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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Devon Energy Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
20 North Broadway, Suite 1500
Oklahoma City, OK 73102-8260
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2001
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To the Stockholders of
Devon Energy Corporation:
The Annual Meeting of Stockholders of Devon Energy Corporation will be held
on May 17, 2001 at 10:00 a.m. (Oklahoma City time) in the Egbert Room on the
second floor of The Renaissance Oklahoma City Hotel, Ten North Broadway,
Oklahoma City, Oklahoma, for the following purposes:
1. To elect three directors for terms expiring in the year 2004; and
2. To transact such other business as may properly come before the meeting
or any adjournments of the meeting.
Stockholders of record at the close of business on March 29, 2001 are
entitled to notice of and to vote at the meeting. A complete list of
stockholders entitled to vote at the meeting will be available for examination
during normal business hours for the ten days prior to the meeting at the
offices of Devon and at the meeting. For reasons outlined in the attached
Proxy Statement, the Board of Directors recommends a vote "FOR" the election
of directors nominated by the Board of Directors.
IMPORTANT
Your proxy is important to assure a quorum at the meeting. Whether or not
you expect to attend the meeting, please vote in any one of the following
ways:
. use the toll-free telephone number shown on the proxy card;
. use the internet web site shown on the proxy card; or
. mark, sign, date and promptly return the enclosed proxy card in the
postage-paid envelope. It requires no postage if mailed in the United
States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JANICE A. DOBBS
Janice A. Dobbs
Corporate Secretary
Oklahoma City, Oklahoma
April 10, 2001
DEVON ENERGY CORPORATION
PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Devon Energy Corporation ("Devon" or the
"Company") to be used at the Annual Meeting of Stockholders and any
adjournment thereof (the "Meeting"). The Meeting will be held on May 17, 2001.
This Proxy Statement is first being sent to the stockholders on or about April
10, 2001.
THE COMPANY
Devon is an independent energy company engaged primarily in oil and gas
exploration, development and production and in the acquisition of producing
properties. Devon currently owns oil and gas properties concentrated in five
operating divisions: the Permian/Mid-Continent, Rocky Mountain and Gulf
divisions include onshore properties in the continental United States and
offshore properties primarily in the Gulf of Mexico; Canada, which includes
properties in the Western Canadian Sedimentary Basin in Alberta and British
Columbia; and the International Division, which includes properties in
Azerbaijan, South America, Southeast Asia and West Africa.
At December 31, 2000, Devon's estimated proved reserves were 1,097.4
million barrels of oil equivalent, of which 53% were natural gas reserves and
47% were oil and natural gas liquids reserves. The present value of pre-tax
future net revenues discounted at 10% per annum assuming essentially constant
prices of such reserves was $17.7 billion. Devon is one of the top five public
independent oil and gas companies based in the United States, as measured by
oil and gas reserves. Unless otherwise indicated, all dollar amounts in this
Proxy Statement are expressed in U.S. dollars.
Since September 29, 1988, Devon's common stock (the "Common Stock") has
been traded on the American Stock Exchange (the "AMEX") under the symbol
"DVN." In addition, following the Northstar combination, a new class of
exchangeable shares (the "Exchangeable Shares") began trading on The Toronto
Stock Exchange under the symbol "NSX." These shares are essentially equivalent
to Devon Common Stock. However, because they are issued by Devon's wholly-
owned subsidiary, Northstar, they qualify as a domestic Canadian investment
for Canadian institutional stockholders. They are exchangeable at any time, on
a one-for-one basis, for Common Stock of Devon. The shares of Common Stock and
the Exchangeable Shares are together referred to herein as the "Voting
Shares." All holders of Common Stock and Exchangeable Shares are referred to
herein as "stockholders" of the Company.
The Company's mailing address is 20 North Broadway, Suite 1500, Oklahoma
City, OK 73102-8260. Its telephone number is (405) 235-3611.
All references in this proxy statement to Devon or the Company include its
predecessors and subsidiary corporations.
GENERAL INFORMATION
Purpose of the Meeting
At the Meeting, the stockholders will elect three directors for terms
expiring in the year 2004. The stockholders will also consider and vote upon
such other business as may properly come before the Meeting or any adjournment
thereof.
Voting at the Meeting
The Board of Directors has established March 29, 2001 as the record date
(the "Record Date") to determine stockholders entitled to notice of and to
vote at the Meeting.
Voting by Holders of Common Stock. At the close of business on the Record
Date, there were 126,803,241 shares of Common Stock outstanding, each of which
are entitled to one vote at the Meeting. The enclosed proxy is a means by
which a stockholder may authorize the voting of his or her shares of Common
Stock at the Meeting. Each proxy that is properly signed, dated and returned
in time for the Meeting, and not revoked, will be voted in accordance with
instructions contained therein. If no contrary instructions are given, proxies
will be voted "FOR" the three director nominees nominated by the Board of
Directors. A proxy may be revoked at any time prior to its exercise by
delivering a written notice of revocation or a later dated proxy to the
Corporate Secretary of the Company. In addition, a stockholder present at the
Meeting may revoke his or her proxy and vote in person. The Company has
furnished this Proxy Statement, the accompanying Notice of Meeting, the proxy
card and certain related materials to the holders of Common Stock.
Voting by Holders of Exchangeable Shares. As of the close of business on
the Record Date, there were 2,610,440 Exchangeable Shares outstanding. Each
Exchangeable Share is entitled to one vote at the Meeting through a Voting and
Exchange Trust Agreement dated December 10, 1998, as amended on August 17,
1999 (the "Voting Agreement"). Under the Voting Agreement, CIBC Mellon Trust
Company (the "Trustee") is entitled to exercise certain voting rights on
behalf of holders of the Exchangeable Shares. The Trustee holds one share of
Special Voting Stock of the Company (the "Special Voting Share"). The Special
Voting Share is entitled to a number of votes equal to the number of
Exchangeable Shares outstanding from time to time that are held by persons
other than the Company. Pursuant to the Voting Agreement, each holder of
Exchangeable Shares (other than the Company) is entitled to give the Trustee
voting instructions for a number of votes equal to the number of such holder's
Exchangeable Shares. A voting direction card is a means by which a holder of
Exchangeable Shares may authorize the voting of his or her voting rights at
the Meeting. The Trustee will exercise each vote only as directed by the
relevant holders on the voting direction card. In the absence of instructions
from a holder as to voting, the Trustee will not exercise such votes. A holder
may also instruct the Trustee to give him or her a proxy entitling him or her
to vote personally the relevant number of votes or to grant to the Company's
management a proxy to vote such votes. The voting direction may be revoked at
any time prior to its exercise by delivering a written notice of revocation or
a later dated voting direction card to the Trustee. In addition, a holder of
Exchangeable Shares present at the Meeting may revoke his voting direction
card and vote in person. The Trustee has furnished (or caused the Company to
furnish) this Proxy Statement, the accompanying Notice of Meeting, the voting
direction card and certain related materials to the holders of Exchangeable
Shares.
General Procedures. The office of the Company's Corporate Secretary
appoints an inspector of election to tabulate all votes and to certify the
results of all matters voted upon at the Meeting. The Common Stock and the
Special Voting Share vote together as a single class. The holders of a
majority of the Voting Shares entitled to vote, present in person or by proxy,
constitute a quorum. Election of each director at the Meeting will be by a
plurality of votes cast at the meeting. Votes may be cast in favor of the
election of each director or withheld. The Company believes that brokers that
are member firms of the New York Stock Exchange ("NYSE") and who hold Common
Stock in street name for customers, but have not received instructions from a
beneficial owner, have the authority under the rules of the NYSE to vote those
shares with respect to the election of directors. In Canada, registrants and
their nominees may not exercise voting rights without instructions from a
beneficial owner. Therefore, no votes with respect to the Exchangeable Shares
will be cast without specific instructions to the Trustee.
2
Except as provided by law or the Company's Certificate of Incorporation or
Bylaws, the affirmative vote of the holders of a majority of the Voting
Shares, present in person or by proxy, entitled to vote at the Meeting is
required to take action with respect to any other matter that may properly be
brought before the Meeting. Shares cannot be voted at the Meeting unless the
holder of record is present in person or by proxy.
The Company will (i) count abstentions and broker non-votes for purposes of
determining the presence of a quorum at the Meeting; (ii) treat abstentions as
votes not cast but as shares represented at the Meeting for determining
results on actions requiring a majority vote; (iii) not consider broker non-
votes for determining actions requiring a majority vote; and (iv) consider
neither abstentions nor broker non-votes in determining results of plurality
votes.
The cost of solicitation of proxies will be borne by the Company. Proxies
may be solicited by mail or personally by directors, officers or regular
employees of the Company, none of whom will receive additional compensation
therefor. The Company has also retained Morrow & Co., Inc. to assist in
solicitation of proxies for a fee of $4,500, plus reimbursement of certain
expenses. Those holding shares of Common Stock of record for the benefit of
others ("Nominee Holders") are being asked to distribute proxy soliciting
materials to, and request voting instructions from, the beneficial owners of
such shares. The Company will reimburse Nominee Holders for their reasonable
out-of-pocket expenses.
