Edgar Filing: APACHE CORP

PRE 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

Filed by the Registrant x Filed by a Party other than the Registrant ¨

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¨		Definitive Proxy Statement

¨		Definitive Additional Materials

¨		Soliciting Material under Rule 14a-12

APACHE CORPORATION

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

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LOGO

APACHE CORPORATION

One Post Oak Central

2000 Post Oak Boulevard, Suite 100

Houston, Texas 77056-4400

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The 2014 annual meeting of shareholders of Apache Corporation, a Delaware corporation, will be held on Thursday, May 15, 2014, at 10:00 a.m. (Houston time), at the Hilton Houston Post Oak, 2001 Post Oak Boulevard, Houston, Texas, for the following purposes:

Election of the three directors named in the attached proxy statement to serve until the Company’s annual meeting in 2017;

Ratification of appointment of Ernst & Young LLP as the Company’s independent auditors for fiscal year 2014;

Advisory vote to approve the compensation of the Company’s named executive officers;

Approval of an amendment to the Company’s Restated Certificate of Incorporation to eliminate the classified Board of Directors to provide for the annual election of all directors; and

Transaction of any other business that may properly come before the meeting or any adjournment thereof.

Holders of record of the Company’s common stock as of the close of business on March 17, 2014, are entitled to notice of, and to vote at, the annual meeting.

It is important that your shares are represented at the meeting. We encourage you to designate the proxies named on the enclosed proxy card to vote your shares on your behalf and per your instructions. This action does not limit your right to vote in person or to attend the meeting.

By order of the Board of Directors

LOGO

Houston, Texas

April [3], 2014

C. L. PEPER

Corporate Secretary

APACHE CORPORATION

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Shareholders to be held on May 15, 2014:

This proxy statement, along with the Company’s Annual Report on Form 10-K for the fiscal

year ended December 31, 2013 with 2013 Summary Annual Report, are available free of

charge on the Company’s website at http://www.apachecorp.com

PROXY STATEMENT TABLE OF CONTENTS


	Page

General		1

Purpose of the Annual Meeting		1

Who Can Vote		1

How to Vote		2

Voting 401(k) Savings Plan Shares		3

Revoking a Proxy		3

Quorum		3

Votes Needed		3

Who Counts the Votes		4

Election of Directors (Item Nos. 1 - 3)		5

Nominees for Election as Directors		6

Continuing Directors		7

Qualifications of Directors		9

Director Independence		12

Standing Committees and Meetings of the Board of Directors		15

Criteria for New Board Members and Re-Election of Board Members		18

Report of the Audit Committee		19

Director Compensation		21

Securities Ownership and Principal Holders		25

Section 16(a) Beneficial Ownership Reporting Compliance		26

Equity Compensation Plan Information		27

Executive Officers of the Company		28

Compensation Discussion and Analysis		32

Management Development and Compensation Committee Report		55

Summary Compensation Table		56

Grants of Plan Based Awards Table		61

Outstanding Equity Awards at Fiscal Year-End Table		64

Option Exercises and Stock Vested Table		65

Non-Qualified Deferred Compensation Table		66

Employment Contracts and Termination of Employment and Change-in-Control Arrangements		67

Compensation Committee Interlocks and Insider Participation		70

Certain Business Relationships and Transactions		71



Ratification of Appointment of Independent Auditors (Item No. 4)			72

Advisory Vote to Approve Compensation of Named Executive Officers (Item No. 5)			74

Approval of Amendment to Restated Certificate of Incorporation (Item No. 6)			77

Future Shareholder Proposals and Director Nominations			78

Shareholders with the Same Last Name and Address			78

Solicitation of Proxies			79

Annex A: Amendment to Article NINTH of Restated Certificate of Incorporation			A-1

Note: Throughout this proxy statement, references to the “stock split” relate to the two-for-one stock split of Apache common stock distributed in shares of common stock on January 14, 2004, to shareholders of record on December 31, 2003, and references to the “stock dividends” relate to the five-percent stock dividend on Apache common stock distributed in shares of common stock on April 2, 2003, to shareholders of record on March 12, 2003, and to the ten-percent stock dividend on Apache common stock distributed in shares of common stock on January 21, 2002, to shareholders of record on December 31, 2001.

Information on our website is not incorporated by reference into, and does not constitute a part of, this proxy statement.

APACHE CORPORATION

One Post Oak Central

2000 Post Oak Boulevard, Suite 100

Houston, Texas 77056-4400

April [3], 2014

PROXY STATEMENT

GENERAL

This proxy statement contains information about the 2014 annual meeting of shareholders of Apache Corporation. In this proxy statement both “Apache” and the “Company” refer to Apache Corporation. This proxy statement and the enclosed proxy card are being mailed to you by the Company’s Board of Directors starting on or about April [3], 2014.

Purpose of the Annual Meeting

At the Company’s annual meeting, shareholders will vote on the following matters:

•

Items 1- 3: election of directors;

•

Item 4: ratification of appointment of Ernst & Young LLP as the Company’s independent auditors;

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Item 5: advisory vote to approve the compensation of the Company’s named executive officers;

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Item 6: approval of an amendment of the Company’s Restated Certificate of Incorporation to eliminate the classified Board of Directors to provide for the annual election of all directors; and

•

Transaction of any other business that properly comes before the meeting. As of the date of this proxy statement, the Company is not aware of any other business to come before the meeting.

There are no rights of appraisal or similar rights of dissenters arising from matters to be acted on at the meeting.

Who Can Vote

Only shareholders of record holding shares of Apache common stock at the close of business on the record date, March 17, 2014, are entitled to receive notice of the annual meeting and to vote the shares of Apache common stock they held on that date. The Company’s stock transfer books will not be closed. A complete list of shareholders entitled to vote at the annual meeting will be available for examination by any Apache shareholder at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400, for purposes relating to the annual meeting, during normal business hours for a period of ten days before the meeting.

As of January 31, 2014, there were 394,724,983 shares of Apache common stock issued and outstanding. Holders of Apache common stock are entitled to one vote per share and are not allowed to cumulate votes in the election of directors. The enclosed proxy card shows the number of shares that you are entitled to vote.

How to Vote

If your shares of Apache common stock are held by a broker, bank or other nominee (in “street name”), you will receive instructions from them on how to vote your shares. If your shares are held by a broker and you do not give the broker specific instructions on how to vote your shares, your broker may vote your shares at its discretion on “routine” matters to be acted upon at the annual meeting. However, your shares will not be voted on any of the “non-routine” matters described below. An absence of voting instructions on any “non-routine” matters will result in a “broker non-vote.”

The only “routine” matter to be acted upon at the annual meeting is Item 4—ratification of appointment of Ernst & Young LLP as the Company’s independent auditors. All other matters to be acted upon at the annual meeting are “non-routine” matters and, as such, if you hold all or any portion of your shares in street name and you do not give your broker or bank specific instructions on how to vote your shares, your shares will not be voted on any of the following “non-routine” matters:

•

Items 1-3 – the election of directors;

•

Item 5—advisory vote to approve the compensation of the Company’s named executive officers; and

•

Item 6 – approval of an amendment of the Company’s Restated Certificate of Incorporation to eliminate the classified Board of Directors to provide for the annual election of all directors.

If you hold shares of Apache common stock in your own name (as a “shareholder of record”), you may give the Company instructions on how your shares are to be voted by:

(1)

using the internet voting site listed on the enclosed proxy card or scanning the QR code on the enclosed proxy card with your mobile device (specific directions for using the internet/mobile voting system are shown on the proxy card); or

(2)

using the toll-free telephone number listed on the enclosed proxy card (specific directions for using the telephone voting system are included on the proxy card); or

(3)

marking, signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided.

When using internet/mobile or telephone voting, the voting systems will verify that you are a shareholder through the use of a company number for Apache and a unique control number for you. If you vote by internet/mobile or telephone, please do not also mail the enclosed proxy card.

Whichever method you use to transmit your instructions, your shares of Apache common stock will be voted as you direct. If you sign and return the enclosed proxy card or otherwise designate the proxies named on the proxy card to vote on your behalf, but do not specify how to vote your shares, they will be voted:

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FOR the election of the nominees for director,

•

FOR the ratification of appointment of Ernst & Young LLP as the Company’s independent auditors,

•

FOR the advisory vote to approve the compensation of the Company’s named executive officers,

•

FOR approval of an amendment of the Company’s Restated Certificate of Incorporation to eliminate the classified Board of Directors to provide for the annual election of all directors, and

•

In accordance with the judgment of the persons voting the proxy on any other matter properly brought before the meeting, if any are properly raised at the meeting.

Voting 401(k) Savings Plan Shares

If you are an employee or former employee participating in the Apache 401(k) Savings Plan and have shares of Apache common stock credited to your plan account as of the record date, such shares are shown on the enclosed proxy card, and you have the right to direct the plan trustee regarding how to vote those shares. The trustee for the 401(k) Savings Plan is Fidelity Management Trust Company.

The trustee will vote the shares in your plan account in accordance with your instructions. If you do not send instructions (in the manner described under “How to Vote” above) or if your proxy card is not received by May 12, 2014, the shares credited to your account will be voted by the trustee in the same proportion as it votes shares for which it did receive timely instructions.

Revoking a Proxy

You may revoke a proxy before it is voted by submitting a new proxy with a later date (by internet, telephone or mail), by voting at the meeting, or by filing a written revocation with Apache’s corporate secretary. Your attendance at the annual meeting alone will not automatically revoke your proxy.

Quorum

The presence at the annual meeting, in person or by proxy, of the holders of a majority of the shares of Apache common stock outstanding on the record date will constitute a quorum, permitting the business of the meeting to be conducted.

Votes Needed

Election of Directors. The affirmative vote of a majority of the votes cast at the annual meeting is required for the election of directors. You may vote FOR or AGAINST any or all director nominees or you may ABSTAIN as to one or more director nominees. As set forth in our bylaws, only votes FOR or AGAINST the election of a director nominee will be counted. Abstentions and broker non-votes count for quorum purposes, but not for purposes of the election of directors. A vote to ABSTAIN is not treated as a vote FOR or AGAINST and thus, will have no effect on the outcome of the vote.

Ratification of the Appointment of Independent Auditors. The affirmative vote of a majority of the votes cast at the annual meeting is required for ratification of Ernst & Young LLP as the Company’s independent auditors. You may vote FOR or AGAINST the ratification of appointment of Ernst & Young LLP as the Company’s independent auditors or you may ABSTAIN. Votes cast FOR or AGAINST and ABSTENTIONS with respect to this matter will be counted as shares entitled to vote on the matter. Broker non-votes will be counted as shares entitled to vote on this matter. A vote to ABSTAIN will have the effect of a vote AGAINST ratification of the appointment of our independent registered public accounting firm.

Advisory Vote to Approve the Compensation of Named Executive Officers. You may vote FOR or AGAINST the advisory vote to approve the compensation of our named executive officers or you may ABSTAIN. A majority of the shares of the Company’s common stock present in person or represented by proxy at our annual meeting and entitled to vote must be voted FOR approval of the advisory proposal in order for it to pass. Votes cast FOR or AGAINST and ABSTENTIONS with respect to the proposal will be counted as shares entitled to vote on the proposal. Broker non-votes will not be counted as shares entitled to vote on the proposal. A vote to ABSTAIN will have the effect of a vote AGAINST the proposal.

