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ANADARKO PETROLEUM CORPORATION
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
March 23, 1998
TO THE STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders of the Company. The meeting will be held in The Wyndham Hotel, Greenspoint, 12400 Greenspoint Drive, Houston, Texas, on Thursday, April 30, 1998, at 9:30 a.m.
The Notice of the Annual Meeting of Stockholders and Proxy Statement, which are attached, provide information concerning the matters to be considered at the meeting. In addition, the general operations of the Company will be discussed and stockholders will be afforded the opportunity to ask questions.
We value your opinions and encourage you to participate in this year's Annual Meeting by voting your proxy. We would appreciate your signing and returning your proxy card in the enclosed envelope as soon as possible, whether or not you plan to attend the meeting. If you do not return the signed proxy card, your vote cannot be counted.
Very truly yours,
ROBERT J. ALLISON, JR.
Chairman, President and
Chief Executive Officer
ANADARKO PETROLEUM CORPORATION
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Anadarko Petroleum Corporation will be held in The Wyndham Hotel, Greenspoint, 12400 Greenspoint Drive, Houston, Texas, on Thursday, April 30, 1998, at 9:30 a.m., for the purpose of:
(1)electing two directors;
(2)approving the 1998 Director Stock Plan; and
(3)transacting any other business appropriate to the meeting.
RECORD DATE
March 2, 1998, has been fixed as the record date. Holders of Common Stock of record at the close of business on the record date will be entitled to receive notice of and to vote at the meeting.
Whether or not you expect to be present at the meeting, please sign, date and return the enclosed proxy card in the enclosed addressed envelope, which requires no postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
SUZANNE SUTER
Corporate Secretary
Dated: March 23, 1998
Houston, Texas
ANADARKO PETROLEUM CORPORATION
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1998
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, please take the time to vote by completing and mailing the enclosed proxy card. A prepaid-postage envelope has been provided for your convenience.
If you do not return the signed proxy card, your vote cannot be counted. If you sign, date and return your proxy card without indicating how you want to vote, your proxy will be voted as recommended by the Board of Directors.
REVOKING YOUR PROXY
You may revoke your proxy at any time prior to the meeting by (1) sending a written statement to that effect to the Corporate Secretary of the Company; (2) submitting a properly signed proxy with a later date; or (3) voting in person at the annual meeting.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
Number of Shares Outstanding. At the close of business on the Record Date, March 2, 1998, there were 59,917,727 shares of Anadarko Common Stock outstanding and entitled to vote at the meeting.
Quorum. A quorum is present if at least a majority of the outstanding shares on the Record Date are present in person or by proxy.
Vote Required. The following is an explanation of the vote required for each of the items to be voted on at the annual meeting.
Item 1 -- Election of Directors. Directors are elected by a plurality
of the votes cast meaning that the director nominees with the most
affirmative votes will be elected.
Item 2 -- Approval of 1998 Directors Stock Plan. Item 2 requires the
affirmative vote of a majority of shares present in person or by proxy for
approval. Shares represented by proxy which are marked "abstain" will have
the effect of a vote against Item 2. A "broker non-vote" (when a broker
does not have authority to vote on a specific issue) will have no effect on
the vote.
ANADARKO BOARD OF DIRECTORS
STRUCTURE
The Board is divided into three classes of directors for purposes of election. One class of directors is elected at each annual meeting of stockholders to serve for a three-year term.
At the 1998 meeting, the terms of two directors are expiring. Each director nominated for election at this annual meeting will hold office until the expiration of his term in 2001. Other directors not up for election this year will continue in office for the remainder of their term.
If a nominee is unavailable for election, the proxies will be voted for the election of another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the meeting.
ITEM 1 -- DIRECTORS NOMINATED THIS YEAR FOR TERMS EXPIRING IN 2001
Larry Barcus, 60, Chairman of L. G. Barcus and Sons, Inc., Kansas City, Kansas, a general contractor with operations nationwide and Chairman of First Community Bancshares, a Kansas bank holding company. Mr. Barcus has been a director of the Company since 1986.
James L. Bryan, 62, Senior Vice President of Dresser Industries, Inc. ("Dresser"), an oilfield services company with executive offices in Dallas, Texas, since February 1994. In May 1990, Mr. Bryan was elected Vice President-Operations of Dresser. Mr. Bryan has been a director of the Company since 1986.
DIRECTORS UP FOR ELECTION 1999
Ronald Brown, 65, retired in 1992 as Executive Vice President of Compass Bank, Houston, Texas. Mr. Brown has been a director of the Company since 1986.
John R. Butler, Jr., 59, Chairman of the Board of J.R. Butler & Co., an oil and gas consulting company in Houston, since 1976. He was Chairman of the Board and Chief Executive Officer of GeoQuest International Holdings, Inc. a supplier of drilling, production and seismic data, until the company was sold in 1997. Mr. Butler has been a director of the Company since 1996.
John R. Gordon, 50, President of Deltec Asset Management Corporation, a New York investment management company with executive offices in New York, New York, since January 1988. Mr. Gordon has been a director of the Company since 1988.
DIRECTORS UP FOR ELECTION IN 2000
Conrad P. Albert, 52, is engaged in personal investments. He was Executive Vice President of Manufacturers Hanover Trust Company, a banking corporation, New York, New York, from 1983 through 1991. Mr. Albert is also a director of Deep Tech International. He has been a director of the Company since 1986.
Robert J. Allison, Jr., 59, Chairman of the Board and Chief Executive Officer of the Company since 1986 and President of the Company since 1993. Mr. Allison has been a director of the Company since 1985.
John N. Seitz, 47, Executive Vice President, Exploration and Production of the Company since 1997. He was elected Senior Vice President, Exploration in 1995 and Vice President, Exploration in 1993. He has worked for the Company since 1977. Mr. Seitz became a director of the Company in 1997.
BOARD MEETINGS AND COMMITTEES
During 1997, the Board met four times. The Board also has an Executive Committee which may take action with respect to the conduct of the business of the Company between Board meetings. The Executive Committee did not meet during 1997. During 1997, each incumbent director of the Company attended all the meetings of the Board during the period for which he was a director.
The Board has an Audit Committee and Compensation and Benefits Committee. Membership on these two committees is limited to non-employee directors.
Audit Committee. The Audit Committee met three times in 1997. The primary responsibilities of the Audit Committee are to establish and review the activities of the independent auditors and the internal auditors, review recommendations of the independent auditors and responses of management, and review the annual financial statements issued by the Company. Messrs. Albert, Barcus and Butler are members of the Audit Committee and each attended all of the committee meetings in 1997 during the period for which he was on the Committee.