The Board of Directors, as recommended by the Audit Committee, has selected
KPMG LLP to serve as the Company's independent public accountant for the
fiscal year ending December 31, 2001. Representatives of KPMG LLP are expected
to be present at the Meeting. They will have an opportunity to make a
statement if they desire to do so, and will be available to respond to
stockholder questions.
Management's Ownership of Voting Shares. Devon's officers and directors own
a total of 2,524,674 Voting Shares, or 2% of the total 129,413,681 Voting
Shares entitled to be voted at the meeting, and intend to vote all of such
shares in favor of the election of the three nominees for director named
herein.
YOUR PROXY VOTE IS IMPORTANT. YOU ARE ASKED TO VOTE BY USING EITHER THE
TOLL-FREE TELEPHONE NUMBER SHOWN ON THE PROXY CARD; THE INTERNET WEB SITE
SHOWN ON THE PROXY CARD; OR BY RETURNING THE ACCOMPANYING PROXY CARD OR VOTING
DIRECTION CARD, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
3
PRINCIPAL SECURITY OWNERSHIP
The table below sets forth, as of March 29, 2001, the names and addresses
of each person known by management to own beneficially more than 5% of the
Company's outstanding Voting Shares, the number of Voting Shares beneficially
owned by each such stockholder and the percentage of outstanding Voting Shares
owned. The table also sets forth the number and percentage of outstanding
Voting Shares beneficially owned by the Company's Chief Executive Officer
("CEO"), each of the Company's directors, the four most highly compensated
executive officers other than the CEO and by all officers and directors of the
Company as a group.
Percent
Number of of
Name and Address of Beneficial Owner Shares (1) Class
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FMR Corp............................................... 10,683,849(2) 8.3%
82 Devonshire Street
Boston, MA 02109
Kerr-McGee Corporation................................. 9,954,000(3) 7.7%
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
J. Larry Nichols*...................................... 863,201(4) **
Michael E. Gellert*.................................... 323,720(5) **
William T. Vaughn...................................... 180,259(6) **
Darryl G. Smette....................................... 180,100(7) **
David M. Gavrin*....................................... 85,251(8) **
J. Michael Lacey....................................... 80,401(9) **
Duke R. Ligon.......................................... 62,644(10) **
John A. Hill*.......................................... 54,264(11) **
Michael M. Kanovsky*................................... 43,526(12) **
William E. Greehey*.................................... 29,922(13) **
Thomas F. Ferguson*.................................... 12,000(14) **
William J. Johnson*.................................... 10,180(15) **
Robert B. Weaver*...................................... 3,523(16) **
Robert A. Mosbacher, Jr.*.............................. 3,223(17) **
All directors and officers of Devon as a group (29
persons).............................................. 2,524,674(18) 2.0%
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* Director. The business address of each director is 20 North Broadway, Suite
1500, Oklahoma City, Oklahoma 73102-8260.
** Less than 1%.
(1) Shares beneficially owned includes shares of Common Stock, Exchangeable
Shares and shares of Common Stock issuable within 60 days of April 10,
2001.
(2) FMR Corp. has reported ownership on Schedule 13G filed on February 13,
2001. Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. and a registered investment adviser, is the
beneficial owner of 9,584,909 shares of Common Stock of the Company. As a
result of acting as investment adviser to various investment companies,
the number of shares of Common Stock of Devon owned by the investment
companies includes 189,413 shares of Common Stock resulting from the
assumed conversion of $32,890,000 principal amount of Devon Energy
Corporation Zero Coupon Convertible Senior Debentures due 2020 (5.759
shares of Common Stock for each $1,000 principal amount of debenture).
(3) Kerr-McGee Corporation ("Kerr-McGee") has reported beneficial ownership of
these shares on Schedule 13G filed on August 27, 1999. Kerr-McGee acquired
these shares on December 31, 1996, in connection with a transaction
whereby Devon acquired the North American onshore oil and gas exploration
and production properties and businesses of Kerr-McGee in exchange for
9,954,000 shares of Common Stock.
4
On August 2, 1999, Kerr-McGee completed an offering of exchangeable notes
which are due on August 2, 2004. These notes are exchangeable into the
Devon Common Stock owned by Kerr-McGee or, at Kerr-McGee's option, the cash
equivalent of the value of such Devon Common Stock. Kerr-McGee reports sole
voting and investment power with respect to these shares.
(4) Includes 42,965 shares owned of record by Mr. Nichols as Trustee of a
family trust, 78,624 shares owned by Mr. Nichols' wife, and 408,000 shares
which are deemed beneficially owned pursuant to stock options held by Mr.
Nichols.
(5) Includes 309,149 shares owned by Windcrest Partners, a limited
partnership, in which Mr. Gellert shares investment and voting power and
12,000 shares which are deemed beneficially owned pursuant to stock
options held by Mr. Gellert.
(6) Includes 174,600 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Vaughn.
(7) Includes 169,600 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Smette.
(8) Includes 2,141 shares owned by Mr. Gavrin as co-trustee of the Mark
Sandler 1987 Trust, 9,249 shares owned by Mr. Gavrin's wife and 12,000
shares that are deemed beneficially owned pursuant to stock options held
by Mr. Gavrin.
(9) Includes 75,236 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Lacey.
(10) Includes 57,354 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Ligon.
(11) Includes 11,942 shares owned by a partnership in which Mr. Hill shares
voting and investment power, 4,727 shares owned by Mr. Hill's immediate
family, 1,353 shares in a savings plan and 7,784 shares that are deemed
beneficially owned pursuant to stock options held by Mr. Hill.
(12) Includes Exchangeable Shares that are convertible into 36,116 shares of
Common Stock and 7,410 shares that are deemed beneficially owned pursuant
to stock options held by Mr. Kanovsky.
(13) Includes 5,046 shares in managed accounts and 10,800 shares that are
deemed beneficially owned pursuant to stock options held by Mr. Greehey.
(14) Includes 12,000 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Ferguson.
(15) Includes 5,256 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Johnson.
(16) Includes 3,000 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Weaver.
(17) Includes 3,000 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Mosbacher.
(18) Includes Exchangeable Shares that are convertible into 37,924 shares of
Common Stock and 1,532,571 shares that are deemed beneficially owned
pursuant to stock options held by officers and directors.
ELECTION OF DIRECTORS
Pursuant to provisions of the Company's Certificate of Incorporation and
Bylaws, the Board of Directors has fixed the number of directors at 10. The
Company's Certificate of Incorporation and Bylaws provide for three classes of
directors, serving staggered three-year terms, with Class I having three
directors, Class II having four directors and Class III having three
directors. The Board of Directors has nominated Thomas F. Ferguson, David M.
Gavrin and Michael E. Gellert for re-election as directors for terms expiring
at the annual meeting in the year 2004, and in each case until their
successors are elected and qualified. Proxies cannot be voted for a greater
number of persons than the number of nominees named. The three nominees are
presently directors of the Company whose terms expire at the Meeting. Other
directors who are remaining on the Board will continue in office in accordance
with their previous elections until the expiration of their terms at the 2002
or 2003 annual meeting, as the case may be.
The Board of Directors recommends a vote "FOR" each of the nominees for
election to the Board of Directors.
It is the intention of the persons named in the proxy to vote proxies "FOR"
the election of the three nominees. In the event that any of the nominees
should fail to stand for election, the persons named in the proxy intend to
vote for substitute nominees designated by the Board of Directors, unless the
Board of Directors reduces the number of directors to be elected.
5
INFORMATION ABOUT NOMINEES AND DIRECTORS
Nominees for Re-election as Directors for Terms Expiring in 2004
Thomas F. Ferguson, 64, has been a Director of Devon since 1982 and is the
Chairman of the Audit Committee. He is the Managing Director of United Gulf
Management Ltd., a wholly-owned subsidiary of Kuwait Investment Projects
Company KSC. Mr. Ferguson represents United Gulf Management Ltd. on the boards
of various companies in which it invests, including Baltic Transit Bank in
Latvia and Tunis International Bank in Tunisia. Mr. Ferguson is a Canadian
qualified Certified General Accountant and was formerly employed by the
Economist Intelligence Unit of London as a financial consultant.
David M. Gavrin, 66, has been a Director of Devon since 1979, and serves as
the Chairman of the Compensation and Stock Option Committee. He is a Director
of United American Energy Corp., an independent power producer, and MetBank
Holding Corporation. For 11 years prior to 1990 he was a General Partner of
Windcrest Partners and for 14 years prior to that he was an officer of Drexel
Burnham Lambert Incorporated.
Michael E. Gellert, 69, has been a Director of Devon since 1971 and is a
member of the Compensation and Stock Option Committee. Mr. Gellert is a
General Partner of Windcrest Partners, a private investment partnership in New
York City, having held that position since 1967. From January 1958 until his
retirement in October 1989, Mr. Gellert served in executive capacities with
Drexel Burnham Lambert Incorporated and its predecessors in New York City. In
addition to serving as a Director of Devon, Mr. Gellert also serves on the
boards of High Speed Access Corporation, Humana Inc., Seacor Smit Inc., Six
Flags Inc. and Smith Barney World Funds. Mr. Gellert is also a member of the
Putnam Trust Company Advisory Board to the Bank of New York.