Approval of an Amendment to our Restated Certificate of Incorporation. Four-fifths (80%) of the outstanding shares of the Company’s common stock must be voted FOR the proposal to amend the Company’s Restated Certificate of Incorporation to eliminate the classified Board of Directors to provide for the annual election of all directors in order for it to pass. You may vote FOR or AGAINST the proposal, or you may ABSTAIN. Broker non-votes will be counted as shares entitled to vote on this matter. A vote to ABSTAIN or a broker non-vote will have the effect of a vote AGAINST the proposal.

Other Business. The affirmative vote of a majority of the votes cast at the annual meeting is required for approval of any other business which may properly come before the meeting or any adjournment thereof. Only votes FOR or AGAINST approval of any other business will be counted. Abstentions and broker non-votes count for quorum purposes, but not for the voting on the approval of such other business.

Who Counts the Votes

Representatives of Wells Fargo Bank, N.A. will tabulate the votes and act as inspectors of the election.

ELECTION OF DIRECTORS

(ITEM NOS. 1 - 3 ON PROXY CARD)

The Company’s Restated Certificate of Incorporation provides that, as near as numerically possible, one-third of the directors shall be elected at each annual meeting of shareholders. Unless directors earlier resign or are removed, their terms are for three years, and continue thereafter until their successors are elected and qualify as directors.

The current terms of directors G. Steven Farris, Randolph M. Ferlic, and A. D. Frazier, Jr. will expire at the annual meeting. Amy H. Nelson was appointed to the Board of Directors on February 5, 2014. Each of Mr. Farris, Mr. Frazier, and Ms. Nelson has been recommended by the Company’s Corporate Governance and Nominating Committee and nominated by the Board of Directors for election by the shareholders to an additional three-year term. If elected, Mr. Farris, Mr. Frazier, and Ms. Nelson will serve beginning upon their election until the annual meeting of shareholders in 2017.

Randolph M. Ferlic, who has served as a director since 1986, will retire from the Company’s Board of Directors effective as of the close of the annual meeting on May 15, 2014.

Unless otherwise instructed, all proxies will be voted in favor of these nominees. If one or more of the nominees is unwilling or unable to serve, the proxies will be voted only for the remaining named nominees. Proxies cannot be voted for more than three nominees. The Board of Directors knows of no nominee for director who is unwilling or unable to serve.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTORS.

NOMINEES FOR ELECTION AS DIRECTORS

Biographical information, including principal occupation and business experience during the last five years, of each nominee for director, is set forth below. Unless otherwise stated, the principal occupation of each nominee has been the same for the past five years. In addition, each nominee’s experience, qualifications, attributes or skills to serve on our Board are discussed under the heading “Qualifications of Directors” below.

G. STEVEN FARRIS, 65, joined the Company’s Board of Directors in 1994, was appointed chairman of the board in January 2009, and has served as chief executive officer since May 2002. Mr. Farris also served the Company as president and chief operating officer from May 1994 to February 2009, as senior vice president from 1991 to 1994, and as vice president - exploration and production from 1988 to 1991. Prior to joining Apache, Mr. Farris was vice president of finance and business development for Terra Resources, Inc., a Tulsa, Oklahoma oil and gas company, from 1983 to 1988. He is a member of the Board of Visitors of M.D. Anderson Cancer Center, Houston, Texas, and is a founding member and serves on the executive committee of America’s Natural Gas Alliance (“ANGA”).

A. D. FRAZIER, JR., 69, joined the Board of Directors of the Company in 1997. He has served as president of Georgia Oak Partners, a private equity investment firm, since September 2011, having previously been a partner in Affiance, Inc., a Georgia - based bank consulting group. In July 2010, Mr. Frazier was appointed chairman of the Special Council for Tax Reform and Fairness to Georgians, established by the Georgia state legislature to examine the state’s tax code. He served as chairman and chief executive officer of Danka Business Systems PLC, St. Petersburg, Florida, from March 2006 until its sale in July 2008, and was of Counsel with the law firm of Balch & Bingham LLP, Atlanta, Georgia, from January 2005 to March 2006. From October 2004 until its sale in January 2007, he was a director and chairman of the board of Gold Kist, Inc., Atlanta, Georgia, an integrated chicken production, processing, and marketing company. At Apache, Mr. Frazier is a member of the Management Development and Compensation Committee and chairman of the Stock Plan Committee.

AMY H. NELSON, 44, joined Apache’s Board of Directors in February 2014. Ms. Nelson is the president of Greenridge Advisors, LLC, an energy services and equipment consulting firm focused on the development, execution and financing of growth strategies, that she founded in 2007. Prior to Greenridge, she served as a vice president of SCF Partners, a private equity firm, from 2000 to 2007, and she worked for Amoco Production Company in planning and engineering roles from 1992 to 1998. Since 2009, Ms. Nelson has been an adjunct professor of management at Rice University’s Jesse H. Jones Graduate School of Business.

CONTINUING DIRECTORS

Biographical information, including principal occupation and business experience during the last five years, for each continuing member of the Board of Directors whose term is not expiring at the 2014 annual meeting, is set forth below. Unless otherwise stated, the principal occupation of each director has been the same for the past five years. In addition, each director’s experience, qualifications, attributes or skills to serve on our Board are discussed under the heading “Qualifications of Directors” below.


Term Expires

CHANSOO JOUNG, 53, joined the Company’s Board of Directors in February 2011. Mr. Joung serves as a senior advisor at Warburg Pincus LLC, a firm at which he was a partner from 2005 to 2010. Prior to joining Warburg Pincus, Mr. Joung was co-head, then head, of the Americas Natural Resources Group in the investment banking division of Goldman Sachs from 1999 to 2004, and he served as a corporate finance banker in the Natural Resources Group from 1994 to 1999. While in the Natural Resources Group, he was promoted to managing director in 1996 and partner in 1998. Mr. Joung founded and led Goldman Sachs’ London-based European Energy Group in investment banking from 1992 to 1994. He began his career with Goldman Sachs in 1987 in the corporate finance department and also worked in the mergers and acquisitions department until 1990. Mr. Joung served as a director of Targa Resources Corp. and Targa Resources Partners, LP from 2007 to February 2011. At Apache, he is a member of the Audit Committee and a member of the Corporate Governance and Nominating Committee.		2016

GEORGE D. LAWRENCE, 63, a private investor, joined the Company’s Board of Directors in May 1996. Mr. Lawrence was president, chief executive officer, and a director of The Phoenix Resource Companies, Inc., a public oil and gas company, from 1990 until May 1996, when Phoenix merged with Apache. At Apache, he is chairman of the Management Development and Compensation Committee.		2015

JOHN E. LOWE, 54, joined the Company’s Board of Directors in July 2013. Mr. Lowe was assistant to the chief executive officer of ConocoPhillips from 2008 to 2012, and held a series of executive positions with ConocoPhillips, including executive vice president, exploration and production from 2007 to 2008; executive vice president, Commercial from 2006 to 2007; and executive vice president, planning, strategy and corporate affairs from 2002 to 2006. He is a former board member of Chevron Phillips Chemical Co. LLC, DCP Midstream LLC, and DCP Midstream GP, LLC, the general partner of DCP Midstream Partners LP. Mr. Lowe is a member of the board of directors for Phillips 66, Houston, Texas, and Agrium Inc., Calgary, Alberta, and a special executive advisor to Tudor, Pickering, Holt & Co. At Apache, Mr. Lowe is a member of the Management Development and Compensation Committee and a member of the Stock Plan Committee.		2015

WILLIAM C. MONTGOMERY, 52, joined Apache’s Board of Directors in September 2011. Since July 2011, Mr. Montgomery has served as a managing director of Quantum Energy Partners, a private equity firm that focuses on investments in the energy and power industries, and is a member of Quantum’s executive and investment committees. Prior to joining Quantum, Mr. Montgomery was a partner in the investment banking division of Goldman, Sachs & Co. from October 2002 to April 2011, where he headed the firm’s Americas Natural Resources Group as well as its Houston office. During his 22 years as an investment banker, Mr. Montgomery focused globally on large cap energy companies primarily in the upstream, integrated, and oil service sectors. At Apache, Mr. Montgomery is a member of the Corporate Governance and Nominating Committee and a member of the Management Development and Compensation Committee.		2016


Term Expires

RODMAN D. PATTON, 70, joined the Company’s Board of Directors in December 1999. Mr. Patton has over 30 years of experience in oil and gas investment banking and corporate finance activity, including serving as managing director of the Merrill Lynch Energy Group from 1993 until April 1999. Prior to joining Merrill Lynch, he was with The First Boston Corporation (later Credit Suisse First Boston) and Eastman Dillon, Union Securities (later Blyth Eastman Dillon). Mr. Patton is a director of NuStar GP, LLC (formerly Valero GP, LLC), San Antonio, Texas, and is chairman of its audit committee and a member of its compensation committee. NuStar GP LLC is the general partner of NuStar Energy L.P. (formerly Valero L.P.), owner and operator of crude oil and refined products pipeline, terminalling, and storage assets. At Apache, Mr. Patton is a member of the Audit Committee.		2015

CHARLES J. PITMAN, 71, joined the Company’s Board of Directors in May 2000. Mr. Pitman served as a non-executive director and chairman of Urals Energy Public Company Limited, an oil exploration and production company operating in Russia, from September 2005 until January 2009, chairman of the board of First Calgary Petroleums Ltd., an oil and gas exploration company engaged in exploration and development activities in Algeria, from June 2007 to March 2008, and was sole member of Shaker Mountain Energy Associates LLC from September 1999 to November 2007. He retired from BP Amoco plc in late 1999, having served as regional president - Middle East/Caspian/Egypt/India. Prior to the merger of British Petroleum and Amoco Corporation in 1998, Mr. Pitman held a variety of executive positions at Amoco. At Apache, Mr. Pitman was appointed lead director in February 2013, and is chairman of the Corporate Governance and Nominating Committee and a member of the Stock Plan Committee.		2015

QUALIFICATIONS OF DIRECTORS

In selecting our directors and director nominees, the CG&N Committee has sought to create a Board with a broad and balanced set of skills, complemented by diversity of experience and expertise. As is evidenced by the biographical information set forth above, each director contributes his or her own unique background which has led the CG&N Committee to conclude that the Company and our shareholders will benefit from the director’s service on the Company’s Board. It is equally important that the particular skill sets of each director complement the experience, qualifications, attributes and skills of our Board of Directors as a whole. In addition to the qualifications described in the preceding biographical information, the following is a discussion of the particular experience, qualifications, attributes or skills of each director that led our Board to conclude that he or she will contribute to the diversity of experience and expertise required for the effective functioning of our Board.