Compensation and Benefits Committee. During 1997, this committee met six
times. The primary responsibilities of the Compensation and Benefits Committee
are to establish the salaries and determine any bonus awards for the Company's
executive officers, consider and make recommendations on executive compensation
plans and grant stock options, restricted stock and other stock-based awards.
Messrs. Brown,
Bryan and Gordon are members of the Compensation and Benefits Committee and each attended all of the committee meetings in 1997 during the period for which he was on the Committee.
DIRECTOR COMPENSATION
Directors that are not employees of Anadarko receive compensation for Board service. Directors who are employees of Anadarko receive no compensation for Board service. The principal components of director compensation, which a director may elect to receive in cash or Common Stock, are as follows:
1. an annual board retainer of $35,000;
2. a fee of $1,250 for each Board or Committee meeting attended plus expenses related to attendance;
3. an annual committee membership retainer of $3,000; and
4. an annual retainer of $3,000 for serving as a Committee chairman.
1988 Stock Option Plan for Non-Employee Directors. This plan terminates on October 26, 1998. Under the plan, each non-employee director received an initial grant of 10,000 options and was granted an option to purchase 5,000 shares of Common Stock annually. All outstanding options under the 1988 Plan expire 10 years from the date of grant.
Director Retirement Income Plan. This plan was terminated on January 1, 1998, for all current directors. When this plan was terminated, each current director received phantom stock units equal to the dollar value of past pension accruals to be held until the director terminates service.
Phantom Stock Units. In January 1998, each current director received phantom stock units equal to $13,000 to be held until the director terminates service. Directors may receive additional phantom stock units in future years.
Director Deferred Compensation Plan. This plan allowed non-employee directors to defer all or part of their director annual retainer and fees. The plan provides benefit payments based upon the amount of compensation deferred, age of the director at the time the compensation was deferred and accrued interest at 20% per annum. Payments are made under the plan to the director while he is a member of the Board and upon retirement, death, disability or the attainment of age 65. There have been no deferrals since 1990.
ITEM 2 -- 1998 DIRECTOR STOCK PLAN. The directors approved this plan to replace
the 1988 Plan on January 30, 1998, subject to your approval at this meeting. The
key provisions of the plan are summarized below. Because it is a summary, it may
not contain all the information that you think is important. See Appendix A for
the full text of the plan.
SUMMARY OF 1998 DIRECTOR STOCK PLAN
Purpose and Eligibility. The purpose of the Plan is to attract and retain experienced and knowledgeable directors for the benefit of the Company and stockholders. Another purpose of the Plan is to put the directors in the same position as stockholders by enabling the directors to acquire a proprietary interest in the Company. Only directors who are not employees of Anadarko are eligible to participate in this Plan.
Administration. The Plan will be administered by the Board. The Board will determine the type and terms of awards to be granted under the Plan.
Amendment and Termination. The Board may terminate or amend the Plan without stockholder approval.
Shares Subject to Program. A total of 400,000 shares of Common Stock are authorized for issuance under the Plan. The number may be adjusted as a result of action by the Board that affects Anadarko's Common Stock or if an adjustment is determined to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended under the Plan.
Types of Awards. Stock options, restricted stock, stock compensation and other stock-based awards may be granted under the Plan.
Stock Options. The exercise price for stock options cannot be less than 100 percent of fair market value of a share of Common Stock at the time the option is granted. The Board shall determine the form in which payment of the exercise price may be made.
Restricted Stock. Restricted stock may not be disposed of until the restrictions specified in the award expire. If a director is awarded restricted stock, the director shall have the right to vote the shares and receive any cash dividends. Except as otherwise determined by the Board, upon termination of a director's service during the restriction period, all Restricted Stock shall be forfeited by the director.
Stock Compensation. The Board shall have the authority to pay all or a portion of any amounts payable under any directors' compensation program in shares of Common Stock. The number and type of shares to be distributed in lieu of the cash compensation, as well as the terms and conditions of any stock compensation, shall be determined by Board.
Other Stock-Based Awards. The Board may grant other forms of Common Stock awards under the Plan. The Board shall determine the terms and conditions of any such other stock-based awards.
Change of Control. In the event of a "Change of Control", any outstanding awards will automatically vest. The Board may also take any one or more of the following actions: (i) provide for the purchase of any outstanding awards by the Company; (ii) make adjustments to any outstanding awards; or, (iii) allow for the substitution of awards relating to an acquiring company's stock for any outstanding awards.
New Plan Benefits. No grants have been made to any director under the 1998 Plan at this time.
STOCK OWNERSHIP
In general, "beneficial ownership" includes those shares someone has the power to vote, sell or acquire within 60 days. It includes stock that is held directly and also shares held indirectly through a relationship, a position as a trustee or under a contract or understanding.
OWNERS OF MORE THAN FIVE PERCENT OF ANADARKO STOCK
The following table shows, as of December 31, 1997, the beneficial owners of more than five percent of Anadarko Common Stock. This information is based on reports (called Schedule 13G) filed with the Securities and Exchange Commission ("SEC") by each of the firms listed in the table below. If you wish, you may obtain copies of these reports from the SEC.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNER OF CLASS
-------------- ------------------- ---------- --------
Common Stock FMR Corp. 6,878,509 11.5%
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock Sonatrach 6,060,000 10.1%
10, rue du Sahara
16035, Algiers, Algeria
Common Stock Oppenheimer Group Inc. 4,104,650 6.9%
Oppenheimer Tower
World Financial Center
New York, New York 10281
Common Stock American Express Financial 3,118,660 5.2%
Corporation
IDS Tower 10
Minneapolis, Minnesota 55440
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DIRECTORS AND EXECUTIVE OFFICERS
On February 28, 1998, the directors and executive officers of Anadarko beneficially owned, in the aggregate, 2,156,232 shares of Anadarko Common Stock (approximately 3.6% of the outstanding shares entitled to vote). Except for Mr. Allison, no director, nominee for director or officer of the Company owns or has the right to acquire more than 1% of the outstanding Common Stock.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
---------------------------------------------
SHARES
NAME OF NUMBER OF SHARES EXERCISABLE TOTAL
BENEFICIAL BENEFICIALLY OWNED WITHIN BENEFICIAL PERCENT
OWNER (1) 60 DAYS OWNERSHIP OF CLASS
---------- ------------------ ----------- ---------- --------
Robert J. Allison, Jr............... 214,910 500,000 714,910 1.2
John N. Seitz....................... 20,610 133,000 153,610 *
Michael E. Rose..................... 21,951 60,667 82,618 *
Charles G. Manley................... 37,162 111,000 148,162 *
William D. Sullivan................. 15,321 63,000 78,321 *
Conrad P. Albert.................... 17,000 24,000 41,000(2) *
Larry Barcus........................ 1,000 50,000 51,000 *
Ronald Brown........................ 3,222 43,000 46,222(3) *
James L. Bryan...................... 1,000 50,000 51,000 *
John R. Butler, Jr.................. 4,282 5,000 9,282 *
John R. Gordon...................... 12,847 50,000 62,847 *
All directors and executive officers
as a group (22 persons)........... 504,165 1,652,067 2,156,232 3.6
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* Less than one percent.
