SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
Anadarko Petroleum Corp.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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(ANADARKO LOGO)
P.O. BOX 1330
HOUSTON, TEXAS 77251-1330
March 24, 2003
To THE STOCKHOLDERS:
The 2003 Annual Meeting of Stockholders of Anadarko Petroleum Corporation
will be held at The Woodlands Waterway Marriott Hotel and Convention Center,
1601 Lake Robbins Drive, The Woodlands, Texas, on Thursday, April 24, 2003, at
8:00 a.m. (CDT). At the meeting, the holders of the Company's outstanding common
stock will act on the following matters:
(1) Electing four directors; and
(2) Transacting any other business as may properly be brought before the
meeting and any adjournments or postponements thereof.
The format of the Annual Meeting will be a departure from our past practice
of providing a management presentation. The Annual Meeting will be a
business-only meeting. There will be no management review presentation.
We value your opinions and encourage you to participate in this year's
Annual Meeting by voting your proxy. You may vote either by Internet or
telephone using the instructions on the proxy card or by signing and returning
your proxy card in the enclosed envelope.
Very truly yours,
/s/ JOHN N. SEITZ
JOHN N. SEITZ
President and Chief Executive
Officer
(ANADARKO LOGO)
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Anadarko Petroleum Corporation will
be held at The Woodlands Waterway Marriott Hotel and Convention Center, 1601
Lake Robbins Drive, The Woodlands, Texas, on Thursday, April 24, 2003, at 8:00
a.m. (CDT) for the purpose of:
(1) Electing four directors; and
(2) Transacting any other business as may properly be brought before the
meeting and any adjournments or postponements thereof.
RECORD DATE
March 5, 2003, has been fixed as the record date. If you are a record
holder of common stock at the close of business on the record date, then you are
entitled to receive notice of and to vote at the Annual Meeting.
Please take the time to vote by following the Internet or telephone voting
instructions on the enclosed proxy card or by completing and mailing the proxy
card. A postage-prepaid envelope has been provided for your convenience if you
wish to vote by mail. You may revoke your proxy at any time before the vote is
taken by sending to the Corporate Secretary of Anadarko a proxy with a later
date or voting again by Internet or telephone. Alternatively, you may revoke
your proxy by delivering to the Corporate Secretary of Anadarko a written
revocation prior to the Annual Meeting or by voting in person at the Annual
Meeting.
REGARDLESS OF THE NUMBER OF ANADARKO COMMON STOCK SHARES YOU HOLD, YOUR
VOTE IS VERY IMPORTANT.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SUZANNE SUTER
SUZANNE SUTER
Vice President, Corporate Secretary
and Chief Governance Officer
Dated: March 24, 2003
The Woodlands, Texas
[ANADARKO LOGO]
P.O. BOX 1330
HOUSTON, TEXAS 77251-1330
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 24, 2003
YOUR VOTE IS VERY IMPORTANT. Please take the time to vote by following the
Internet or telephone voting instructions on the enclosed proxy card or by
completing and mailing the proxy card. A postage-prepaid envelope has been
provided for your convenience if you wish to vote by mail.
If you vote by mail and your proxy card is returned unsigned, then your
vote cannot be counted. If you vote by mail and the returned proxy card is
signed and dated without indicating how you want to vote, then your proxy will
be voted as recommended by the Board of Directors.
REVOKING YOUR PROXY
You may revoke your proxy at any time prior to the meeting by:
- sending a written statement to the Corporate Secretary of the Company;
- submitting a valid proxy with a later date either by Internet, by
telephone or in writing; or
- voting in person at the Annual Meeting.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
Number of Shares Outstanding. At the close of business on the record date,
March 5, 2003, there were 248,925,339 shares of common stock outstanding, which
are entitled to vote at the meeting.
Quorum. A quorum is present if at least a majority of the outstanding
shares of common stock on the record date is present in person or by proxy.
Vote Required. A plurality of the votes cast is required for the election
of directors. This means that the four director nominees with the most votes are
elected. Only votes "for" or "against" affect the outcome. Abstentions are not
counted for purposes of the election of directors.
Under New York Stock Exchange rules, if you are a beneficial owner and your
broker holds your shares in its name, the broker is permitted to vote your
shares on the election of directors even if the broker does not receive voting
instructions from you.
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ANADARKO BOARD OF DIRECTORS
STRUCTURE
The Board of Directors for Anadarko Petroleum Corporation (the "Company")
is divided into three classes of directors for purposes of election. One class
of directors is elected at each Annual Meeting of stockholders to serve for a
three-year term.
At the 2003 meeting, the terms of four directors are expiring. Each
director elected at this Annual Meeting will hold office until the expiration of
his term in 2006. Those directors not up for election this year will continue in
office for the remainder of their terms.
If a nominee is unavailable for election, then the proxies will be voted
for the election of another nominee proposed by the Board or, as an alternative,
the Board may reduce the number of directors to be elected at the meeting.
ITEM 1 -- ELECTION OF DIRECTORS
DIRECTORS NOMINATED THIS YEAR FOR TERMS EXPIRING IN 2006
Conrad P. Albert (57) -- Mr. Albert resides in Bedford, New York and has
been engaged in private investments since 1991. From 1983 to 1991, Mr. Albert
served as Executive Vice President with Manufacturers Hanover Trust Company, a
banking corporation, located in New York, New York. He was a director of Deep
Tech International from February 1992 until August 1998. Mr. Albert has been a
director of the Company since 1986.
Robert J. Allison, Jr. (64) -- Mr. Allison has been Chairman of the Board
since 1986 and a director since 1985. He was also Chief Executive Officer of the
Company from 1986 until his resignation from that position in January 2002.
Since 2001, Mr. Allison has also been a director of Freeport-McMoRan Copper and
Gold Inc., located in New Orleans, Louisiana.
John W. Poduska, Sr. (65) -- Mr. Poduska resides in Boston, Massachusetts.
He is a retired business executive. Mr. Poduska was Chairman of Advanced Visual
Systems, Inc., a provider of visualization software from 1992 until 2002. Mr.
Poduska is a director of Novell, Inc. and Safeguard Scientific, Inc. He was a
director of Union Pacific Resources Group Inc. ("UPRG") from 1995 until 2000.
Mr. Poduska has been a director of the Company since 2000.
John N. Seitz (52) -- Mr. Seitz was elected Chief Executive Officer of the
Company in January 2002. He has been President and Chief Operating Officer of
the Company since 1999. He was named Executive Vice President, Exploration and
Production of the Company in 1997. He was elected Senior Vice President,
Exploration in 1995. He has worked for the Company since 1977. Mr. Seitz has
been a director of the Company since 1997.
DIRECTORS WITH TERMS EXPIRING IN 2004
Larry Barcus (65) -- Since 1990, Mr. Barcus has served as Chairman of L.G.
Barcus and Sons, Inc., a general contractor, located in Kansas City, Kansas with
operations nationwide. He has also served as Chairman of First Community
Bancshares and Chairman of First Community Bank since 1995. Mr. Barcus has been
a director of the Company since 1986.
James L. Bryan (67) -- Since 1999, Mr. Bryan has been Executive Vice
President of Newpark Drilling Fluids, Inc., an oilfield services firm
headquartered in Houston, Texas. He retired as Senior Vice President of Dresser
Industries, Inc. in 1998. He had been a Vice President of Dresser since 1990.
Mr. Bryan has been a director of the Company since 1986.
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DIRECTORS WITH TERMS EXPIRING IN 2005
Ronald Brown (70) -- Mr. Brown resides in Naples, Florida. He retired as
Executive Vice President from Compass Bank in 1992. Mr. Brown has been a
director of the Company since 1986.
John R. Butler, Jr. (64) -- Since 1976, Mr. Butler has been Chairman of
J.R. Butler and Company, a reservoir engineering company located in Houston,
Texas. He was Chairman and Chief Executive Officer of GeoQuest International
Holdings, Inc., Senior Chairman of Petroleum Information Corp. and Vice Chairman
of Petroleum Information/Dwights, L.L.C. until 1997. He was also Chairman of the
Society of Exploration Geophysicists Foundation until December 2001. Mr. Butler
is also a director of Kelman Technology, Inc. of Calgary, Alberta, Canada, a
Toronto Stock Exchange Company. Mr. Butler has been a director of the Company
since 1996.