Directors Whose Terms Expire in 2003
William E. Greehey, 64, was elected to the Board of Directors in 2000.
Prior to that, he served as a Director of Santa Fe Snyder Corporation. He is
Chairman of the Board, Chief Executive Officer and Director of Valero Energy
Corporation (refining and marketing). He has been with Valero since 1963.
J. Larry Nichols, 58, is a co-founder of Devon. He was named Chairman of
the Board of Directors in 2000. He has been a Director since 1971, President
since 1976 and Chief Executive Officer since 1980. Mr. Nichols serves as Vice
President of the Independent Petroleum Association of America and Vice
Chairman of the Natural Gas Supply Association. In addition, Mr. Nichols is
the Regional Chairman of the Business Industry Political Action Committee, a
Director of the Domestic Petroleum Council, the National Association of
Manufacturers, the Independent Petroleum Association of New Mexico, the
Oklahoma Independent Petroleum Association and the National Petroleum Council.
Mr. Nichols serves on the Board of Governors of the American Stock Exchange.
He also serves as a Director of New York Stock Exchange listed companies
Smedvig asa, CMI Corporation and Baker Hughes Incorporated.
Robert B. Weaver, 62, was elected to the Board of Directors in 1999. He
served as an energy finance specialist of the Chase Manhattan Bank, N.A.,
where he was in charge of its worldwide energy group from 1981 until his
retirement in 1994. Mr. Weaver was previously a Director of PennzEnergy
Company beginning in 1998, was Chairman of the Audit Committee and served on
the Compensation Committee.
Directors Whose Terms Expire in 2002
John A. Hill, 59, was elected to the Board of Directors in 2000. Prior to
that, he served as a Director of Santa Fe Snyder Corporation. Mr. Hill has
been with First Reserve Corporation, an oil and gas investment management
company since 1983 and currently serves as the Vice Chairman and Managing
Director. Prior to joining First Reserve, Mr. Hill was President, Chief
Executive Officer and Director of Marsh & McLennan Asset Management Company
and served as the Deputy Administrator of the Federal Energy Administration
during the Ford administration. Mr. Hill is a Trustee of the Putnam Funds in
Boston and a Director of TransMontaigne Inc. and various companies controlled
by First Reserve Corporation.
6
William J. Johnson, 66, was elected to the Board of Directors in 1999. Mr.
Johnson is a private consultant for the oil and gas industry. He is President
and a Director of JonLoc Inc., an oil and gas company of which he and his
family are sole shareholders. He also serves as a Director of Tesoro Petroleum
Corp. From 1991 to 1994, Mr. Johnson was President, Chief Operating Officer
and a Director of Apache Corporation.
Michael M. Kanovsky, 52, was elected to the Board of Directors in 1998. Mr.
Kanovsky has been on the Board of Directors of Northstar Energy Corporation,
Devon's Canadian subsidiary, since 1982. Mr. Kanovsky is President of Sky
Energy Corporation, a privately held energy corporation. He is a Director of
ARC Resources Ltd., Bonavista Petroleum Corporation and Vanguard Oil
Corporation. Mr. Kanovsky was Chairman of Taro Industries Ltd., Vice Chairman
of Precision Drilling Inc. and a past Director of the Canadian Association of
Oilwell Drilling Contractors.
Robert A. Mosbacher, Jr., 49, was elected to the Board of Directors in
1999. Since 1986, Mr. Mosbacher has served as President and Vice Chairman of
Mosbacher Energy Company and Vice Chairman of Mosbacher Power Group. Mr.
Mosbacher was previously a Director of PennzEnergy Company and served on the
Executive Committee. He currently serves as a Director of JPMorgan Chase and
Company and is on the Executive Committee of the U.S. Oil & Gas Association.
Chairman Emeritus
John W. Nichols, 86, a co-founder of Devon, was named Chairman Emeritus in
1999. He was Chairman of the Board of Directors since Devon began operations
in 1971 until 1999. He is a founding partner of Blackwood & Nichols Co., which
developed the conventional reserves in the Northeast Blanco Unit of the San
Juan Basin. Mr. Nichols is a non-practicing Certified Public Accountant.
INFORMATION ABOUT EXECUTIVE OFFICERS
The positions held by the executive officers of the Company are as follows:
J. Michael Lacey, 55, was elected to the position of Senior Vice
President--Exploration and Production in 1999. Mr. Lacey had previously joined
Devon as Vice President of Operations and Exploration in 1989. Prior to his
employment with Devon, Mr. Lacey served as General Manager in Tenneco Oil
Company's Mid-Continent and Rocky Mountain Divisions. He is a registered
professional engineer, and a member of the Society of Petroleum Engineers and
the American Association of Petroleum Geologists. Mr. Lacey holds both
undergraduate and graduate degrees in petroleum engineering from the Colorado
School of Mines.
Duke R. Ligon, 59, was elected to the position of Senior Vice President--
General Counsel in 1999. Mr. Ligon had previously joined Devon as Vice
President--General Counsel in 1997. In addition to Mr. Ligon's primary role of
managing Devon's corporate legal matters (including litigation), he has direct
involvement with Devon's governmental affairs, purchasing and its merger and
acquisition activities. Prior to joining Devon, Mr. Ligon practiced energy law
for 12 years, most recently as a partner at the law firm of Mayer, Brown &
Platt in New York City. In addition, he was a Senior Vice President and
Managing Director for investment banking at Bankers Trust Company in New York
City for 10 years. Mr. Ligon also served for three years in various positions
with the U. S. Departments of the Interior and Treasury, as well as the
Department of Energy. Mr. Ligon holds an undergraduate degree in chemistry
from Westminister College and a law degree from the University of Texas School
of Law.
Marian J. Moon, 50, was elected to the position of Senior Vice President--
Administration in 1999. Ms. Moon is responsible for Human Resources, Office
Administration, Information Technology and Corporate Governance. Ms. Moon has
been with Devon for 17 years, serving in various capacities, including Manager
of Corporate Finance. Prior to joining Devon, Ms. Moon was employed for 11
years by Amarex, Inc., an Oklahoma City based oil and natural gas production
and exploration firm, where she served most recently as Treasurer. Ms. Moon is
a member of the American Society of Corporate Secretaries. She is a graduate
of Valparaiso University.
7
John Richels, 50, was appointed in 1999 to the position of Chief Executive
Officer of Northstar Energy Corporation, Devon's Canadian subsidiary. Mr.
Richels served as Northstar's Executive Vice President and Chief Financial
Officer from 1996 to 1998 and was on its Board of Directors from 1993 to 1996.
Prior to joining Northstar, Mr. Richels was Managing Partner, Chief Operating
Partner and a member of the Executive Committee of the Canadian based national
law firm, Bennett Jones. Mr. Richels also served, on a secondment from Bennett
Jones, as General Counsel of the XV Olympic Winter Games Organizing Committee
in Calgary, Alberta. Mr. Richels has previously served as a director of a
number of publicly traded companies and is a member of the Board of Governors
of the Canadian Association of Petroleum Producers. He holds a bachelor's
degree in economics from York University and a law degree from the University
of Windsor.
Darryl G. Smette, 53, was elected to the position of Senior Vice
President--Marketing in 1999. Mr. Smette previously held the position of Vice
President-Marketing and Administrative Planning since 1989. He joined Devon in
1986 as Manager of Gas Marketing. His marketing background includes 15 years
with Energy Reserves Group, Inc./BHP Petroleum (Americas), Inc., most recently
as Director of Marketing. He is also an oil and gas industry instructor,
approved by the University of Texas Department of Continuing Education. Mr.
Smette is a member of the Oklahoma Independent Producers Association, Natural
Gas Association of Oklahoma and the American Gas Association. He holds an
undergraduate degree from Minot State College and a master's degree from
Wichita State University.
H. Allen Turner, 48, was elected to the position of Senior Vice President--
Corporate Development in 1999. Mr. Turner previously held the position of Vice
President-Corporate Development and has been responsible for Devon's corporate
finance, capital formation and merger and acquisitions activities since 1982.
In 1981 he served as Executive Vice President of Palo Pinto/Harken Drilling
Programs. For the six prior years he was associated with Merrill Lynch with
various responsibilities including Regional Tax Investments Manager. He is a
member of the Petroleum Investor Relations Association. He has served on the
Capital Markets Committee of the Independent Petroleum Association of America
and served as Chairman of the IPAA Oil and Gas Symposium. Mr. Turner is a
member of the Financial Executives Institute and he attended Duke University.