(1) This number does not include shares of Common Stock which the directors or officers of the Company have the right to acquire within 60 days of February 28, 1998.
(2) Mr. Albert disclaims beneficial ownership of the 1,000 shares held in his wife's name and the 2,831 shares held in his children's names.
(3) Mr. Brown disclaims beneficial ownership of the 50 shares held in his wife's name.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company purchases production, drilling and seismic data from Petroleum Information/Dwights LLC and its subsidiaries. In 1997, the aggregate amount paid to Petroleum Information/Dwights LLC and its subsidiaries was approximately $800,000. Mr. Butler, a director of the Company, served as Senior Chairman of Petroleum Information/Dwights LLC and its subsidiaries during 1997. In addition, the Company paid approximately $20,000 in 1997 to Houston Advance Research Center for a seismic imaging project. Mr. Butler is Chairman of the Houston Advance Research Center.
During 1989, Anadarko Algeria Corporation, a wholly-owned subsidiary of the Company, entered into an agreement with Sonatrach, the national oil and gas enterprise of Algeria, which gives Anadarko Algeria the right to explore for and produce liquid hydrocarbons in Algeria. Sonatrach is wholly-owned by the People's Democratic Republic of Algeria and owns 99.9% of the capital stock of Sonatrach Petroleum Investment Corporation (Ireland) Limited. In 1997, approximately $438,000 was paid to Sonatrach for charges related to reservoir studies, laboratory services and well testing services. As of December 31, 1997, a total of approximately $405 million in exploration and development costs had been incurred by Anadarko Algeria of which approximately $173 million was incurred in 1997.
In 1996, Anadarko Algeria and Sonatrach entered into a contract with Brown & Root Condor, SPA ("BRC") for the construction of an oil production facility. Sonatrach owns 51 percent of BRC either directly or indirectly. In 1997, approximately $107 million was paid to BRC pursuant to the agreement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 furnished to the Company during its most recent fiscal year and Forms 5 furnished to the Company with respect to its most recent fiscal year, the Company believes that all transactions by reporting persons during the most recent fiscal year and the prior fiscal year were reported on a timely basis.
COMPENSATION AND BENEFITS COMMITTEE REPORT
ON 1997 EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing and administering the executive compensation programs of the Company. This report describes the compensation decisions made by the Compensation Committee during 1997 with respect to Anadarko's executive officers.
COMPENSATION PHILOSOPHY OF THE COMPANY
Anadarko's executive compensation programs consist primarily of base salary, performance-based annual bonus and long-term stock incentive plans which the Company considers essential to attract, reward, incent and retain key personnel. Collectively, these programs are designed to promote the strategic objectives which are critical to the long-term success of the Company.
The Company utilizes an outside compensation consultant to review executive compensation and benefits programs as well as total compensation levels provided to executive officers. Anadarko's compensation programs provide executives the opportunity to earn compensation levels within the top quartile of a select peer group of oil and gas companies, to the extent that Company and executive performance on an individual and combined basis so warrants. The peer group consists of energy companies similar in business operations and size to Anadarko, some of whom are also included in the Dow Jones Oil-Secondary index used for stock price performance comparison on the Performance Graph. Not all companies included in the Dow Jones Oil-Secondary index are considered comparable with respect to analyzing executive compensation and benefits levels. This index is comprised of select energy companies representing most facets of the industry including independent oil companies as well as those having integrated operations or operating in diversified industries. The index does, however, provide a meaningful comparison of total stockholder return against a consistent representation of oil and gas companies with whom Anadarko competes for investment dollars.
In designing Anadarko's compensation programs and as part of determining appropriate award levels, the Compensation Committee's primary consideration is the Company's achievement of strategic business goals. Consideration is also given to competitive practice, market economics and other factors. Section 162(m) of the Code limits a company's ability to deduct compensation paid in excess of $1 million during any fiscal year to the Chief Executive Officer and the next four highest paid officers, unless such compensation meets certain performance-based requirements. The Compensation Committee is committed to making awards that qualify for the performance-based deduction to the extent fulfilling the Company's goals is consistent with favorable tax treatment under section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Company believes that the compensation paid for 1997 under the Annual Incentive Bonus Plan (the "Incentive Plan") and resulting from the exercise of stock options awarded under the 1993 Stock Incentive Plan (the "1993 Plan") is deductible compensation.
BASE SALARY
Anadarko structures its compensation programs to match pay with performance. Individual base salaries are determined based on a subjective evaluation considering peer company market data, the executive's performance and the length of time the executive has been in the position. Base compensation is reviewed annually by the Compensation Committee and adjusted accordingly to reflect each executive officer's contribution to the performance of the Company.
Mr. Allison's annual base salary for 1997 was increased, effective January 1, as a result of his contribution to the Company's outstanding performance for 1996. In determining Mr. Allison's base salary compensation,
the Compensation Committee considered Mr. Allison's leadership and specific individual contributions to the Company's continued growth during his 19 years as Anadarko's Chief Executive Officer.
ANNUAL INCENTIVE BONUS
The Incentive Plan puts a significant portion of compensation at risk by linking potential annual compensation to the Company's achievement of specific performance goals. These goals are established by the Compensation Committee at the beginning of each calendar year and for 1997 included:
(1) Financial criteria of net income and cash flow, both of which were measured against internal objectives;
(2) Operational criteria including comparisons of Anadarko's average five-year worldwide reserve replacement measured against an internal objective and Anadarko's average five-year worldwide cost of finding measured against the most recent available industry average five-year worldwide cost of finding; and,
(3) Stock performance criteria comparing Anadarko's relative stock performance for 1997 against the relative average stock performance of a select group of peer companies for the same period.