Preston M. Geren III (51) -- Since 2001, Mr. Geren has been a Senior
Executive with the Department of Defense. He had been an Attorney in Fort Worth,
Texas since 1998. From January 1997 through August 1998, he was a management
consultant for Public Strategies, Inc. He was a U.S. Congressman for the Twelfth
Congressional District of Texas from 1989 to 1997. He is also a director of
Cullen Frost Bankers, Inc. He was a director of UPRG from 1997 until 2000. Mr.
Geren has been a director of the Company since 2000.
John R. Gordon (55) -- Mr. Gordon is Senior Managing Director of Deltec
Asset Management LLC, an investment firm located in New York, New York. He had
been President of Deltec Securities Corporation since 1988 until it was
converted into Deltec Asset Management LLC. Mr. Gordon has been a director of
the Company since 1988.
CORPORATE GOVERNANCE
The Company has always taken the issue of corporate governance seriously.
The Board has been comprised of a majority of independent directors since the
Company became an independent company in 1986. The Audit Committee and the
Compensation and Benefits Committee have each been comprised entirely of
independent directors since their inception. As a result of the proposed New
York Stock Exchange ("NYSE") rules, the Board appointed an independent
Nominating and Corporate Governance Committee and has adopted written charters
for all three independent committees that provide, among other things, for an
annual self-evaluation. In addition, the Board has adopted (1) a Code of
Business Conduct and Ethics, (2) a Code of Ethics for the Chief Executive
Officer, Chief Financial Officer and Chief Accounting Officer, and (3) Corporate
Governance Guidelines. These documents are included as appendices to this proxy
statement. The documents can also be found on the Company's website at
www.anadarko.com. An Anonymous Reporting Hotline has been established to
facilitate reporting of violations of financial and non-financial policies.
BOARD OF DIRECTORS
The Board of Directors has ten members. The Board, on the recommendation of
the Nominating and Corporate Governance Committee, has determined that Messrs.
Albert, Barcus, Brown, Bryan, Butler, Geren, Gordon, and Poduska are independent
directors as defined under the Company's Corporate Governance Guidelines. These
directors are also referred to as non-management directors. See page 7 for a
summary of the Corporate Governance Guidelines. Messrs. Allison and Seitz are
management directors.
The Board met six times in 2002. All of the directors attended all of the
Board meetings held in 2002.
DIRECTORS' CONTINUING EDUCATION
In March 2003, Messrs. Allison, Bryan, Butler and Seitz attended a seminar
on the "Role of the Board in Risk Oversight: Board Leadership for Turbulent
Times" that was sponsored by the National Association of Corporate Directors.
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During 2003, the Company will provide the directors with an education
program on the duties and responsibilities of directors. If a director has not
attended a director seminar prior to the time of the education program, then the
director will be expected to attend the program provided by the Company.
PRESIDING DIRECTOR AT THE NON-MANAGEMENT DIRECTORS' EXECUTIVE SESSIONS
The non-management directors meet in executive session immediately after
each regularly scheduled quarterly meeting of the Board of Directors. Mr. Gordon
has been elected to preside at these executive sessions. He may be contacted at
anadarkodirector@apcdirector.com or at Anadarko Petroleum Corporation, Presiding
Director, P.O. Box 9178, The Woodlands, Texas 77387-9178.
TRANSACTIONS WITH ENTITIES CONNECTED TO DIRECTORS
The Company purchases drilling fluids from several companies including
Newpark Drilling Fluids, Inc. ("Newpark"), a subsidiary of Newpark Resources,
Inc. In 2002, the Company paid Newpark and its affiliates and subsidiaries
approximately $10 million. This amount is approximately 3% of Newpark Resources,
Inc.'s 2001 revenues, or approximately 5% of the 2001 revenues attributable to
fluids sales and the engineering segment, reported in the Newpark Resources,
Inc. Form 10-K for the year ended December 31, 2001. The amount paid to Newpark
in 2002 includes amounts paid by Howell Corporation, which the Company acquired
in December 2002. Mr. Bryan, a director of the Company, is Executive Vice
President of Newpark. His position with Newpark is not the result of his
position on the Company's Board of Directors. He receives no compensation from
Newpark based on the business relationship between the Company and Newpark. He
does not hold 5% or more of any outstanding securities of Newpark Resources,
Inc. The Board has determined that Mr. Bryan is an independent director and that
his position with Newpark does not cause a conflict of interest.
DIRECTOR COMPENSATION
Non-management directors of the Company receive compensation for Board and
committee service. Management directors of the Company receive no compensation
for their service on the Board. The principal components of director
compensation, which a director may elect to receive in cash, common stock or a
combination of both, are as follows:
(1) an annual Board retainer of $50,000;
(2) a fee of $1,250 for each Board or committee meeting attended, plus
expenses related to attendance;
(3) an annual committee membership retainer of $3,000; and
(4) an additional annual committee retainer of $3,000 for serving as
committee chair.
1998 Director Stock Plan. Under the 1998 Director Stock Plan, the
directors may grant stock-based awards to non-management directors. The
following grants were made in 2002 and 2003 under the 1998 Director Stock Plan:
- On July 29, 2002, the directors granted each non-management director an
option to purchase 5,000 shares of common stock. The option price is the
fair market value on the date of grant. The options will vest 50% one
year from the date of grant, and the remaining 50% will vest two years
from the date of grant. The options granted will expire 10 years from the
date of grant.
- On January 30, 2003, the Board made a deferred stock grant equal to
$14,500 to each non-management director. The deferred stock will be
distributed in shares when the director terminates. Directors will
receive dividends on and will be entitled to vote the deferred stock.
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COMMITTEES OF THE BOARD
The Board of Directors has five committees. The Audit Committee, the
Compensation and Benefits Committee, and the Nominating and Corporate Governance
Committee are independent committees. The CEO Advisory Committee and the
Executive Committee have both independent and management directors as members.
In order for a committee to be independent, all of the members of the committee
shall be independent as determined by the Board in accordance with the Company's
Corporate Governance Guidelines.
AUDIT COMMITTEE
The Board elected Messrs. Albert, Barcus and Butler as members of the Audit
Committee in April 2002. The Board elected Mr. Brown as a member of the Audit
Committee in July 2002. The Board elected Mr. Butler as chairman of the Audit
Committee in April 2002. During 2002, the Audit Committee held 10 meetings. Each
committee member attended all of the 2002 meetings for the period that he was a
member of the Audit Committee.
The purpose of the Audit Committee is to assist the Board in monitoring:
- the integrity of the Company's financial statements;
- compliance by the Company with legal and regulatory requirements;
- the independent auditor's qualifications and independence;
- the performance of the Company's internal and independent auditors; and
- the business practices and ethical standards of the Company.
The Audit Committee is also directly responsible for the appointment,
compensation, retention and oversight of the work of the Company's independent
auditor, KPMG LLP, and the preparation of the Audit Committee report, which is
on page 11.
All of the members meet the independence requirements of the NYSE, the
Sarbanes-Oxley Act and the rules of the Securities and Exchange Commission
("SEC") adopted thereunder, and the Company's Corporate Governance Guidelines.
A copy of the Audit Committee charter that has been approved by the Audit
Committee and the Board of Directors is attached to this proxy statement as
Appendix A.
COMPENSATION AND BENEFITS COMMITTEE
The Board appointed Messrs. Brown, Bryan, Geren, Gordon and Poduska as
members of the Compensation and Benefits Committee in April 2002. In July 2002,
the Board moved Mr. Brown from the Compensation and Benefits Committee to the
Audit Committee. Mr. Poduska was elected as chairman of the Compensation and
Benefits Committee in April 2002. During 2002, the Compensation and Benefits
Committee met six times. All but one Committee member attended all of the 2002
meetings during the period that he was a member of the Compensation and Benefits
Committee. That Committee member missed two of the 2002 meetings. All of the
Committee members meet the independence requirements of the NYSE, the
Sarbanes-Oxley Act and the SEC's rules adopted thereunder, and the Company's
Corporate Governance Guidelines.
The Compensation and Benefits Committee has overall responsibility for
approving and evaluating the director and executive officer compensation plans,
policies and programs of the Company. The Compensation and Benefits Committee is
also responsible for producing the annual report on executive compensation,
which is on page 12.
A copy of the Compensation and Benefits Committee charter that has been
approved by the Compensation and Benefits Committee and the Board of Directors
is attached to this proxy statement as Appendix B.
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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
In July 2002, the Board appointed Messrs. Albert, Barcus, Bryan, Geren and
Gordon as members of the Nominating and Corporate Governance Committee. The
Board elected Mr. Bryan as chairman of the Nominating and Corporate Governance
Committee in July 2002. The Nominating and Corporate Governance Committee held
its first meeting in January 2003. All of the Committee members attended the
initial meeting. All of the members meet the independence requirements of the
NYSE, the Sarbanes-Oxley Act and the SEC's rules adopted thereunder, and the
Company's Corporate Governance Guidelines.