William T. Vaughn, 54, was elected to the position of Senior Vice
President--Finance in 1999. Mr. Vaughn previously served as Devon's Vice
President of Finance in charge of commercial banking functions, accounting,
tax and information services since 1987. Prior to that, he was Controller of
Devon from 1983 to 1987. Mr. Vaughn's previous experience includes serving as
Controller of Marion Corporation for two years and employment with Arthur
Young & Co. for seven years most recently as Audit Manager. He is a Certified
Public Accountant and a Member of the American Institute of Certified Public
Accountants. He is a graduate of the University of Arkansas with a Bachelor's
of Science degree.
Other Officers
Rick D. Clark, 53, was elected to the position of Vice President and
General Manager--Permian/Mid-Continent Division in 1999. Mr. Clark previously
served as Production/Operations Manager since joining Devon in 1995. As such,
he was responsible for the Company's drilling and production activities. Prior
to joining Devon, Mr. Clark was employed by Patrick Petroleum Company where he
served since 1988 as Executive Vice President, Operations and Corporate
Development. Prior to 1988, Mr. Clark worked in various production
engineering, reservoir engineering, financial and managerial capacities for
Ladd Petroleum Corporation and Conoco Inc. He is a member of the Society of
Petroleum Engineers. Mr. Clark holds a professional degree in Petroleum
Engineering from the Colorado School of Mines.
Don D. DeCarlo, 44, was elected to the position of Vice President and
General Manager--Rocky Mountain Division in September 2000. Mr. DeCarlo
previously served as Vice President and General Manager, Rocky Mountain
Division, for Santa Fe Snyder Corporation. Mr. DeCarlo began his professional
career in 1978 with Tenneco Oil Company in Oklahoma City. In 1989 he joined
Santa Fe Energy Resources as an Engineering Manager in Tulsa, Oklahoma. During
his 11-year tenure with Santa Fe, Mr. DeCarlo held management positions of
increasing responsibilities in: Bakersfield, California; Midland, Texas and
most recently in Denver, Colorado.
8
He received a Bachelor of Science degree in Petroleum Engineering from West
Virginia University in 1978. He is a member of the Society of Petroleum
Engineers and currently holds the position of Vice President for the
Independent Petroleum Association of the Mountain States.
Janice A. Dobbs, 52, was elected to the position of Corporate Secretary in
2001. Ms. Dobbs joined Devon in November 1999 as the Manager of Corporate
Governance and Assistant Corporate Secretary. From 1993 to 1999 Ms. Dobbs
served as the Corporate Secretary and Compliance Manager of Chesapeake Energy
Corporation, an Oklahoma City independent oil and gas company. From 1975 until
her association with Chesapeake, Ms. Dobbs was the corporate/securities legal
assistant with the law firm of Andrews Davis Legg Bixler Milsten & Price, Inc.
in Oklahoma City. Prior to that she was the corporate/securities legal
assistant with Texas International Petroleum Company, an Oklahoma City oil and
gas exploration and production company. Ms. Dobbs is a Certified Legal
Assistant, an associate member of the American Bar Association and a member of
the American Society of Corporate Secretaries.
Danny J. Heatly, 45, was elected to the position of Vice President--
Accounting in 1999. Mr. Heatly had previously served as Devon's Controller
since 1989. Prior to joining Devon, Mr. Heatly was associated with Peat
Marwick Main & Co. (now KPMG LLP) in Oklahoma City for 10 years with various
duties, including Senior Audit Manager. He is a Certified Public Accountant
and a member of the American Institute of Certified Public Accountants and the
Oklahoma Society of Certified Public Accountants. He graduated with a
Bachelor's of Accountancy degree from the University of Oklahoma.
Brian J. Jennings, 40, was elected to the position of Vice President--
Corporate Finance in March 2000. Prior to joining Devon, Mr. Jennings was a
Managing Director in the Energy Investment Banking Group of PaineWebber, Inc.
He began his banking career at Kidder, Peabody before moving to Lehman
Brothers and later to PaineWebber. Mr. Jennings specialized in providing
strategic advisory and corporate finance services to public and private
companies in the E&P and oilfield service sectors. He began his energy career
with ARCO International Oil & Gas, a subsidiary of Atlantic Richfield Company.
Mr. Jennings received his Bachelor of Science in Petroleum Engineering from
the University of Texas at Austin and his Master of Business Administration
from the University of Chicago's Graduate School of Business.
Richard E. Manner, 53, was elected to the position of Vice President--
Information Services in July 2000. Mr. Manner has been an Information
Technology professional for 25 years. Prior to joining Devon, he was employed
by Unisys in Houston, Texas. There he served for 14 years in various positions
including Director of Information Systems. Prior to his tenure with Unisys,
Mr. Manner spent two years with a National Aeronautics and Space
Administration contractor as a software engineer, and eight years with AMF
Tuboscope where he supervised the design of oilfield inspection
instrumentation and facilities. He is a registered professional engineer and a
member of the Society of Professional Engineers. Mr. Manner received his
electrical engineering degree from the University of Oklahoma.
R. Alan Marcum, 34, was elected to the position of Controller in 1999. Mr.
Marcum has been with Devon since 1995, most recently having held the position
of Assistant Controller. He is responsible for revenue, joint interest,
international and operations accounting for Devon. Prior to joining Devon, Mr.
Marcum was employed by KPMG Peat Marwick (now KPMG LLP) as a Senior Auditor,
with responsibilities including special engagements involving due diligence
work, agreed upon procedures and SEC filings. He holds a Bachelor's of Science
degree from East Central University, majoring in Accounting and Finance, and
is a Certified Public Accountant and a member of the Oklahoma State Society of
Certified Public Accountants.
Gary L. McGee, 51, was elected to the position of Vice President--
Government Relations in 1999. Mr. McGee had previously served as Devon's
Treasurer since 1983, having first served as Controller. Mr. McGee is a member
of the Petroleum Association of Wyoming and the New Mexico Oil & Gas
Association. He served as Vice President of Finance with KSA Industries, Inc.,
a private holding company with various interests including oil and gas
exploration. Mr. McGee also held various accounting positions with Adams
Resources and Energy Company and Mesa Petroleum Company. He received his
accounting degree from the University of Oklahoma.
9
Paul R. Poley, 47, was elected to the position of Vice President--Human
Resources in March 2000. Mr. Poley was previously employed by Fleming
Companies in Oklahoma City most recently as Director of Human Resources
Planning and Development. At Fleming, his responsibilities included human
resources development, management succession, strategic planning, performance
management and training for 39,000 employees. Prior to his 11 years at
Fleming, Mr. Poley was Regional Personnel Manager for International Mill
Service, Inc. He received his Bachelor's of Arts degree in Sociology from
Bucknell University.
William A. Van Wie, 55, was elected to the position of Vice President and
General Manager--Gulf Division in 1999. Mr. Van Wie previously served as
Senior Vice President and General Manager--Offshore for PennzEnergy. Mr. Van
Wie began his career as a geologist for Tenneco Oil Company's Frontier
Projects Group in 1974. Following the sale of Tenneco's Gulf of Mexico
properties to Chevron in 1988, he joined that company as Division Geologist.
In 1992, he moved to Pennzoil Exploration and Production Company as Vice
President/Exploitation Manager. He then served as Manager of Offshore
Exploration for Amerada Hess Corporation, before he rejoined Pennzoil in 1997.
He is an active member of the American Association of Petroleum Geologists,
serves as a Trustee for the American Geological Institute Foundation and is
also a member of the National Ocean Industries Association. Mr. Van Wie
received his Bachelor of Science degree in Geology from St. Lawrence
University in Canton, New York and a master's degree and Ph.D. in geology from
the University of Cincinnati.
Vincent W. White, 43, was elected to the position of Vice President--
Communications and Investor Relations in 1999. He has primary responsibility
for Devon's investor communications, media relations and employee
communications. Mr. White had previously served as Devon's Director of
Investor Relations since 1993. Prior to joining Devon, he served as Controller
of Arch Petroleum Inc. and was an auditor with KPMG Peat Marwick (now KPMG
LLP). Mr. White is a Certified Public Accountant and a member of the Petroleum
Investor Relations Association, the National Investor Relations Institute and
the American Institute of Certified Public Accountants. Mr. White received his
Bachelor of Accounting degree from the University of Texas at Arlington.
Dale T. Wilson, 41, was elected to the position of Treasurer of Devon in
1999. He has primary responsibility of the Company's treasury and risk
management functions. Prior to joining Devon, Mr. Wilson was employed in the
banking industry for 17 years and was employed by Bank of America for the 15
years prior to working for Devon, as a Managing Director of the Energy Finance
Group. Mr. Wilson has been active in oil and gas trade associations such as
the Permian Basin Petroleum Association, the New Mexico Oil & Gas Association
and the Texas Independent Producers & Royalty Owners Association. He is a 1982
graduate of Baylor University with a bachelor's degree in finance and
accounting.
MEETINGS AND COMMITTEES OF THE BOARD
During 2000, the Board of Directors of the Company held four regular
meetings and one special meeting. All directors attended at least four of the
five meetings of the Board of Directors. The Board of Directors has standing
Audit, Compensation and Stock Option, Nominating and Dividend Committees.
