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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 Rule 14a-12
EOG Resources, Inc.
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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.
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[ ] Fee paid previously with preliminary materials.
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[EOG RESOURCES LOGO]
EOG RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 8, 2001
TO THE SHAREHOLDERS:
Notice is hereby given that the annual meeting of shareholders of EOG
Resources, Inc. (the "Company") will be held in the Granger "B" Ballroom of the
Doubletree Hotel at Allen Center, 400 Dallas Street, Houston, Texas, at 2:00
p.m. Houston time on Tuesday, May 8, 2001, for the following purposes:
1. To elect 7 directors of the Company to hold office until the next annual
meeting of shareholders and until their respective successors are duly
elected and qualified;
2. To ratify the Board of Directors' appointment of Arthur Andersen LLP,
independent public accountants, as auditors for the Company for the year
ending December 31, 2001;
3. To approve the EOG Resources, Inc. Employee Stock Purchase Plan;
4. To approve the EOG Resources, Inc. Executive Officer Annual Bonus Plan;
and
5. To transact such other business as may properly be brought before the
meeting or any adjournments thereof.
Holders of record of Common Stock of the Company at the close of business
on March 12, 2001, will be entitled to notice of and to vote at the meeting or
any adjournments thereof.
Shareholders who do not expect to attend the meeting are encouraged to vote
via the Internet, vote by phone or vote by returning a signed proxy card.
By Order of the Board of Directors,
PATRICIA L. EDWARDS
Vice President, Human Resources,
Administration
& Corporate Secretary
Houston, Texas
March 30, 2001
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[EOG RESOURCES LOGO]
EOG RESOURCES, INC.
PROXY STATEMENT
The enclosed form of proxy is solicited by the Board of Directors of EOG
Resources, Inc. (the "Company" or "EOG") to be used at the annual meeting of
shareholders to be held in the Granger "B" Ballroom of the Doubletree Hotel at
Allen Center, 400 Dallas Street, Houston, Texas, at 2:00 p.m. Houston time on
Tuesday, May 8, 2001 (the "Annual Meeting"). The mailing address of the
principal executive offices of the Company is 1200 Smith Street, Suite 300,
Houston, Texas 77002. This proxy statement and the related proxy are to be first
sent or given to the shareholders of the Company on approximately March 30,
2001. Any shareholder giving a proxy may revoke it at any time provided written
notice of such revocation is received by the Vice President, Human Resources,
Administration & Corporate Secretary of the Company before such proxy is voted;
otherwise, if received in time, properly completed proxies will be voted at the
Annual Meeting in accordance with the instructions specified thereon.
Shareholders attending the Annual Meeting may revoke their proxies and vote in
person.
Holders of record at the close of business on March 12, 2001, of Common
Stock of the Company, par value $.01 per share (the "Common Stock"), will be
entitled to one vote per share on all matters submitted to the meeting. On March
12, 2001, the record date, there were outstanding 116,731,591 shares of Common
Stock. There are no other voting securities outstanding.
The Company's annual report for the year ended December 31, 2000, is being
mailed herewith to all shareholders entitled to vote at the Annual Meeting.
However, the annual report does not constitute a part of the proxy soliciting
materials.
ITEM 1.
ELECTION OF DIRECTORS
At the Annual Meeting, 7 directors are to be elected to hold office until
the next succeeding annual meeting of the shareholders and until their
respective successors have been elected and qualified. All of the nominees are
currently directors of the Company. Proxies cannot be voted for a greater number
of persons than the number of nominees named on the enclosed form of proxy. A
plurality of the votes cast in person or by proxy by the holders of Common Stock
is required to elect a director. Accordingly, under Delaware law, abstentions
and broker non-votes (which occur if a broker or other nominee does not have
discretionary authority and has not received instructions with respect to a
particular item) would not have the same effect as a vote withheld with respect
to a particular director. Shareholders may not cumulate their votes in the
election of directors.
It is the intention of the persons named in the enclosed proxy to vote such
proxy "FOR" the election of the nominees named herein. Should any nominee become
unavailable for election, discretionary authority is conferred to vote for a
substitute. The following information regarding the nominees, their principal
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occupations, employment history and directorships in certain companies is as
reported by the respective nominees.
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[ACKMAN PHOTO] FRED C. ACKMAN, 70
Director since 1989
Mr. Ackman has been a consultant to the oil and gas industry
for over six years and has interests in ranching and
investments.
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[ALCORN PHOTO] GEORGE A. ALCORN, 68
Director since 2000
Mr. Alcorn is President of Alcorn Exploration, Inc. He is a
past chairman of the Independent Petroleum Association of
America and a founding member and past chairman of the
Natural Gas Council.
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[PAPA PHOTO] MARK G. PAPA, 54
Director since 1998
Mr. Papa was elected Chairman of the Board and Chief
Executive Officer in August 1999, President and CEO and
Director of the Company in September 1998, President and
Chief Operating Officer in September 1997, President in
December 1996 and was President -- North America Operations
from February 1994 to September 1998. From May 1986 through
January 1994, Mr. Papa served as Senior Vice President --
Operations. Mr. Papa joined Belco Petroleum Corporation, a
predecessor of the Company, in 1981. Mr. Papa is also a
director of Oil States International, Inc.
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[RANDALL PHOTO] EDWARD RANDALL, III, 74
Director since 1990
Mr. Randall's principal occupation is investments. Mr.
Randall is also a director of Kinder Morgan, Inc. and
EcOutlook.com, Inc.
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[SEGNER PHOTO] EDMUND P. SEGNER, III, 47
Director since 1999
Mr. Segner became President and Chief of Staff and Director
of the Company in August 1999. He became Vice Chairman and
Chief of Staff in September 1997. He was also a Director of
the Company from January 1997 to October 1997. Prior to
joining the Company, Mr. Segner was Executive Vice President
and Chief of Staff of Enron Corp. Mr. Segner is also a
director of Universal Compression Holdings, Inc.
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[TEXTOR PHOTO] DONALD F. TEXTOR, 54
Director since 2001
Mr. Textor's principal occupation is investments. Mr. Textor
was a partner and managing director at Goldman Sachs until
his retirement in March 2001. For the past 21 years he was
the firm's senior security analyst for domestic integrated
oils and exploration and production companies.
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[WISNER PHOTO] FRANK G. WISNER, 62
Director since 1997
Mr. Wisner has served as Vice Chairman of American
International Group Inc. since 1997, following his
retirement as U.S. Ambassador to India. American
International Group Inc. is an insurance company, which
provides risk insurance to companies investing in foreign
operations. Mr. Wisner's more than 35-year career with the
U.S. State Department, primarily in Africa, Asia and
Washington, D.C., included serving as U.S. Ambassador to the
Philippines, Egypt and Zambia.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ON FEBRUARY 15, 2001
The Company knows of no one who beneficially owns in excess of 5% of the
Company's Common Stock except as set forth in the table below:
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
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NAME AND ADDRESS SHARED VOTING AND PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER INVESTMENT POWER OF CLASS
- -------------- ------------------- -------------------- --------
Common Enron Corp. 11,500,000(1) 9.8%
1400 Smith Street
Houston, TX 77002
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(1) Until the later of July 31, 2002 or the date Enron Corp. ceases to
beneficially own more than 5% of the issued and outstanding shares of the
Company's Common Stock, shares must be voted in the manner, if any,
recommended by the Board of Directors of the Company.
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SECURITY OWNERSHIP OF THE BOARD OF DIRECTORS AND MANAGEMENT ON FEBRUARY 15, 2001
SHARES OPTIONS
BENEFICIALLY EXERCISABLE PHANTOM TOTAL
TITLE OF CLASS NAME OWNED(1) WITHIN 60 DAYS SHARES(2) OWNERSHIP(3)
-------------- ---- ------------ -------------- --------- ------------
EOG Resources, Inc. Fred C. Ackman........................ 2,000 0 0 2,000
Common Stock George A. Alcorn...................... 1,000 0 0 1,000
Barry Hunsaker, Jr. .................. 7,814 53,220 5,656 66,690
Loren M. Leiker....................... 27,565 31,250 11,861 70,676
Mark G. Papa.......................... 79,785 137,500 53,310 270,595
Edward Randall, III................... 4,000 76,500 13,714 94,214
Edmund P. Segner, III................. 26,111 0 16,633 42,744
Donald F. Textor...................... 5,000 0 0 5,000
Gary L. Thomas........................ 53,849 249,990 6,997 310,836
Frank G. Wisner....................... 0 30,000 2,055 32,055
All directors and executive officers
as a
Group (12 in number).................. 215,401 590,645 114,019 920,065
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(1) Includes shares for which the person directly or indirectly has sole or
shared voting and investment power, shares held under the EOG Resources,
Inc. Savings Plan (the "Savings Plan") for which the participant has sole
voting power and limited investment power, and restricted shares held under
the EOG Resources, Inc. 1992 Stock Plan (the "1992 Stock Plan") for which
the participant has sole voting power and no investment power until such
shares vest in accordance with plan provisions.
(2) Includes restricted stock units held under the 1992 Stock Plan for which the
participant has no voting or investment power until such units vest and are
released as shares in accordance with plan provisions. Also includes shares
held in the Phantom Stock Account of the EOG Resources, Inc. 1996 Deferral
Plan (the "1996 Deferral Plan") for which the participant has a vested
right, but has no voting or investment power until such shares are released
in accordance with plan provisions and the participant's deferral election.
(3) No director or officer of the Company owns or has the right to acquire more
than 1% of the outstanding Common Stock.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors uses working committees with functional
responsibility in the more complex recurring areas where disinterested oversight
is required. The Audit Committee is the communication link between the Board of
Directors and independent auditors of the Company. The Audit Committee
recommends to the Board of Directors the appointment of independent public
accountants as auditors for the Company and reviews as deemed appropriate the
scope of the audit, the accounting policies and reporting practices, the system
of internal controls, compliance with policies regarding business conduct and
other matters. The Audit Committee met seven times during the year ended
December 31, 2000, and is currently composed of Messrs. Ackman (Chairman),
Alcorn, Randall and Wisner.
The Compensation Committee is responsible for administration of the Company
stock plans and approval of compensation arrangements of senior management. The
Compensation Committee met six times during the year ended December 31, 2000,
and is currently composed of Messrs. Randall (Chairman), Ackman, Alcorn, Textor
and Wisner.