Each performance goal, including the specific criteria for such goal, was assigned a weighting based upon the relative importance of each goal as determined by the Compensation Committee.
A bonus target, ranging up to 80% of base salary, is established for each executive officer under the Incentive Plan based upon individual position, level of responsibility and ability to impact the Company's success. Bonus targets are adjusted based on the Company's achievement of the performance goals. Individuals may receive up to 150% of their bonus target if the Company exceeded the specified goals and, conversely, a reduced bonus or no bonus payment if the Company does not attain the specified goals.
Anadarko's operating performance for 1997 was the best in the Company's 39-year history. The Company added over 151 million energy equivalent barrels (EEBs) of reserves, increasing total reserves to 708 million EEBs. Reserve replacement for 1997 was 341%, which resulted in the Company replacing annual production volumes for the 16th consecutive year. In addition, Anadarko's worldwide five-year cost of finding continued to be better than the most recently published industry worldwide five-year average. The Company's financial performance for the year yielded record results. Based on Anadarko's outstanding results as measured against the performance goals, the Compensation Committee approved a bonus for Mr. Allison representing 150% of his 80% bonus target.
STOCK PLANS
The Company makes certain stock-based awards under the 1993 Plan to align the interests of executive officers with those of stockholders. Anadarko has established stock ownership guidelines for executive officers of two and one-half times base salary for Vice Presidents, three times base salary for Senior Vice Presidents, four times base salary for the Executive Vice President and five times base salary for the Chief Executive Officer.
The Compensation Committee annually reviews competitive market data to determine appropriate stock awards based on the executive's position and the market value of the stock. In addition, the Compensation Committee considers previous stock grants when determining grant size for executive officers. Historically, the Compensation Committee has made annual grants of stock options at the fair market value of the Common Stock on the date of grant.
In 1996, the Compensation Committee granted stock options and awarded performance shares to the Chief Executive Officer to encourage the increase in stockholder value both in absolute dollars and relative to the Company's peers. As a result of the stock compensation package awarded to Mr. Allison in 1996, no stock grants were awarded to him in 1997.
SUMMARY
Anadarko's compensation strategy is to provide total compensation commensurate with the achievement of specific operational, financial and strategic objectives and the long-term appreciation of the Company's stock price. Accordingly, Mr. Allison's total compensation for 1997 was within the top quartile of the peer companies as a result of Anadarko's outstanding performance.
The Compensation Committee believes the design of the Company's total executive compensation program provides executives the incentive to maximize long-term operational performance using sound financial controls and high standards of integrity. It is the Compensation Committee's belief that this focus will ultimately be reflected in Anadarko's stock price and stockholder return.
The Compensation and Benefits Committee of the Board of Directors consists of the following:
Mr. Ronald Brown, Chairman
Mr. James L. Bryan
Mr. John R. Gordon
The following table sets forth information with respect to the Chief Executive Officer and the four most highly compensated executive officers of the Company as to whom the total annual salary and bonus for the fiscal year ended December 31, 1997, exceeded $100,000:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------------
OTHER
ANNUAL
COMPEN-
SALARY BONUS SATION
NAME PRINCIPAL POSITION YEAR ($) ($) ($)(1)
---- ------------------ ---- --------- --------- -------
Robert J. Allison, Jr.... Chairman, President and Chief 1997 1,000,000 1,200,000 60,253
Executive Officer
Chairman, President and Chief 1996 925,000 1,110,000 53,172
Executive Officer
Chairman, President and Chief 1995 825,000 1,000,000(5) 0
Executive Officer
John N. Seitz............ Executive Vice President, 1997 387,083 325,000 0
Exploration & Production
Senior Vice President, 1996 300,000 190,000 0
Exploration
Senior Vice President, 1995 258,333 165,000 0
Exploration
Michael E. Rose.......... Senior Vice President, Finance 1997 350,000 186,000 0
Senior Vice President, Finance 1996 315,000 167,000 0
Senior Vice President, Finance 1995 280,000 148,000 0
Charles G. Manley........ Senior Vice President, 1997 345,000 183,000 0
Administration
Senior Vice President, 1996 310,000 164,000 0
Administration
Senior Vice President, 1995 280,000 148,000 0
Administration
William D. Sullivan...... Vice President, Algeria 1997 250,000 113,000 126,083
Vice President, Algeria 1996 215,000 97,000 0
Vice President, Algeria 1995 180,000 85,000 0
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LONG-TERM COMPENSATION
---------------------------------
AWARDS
-----------------------
SECURITIES ALL
UNDERLYING OTHER
RESTRICTED OPTIONS/ LTIP COMPEN-
STOCK(2) SARS(3) PAYOUTS SATION(4)
NAME ($) (#) ($) ($)
---- ---------- ---------- ------- ---------
Robert J. Allison, Jr.... 0 0 0 349,812
0 480,000 0 331,687
0 60,000 0 316,741
John N. Seitz............ 0 40,000 0 83,778
0 24,000 0 74,312
0 24,000 0 70,721
Michael E. Rose.......... 0 27,000 0 96,398
0 24,000 0 97,214
81,250 24,000 0 101,312
Charles G. Manley........ 0 24,000 0 103,179
0 24,000 0 105,144
0 24,000 0 108,817
William D. Sullivan...... 0 24,000 0 229,277
0 18,000 0 106,613
0 18,000 0 39,421
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(1) Represents certain perquisites, including $29,908 and $17,790 attributable to personal use of the Company airplane and financial counseling, respectively, for Mr. Allison; and $104,780 attributable to the net payment of taxes by the Company on Mr. Sullivan's behalf associated with his foreign assignment.
(2) As of December 31, 1997, the number of restricted shares held by each executive officer and corresponding value on December 31, 1997 was for Mr. Rose, 667 shares valued at $40,479. The restricted stock awarded to Mr. Rose in 1995 vests 33% per year each April 27th beginning in 1996. Dividends will be paid on unvested shares.
(3) No SARs are outstanding.
(4) This column includes (a) Company contributions to the Anadarko Employee Savings Plan and Savings Restoration Plan; (b) interest earned above 120% of the applicable federal rate on deferred compensation under the Executive Deferred Compensation Plan; (c) payments under the Annual Override Bonus Plan ("ORRI"); and (d) the value of Company paid split-dollar insurance. The 1997 amounts for items (a), (b), (c) and (d) for each of the individuals named in the table are for Mr. Allison, $126,600, $63,747, $49,632 and $109,833; Mr. Seitz, $34,625, $12,679, $12,829 and $23,645; Mr. Rose, $31,020, $27,662, $10,822 and $26,894; Mr. Manley, $30,540, $30,853, $11,036 and $30,750; and Mr. Sullivan, $20,820, $0, $7,794 and $12,519, respectively. In addition, this column includes $188,144 applicable to foreign service and relocation payments associated with Mr. Sullivan's foreign service assignment. No deferrals have been made under the Executive Deferred Compensation Plan since 1990. Grants under the ORRI were discontinued after 1986; however, awards that were previously made will continue to produce payments to recipients in accordance with the provisions of the plan.