The Audit Committee, which consists of Messrs. Ferguson (Chairman),
Kanovsky and Weaver, meets with the Company's independent public accountants
and reviews the consolidated financial statements of the Company on a regular
basis. The functions of the Audit Committee consist of recommending
independent accountants to the Board of Directors; approving the nature and
scope of services performed by the independent accountants and reviewing the
range of fees for such services; conferring with the independent accountants
and reviewing the results of their audit; reviewing the Company's accounting
and financial controls and providing assistance to the Board of Directors with
respect to the corporate and reporting practices of the Company. The Board of
Directors, as recommended by the Audit Committee, has selected KPMG LLP to
serve as the Company's independent public accountants for the fiscal year
ending December 31, 2001. The Audit Committee met five times during 2000.
10
The Compensation and Stock Option Committee, which consists of Messrs.
Gavrin (Chairman), Gellert, Johnson and Weaver, determines the nature and
amount of compensation of all executive officers of the Company who are also
directors and the amount and terms of stock options granted to all employees.
In addition, this Committee provides guidance to and makes recommendations to
management regarding employee benefit programs. The Compensation and Stock
Option Committee held five meetings in 2000.
The Nominating Committee, which consists of Messrs. Gellert (Chairman) and
Mosbacher, recommends to the Board of Directors nominees to fill vacancies as
they occur among the Directors; and prior to each annual meeting of
stockholders, a slate of nominees for election or re-election as Directors by
the stockholders of the Company at the annual meeting. The Nominating
Committee will consider nominees recommended by the Company's stockholders. In
order to recommend a nominee for the next annual meeting, stockholders must
deliver the recommendation in writing to the Company on or before December 10,
2001, addressed to the attention of the Corporate Secretary of the Company and
must provide the full name, address, and business history of the recommended
nominee. The Nominating Committee met once in 2000.
The Dividend Committee declares dividends on Common Stock and Preferred
Stock. However, such Committee may not declare dividends more or less than the
amount last declared by the full Board of Directors. In 2000, the Dividend
Committee consisted of Mr. Larry Nichols (Chairman), and prior to September
2000, Mr. James L. Pate, formerly a director of the Company. The Dividend
Committee acted by written consent four times.
11
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding annual and long-term
compensation during 1998, 1999 and 2000 for the Chief Executive Officer
("CEO") and the four most highly compensated executive officers, other than
the CEO, who were serving as executive officers of the Company on December 31,
2000.
Annual Compensation Long-term Compensation(1)
------------------- --------------------------
Awards of
Options All Other
Name Principal Position Year Salary Bonus (# of Shares) Compensation
- ---- ------------------ ---- -------- ---------- ------------ ------------
J. Larry Nichols........ Chairman, President 2000 $600,000 $1,000,000 70,000 $10,200(3)
and CEO 1999 450,000 900,000 70,000 9,600(3)
1998 450,000 450,000 80,000(2) 9,600(3)
J. Michael Lacey........ Senior Vice President 2000 $325,000 $ 300,000 35,000 $10,200(3)
1999 267,800 250,000 35,000 9,600(3)
1998 260,000 125,000 40,000(2) 9,600(3)
Duke R. Ligon........... Senior Vice President 2000 $275,000 $ 250,000 35,000 $10,200(3)
1999 226,600 225,000 35,000 9,600(3)
1998 220,000 125,000 40,000(2) 9,600(3)
Darryl G. Smette........ Senior Vice President 2000 $300,000 $ 300,000 35,000 $10,200(3)
1999 226,600 250,000 35,000 9,600(3)
1998 220,000 125,000 40,000(2) 28,761(4)
William T. Vaughn....... Senior Vice President 2000 $275,000 $ 250,000 35,000 $10,200(3)
1999 203,500 225,000 35,000 9,600(3)
1998 197,000 125,000 40,000(2) 40,175(5)
- --------
(1) No awards of restricted stock or payments under long-term incentive plans
were made by the Company to any of the named executives in any periods
covered by the table.
(2) Annual option grants for 1997, which normally would have been made in
December 1997 were not made until January 1998. Annual option grants for
1998 were made at the usual time in December 1998.
(3) These amounts represent Company matching contributions to the Devon Energy
Incentive Savings Plan.
(4) Includes $9,600 of Company matching contributions to the Devon Energy
Incentive Savings Plan and a one-time payment of $19,161 for unused
vacation time.
(5) Includes $9,600 of Company matching contributions to the Devon Energy
Incentive Savings Plan and a one-time payment of $30,575 for unused
vacation time.
12
Option Grants in 2000
The following table sets forth information concerning options to purchase
Common Stock granted in 2000 to the five individuals named in the Summary
Compensation Table. The material terms of such options appear in the following
table and the footnotes thereto.
Individual Grants
---------------------------------------------------
Percent of
Options Total Options ExercisePrice Expiration Grant Date
Name Granted(1) Granted in 2000 Per Share(2) Date Present Value(3)
- ---- ---------- --------------- ------------- ---------- ----------------
J. Larry Nichols........ 70,000 4% $51.70 11/29/2010 $2,155,160
J. Michael Lacey........ 35,000 2% $51.70 11/29/2010 $1,077,580
Duke R. Ligon........... 35,000 2% $51.70 11/29/2010 $1,077,580
Darryl G. Smette........ 35,000 2% $51.70 11/29/2010 $1,077,580
William T. Vaughn....... 35,000 2% $51.70 11/29/2010 $1,077,580
- --------
(1) These options were granted on November 29, 2000 and were immediately
vested and exercisable as of November 29, 2000. However, 80% of the
unexercised portion of such options are subject to forfeiture upon the
officer's voluntary termination or termination for cause prior to November
29, 2001. This percentage decreases 20% in each subsequent year. After
November 29, 2004, none of the options are subject to forfeiture.
(2) Exercise price is the fair market value on the date of grant, which is the
closing price of Common Stock on the date of grant as reported by the
AMEX.
(3) The grant date present value is an estimation of the possible future value
of the option grant based upon the Black-Scholes Option Pricing Model. The
following assumptions were used in the model: volatility (a measure of the
historic variability of a stock price)--40.3%; risk-free interest rate
(the interest paid by zero-coupon U.S. government issues with a remaining
term equal to the expected life of the options)--5.5% per annum; annual
dividend yield--0.4%; and expected life of the options--five years from
grant date. The option value estimated using this model does not
necessarily represent the value to be realized by the named officers.
Aggregate Option Exercises in 2000 and Year-End Option Values
The following table sets forth information for the five individuals named
in the Summary Compensation Table concerning the exercise of options to
purchase Common Stock in 2000 and unexercised options to purchase Common Stock
held at December 31, 2000.
Value of Unexercised In-
Number of Unexercised the-Money Options at
Number of Shares Options at 12/31/00 12/31/00(1)
Acquired Upon Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ---------------- -------- ----------- ------------- ----------- -------------
J. Larry Nichols........ -- $ -- 408,000 -- $11,842,135 $--
J. Michael Lacey........ -- $ -- 113,700 -- $ 2,568,139 $--
Duke R. Ligon........... 33,000 $519,670 107,000 -- $ 2,383,437 $--
Darryl G. Smette........ 22,400 $458,512 199,600 -- $ 5,910,437 $--
William T. Vaughn....... 18,400 $352,612 199,600 -- $ 5,910,437 $--
- --------
(1) The value is based on the aggregate amount of the excess of $60.97 (the
closing price as reported by the AMEX for December 31, 2000) over the
relevant exercise price for outstanding options that were exercisable and
in-the-money at year-end.
Compensation Pursuant to Plans
Long-term Incentive Plans. Devon has outstanding stock options issued to
certain of its directors, executive officers and employees under six separate
stock option plans. Three of such plans were adopted by Devon stockholders in
1988, 1993 and 1997 (the "1988 Plan," the "1993 Plan" and the "1997 Plan,"
13
respectively). The Company also has outstanding stock options which it assumed
from Northstar in connection with the Northstar Combination (the "Northstar
Plan"), options assumed from PennzEnergy in connection with the PennzEnergy
Merger (the "PennzEnergy Plan") and options assumed from Santa Fe Snyder in
connection with the Santa Fe Snyder Merger (the "Santa Fe Snyder Plan").
Options granted under the 1988 Plan, the 1993 Plan, the Northstar Plan, the
PennzEnergy Plan and the Santa Fe Snyder Plan remain exercisable by the owners
of such options, but no new options will be granted under any of such plans.
At December 31, 2000, four participants held options granted under the 1988
Plan, 18 participants held options granted under the 1993 Plan, 77
participants held options granted under the Northstar Plan, 2,521 held options
granted under the PennzEnergy Plan and 284 held options under the Santa Fe
Snyder Plan.