The purpose of the Nominating and Corporate Governance Committee is to:
- assist the Board in identifying qualified individuals to become
directors;
- recommend to the Board qualified director nominees for election at the
stockholders' annual meeting;
- determine membership on the Board committees;
- recommend the Corporate Governance Guidelines;
- conduct annual self-evaluations of the Board and the Nominating and
Corporate Governance Committee; and
- report annually to the Board on the Chief Executive Officer succession
plan.
At its first meeting, the Nominating and Corporate Governance Committee
conducted a review of the Board of Directors as a whole, as well as each
individual Board member who was being considered for re-election. The Nominating
and Corporate Governance Committee reviewed the composition of the Board,
including each director's independence, relevant experience and skills, length
of Board service, service on other public company boards, attendance at Board
and committee meetings and participation at Board and committee meetings. Based
on this review the Nominating and Corporate Governance Committee recommended to
the Board that Messrs. Albert, Allison, Poduska and Seitz be nominated for
re-election to the Board.
The Nominating and Corporate Governance Committee also reviewed and
recommended to the Board approval of the Nominating and Corporate Governance
Committee charter, the Corporate Governance Guidelines and the Code of Business
Conduct and Ethics. The Nominating and Corporate Governance Committee reviewed
procedures for investigating calls received by the Company's Anonymous Reporting
Hotline and for handling reports of conflicts of interest under the Code of
Business Conduct and Ethics.
A copy of the Nominating and Corporate Governance Committee charter that
has been approved by the Nominating and Corporate Governance Committee and the
Board of Directors is attached to this proxy statement as Appendix C.
CEO ADVISORY COMMITTEE
In July 2002, the Board established the CEO Advisory Committee. This
Committee is not an independent committee. Mr. Allison is an officer of the
Company and is a member of this Committee. The other members of the CEO Advisory
Committee are Messrs. Butler, Gordon, and Poduska. Mr. Gordon was appointed
chairman of the CEO Advisory Committee by the Board at the July 2002 meeting.
The purpose of the CEO Advisory Committee is to provide advice, guidance, and
feedback to the Company's CEO. During 2002, the CEO Advisory Committee met
twice. Each Committee member attended all of the meetings during the period that
he was a member of the CEO Advisory Committee.
EXECUTIVE COMMITTEE
This Committee is not an independent committee. Messrs. Allison and Seitz
are both officers of the Company and are members of this Committee. The other
members of the Executive Committee are Messrs. Brown, Bryan, and Butler. Mr.
Allison is the chairman of the Executive Committee. The
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Company's bylaws provide for an Executive Committee to act with the power and
authority of the Board in the management of the business and affairs of the
Company while the Board is not in session. Meetings of this Committee have
generally been held to approve specific terms of financing transactions that
have previously been approved by the Board. During 2002, the Executive Committee
met four times. Each Committee member attended all of the meetings during the
period that he was a member of the Executive Committee except for Mr. Seitz. Mr.
Seitz attended two of the meetings held in 2002.
ANNUAL SELF-EVALUATIONS
The Nominating and Corporate Governance Committee shall have responsibility
for conducting and overseeing the annual self-evaluation for the Board and
reporting the self-evaluation results to the Board following the end of each
fiscal year. The Nominating and Corporate Governance Committee, the Audit
Committee, and the Compensation and Benefits Committee shall each conduct its
own annual self-evaluation.
GUIDELINES AND CODES
CORPORATE GOVERNANCE GUIDELINES
The Board adopted Corporate Governance Guidelines (the "Guidelines") on the
recommendation of the Nominating and Corporate Governance Committee. Under the
Guidelines, the Board or a Board committee must perform the following functions:
- Oversee the conduct of the Company's business to evaluate whether the
business is being properly managed.
- Review and, where appropriate, approve the Company's major financial
objectives, plans and actions.
- Review and, where appropriate, approve major changes in, and
determinations of other major issues respecting the appropriate auditing
and accounting principles and practices to be used in the preparation of
the Company's financial statements.
- Assess major risk factors relating to the Company and its performance,
and review measures to address and mitigate such risks.
- Evaluate regularly the performance and approve the compensation of the
CEO and, with the advice of the CEO, evaluate regularly the performance
of principal senior executives.
- Plan for succession of the CEO and monitor management's succession
planning for other key executives.
The Guidelines provide that an individual director should offer his or her
resignation in the event the director's principal occupation or business
association changes substantially from the position the director held when
originally invited to join the Board. Also, a director should tender a
resignation in the event there is a substantial conflict of interest between the
director and the Company or the Board and such conflict cannot be resolved to
the satisfaction of the Board. A director is required to retire on the last day
of the calendar year in which he or she reaches 70 years of age.
The Guidelines provide that a director is deemed to be independent if he or
she does not have a direct or indirect material relationship with the Company or
any of its affiliates or with any senior management member of the Company or any
of its affiliates. A director will not be deemed independent if, within the past
five years, he or she or a family member has been employed by the Company or its
affiliates or employed by the Company's or any of its affiliates' independent
auditor. A director that has a relationship with a significant customer of or
supplier to the Company of nonprofessional services and goods shall not be
deemed to be independent. Also, a director that has a significant relationship
with a paid adviser, consultant or other provider of professional services to
the Company or to any senior management member will not be deemed to be
independent.
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Based on the independence standards in the Guidelines, the Board has
determined that each non-management director is independent. The Board also
determined that each member of the Audit, the Compensation and Benefits, and the
Nominating and Corporate Governance Committees is independent. Messrs. Allison
and Seitz are not considered independent directors due to the positions they
hold with the Company.
A copy of the Corporate Governance Guidelines that has been adopted by the
Board of Directors is attached to this proxy statement as Appendix D.
CODE OF BUSINESS CONDUCT AND ETHICS FOR ALL DIRECTORS, OFFICERS AND EMPLOYEES
The Board has adopted a Code of Business Conduct and Ethics for all
directors, officers and employees. It is the responsibility of every Company
director, officer and employee to maintain a commitment to high standards of
conduct and ethics. It is the intent of the Code of Business Conduct and Ethics
to inspire continuing dedication to the fundamental principles of honesty,
loyalty, fairness and forthrightness. There shall be no waiver of any part of
this Code for any director or officer except by a vote of the Board of Directors
or a designated Board committee that shall ascertain whether a waiver is
appropriate under all the circumstances. In case a waiver of this Code is
granted to a director or officer, the notice of such waiver shall be posted on
the Company's website at www.anadarko.com.
A copy of the Code of Business Conduct and Ethics that has been adopted by
the Board of Directors is attached to this proxy statement as Appendix E and is
available on the Company's website at www.anadarko.com.
CODE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND
CHIEF ACCOUNTING OFFICER
The Board has also adopted a separate Code of Ethics for the Chief
Executive Officer, Chief Financial Officer and Chief Accounting Officer ("Senior
Officers' Code"). Each of the covered officers has to certify on an annual basis
that the officer shall:
- Act with honesty and integrity, avoiding actual or apparent conflicts of
interest in personal and professional relationships.
- Provide constituents with information that is accurate, complete,
objective, relevant, timely and understandable.
- Comply with all applicable laws, rules and regulations of federal, state
and local governments, and other appropriate private and public
regulatory agencies.
- Act in good faith, responsibly, with due care, competence and diligence,
without misrepresenting material facts or allowing the officer's
independent judgment to be subordinated.
- Respect the confidentiality of information acquired in the course of
business except when authorized or otherwise legally obligated to
disclose the information, acknowledging that confidential information
acquired in the course of business is not to be used for personal
advantage.
- Proactively promote ethical behavior among employees at the Company and
as a responsible partner with industry peers and associates.
- Maintain control over and responsibly manage all assets and resources
employed or entrusted to the officer by the Company.
- Report illegal or unethical conduct by any director, officer or employee
that has occurred, is occurring or may occur, including any potential
violations of the Senior Officers' Code or the Code of Business Conduct
and Ethics.
There shall be no waiver of any part of the Senior Officers' Code except by
a vote of the Board of Directors or a designated Board committee that shall
ascertain whether a waiver is appropriate under all
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the circumstances. In case a waiver of the Senior Officers' Code is granted, the
notice of such waiver shall be posted on the Company's website at
www.anadarko.com.