(5) Includes $743,000 paid under the Company's Incentive Plan and a special bonus of $257,000, the payment of which is deferred until Mr. Allison's retirement from the Company.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS/SARS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN PRICE(2) EXPIRATION -------------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ------------- ------------ -------- ---------- ----- ---------- ----------
Robert J. Allison,
Jr................. 0 0% N/A N/A $0 $ 0 $ 0
John N. Seitz........ 40,000(4) 6.3% $75.938 11/04/07 $0 $1,910,267 $4,840,993
Michael E. Rose...... 27,000(4) 4.2% $75.938 11/04/07 $0 $1,289,431 $3,267,670
Charles G. Manley.... 24,000(4) 3.8% $75.938 11/04/07 $0 $1,146,160 $2,904,596
William D.
Sullivan........... 24,000(4) 3.8% $75.938 11/04/07 $0 $1,146,160 $2,904,596
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(1) No SARs were granted in 1997.
(2) The exercise price equals the fair market value of the Common Stock on the date of grant.
(3) The dollar amounts under these columns are the results of calculation at 0% and at the 5% and 10% rates set by the SEC and are not intended to forecast possible future appreciation, if any, of the Company's stock price. The Company did not use an alternative formula for a grant date valuation, as the Company is not aware of any formula which will determine with reasonable accuracy a present value based on future unknown or volatility factors.
(4) The stock options were granted on November 4, 1997, under the 1993 Plan. Fifty percent of the options become fully exercisable on November 4, 1998, and 50% become fully exercisable on November 4, 1999. In the event of a "Change of Control", any outstanding options will automatically vest. The Board may also take any one or more of the following actions: (i) provide for the purchase of any outstanding awards by the Company; (ii) make adjustments to any outstanding awards; or, (iii) allow for the substitution of any outstanding awards by the acquiring company's stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY
ON VALUE OPTIONS/SARS AT OPTIONS/SARS AT
EXERCISE REALIZED FISCAL YEAR-END(#) FISCAL YEAR-END($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE*
---- -------- -------- ------------------------- --------------------------
Robert J. Allison, Jr.......... 0 $ 0 440,000/360,000 $7,173,750/$2,047,500
John N. Seitz.................. 1,600 $83,862 133,000/ 52,000 $2,612,500/$ 0
Michael E. Rose................ 0 $ 0 60,000/ 39,000 $ 736,500/$ 0
Charles G. Manley.............. 0 $ 0 111,000/ 36,000 $1,780,500/$ 0
William D. Sullivan............ 0 $ 0 63,000/ 33,000 $ 787,500/$ 0
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* Computed based upon the difference between aggregate fair market value on December 31, 1997 ($60.0625) and aggregate exercise price.
PENSION PLAN TABLE
The Company has a defined benefit plan covering all United States employees that does not require employee contributions. The Retirement Plan provides benefits based on a length of service and a final average pay formula. For this purpose, "pay" generally includes the amounts shown in the Salary and Bonus columns of the Summary Compensation Table. The following table shows the estimated single life annuity payable annually at normal retirement in specified remuneration and years-of-service classifications, based on the benefit formula in effect on December 31, 1997.
YEARS OF SERVICE
--------------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ -------- -------- ---------- ---------- ----------
$ 250,000............... $ 66,000 $ 88,000 $ 110,000 $ 131,000 $ 153,000
300,000............... 79,000 106,000 132,000 158,000 185,000
400,000............... 106,000 142,000 177,000 212,000 248,000
500,000............... 133,000 178,000 222,000 266,000 311,000
600,000............... 160,000 214,000 267,000 320,000 374,000
700,000............... 187,000 250,000 312,000 374,000 437,000
800,000............... 214,000 286,000 357,000 428,000 500,000
900,000............... 241,000 322,000 402,000 482,000 563,000
1,000,000............... 268,000 358,000 447,000 536,000 626,000
1,100,000............... 295,000 394,000 492,000 590,000 689,000
1,200,000............... 322,000 430,000 537,000 644,000 752,000
1,300,000............... 349,000 466,000 582,000 698,000 815,000
1,400,000............... 376,000 502,000 627,000 752,000 878,000
1,500,000............... 403,000 538,000 672,000 806,000 941,000
1,600,000............... 430,000 574,000 717,000 860,000 1,004,000
1,700,000............... 457,000 610,000 762,000 914,000 1,067,000
1,800,000............... 484,000 646,000 807,000 968,000 1,130,000
1,900,000............... 511,000 682,000 852,000 1,022,000 1,193,000
2,000,000............... 538,000 718,000 897,000 1,076,000 1,256,000
2,100,000............... 565,000 754,000 942,000 1,130,000 1,319,000
2,200,000............... 592,000 790,000 987,000 1,184,000 1,382,000
2,300,000............... 619,000 826,000 1,032,000 1,238,000 1,445,000
2,400,000............... 646,000 862,000 1,077,000 1,292,000 1,508,000
2,500,000............... 673,000 898,000 1,122,000 1,346,000 1,571,000
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Messrs. Allison, Seitz, Rose, Manley, and Sullivan, respectively, have 24, 20, 20, 24 and 16 years of accrued service under the Plan. An employee becomes vested in his benefit under the Retirement Plan at completion of five years of vesting service, as defined in the Retirement Plan.
A portion of the benefits shown in the table may be paid from the Company's supplementary retirement plans, rather than from the Retirement Plan, due to limitations imposed by the Internal Revenue Code, which restricts the amount of benefits payable under tax-qualified plans.