Effective May 21, 1997, Devon stockholders adopted the 1997 Plan and
reserved two million shares of Common Stock for issuance thereunder to
directors, officers and employees. On December 9, 1998, Devon stockholders
voted to increase the number of shares available under the 1997 plan to three
million. On August 17, 1999, Devon stockholders voted to increase the number
of shares available under the 1997 plan to six million. On August 29, 2000,
Devon stockholders voted to increase the number of shares available under the
1997 plan to ten million. The exercise price of options granted under the 1997
Plan may not be less than the estimated fair market value of the stock on the
date of grant (plus 10% if the grantee owns or controls more than 10% of the
total voting stock of Devon prior to the grant). Options granted are
exercisable during a period established for each grant, which period may not
exceed 10 years from the date of grant. Under the 1997 Plan, the grantee must
pay the exercise price in cash or in Common Stock, or a combination thereof,
at the time the option is exercised. The 1997 Plan expires on March 25, 2007.
As of December 31, 2000, 268 participants held options granted under the 1997
Plan.
The Company has no other plans that provide compensation intended to serve
as incentive for performance to occur over a period longer than one fiscal
year.
Retirement Plan. Devon maintains a defined benefit retirement plan (the
"Basic Plan") which provides benefits based upon past and future employment
service with Devon. Each eligible employee who retires is entitled to receive
annual retirement income, computed as a percentage of "final average
compensation" (which consists of the average of the highest three consecutive
years' salaries, wages, and bonuses out of the last ten years), and credited
years of service up to 25 years. Contributions by employees are neither
required nor permitted under the Basic Plan. Benefits are computed based on
straight-life annuity amounts and are reduced by Social Security benefits. All
of the executive officers participate in the Basic Plan.
The following table sets forth the credited years of service under Devon's
Basic Plan for each of the five individuals named in the Summary Compensation
Table.
Credited Years of Service
Name of Individual (Through December 31, 2000)
------------------ ---------------------------
J. Larry Nichols............................... 31 years
J. Michael Lacey............................... 12 years
Duke R. Ligon.................................. 4 years
Darryl G. Smette............................... 14 years
William T. Vaughn.............................. 18 years
Supplemental Retirement Plan. Devon also has a non-qualified deferred
compensation plan (the "Supplemental Plan"), the purpose of which is to
provide supplemental retirement income to certain selected key management and
highly compensated employees because their annual compensation is greater than
the maximum annual compensation that can be considered in computing their
benefits under the Basic Plan. An employee must be selected by the
Compensation and Stock Option Committee in order to be eligible for
participation in the Supplemental Plan. All of the five individuals named in
the Summary Compensation Table have been selected to participate in the
Supplemental Plan. Each eligible participant's supplemental retirement income
will equal 65% of his final average compensation, multiplied by a fraction,
the numerator of which is his
14
credited years of service (not to exceed 20) and the denominator of which is
20 (or less, if so determined by the Committee), less any offset amounts.
Offset amounts are (i) retirement benefits payable to the participant under
the Basic Plan, (ii) benefits due to the participant under Social Security,
and (iii) any benefits which are paid to the participant under the Company's
long-term disability plan. The Supplemental Plan is currently unfunded.
In general, benefits will be paid when the participant retires from the
Company. However in the event that the participant's employment with the
Company is terminated (i) within two years of the acquisition by the Company
of reserves or assets which results in the reserves or assets of the Company
increasing by at least 20%, or (ii) within two years of a change of control of
the Company, then the participant shall be 100% vested in his benefit and
shall be entitled to receive the actuarial equivalent of such benefit earned
as of the date of termination of employment. "Change of Control" is defined in
the Supplemental Plan as being an event which results in an entity or group
acquiring either (i) 30% or more of the Company's outstanding voting
securities, or (ii) less than 30% of the outstanding voting securities, but
which a majority of the Board of Directors has determined has caused a change
of control. If the participant is terminated within two years following a
change of control or the acquisition of reserves or assets that results in the
reserves or assets increasing by at least 20%, the participant's benefit will
be paid in a single lump sum payment. Otherwise, the participant's benefit
will be paid for the life of the participant. The participant may elect to
provide a 50% survivor benefit for his or her beneficiary.
The following table illustrates estimated annual benefits payable upon
retirement under the Basic Plan and the Supplemental Plan to participants in
specified compensation and years of service classifications, assuming a normal
retirement in 2000 at age 65.
Years of Service
Final Average -------------------
Compensation 15 20 or more
------------ -------- ----------
$ 250,000.............. $109,789 $ 146,385
$ 300,000.............. $134,164 $ 179,885
$ 350,000.............. $158,539 $ 211,385
$ 400,000.............. $182,914 $ 243,885
$ 450,000.............. $207,289 $ 276,385
$ 500,000.............. $231,664 $ 308,885
$ 550,000.............. $256,039 $ 341,385
$ 600,000.............. $280,414 $ 373,885
$ 650,000.............. $304,789 $ 406,385
$ 700,000.............. $329,164 $ 438,885
$ 750,000.............. $353,539 $ 471,385
$ 800,000.............. $377,914 $ 503,885
$ 850,000.............. $402,289 $ 536,385
$ 900,000.............. $426,664 $ 568,885
$ 950,000.............. $451,039 $ 601,385
$1,000,000.............. $475,414 $ 633,885
$1,500,000.............. $719,164 $ 958,885
$2,000,000.............. $962,913 $1,283,885
Severance Agreements
Pursuant to severance agreements, each of the five individuals named in the
Summary Compensation Table is entitled to certain compensation ("Severance
Payment") in the event that his employment with the Company is terminated (a)
within two years of the acquisition by the Company of reserves or assets which
result in the reserves or assets of the Company increasing by at least 20% or
(b) within two years of a Change in Control of the Company. "Change of
Control" is defined in the agreements as being an event which results in an
entity or group acquiring either (i) 30% or more of the Company's outstanding
voting securities, or (ii) less than 30% of the outstanding voting securities,
but which a majority of the Board of Directors determines has caused a change
of control. In either case the Severance Payment would be equal to up to
approximately three times the individual's annual compensation plus one month
for each year of employment up to 12 years.
15
Director Compensation
Non-management directors of Devon receive an annual retainer of $30,000,
payable quarterly, plus $2,000 for each Board meeting attended. Directors
participating in a telephonic meeting will receive a fee of $1,000. In
addition, Directors serving as chairmen of the standing committees of the
Board of Directors will receive an additional $3,000 per year. Committee
members who attend the meetings of their standing committee which requires
travel will receive $2,000 per meeting. Committee members who attend the
meetings that do not require travel will receive $1,000 per meeting.
Non-management directors are eligible to receive stock options in addition
to their cash remuneration. Such directors are eligible to receive stock
option grants of up to 3,000 shares immediately after each annual meeting of
stockholders at an exercise price equal to the fair market value of the Common
Stock on that date. Any unexercised options will expire ten years after the
date of grant. The Compensation and Stock Option Committee, which awards
options to non-management directors, may elect to grant awards that are less
than the 3,000 shares maximum. However, the Compensation and Stock Option
Committee has no other discretion regarding the award of stock options to non-
management directors. The directors were eligible to receive stock options
beginning in 1997. The following table sets forth information concerning
options granted to non-management directors in 2000:
Individual Grants in 2000
----------------------------------------------------
Percent of
Options Total Options Exercise Price Expiration Grant Date
Name Granted(1) Granted in 2000 Per Share(2) Date Present Value(3)
- ---- ---------- --------------- -------------- ---------- ----------------
Thomas F. Ferguson...... 3,000 0.2% $58.50 5/18/2010 $105,780
David M. Gavrin......... 3,000 0.2% $58.50 5/18/2010 $105,780
Michael E. Gellert...... 3,000 0.2% $58.50 5/18/2010 $105,780
William E. Greehey...... -- -- -- -- --
John A. Hill............ -- -- -- -- --
William J. Johnson...... 3,000 0.2% $58.50 5/18/2010 $105,780
Michael M. Kanovsky..... 3,000 0.2% $58.50 5/18/2010 $105,780
Robert A. Mosbacher..... 3,000 0.2% $58.50 5/18/2010 $105,780
Robert B. Weaver........ 3,000 0.2% $58.50 5/18/2010 $105,780
- --------
(1) The options were granted on May 18, 2000, and immediately became vested
and exercisable on the date of grant.
(2) Exercise price is the fair market value on the date of grant that is the
closing price of Common Stock on the date of grant as reported by the
AMEX.
(3) The grant date present value is an estimation of the possible future value
of the option grant based upon the Black-Scholes Option Pricing Model. The
following assumptions were used in the model: volatility (a measure of the
historic variability of a stock price)--37.4%; risk-free interest rate
(the interest paid by zero-coupon U.S. government issues with a remaining
term equal to the expected life of the options)--6.4% per annum; annual
dividend yield--0.4%; and expected life of the options--five years from
grant date. The option value estimated using this model does not
necessarily represent the value to be realized by the named directors.
Compensation and Stock Option Committee Report on Executive Compensation
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") establishes the general compensation policies of the Company. The
Committee meets in November or December of each year to establish specific
compensation levels for the CEO and to review the executive officers'
compensation in general. (The compensation for executive officers other than
the CEO is determined by the CEO.)
The Committee's goal in setting executive compensation is to motivate,
reward and retain management talent who support the Company's goals of
increasing absolute and per share value for stockholders. This goal is carried
out through awards of base salary, annual cash bonuses and stock options.