The International Strategy Committee provides a forum for the consideration
of international business opportunities and for the discussion of international
business and political developments that could affect project operations and
development. The International Strategy Committee met once during the year ended
December 31, 2000, and is currently composed of Messrs. Wisner (Chairman),
Ackman, Alcorn, Randall and Textor.
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The Company does not have a standing nominating committee. However, in
future searches for suitable director candidates, the Board of Directors will
continue to make substantial efforts to ensure that women and persons from
minority racial groups are among those it considers for nomination.
The Board of Directors held four regularly scheduled meetings and four
special meetings during the year ended December 31, 2000. Each director attended
at least 75% of the total number of meetings of the Board of Directors and the
committees on which the director served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
During 2000, each director who was not an employee of the Company or its
affiliates ("nonemployee director"), other than Mr. Textor who was elected to
the Board of Directors in March 2001, received annual fees of $45,000 for
serving as a director. Total directors fees earned in 2000 were $157,500.
Nonemployee directors can defer fees to a later specified date under the
1996 Deferral Plan. The 1996 Deferral Plan credits interest based on fund
elections chosen by participants. In 2000, three nonemployee directors
participated in the 1996 Deferral Plan.
Nonemployee directors also participate in the EOG Resources, Inc. 1993
Nonemployee Director Stock Option Plan (the "Director Stock Option Plan"), which
was approved by Company shareholders at the 1993 annual meeting. Under the terms
of the Director Stock Option Plan, each nonemployee director receives on the
date of each annual meeting an option to purchase 7,000 shares of Common Stock
at an exercise price equal to the fair market value of the Common Stock on the
date of grant. In addition, each nonemployee director who is elected or
appointed to the Board of Directors for the first time after an annual meeting
is granted on the date of such election or appointment, an option to purchase
7,000 shares of Common Stock at an exercise price equal to the fair market value
of the Common Stock on the date of grant. Options granted under the Director
Stock Option Plan vest 50% after one year and 100% after two years of service as
a director following the date of grant. All options expire ten years from the
date of grant. During 2000, Messrs. Ackman, Randall and Wisner were each granted
7,000 options at an exercise price of $28.5625, and Mr. Alcorn was granted 7,000
options at an exercise price of $29.00.
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REPORT FROM THE COMPENSATION COMMITTEE REGARDING
EXECUTIVE COMPENSATION
Compensation for Company officers is administered by the Compensation
Committee of the Board of Directors (the "Committee"), which is composed
exclusively of outside directors. It is the responsibility of the Committee to
develop compensation philosophy, authorize salary increases, annual bonuses and
long-term incentive grants for executive officers, and approve other incentive
programs, including stock-based programs, consistent with the stated philosophy.
The Committee believes that appropriately balanced compensation components
contribute to the success of the Company. Hay Management Consultants provides an
annual analysis of executive base salaries, annual bonuses and long-term
incentives paid by the Company as compared to those paid by a number of the
industry peer companies included in the "Comparative Stock Performance" section.
The Committee believes that the best compensation philosophy is to put a
substantial portion of the total compensation package at risk, tied to both the
financial results achieved by the Company and the performance of the Common
Stock of the Company. The ongoing human resource challenge in the oil and gas
industry is attraction and retention of high quality technical talent. The
Committee continues to support the practice of paying base salaries that are
above the average of the competitive market, and bonuses and long term
incentives which deliver above average compensation if financial results and/or
shareholder return exceed the average achieved by peer companies.
The Committee also believes that it is in the best interest of shareholders
for executive officers to maintain a certain level of ownership in the Company.
Therefore, stock ownership guidelines have been established ranging from one
times base salary for Vice Presidents up to five times base salary for the Chief
Executive Officer. Each executive officer currently meets the stated ownership
guideline.
Annual Bonus Program. All employees are eligible to receive annual bonuses
under the Company's Annual Bonus Program (the "Program"). Each year, a target
bonus pool is established using an approach whereby each position in the Company
is assigned a market competitive target bonus, expressed as a percentage of
salary. The individual bonus targets are then added together to create the
target bonus pool. At the end of each year, the Committee approves the actual
funding relative to the target based on management's report of the actual
performance of the Company relative to pre-established goals. The primary
performance goal is reinvestment rate of return. Other goals considered are
stock price performance relative to peer companies, utilization of incremental
free cash flow, production volume growth, reserve replacement, finding costs and
net income. These goals are designed to address both current financial
performance and the long-term development of the Company (no specific formula is
used for weighting the individual performance criteria). The target pool
allocated to each division or department may then be adjusted up or down, based
on the individual division/department's results. Individual employee bonuses are
further determined based on individual performance. For bonuses paid in 2001 for
2000 performance, the Committee approved delivery of 20% of any bonus of $5,000
or greater in restricted stock units that vest after five years, at a 50%
premium to cash. In addition, employees can choose to receive the cash portion
of their annual bonus in a combination of cash, stock options at a 50% premium
to cash, and/or restricted stock units with a premium to cash of between 5% and
25%, depending on the vesting schedule chosen.
Stock Plans. The Company's 1992 and 1994 Stock Plans (the "Stock Plans")
comprise the long-term incentive component for executive officers and other
selected employees of the Company. The purposes of the Stock Plans are to
encourage employees who receive grants to develop a proprietary interest in the
performance of the Company, to generate an increased incentive to contribute to
the future success of the
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Company, thus enhancing the value of the Company for the benefit of shareholders
and to enhance the ability of the Company and its subsidiaries to attract and
retain individuals with qualifications essential to the progress, growth and
profitability of the Company. Under the Stock Plans, the Committee is authorized
to grant awards of stock options, restricted stock and restricted stock units.
Stock options are normally granted to executive officers and other selected
employees on an annual basis. Stock options normally vest over four years, are
exercisable for ten years and are granted at an option price equal to the fair
market value of Common Stock on the date of grant. Stock options granted in lieu
of bonus cash vest immediately and are exercisable for seven years. The awards
under the Stock Plans are made at levels that are not anticipated to generate
significant benefits relative to the industry peer group unless the Common Stock
performs correspondingly well during the life of the grant. With the success of
the Company (and the resulting benefits to its shareholders), this component
becomes a larger part of the total compensation package, as was the case in
2000. Occasionally, the Committee grants restricted stock or restricted stock
units for specific reasons such as retention or to address external market
pressures or in lieu of cash bonuses, as discussed previously.
Chief Executive Officer Compensation. Under the provisions of Mr. Papa's
employment agreement with the Company, which he entered into on November 7,
1997, Mr. Papa's annual salary will be no less than $400,000. In July 2000,
based on competitive market data, Mr. Papa's salary was increased to $650,000.
In August 2000, Mr. Papa was granted 125,000 stock options that were priced at
the fair market value of Common Stock on the date of grant, consistent with the
stated long-term incentive objectives. The options vest over four years, and are
exercisable for ten years. In February 2001, Mr. Papa was paid a bonus for 2000
performance consisting of $408,200 in cash, 18,750 restricted stock units that
vest in one-third increments after three, four and five years, and 8,270
restricted stock units that vest after five years. In lieu of the cash portion,
Mr. Papa chose to receive 25% in the form of 2,758 restricted stock units that
vest after five years, and 75% was deferred into the 1996 Deferral Plan,
primarily into a phantom stock account. In determining the level of Mr. Papa's
bonus, the Committee considered the criteria previously discussed.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code, as amended, generally disallows a tax deduction to
public companies for compensation over $1 million paid to the Chief Executive
Officer and the four other most highly compensated executive officers of a
company, as reported in that company's proxy statement. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. The Company has structured the key component of its
long-term incentives in the form of stock option grants that comply with the
statute. The Committee is committed to preserving the deductibility of
compensation under Section 162(m) whenever possible. However, as discussed
previously, the Committee may grant awards that are non-deductible, such as
restricted stock and restricted stock units, if it feels such grants are in the
best interest of the Company. The Company's Annual Bonus Program does not
qualify as performance-based compensation under the statute. However, the
Company anticipates no loss of deductibility attributable to bonuses paid in
2001 for 2000 performance. The EOG Resources, Inc. Executive Officer Annual
Bonus Plan is being submitted to shareholders for approval at this meeting, so
that future annual bonuses will qualify as performance-based compensation under
the statute.
Compensation Committee
Edward Randall, III (Chairman)
Fred C. Ackman
George A. Alcorn
Frank G. Wisner
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COMPARATIVE STOCK PERFORMANCE
The performance graph shown below was prepared by Value Line, Inc., for use
in this proxy statement. As required by applicable rules of the Securities and
Exchange Commission (the "SEC"), the graph was prepared based upon the following
assumptions:
1. $100 was invested on December 31, 1995 in Common Stock of EOG, the
Standard & Poors 500 (the "S&P 500") and a peer group of independent
exploration and production companies (the "Peer Group").
2. The investments in the Peer Group are weighted based on the market
capitalization of each individual company within the Peer Group at the
beginning of each year.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Peer Group are as follows: Anadarko
Petroleum Corporation, Apache Corporation, Burlington Resources Inc., Noble
Affiliates, Inc., Oryx Energy Company (acquired by Kerr-McGee in February 1999),
Pioneer Natural Resources Company, Santa Fe Snyder Corp. (acquired by Devon
Energy Corporation in August 2000), Ocean Energy, Inc. (formerly Seagull Energy
Corporation), Union Pacific Resources Company (acquired by Anadarko Petroleum
Corporation in July 2000), Union Texas Petroleum Holdings Inc. (acquired by
Atlantic Richfield Company in June 1998, which was acquired by BP Amoco PLC in
April 2000) and Vastar Resources, Inc. (acquired by BP Amoco PLC in September
2000).