G. STEVEN FARRIS Mr. Farris’ 31 years’ experience in the oil and gas industry coupled with his 19 years of direct leadership at Apache provide him with valuable insight not only into the oil and gas industry, but also the unique day-to-day operations of Apache. Throughout his career, Mr. Farris has held positions of increasing responsibility in the oil and gas industry, culminating in his appointment as chief executive officer of Apache in May 2002 and chairman of the board in January 2009. Since being named as chief operating officer in 1994, Mr. Farris has been instrumental in growing the Company’s reserves by ten times to approximately 2.6 billion barrels of oil equivalent (‘boe”) and production to 760,775 boe per day.

A. D. FRAZIER, JR. In addition to the executive positions noted in his biographical information above, Mr. Frazier spent a large part of his career as an executive in the investment banking industry. He served as the chief executive officer of INVESCO, Inc., an affiliate of an independent global investment management firm, from 1997 to 2000. Mr. Frazier also served as executive vice president, North American Banking Group, of First Chicago Corporation and First National Bank of Chicago from 1982 to 1991, where, among other numerous industry specialties, he oversaw the Bank’s oil and gas specialty, which provided him with an intimate knowledge of the oil and gas industry. He also served as the chief operating officer of the Atlanta Olympic Games Committee from 1991 to October 1996, and senior advisor to The Dilenschneider Group, Inc., a New York-based public relations consulting company, during 2011. During his career, Mr. Frazier has been responsible for the development, management, and operation of a diverse group of businesses and organizations. Through these executive and director positions, Mr. Frazier gathered extensive experience in identifying, analyzing, and managing risk across a wide range of industries.

CHANSOO JOUNG Mr. Joung has spent almost his entire career working in the finance industry with energy companies. He currently serves as a senior advisor at Warburg Pincus LLC where he provides advice on new and existing investments in the energy sector. Previously, as a partner at Warburg Pincus, his duties included sourcing, executing and monitoring energy investments. Prior to joining Warburg Pincus, Mr. Joung spent almost 18 years at Goldman Sachs where he worked in the Natural Resources Group and also founded and led the London-based European Energy Group in investment banking. While at Warburg Pincus, Mr. Joung served on the boards of a number of private companies in a variety of sectors in the energy industry. He also served on the boards of Targa Resources Corp. and Targa Resources Partners, LP. Through his experiences in private equity and as an investment banker, Mr. Joung gained significant experience with energy companies, the energy industry, and energy-related capital markets activity, which enhance his contributions to the Board. Those experiences have also given Mr. Joung the ability to identify, assess, and manage risk that can affect a large energy company like Apache.

GEORGE D. LAWRENCE Mr. Lawrence began his oil and gas career with the predecessor to The Phoenix Resource Companies, Inc. in 1985, holding management positions with increasing responsibility, culminating in his serving as president, chief executive officer, and a director of Phoenix from 1990 until 1996, when the company merged with Apache. During his tenure as chief executive officer of Phoenix, Mr. Lawrence gained valuable corporate leadership experience in all aspects of business including finance, securities, operations, strategy, and risk. At Phoenix and its predecessor, Mr. Lawrence was extensively involved in international operations that were spread over several continents and he was especially instrumental in leading Phoenix’s operations in Egypt, an area that remains at the core of Apache’s operations. Prior to entering the oil and gas business, Mr. Lawrence engaged in a diversified private practice of law and also served five years at the United States Department of Justice, his last position there being the assistant chief of the environmental enforcement section.

JOHN E. LOWE Mr. Lowe enjoyed a 30-year career with Phillips Petroleum Company and ConocoPhillips serving in positions of increasing responsibilities during that time. Most recently, he served as assistant to the CEO of ConocoPhillips, a position he held from 2008 until Phillips 66 was spun-off from ConocoPhillips in 2012. He previously held a series of executive positions with ConocoPhillips, including executive vice president, exploration and production, from 2007 to 2008, executive vice president, commercial, from 2006 to 2007, and executive vice president, planning, strategy and corporate affairs from 2002 to 2006. Mr. Lowe is a director at Phillips 66, special executive advisor to Tudor, Pickering, Holt & Co., and serves on the board of Agrium, Inc. Through these positions and his career in the oil and gas industry, Mr. Lowe has gained valuable experience in identifying, assessing, and minimizing risk that can affect large oil and gas companies. These positions and his career have also provided him with the experience necessary for his role on Apache’s Management Development and Compensation and Stock Plan committees.

WILLIAM C. MONTGOMERY Mr. Montgomery has spent almost his entire career working in the finance industry focusing on large cap energy companies. He currently serves as a managing director at Quantum Energy Partners where he provides advice on new and existing investments in the energy and power industries. At Quantum, his duties include membership on the executive and investment committees, which set the firm’s strategy and originate and oversee investments in the upstream, midstream, and oilfield service sectors of the oil and gas industry. Previously, as a partner at Goldman, Sachs & Co. for over eight years, he headed the Americas Natural Resources Group and was a member of the Investment Banking Services Leadership Group. Mr. Montgomery’s contributions to the Board will be aided by the knowledge and experience he gains from his current role at Quantum Energy Partners, which involves broad and deep exposure to key issues impacting the upstream, midstream, and oil services sectors. His contributions to the Board will also be enhanced by his background as an investment banker, where he gained significant experience with the energy industry and energy-related capital markets. Apache will also benefit from the extensive relationships that Mr. Montgomery has formed throughout his 22-year career serving various global energy companies.

AMY H. NELSON Ms. Nelson has devoted her entire 22-year career to serving companies in the oil and gas industry. Ms. Nelson is the founder and president of Greenridge Advisors, LLC, an energy services and equipment consulting firm, where her consulting practice focuses on the development, execution, and financing of growth strategies for her oil and gas industry clients. She advises her clients on strategy development, acquisition evaluation, and infrastructure development. Prior to Greenridge, Ms. Nelson served as vice president of a private equity firm, SCF Partners, where she focused on investment strategy, investment execution, and portfolio company management. Previously, she also worked at Amoco Production Company in various roles including as planning coordinator, project manager, and as an engineer. Her various roles in the oil and gas industry have provided Ms. Nelson with valuable experience in the assessment and management of risk faced by oil and gas companies.

RODMAN D. PATTON Prior to joining Apache’s Board of Directors, for over 25 years, Mr. Patton held various executive positions in the oil and gas investment banking industry. As a managing director at Merrill Lynch, First Boston (later Credit Suisse) and other investment banks, Mr. Patton gained extensive experience advising oil and gas companies on capital structure, strategy, and direction. He also gained valuable experience in the assessment and management of risk faced by oil and gas companies. As a former investment banker and as chairman of NuStar GP’s audit committee, Mr. Patton has extensive financial reporting expertise, which serves him well in his role as a member of Apache’s Audit Committee.

CHARLES J. PITMAN Having served in executive and director capacities at numerous oil and gas companies, Mr. Pitman has gained invaluable experience in and knowledge of the oil and gas industry. During his 24-year career at Amoco Corporation and BP Amoco plc, Mr. Pitman served in a variety of leadership positions in the United States and multiple international locations, principally in the Middle East. Notably, Mr. Pitman served as president of Amoco Egypt Oil Company from 1992 to 1996, president of Amoco Eurasia Petroleum Company from 1997 to 1998, regional president BP Amoco plc - Middle East/Caspian/Egypt/India from December 1998 until his retirement in 1999. Most recently, Mr. Pitman has utilized his considerable experience in international oil and gas by participating in oil and gas ventures in Russia and Algeria. Prior to joining Amoco, Mr. Pitman served in the United States Department of State as a foreign service officer and attorney-adviser.

DIRECTOR INDEPENDENCE

During 2013 and the first two months of 2014, the Board of Directors evaluated all business and charitable relationships between the Company and the Company’s non-employee directors (all directors other than Mr. Farris) and all other relevant facts and circumstances. As a result of the evaluation, the Board of Directors determined, as required by the Company’s Governance Principles, that each non-employee director is an independent director as defined by the standards for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards for independent directors established by The New York Stock Exchange, Inc. (“NYSE”), The NASDAQ National Market (“NASDAQ”), and the Securities and Exchange Commission (“SEC”). The Company’s Governance Principles are available on the Company’s website (www.apachecorp.com).

Subject to some exceptions, these standards generally provide that a non-employee director will not be independent if (a) the director is, or in the past three years has been, an employee of the Company; (b) the director or a member of the director’s immediate family is, or in the past three years has been, an executive officer of the Company; (c) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from the Company (other than for service as a director or for the immediate family member, as a non-executive employee); (d) the director is an employee of or the director or a member of the director’s immediate family is employed as a partner of Ernst & Young LLP, the Company’s independent registered public accountants, or the director has an immediate family member who is a current employee of such firm and works in any capacity on the Company’s audit, or the director or an immediate family member was within the last three years a partner or employee of such firm and personally worked on the Company’s audit within that time; (e) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where an Apache executive officer serves on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer of a company that makes payments to, or receives payments from, Apache in an amount which, in any twelve-month period during the past three years, exceeds the greater of $200,000 or two percent of the consolidated gross revenues of the company receiving the payment.

Lead Director

The Company’s Governance Principles require that the independent (non-employee) directors meet in executive session at least twice each year and, in 2013, they met five times in executive session. These executive sessions are chaired by a lead director. Pursuant to the Company’s Governance Principles, the lead director is an independent director who is elected from time to time, but not less than annually, by the affirmative vote of a majority of the non-management directors. In addition to chairing the executive sessions, the lead director discusses management’s proposed meeting agenda with the other independent directors and reviews the approved meeting agenda with our chairman and chief executive officer, leads the discussion with our chief executive officer following the independent directors’ executive sessions, ensures that the Board’s individual group, and committee self-assessments are done annually, leads periodic discussions with other Board members and management concerning the Board’s information needs, and is available for discussions with major shareholders. Randolph M. Ferlic served as lead director from February 2011 until February 2013. Effective February 2013, Charles J. Pitman was elected as the Company’s lead director and effective February 2014, Mr. Pitman was re-elected as lead director. The role and responsibilities of the lead director and the method established for communication of concerns to the independent directors are included in the Company’s Governance Principles.

Reporting of Concerns to Independent Directors

Anyone who has concerns about the Company may communicate those concerns to the independent directors. Such communication should be mailed to the Company’s corporate secretary at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400, who will forward such communications to the independent directors.

Board Leadership Structure and Risk Oversight

Board Leadership Structure

Throughout much of Apache’s history, the Company has ascribed to the traditional U.S. board leadership structure, under which our chief executive officer has also served as the chairman of our Board of Directors. From 1969 until 2002, both of these positions were held by our founder, Mr. Raymond Plank. However, upon Mr. Raymond Plank’s retirement as chief executive officer of the Company in 2002, Mr. Farris was appointed as the Company’s chief executive officer and Mr. Raymond Plank remained as the Company’s chairman of the board. Upon Mr. Plank’s retirement as chairman of the board in January 2009, Mr. Farris was appointed the Company’s chairman of the board, once again unifying the roles of chairman and chief executive officer. As Apache’s history demonstrates, we believe it is important to maintain the flexibility to have either a combined or a separated chair and chief executive officer structure as circumstances dictate. Each structure has served us well in the past. Currently, we believe that the efficiencies created by a combined position work best, especially when viewed in conjunction with our lead director, elected annually by our independent directors, assuring strong board leadership. In particular, this structure helps to ensure clarity regarding leadership of the Company, allows the Company to speak with one voice and provides for efficient coordination of board action, particularly in the event of crisis. The combination of the chairman’s ability to call board meetings with the chief executive officer’s intimate knowledge of our business, including our risk management framework, provides a strong structure for the efficient operation of our board process and effective leadership of our Board overall. This structure avoids potential confusion as to leadership roles and duplication of efforts that can result from the roles being separated. It also assists our chairman and chief executive officer in managing the Company and dealing with third parties more effectively on a day-to-day basis. Our Board regularly reviews all the aspects of our governance profile, including this one, and will make changes as circumstances warrant. This is the model that the Company has utilized for much of its history, and we believe that it is the most effective way to lead the Company going forward.