16
The Committee generally believes that the total cash compensation of its
CEO and other executive officers should be similar to the total cash
compensation of similarly situated executives of peer group public companies
within the oil and gas industry. Further, a significant portion of the
complete compensation package should be tied to the Company's success in
achieving long-term growth in per share earnings, cash flow, reserves,
production and stock price.
Base Salary. A competitive base salary is considered vital to support the
continuity of management and is consistent with the long-term nature of the
oil and gas business. The Committee believes that the base salaries of the
executive officers should be similar to the base salaries of executive
officers of similar companies within the oil and gas industry. Therefore, no
performance criteria are applied to the base salary portion of the total
compensation. Performance of the Company versus its peers is, however, given
significant weight in the cash bonus and stock option portions of
compensation.
The CEO's base salary for 2000 was based upon information available to the
Committee at its December 1999 meeting. At that meeting the Committee
established a peer group of nine companies to which Devon should be compared.
This peer group included companies that are similar to Devon in total
revenues, balance sheet ratios, oil and gas reserves and overall oil and gas
operations. (The industry group index in the Performance Graph included in
this proxy statement includes, but is not limited to, the companies used for
this compensation analysis. In its analysis, the Committee specifically
focused on those companies that are most similar to Devon in size, financial
structure and operations, believing that the most direct comparisons would not
necessarily include all of the more than 200 companies included in the
industry group index used for the performance graph.)
A review of the base salaries for the highest-paid executive at each of
these peer companies revealed that the 1999 base salary of Devon's CEO was at
the low end of the range of all base salaries in the group, and only 67% of
the average base salary for the group. As a result of this finding, the
Committee increased the CEO's base salary for 2000 by 33% to $600,000.
The Committee advised the CEO that a similar procedure should be used in
evaluating the base salaries of the other executive officers of the Company.
Cash Bonuses. The Committee believes that the officers' cash bonuses should
be tied to Devon's success in meeting its corporate goals and budgets and in
achieving growth in comparison to those of the Company's industry peers and to
the individual officers' contribution to such success. Cash bonuses for
calendar year 2000 were set at the November 2000 Committee meeting. In setting
the cash bonus for the CEO for the calendar year 2000, the Committee reviewed
the performance of the peer group of 10 oil and gas companies. (Due to the
significant increase in size and scope of Devon's operations during 2000 as a
result of the merger with Santa Fe Snyder, one additional peer company was
added to the group of companies used for the comparison.)
The Committee reviewed Devon's growth over the last three years, compared
with the peer group average on a number of different measures, notably, change
in earnings per share, cash flow per share, reserves per share and stock
price. Devon's growth in all of these measures except earnings per share
exceeded that of the peer group average for the years reviewed. The Committee
also noted the CEO's efforts in successfully completing the integration of
PennzEnergy into Devon and in initiating and closing the merger with Santa Fe
Snyder. As a result of this analysis, the Committee awarded the CEO a cash
bonus of $1,000,000. This award resulted in his total cash compensation for
2000 being 79% of the average total 1999 cash compensation for the highest-
paid executives of the companies in the peer group.
The Committee advised the CEO that similar criteria should be used in
establishing cash bonuses for the other executive officers.
Stock Options. The Committee desires to reward key management and
professional employees for long-term strategic management practices and
enhancement of stockholder value by awarding stock options. Stock options are
granted at an option price equal to the fair market value of the Common Stock
on the grant date. The
17
grant of these options and the optionees' holdings of unexercised options
and/or ownership of exercised option shares is designed to closely align the
interests of the executive officers with those of the stockholders. The
ultimate value of the stock options will depend on the continued success of
the Company, thereby creating a continuing incentive for executive officers to
perform long after the initial grant.
The Committee considered stock option grants in connection with 2000
Company performance at its meeting in November 2000. Stock options were
awarded to the CEO and other executive officers at this meeting.
The Committee has established stock option targets for each participating
level of responsibility within the Company. Corporate financial performance
may be considered by the Committee in determining the number of stock options
granted. The Committee wants to encourage executives to maintain ownership of
Company stock and/or unexercised options. Although there are no specific
ownership criteria used in awarding options, long-term ownership is viewed
favorably. The Committee noted that Devon's officers as a group still retained
74% of all options (both vested and unvested) that had been granted to them
through November 2000.
The Committee generally seeks to award no more than 2% of the outstanding
shares in any one year, and further desires to keep the total number of shares
under option and available for option to less than 10% of the total shares
outstanding. As of November 20, 2000, there were 6,054,960 shares under option
(including options on 3,692,825 shares granted by Northstar, PennzEnergy and
Santa Fe Snyder and assumed by Devon) and 7,676,283 shares available for
option, which were 4.5% and 5.6%, respectively, of total shares on a fully
diluted basis.
Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code limits the tax deduction to $1 million for compensation paid to
any one executive officer, unless certain requirements are met. The Committee
may award compensation which is not deductible under Section 162(m) if it
believes that such awards would be in the best interest of the Company or its
stockholders.
Submission of Compensation Plans to Stockholders. On August 29, 2000 the
Company submitted a proposal to the Devon stockholders to increase the number
of shares available for grant under the 1997 Plan from six million to ten
million shares. This amendment was approved by the stockholders. This
amendment was submitted in connection with the Santa Fe Snyder merger. After
the combination of the two companies, Devon has increased its number of
employees by more than one-third. The stock option plan amendment permits
Devon to have sufficient stock options available for future grants to
employees and directors. The Committee has no present intention of submitting
any other compensation plans to the stockholders for approval that would
result in the issuance of more than 5% of the Company's outstanding Common
Stock.
We believe that the Company has an appropriate compensation structure that
properly rewards and motivates its executive officers to build stockholder
value.
As to Compensation of the CEO As to Compensation of Executive
Officers other than the CEO
David M. Gavrin, Chairman
Michael E. Gellert J. Larry Nichols
William J. Johnson
Robert B. Weaver
Compensation Committee Interlocks
The Compensation Committee is composed of four independent, non-employee
directors, Messrs. Gavrin, Gellert, Johnson and Weaver. These directors have
no interlocking relationships as defined by the Securities and Exchange
Commission.
18
Audit Committee Report
The Board of Directors maintains an Audit Committee comprised of three of
the Company's outside directors. The Board of Directors and the Audit
Committee believe that the Audit Committee's current member composition
satisfies the rules of the American Stock Exchange, LLC. ("AMEX") that governs
audit committee composition, including the requirement that audit committee
members all be "independent directors" as that term is defined by AMEX Listing
Standards, Policies and Requirements--Section 121(A).
The Audit Committee oversees the Company's financial process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements. The Board has adopted a
written Charter of the Audit Committee, a copy of which is attached as an
Appendix A hereto.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with accounting principles generally accepted in the United States
of America, their 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 Committee under generally accepted auditing standards,
including Statement on Auditing Standards No. 61. In addition, the Committee
has discussed with the independent auditors the auditors' independence from
management and the Company including the matters in the written disclosures
and the letter from the independent auditors required by the Independence
Standards Board Standard No. 1.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their audit. The Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examination, their evaluation of the Company's internal controls, and the
overall quality of the Company's financial reporting. The Committee held five
meetings during fiscal 2000.
Under the terms of its charter, the Committee approves fees paid by the
Company to its independent auditors. For the fiscal year ended December 31,
2000, the Company paid the following fees to KPMG LLP:
Audit fees -- $565,000;
Financial information systems design and implementation fees -- none; and
All other fees -- $984,000. "Other fees" included services provided for
tax, business combinations and accounting consulting, as well as services
related to various registration statements filed with the Securities and
Exchange Commission. The Committee considered whether the provision of such
services is compatible with maintaining KPMG LLP's independence.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 for filing with the
Securities and Exchange Commission. The Committee and the Board have also
recommended the selection of the Company's independent auditors.
Thomas F. Ferguson, Chairman
Michael M. Kanovsky
Robert B. Weaver
19
Performance Graph
The following performance graph compares the Company's cumulative total
stockholder return on its Common Stock for the five-year period from December
31, 1995 to December 31, 2000, with the cumulative total return of the
Standard & Poor's 500 stock index and the Stock Index by Standard Industrial
Classification Code ("SIC Code") for Crude Petroleum and Natural Gas. The SIC
Code for Crude Petroleum and Natural Gas is 1311. The identities of the 200+
companies included in the index will be provided upon request.
CUMULATIVE TOTAL RETURN*
THE COMPANY, S&P 500, AND SIC CODE INDEX
FOR CRUDE PETROLEUM AND NATURAL GAS
[PERFORMANCE GRAPH]
FISCAL YEAR ENDING
-------------------------------------------------
COMPANY 1995 1996 1997 1998 1999 2000
- ------- ---- ---- ---- ---- ---- ----
DEVON ENERGY CORP. 100 137.02 152.65 122.41 131.92 245.57
SIC CODE INDEX 100 132.97 134.78 107.96 131.87 167.53
S&P 500 INDEX 100 122.96 163.98 210.84 255.22 231.98
Assumes $100 invested on January 1, 1995, in Devon Common Stock, S&P 500 Index
and SIC Code Index for Crude Petroleum and Natural Gas.