A copy of the Senior Officers' Code that has been adopted by the Board of
Directors is attached to this proxy statement as Appendix F and is available on
the Company's website at www.anadarko.com.
ANONYMOUS REPORTING HOTLINE
To facilitate the reporting of violations of financial and/or non-financial
policies, Anadarko has established an Anonymous Reporting Hotline ("Hotline").
Any concerns regarding accounting, internal accounting controls, auditing or
other disclosure matters reported on the Hotline shall be reported to the
Chairman of the Audit Committee, the Chief Governance Officer, the General
Counsel, the Chief Financial Officer, the Chief Accounting Officer and the
manager of Corporate Audit. Any concerns regarding non-financial matters
reported on the Hotline shall be reported to the Chairman of the Nominating and
Corporate Governance Committee, the Chief Governance Officer, the General
Counsel and two applicable Vice Presidents.
These reports are confidential and anonymous. Procedures are in place to
investigate all reports received by the Hotline, and to take any corrective
action, if necessary. The Board shall be notified of these reports at every
quarterly Board meeting or sooner if necessary.
NO RETALIATION FOR REPORTING
There shall be no retaliation against any director, officer or employee for
any report made in good faith. However, if the reporting individual was involved
in improper activity the individual may be appropriately disciplined even if he
or she was the one who disclosed the matter to the Company. In these
circumstances, the Company may consider the conduct of the reporting individual
in promptly reporting the information as a mitigating factor in any disciplinary
decision.
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STOCK OWNERSHIP
As of March 5, 2003, there were 248,925,339 shares of Anadarko common stock
outstanding which are entitled to vote at the meeting. Each share of common
stock is entitled to one vote. The information provided below summarizes the
beneficial ownership of officers and directors of the Company and owners of more
than 5% of outstanding common stock. In general, "beneficial ownership" includes
those shares of common stock someone has the power to vote, sell or acquire
within 60 days. It includes common stock that is held directly and also shares
held indirectly through a relationship, a position as a trustee or under a
contract or understanding.
DIRECTORS AND EXECUTIVE OFFICERS
On February 28, 2003, the directors and executive officers of the Company
beneficially owned, in the aggregate, 7,762,907 shares of Anadarko common stock
(approximately 3% of the outstanding shares entitled to vote). Mr. Allison is
the only director, nominee for director or officer of the Company who owns or
has the right to acquire more than 1% of the outstanding common stock.
<Table>
<Caption>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------
SHARES
NUMBER OF SHARES EXERCISABLE TOTAL
BENEFICIALLY WITHIN BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNED(1) 60 DAYS OWNERSHIP OF CLASS
- ------------------------ ---------------- ----------- ---------- --------
Robert J. Allison, Jr. ....................... 528,512 2,195,000 2,723,512 1%
John N. Seitz................................. 205,846 1,028,000 1,233,846 *
Michael E. Rose............................... 69,276 150,000 219,276 *
Charles G. Manley............................. 129,974 486,000 615,974 *
William D. Sullivan........................... 103,059 0 103,059 *
Conrad P. Albert(2)........................... 53,364 52,480 105,844 *
Larry Barcus.................................. 40,665 67,500 108,165 *
Ronald Brown.................................. 21,105 62,500 83,605 *
James L. Bryan................................ 40,775 67,500 108,275 *
John R. Butler, Jr. .......................... 26,062 47,500 73,562 *
Preston M. Geren III.......................... 6,515 33,299 39,814 *
John R. Gordon................................ 43,366 67,500 110,866 *
John W. Poduska, Sr. ......................... 14,763 41,262 56,025 *
All directors and executive officers as a
group, (31 persons)......................... 1,912,271 5,850,636 7,762,907 3%
</Table>
- ---------------
* Less than one percent.
(1) This number does not include shares of common stock which the directors or
officers of the Company have the right to acquire within 60 days of February
28, 2003.
(2) Mr. Albert disclaims beneficial ownership of the 11,573 shares held in his
wife's name and his children's names.
OWNERS OF MORE THAN FIVE PERCENT OF ANADARKO STOCK
The Company has not been notified of any beneficial owners of more than 5%
of Anadarko common stock.
10
TOP TEN OWNERS OF ANADARKO STOCK
The following information summarizes the top ten shareholders of Anadarko
common stock as of December 31, 2002:
<Table>
<Caption>
% OF STOCK NUMBER OF
NAME OUTSTANDING SHARES HELD
- ---- ----------- -----------
1. Sonatrach................................................. 4.87% 12,113,679
2. Janus Capital Management LLC.............................. 4.22% 10,500,000
3. Oppenheimer Capital L.P. ................................. 4.02% 10,000,000
4. Fidelity Management & Research............................ 3.12% 7,750,000
5. Barclays Global Investors................................. 3.00% 7,464,000
6. State Street Global Advisors.............................. 2.85% 7,100,000
7. Wellington Management Company, LLP........................ 2.53% 6,300,000
8. J.P. Morgan Investment Mgmt. Inc. ........................ 2.35% 5,850,000
9. PRIMECAP Management Company............................... 1.73% 4,300,000
10. Vanguard Group, Inc. ..................................... 1.69% 4,200,000
</Table>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company
during and with respect to its most recently completed fiscal year, the Company
believes that all transactions by reporting persons during 2002 were reported on
a timely basis. A Form 4 was filed late for one transaction for Mr. Allison that
occurred during the 2001 fiscal year. The Form 4 for the 2001 transaction was
filed in 2002.
AUDIT COMMITTEE REPORT
The following report of the Audit Committee of the Company shall not be
deemed to be "soliciting material" or to be "filed" with the SEC, nor shall this
report be incorporated by reference into any filing made by the Company under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended.
The Audit Committee of the Board is responsible for independent, objective
oversight of the Company's accounting functions and internal controls over
financial reporting. The Audit Committee is composed of four directors, each of
whom is independent as defined by the NYSE listing standards. The Audit
Committee operates under a written charter approved by the Board of Directors.
Management is responsible for the Company's internal controls over
financial reporting. The independent auditor is responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards in the United States of
America and issuing a report thereon. The Audit Committee's responsibility is to
monitor and oversee these processes.
KPMG LLP served as the Company's independent auditor during 2002 and was
appointed by the Audit Committee to serve in that capacity for 2003. KPMG LLP
has served the Company since its initial public offering in 1986.
Representatives of KPMG LLP will be present at the annual stockholders' meeting,
will have the opportunity to make a statement, if so desired, and will be
available to respond to appropriate questions from stockholders.
In connection with these responsibilities, the Audit Committee met with
management and the independent auditor to review and discuss the December 31,
2002 financial statements. The Audit Committee also discussed with the
independent auditor the matters required by Statement on Auditing Standards No.
61 (Communication with Audit Committees).
11
The Audit Committee also received written disclosures from the independent
auditor required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the Audit Committee discussed with the
independent auditor that firm's independence.
The following table presents fees for the audits of the Company's annual
consolidated financial statements for 2002 and 2001 and for other services
provided by KPMG LLP.
<Table>
<Caption>
2002 2001
---------- ----------
Audit Fees.................................................. $1,733,000 $1,425,000
Audit-Related Fees.......................................... $ 141,000 $ 187,000
Tax Fees.................................................... $1,187,000 $ 858,000
All Other Fees.............................................. $ 0 $ 0
</Table>
Audit-related fees are primarily for the Company's benefit plan and other
plan audits. Tax fees are primarily for tax compliance and tax consulting
services. The Audit Committee has concluded that the provision of tax services
is compatible with maintaining KPMG LLP's independence.
Based upon the Audit Committee's review and discussions with management and
the independent auditor, and the Audit Committee's review of the representations
of management and the independent auditor, the Audit Committee recommended that
the Board of Directors include the audited consolidated financial statements in
the Company's Annual Report on Form 10-K for the year ended December 31, 2002,
to be filed with the SEC.
THE AUDIT COMMITTEE
John R. Butler, Jr., Chairman
Conrad P. Albert
Larry Barcus
Ronald Brown
EXECUTIVE COMPENSATION
COMPENSATION AND BENEFITS COMMITTEE REPORT
ON 2002 EXECUTIVE COMPENSATION
The Compensation and Benefits Committee ("Compensation Committee"), listed
on page 5, is responsible for establishing and administering the executive
compensation programs of the Company. This report describes the compensation
decisions made by the Compensation Committee during 2002 with respect to
Anadarko's executive officers.