COMPARATIVE TOTAL RETURNS
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
EOG Resources Inc., Standard & Poors 500 and Peer Group
(Performance Results Through December 31, 2000)
PERFORMANCE GRAPH
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1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
EOG Resources,
Inc. 100.00 105.72 89.23 73.10 74.91 238.15
Standard & Poors
500 100.00 123.25 164.21 210.85 253.61 227.89
Peer Group 100.00 127.37 117.58 82.57 95.98 121.41
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EXECUTIVE COMPENSATION
The following table summarizes certain information regarding compensation
paid or accrued during each of the last three fiscal years to the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- -----------------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS PAYOUTS
------------------------- ---- -------- -------- --------------- ---------- ---------- -------
Mark G. Papa 2000 $592,319 $408,200 $22,201 $242,017 125,000 $0
Chairman and Chief 1999 $462,520 $435,600 $12,000 $ 0 250,000 $0
Executive Officer 1998 $400,020 $400,000 $11,500 $ 68,761 367,500 $0
Edmund P. Segner, III 2000 $433,467 $540,000 $13,204 $139,500 75,000 $0
President and Chief of Staff 1999 $381,252 $372,000 $10,500 $ 0 150,000 $0
1998 $320,833 $350,000 $ 9,850 $ 0 175,000 $0
Loren M. Leiker 2000 $272,310 $320,000 $ 8,369 $ 69,006 40,000 $0
Executive Vice President, 1999 $255,418 $184,000 $ 7,232 $ 0 30,000 $0
Exploration & Development 1998 $241,333 $195,000 $ 6,300 $305,641 65,000 $0
Gary L. Thomas 2000 $272,310 $320,000 $38,716 $ 69,006 40,000 $0
Executive Vice President, 1999 $255,430 $184,000 $ 6,890 $ 0 30,000 $0
North America Operations 1998 $237,638 $180,000 $54,816 $ 0 157,500 $0
Barry Hunsaker, Jr. 2000 $268,502 $200,000 $ 8,255 $ 63,008 15,000 $0
Senior Vice President and 1999 $258,335 $168,000 $ 6,200 $ 0 15,000 $0
General Counsel 1998 $252,500 $150,000 $ 6,300 $143,938 85,000 $0
ALL OTHER
COMPENSATION
------------
NAME & PRINCIPAL POSITION (3)
------------------------- ------------
Mark G. Papa $25,500
Chairman and Chief $21,346
Executive Officer $ 3,260
Edmund P. Segner, III $22,100
President and Chief of Staff $14,229
$ 2,860
Loren M. Leiker $22,100
Executive Vice President, $10,982
Exploration & Development $ 3,257
Gary L. Thomas $25,500
Executive Vice President, $12,202
North America Operations $ 2,994
Barry Hunsaker, Jr. $22,100
Senior Vice President and $ 8,803
General Counsel $ 1,333
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(1) No Named Officer had "Perquisites and Other Personal Benefits" with a value
greater than the lesser of $50,000 or 10% of reported salary and bonus. The
Company maintains the 1996 Deferral Plan under which payment of base salary
and annual bonus may be deferred to a later specified date. The 1996
Deferral Plan credits interest based on fund elections chosen by
participants. Since earnings on deferred compensation invested in
third-party investment vehicles, comparable to mutual funds, need not be
reported, no interest has been reported as Other Annual Compensation under
the 1996 Deferral Plan during 1998, 1999 or 2000. Includes reimbursement of
relocation expenses in 1998 for Mr. Thomas. Other Annual Compensation also
includes cash perquisite allowances and payment for vacation not taken in
the prior year (2000 only).
(2) Following is the aggregate number of shares of unreleased restricted stock
and restricted stock units and their value as of December 31, 2000, for each
of the Named Officers: Mr. Papa, 18,958 shares/units valued at $1,035,581;
Mr. Segner, 9,000 shares/units valued at $491,625; Mr. Leiker, 19,316
shares/units valued at $1,055,137; Mr. Thomas, 4,452 shares/units valued at
$243,191; and Mr. Hunsaker, 11,065 shares/units valued at $604,426. Dividend
equivalents accrue from the date of grant and become payable effective with
the vesting date of the shares. All restricted stock and restricted stock
units granted vest five years from date of grant. Upon the date a press
release is issued announcing a pending Shareholder vote, tender offer, or
other transaction which, if approved or consummated, would constitute a
change of control of the company as defined in the company's Change of
Control Severance Plan, all restrictions placed on each share of non-vested
restricted stock or restricted stock unit shall lapse and such shares will
become fully vested released securities.
(3) Includes matching contributions under the Savings Plan each year and the
Company's contribution on behalf of each employee to the Money Purchase
Pension Plan (1999 and 2000 only).
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STOCK OPTION GRANTS DURING 2000
The following table sets forth information with respect to grants of stock
options to the Named Officers reflected in the Summary Compensation Table and
all employee optionees as a group. No stock appreciation rights ("SARs") units
were granted during 2000, and none are outstanding.
2000 GRANTS
--------------------------------------------------------
PERCENT OF
OPTIONS/ TOTAL OPTIONS
SARS GRANTED TO AVERAGE
GRANTED EMPLOYEES IN OPTION PRICE EXPIRATION
NAME/GROUP (#)(2) FISCAL YEAR PER SHARE DATE
- ---------- --------- -------------- ------------ ----------
NAMED OFFICERS
- --------------
Mark G. Papa 125,000(4) 9.7% $32.8125 08/08/10
Edmund P. Segner, III 75,000(4) 5.8% 32.8125 08/08/10
Loren M. Leiker 40,000(4) 3.1% 32.8125 08/08/10
Gary L. Thomas 40,000(4) 3.1% 32.8125 08/08/10
Barry Hunsaker, Jr. 15,000(4) 1.2% 32.8125 08/08/10
All Optionees 1,288,385 100.0% 30.8812(5) 2007-2010
All Shareholders N/A N/A N/A N/A
Optionees' gain as % of all
shareholders' gain N/A N/A N/A
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM(1)
-----------------------------------------
NAME/GROUP 0%(3) 5% 10%
- ---------- ----- -------------- --------------
NAMED OFFICERS
- --------------
Mark G. Papa $ 0 $ 2,579,451 $ 6,536,834
Edmund P. Segner, III 0 1,547,670 3,922,101
Loren M. Leiker 0 825,424 2,091,787
Gary L. Thomas 0 825,424 2,091,787
Barry Hunsaker, Jr. 0 309,534 784,420
All Optionees 0 25,021,752(6) 63,410,032(6)
All Shareholders N/A 2,270,400,681(6) 5,753,641,090(6)
Optionees' gain as % of all
shareholders' gain N/A 1.10% 1.10%
- ---------------
(1) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of the
underlying security appreciates in value from the date of grant at the 5%
and 10% annual rates prescribed by the SEC. These calculations are not
intended to forecast possible future appreciation, if any, of the price of
Company Common Stock.
(2) Upon the date a press release is issued announcing a pending shareholder
vote, tender offer, or other transaction which, if approved or consummated,
would constitute a change of control of the Company as defined in the
Company's Change of Control Severance Plan, stock options shall vest and be
fully exercisable.
(3) An appreciation in stock price, which will benefit all shareholders, is
required for optionees to receive any gain. A stock price appreciation of
zero percent would render the option without value to the optionees.
(4) Stock options awarded on August 8, 2000 vest at the cumulative rate of 20%
per year, commencing on the date of grant.
(5) Weighted average grant price for all stock options for the purchase of
Company Common Stock granted to employees in 2000.
(6) Appreciation for all optionees is calculated using the maximum allowable
option term of ten years, even though in some cases the actual option term
is less than ten years. Appreciation for all shareholders is calculated
using an assumed ten-year term, the weighted average exercise price for all
optionees ($30.8812) and the number of shares of Company Common Stock
outstanding on December 31, 2000 (116,904,292).
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AGGREGATED STOCK OPTION/SARS EXERCISES DURING 2000 AND STOCK OPTION/SARS VALUES
AS OF DECEMBER 31, 2000
The following table sets forth information with respect to the Named
Officers concerning the exercise of options during the last fiscal year and
unexercised options and SARs held as of the end of the fiscal year:
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES AT DECEMBER 31, 2000(1) AT DECEMBER 31, 2000(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Mark G. Papa.......................... 599,535 $15,849,880 119,375 398,125 $3,786,875 $13,218,438
Edmund P. Segner, III................. 255,000 $3,719,337 0 245,000 $ 0 $ 8,048,438
Loren M. Leiker....................... 175,265 $2,763,849 20,000 83,500 $ 659,750 $ 2,561,531
Gary L. Thomas........................ 148,375 $4,154,262 240,615 114,375 $8,464,388 $ 3,830,313
Barry Hunsaker, Jr. .................. 48,065 $1,077,538 48,220 58,500 $1,459,650 $ 2,040,563
- ---------------
(1) There are no SARs applicable to the Named Officers.
RETIREMENT AND SUPPLEMENTAL BENEFIT PLANS
The Company maintains a Savings Plan, that qualifies under Section 401(k)
of the Internal Revenue Code, as amended, under which the Company currently
matches 100% of employees' pre-tax contributions up to 6% of annual base salary.
The Company also maintains a Money Purchase Pension Plan, under which the
Company contributes from 3% to 9% of an employee's annual base salary, depending
on the employee's age and years of service with the Company. Following are the
current contribution percentages for the Named Officers: Mr. Papa, 9%; Mr.
Segner, 9%; Mr. Leiker, 7%; Mr. Thomas, 9%; and Mr. Hunsaker, 7%. In addition,
the Company may make contributions into the 1996 Deferral Plan in the event of a
reduction in an employee's benefits under the Savings Plan or Money Purchase
Pension Plan due to either statutory and/or plan earnings limits or the
employee's deferral of salary into the 1996 Deferral Plan.
SEVERANCE PLANS/CHANGE OF CONTROL PROVISIONS
The Company maintains a Severance Plan that provides benefits to employees
who are terminated for failing to meet performance objectives or standards, or
who are terminated due to reorganization or economic factors. The amount of
benefits payable for performance related terminations is based on length of
service and may not exceed six weeks pay. For those terminated as the result of
reorganization or economic circumstances, the benefit is based on length of
service and amount of pay up to a maximum payment of 26 weeks of base pay. In
each case, if the employee signs a Waiver and Release of Claims Agreement, the
severance pay benefits are doubled. Under no circumstances will the total
severance pay benefit from the plan exceed 52 weeks of pay.
Under the Company's Change of Control Severance Plan, in the event of a
change of control of the Company, any eligible employee who is involuntarily
terminated within two years following the change of control will receive
severance benefits equal to two weeks of base pay multiplied by the number of
full or partial years of service, plus one month of base pay for each $10,000
(or portion of $10,000) included in the employee's annual base pay, plus one
month of base pay for each 5% of annual incentive award opportunity under any
approved plan. The minimum an employee can receive is six months of base pay.
The maximum an employee can receive is the lesser of 2.99 times the employee's
average W-2 earnings over the past five years or three times the sum of the
employee's annual base pay and 100% of the employee's annual incentive award
opportunity under any approved plan. Officers of the Company have the same
change of control severance
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benefits. However, some have higher minimum benefits under contractual
arrangements. For a further description of severance arrangements under
employment agreements, see "Employment Contracts" below.