Risk Oversight

The goal of the Company’s risk management process is to understand and manage risk; management is responsible for identifying and managing the risks, while directors provide oversight to management in this process. Management identifies the significant risks facing the Company and the approaches to mitigate such risk. The Company’s Governance Principles state that in addition to its general oversight of management, the Board of Directors is responsible for a number of specific functions, including assessing major risks facing the Company and reviewing options for their mitigation.

Our Board of Directors has four standing independent committees: Audit, Corporate Governance and Nominating, Management Development and Compensation, and Stock Plan. The Executive Committee was eliminated by the Board of Directors in May 2013. Our Audit Committee is primarily responsible for overseeing the Company’s risk management processes on behalf of the Board. The Audit Committee charter provides that the Audit Committee should discuss and consider the process by which senior management of the Company and the relevant departments assess and manage the Company’s exposure to risk, and discuss the Company’s major financial risk exposure and the steps management has taken to monitor, control, and report such exposures. In addition, the Audit Committee reports to the Board of Directors, which also considers the Company’s risk profile. The Audit Committee and the Board of Directors obtain input from management regarding the most significant risks facing the Company and the Company’s risk management strategy. The Audit Committee and the Board ensure that the risks undertaken are consistent with the Board’s tolerance for risk. While the Board is responsible for setting, monitoring and maintaining the Company’s risk management policies and practices, the Company’s executive officers and members of our management team are responsible for implementing and overseeing our day-to-day risk management processes. Additionally, the Board has created a Corporate Risk Committee composed of members of our management team. The Corporate Risk Committee monitors and manages risks and is tasked with, among other things, ensuring sound policies, procedures, and practices are in place to address corporate-wide management of risks. The Company believes that this division of responsibility is the most effective way to monitor and control risk.

In addition to the oversight provided by our full Board of Directors, Audit Committee, executive officers and the members of our management team, including our Corporate Risk Committee, our independent (non-employee) directors hold regularly scheduled executive sessions as often as they deem appropriate, but in any event at least twice each year. These executive sessions are chaired by our lead director, and provide an additional avenue through which we monitor the Company’s risk exposure and policies regarding risk management.

For risk considerations in our compensation programs, please read the Compensation Discussion and Analysis section included in this proxy statement.

STANDING COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors has an Audit Committee, a Corporate Governance and Nominating (“CG&N”) Committee, a Management Development and Compensation (“MD&C”) Committee, a Stock Plan Committee, and until May 2013, an Executive Committee. Actions taken by these committees are reported to the Board of Directors at the next board meeting. During 2013, each of the Company’s current directors attended at least 75 percent of all meetings of the Board of Directors and committees of which he or she was a member. All directors attended the Company’s 2013 annual meeting of shareholders held on May 16, 2013.

Name

Board

Audit

CG&N

MD&C

Stock
Plan

Executive
(1)

G. Steven Farris

ü*

Randolph M. Ferlic (2)

ü†

ü**

Eugene C. Fiedorek (3)

A. D. Frazier, Jr.

ü**

Patricia Albjerg Graham (4)

Scott D. Josey (5)

Chansoo Joung

John A. Kocur (6)

ü**

George D. Lawrence

ü**

John E. Lowe (7)

William C. Montgomery (8)

Rodman D. Patton

Charles J. Pitman (2)

ü†

ü**

No. of Meetings in 2013

*	Chairman of the Board

**	Committee Chairman

†	Lead Director

(1)	The Executive Committee was eliminated by the Board of Directors in May 2013.

(2)	Dr. Ferlic served as lead director from February 2011 until February 2013, at which time Mr. Pitman became lead director.

(3)	Mr. Fiedorek retired from the Board of Directors in February 2014.

(4)	Dr. Graham retired from the Board of Directors in May 2013.

(5)	Mr. Josey resigned from the Board of Directors in March 2013.

(6)	Mr. Kocur retired from the Board of Directors in October 2013.

(7)	Mr. Lowe joined the Board of Directors in July 2013.

(8)	Mr. Montgomery served on the Stock Plan Committee until July 2013, at which time he was appointed to the CG&N Committee.

Audit Committee

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility relating to (i) the integrity of the Company’s consolidated financial statements, accounting and financial reporting processes, and systems of internal controls over accounting and financial reporting; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the independent auditor’s qualifications, independence, and performance, including sole authority for appointment, compensation, oversight, evaluation, and termination; (iv) the performance of the Company’s internal audit function; (v) the report of the Audit Committee required by the rules of the SEC, as included in this proxy statement; and (vi) the fulfillment of the other responsibilities set out in its charter. The Audit Committee charter, as adopted by the Board of Directors and which reflects applicable SEC, NYSE and NASDAQ rules and regulations, is available on the Company’s website (www.apachecorp.com).

As described more fully above in “Board Leadership Structure and Risk Oversight,” the Audit Committee is also tasked with overseeing the guidelines, policies, and controls governing the process by which management of the Company assesses and manages the Company’s exposure to risk.

The Board of Directors has determined that all members of the Audit Committee qualify as financial experts, as defined in Item 407 of Regulation S-K under the Securities Act of 1933, as amended, and each are considered “financially literate” under NYSE rules. During 2013 and the first two months of 2014, the Board of Directors reviewed the composition of the Audit Committee pursuant to the rules of the SEC, NYSE and NASDAQ governing audit committees. Based on this review, the Board of Directors confirmed that all members of the Audit Committee are “independent” under the SEC, NYSE and NASDAQ rules.

CG&N Committee

The duties of the CG&N Committee include recommending to the Board of Directors the slate of director nominees submitted to the shareholders for election at each annual meeting and proposing qualified candidates to fill vacancies on the Board of Directors. The CG&N Committee is also responsible for developing corporate governance principles for the Company, reviewing related party transactions, and overseeing the evaluation of the Board of Directors. During 2013 and the first two months of 2014, the Board of Directors reviewed the composition of the CG&N Committee pursuant to the rules of the NYSE and NASDAQ governing nominating and governance committees. Based on this review, the Board of Directors confirmed that all members of the CG&N Committee are “independent” under the NYSE and NASDAQ rules. The CG&N Committee charter, as adopted by the Board of Directors, is available on the Company’s website (www.apachecorp.com).

The CG&N Committee considers director nominee recommendations from executive officers of the Company, independent members of the Board and shareholders of the Company, as well as recommendations from other interested parties. The CG&N Committee may also retain an outside search firm to assist it in finding appropriate nominee candidates. Shareholder recommendations for director nominees received by Apache’s corporate secretary (at the address for submitting shareholder proposals and nominations set forth under the heading “Future Shareholder Proposals and Director Nominations” below) are forwarded to the CG&N Committee for consideration.

MD&C Committee

The MD&C Committee reviews the Company’s management resources and structure and administers the Company’s compensation programs and retirement, stock purchase and similar plans. Under the provisions of its charter, the MD&C Committee may, at its discretion and if allowed by applicable laws or regulations, delegate all or a portion of its duties and responsibilities to a subcommittee of the MD&C Committee composed of at least two members. During 2013 and the first two months of 2014, the Board of Directors reviewed the composition of the MD&C Committee pursuant to the rules of the NYSE and NASDAQ governing compensation committees. Based on this review, the Board of Directors confirmed that all members of the MD&C Committee are “independent” under the NYSE and NASDAQ rules. The MD&C Committee charter, as adopted by the Board of Directors, is available on the Company’s website (www.apachecorp.com).

Stock Plan Committee

The principal purpose of the Stock Plan Committee is to assist the Board of Directors in the discharge of its responsibilities related to equity-based compensation for the Company’s employees, including the named executive officers. The Stock Plan Committee charter, as adopted by the Board of Directors, is available on the Company’s website (www.apachecorp.com).

The members of the Stock Plan Committee are “outside directors” as defined by applicable federal tax law or regulations of the Internal Revenue Service. The duties of the Stock Plan Committee include (i) administration of the Company’s equity-based compensation plans and programs and approval, award, and administration of grants made thereunder, (ii) certification of performance goals and their achievement, (iii) making recommendations to the Board of Directors with respect to the Company’s equity-based compensation plans and programs, and (iv) any other duties and responsibilities expressly delegated to the Stock Plan Committee by the Board of Directors relating to equity-based compensation plans and programs.

Executive Committee

Prior to its elimination by the Board of Directors in May 2013, the Executive Committee was vested with the authority to exercise the full power of the Board of Directors, within established policies, in the intervals between meetings of the Board of Directors. In addition to the general authority vested in it, the Executive Committee was, from time to time, vested with specific powers and authority by resolution of the Board of Directors.

Committee Charters

As noted above, you can access electronic copies of the charters of the Audit Committee, CG&N Committee, MD&C Committee, and Stock Plan Committee of the Board of Directors on the Company’s website (www.apachecorp.com). Also available on the Company’s website are our Governance Principles and our Code of Business Conduct, which meets the requirements of a code of ethics under applicable SEC regulations and NYSE and NASDAQ standards. You may request printed copies of any of these documents by writing to Apache’s corporate secretary at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400.

CRITERIA FOR NEW BOARD MEMBERS

AND RE-ELECTION OF BOARD MEMBERS

The CG&N Committee considers the following criteria in recommending new nominees or the re-election of directors to the Company’s Board of Directors and its committees:

•

Expertise and perspective needed to govern the business and strengthen and support senior management – for example: strong financial expertise, knowledge of international operations, or knowledge of the petroleum industry and/or related industries.

•

Sound business judgment and a sufficiently broad perspective to make meaningful contributions.

•

Interest and enthusiasm in the Company and a commitment to become involved in its future.

•

The time and energy to meet Board of Directors commitments.

•

Ability to constructively participate in discussions, with the capacity to quickly understand and evaluate complex and diverse issues.

•

Dedication to the highest ethical standards.

•

Supportive of management, but independent, objective, and willing to question and challenge both openly and in private exchanges.

•

An awareness of the dynamics of change and a willingness to anticipate and explore opportunities.

All decisions to recommend the nomination of a new nominee for election to the Board of Directors or for the re-election of a director are within the sole discretion of the CG&N Committee.

All director candidates are evaluated, and the decision of whether or not to nominate a particular candidate is made, based solely on Company- and work-related factors and not with regard to a candidate’s or director’s inclusion in any protected class or group identified in the Company’s anti-discrimination policy.