COMPENSATION PHILOSOPHY OF THE COMPANY
Anadarko's executive compensation programs consist primarily of base
salary, performance-based annual bonus and long-term stock incentive plans which
the Company considers essential to attract, retain and reward key personnel.
Collectively, these programs are designed to promote the strategic objectives
that are critical to the long-term success of the Company.
The Compensation Committee utilizes an independent compensation consultant
to review executive compensation and benefit programs as well as total
compensation levels provided to executive officers. Anadarko's compensation
programs provide executives the opportunity to earn compensation levels within
the top quartile of a select peer group of oil and gas companies, to the extent
that Company and executive performance on a combined and individual basis so
warrants. The peer group consists of energy companies similar in business
operations and comparable in size to Anadarko. Most of these energy companies
are also included in the Dow Jones Oil-Secondary index used for stock price
performance comparison on the Performance Graph on page 18. The Dow Jones
Oil-Secondary index is comprised of specific energy companies representing most
facets of the industry including independent oil and gas companies as well as
those having integrated operations. Not all companies included in the index are
considered comparable to
12
Anadarko with respect to analyzing executive compensation and benefit levels.
This index does, however, provide a meaningful comparison of total stockholder
return against a consistent representation of oil and gas companies with whom
Anadarko competes for investment dollars.
During 2002, Anadarko changed its compensation philosophy to place slightly
more emphasis on annual incentive opportunity and lessen reliance on stock based
programs. The Company believes this change is appropriate given that awards
under the Annual Incentive Plan are based on reserve replacement, cost of
finding and relative total shareholder return measures that are all evaluated
from a long-term perspective. Additionally, Anadarko has maintained aggressive
stock ownership guidelines for its executive group since 1993. Anadarko believes
the program has accomplished the desired objective of requiring our executives
to acquire and maintain, for the duration of their careers, a significant
position in Anadarko stock.
BASE SALARY
Anadarko structures its compensation programs to match pay with
performance. Individual base salaries are determined based on a subjective
evaluation considering peer-company market data, the executive's performance and
the length of time the executive has been in the position. Base compensation is
reviewed annually by the independent compensation consultant and the
Compensation Committee and adjustments, if any, are designed to reflect each
executive officer's contribution to the performance of the Company. In 2002, the
Compensation Committee approved base salary increases for the Company's
officers, including all of the executives named in the Summary Compensation
Table.
ANNUAL INCENTIVE BONUS
The Annual Incentive Plan puts a significant portion of total compensation
at risk by linking potential annual compensation to the Company's achievement of
specific performance goals. These goals are established by the Compensation
Committee at the beginning of each calendar year and for 2002 included:
(1) Operational criteria comparing Anadarko's five-year worldwide
reserve replacement and five-year worldwide cost of finding against
the five-year worldwide reserve replacement and five-year worldwide
cost of finding for a select group of peer companies;
(2) Financial criteria of net income and cash flow, both of which are
measured against internal objectives; and
(3) Stock performance criteria comparing Anadarko's total stockholder
return for a three-year period against the total stockholder return
of a select group of peer companies for the same period.
Each performance goal and its specific criteria are weighted based upon the
relative importance of the goal as determined by the Compensation Committee.
Under the Annual Incentive Plan, a bonus target is established for each
executive officer based upon a review of the competitive data for that position,
level of responsibility and the position's ability to impact the Company's
success. These individual targets range up to 120% of base salary for the Chief
Executive Officer. Actual bonus awards are based on the Company's achievement of
the performance goals and the executive's individual performance. Individuals
may receive up to 200% of their individual bonus target if the Company
significantly exceeds the specified goals and, conversely, no bonus is paid if
the Company does not achieve a minimum threshold level of performance.
Based on the Company's overall performance during 2002 against the
specified operational, financial and stock performance goals, the Compensation
Committee approved a bonus of 150% of individual bonus targets for Mr. Seitz and
the executive officers as reflected in the Summary Compensation Table.
13
STOCK PLANS
The Company makes stock-based awards under the 1999 Stock Incentive Plan to
align the interests of executive officers with those of stockholders. The
Compensation Committee annually reviews competitive market data to determine
appropriate stock awards based on the executive's position and the market value
of the stock. In addition, the Compensation Committee considers target
compensation and previous stock grants when determining grant size for executive
officers. The Compensation Committee typically grants stock options, which only
produce value to the holder through the appreciation of the stock. Periodically,
the Compensation Committee makes awards of restricted stock on a limited basis
to recognize significant key individual contributions and to encourage
retention.
In 2002, Mr. Seitz was elected President and Chief Executive Officer. In
recognition of his election and his expected future contributions to the success
of the Company, the Compensation Committee awarded stock options to Mr. Seitz.
There were no other stock options awarded to any named executive officers.
During 2002, two individuals received stock option grants in recognition of
their election to executive officer positions. The Compensation Committee also
made awards of restricted stock to three named executive officers in recognition
of their contributions and to encourage retention. The number of options granted
to Mr. Seitz, along with special restricted stock awards, are reflected in the
Summary Compensation Table.
SUMMARY
The Compensation Committee believes the design of the Company's total
executive compensation program provides executives the incentive to maximize
long-term operational performance using sound financial controls and high
standards of integrity. It is the Compensation Committee's belief that this
focus will continue to be reflected in Anadarko's operational, financial and
stock price performance. The Compensation Committee also believes that total
compensation for each executive should be commensurate with the achievement of
specific short-term and long-term operational, financial and strategic
objectives. Accordingly, Mr. Seitz's total compensation for 2002 was within the
top quartile of the peer companies as a result of Anadarko's overall
performance.
In designing the Company's compensation programs, the Compensation
Committee's primary consideration is Anadarko's achievement of strategic
business goals that serve to enhance shareholder value. Consideration is also
given to competitive practice, market economics and other factors. Section
162(m) of the Internal Revenue Code, as amended (the "Code"), limits a company's
ability to deduct compensation paid in excess of $1 million during any fiscal
year to the Chief Executive Officer and the next four highest paid officers,
unless the compensation meets shareholder approved performance-based
requirements. Awards under the Annual Incentive Plan and the 1999 Stock
Incentive Plan satisfy the performance-based requirements under section 162(m).
The Compensation Committee is committed to making awards that qualify as
deductible compensation under section 162(m) of the Code whenever possible.
However, where granting awards is consistent with the strategic goals of the
Company, the Compensation Committee reserves the right to make awards that are
non-deductible when it believes it is in the best interest of the Company. As a
result of the Company restructuring the components of the executive compensation
program, some bonus awards paid in 2002 were non-deductible.
THE COMPENSATION AND BENEFITS COMMITTEE
John W. Poduska, Sr., Chairman
James L. Bryan
Preston M. Geren III
John R. Gordon
14
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
ANNUAL COMPENSATION
-------------------------------
OTHER
ANNUAL
COMPEN-
SALARY BONUS SATION
NAME PRINCIPAL POSITION YEAR ($) ($) ($)
- ---- ------------------ ---- --------- --------- -------
Robert J. Allison, Jr. ....... Chairman 2002 1,300,000 975,000 0
Chairman and Chief Executive Officer 2001 1,300,000 1,950,000 0
Chairman and Chief Executive Officer 2000 1,125,000 2,600,000 0
John N. Seitz(3).............. President and Chief Executive Officer 2002 1,000,000 1,980,000 0
President and Chief Operating Officer 2001 800,000 1,080,000 0
President and Chief Operating Officer 2000 639,583 1,440,000 0
Michael E. Rose............... Executive Vice President and CFO 2002 566,667 768,000 0
Executive Vice President, Finance and CFO 2001 500,000 490,000 0
Executive Vice President, Finance and CFO 2000 441,667 650,000 0
Charles G. Manley............. Executive Vice President, Administration 2002 513,333 678,000 0
Executive Vice President, Administration 2001 480,000 470,000 0
Executive Vice President, Administration 2000 423,417 624,000 0
William D. Sullivan........... Executive Vice President, Exploration and
Production 2002 438,333 576,000 0
Executive Vice President, Exploration and
Production 2001 374,167 407,000 81,764
VP Operations -- Int'l, Gulf of Mexico &
Alaska 2000 310,000 380,000 0
<Caption>
LONG-TERM COMPENSATION
---------------------------------
AWARDS
-----------------------
SECURITIES ALL
UNDERLYING OTHER
RESTRICTED OPTIONS/ LTIP COMPEN-
STOCK(1) SARS(2) PAYOUTS SATION
NAME ($) (#) ($) ($)
- ---- ---------- ---------- ------- ---------
Robert J. Allison, Jr. ....... 0 0 0 248,288(4)
0 0 0 294,441
0 750,000 0 1,648,619
John N. Seitz(3).............. 0 500,000 0 135,876(4)
0 0 0 145,970
0 500,000 0 5,668,216
Michael E. Rose............... 1,427,700 0 0 72,971(4)
499,500 0 0 78,952
0 300,000 0 5,019,886
Charles G. Manley............. 1,427,700 0 0 69,175(4)
0 0 0 76,715
0 300,000 0 4,246,151
William D. Sullivan...........