In order to ensure continuity of operations in the event of a change of
control of the Company, as defined in the Company's Change of Control Severance
Plan, a retention bonus plan would become effective. To be eligible to receive
the retention bonus, an employee must stay with the Company through the
effective date of the change of control and be employed by the acquiring company
180 days after the effective date, or be involuntarily terminated, as defined in
the Company's Change of Control Severance Plan, by the acquiring company on or
within 180 days after the effective date. Eligible employees would receive a
bonus equal to the most recent bonus they had received under the Company's
Annual Bonus Program, payable upon the earlier of 180 days after the effective
date of the change of control or upon severance.
In addition, in the event of a change of control of the Company, as defined
in the Company's Change of Control Severance Plan, holders of certain
outstanding stock options granted under the Company's Bonus Stock Option
Program, the All-Employee Stock Option Program and the Directors' Stock Option
Plan would be offered the opportunity to request that their rights under such
grants be waived in return for a cash payment equal to 75 percent of the
theoretical Black-Scholes value for each grant, as determined on the date a
press release is issued announcing a pending shareholder vote, tender offer, or
other transaction which, if approved or consummated, would constitute a change
of control of the Company as defined in the Company's Change of Control
Severance Plan. Holders of certain outstanding stock options granted outside of
the programs described above, would be offered the opportunity to request that
their rights under such grants be waived in return for a cash payment only upon
an involuntary termination of employment, as defined in the Company's Change of
Control Severance Plan.
EMPLOYMENT CONTRACTS
Mr. Papa entered into an employment agreement with the Company on November
1, 1997 as President and Chief Operating Officer of the Company at a minimum
annual salary of $400,000. Pursuant to the employment agreement, as amended, Mr.
Papa currently serves as Chairman of the Board and Chief Executive Officer. In
the event of his involuntary termination, Mr. Papa will receive two times his
then current annual base salary, plus two times his annual bonus award
opportunity, plus the value of unvested stock options based on the difference
between the Company's stock price at termination and the grant price of such
options. The employment agreement, as amended, also provides that if Mr. Papa is
involuntarily terminated within two years of a change of control of the Company,
as defined in the Company's Change of Control Severance Plan, he will be
entitled to minimum severance pay equal to 2.99 times his annual base salary,
plus two times his annual bonus award opportunity. In addition, Mr. Papa will be
entitled to be reimbursed for any excise taxes, interest and penalties which may
be payable if payments or benefits he receives due to a change of control create
an excise tax liability under Section 280G of the Internal Revenue Code. The
employment agreement contains a noncompete provision applicable in the event of
Mr. Papa's termination of employment. However, in the event of involuntary
termination due to change of control, the noncompete provision in Mr. Papa's
employment agreement will be waived. The employment agreement, as amended,
expires on October 31, 2001.
Mr. Segner entered into an employment agreement with the Company on
September 1, 1998 as Vice Chairman and Chief of Staff with a minimum annual
salary of $350,000. Pursuant to the employment agreement, as amended, Mr. Segner
currently serves as President and Chief of Staff. In the event of his
involuntary termination, Mr. Segner will receive two times his then current
annual base salary, plus two times his annual bonus award opportunity, plus the
value of unvested stock options based on the difference between
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the Company's stock price at termination and the grant price of such options.
The employment agreement, as amended, also provides that if Mr. Segner is
involuntarily terminated within two years of a change of control of the Company,
as defined in the Company's Change of Control Severance Plan, Mr. Segner will be
entitled to minimum severance equal to 2.99 times his then current annual base
salary, plus two times his annual bonus award opportunity. In addition, Mr.
Segner will be entitled to reimbursement for any excise taxes, interest and
penalties which may be payable if payments or benefits he receives due to a
change of control create an excise tax liability under Section 280G of the
Internal Revenue Code. The employment agreement contains a noncompete provision
applicable in the event of Mr. Segner's termination of employment. However, in
the event of involuntary termination due to change of control, the noncompete
provision in Mr. Segner's employment agreement will be waived. The employment
agreement, as amended, expires on August 31, 2001.
Mr. Leiker entered into an employment agreement with the Company on March
1, 1998 as Senior Vice President, Exploration, with a minimum annual salary of
$250,000. Pursuant to the employment agreement, as amended, Mr. Leiker currently
serves as Executive Vice President, Exploration and Development. In the event of
his involuntary termination, Mr. Leiker will receive 125% of his then current
monthly base salary as if his employment had continued for the remaining term of
the agreement, which expires on February 28, 2003. If Mr. Leiker is
involuntarily terminated within two years of a change of control of the Company,
as defined in the Company's Change of Control Severance Plan, he will be
entitled to minimum severance pay equal to the greater of 125% of his then
current monthly base salary as if his employment had continued for the remaining
term of the agreement or the sum of 2.99 times his then current annual base
salary plus two times his annual bonus award opportunity. In addition, Mr.
Leiker will be entitled to reimbursement for any excise taxes, interest and
penalties which may be payable if payments or benefits he receives due to a
change of control create an excise tax liability under Section 280G of the
Internal Revenue Code. The employment agreement contains a noncompete provision
applicable in the event of Mr. Leiker's termination of employment. However, in
the event of involuntary termination due to change of control, the noncompete
provision in Mr. Leiker's employment agreement will be waived.
Mr. Thomas entered into an employment agreement with the Company on
September 1, 1998 under which he has agreed to serve as Executive Vice
President, North America Operations, with a minimum annual salary of $250,000.
The employment agreement, as amended, provides that in the event of his
involuntary termination, Mr. Thomas will receive his then current monthly base
salary as if his employment had continued for the remaining term of the
agreement, which expires on August 31, 2001. The employment agreement, as
amended, also provides that if Mr. Thomas is involuntarily terminated within two
years of a change of control of the Company, as defined in the Company's Change
of Control Severance Plan, Mr. Thomas will be entitled to minimum severance
equal to 2.99 times his then current annual base salary, plus two times his
annual bonus award opportunity. In addition, Mr. Thomas will be entitled to
reimbursement for any excise taxes, interest and penalties which may be payable
if payments or benefits he receives due to a change of control create an excise
tax liability under Section 280G of the Internal Revenue Code. The employment
agreement contains a noncompete provision applicable in the event of Mr.
Thomas's termination of employment. However, in the event of involuntary
termination due to change of control, the noncompete provision in Mr. Thomas's
employment agreement will be waived.
Mr. Hunsaker entered into an employment agreement with the Company on
September 1, 1998 under which he has agreed to serve as Senior Vice President
and General Counsel with a minimum annual salary of $255,000. The employment
agreement, as amended, provides that in the event of his involuntary
termination, Mr. Hunsaker will receive his then current monthly base salary as
if his employment had continued for the greater of 12 months or the remaining
term of the agreement, which expires on August 31, 2001, and
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reimbursement for the difference between the cost of COBRA coverage and a
private medical insurance policy for a maximum of six months beyond the end of
his eligibility for COBRA coverage. The employment agreement, as amended, also
provides that if Mr. Hunsaker is involuntarily terminated within two years of a
change of control of the Company, as defined in the Company's Change of Control
Severance Plan, Mr. Hunsaker will be entitled to minimum severance equal to 2.99
times his then current annual base salary, plus two times his annual bonus award
opportunity, plus the medical provision described above. In addition, Mr.
Hunsaker will be entitled to reimbursement for any excise taxes, interest and
penalties which may be payable if payments or benefits he receives due to a
change of control create an excise tax liability under Section 280G of the
Internal Revenue Code. The employment agreement contains a noncompete provision
applicable in the event of Mr. Hunsaker's termination of employment. However, in
the event of involuntary termination due to change of control, the noncompete
provision in Mr. Hunsaker's employment agreement will be waived.
CERTAIN TRANSACTIONS
The Company and Enron Corp. have in the past entered into material
transactions and agreements incident to their respective businesses, and they
may be expected to enter into such transactions and agreements in the future.
Such transactions and agreements have related to, among other things, the
purchase and sale of natural gas and crude oil, hedging and trading activities,
and the provision of certain corporate services. During 2000, Enron Corp. and
its affiliates paid the Company approximately $136.3 million as a net result of
the foregoing described transactions and agreements. The Company believes that
its existing transactions and agreements with Enron Corp. have been at least as
favorable to the Company as could be obtained from other third parties, and the
Company intends that the terms of any future transactions and agreements between
the Company and Enron Corp. will be at least as favorable to the Company as
could be obtained from other third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires certain of the Company's executive officers and
directors and any persons who own more than 10% of the Common Stock to file
reports of ownership and changes in ownership concerning the Common Stock with
the SEC and to furnish the Company with copies of all Section 16(a) forms they
file. Based upon the Company's review of the Section 16(a) filings that have
been received by the Company, the Company believes that all filings required to
be made under Section 16(a) during 2000 were timely made.
ITEM 2.
RATIFICATION OF APPOINTMENT OF AUDITORS
In 2000, the Board of Directors approved and adopted an Audit Committee
Charter, which is attached to this Proxy Statement as Exhibit A. Under the rules
of the New York Stock Exchange, all of the members of the Audit Committee are
independent.
During fiscal year 2000, the company retained its principal auditors,
Arthur Andersen LLP, to provide services in the following categories and
amounts: Audit Fees -- $352,000; Financial Information Systems Design and
Implementation Fees -- $0; and All Other Fees -- $191,000.
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Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed Arthur Andersen LLP, independent public accountants, to
audit the consolidated financial statements of the Company for the year ending
December 31, 2001.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Accordingly,
under Delaware law and the Restated Certificate of Incorporation and bylaws of
the Company, abstentions would have the same legal effect as a vote against this
proposal, but a broker non-vote would not be counted for purposes of determining
whether a majority had been achieved.
In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. A representative of
Arthur Andersen LLP is expected to be present at the Annual Meeting and will be
available to make a statement if such representative desires to do so and to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
REPORT OF THE AUDIT COMMITTEE
In connection with the Company's December 31, 2000 financial statements,
the Audit Committee (1) reviewed and discussed the audited financial statements
with management; (2) discussed with the independent auditors the matters
required by Statement on Auditing Standards No. 61, as amended; and (3) received
the written disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, discussed with the independent
auditors the independent auditors' independence, and considered whether the
provision of non-audit services by the Company's principal auditors is
compatible with maintaining auditor independence. Based upon these reviews and
discussions, the Audit Committee has recommended to the Board of Directors, and
the Board of Directors has approved, that the Company's audited financial
statements be included or incorporated by reference 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.