The above criteria and guidelines, together with the section of the Company’s Governance Principles entitled “Qualifications of Board Members” constitute the policy of the CG&N Committee regarding the recommendation of new nominees or the re-election of directors to the Company’s Board of Directors or its committees. The Company’s Governance Principles are available on the Company’s website (www.apachecorp.com).

Diversity

Company policy precludes directors and employees from discriminating against any protected group. Company policy also precludes directors and employees from basing work-related decisions on anything other than work-relevant criteria. The Company’s approach to diversity complements these policies without conflicting with them. Our status as a global company makes the need for board diversity in all its aspects essential to our business. Our criteria for board selection, summarized in this section, operates as our diversity policy.

REPORT OF THE AUDIT COMMITTEE

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 is operated under a charter that specifies the scope of the Committee’s responsibilities. The charter, which is reviewed annually and available on the Company’s website (www.apachecorp.com), was last amended effective May 16, 2013.

The Board of Directors has determined that all four members of the Committee are independent based upon the standards adopted by the Board, which incorporate the independence requirements under applicable laws, rules and regulations, including the listing standards of the New York Stock Exchange and the NASDAQ National Market and Rule 10A-3 of the Securities Exchange Act of 1934, as amended.

The Company’s management has the primary responsibility for preparing the Company’s financial statements, managing the accounting and financial reporting processes, devising and maintaining the systems of internal controls over financial reporting, and assessing the effectiveness of internal controls over financial reporting. Ernst & Young LLP, Apache’s independent registered public accounting firm (the “independent auditors”), is responsible for the integrated audit of the consolidated financial statements and auditing the Company’s internal controls over financial reporting. The Committee’s responsibility is to monitor and oversee these processes and procedures on behalf of the Board of Directors.

The Audit Committee held ten meetings during fiscal year 2013, including the five in-person meetings referenced below. The meetings of the Audit Committee are designed to facilitate and encourage communication among the Audit Committee, the Company, the Company’s internal audit function, and the Company’s independent auditors. Meeting agendas are set based upon the Audit Committee Charter and also include suggested topics from committee members and/or other relevant topics. At four of the five Audit Committee meetings held in person during 2013, the Committee met with the internal auditors and the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, including internal controls over financial reporting, and the overall quality of the Company’s financial reporting.

The Committee is responsible for oversight of the qualifications, performance, and independence of the Company’s independent auditors and annually determines whether to retain the Company’s current independent auditors or retain another auditor. In doing so, the Audit Committee takes into consideration a number of factors, including the historical and recent performance of the independent auditors and lead partner, its global capabilities, its knowledge of the Company’s operations and industry, external data relating to audit quality and performance, including recent Public Company Accounting Oversight Board (United States) (“PCAOB”) reports, and independence. The Audit Committee recognizes the importance of maintaining the independence of the Company’s independent auditors, in both fact and appearance.

The Audit Committee discussed with the Company’s internal auditors and the independent auditors the overall scope and plans for their respective audits. In addition, the Audit Committee reviewed with the independent auditors, which is responsible for expressing an opinion on the conformity of the Company’s audited consolidated financial statements with U.S. generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee by the standards of the PCAOB, including PCOAB Auditing Standard No. 16, Communications With Audit Committees, the rules of the Securities and Exchange Commission, and other applicable regulations. In addition, the Audit Committee has discussed with the independent auditors the firm’s independence from Company management and the Company, including the matters in the letter from the firm required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and considered the compatibility of non-audit services with the independent auditors’ independence.

The Audit Committee also reviewed and discussed together with management, the internal auditors, and the independent auditors the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, including the clarity of disclosures in the financial statements, the results of management’s assessment of the effectiveness of the Company’s internal controls over financial reporting, and the independent auditors’ audit of the Company’s internal controls over financial reporting.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board of Directors has approved, that the audited consolidated financial statements and management’s assessment of the effectiveness of the Company’s internal controls over financial reporting be included in the Annual Report on Form 10-K for the year ended December 31, 2013, filed by the Company with the Securities and Exchange Commission.


February 18, 2014		Members of the Audit Committee

		Randolph M. Ferlic, Chairman
		Eugene C. Fiedorek
		Chansoo Joung
		Rodman D. Patton

DIRECTOR COMPENSATION

Non-Employee Directors’ Cash Compensation

During 2013, under the terms of the non-employee directors’ compensation plan, each non-employee director received an annual cash retainer of $150,000 (with no separate meeting attendance fees and no retainers payable in shares), and the chairman of each committee received an additional annual cash retainer of $15,000 for chairing that committee.

During 2013, under the terms of the Company’s non-employee directors’ compensation plan, non-employee directors could defer receipt of all or any portion of their cash retainers. Deferred cash amounts accrue interest equal to the Company’s rate of return on its short-term marketable securities. Once each year, participating directors may elect to transfer all or a portion of their deferred cash amounts into the form of shares of Apache common stock. After such election, amounts deferred in the form of Apache common stock accrue dividends as if the stock were issued and outstanding when such dividends were payable. All deferred amounts, as well as accrued interest and dividends, are maintained in a separate memorandum account for each participating non-employee director. Amounts are paid out in cash and/or shares of Apache common stock, as applicable, upon the non-employee director’s retirement or other termination of his or her directorship, or on a specific date, in a lump sum or in annual installments over a ten-year (or shorter) period. During 2013, one non-employee director deferred all of his cash retainer fees and one non-employee director deferred a portion of his cash retainer fees.

Non-Employee Directors’ Restricted Stock Units Program

In May 2011, the Company established the Non-Employee Directors’ Restricted Stock Units Program (the “RSU Program”), pursuant to the Company’s 2011 Omnibus Equity Compensation Plan. During 2013, all non-employee directors were eligible to receive grants of restricted stock units the number of which was calculated by dividing $150,000 by the fair market value of a share of Apache common stock on the date of grant. In May 2013, the Board determined that the amount used to calculate the number of restricted stock units granted in 2013 would be reduced to $150,000 from $200,000 in 2012.

On August 15, 2013, each non-employee director was awarded 1,868 restricted stock units under the RSU Program, with a grant date fair value of $149,944. Half of the restricted stock units vest thirty days after the grant and the other half vest on the one-year anniversary date of the grant. Each restricted stock unit is equivalent to one share of common stock. Except as noted below, any unvested restricted stock units are forfeited at the time the non-employee director ceases to be a member of the Board of Directors. The unvested portion of any award automatically vests upon death or termination without cause (including retirement). Non-employee directors are required to choose, at the time of each award, whether such award will vest as 100 percent common stock or a combination of 40 percent cash and 60 percent common stock. Effective with the 2012 award, non-employee directors no longer receive dividend equivalents on the unvested portions of their restricted stock unit awards.

Prior Plan for Directors’ Equity Compensation

The equity compensation plan for non-employee directors, originally established in February 1994, was terminated in January 2007. The original expiration date for this plan was July 1, 2009, with a maximum of 50,000 shares of common stock (115,500 shares after adjustment for the stock dividends and stock split) for awards granted during the term of the plan. However, in February 2007, the plan was amended to provide that no new awards would be granted subsequent to January 1, 2007, and no awards have been made since that date. The plan continues in existence solely for the purpose of governing still-outstanding awards made prior to January 1, 2007.

Under the plan, each non-employee director was awarded 1,000 restricted shares of the Company’s common stock every five years from July 1, 1994 through July 1, 2000, with the shares vesting at a rate of 200 shares annually. On May 3, 2001, the plan was amended to provide that on July 1, 2001 and on July 1 of each third year thereafter, each non-employee director was awarded 1,000 restricted shares of common stock, with one-third of the shares vesting annually. On February 5, 2004, the plan was amended to adjust the awards to 2,310 restricted shares of common stock (1,000 shares adjusted for the stock dividends and stock split) for any awards made on July 1, 2004 and thereafter.

Awards were made from shares of common stock held in the Company’s treasury and were automatic and non-discretionary. All shares awarded under the plan have vested, have full dividend and voting rights, and are not eligible for sale while the non-employee director is still serving as a member of the Board.

Outside Directors’ Retirement Plan

An unfunded retirement plan for non-employee directors was established in December 1992, and amended most recently in July 2011. The plan is administered by the MD&C Committee and generally pays an annual benefit equal to 100 percent of the retired director’s annual cash retainer for a period based on length of service. Payments are made either (i) on a quarterly basis, for a maximum of ten years, or (ii) in a single lump sum equal to the net present value of the quarterly payments to which the director is entitled, and are paid from the general assets of the Company. In the event of the director’s death prior to receipt of all benefits payable under the plan, the remaining benefits are payable to the director’s surviving spouse or designated beneficiary until the earlier of the termination of the payment period or the death of the surviving spouse or designated beneficiary. During 2013, benefits were paid under this plan to four former directors who retired or resigned from the Company’s Board of Directors in 2012 or 2013.

Annual Review of Director Compensation

In our annual review of director compensation, the Board determined that the aggregate compensation paid to the Company’s directors for 2012 was slightly below the 50th percentile of the Compensation Peer Group (as defined in the Compensation Discussion and Analysis section). As discussed above, during 2013, the Board made a change to our non-employee director compensation to reduce the amount of the 2013 grant under the RSU Program to $150,000 from $200,000. As a result of this change, the benchmarking analysis provided to the Board for 2013 indicated that the average director compensation was the lowest of our Compensation Peer Group at that time.

Share Ownership Requirement

The Company has a minimum share ownership requirement for non-employee directors. Within three years of joining the Board of Directors, each non-employee director is required to directly own shares and/or share equivalents totaling at least 7,000 shares of the Company’s common stock. Non-employee directors must continue to meet the minimum share ownership requirement while serving on the Board. As of the date of this proxy statement, each non-employee director directly owned shares and/or share equivalents totaling more than 7,000 shares of the Company’s common stock, except (i) Mr. Lowe who joined the Board in July 2013 and has until July 2016 to meet the requirement and (ii) Ms. Nelson who joined the Board in February 2014 and has until February 2017 to meet the requirement. See beneficial ownership information under the heading “Securities Ownership and Principal Holders” below.

Pledging and Hedging Policies

The Company has a pledging policy that prohibits non-employee directors and executive officers from holding Apache securities in a margin account or pledging any Apache securities as collateral for a loan. During 2013, the Company also adopted a hedging policy that prohibits non-employee directors and executive officers from entering into any hedge, or other transaction (such as puts, calls, options, or other derivative securities), in Apache securities that has the effect of limiting the risk of ownership of Apache common stock or stock options. As of the date of this proxy statement, each non-employee director was in compliance with the Company’s pledging and hedging policies.