1,427,700 0 0 57,623(4)
0 0 0 52,554
0 175,000 0 1,771,497
</Table>
- ---------------
(1) As of December 31, 2002, Mr. Rose held 35,625 restricted shares valued at
$1,706,438, Mr. Manley held 30,000 restricted shares valued at $1,437,000
and Mr. Sullivan held 30,000 restricted shares valued at $1,437,000 based on
the year-end closing stock price. The restricted stock award to Mr. Rose in
2001 vests 25% per year each April 26 beginning in 2002. The restricted
stock awards to Mr. Rose, Mr. Manley and Mr. Sullivan in 2002 vest 100% on
July 2, 2005. Dividends will be paid on unvested shares.
(2) No SAR's are outstanding.
(3) Mr. Seitz was named President and Chief Executive Officer of the Company in
January 2002.
(4) Includes (a) Company contributions to the Anadarko Employee Savings Plan and
Savings Restoration Plan; (b) payments under the Annual Override Bonus Plan
(no new awards have been made under this plan since 1986) and (c) the full
value of Company paid split-dollar insurance. In early 2003, the Company
terminated the split-dollar life insurance policies. The 2002 amounts for
items (a), (b) and (c) are for Mr. Allison, $195,000, $40,237 and $8,907;
for Mr. Seitz, $124,800, $9,640 and $1,436; for Mr. Rose, $63,400, $7,941
and $1,630; for Mr. Manley, $59,000, $8,127 and $2,048; and for Mr.
Sullivan, $50,720, $6,280, and $623. In addition, Mr. Allison's amount
includes $4,144 attributable to the full annual cost of term life insurance
purchased by the Company for Mr. Allison under the Estate Enhancement Option
Program in exchange for his relinquishment of certain benefits owed him by
the Company.
15
The following table sets forth information concerning individual grants of
stock options made during 2002 to each of the named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS
--------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS/SARS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN PRICE(2) EXPIRATION ---------------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
- ---- ------------- ------------ -------- ---------- ----- ----------- -----------
Robert J. Allison,
Jr. .................. 0 0% n/a n/a $ 0 $ 0 $ 0
John N. Seitz........... 500,000 40% $48.38 07/02/12 $ 0 $15,212,961 $38,552,630
Michael E. Rose......... 0 0% n/a n/a $ 0 $ 0 $ 0
Charles G. Manley....... 0 0% n/a n/a $ 0 $ 0 $ 0
William D. Sullivan..... 0 0% n/a n/a $ 0 $ 0 $ 0
</Table>
- ---------------
(1) No Stock Appreciation Rights ("SARs") were granted in 2002. Stock options
granted on July 2, 2002, were granted under the Company's 1999 Stock
Incentive Plan. Twenty-five percent (25%) of the options become exercisable
each year on the anniversary date of the date of grant beginning on July 2,
2003. In the event of a change of control, any outstanding options will
automatically vest. The Board may also take any one or more of the following
actions: (i) provide for the purchase of any outstanding awards by the
Company; (ii) make adjustments to any outstanding awards; or (iii) allow for
the substitution of any outstanding awards by the acquiring company's stock.
(2) The exercise price equals the fair market value of the common stock on the
date of grant.
(3) The dollar amounts under these columns are the results of calculation at 0%
and at the 5% and 10% rates set by the SEC and are not intended to forecast
possible future appreciation, if any, of the Company's stock price. The
Company did not use an alternative formula for a grant date valuation as the
Company is not aware of any formula which will determine with reasonable
accuracy a present value based on future unknown or volatility factors.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<Table>
<Caption>
NUMBER OF SECURITIES
SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-
ACQUIRED UNEXERCISED OPTIONS/SARS MONEY OPTIONS/SARS AT
ON EXERCISE VALUE AT FISCAL YEAR-END(#) FISCAL YEAR-END($)
NAME (#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE*
- ---- ----------- ----------- ------------------------- ----------------------------
Robert J. Allison,
Jr. ................... 165,000 $3,606,488 2,195,000/0 $27,371,425/$0
John N. Seitz............ 30,000 $ 934,013 1,028,000/500,000 $ 7,848,820/$0
Michael E. Rose.......... 150,000 $1,197,563 150,000/0 $ 0/$0
Charles G. Manley........ 0 $ 0 486,000/0 $ 2,185,965/$0
William D. Sullivan...... 0 $ 0 0/175,000 $ 0/$0
</Table>
- ---------------
* Computed based upon the difference between the fair market value of the
Company's common stock on December 31, 2002 ($47.69 per share) and aggregate
exercise price.
16
PENSION PLAN TABLE
The Company has a defined benefit retirement plan that covers all United
States employees and does not require employee contributions. The Retirement
Plan provides benefits based on a formula that considers length of service and
final average pay. For this purpose, "pay" or remuneration generally includes
the amounts shown in the Salary and Bonus columns of the Summary Compensation
Table. The following table reflects the estimated single life annuity payable
annually at normal retirement at age 65 in specified remuneration and
years-of-service classifications, based on the benefit formula in effect on
December 31, 2002.
<Table>
<Caption>
YEARS OF SERVICE
--------------------------------------------------------------
REMUNERATION 15 20 25 30 35
($) ($) ($) ($) ($) ($)
- ------------ ---------- ---------- ---------- ---------- ----------
1,000,000 268,000 357,000 446,000 535,000 624,000
1,250,000 335,000 447,000 559,000 670,000 782,000
1,500,000 403,000 537,000 671,000 805,000 939,000
1,750,000 470,000 627,000 784,000 940,000 1,097,000
2,000,000 538,000 717,000 896,000 1,075,000 1,254,000
2,250,000 605,000 807,000 1,009,000 1,210,000 1,412,000
2,500,000 673,000 897,000 1,121,000 1,345,000 1,569,000
2,750,000 740,000 987,000 1,234,000 1,480,000 1,727,000
3,000,000 808,000 1,077,000 1,346,000 1,615,000 1,884,000
3,250,000 875,000 1,167,000 1,459,000 1,750,000 2,042,000
3,500,000 943,000 1,257,000 1,571,000 1,885,000 2,199,000
3,750,000 1,010,000 1,347,000 1,684,000 2,020,000 2,357,000
4,000,000 1,078,000 1,437,000 1,796,000 2,155,000 2,514,000
4,250,000 1,145,000 1,527,000 1,909,000 2,290,000 2,672,000
4,500,000 1,213,000 1,617,000 2,021,000 2,425,000 2,829,000
4,750,000 1,280,000 1,707,000 2,134,000 2,560,000 2,987,000
</Table>
Messrs. Allison, Seitz, Rose, Manley and Sullivan, respectively, have 29,
25, 25, 29 and 21 years of accrued service under the Plan. An employee becomes
vested in his or her benefit under the Retirement Plan at completion of five
years of vesting service as defined in the Retirement Plan.
A portion of the benefits shown in the table may be paid from the Company's
Supplemental Retirement Restoration Plan, rather than from the Retirement Plan,
due to limitations imposed by the Internal Revenue Code that restrict the amount
of benefits payable under tax-qualified plans.
17
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
common stock to the S&P 500 Index and to the Dow Jones Oil -- Secondary Index
for the last five years. The graph assumes that the value of the investment in
the Company's common stock and each index was $100 at December 31, 1997, and
that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ANADARKO PETROLEUM CORP., DOW JONES OIL -- SECONDARY AND S&P 500 INDEX
(PERFORMANCE GRAPH)
FISCAL YEAR ENDED DECEMBER 31
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
- ----------------------------------------------------------------------------------------------------------------
Anadarko Petroleum Corporation... 100 102 114 238 191 162
Dow Jones Oil -- Secondary
Index........................... 100 69 79 126 116 119
S&P 500 Index.................... 100 129 156 141 125 97
</Table>
Assumes $100 invested on December 31, 1997.
* Total Return Assumes Reinvestment of Dividends
Total Return Data Provided by S&P's Institutional Market Services and Dow Jones
& Company Inc.