Audit Committee
Fred C. Ackman, Chairman
George A. Alcorn
Edward Randall, III
Frank G. Wisner
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ITEM 3.
APPROVAL OF THE EOG RESOURCES, INC. EMPLOYEE STOCK PURCHASE PLAN
At the meeting, the shareholders of the Company will be asked to vote upon
a proposal to approve the EOG Resources, Inc. Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan"). The Employee Stock Purchase Plan allows
eligible employees to authorize payroll deductions for the periodic purchase of
the Company's Common Stock at a discount. The Employee Stock Purchase Plan will
terminate on the tenth anniversary of the date of commencement of the initial
offering period under the Employee Stock Purchase Plan.
REASONS FOR THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors believes that it is in the best interest of the
Company to encourage ownership of the Company's stock by its employees.
Providing our employees an opportunity to hold an equity interest in the Company
helps our employees develop a stronger incentive to work for the continued
success of the Company and its Affiliates.
SUMMARY OF THE EMPLOYEE STOCK PURCHASE PLAN
The following summary does not purport to be a complete description of the
Employee Stock Purchase Plan and is qualified in its entirety by reference to
the full text of the plan document, which is attached as Exhibit B to this Proxy
Statement.
The Board of Directors adopted the Employee Stock Purchase Plan in February
2001, subject to approval by the shareholders of the Company. The Employee Stock
Purchase Plan will be administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Employee Stock Purchase Plan provides for the
periodic grant of options to all eligible employees to purchase shares of the
Company's Common Stock. Such options may be exercised on the last day of the
applicable offering period for which such options were granted and only with
funds accumulated through payroll deductions of between 1% and 10% of an
eligible employee's compensation. Except as may be otherwise determined by the
Committee and announced to employees prior to an offering period, the maximum
number of shares of Common Stock for which each eligible employee may be granted
an option during an offering period will be determined by dividing $12,500 by
the fair market value of a share of the Company's Common Stock on the first day
of the offering period. The price to be paid for each share of Common Stock upon
exercise of an option shall be the lesser of (i) 85% of the fair market value on
the date of grant of the option or (ii) 85% of the fair market value on the date
of exercise. Eligible employees include any employee working more than 20 hours
per week.
Under the Employee Stock Purchase Plan, an aggregate of 500,000 shares of
Common Stock have been authorized and reserved for purchase pursuant to options
granted to eligible employees. The offering periods shall be six-month periods
commencing on January 1 and July 1. The initial offering period shall commence
on July 1, 2001 unless the Committee determines that the initial offering period
shall commence on January 1, 2002.
FEDERAL TAX CONSEQUENCES
The Employee Stock Purchase Plan and the right of participants to make
purchases thereunder are intended to qualify under the provisions of sections
421 and 423 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code"). Under these provisions, no income will be taxable to a participant
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until the shares of Common Stock purchased under the Employee Stock Purchase
Plan are sold or otherwise disposed of. Upon the sale of or other disposition of
the shares, the participant will generally be subject to tax. The amount of tax
will depend on how long the participant holds the Common Stock.
If the participant sells or otherwise disposes of the shares more than two
years from the first day of the offering period and more than one year from the
date of the transfer of Common Stock to him, he will recognize ordinary income
in an amount equal to the lesser of (i) the excess of the fair market value of
the shares at the time of such sale or other disposition over the purchase
price, or (ii) an amount equal to 15% of the fair market value of the shares as
of the first day of the offering period. Any additional gain will be treated as
long-term capital gain.
If the shares are sold or otherwise disposed of BEFORE the expiration of
the holding period, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss on
such sales or disposition will be long-term or short-term capital gain or loss,
depending on the holding period.
The Company is not entitled to a deduction for amount taxed as ordinary
income or capital gain to a participant except to the extent ordinary income is
recognized by participants upon a sale or disposition of shares prior to the
expiration of the holding period described above.
The IRS recently issued guidance providing that it will not require the
withholding or payment of FICA or FUTA taxes or withholding for Federal income
taxes at the time a participant's options are exercised or at the time a
participant disposes of some or all of the shares of stock purchased under the
Employee Stock Purchase Plan. The IRS stated that further guidance regarding
withholding may be issued effective January 1, 2003, in which it may require the
withholding and payment of FICA, FUTA, and Federal income taxes upon an exercise
or disposition made on or after that date.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the shares purchased under
the Employee Stock Purchase Plan. Reference should be made to the applicable
provisions of the Code. In addition, this summary does not discuss the tax
consequences of a participant's death or income tax laws of any state or foreign
country in which the participant may reside.
REQUIRED VOTE AND RECOMMENDATION
Approval of the Employee Stock Purchase Plan shall be effective upon
receiving the affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting.
Accordingly, under Delaware law and the Restated Certificate of Incorporation
and bylaws of the Company, an abstention would have the same legal effect as a
vote against this proposal, but a broker non-vote would not be counted for
purposes of determining whether a majority had been achieved.
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The shares represented by the proxies solicited by the Board of Directors
will be voted as directed on the form of proxy or, if no direction is indicated,
will be voted "FOR" the approval of the Employee Stock Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
ITEM 4.
APPROVAL OF THE EOG RESOURCES, INC. EXECUTIVE OFFICER ANNUAL BONUS PLAN
Generally, Section 162(m) of the Internal Revenue Code disallows a tax
deduction for compensation over $1 million paid to the chief executive officer
and the other four highest paid officers, unless it qualifies as
performance-based. One of the requirements of performance-based compensation is
that the compensation be paid pursuant to a plan that has been approved by the
company's shareholders. The Board of Directors believes that it is desirable and
in the best interests of the Company and its shareholders to provide an annual
bonus plan and that the bonuses paid to the Company's executive officers be
deductible for federal income tax purposes. Accordingly, the EOG Resources, Inc.
Executive Officer Annual Bonus Plan (the "Executive Officer Annual Bonus Plan")
has been structured to satisfy the requirements of Section 162(m) for
performance-based compensation.
Below is a summary of the key provisions of the Executive Officer Annual
Bonus Plan. See Exhibit C for a full text.
Eligibility. Eligibility is limited to Executive Officers of the Company,
as defined in Section 16 of the Securities Exchange Act of 1934, as amended, who
shall hereinafter be referred to as Participants.
Administration. The Executive Officer Annual Bonus Plan shall be
administered by the Compensation Committee of the Board of Directors (the
"Committee") and shall operate on the basis of the calendar year. The Committee
is authorized to interpret the Executive Officer Annual Bonus Plan and from time
to time may adopt such rules, regulations, definitions and forms consistent with
the provisions of the Executive Officer Annual Bonus Plan as it may deem
advisable to carry out the Executive Officer Annual Bonus Plan.
Performance Goal. The performance goal necessary for the payment of
bonuses under the Executive Officer Annual Bonus Plan will be the achievement of
positive Net Income Available to Common, excluding nonrecurring or extraordinary
items, as reported in the Company's year-end earnings release. The Committee
will certify in writing prior to payment of any bonuses under the Executive
Officer Annual Bonus Plan that the performance goal was met.
Maximum Individual Bonus. In no event shall a bonus paid pursuant to the
Executive Officer Annual Bonus Plan to any Participant for any calendar year be
in excess of $2.0 million. The Committee may reduce the bonus payable to any
Participant below the maximum amount based on such objective or subjective
criteria as the Committee deems appropriate in its sole and absolute discretion.
Effective Date and Term of Plan. If approved by shareholders, as provided
below, the Executive Officer Annual Bonus Plan will be effective January 1,
2001. The term of the Plan will be ten years.
Amendment and Termination. The Committee may modify or terminate the
Executive Officer Annual Bonus Plan at any time without prior notice to or
consent of Participants; provided that, without the approval of the shareholders
of the Company, no such amendment shall be made that would change the class of
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Employees eligible to receive awards, increase the maximum individual bonus
allowed, change the stated performance goal, or modify any other material terms
of the Executive Officer Annual Bonus Plan.
REQUIRED VOTE AND RECOMMENDATION
Approval of the Executive Officer Annual Bonus Plan shall be effective upon
receiving the affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting.
Accordingly, under Delaware law and the Restated Certificate of Incorporation
and bylaws of the Company, an abstention would have the same legal effect as a
vote against this proposal, but a broker non-vote would not be counted for
purposes of determining whether a majority had been achieved.
The shares represented by the proxies solicited by the Board of Directors
will be voted as directed on the form of proxy or, if no direction is indicated,
will be voted "FOR" the approval of the Executive Officer Annual Bonus Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Shareholders may propose matters to be presented at shareholder meetings
and may also nominate persons to be directors. Formal procedures have been
established for those proposals and nominations.
PROPOSALS FOR 2002 ANNUAL MEETING
Pursuant to various rules promulgated by the SEC, any proposals of holders
of Common Stock of the Company intended to be presented at the Annual Meeting of
Shareholders of the Company to be held in 2002 must be received by the Company,
addressed to Patricia L. Edwards, Vice President, Human Resources,
Administration & Corporate Secretary (the "Secretary"), 1200 Smith Street, Suite
300, Houston, Texas 77002, no later than November 30, 2001, to be included in
the Company's proxy statement and form of proxy relating to that meeting.
In addition to the SEC rules described in the preceding paragraph, the
Company's bylaws provide that for business to be properly brought before the
Annual Meeting of Shareholders, it must be either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise brought before the meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before the meeting by
a shareholder of the Company who is a shareholder of record at the time of
giving of notice hereinafter provided for, who shall be entitled to vote at such
meeting and who complies with the following notice procedures. In addition to
any other applicable requirements for business to be brought before an annual
meeting by a shareholder of the Company, the shareholder must have given timely
notice in writing of the business to be brought before an Annual Meeting of
Shareholders of the Company to the Secretary of the Company. To be timely,
notice given by a shareholder must be delivered to or mailed and received at the
principal executive offices of the Company, 1200 Smith Street, Suite 300,
Houston, Texas 77002, no later than November 30, 2001. The notice shall set
forth as to each matter the shareholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the Company's books, of
the shareholder proposing such business, (iii) the acquisition date, the class
and the number of shares of voting stock of the Company which are owned
beneficially by the shareholder, (iv) any material interest of the shareholder
in such business, and
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(v) a representation that the shareholder intends to appear in person or by
proxy at the meeting to bring the proposed business before the meeting.
