used in the proposal such as
change of control and termination of
employment. Consequently, the proposal is unclear regarding the
circumstances under which accelerated vesting of unvested equity
awards held by our executive officers would be prohibited.
Likewise, the proposal is unclear as to how pro rata vesting
would be administered and calculated.
We believe that the current structure of the Companys
executive compensation programs, including the provisions of the
Companys program providing for the accelerated vesting of
executive officer equity awards if a senior executive is
terminated or upon a change of control, is appropriate and
effective, is consistent with the compensation practices of our
industry peer companies and is in the best interest of the
Company and its stockholders.
THE BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
ITEM 8 IF
PRESENTED, CONSIDER AND VOTE UPON A STOCKHOLDER PROPOSAL
RELATING TO POLITICAL CONTRIBUTIONS
The New York State Common Retirement Fund, located at 633 Third
Avenue-31st Floor,
New York, NY 10017, telephone
(212) 681-4489,
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 the shareholders of Anadarko Petroleum
Corporation hereby request that the Company provide a report,
updated semi-annually, disclosing the Companys:
1. Policies and procedures for political contributions and
expenditures (both direct and indirect) made with corporate
funds.
2. Monetary and non-monetary contributions and expenditures
(direct and indirect) used to participate in or intervene in any
political campaign on behalf of (or in opposition to) any
candidate for public office, and used in any attempt to
influence the general public, or segments thereof, with respect
to elections or referendums. The report shall include the
following:
a. An accounting through an itemized report that includes
the identity of the recipient as well as the amount paid to each
recipient of the Companys funds that are used for
political contributions or expenditures as described
above; and
b. The title of the person or persons in the Company who
participated in making the decisions to make the political
contribution or expenditure.
78
The report shall be presented to the board of directors
audit committee or other relevant oversight committee and posted
on the companys website to reduce costs to shareholders.
Stockholder
Supporting Statement
As long-term shareholders of Anadarko Petroleum Corporation, we
support transparency and accountability in corporate spending on
political activities. These activities include direct and
indirect political contributions to candidates, political
parties, political organizations or ballot referendums;
independent expenditures; or electioneering communications on
behalf of a federal, state or local candidate.
Disclosure is consistent with public policy, in the best
interest of the company and its shareholders, and critical for
compliance with federal ethics laws. Moreover, the majority in
the Supreme Courts Citizens United decision
recognized the importance of political spending disclosure for
shareholders when it said [D]isclosure permits citizens
and shareholders to react to the speech of corporate entities in
a proper way. This transparency enables the electorate to
make informed decisions and give proper weight to different
speakers and messages. Gaps in transparency and
accountability may expose the company to reputational and
business risks that could threaten long-term shareholder value.
Anadarko Petroleum Corporation contributed at least $1,544,705
in corporate funds since the 2002 election cycle. (CQ:
http://moneyline.cq.com/pml/home.do
and National Institute on Money in State Politics:
http:www.followthemoney.org/index.phtml.)
However, relying on publicly available data does not provide a
complete picture of the Companys political expenditures.
For example, the Companys payments to trade associations
used for political activities are undisclosed and unknown. In
many cases, even management does not know how trade associations
use their companys money politically. The proposal asks
the Company to disclose all of its political contributions,
including payments to trade associations and other tax exempt
organizations. This would bring our Company in line with a
growing number of leading companies, including Hewlett-Packard,
Aetna and American Electric Power that support political
disclosure and accountability and present this information on
their websites.
The Companys Board and its shareholders need complete
disclosure to be able to fully evaluate the political use of
corporate assets. Thus, we urge your support for this critical
governance reform.