CHANGE OF CONTROL ARRANGEMENTS
The Company has Key Employee Change of Control Contracts (the "Severance
Contracts") with all current executive officers. The Severance Contracts provide
that in the event of a Change of Control, as defined in the Severance Contracts,
such individuals will receive certain benefits in the event of the termination
of their employment within three years of the effective date of such Change of
Control. If termination of employment is (i) by the Company other than for cause
(ii) by the executive for good reason (as defined in the Severance Contracts) or
(iii) by the executive without good reason during a window period (as defined in
the Severance Contracts) benefits payable under the terms of the Severance
Contracts include a lump-sum cash payment equal to (i) sum of earned but unpaid
base salary plus pro-rata bonus for the year plus accrued unpaid vacation pay;
(ii) 2.9 times the highest total annualized compensation paid during the three
years ending with the year of such executive's termination from the Company
(including base salary and the amount or value of any bonuses); (iii) the
Company matching contributions which would have been made on the executive's
behalf had he continued to participate in the Anadarko Employee Savings Plan and
the Savings Restoration Plan for up to an additional three years; (iv) the value
of any investments credited to the executive under the Savings Restoration Plan;
(v) the present value of the accrued retirement benefit under the Retirement
Restoration Plan and the additional normal retirement benefit which would have
been received had the executive continued service for three additional years;
and, (vi) the present value of the amounts of deferred compensation and
interest, if any, which would have been received had the executive continued
service through age 65. In addition, the Severance Contracts provide for a
continuation of various health care, disability and life insurance plans and
financial counseling for a period of up to three years, outplacement services
and the payment of all legal fees and expenses incurred by the executive in
obtaining or enforcing any right or benefit provided by the Severance Contracts.
The Severance Contracts also obligate the Company to pay an executive such cash
amount as may be necessary to restore any benefit diminution resulting directly
or indirectly from the assessment of any special excise taxes under section 280G
of the Code in respect to benefits provided under the Severance Contracts. In
consideration of these benefits the executive agrees, in the event a person
seeks to effect a change of control, not to leave the employ of the Company and
to render services commensurate with his position until such person has
abandoned or terminated his efforts or the change of control has occurred. The
executive also agrees to retain, in confidence, any and all confidential
information known to him concerning the Company and its business so long as such
information is not otherwise publicly disclosed. No amounts have been paid under
the Severance Contracts.
The Change of Control Severance Pay Plan (the "Severance Plan") covers all of the Company employees who are not covered by the Severance Contracts. The Severance Plan provides that, in the event of a Change of Control, as defined in the Severance Plan, employees will have certain benefits provided to them in the event of the termination of their employment within three years after the effective date of such change of control. Benefits are provided unless termination of employment is (i) because of disability or retirement; (ii) for cause or (iii) due to a qualified sale of business. The Severance Plan provides benefits that include a lump sum cash payment based on salary and service ranging from a minimum of three months to a maximum of two years salary; and a continuation of employee's life insurance and medical and dental insurance for six months. No amounts have been paid under the Severance Plan.
Under the 1993 Plan in the event of a "Change of Control", any outstanding options will automatically vest and restrictions on restricted stock shall lapse. The Board may also take any one or more of the following actions: (i) provide for the purchase of any outstanding awards by the Company; (ii) make adjustments to any outstanding awards; or, (iii) allow for the substitution of any outstanding awards by the acquiring company's
stock. In the event of a "Change of Control", under the terms of the 1987 Stock Option Plan, all outstanding options shall be surrendered to the Company and the optionee shall receive a cash payment in an amount equal to the number of shares of Common Stock subject to the options multiplied by the difference between the fair market value of a share of Common Stock on the date determined to be the date of cancellation and surrender of such options and the option price. The Board also has the ability to substitute Common Stock for the cash payment under the 1987 Stock Option Plan.
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's Common Stock to the Dow Jones Oil -- Secondary Index and to the S&P 500 Index for the last five years. The graph assumes that the value of the investment in the Company's Common Stock and each index was $100 at December 31, 1992 and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
ANADARKO PETROLEUM CORP., DOW JONES OIL -- SECONDARY AND S&P 500
ANADARKO DOW JONES
MEASUREMENT PERIOD PETROLEUM OIL - S&P 500
(FISCAL YEAR COVERED) CORPORATION SECONDARY INDEX
1992 100 100 100
1993 156 111 110
1994 133 107 112
1995 188 124 153
1996 226 153 189
1997 213 163 252
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Total Return Data provided by S&P's Compustat Services, Inc. and Dow Jones & Company Inc.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP served as the Company's independent auditors during 1997 and was appointed by the Board to serve in that capacity for 1998. Representatives of KPMG Peat Marwick LLP will be present at the meeting to respond to appropriate questions from stockholders.
OTHER MATTERS
It is not expected that any other matters will come before the meeting. However, if any other matters properly come before the meeting, it is the intention of the persons named in the accompanying form of proxy to vote such proxy in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
An eligible stockholder who wants to have a qualified proposal considered for inclusion in the proxy statement for the 1999 Annual Meeting must notify the Corporate Secretary of the Company. The proposal must be received no later than November 13, 1998.
PROXY SOLICITATION
The Company pays for the cost of preparing, assembling and mailing the material in connection with the solicitation of proxies. It is expected that the solicitation of proxies will be primarily by mail but solicitations may also be made personally or by telephone or telegraph by officers and other employees of the Company without additional compensation. Anadarko pays all costs of solicitation, including certain expenses of brokers and nominees who mail proxy material to their customers or principals. In addition, the Company has engaged ChaseMellon Shareholder Services, L.L.C. to assist in the solicitation of proxies for this Annual Meeting at an estimated fee of $5,000 plus disbursements.
BY ORDER OF THE BOARD OF DIRECTORS
SUZANNE SUTER
Corporate Secretary
Dated: March 23, 1998
Houston, Texas
SEE ENCLOSED PROXY CARD -- PLEASE SIGN AND MAIL PROMPTLY.
APPENDIX A
ANADARKO PETROLEUM CORPORATION
1998 DIRECTOR STOCK PLAN
SECTION 1. Purpose.
The purposes of the Plan are to attract and retain experienced and knowledgeable non-employee directors for the benefit of the Company and its stockholders, and for such directors to acquire a proprietary interest in the Company and to further align the interests of such directors with the interests of the Company and its stockholders.
SECTION 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth below:
"Award" shall mean any Option, Restricted Stock, Stock Compensation Award or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract, or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Change of Control" shall have the meaning set forth in Section 8(c) of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
"Company" means Anadarko Petroleum Corporation, a Delaware corporation.
"Eligible Director" shall mean each director of the Company, who is not an employee of the Company or any of its subsidiaries.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean, as of any given date, the mean between the highest and lowest reported sales prices of a Share on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Shares are listed or on NASDAQ. If there is no regular public trading market for such Shares, the Fair Market Value of a Share shall be determined by the Board in good faith.
"Option" shall mean a Non-Qualified Stock Option granted under Section 6(a) of the Plan.