Notwithstanding the foregoing bylaw provisions, a shareholder must also comply
with all applicable requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder with
respect to the matters set forth in the foregoing bylaw provisions.
Notwithstanding anything in the Company's bylaws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures outlined above.
NOMINATIONS FOR 2002 ANNUAL MEETING AND FOR ANY SPECIAL MEETINGS
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as directors. Nominations of persons for election
to the Company's Board of Directors may be made at a meeting of shareholders (a)
by or at the direction of the Board of Directors or (b) by any shareholder of
the Company who is a shareholder of record at the time of giving of notice
hereinafter provided for, who shall be entitled to vote for the election of
directors at the meeting and who complies with the following notice procedures.
Such nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Company. To be timely, notice given by a shareholder shall be delivered
to or mailed and received at the principal executive offices of the Company,
1200 Smith Street, Suite 300, Houston, Texas 77002, (i) with respect to an
election to be held at the 2002 Annual Meeting of Shareholders of the Company,
on or before November 30, 2001, and (ii) with respect to an election to be held
at a special meeting of shareholders of the Company for the election of
directors, not later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or public
disclosure of the date of meeting was made, whichever first occurs. Such notice
shall set forth (a) as to each person whom the shareholder proposes to nominate
for election or re-election as a director, all information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors, or is otherwise required, pursuant to Regulation 14A
under the Exchange Act (including the written consent of such person to be named
in the proxy statement as a nominee and to serve as a director if elected); and
(b) as to the shareholder giving the notice (i) the name and address, as they
appear of record on the Company's books, of such shareholder, and (ii) the class
and number of shares of capital stock of the Company which are beneficially
owned by the shareholder. In the event a person is validly designated as nominee
to the Board of Directors and shall thereafter become unable or unwilling to
stand for election to the Board of Directors, the Board of Directors or the
shareholder who proposed such nominee, as the case may be, may designate a
substitute nominee. Notwithstanding the foregoing bylaw provisions, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in the foregoing bylaw provisions.
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GENERAL
As of the date of this proxy statement, the management of the Company has
no knowledge of any business to be presented for consideration at the meeting
other than that described above. If any other business should properly come
before the meeting, it is intended that the shares represented by proxies will
be voted with respect thereto in accordance with the judgment of the persons
named in such proxies.
The cost of any solicitation of proxies will be borne by the Company. In
addition to solicitation by use of the mails, certain officers and regular
employees of the Company may solicit the return of proxies by telephone,
telegraph or personal interview. Arrangements may also be made with brokerage
firms and other custodians, nominees and fiduciaries for the forwarding of
material to and solicitation of proxies from the beneficial owners of Common
Stock held of record by such persons, and the Company will reimburse such
brokerage firms, custodians, nominees and fiduciaries for reasonable out of
pocket expenses incurred by them in connection therewith.
By Order of the Board of Directors,
PATRICIA L. EDWARDS
Vice President, Human Resources,
Administration & Corporate Secretary
Houston, Texas
March 30, 2001
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EXHIBIT A
EOG RESOURCES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in
monitoring (1) the integrity of the financial statements of the Company, (2) the
compliance by the Company with legal and regulatory requirements and (3) the
independence and performance of the Company's internal and external auditors.
The members of the Audit Committee and its Chairman shall be appointed by
the Board and shall meet the independence and experience requirements of the New
York Stock Exchange. The Audit Committee shall consist of not less than three
(3) members.
The Audit Committee shall have the authority to retain at the expense of
the Company special legal, accounting or other consultants or experts to advise
the Committee.
The Audit Committee shall meet as often as it deems necessary but not less
than four times each year. The Audit Committee may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee.
Minutes of each meeting are to be prepared, approved by the Audit Committee
and filed by the Corporate Secretary with permanent records.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter at least annually
and recommend any appropriate changes to the Board for approval.
2. Review the annual audited financial statements prior to filing or
distribution. The review should include discussions with management and the
Company's independent auditor of significant issues regarding accounting
and auditing principles and practices, and judgments as well as the
adequacy of internal controls that could significantly affect the Company's
financial statements.
3. Review with management and the independent auditor the Company's
quarterly financial statements.
4. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor and
control such exposures.
5. Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor, internal
auditors or management.
6. Recommend to the Board the appointment of the independent auditor,
which firm is ultimately accountable to the Audit Committee and the Board.
7. Approve the fees and other significant compensation to be paid to
the independent auditor.
8. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and if
determined appropriate by the Audit Committee,
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recommend to the Board that appropriate action be taken to affirm
satisfaction as to the independence of the auditor.
9. Evaluate together with the Board the performance of the independent
auditor and, if determined appropriate by the Audit Committee, recommend to
the Board that the independent auditor be replaced.
10. Review the appointment and replacement of the senior internal
auditing executive.
11. Review significant items from reports to management prepared by
the internal auditing department and management's responses.
12. Meet with the independent auditor prior to the audit to review the
scope, planning and staffing of the audit, the extent of reliance on
management and internal audit, and the general audit approach.
13. Obtain from the independent auditor assurance that as a result of
their audit, they did not detect any errors, irregularities or illegal acts
that would have a material impact on the financial statements.
14. Obtain reports from management covering the actions undertaken to
insure that the Company and its subsidiary/foreign affiliated entities are
in conformity with the Company's General Policy Regarding Laws and Business
Conduct which encompasses the policies contained in the Conduct of Business
Affairs Handbook and the Compliance with Laws Regarding Antitrust,
Anti-boycott and Foreign Corrupt Practices Policy and Handbook (the
"General Policy").
15. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct
of the audit.
16. Review with the independent auditor any problems or difficulties
the auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b) Any changes required in the planned scope of the audit.
17. Oversee preparation of and approve the report covering its
financial reporting oversight responsibilities required by the rules of the
Securities and Exchange Commission to be included in the Company's annual
proxy statement.
18. Advise the Board with respect to the Company's compliance with the
General Policy.
19. Consider the independent auditor's judgments about the quality and
appropriateness of the company's accounting principles as applied in its
financial reporting.
20. Review the budget, plan, changes in plan, activities,
organizational structure, and qualifications of the internal audit
department, as needed.
21. Review with the Company's General Counsel legal matters that may
have a material impact on the financial statements, the Company's
compliance policies and any material reports or inquiries received from
regulators or governmental agencies at least annually and otherwise as
needed.
22. Meet at least annually with the senior financial and/or accounting
officers, the senior internal auditing executive and the independent
auditor in separate executive sessions.
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While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's General Policy.
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EXHIBIT B
EOG RESOURCES, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1
PURPOSE, COMMITMENT AND INTENT
1.1 Purpose. The purpose of this Plan is to provide Employees of the
Company and its Affiliates which adopt the Plan with an opportunity to purchase
Stock of the Company through offerings of options at a discount and thus develop
a stronger incentive to work for the continued success of the Company and its
Affiliates. Therefore, this Plan is available to all Employees of every Employer
upon their fulfilling the eligibility requirements of Section 3.1. Any Affiliate
may adopt it with the approval of the Committee by fulfilling the requirements
of Section 8.1. This Plan is sponsored by the Company. The Plan will terminate
on the tenth anniversary of the date of commencement of the initial offering
period under the Plan.
1.2 Share Commitment. The aggregate number of Shares authorized to be
sold pursuant to Options granted under this Plan is 500,000 Shares, subject to
adjustment as provided in this Section. Any Shares relating to Options that are
granted, but subsequently lapse, are canceled, or are otherwise not exercised by
the Exercise Date, shall be available for future grants of Options.
In the event of any stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of Shares, or the like, as a result of
which shares shall be issued in respect of the outstanding Shares, or the Shares
shall be changed into the same or a different number of the same or another
class of stock, the total number of Shares authorized to be committed to this
Plan, the number of Shares subject to each outstanding Option and the Option
Price applicable to each Option shall be appropriately adjusted by the
Committee.
1.3 Intent. It is the intention of the Company to have the Plan qualify
as an "employee stock purchase plan" under section 423 of the Code. Therefore,
the provisions of the Plan are to be construed in a manner consistent with the
requirements of section 423 of the Code.
1.4 Shareholder Approval. To be effective for an Employer, this Plan must
be approved by the shareholders of that Employer within 12 months before or
after the Plan is approved by the board of directors of that Employer. The
approval of shareholders must comply with all applicable provisions of the
corporate charter, bylaws and applicable laws of the jurisdiction prescribing
the method and degree of shareholder approval required for the issuance of
corporate stock or options.
ARTICLE 2
DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
word or phrase appears reasonably requires a broader, narrower, or different
meaning.
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2.1 "Affiliate" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
2.2 "Beneficiary" means the person who is entitled to receive amounts
under the Plan upon the death of a Participant.
2.3 "Board of Directors" means the board of directors of the Company.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.5 "Committee" means the Compensation Committee of the Board of Directors
of the Company.
2.6 "Company" means EOG Resources, Inc.
2.7 "Compensation" means the Employee's regular rate of wages from the
Employer.
2.8 "Employee" means any person who is a common law employee of the
Employer excluding only those whose customary employment with the Employer is 20
hours or less per week.
2.9 "Employer" means the Company and each Affiliate which has adopted the
Plan as provided in Section 8.1 of the Plan.
2.10 "Exercise Date" means the last business day of the Offering Period,
which is the day that all Options that Participants have elected to exercise are
to be exercised.
2.11 "Fair Market Value" or "FMV" of the Stock as of any date means the
closing price of the Stock on that date (or if there was no sale on a given
date, the next preceding date on which there was a sale) on the principal
securities exchange on which the Stock is listed.
2.12 "Grant Date" means the first business day of the Offering Period,
which is the day the Committee grants all eligible Employees an Option under
this Plan.
2.13 "Offering Period" means the six-month periods commencing on July 1
and January 1 of each year. The initial offering period shall begin July 1, 2001
unless the Committee determines that the initial Offering Period shall commence
on January 1, 2002.
2.14 "Option" means an option granted under this Plan to purchase shares
of Stock at the Option Price on the Exercise Date.
2.15 "Option Price" means the price to be paid for each Share upon
exercise of an Option, which shall be the lesser of (a) 85% of the FMV of a
Share on the Grant Date or (b) 85% of the FMV of a Share on the Exercise Date.