Director Compensation Table

The table below summarizes the compensation paid by the Company to non-employee directors for the fiscal year ended December 31, 2013:


Name (1) (a)	Fees Earned or Paid in Cash ($) (b)		Stock Awards (2) ($) (c)		Option Awards ($) (d)		Non-Equity Incentive Plan Compensation ($) (e)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f)		All Other Compensation ($) (g)			Total ($) (h)
Randolph M. Ferlic		165,000		149,944		—		—		—		—			314,944
Eugene C. Fiedorek (3)		150,000		149,944		—		—		—		—			299,944
A.D. Frazier		165,000		149,944		—		—		—		—			314,944
Patricia A. Graham (4)		56,250		—		—		—		6,783		93,750	(5)		156,783
Scott D. Josey (6)		31,250		—		—		—		—		329,366	(7)		360,616
Chansoo Joung		150,000		149,944		—		—		—		—			299,944
John A. Kocur (8)		118,146		149,944		—		—		—		86,653	(9)		354,743
George D. Lawrence		165,000		149,944		—		—		7,495		—			322,439
John E. Lowe (10)		55,632		149,944				—		—		—			205,576
William C. Montgomery		150,000		149,944		—		—		—		—			299,944
Rodman D. Patton		150,000		149,944		—		—		10,760		—			310,704
Charles J. Pitman		165,000		149,944		—		—		131		—			315,075

(1)

Employee directors do not receive additional compensation for serving on the Board of Directors or any committee of the Board. G. Steven Farris, the Company’s chairman and chief executive officer, is not included in this table as he was an employee of the Company during 2013. The compensation he received as an employee of the Company is shown in the Summary Compensation Table.

(2)

Grant date fair value, as computed in accordance with FASB ASC Topic 718, of 1,868 restricted stock units granted on August 15, 2013 to each non-employee director based on the per share closing price of the Company’s common stock of $80.27 on August 15, 2013. At year-end 2013, the aggregate number of unvested, restricted stock units was 934 units for each director. None of the directors had unvested, restricted Apache common stock at year-end 2013.

(3)	Mr. Fiedorek retired from the Board of Directors effective February 28, 2014.

(4)	Dr. Graham retired from the Board of Directors effective May 16, 2013.

(5)	Benefits paid pursuant to the Outside Directors’ Retirement Plan.

(6)	Mr. Josey resigned from the Board of Directors effective March 15, 2013.

(7)	Lump sum payment equal to the net present value of the quarterly payments to which Mr. Josey was entitled under the Outside Directors’ Retirement Plan.

(8)	Mr. Kocur retired from the Board of Directors effective October 1, 2013.

(9)	Includes (i) $ 37,500 in benefits paid pursuant to the Outside Directors’ Retirement Plan and (ii) life insurance and medical and dental premiums of $25,928 and $23,225 reimbursed for the taxes payable on income attributable to this benefit.

(10)	Mr. Lowe was appointed to the Board of Directors on July 18, 2013.

SECURITIES OWNERSHIP AND PRINCIPAL HOLDERS

The following tables set forth, as of January 31, 2014, the beneficial ownership of (i) each director or nominee for director of the Company, (ii) the principal executive officer, the principal financial officer, and the three other most highly compensated executive officers who served as officers of the Company during 2013, and (iii) all directors and executive officers of the Company as a group. All ownership information is based upon filings made by those persons with the SEC and upon information provided to the Company.


Title of Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)			Percent of Class
Common Stock, par value $0.625	G. Steven Farris		745,310	(5)(6)(7)		*
	Randolph M. Ferlic		356,513	(2)(7)		*
	Eugene C. Fiedorek		49,949	(2)(7)		*
	A. D. Frazier, Jr.		27,392	(2)(7)		*
	Chansoo Joung		30,285	(7)		*
	George D. Lawrence		49,330	(2)(3)(7)		*
	John E. Lowe		5,368	(7)		*
	William C. Montgomery		15,147	(7)		*
	Amy H. Nelson		0			*
	Rodman D. Patton		45,944	(2)(3)(7)		*
	Charles J. Pitman		40,632	(2)(3)(7)		*
	Roger B. Plank		432,421	(5)(6)(7)		*
	Rodney J. Eichler		234,901	(4)(5)(6)(7)		*
	Thomas E. Voytovich		103,051	(5)(6)(7)		*
	Thomas P. Chambers		81,662	(4)(5)(6)(7)		*
	All directors, nominees, and executive officers as a group (including the above named persons)		3,368,620	(4)(5)(6)(7)		*

*	Represents less than one percent of outstanding shares of common stock.

(1)

All ownership is sole and direct unless otherwise noted. Inclusion of any common shares not owned directly shall not be construed as an admission of beneficial ownership. Fractional shares have been rounded to the nearest whole share. All share numbers in the table and footnotes have been adjusted for the stock dividends and stock split.

(footnotes continued on following page)

(2)	Includes vested restricted common shares awarded under the Company’s Equity Compensation Plan for Non-Employee Directors.

(3)	Includes the following common share equivalents related to retainer fees deferred under the Company’s Non-Employee Directors’ Compensation Plan: Mr. Lawrence – 9,454; Mr. Patton – 15,349; and Mr. Pitman – 335.

(4)	Includes the following common stock equivalents held through the Company’s Deferred Delivery Plan: Mr. Eichler – 87,825; Mr. Chambers – 6,045; and all directors and executive officers as a group – 184,040.

(5)

Includes the following common shares issuable upon the exercise of outstanding employee stock options which are exercisable within 60 days: Mr. Farris – 239,125; Mr. Plank – 85,883; Mr. Eichler – 74,866; Mr. Voytovich – 25,069; Mr. Chambers – 16,947; and all directors and executive officers as a group – 816,452.

(6)	Includes shares held by the trustee of the Company’s 401(k) Savings Plan and related Non-Qualified Retirement/Savings Plan: Mr. Farris – 42,898; Mr. Plank – 64,675; Mr. Eichler – 13,155; Mr. Voytovich – 3,767; Mr. Chambers – 8,334; and all directors and executive officers as a group – 245,083.

(7)

Includes 934 restricted stock units (each equivalent to one share of common stock) for Apache’s non-employee directors. Includes the following restricted stock units granted under the Company’s 2007 and 2011 Omnibus Equity Compensation Plans: Mr. Farris – 69,666; Mr. Plank – 33,330; Mr. Eichler – 33,330; Mr. Voytovich – 60,819; Mr. Chambers – 25,179; and all directors and executive officers as a group – 525,516.

The following table sets forth the only persons known to the Company, as of February 28, 2014, to be the owners of more than five percent of the outstanding shares of the Company’s common stock, according to reports filed with the SEC:


Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percent of Class
Common Stock par value $0.625	BlackRock, Inc. 40 East 52nd Street New York, New York 10022		21,916,632	*		5.55
Common Stock par value $0.625	T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, Maryland 21202		22,924,143	**		5.81

*	Per Schedule 13G/A, dated January 17, 2014, filed by BlackRock, Inc. on January 28, 2014.

**	Per Schedule 13G, dated February 14, 2014, filed by T. Rowe Price Associates, Inc. on February 12, 2014.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and officers, as well as beneficial owners of ten percent or more of the Company’s common stock, to report their holdings and transactions in the Company’s securities. Based on information furnished to the Company and contained in reports provided pursuant to Section 16(a), as well as written representations that no other reports were required for 2013, the Company’s directors and officers timely filed all reports required by Section 16(a), with the exception of a late report filed by Charles J. Pitman.

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes information as of December 31, 2013, relating to the Company’s equity compensation plans, under which grants of stock options, restricted stock units, and other rights to acquire shares of Apache common stock may be granted from time to time.


	(a)		(b)			(c)
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Equity compensation plans approved by security holders (1) (5)		12,551,401	$	89.77	(3)		27,259,430	(4)
Equity compensation plans not approved by security holders (2) (5)		210,381	$	44.21	(3)		587,387
Total		12,761,782	$	89.71	(3)		27,846,817

(1)	Includes the Company’s 2005 Stock Option Plan, 2007 Omnibus Equity Compensation Plan, and 2011 Omnibus Equity Compensation Plan (including 2012 and 2013 Total Shareholder Return Programs).

(2)	Includes the Company’s 2000 Stock Option Plan, Non-Employee Directors’ Compensation Plan, and Deferred Delivery Plan.

The Company’s Deferred Delivery Plan allows officers and certain key employees to defer income from restricted stock units granted under the 2007 Omnibus Equity Compensation Plan and the 2011 Omnibus Equity Compensation Plan in the form of deferred units. Each deferred unit is equivalent to one share of Apache common stock. Distributions from the plan are made, at the election of the participant, beginning five years from deferral or upon termination of employment.

(3)	Weighted average exercise price of outstanding stock options; excludes restricted stock units, performance-based stock units, and deferred stock units.

(4)	Available for grant under the 2011 Omnibus Equity Compensation Plan, as of December 31, 2013.

(5)

See Note 10 of the Notes to Consolidated Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2013, for the material features of the 2000 Stock Option Plan, 2005 Stock Option Plan, 2007 Omnibus Equity Compensation Plan (including 2011 Total Shareholder Return Program), the stock options converted to Apache stock options in connection with the acquisition of Mariner Energy, Inc., and the 2011 Omnibus Equity Compensation Plan (including 2012 and 2013 Total Shareholder Return Programs).

EXECUTIVE OFFICERS OF THE COMPANY

Biographical information for the executive officers of the Company is set forth below. Biographical information for G. Steven Farris is set forth above under the caption “Continuing Directors.”

MICHAEL S. BAHORICH, 57, was appointed executive vice president and chief technology officer in November 2010, having previously served as the Company’s executive vice president and technology officer since February 2009, executive vice president – exploration and production technology since May 2000, vice president - exploration and production technology since January 1999, vice president - exploration technology since December 1997, and chief geophysicist since 1996. From 1981 until joining the Company in 1996, he held positions of increasing responsibility at Amoco Corporation in Denver, Colorado and Tulsa, Oklahoma. Mr. Bahorich is a director of Global Geophysical, a member of the board of trustees of the Houston Museum of Natural Science and of the Star of Hope, and serves on an advisory board at Stanford University.

THOMAS P. CHAMBERS, 58, was appointed senior vice president, finance, in February 2014, having previously served as the Company’s executive vice president and chief financial officer since November 2010, vice president – corporate planning and investor relations since March 2009, vice president - corporate planning since September 2001, and director of corporate planning since March 1995. Prior to joining the Company, Mr. Chambers was in the international business development group at Pennzoil Exploration and Production, having held a variety of management positions with the BP plc group of companies from 1981 to 1992. Mr. Chambers is a member of the Society of Petroleum Engineers and serves on the advisory board of Houston Foundation for Life.

JOHN J. CHRISTMANN, IV, 47, was appointed executive vice president and chief operating officer, North America, effective January 1, 2014, having been region vice president, Permian Region, from 2010 through 2013. He previously served as vice president, Business Development, since January 2004, and production manager for the Gulf Coast region since April 2003. Prior to that, Mr. Christmann held various positions of increasing responsibility in the business development area since joining the Company in 1997. Previously, he was employed by Vastar Resources/ARCO Oil and Gas Company in business development, crude oil marketing, and various production, operational and reservoir engineering assignments.

MATTHEW W. DUNDREA, 60, was appointed senior vice president – treasury and administration in November 2010, having previously served as the Company’s vice president and treasurer since July 1997, treasurer since March 1996, and assistant treasurer since 1994. Prior to joining the Company, Mr. Dundrea held positions of increasing responsibility at Union Texas Petroleum Holding, Inc. from 1982 to 1994.