"Other Stock-Based Award" shall mean any right granted under Section 6(d) of the Plan.
"Participant" shall mean any Eligible Director granted an Award under the Plan.
"Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
"Plan" shall mean the Anadarko Petroleum Corporation 1998 Director Stock Plan.
"Restricted Period" shall have the meaning set forth in Section 6(b) of the Plan.
"Restricted Stock" shall mean any Share, prior to the lapse of restrictions thereon, granted under Section 6(b) of the Plan.
"SEC" shall mean the Securities and Exchange Commission, or any successor thereto.
"Shares" shall mean the common shares of the Company, $0.10 par value, and such other securities or property as may become the subject of Awards or become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan.
"Stock Compensation" shall mean any right granted under Section 6(c) of the Plan.
SECTION 3. Administration.
The Plan shall be administered by the Board. Subject to the terms of the Plan and applicable law, the Board shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to an Eligible Director; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Board; (vii) determine whether, to what extent, and under what circumstances Awards are transferable; (viii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (ix) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (x) make any other determination and take any other action that the Board deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Board, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Participant, any holder or beneficiary of any Award, any shareholder and any Eligible Director.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c), the number of Shares with respect to which Awards may be granted under the Plan shall be 400,000 after the effective date of the Plan, any Shares covered by an Award granted under the Plan, or to which such an Award relates, are forfeited, or if an Award otherwise terminates or is canceled without the delivery of Shares or of other consideration, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares with respect to which Awards may be granted, to the extent of any such forfeiture, termination or cancellation, shall again be, or shall become, Shares with respect to which Awards may be granted. In the event that any Option or other Award granted hereunder is exercised through the delivery of Shares, the number of Shares available for Awards under the Plan shall be increased by the number of Shares surrendered.
(b) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.
(c) Adjustments. In the event that the Board determines that any dividend
or other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Board to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Board shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) with respect to which Awards may be granted, (ii)
the number and type of Shares (or other securities or property) subject to
outstanding Awards, (iii) the grant or exercise price with respect to any Award,
(iv) if deemed appropriate, make provision for a cash payment to the holder of
an outstanding Award, and/or (v) such other equitable substitutions or
adjustments as the Board may determine to be appropriate in its sole discretion;
provided, that the number of Shares subject to any Award denominated in Shares
shall always be a whole number.
SECTION 5. Eligibility.
Any Eligible Director shall be eligible to be designated as a Participant.
SECTION 6. Awards.
(a) Options. Subject to the provisions of the Plan, the Board shall have authority to determine the Eligible Directors to whom Options shall be granted, the number of Shares to be covered by each Option, the purchase price therefore and the conditions and limitations applicable to the exercise of the Option, including the terms and conditions set forth below, and such additional terms and conditions, as the Board shall determine are not inconsistent with the provisions of the Plan as set forth in an Award Agreement.
(i) Exercise Price. The exercise price per Share purchasable under an Option shall be determined by the Board at the time each Option is granted; provided, however, that the exercise price per Share shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except in the case of an Option that is a Substitute Award.
(ii) Time and Method of Exercise. The Board shall determine the time or times at which an Option may be exercised in whole or in part, and the method or methods by which, and the form or forms (which may include, without limitation, cash, Shares, outstanding Awards, other securities or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price) in which payment of the exercise price with respect thereto may be made or deemed to have been made. Pursuant to Section 7(b) of the Plan, the Board may, at its discretion, accelerate the time at which an Option may be exercised and otherwise modify the time or methods of exercise of the Option.
(b) Restricted Stock. Subject to the provisions of the Plan, the Board shall have authority to determine the Eligible Directors to whom Restricted Stock shall be granted, the number of Shares of Restricted Stock to be granted to each such Participant, the duration of the Period of Restriction (the "Restricted Period") during which, and the conditions under which, the Restricted Stock may be forfeited to the Company, and the other terms and conditions of such Awards.
(i) Dividends. Unless otherwise determined by the Board, Restricted Stock Awards shall provide for the payment of dividends during the Restricted Period. Dividends paid on Restricted Stock may be paid directly to the Participant, may be subject to risk of forfeiture and/or transfer restrictions during any period established by the Board, all as determined by the Board in its discretion.
(ii) Registration. Any Restricted Stock may be evidenced in such manner as the Board shall deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.
(iii) Forfeiture. Except as otherwise determined by the Board, if a Participant shall cease to be an Eligible Director for any reason during the applicable Restricted Period, all Restricted Stock shall be forfeited by the Participant. The Board may, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to such Participant's Restricted Stock. Unrestricted Shares, evidenced in such manner as the Board shall deem appropriate, shall be issued to the holder of Restricted Stock promptly after the applicable restrictions have lapsed or otherwise been satisfied.
(iv) Transfer Restrictions. During the Restricted Period, Restricted
Stock will be subject to the limitations on transfer as provided in Section
6(e)(vii).
(c) Stock Compensation. The Board shall have the authority to pay in Shares all, or such portion as it shall determine, of compensation that such Eligible Director would be entitled to receive for serving as director during a fiscal quarter, including fees paid in connection with service as Chairman of a committee of the Board, as a member of the Board and as a member of any committee of the Board, attendance at meetings
and any other services provided to the Company, but excluding any amounts an Eligible Director has elected to defer (the "Quarterly Retainer") as follows:
(i) Subject to subsection (iii) below, Shares shall be issued automatically to any Eligible Director who files with the Corporate Secretary of the Company, at least 30 days prior to Share Issuance Date, an election to receive Shares in lieu of all or a portion, expressed as a fraction (the "Elected Percentage") of his or her Quarterly Retainer. As soon as is practicable following the last business day of the relevant fiscal quarter (such last business day, the "Share Issuance Date"), each Eligible Director making such an election under this subsection (i) shall be issued certificates for the Shares as determined under subsection (ii) below; provided that no such election shall be given effect if it is not timely made.
(ii) The number of Shares issued on a Share Issuance Date shall be equal to the nearest number of whole shares determined in accordance with the following formula:
For purposes of this Section 6(c), Fair Market Value shall be determined on the Share Issuance Date.
(iii) The Eligible Director shall have none of the rights of a stockholder with respect to any Shares acquired pursuant to this Section 6(c) prior to the Share Issuance Date and the receipt by the Eligible Director of a certificate or certificates for such Shares.