2.16 "Participant" means a person who is eligible to be granted an Option
under this Plan and who elects to have payroll deductions withheld under the
Plan for the purpose of exercising that Option on the Exercise Date.
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2.17 "Plan" means the EOG Resources, Inc. Employee Stock Purchase Plan, as
set out in this document and as it may be amended from time to time.
2.18 "Shares" means shares of Stock.
2.19 "Stock" means the Company's common stock.
ARTICLE 3
ELIGIBILITY
3.1 General Requirements. Each Employee is eligible to participate in the
Plan for a given Offering Period if he is an Employee on the Grant Date, subject
to the limitations imposed in Section 3.2.
3.2 Limitations Upon Participation. Any provision of this Plan to the
contrary notwithstanding, no Employee shall be granted an Option:
(a) if, immediately after the grant, the Employee would own, including
all outstanding options which are still exercisable to purchase Stock, five
percent or more of the total combined voting power or value of all classes
of Stock of the Company or of any parent or subsidiary of the Company
within the meaning of sections 423 and 424 of the Code;
(b) which permits the Employee to purchase Stock under all employee
stock purchase plans, as defined in section 423 of the Code, of the Company
and all Affiliates at a rate which exceeds $25,000 in Fair Market Value of
the Stock (determined at the time the Option is granted) for each calendar
year in which the option granted to the Employee is outstanding at any time
as provided in sections 423 and 424 of the Code; or
(c) which permits the Employee rights to purchase Stock in excess of
the number of Shares set by the Committee if it deems such a restriction to
be appropriate.
ARTICLE 4
PARTICIPATION
4.1 Grant and Exercise of Option. Effective as of the Grant Date the
Committee shall grant an Option to each Participant that shall be exercisable on
the Exercise Date only through funds accumulated by the Employee through payroll
deductions made during the Offering Period together with any funds remaining in
the Participant's payroll deduction account at the beginning of the Offering
Period. Except as may be determined otherwise by the Committee and announced to
Employees prior to an Offering Period, the number of Shares included in an
Option deemed to have been granted to an Employee on the Grant Date shall be
determined by dividing $12,500 by the FMV of a share of Stock on such date.
4.2 Payroll Deduction. For an Employee to become eligible to receive an
Option granted for a given Offering Period, the Employee must complete a payroll
deduction form and file it with the Employer no earlier than 30 nor later than
15 days prior to the beginning of the Offering Period. The payroll deduction
form shall permit a Participant to elect to have withheld from his Compensation
an amount no less than one percent, nor more than ten percent, of his
Compensation (only in whole percentages) taken pro rata from the Compensation
paid to him by the Employer. Each payroll deduction shall begin on the first pay
period ending after the beginning of an Offering Period and shall continue
through the last pay period ending prior to the
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Exercise Date. No Participant shall be permitted to begin payroll deductions at
any other time. A Participant may not make additional contributions to his Plan
account.
4.3 Payroll Deductions Continuing. A Participant's election to have
payroll deductions shall remain in effect for all ensuing Offering Periods until
changed by the Participant by filing an appropriate amended payroll deduction
form not earlier than 30 nor later than 15 days prior to the commencement of the
Offering Period for which it is to be effective.
4.4 Right to Stop Payroll Deductions. A Participant may discontinue
payroll deductions and his participation in the Plan as provided in Section 5.1,
but no other change may be made during an Offering Period and, specifically, a
Participant may not alter the rate of his payroll deductions for that Offering
Period.
4.5 Accounting for Funds. As of each payroll deduction period, the
Employer shall cause to be credited to the Participant's payroll deduction
account in a ledger established for that purpose, the funds withheld from and
attributable to the Employee's compensation for that period. No interest shall
be credited to the Participant's payroll deduction account at any time. The
obligation of the Employer to the Participant for this account shall be a
general corporate obligation and shall not be funded through a trust nor secured
by any assets which would cause the Participant to be other than a general
creditor of the Employer.
4.6 Employer's Use of Funds. All payroll deductions received or held by
an Employer may be used by the Employer for any corporate purposes, and the
Employer shall not be obligated to segregate such payroll deductions.
ARTICLE 5
IN SERVICE WITHDRAWAL
TERMINATION OF EMPLOYMENT
RETIREMENT OR DEATH
5.1 In Service Withdrawal. A Participant may, at any time on or before 15
days prior to the Exercise Date, or such other date as shall be determined by
the Committee from time to time, elect to withdraw all funds then credited to
his payroll deduction account by giving written notice to his Employer in
accordance with the rules established by the Committee. All funds credited to
the Participant's payroll deduction account shall be paid to him as soon as
administratively feasible. The withdrawal election terminates the Participant's
right to exercise his Option on the Exercise Date and his entitlement to elect
any further payroll deductions for the then current Offering Period. Should the
Participant wish to participate in any future Offering Period, the Participant
must file a new payroll deduction election form with the Committee within the
time frame required for participation for that Offering Period.
5.2 Termination of Employment. If a Participant's employment is
terminated for any reason other than death prior to the Exercise Date, the
Option granted to the Participant for that Option Period shall lapse. The
Participant's payroll deduction account shall be returned to him as soon as
administratively feasible.
5.3 Death. If a Participant dies before the Exercise Date, the Option
granted to the Participant for that Offering Period shall lapse. The
Participant's payroll deduction account shall be returned to him as soon as
administratively feasible. If the Participant dies after the Exercise Date but
prior to the delivery of his certificate, the Stock shall be delivered to his
Beneficiary (or to his estate if he has no Beneficiary). If there is no
Beneficiary, the Stock shall be held in the Participant's account until the
representative of the estate has been appointed and provides such evidence as
may be required by the Committee before the certificate is
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delivered to the proper party together with a check in the amount of any
remaining funds in the Participant's payroll deduction account.
ARTICLE 6
EXERCISE OF OPTIONS
6.1 Purchase of Stock. Subject to the limitations in Sections 3.2 and 4.1
of the Plan, on the Exercise Date of each Offering Period each Participant's
payroll deduction account shall be used to purchase the maximum number of whole
shares of Stock that can be purchased at the Option Price for that Offering
Period. Any funds remaining in a Participant's payroll deduction account after
the exercise of his Option for an Offering Period shall remain in the
Participant's account to be used in the ensuing Offering Period, together with
new payroll deductions, if any, for that Offering Period to exercise the next
succeeding Option which is to be exercised. If in any Offering Period the total
number of shares of Stock to be purchased by all Participants exceed the number
of shares of Stock committed to the Plan, then each Participant shall be
entitled to purchase only his pro rata portion of the shares of Stock remaining
available under the Plan based on the balances in each Participant's payroll
deduction account as of the Exercise Date. No fractional shares of Stock may be
purchased under this Plan. After the purchase of all shares of Stock available
on the Exercise Date, all Options granted for the Offering Period to the extent
not used shall terminate.
6.2 Accounting for Stock. After the Exercise Date of each Offering Period
a report shall be given to each Participant stating the amount of his payroll
deduction account, the number of shares of Stock purchased and the applicable
Option Price.
6.3 Issuance of Shares. As soon as administratively feasible after the
end of the Offering Period the Committee shall advise the appropriate officer of
the Company that the terms of the Plan have been complied with and that it is
appropriate for the officer to cause to be issued the shares of Stock upon which
Options have been exercised under the Plan. The Committee may determine to hold
such shares of Stock until the Participant requests such shares of Stock. The
Committee may determine in its discretion the manner of delivery of the shares
of Stock purchased under the Plan, which may be by electronic account entry into
new or existing accounts, delivery of certificates or any other means as the
Committee, in its discretion, deems appropriate. The Committee may, in its
discretion, hold the certificate for any shares of Stock or cause it to be
legended in order to comply with the securities laws of the applicable
jurisdiction.
6.4 Restriction on Shares. A Participant shall be free to undertake a
disposition (as that term is defined in Section 424(c) of the Code) of the
shares in his account at any time, whether by sale, exchange, gift, or other
transfer of legal title, but in the absence of such a disposition of the shares,
the shares must remain in the Participant's account at the brokerage or other
financial services firm designated by the Committee until the holding period set
forth in Section 423(a) of the Code has been satisfied. With respect to Shares
for which such holding period has been satisfied, the Participant may direct
that those Shares be moved to another account of Participant's choosing or
request that a stock certificate be issued and delivered to him.
Notwithstanding anything to the contrary contained in this Plan, a
Participant shall not transfer or otherwise dispose of Stock in violation of the
Company's Insider Trading Policy.
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ARTICLE 7
ADMINISTRATION
7.1 Powers of Committee. The Committee has the exclusive responsibility
for the general administration of the Plan, and has all powers necessary to
accomplish that purpose, including but not limited to the following rights,
powers, and authorities:
(a) to make rules for administering the Plan so long as they are not
inconsistent with the terms of the Plan;
(b) to construe all provisions of the Plan;
(c) to correct any defect, supply any omission, or reconcile any
inconsistency which may appear in the Plan;
(d) to select, employ, and compensate at any time any consultants,
accountants, attorneys, and other agents the Committee believes necessary
or advisable for the proper administration of the Plan;
(e) to determine all questions relating to eligibility, Fair Market
Value, Option Price and all other matters relating to benefits or
Participants' entitlement to benefits;
(f) to determine all controversies relating to the administration of
the Plan, including but not limited to any differences of opinion arising
between the Employer and a Participant, and any questions it believes
advisable for the proper administration of the Plan; and
(g) to delegate any clerical or record-keeping duties of the Committee
as the Committee believes is advisable to properly administer the Plan.
7.2 Standard of Judicial Review of Committee Actions. The Committee has
full and absolute discretion in the exercise of each and every aspect of its
authority under the Plan. Notwithstanding anything to the contrary, any action
taken, or ruling or decision made, by the Committee in the exercise of any of
its powers and authorities under the Plan shall be final and conclusive as to
all parties other than the Company and its Affiliates, including without
limitation all Participants and their Beneficiaries, regardless of whether the
Committee or one or more of its members may have an actual or potential conflict
of interest with respect to the subject matter of the action, ruling, or
decision. No final action, ruling, or decision of the Committee shall be subject
to de novo review in any judicial proceeding; and no final action, ruling, or
decision of the Committee may be set aside unless it is held to have been
arbitrary and capricious by a final judgment of a court having jurisdiction with
respect to the issue.