BOARD OF
DIRECTORS STATEMENT REGARDING PROPOSAL
The Board
of Directors recommends a vote AGAINST the above
stockholder proposal for the following reasons:
The Board believes that it is in the best interest of the
Company and its stockholders for us to participate in the
political process by engaging in a government relations program
to educate public officials about our position on issues
significant to the Companys business, and to support those
candidates who advocate pro-growth, free enterprise economic
policies. A major vehicle for the Companys political
activities is the Anadarko Petroleum Corporation Political
Action Committee (APC PAC). The APC PAC was formed
more than 20 years ago as a nonpartisan committee which
allows Anadarko employees the opportunity to voluntarily
contribute personal funds and join together to make political
contributions to federal, state and local candidates who share
Anadarkos commitment to a strong, free enterprise-based
energy industry. All of APC PACs contributions are fully
disclosed to the Federal Election Commission (FEC)
and posted by the FEC on its website, where they can be reviewed
by any stockholder or member of the public.
The APC PAC provides value to our stockholders by enhancing our
ability to engage in the democratic political process,
communicate clearly and frequently with public officials,
advocate sound and responsible legislative and regulatory
policies, and identify and support candidates who support our
Company and industry.
Anadarko makes no corporate contributions in federal elections.
In those states where the Company is permitted by law to make
corporate contributions to state candidates or ballot
initiatives, those contributions
79
are reported by the candidates or ballot initiative committees
to the appropriate state agencies. Such contributions are
already a matter of public record. Indeed, as noted by the
requestor, this information is often already available to the
public, having been compiled by advocacy groups or the press.
Additionally, the Company participates in various industry trade
associations. None of the trade associations the Company belongs
to are political committees, and consequently, none of its dues
payments or assessments are, as a matter of law, political
contributions. The Companys dues and other payments
to trade associations and other tax-exempt organizations are
used for a wide variety of purposes by those organizations, such
as developing and publishing technical industry standards and
providing professional development, research and education. In
light of these industry specific purposes, it would be
misleading to treat all such payments as political
contributions by the Company.
The requesters use of the term political
contribution, which the requester does not define, appears
to be extremely overbroad. Moreover, the requester loosely seeks
disclosure of indirect contributions, without
specifying what would be considered an indirect contribution.
Particularly in light of the vague use of these undefined terms,
the Board believes that additional reports requested in the
proposal, beyond the public disclosure that the Company is
already required to make and does make, would result in an
unnecessary and unproductive use of the Companys time and
resources.
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 25, 2011
The Woodlands, Texas
See
enclosed proxy card please vote
promptly
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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.
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS:
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M30660-P05522-Z54600
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH
AND RETURN THIS PORTION
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THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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ANADARKO PETROLEUM CORPORATION |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
Vote on Directors |
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1.
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Election of Directors
Nominees:
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John R. Butler, Jr.
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1b.
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Kevin P. Chilton
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THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR 3 YEARS FOR ITEM 4. |
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1c.
1d.
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Luke R. Corbett
H. Paulett Eberhart
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4.
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Advisory Vote on the Frequency of Future Advisory
Votes on Named Executive Officer Compensation.
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Preston M. Geren III |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST ITEMS 5, 6, 7 AND 8. |
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Stockholder Proposal- Gender Identity Non-Discrimination
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James T. Hackett |
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Stockholder Proposal- Adoption of Policy of Independent
Director Chairman. |
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Vote on Proposals |
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Stockholder Proposal- Adoption of Policy on Accelerated
Vesting of Equity Awards. |
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Ratification of Appointment of KPMG LLP as
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Stockholder Proposal- Report on Political Contributions.
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Advisory Vote on Named Executive Officer
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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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The shares represented by this proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder(s). If no direction is made,
this proxy will be voted FOR Items 1, 2 and 3, for 3 YEARS for Item 4, and
AGAINST Items 5, 6, 7 and 8. 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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Please indicate if you plan to attend this meeting. |
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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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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 25, 2011. |
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Signature [PLEASE SIGN WITHIN
BOX] |
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Signature (Joint Owners) |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and 10-K Wrap are available at:
http://bnymellon.mobular.net/bnymellon/apc
ê FOLD AND DETACH HERE ê
M30661-P05522-Z54600
ANADARKO PETROLEUM CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
May 17, 2011
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 17, 2011, 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)