(d) Other Stock-Based Awards. The Board is hereby authorized to grant to an
Eligible Director an "Other Stock-Based Award", which shall consist of a right
(i) which is not an Award or right described in Section 6(a), (b), or (c) and
(ii) which is denominated or payable in, valued in whole or in part by reference
to, or otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as are deemed by the Board to be consistent
with the purposes of the Plan; provided, that any such rights must comply, to
the extent deemed desirable by the Board, with applicable law. Subject to the
terms of the Plan and any applicable Award Agreement, the Board shall determine
the terms and conditions of any such Other Stock-Based Award.
(e) General.
(i) Awards May Be Granted Separately or Together. Awards may, in the discretion of the Board, be granted either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Company. Awards granted in addition to or in tandem with other Awards or awards granted under any other plan of the Company may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
(ii) Forms of Payment by Company Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company upon the grant, exercise or payment of an Award may be made in such form or forms as the Board shall determine, including, without limitation, cash, Shares, other securities, other Awards or other property, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Board. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments.
(iii) Term of Awards. The term of each Award shall be for such period as may be determined by the Board.
(iv) Share Certificates. All certificates for Shares or other securities of the Company delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Board may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed,
and any applicable Federal or state laws, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(v) Consideration for Grants. Awards may be granted for no cash consideration or for such consideration as the Board determines including, without limitation, such minimal cash consideration as may be required by applicable law.
(vi) Delivery of Shares or other Securities and Payment by Participant of Consideration. No Shares or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement is received by the Company. Such payment may be made by such method or methods and in such form or forms as the Board shall determine, including, without limitation, cash, Shares, other securities, other Awards or other property, or any combination thereof; provided that the combined value, as determined by the Board, of all cash and cash equivalents and the Fair Market Value of any such Shares or other property so tendered to the Company, as of the date of such tender, is at least equal to the full amount required to be paid to the Company pursuant to the Plan or the applicable Award Agreement.
(vii) Transferability. Except as otherwise provided by the Board, Awards are not transferable other than, as designated by the Participant, in the event of his death, by will or by the laws of descent and distribution.
SECTION 7. Amendment and Termination.
Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Plan without the consent of any shareholder, Participant, other holder or beneficiary of an Award, or other Person.
(b) Amendments to Awards. The Board may waive any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided no change in any Award shall reduce the benefit to a Participant without the consent of such Participant.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Board is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(c) of the Plan) affecting the Company, or the financial statements of the Company, or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.
SECTION 8. Change of Control.
(a) Impact of Event. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control:
(i) Any Options outstanding as of the date such Change of Control is determined to have occurred, and which are not then exercisable and vested, shall become fully exercisable and vested to the full extent of the original grant.
(ii) The restrictions applicable to any Restricted Stock shall lapse, and such Restricted Stock shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant.
(iii) The restrictions or other limitations applicable to any Other Stock-Based Awards shall lapse, and such Other Stock-Based Awards shall become fully vested and transferable to the full extent of the original grant.
(b) In addition to the Board's authority set forth in Sections 7(c) and 8(a) of the Plan, in order to maintain the Participants' rights in the event of any Change of Control, the Board, as constituted before such Change of Control, is hereby authorized, and has sole discretion, as to any Award, either at the time such Award is made hereunder or any time thereafter, to take any one or more of the following actions: (i) provide for the purchase of any such Award, upon the Participant's request, for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant's rights had such Award been currently exercisable or payable; (ii) make such adjustment to any such Award then outstanding as the Board deems appropriate to reflect such Change of Control; or (iii) cause any such Award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after such Change of Control. The Board may, in its discretion, include such further provisions and limitations in any Award Agreement as it may deem equitable and in the best interests of the Company.
(c) A "Change of Control" shall be deemed to occur if:
(i) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section (c); or
(ii) individuals who, as of the effective date of the Plan, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the effective date of the Plan whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii) approval by the stockholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
SECTION 9. General Provisions.
(a) No Rights to Awards. No Eligible Director, Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Eligible Directors, Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards need not be the same with respect to each recipient.
(b) No Right to be a Director. Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any Eligible Director for re-election by the Company's shareholders or to limit the rights of the stockholders to remove any Eligible Director.
(c) Withholding. The Company shall have the right to require, prior to the issuance or delivery of any cash or Shares pursuant to the Plan, that a Participant make arrangements satisfactory to the Board for the withholding of any taxes required by law to be withheld with respect to the issuance or delivery of such cash or Shares, including without limitation by the withholding of Shares that would otherwise be so issued or delivered, by withholding from any other payment due to the Participant, or by a cash payment to the Company by the Participant.
(d) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other compensation arrangements (subject to shareholder approval of such other arrangement, if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases.
(e) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware without reference to the principles of conflict of laws.
(f) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
(g) Other Laws. The Board may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation, or entitle the Company to recover the same, under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other Person. To the extent that any Participant or Person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Board shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
(j) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
SECTION 10. Effective Date of the Plan.
The Plan shall be effective as of January 30, 1998, the date of its approval by the Board.
SECTION 11. Term of the Plan.
The Plan shall remain in full effect until terminated by action of the Board, or until all Participants have received all amounts to which they are entitled, if earlier. Subject to Section 7(a) of the Plan or any Award Agreement, the authority of the Board to amend, alter, adjust, suspend, discontinue, or terminate any Award granted prior to the termination of the Plan or to waive any conditions or rights under any such Award shall extend beyond such date of termination.
Please mark [X] your votes as indicated in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
Item 1 - ELECTION OF CLASS III DIRECTORS FOR AGAINST ABSTAIN Larry Barcus and James L. Bryan. [ ] [ ] [ ] Item 2 - APPROVAL OF 1998 DIRECTOR STOCK FOR AGAINST ABSTAIN PLAN [ ] [ ] [ ] |
Withheld For: (Write that nominee's namde in the space provided below)
THIS PROXY MUST BE SIGNED AND RETURNED TO BE COUNTED
ANADARKO PETROLEUM CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
P FOR ANNUAL MEETING OF STOCKHOLDERS
R APRIL 30, 1998
O The undersigned stockholder hereby appoints ROBERT J. ALLISON, JR. AND
SUZANNE SUTER, and any one of them, with power of substitution and
X revocation, the attorneys of the undersigned to vote all shares
registered in the name of the undersigned for the election of directors
Y (unless such authority is withheld), approval of the 1998 Director Stock
Plan and on all other matters which may come before the 1998 Annual
Meeting of Stockholders of Anadarko Petroleum Corporation to be held on
Thursday, April 30, 1998 at 9:30 A.M. or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY
THE STOCKHOLDER. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED
TO BE CHECKED.
(continued, and to be marked, dated and signed on other side)
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