ROBERT J. DYE, 58, was appointed senior vice president – global communications and corporate affairs in November 2010. He previously served as the Company’s vice president – corporate services since March 2009, vice president - investor relations since May 1997, director of investor relations since 1995, and held positions of increasing responsibility in the Company’s corporate planning area since 1992. Prior to joining the Company, Mr. Dye was planning manager for the offshore division of BP Exploration, Houston, Texas, from 1988 to 1992.

RODNEY J. EICHLER, 64, was appointed executive advisor to the chairman and as chief executive officer, Kitimat (LNG and upstream), effective January 1, 2014, having been president and chief operating officer from 2011 through 2013. He previously served as the Company’s co-chief operating officer and president – international since February 2009, executive vice president – Egypt since February 2003, regional vice president in Egypt since 1999, and vice president of exploration and production in Egypt since 1997. Mr. Eichler also served as regional vice president for the Western region in Houston since 1996, and regional exploration and development manager for the Rocky Mountain region in Denver since 1993. Prior to joining the Company, he was vice president – exploration for Axem Resources, LLC in Denver, Colorado, and held geologist and management roles for Tenneco Oil Company.

JON A. GRAHAM, 59, was appointed vice president, health, safety, security and environmental, effective January 1, 2014, having served as vice president – environmental, health and safety since May 2011 and as the Company’s region vice president and country manager in Argentina since June 2009. He joined the Company in 1994 as reservoir engineering manager in the Rockies Region. He was also vice president for reservoir engineering in Canada, reservoir engineering manager for the Western and Gulf of Mexico regions, Gulf Coast Onshore Region vice president, and engineering general manager for Apache Egypt Companies. Prior to joining Apache, he was associated with Hunt Oil Co., Pacific Enterprises Oil Co., Santa Fe Minerals, and Amoco.

RODNEY A. GRYDER, 65, was appointed vice president, audit in November 2010. He previously served as the Company’s director, internal audit and business analysis since December 2001, and director, internal audit since 1998. Prior to joining Apache, Mr. Gryder was the director of corporate audit services at Western Atlas, Inc., manager of internal audit at TransTexas Gas Corporation, finance manager at Occidental International Exploration & Production, and held various audit positions at Tenneco Oil Exploration & Production.

MARGERY M. HARRIS, 53, was appointed executive vice president - human resources in December 2011, having been senior vice president - human resources since February 2011, and vice president – human resources since September 2007. Prior to joining the Company, she was consultant/principal of MMH Consulting Services, a privately-held human resources consulting firm, from 2006 to September 2007, executive vice president and senior vice president - human resources with Texas Genco LLC, a wholesale power generator, from 2005 to 2006, and senior vice president - human resources and administration of Integrated Electrical Services, Inc., from 2000 to 2005. Ms. Harris worked for Santa Fe Snyder (successor to Santa Fe Energy Resources) from 1995 to 2000 in a variety of human resources capacities, including vice president - human resources.

REBECCA A. HOYT, 49, was appointed vice president, chief accounting officer, and controller in November 2010. She previously served as the Company’s vice president and controller since November 2006, assistant controller since 2003, and held positions of increasing responsibility within the accounting area since joining the Company in 1993. Previously, Ms. Hoyt was an audit manager with Arthur Andersen LLP, an independent public accounting firm, from 1992 to 1993.

ROBERT V. JOHNSTON, 58, was appointed executive vice president, Central Region, effective January 1, 2014, having been region vice president, Central Region, from 2009 through 2013. Previously, he was region vice president, Argentina, from 2006 to 2009, and was region vice president, Central Region from 2002 to 2006. Mr. Johnston joined Apache in 1982 as a geologist in the Mid-Continent Region, before transferring to Cairo as development manager in 1996, and to Calgary as exploitation manager in 2000.

P. ANTHONY LANNIE, 59, was appointed executive vice president and general counsel in August 2009, having been senior vice president and general counsel since May 2004, and vice president and general counsel since March 2003. Prior to joining the Company, he was president of Kinder Morgan Power Company, Houston, Texas, from 2000 through February 2003, and president of Coral Energy Canada in 1999. Mr. Lannie was senior vice president and general counsel of Coral Energy, an affiliate of Shell Oil Company and Tejas Gas Corporation, from 1995 through 1999, and of Tejas Gas Corporation from 1994 until its combination with Coral Energy in 1998.

ALFONSO LEON, 37, was appointed executive vice president and chief financial officer in February 2014, having been senior vice president – chief of staff since August 2012, vice president – planning and strategy since November 2011, vice president - planning, strategy, and investor relations since November 2010, and the Company’s director of strategic planning since March 2009. Prior to joining Apache, Mr. Leon was a director and head of energy investment banking at Perella Weinberg Partners from 2006 until 2009. He previously served in various corporate strategy, planning, and business development roles at Royal Dutch Shell.

JANINE J. MCARDLE, 53, was appointed senior vice president – gas monetization in September 2010, having been vice president - oil and gas marketing since November 2002. Prior to joining the Company, she served as managing director for Aquila Europe Ltd from November 2001 to October 2002, and held executive and management positions with Aquila Energy Marketing from 1993 to November 2001, including vice president - trading and vice president - mergers and acquisitions. Previously, she was a partner in Hesse Gas from 1991 to 1993, and was a member of the board of directors of Intercontinental Exchange, the electronic trading platform, from 2000 to October 2002.

AARON S. G. MERRICK, 51, was appointed vice president – information technology in August 2009, having served as director of information technology since March 2006. Prior to joining the Company, he was president of Merrick Applied Consulting, Inc. from July 2005 to March 2006, and owner of Aaron Merrick Computer Consulting from 2002 to 2005, consulting with Apache on the development of its data warehouse. He served as vice president of T-NETIX, Inc., a specialized telecommunications company, from 1995 to 2000, and was previously employed by the Company as assistant director of gas flow management from 1991 to 1994. From 1984 to 1990, Mr. Merrick was with KPMG Peat Marwick, an independent public accounting firm.

URBAN F. O’BRIEN, 60, was appointed vice president – governmental affairs in August 2009, having previously served as director of governmental, regulatory and community affairs since 1992. Prior to joining the Company, Mr. O’Brien served as governmental affairs manager for Mitchell Energy, special projects director for U.S. Representative Lloyd Bentsen, and projects coordinator for U.S. Representative Michael A. Andrews.

W. KREGG OLSON, 60, was appointed executive vice president – corporate reservoir engineering in August 2009, having been senior vice president – corporate reservoir engineering since September 2007, and vice president – corporate reservoir engineering since January 2004. Prior to that, Mr. Olson served as director of technical services from 1995 through 2003, and held positions of increasing responsibility within corporate reservoir engineering since joining the Company in 1992. Previously, he was associated with Grace Petroleum Corporation.

F. BRADY PARISH, JR. 48, was appointed vice president - investor relations in September 2012. Prior to joining the Company, he served as a managing director at Moelis & Company, leading its oil and gas advisory practice, from March 2011 to September 2012, and a managing director in the Global Natural Resources Group at Goldman, Sachs & Co. from June 2005 to June 2010. Previously, Mr. Parish was a director in the Global Energy & Power Group at Merrill Lynch & Co., from 1999 to 2005.

CHERI L. PEPER, 60, was appointed corporate secretary in May 1995, having previously served as assistant secretary since 1992. Prior to joining the Company, she was assistant secretary for Panhandle Eastern Corporation (subsequently PanEnergy Corp.) since 1988. Ms. Peper is a certified public accountant and a director of MemberSource Credit Union, formerly known as PT&T Federal Credit Union.

JON W. SAUER, 53, was appointed vice president - tax in May 2001, having previously served as director of tax since March 1997, and manager of tax since August 1992. Prior to joining the Company, Mr. Sauer was tax manager with Swift Energy Company, Houston, Texas, from 1989 to 1992, and a manager in the tax practice of Arthur Andersen & Co., an independent public accounting firm, from 1983 to 1989. Mr. Sauer is a certified public accountant and past chairman of the American Exploration & Production Council (formerly Domestic Petroleum Council) tax committee, and he serves on the tax committee of the American Petroleum Institute.

SARAH B. TESLIK, 60, was appointed senior vice president - policy and governance in October 2006. Prior to joining the Company, she was chief executive officer of the Certified Financial Planner Board of Standards, Inc. from November 2004 to October 2006, and executive director of the Council of Institutional Investors from July 1988 to October 2004.

THOMAS E. VOYTOVICH, 57, was appointed executive vice president and chief operating officer, international, effective January 1, 2014, having been executive vice president, international operations, since February 2013, and regional vice president and general manager in Egypt since June 2009. He previously served as regional vice president for the Central region in Tulsa, Oklahoma, since March 2006, regional exploration manager for the Central region since May 2004, and in various technical positions with the Company in Tulsa beginning in March 1993. Prior to joining the Company, Mr. Voytovich held positions of increasing responsibility with Hillin-Simon Oil Company, Berexco Inc., Petro-Lewis Corporation, and Shell Oil Company from 1978 to 1993.

COMPENSATION DISCUSSION AND ANALYSIS


CD&A HIGHLIGHTS – 2013: A YEAR OF SIGNIFICANT CHANGE			32
Key Compensation and Governance Actions			33
Other Best Practices			36
2013 Strategic Corporate Achievements			37
Overview of CEO Pay for Performance			37

OUR COMPENSATION PHILOSOPHY AND USE OF PEER GROUPS			40
Compensation Peer Group			40
Our Approach			41
Use of Judgment			41

OUR NAMED EXECUTIVE OFFICERS			42

OUR ELEMENTS OF COMPENSATION AND COMPENSATION DECISIONS			43
Base Salary
Summary			43
2013 Decisions			43
Annual Cash Incentive Bonus
Summary			44
2013 Decisions			44
2013 Payouts			46
Long-Term Compensation Awards
Summary			47
2013 Decisions			48
Compensation Decisions With Respect to 2014			49

OUR EXECUTIVE COMPENSATION DECISION MAKING PROCESS			51
Role of the Board of Directors			51
Role of the Management Development and Compensation Committee			52
Role of the Stock Plan Committee			52
Role of the Compensation Consultant			52
Role of Management			53
Risk Considerations in Our Compensation Programs			53

TAX LEGISLATION RELATED TO COMPENSATION			54

CD&A HIGHLIGHTS – 2013: A YEAR OF SIGNIFICANT CHANGE

Our compensation decisions for 2013 had a complex backdrop. The year 2013 was strategically transformative for Apache. We accomplished key strategic objectives by divesting more than $7 billion of assets and using the proceeds to pay down debt and repurchase Apache common shares, while simultaneously reporting impressive operational performance results, particularly in our North American resource plays. We believe these moves have set the stage for a successful future, but despite these accomplishments, our stock price has not yet seen the impact of these efforts.

At the same time, we failed our annual say-on-pay vote in 2013, receiving slightly less than majority support. This disappointing result was a clear signal to the Board that our compensation programs required a thorough review, and our actions in this arena have also been transformative.