ARTICLE 8
ADOPTION OF PLAN BY OTHER EMPLOYERS
8.1 Adoption Procedure. With the approval of the Committee, any Affiliate
may adopt this Plan by:
(a) a certified resolution or consent of the board of directors of the
adopting Affiliate or an executed adoption instrument (approved by the
board of directors of the adopting Affiliate) agreeing to be bound as an
Affiliate by all the terms, conditions and limitations of this Plan; and
(b) providing all information required by the Committee.
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8.2 No Joint Venture Implied. The document which evidences the adoption
of the Plan by an Affiliate shall become a part of this Plan. However, neither
the adoption of this Plan by an Affiliate nor any act performed by it in
relation to this Plan shall create a joint venture or partnership relation
between it and the Company or any other Affiliate.
ARTICLE 9
TERMINATION AND AMENDMENT OF THE PLAN
9.1 Termination. The Company may, by action of the Board of Directors,
terminate the Plan at any time and for any reason. The Plan shall automatically
terminate upon the purchase by Participants of all shares of Stock committed to
the Plan, unless the number of Shares committed to the Plan are increased by the
Board of Directors and approved by the shareholders of the Company. Upon
termination of the Plan, as soon as administratively feasible there shall be
refunded to each Participant the remaining funds in his payroll deduction
account, and there shall be forwarded to the Participants certificates for all
shares of Stock held under the Plan for the account of Participants. The
termination of this Plan shall not affect the current Options already
outstanding under the Plan to the extent there are Shares committed, unless the
Participants agree.
9.2 Amendment. The Board of Directors reserves the right to modify, alter
or amend the Plan at any time and from time to time to any extent that it deems
advisable, including, without limiting the generality of the foregoing, any
amendment deemed necessary to ensure compliance of the Plan with Section 423 of
the Code. The Board of Directors may suspend operation of the Plan for any
period as it may deem advisable. However, no amendment or suspension shall
operate to reduce any amounts previously allocated to a Participant's payroll
deduction account, to reduce a Participant's rights with respect to shares of
Stock previously purchased and held on his behalf under the Plan nor to affect
the current Option a Participant already has outstanding under the Plan without
the Participant's agreement. Any amendment changing the aggregate number of
Shares to be committed to the Plan or the class of employees eligible to receive
Options under the Plan must have shareholder approval as set forth in Section
1.4.
ARTICLE 10
MISCELLANEOUS
10.1 Designation of Beneficiary.
(a) A Participant may file a written designation of a Beneficiary who
is to receive any cash and Shares credited to the Participant's account
under the Plan. If a Participant is married and the designated Beneficiary
is not the Participant's spouse, written spousal consent shall be required
for the designation to be effective.
(b) A Participant may change his designation of a Beneficiary at any
time by written notice. If a Participant dies when he has not validly
designated a Beneficiary under the Plan, the Company shall deliver such
Shares and cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver
such Shares and cash to the spouse or to any one or more dependents or
relatives of the Participant, or if no spouse, dependent or relative is
known to the Company, then to such other person as the Company may
designate.
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10.2 Plan Not An Employment Contract. The adoption and maintenance of
this Plan is not a contract between the Employer and its Employees which gives
any Employee the right to be retained in its employment. Likewise, it is not
intended to interfere with the rights of the Employer to discharge any Employee
at any time or to interfere with the Employee's right to terminate his
employment at any time.
10.3 All Participants' Rights Are Equal. All Participants will have the
same rights and privileges under this Plan as are required by section 423 of the
Code and section 1.423-2(f) of the regulations promulgated under that section of
the Code.
10.4 Options Granted Are Not Transferable. No Option granted a
Participant under this Plan is transferable by the Participant and must be
exercisable only by him. In the event any Participant attempts to violate the
terms of this Section, any Option held by the Participant shall be terminated by
the Company and upon return to the Participant of the remaining funds in his
payroll deduction account, all of his rights under the Plan will terminate.
10.5 Voting of Stock. Shares of Stock held under the Plan for the account
of each Participant shall be voted by the holder of record of those shares in
accordance with the Participant's instructions.
10.6 No Shareholder Rights. No eligible Employee or Participant shall by
reason of participation in the Plan have any rights of a shareholder of the
Company until he acquires shares of Stock as provided in this Plan.
10.7 Governmental Regulations. The obligation to sell or deliver the
shares of Stock under this Plan is subject to the approval of all governmental
authorities required in connection with the authorization, purchase, issuance or
sale of that Stock.
10.8 Notices. All notices and other communication in connection with the
Plan shall be in the form specified by the Committee and shall be deemed to have
been duly given when sent to the Participant at his last known address or to his
designated personal representative or beneficiary, or to the Employer or its
designated representative, as the case may be.
10.9 Indemnification of Committee. In addition to all other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection with the
Plan or any Option granted under the Plan, and against all amounts paid in
settlement (provided the settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
action, suit or proceeding, except in relation to matters as to which it is
adjudged in the action, suit or proceeding, that the Committee member is liable
for gross negligence or willful misconduct in the performance of his duties.
10.10 Tax Withholding. At the time a Participant's Option is exercised or
at the time a Participant disposes of some or all of the Stock purchased under
the Plan, the Participant must make adequate provision for the Employer's
federal, state or other tax withholding obligations, if any, which arise upon
the exercise of the Option or the disposition of the Stock. At any time, the
Employer may, but shall not be obligated to, withhold from the Participant's
compensation the amount necessary for the Employer to meet applicable
withholding obligations.
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The IRS recently issued guidance providing that it will not require the
withholding or payment of FICA or FUTA taxes or withholding for Federal income
taxes at the time a participant's Options are exercised or at the time a
participant disposes of some or all of the Stock purchased under the Plan prior
to January 1, 2003. The IRS stated that further guidance regarding withholding
may be issued effective January 1, 2003 in which it may require the withholding
and payment of FICA, FUTA, and Federal income taxes upon an exercise or
disposition made on or after that date.
10.11 Gender and Number. If the context requires it, words of one gender
when used in this Plan shall include the other genders, and words used in the
singular or plural shall include the other.
10.12 Severability. Each provision of this Plan may be severed. If any
provision is determined to be invalid or unenforceable, that determination shall
not affect the validity or enforceability of any other provision.
10.13 Governing Law; Parties to Legal Actions. The provisions of this
Plan shall be construed, administered, and governed under the laws of the State
of Texas and, to the extent applicable, by the securities, tax, employment and
other laws of the United States which are applicable to an employee stock
purchase plan.
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EXHIBIT C
EOG RESOURCES, INC.
EXECUTIVE OFFICER ANNUAL BONUS PLAN
I. Purpose of the Plan. The Executive Officer Annual Bonus Plan (the "Plan)
of EOG Resources, Inc. (the "Company") is designed to enhance the
Company's ability to attract and retain highly qualified executives and
provide additional financial incentives to such executives to promote the
success of the Company.
II. Eligibility. Eligibility under this Plan is limited to Executive Officers
of the Company, as defined in Section 16 of the Securities Exchange Act of
1934, as amended, who shall hereinafter be referred to as Participants.
III. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors comprised solely of two or more
outside directors (the "Committee") and shall operate on the basis of the
calendar year. The Committee is authorized to interpret the Plan and from
time to time may adopt such rules, regulations, definitions and forms
consistent with the provisions of the Plan as it may deem advisable to
carry out the Plan.
IV. Performance Goal. Bonuses paid under the Plan are intended to constitute
qualified performance-based compensation for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended. The performance goal
necessary for the payment of bonuses under the Plan will be the
achievement of positive Net Income Available to Common, excluding
nonrecurring or extraordinary items, as reported in the Company's year-end
earnings release. The Committee will certify in writing prior to payment
of any bonuses under the Plan that the performance goal was met.
V. Maximum Individual Bonus. In no event shall a bonus paid pursuant to the
Plan to any Participant for any calendar year be in excess of $2.0
million. The Committee may reduce the bonus payable to any Participant
below the maximum amount based on such objective or subjective criteria as
the Committee deems appropriate in its sole and absolute discretion.
VI. Unfunded Nature of Plan. The Plan shall constitute an unfunded, unsecured
obligation of the Company to make bonus payments from its general assets
in accordance with the provisions of the Plan. The establishment of the
Plan shall not be deemed to create a trust. No participant shall have any
security or other interest in any assets of the Company.
VII. Prohibition Against Assignment or Encumbrance. No right, title, interest
or benefit hereunder shall ever be liable for or charged with any of the
torts or obligations of a Participant, or be subject to seizure by any
creditor of a Participant or any person claiming under a Participant. No
Participant nor any person claiming under a Participant shall have the
power to sell, transfer, pledge, anticipate or dispose of any right,
title, interest or benefit hereunder in any manner until the same shall
have been actually distributed free and clear of the terms of the Plan.
VIII. Plan Not an Employment Contract. Nothing in the adoption or
implementation of the Plan shall confer on any Participant any right to
continued employment by the Company or affect in any way the right of the
Company to terminate a Participant's employment.
IX. Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall not
affect the remaining parts of the Plan, but the Plan shall be construed
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and enforced as if the illegal or invalid provision had never been
inserted, and the Company shall have the privilege and opportunity to
correct and remedy such questions of illegality or invalidity by amendment
as provided in the Plan.
X. Withholding of Taxes. The Company shall have the right to deduct from any
payment made under the Plan any federal, state or local taxes required by
law to be withheld with respect to such payments.
XI. Applicable Law. The Plan shall be governed and construed in accordance
with the laws of the State of Texas, except to the extent such laws are
preempted by an applicable federal law.
XII. Rights of Company. Nothing contained in the Plan shall prevent the
Company from adopting or continuing in effect other compensation
arrangements, which arrangements may be either generally applicable or
applicable only in specific cases.
XIII. Effective Date and Term of Plan. Upon approval by the shareholders of the
Company at the 2001 Annual Meeting of Shareholders, the Plan shall be
considered effective as of January 1, 2001. The term of the Plan shall be
ten years.
XIV. Amendment and Termination of the Plan. The Committee may modify or
terminate the Plan at any time without prior notice to or consent of
Participants; provided that, without the approval of the shareholders of
the Company, no such amendment shall be made that would change the class
of Employees eligible to receive awards under the Plan, increase the
maximum individual bonus allowed under the Plan, change the stated
performance goal, or modify any other material terms of the Plan.
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[EOG RESOURCES LOGO]
EOG RESOURCES, INC.