* Total return assumes reinvestment of dividends.
CERTAIN TRANSACTIONS
The Company has a three-year Consulting Agreement with Brent Scrowcroft, a
former director of the Company. Mr. Scowcroft provides a consulting service
primarily related to international projects and investments. In exchange for
these services, the Company will pay Mr. Scowcroft an annual retainer of
$100,000. The Consulting Agreement expires on May 31, 2002.
20
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for inclusion in the
Company's Proxy Statement for the 2002 Annual Meeting of Stockholders of the
Company must present the proposal to the Corporate Secretary of the Company
not later than December 10, 2001. Only those proposals that comply with the
requirements of Rule 14a-8 promulgated under the Securities Exchange Act of
1934 will be included in the Company's Proxy Statement for the 2002 Annual
Meeting. Written notice of stockholder proposals submitted outside the process
of Rule 14a-8 for consideration at the 2002 Annual Meeting of Stockholders
(but not included in the Company's Proxy Statement) must be received by the
Corporate Secretary of the Company between January 17, 2002 and February 16,
2002 in order to be considered timely, subject to any provisions of the
Company's Bylaws. The chairman of the meeting may determine that any proposal
for which the Company did not receive timely notice shall not be considered at
the meeting. If in the discretion of the Chairman any such proposal is to be
considered at the meeting, the persons designated in the Company's Proxy
Statement shall be granted discretionary authority with respect to the
untimely stockholder proposal.
OTHER MATTERS
The Board of Directors of the Company knows of no other matter to come
before the Meeting other than that set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. However, if any other matters should
properly come before the Meeting, it is the intention of the persons named in
the accompanying proxy to vote such proxies, as they deem advisable in
accordance with their best judgment.
Your cooperation in giving this matter your immediate attention and in
returning your proxy promptly will be appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JANICE A. DOBBS
Janice A. Dobbs
Corporate Secretary
April 10, 2001
21
Appendix A
Audit Committee Charter
I. Statement of Purpose
The Audit Committee will have the responsibility to assist the Board of
Directors in fulfilling their responsibility to the stockholders, potential
stockholders and the investment community relating to the Company's
financial reporting process and systems of internal control. To carry out
these responsibilities, the Board of Directors believes the duties and
responsibilities of the Audit Committee should remain flexible in order to
best react to changing conditions and to enable it to assure to the Board
of Directors and stockholders that the Company's financial systems and
reporting practices are in accordance with all requirements and are of the
highest quality. The Audit Committee shall be given the resources necessary
to satisfy its responsibilities including the authority to institute
special investigations and to retain special counsel or experts.
II. Composition
The Audit Committee shall be appointed by the Board of Directors and shall
be composed of not less than three directors all of whom will be
financially literate with at least one having professional certification as
an Accountant. They will be independent of management and free from any
relationships that, in the opinion of the Board, would interfere with the
exercise of objective judgment as a Committee member. The members of the
Audit Committee shall be directors who were not formerly officers of the
Company or any of its subsidiaries. The Chairman of the Audit Committee
shall be designated by the Board of Directors.
III. Functions
The Audit Committee shall perform the following functions:
1. Recommend the appointment or termination of the Company's independent
auditors;
2. Review the adequacy of the Company's system of internal controls
including the reliability of its financial reporting systems; confer
with the Company's independent auditors with respect to their assessment
of the adequacy of such controls and systems; and review management's
response to any material weaknesses in the Company's internal controls
which may be identified by the independent auditors;
3. Confer with the Company's independent auditors concerning the scope of
their audit of the financial statements of the Company and its
subsidiaries; review and approve the independent auditors' engagement
letter; direct the attention of the independent auditors to specific
maters or areas deemed by the Committee to be of special significance to
the Company and its subsidiaries; authorize such auditors to perform
such supplemental reviews or audits as the Committee may deem necessary
or appropriate; and receive from the independent auditors a formal
written statement delineating all relationships between the independent
auditors and the Company, consistent with the Independence Standards
Board Standard No. 1 and engage in a dialogue with the independent
auditors on all maters which could affect the independence of the
auditors;
4. Review the Company's significant accounting principles and policies and
significant changes thereto; review proposed and implemented changes in
accounting standards and principles which have or may have a material
impact on the Company's financial statements; review significant
management judgments and accounting estimates used in financial
statement preparation; and review the accounting for significant
corporate transactions;
5. Review with the independent auditors any disagreements with management
or difficulties they may have encountered in performing their audits of
the financial statements of the Company and its subsidiaries;
A-1
6. Review the scope of audit and non-audit services provided to the Company
and its subsidiaries by the independent auditors and the fees for such
services;
7. Review and recommend approval of (a) the Company's quarterly earnings
releases, and (b) the annual financial statements and the Notes thereto
which are included in the Company's Annual Reports to Shareholders; and
review the independent auditors' letter delivered in connection with
their audit of the annual financial statements of the Company and its
subsidiaries; and
8. Initiate, when appropriate, investigations of matters within the scope
of its responsibilities.
IV. Meetings
The Audit Committee will meet a minimum of four times per year.
V. Reporting
The Audit Committee will report to the Board of Directors all significant
issues which were discussed, and make recommendations for action by the
full Board when appropriate.
A-2
DEVON ENERGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Devon Energy Corporation, a Delaware
corporation, hereby nominates and appoints J. Larry Nichols with full power of
substitution, as true and lawful agent and proxy to represent the undersigned
and vote all shares of stock of Devon Energy Corporation owned by the
undersigned in all matters coming before the Annual Meeting of Stockholders (or
any adjournment thereof) of Devon Energy Corporation to be held in the Egbert
Room on the second floor of The Renaissance Oklahoma City Hotel, Ten North
Broadway, Oklahoma City, Oklahoma, on Thursday, May 17, 2001, at 10:00 a.m.,
Oklahoma City time. The Board of Directors recommends a vote "FOR" the matters
set forth on the reverse side.
Do not return your Proxy Card if you are voting by Telephone or Internet
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please mark
[X] votes as in this
example.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER SPECIFIED BELOW
BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS ARE NOT GIVEN, THIS
PROXY WILL BE VOTED "FOR" THE NOMINEES LISTED IN ITEM 1.
1. ELECTION OF DIRECTORS 2. OTHER MATTERS:
Nominees: Thomas F. Ferguson, In their discretion, to vote with respect
David M. Gavrin and Michael E. Gellert to any other matters that may come before the
meeting or any adjournment thereof, including
FOR WITHHELD matters incident to its conduct.
(all nominees) (as to all nominees)
[ ] [ ] I RESERVE THE RIGHT TO REVOKE THE PROXY AT
ANY TIME BEFORE THE EXERCISE THEREOF.
WITHHELD
(as to nominees listed below)
[ ]
- ---------------------------------------------
You may withhold your vote for a particular
nominee by marking this box and naming the
nominee for which your vote is being withheld.
Mark here for address change and note at left / /
Mark here if you plan to attend the meeting / /
Please sign exactly as your name appears at left, indicating your
official position or representative capacity, if applicable. If
shares are held jointly, each owner should sign.
Signature:_____________________________ Date:____________________ Signature:_____________________________ Date:____________________
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DEVON ENERGY CORPORATION
The undersigned holder of Exchangeable Shares of Northstar Energy
Corporation hereby directs CIBC Mellon Trust Company (the "Trustee") to cast a
number of votes equal to the number of Exchangeable Shares owned by the
undersigned in accordance with the instructions indicated on the reverse side
hereof at the Annual Meeting of Stockholders (or any adjournment thereof) in the
Egbert Room on the second floor of The Renaissance Oklahoma City Hotel, Ten
North Broadway, Oklahoma City, Oklahoma, on Thursday, May 17, 2001, at 10:00
a.m. Oklahoma City time.
PLEASE SIGN THIS VOTING DIRECTION CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
Please mark
[X] votes as in this
example.
WHEN PROPERLY EXECUTED, THE TRUSTEE WILL CAST A NUMBER OF VOTES AT
THE MEETING EQUAL TO THE NUMBER OF EXCHANGEABLE SHARES OF RECORD
OWNED BY THE UNDERSIGNED IN THE MANNER SPECIFIED BELOW.
IF NO INSTRUCTIONS ARE GIVEN, NO VOTES WILL BE CAST
ON BEHALF OF THE UNDERSIGNED.
1. ELECTION OF DIRECTORS Please sign exactly as your name appears below, indicating
your official position or representative capacity, if
Nominees: Thomas F. Ferguson, applicable. If shares are held jointly, each owner should
David M. Gavrin and Michael E. Gellert sign.
FOR WITHHELD Signature:__________________________________ Date:_________________
(all nominees) (as to all nominees)
Signature:__________________________________ Date:_________________
[ ] [ ]
WITHHELD
(as to nominees listed below)
[ ]
- ---------------------------------------------
You may withhold your vote for a particular
nominee by marking this box and naming the
nominee for which your vote is being withheld.