Key Compensation and Governance Actions

Leading up to our 2013 annual meeting, we engaged with many of our largest shareholders and heard their concerns regarding our compensation program. Before last year’s vote was tallied, we:

Following the 2013 annual meeting, we conducted extensive shareholder engagement. Independent Board members met one-on-one with virtually all of our larger shareholders, representing almost 60 percent of our outstanding shares, and listened to their concerns about compensation and governance. This input contributed to these decisions:

The year-over-year changes in our CEO’s reported total compensation demonstrate some of the effects of our compensation actions, which reduced our CEO’s total compensation by 34.3%:

CEO TOTAL COMPENSATION FOR 2013 COMPARED TO 2012

LOGO

In 2013 our independent directors had 47 meetings with shareholders, including virtually all of our larger shareholders. Almost all of these meetings were one-on-one meetings held in our shareholders’ offices country-wide. The shareholders with whom we met represented nearly 60 percent of our outstanding shares. We also met with two different proxy advisory firms. Our senior vice president for policy and governance held an additional 38 meetings with many of our other shareholders both in the U.S. and abroad. Senior management continually received input in the normal course of meetings with our shareholders. The feedback we received from our shareholders was very informative and incisive and significantly impacted the compensation and governance actions that we have recently taken. The following chart summarizes our responses to key compensation concerns specifically raised to us by our shareholders during this engagement process:

Other Best Practices

Our programs also continue to have many other features that our shareholders widely consider best practices and that we view as consistent with our compensation and governance philosophy, including:

2013 Strategic Corporate Achievements

At the end of 2012 and the beginning of 2013, we undertook a strategic review of our portfolio with the goal of rationalizing our assets and keeping the right mix of assets to generate strong returns, drive a more predictable production growth, and create shareholder value. In May 2013, the Company announced that it would divest approximately $4 billion in assets and use the proceeds to pay down debt and repurchase Apache common shares. Apache achieved these goals and more, divesting over $7 billion in assets, paying down debt, and repurchasing common shares. Significant highlights include:

•

Sold a one-third minority participation interest in our Egypt oil and gas business for $3.1 billion;

•

Divested for $3.7 billion our entire portfolio of shallow water Gulf of Mexico Shelf producing properties;

•

Divested $326 million of oil and gas producing properties in Canada;

•

Paid down $2.6 billion in debt, lowering our debt-to-capital ratio to 22 percent from 28 percent at year end 2012;

•

Repurchased 13.6 million shares of Apache common stock for approximately $1.2 billion, accomplishing the first half of our current share purchase authorization; and

•

Announced in early 2014 our entry into an agreement to sell all of our operations in Argentina for $852 million in cash and assumption of bank debt.

In addition, we produced the following operational results in 2013:

•

Reported earnings of $5.50 per diluted common share compared with $4.92 per diluted common share in 2012;

•

Increased onshore North American liquids production growth by 34 percent;

•

Replaced 140 percent of 2013 production through drilling; and

•

For the third consecutive year, continued uninterrupted operations in Egypt through a period of political turmoil.

Overview of CEO Pay for Performance

Apache Total Shareholder Return

Our CEO was appointed president, chief executive officer, and chief operating officer in May 2002, and was appointed chairman of the Board in January 2009. Under his leadership, we have adhered to our core principles of portfolio balance, financial prudence, and rate of return focus. This approach has resulted in competitive, long-term returns to our shareholders as illustrated by the graph below, which compares Apache’s total shareholder return relative to the S&P 500 index and to the average total shareholder return of our Compensation Peer Group during his tenure as chief executive officer.

We are, of course, keenly aware that our Total Shareholder Return compared to our peers has been substandard for the past five, three, and one year periods, and we considered this factor heavily in determining not to pay our CEO an annual bonus for 2013.

+ Egyptian political turmoil began on January 25, 2011.

Reported Pay Relative to Peers

The following graph compares Apache’s CEO’s total compensation as reported in our proxy statements for 2012 and 2013 versus the 2012 reported total compensation of his peers in our Compensation Peer Group as reported in their proxy statements. Overall, our CEO’s 2013 reported compensation was 34.3 percent lower than 2012, lower than all of our peers’ reported total compensation for 2012, and placed our CEO’s reported compensation in line with the relative performance of our stock.

Our CEO is one of the longest tenured CEOs in the above peer group. He has served as CEO for 12 years while the average years of service of the CEOs of our peer companies is less than half of that.

Historical Reported Pay vs. TSR Alignment

The following graph illustrates the alignment between our CEO’s total compensation as reported in our proxy statements for 2009 through 2013 and the total shareholder return over that same period.

Reported Pay vs. Realized Pay

The compensation structure for our CEO is intentionally designed so that a large portion of his realized compensation directly aligns his interests with those of our shareholders. We not only consider the value of his compensation when granted, but also when realized, as we believe that it is important that the amount he eventually takes home correlates with our shareholders’ returns. Therefore, a very substantial percentage of his compensation is long-term and equity-based, the realized value of which will be determined by the future long-term performance of our common stock on both a relative and absolute basis.

A large portion of total compensation reported in the Summary Compensation Table is long-term compensation using grant-date value, the calculated value on the day it is granted; this is only a starting point and is not necessarily indicative of the pay that he will actually realize. Virtually all of his long term compensation vests, if at all, over long periods, precluding its immediate realization at the grant date and correlating its realizable value to future stock performance.

While we appreciate that various methods can be utilized to calculate realized pay, we think it makes most sense to compare the pay as reported and the pay that the executive has taken home or is realizable as of a measurement date.

The following table shows the difference between our CEO’s 2010 and 2011 compensation as reported in the proxy statement for those years and the realized value of that pay as of December 31, 2013. Note that the TSR Shares were conditional grants that were issued under our TSR Program. The three-year performance period for both 2010 and 2011 TSR shares has ended and our poor relative TSR performance resulted in a zero percent payout factor and forfeiture of the award. There is no future potential for realized income on these forfeited TSR Shares.

CEO Reported Pay Versus Realized Pay

LOGO

(1)	Compensation as reported in the Summary Compensation table.

(2)	For the purposes of this illustration, Realized Pay for each year is defined as:

—Actual salary and bonus paid;

—RSUs and TSRs valued at December 31, 2013 stock price of $85.94, whether or not vested;

—Stock options valued using Black-Scholes as of December 31, 2013 ($18.76 for 2010 options, $12.51 for 2011 options) whether or not vested; plus

—Other Compensation as shown in the Summary Compensation table.

OUR COMPENSATION PHILOSOPHY AND USE OF PEER GROUPS

Our people are crucial to our success. We compete in a highly technical and complex industry where available talent is in high demand and valuable. Our business involves high up-front capital investment, risky operations, and long investment lead times. Therefore, we strive to attract, motivate, and retain technically proficient executives with extensive experience in the industry. The market for these executives is tight. To ensure our continued success, we must attract and retain superior talent in this competitive market. To provide competitive compensation packages for our executives, we reference the middle range of the market, while accounting for individual factors that allow us to be competitive in attracting and retaining the right people.

Our executive compensation philosophy is to design compensation programs so that they:

•

Attract, retain, motivate, and reward top talent.

•

Align our executives’ interests with those of our shareholders by paying for performance; and

•

Provide a substantial portion of compensation as long-term equity-based compensation to reward excellent performance over the long-term and align the compensation of our top executives with the shareholder experience.

Compensation Peer Group

We consider multiple sources of internal and external data in making individual and plan-level compensation decisions. Peer group data plays an important role in our compensation decision making. For our 2013 compensation analysis, we expanded our peer group to include ConocoPhillips Company, Noble Energy and Pioneer Natural Resources. Our peer group is focused on the companies that we most often compete with for executive talent. The companies in this group are U.S. companies with North American as well as global oil and/or natural gas operations and are comparable based on relevant financial factors, such as revenue, market capital, net income, oil and gas revenue, and total assets. Apache is one of the larger companies in this peer group. Each company in our Compensation Peer Group also listed Apache as one of its peers in the proxy statement filed by such company in 2013. Our peer group for 2013 (the “Compensation Peer Group”) is set forth below:

Compensation Peer Group


Anadarko Petroleum Corporation	EOG Resources, Inc.	Noble Energy, Inc.

Chesapeake Energy Corporation	Hess Corporation	Occidental Petroleum Corporation

ConocoPhillips Company	Marathon Oil Company	Pioneer Natural Resources

Devon Energy Corporation	Murphy Oil Corporation

In addition to the Compensation Peer Group, we have used a broader group for the limited purpose of our TSR equity instruments issued for years 2010-2013, as described in the next section. Beginning in 2014, we will utilize our Compensation Peer Group for the TSR Program.

In addition to data pertaining to the Compensation Peer Group, we use the latest available data provided by our consultant, from general industry size-based surveys, and from our own experience in the labor market. We review the Consultant’s benchmarking data and its process for assimilating the data used in this competitive benchmarking process, which is a blend of data from our Compensation Peer Group and the applicable survey data. Additionally, we review Fortune 500 proxy data for companies with market capitalization similar to ours to compare the compensation of the CEO.

Our Approach

Our approach to executive compensation begins with an analysis of executive base salaries relative to the market for their talent and experience. In addition to the external markets, we consider the importance of each role as it is valued internally within our organization. Factors such as experience in the industry, length of service with Apache, accountability, and any added functions not included in the market comparison are also evaluated. This is the fundamental step in analyzing our executive pay as both the annual cash incentive bonus and long-term compensation targets operate as a function of base salary. Once the base salary is established, market comparable bonus, and long-term compensation target values are derived based on salary ranges. This tiered approach to setting compensation ensures our executives are well aligned with the market as well as internally to each other. Once each component of pay is evaluated on an individual basis, total compensation for each executive is then compared to the market to ensure overall alignment. In addition, we perform an annual review of our benefits programs to ensure that we provide competitive benefits to all our employees.

Use of Judgment

The Board and the MD&C Committee believe that the application of our collective experiences and business judgment is as important to the compensation decision process as is the application of data and formulae. Our compensation policies and practices reflect this belief.

During our shareholder outreach process, we found that most of our shareholders did not demand a purely formulaic approach to compensation. They understand that business judgment of our directors plays an important role in the compensation decision process. At the same time, there is a concern that board judgment will almost always be in favor of the executives. We believe that one of the most important applications of board discretion in adjusting executive compensation is where the board finds that successful and commendable management efforts have not translated into shareholder value.

While market data provides an important tool for analysis and decision-making, we realize that over-reliance on data can give a false illusion of precision. Consequently, we also give consideration to an individual’s personal contributions to the organization, as well as his or her leadership qualities, skill sets, qualifications, experience, and demonstrated performance. We also value and seek to reward performance that develops talent from within, embraces the sense of urgency that defines us, and demonstrates the qualities of imagination and drive that enable an Apache officer to resolve longer-term challenges and important new issues. While these qualities and competencies are not easily correlated to typical compensation data, they deserve, and are given, consideration in reaching compensation decisions. Market data provides us with the foundation for application of the above principles and the ensuing decisions.

OUR NAMED EXECUTIVE OFFICERS

For 2013 our Named Executive Officers (NEOs) were:

G. Steven Farris

Chairman and Chief Executive Officer