TRANSACTIONS WITH MANAGEMENT
CHANGE OF CONTROL ARRANGEMENTS
The Company has entered into key employee change of control contracts with
each of the named executive officers and with certain other key executives.
These severance contracts have an initial three-year term that is automatically
extended for one year upon each anniversary, unless a notice not to extend is
given by the Company. If a change of control of the Company (as defined below)
occurs during the term of the severance contract, then the contract becomes
operative for a fixed three-year period. The severance contracts generally
provide that the executive's terms and conditions of employment (including
position, work location, compensation and benefits) will not be adversely
changed during the three-year period after a change of control of the Company.
If the Company terminates the executive's employment
18
(other than for cause, death or disability), the executive terminates for good
reason during such three-year period, or the executive terminates employment for
any reason during the 30-day period following the first anniversary of the
change of control, and upon certain terminations prior to a change of control or
in connection with or in anticipation of a change of control, the executive is
generally entitled to receive the following payment and benefits:
(i) earned but unpaid compensation;
(ii) up to 2.9 times the executive's base salary plus annual bonus
(based on historic annual bonus);
(iii) the Company matching contributions which would have been made had
the executive continued to participate in the Anadarko Employee
Savings Plan and the Savings Restoration Plan for up to an
additional three years;
(iv) the value of any investments credited to the executive under the
Savings Restoration Plan; and
(v) the present value of the accrued retirement benefit under the
Retirement Restoration Plan and the additional retirement benefits,
including retiree medical, which would have been received had the
executive continued service for up to an additional three years.
In addition, the severance contract provides for a continuation of various
medical, dental, disability and life insurance plans and financial counseling
for a period of up to three years, outplacement services and the payment of all
legal fees and expenses incurred by the executive in enforcing any right or
benefit provided by the severance contract. The severance contract also provides
that the executive is entitled to receive a payment in an amount sufficient to
make the executive whole for any excise tax on excess parachute payments imposed
under Section 4999 of the Internal Revenue Code.
As a condition to receipt of these severance benefits, the executive must
remain in the employ of the Company and render services commensurate with his or
her position until the executive is terminated pursuant to the provisions of the
agreement. The executive must also agree to retain in confidence any and all
confidential information known to him or her concerning the Company and its
business so long as the information is not otherwise publicly disclosed. As of
the date of this proxy statement, no amounts have been paid under the severance
contracts.
In addition, pursuant to the Company's stock plans, upon a change of
control of the Company (as defined below):
- Outstanding options and stock appreciation rights that are not vested and
exercisable become fully vested and exercisable.
- The restrictions on any outstanding restricted stock lapse.
- If any performance-based restricted stock awards are outstanding, they
become fully vested and the performance goals are deemed to be earned
unless otherwise provided in the participant's award agreement.
For purposes of the severance contracts and the Company's stock plans, a
change of control is generally defined as:
(1) Any individual, entity or group acquiring beneficial ownership of
20% or more of either the outstanding shares of the Company's common
stock or the combined voting power of the outstanding voting
securities of the Company entitled to vote generally for the
election of directors;
(2) Individuals who constitute the Board on the date hereof cease to
constitute a majority of the Board, provided that an individual
whose election or nomination as a director is approved by a vote of
at least a majority of the directors as of the date hereof will be
deemed a member of the incumbent Board;
19
(3) Approval by the Company's stockholders of a reorganization, merger
or consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the acquisition
of assets of another entity, unless following the business
combination:
(a) all or substantially all of the beneficial owners of the
Company's outstanding common stock prior to the business
combination own more than 60% of the outstanding common stock of
the corporation resulting from the business combination;
(b) no person, entity or group owns 20% or more of the outstanding
voting securities of the corporation resulting from the business
combination; and
(c) at least a majority of the board of the corporation resulting
from the business combination were members of the Company's Board
prior to the business combination; or
(4) Approval by the Company's stockholders of a complete liquidation or
dissolution of the Company.
INDEPENDENT AUDITOR
KPMG LLP served as the Company's independent auditor during 2002.
Representatives of KPMG LLP will be present at the meeting to make a statement
if they desire to do so and to respond to appropriate questions from
stockholders.
OTHER MATTERS
It is not expected that any other matters will come before the meeting.
However, if any other matters properly come before the meeting, then it is the
intention of the persons named in the accompanying form of proxy to vote the
proxy in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
An eligible stockholder who wants to have a qualified proposal considered
for inclusion in the proxy statement for the 2004 Annual Meeting must notify the
Corporate Secretary of the Company. The proposal must be received no later than
November 25, 2003.
20
PROXY SOLICITATION
The Company pays for the cost of preparing, assembling and mailing the
material in connection with the solicitation of proxies. It is expected that the
solicitation of proxies will be primarily by mail but solicitations may also be
made personally or by telephone, email or facsimile by officers and other
employees of the Company without additional compensation. The Company pays all
costs of solicitation, including certain expenses of brokers and nominees who
mail proxy material to their customers or principals. In addition, the Company
has engaged Mellon Investor Services, LLC to assist in the solicitation of
proxies for this Annual Meeting at an estimated fee of $5,000 plus
disbursements.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SUZANNE SUTER
SUZANNE SUTER
Vice President, Corporate Secretary
And Chief Governance Officer
Dated: March 24, 2003
The Woodlands, Texas
SEE ENCLOSED PROXY CARD -- PLEASE VOTE PROMPTLY.
21
APPENDIX A
ANADARKO PETROLEUM CORPORATION
AUDIT COMMITTEE CHARTER
COMMITTEE'S PURPOSE
The Audit Committee (Committee) is appointed by the Board of Directors
(Board) to assist the Board in monitoring (1) the integrity of the financial
statements of the Company, (2) compliance by the Company with legal and
regulatory requirements, (3) the independent auditor's qualifications and
independence, (4) performance of the Company's internal and independent
auditors, and (5) the business practices and ethical standards of the Company.
The Committee is also directly responsible for (a) the appointment,
compensation, retention and oversight of the work of the Company's independent
auditors, and (b) the preparation of the report that the Securities and Exchange
Commission (Commission) requires to be included in the Company's annual proxy
statement. While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company's financial statements and disclosures are
presented fairly in all material respects in accordance with generally accepted
accounting principles. These are the responsibility of management and the
independent auditor.
COMMITTEE MEMBERSHIP
Independence. The Committee shall consist of three or more independent
members of the Board of Directors. Independence shall be determined as to each
member by the full Board. To be considered independent, each Committee member
(1) must meet the independence requirements of the New York Stock Exchange
(NYSE), the Sarbanes-Oxley Act of 2002 (SOX) and the rules and regulations of
the Commission, (2) must not accept any compensation from the Company either
directly or indirectly other than compensation as a Board or Committee member
and (3) must not be an affiliated person of the Company or any of its
subsidiaries. Audit Committee members shall not simultaneously serve on the
audit committees of more than two other public companies.
Financial Literacy. All members of the Committee shall be financially
literate as defined by the Commission, or must become financially literate
within a reasonable period of time after their appointment to the Committee, and
at least one member of the Committee shall be an audit committee financial
expert, as determined in the judgment of the Board.
COMMITTEE COMPOSITION
The members of the Committee shall be nominated by the Nominating and
Corporate Governance Committee and elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall
be duly elected and qualified.
Chairman. Unless a Chairman is elected by the full Board, the members of
the Committee shall designate a Chair by majority vote of all the Committee
members.
MEETINGS
The Committee shall meet at least four times annually or more frequently as
circumstances dictate. Meetings may be in person or by telephone as needed to
conduct the business of the Committee. The Committee may take action by the
unanimous written consent of the members in the absence of a meeting. The
Committee shall meet periodically with management, the internal auditors and the
independent auditor in separate executive sessions.
A-1
AUTHORITY OF THE COMMITTEE
The Audit Committee shall have the authority (1) to exercise all powers
with respect to the appointment, compensation, retention and oversight of the
work of the independent auditor for the Company and its subsidiaries, (2) to
retain special legal, accounting or other consultants to advise the Committee
and (3) to approve funds to pay the fees for such advisors. As part of its
oversight role, the Committee may investigate any matter brought to its
attention, with the full power to retain outside counsel or other experts for
this purpose. 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 member of, or consultant to, the
Committee.
RESPONSIBILITIES
The Audit Committee shall:
FINANCIAL STATEMENT AND DISCLOSURE MATTERS
1. Review and discuss prior to public dissemination the annual audited and
quarterly unaudited financial statements with management and the
independent auditor, including major issues regarding accounting,
disclosure and auditing procedures and practices as well as the
adequacy of internal controls that could materially affect the
Company's financial statements. In addition, the review shall include
the Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations." Based on the annual
review, recommend inclusion of the financial statements in the Annual
Report on Form 10-K to the Board.
2. Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements, including any
significant changes in the Company's selection or application of
accounting principles, any major issues as to the adequacy of the
Company's internal controls and any special steps adopted in light of
material control deficiencies.
3. Review and discuss reports from the independent auditors on:
A. All critical accounting policies and practices to be used.
B. All alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, ramification of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor.
C. Other material written communications between the independent
auditor and management, such as any management letter.
4. Discuss with management the Company's earnings press releases as well
as financial information and earnings guidance provided to analysts and
rating agencies. Such discussion may be done generally consisting of
discussing the types of information to be disclosed and the types of
presentations to be made.
5. Discuss with management and the independent auditor the effect on the
Company's financial statements of significant regulatory and accounting
initiatives as well as off-balance sheet structures.
6. Discuss with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures, including the Company's risk assessment and risk management
policies.
7. Review with the independent auditor any audit problems or difficulties
and management's response, including, but not limited to (1) any
restrictions on the scope of the auditor's activities, (2) any
restriction on the access of the independent auditor to requested
materials, (3) any significant disagreements with management and (4)
any audit differences that were noted or
A-2
proposed by the auditor but for which the Company's financial
statements were not adjusted (as immaterial or otherwise). The
Committee will resolve any disagreements between the auditors and
management regarding financial reporting.
8. Review disclosures made to the Audit Committee by the Company's CEO and
CFO during their certification process for the Form 10-K and Form 10-Q
about any significant deficiencies in the design or operation of
disclosure controls and procedures and any fraud involving management
or other employees who have a significant role in the Company's
internal controls.
9. Discuss at least annually with the independent auditor the matters
required to be discussed by Statement of Auditing Standards No.
61 -- Communication with Audit Committees.
10. Prepare the report that the Commission requires to be included in the
Company's annual proxy statement and review the matters described in
such report.
11. Obtain quarterly assurances from the senior internal auditing executive
and management that the system of internal controls is adequate and
effective. Obtain annually a report from the independent auditor, with
attestation, regarding management's assessment of the effectiveness of
the internal control structure and procedures for financial reporting.
RESPONSIBILITY FOR THE COMPANY'S RELATIONSHIP WITH THE INDEPENDENT AUDITOR
12. Be solely responsible for the appointment, compensation, retention and
oversight of the work of the independent auditors employed by the
Company. The independent auditor shall report directly to the Audit
Committee. If the appointment of the independent auditors is submitted
for any ratification by stockholders, the Audit Committee shall be
responsible for making the recommendation of the independent auditors.
13. Review, at least annually, the qualifications, performance and
independence of the independent auditor. In conducting such review, the
Committee shall obtain and review a report by the independent auditor
describing (1) the firm's internal quality-control procedures, (2) any
material issues raised by the most recent internal quality-control
review, or peer review, of the firm or by any formal investigation by
governmental or professional authorities regarding services provided by
the firm which could affect the financial statements of the Company,
and any steps taken to deal with any such issues, and (3) all
relationships between the independent auditor and the Company that
could be considered to bear on the auditor's independence. This
evaluation shall include the review and evaluation of the lead partner
of the independent auditor and shall ensure the rotation of partners in
accordance with Commission rules and the securities laws. In addition,
the Committee shall consider the advisability of regularly rotating the
audit firm in order to maintain the independence between the
independent auditor and the Company.
14. Approve in advance any audit or permissible non-audit engagement or
relationship between the Company and the independent auditors. The
Committee shall establish guidelines for the retention of the
independent auditor for any permissible non-audit services. The
Committee hereby delegates to the Chairman of the Committee the
authority to approve in advance all audit or non-audit services to be
provided by the independent auditor if presented to the full Committee
at the next regularly scheduled meeting.
15. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit including the responsibilities and
staffing of the Company's internal audit department personnel who will
assist in the audit.
16. Recommend to the Board policies for the Company's hiring of employees
or former employees of the independent auditor who participated in any
capacity in the audit of the Company.
A-3
OVERSIGHT OF THE COMPANY'S INTERNAL AUDIT FUNCTION
17. Review the appointment and replacement of the senior internal auditing
executive.
18. Review the activities and organizational structure of the internal
auditing department and the significant reports to management prepared
by the internal auditing department and management's responses.
19. Discuss with the independent auditor and management the internal audit
department responsibilities, budget and staffing and any recommended
changes in the planned scope of the internal audit department.
COMPLIANCE OVERSIGHT RESPONSIBILITY
20. Obtain from the independent auditor assurance that Section 10A(b) of
the Securities Exchange Act of 1934, as amended, has not been
implicated.
21. Obtain reports from management and the Company's senior internal
auditing executive that the Company is in conformity with applicable
legal requirements and the Company's Code of Business Conduct and
Ethics. Review disclosures required to be made under the securities
laws of insider and affiliated party transactions. Advise the Board
with respect to the Company's policies and procedures regarding
compliance with applicable laws and regulations and with the Company's
Code of Business Conduct and Ethics.
22. Establish and maintain procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal controls or auditing matters. Also, the Committee shall
maintain procedures for the confidential anonymous submission by
employees of the Company of concerns regarding questionable accounting,
internal controls or auditing matters.
23. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any published reports that
raise material issues regarding the Company's financial statements or
accounting policies.
24. Review at least annually legal matters with the Company's General
Counsel that may have a material impact on the financial statements,
the Company's compliance policies, including but not limited to the
Foreign Corrupt Practices Act, and any material reports or inquiries
received from regulators or governmental agencies.
OTHER
25. Report regularly to the Board with respect to any issues that arise
with respect to the quality or integrity of the Company's financial
statements, the Company's compliance with legal or regulatory
requirements, the performance and independence of the Company's
independent auditors or the performance of the internal audit function.
26. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
27. Perform an annual performance evaluation of the Committee.
A-4
APPENDIX B
ANADARKO PETROLEUM CORPORATION
COMPENSATION AND BENEFITS COMMITTEE CHARTER
ADOPTED BY THE BOARD OF DIRECTORS JANUARY 30, 2003
PURPOSE
The Compensation and Benefits Committee (the "Committee") is appointed by
the Board to discharge the Board's responsibilities relating to compensation of
the Company's directors and officers. The Committee has overall responsibility
for approving and evaluating the director and officer compensation plans,
policies and programs of the Company. The Committee is also responsible for
producing an annual report on executive compensation for inclusion in the
Company's proxy statement.
COMMITTEE MEMBERSHIP
The Committee shall consist of no fewer than three members. The members of
the Committee shall meet the independence requirements adopted by the Board of
Directors in accordance with the requirements of the New York Stock Exchange and
the Securities and Exchange Commission and shall be outside directors within the
meaning of section 162(m) of the Internal Revenue Code of 1986.
The members of the Committee shall be directors of the Company and shall be
nominated by the Nominating and Corporate Governance Committee and elected by
the Board of Directors. Committee members shall serve for a period of one year
unless such member resigns or is replaced by the Board of Directors and their
successor appointed. Committee members may be removed by a majority vote of the
full Board.
MEETINGS
The Committee shall meet as often as necessary to carry out its
responsibilities. Meetings can be called by any member of the Committee. Reports
of actions of the Committee shall be made to the Board of Directors at its next
regularly scheduled meeting following the Committee meeting.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
1. The Committee shall have the sole authority to retain and terminate any
legal counsel or compensation or other consultant to be used to assist in the
evaluation of director or executive compensation and shall have sole authority
to approve the consultant's fees and other retention terms. The Committee shall
also have authority to obtain advice and assistance from internal or external
legal, accounting or other advisors and the sole authority to approve the
payment of the advisor's fees and other retention items. All fees and other
retention items for compensation consultants, internal or external legal,
accounting or other advisors shall be paid by the Company.
2. Chairman and/or the Chief Executive Officer. The Committee shall set
corporate goals and objectives relevant to the Chairman's and/or the Chief
Executive Officer's compensation. In determining the long-term incentive
component of the Chairman and/or the Chief Executive Officer compensation, the
Committee should consider the Company's performance and relative shareholder
return, the value of similar incentive awards to chairmen and/or the chief
executive officers at comparable companies, and the awards given to the
Company's Chairman and/or the Chief Executive Officer in past years. The
Committee shall annually review and evaluate, including a written evaluation,
the Chairman's and/or the Chief Executive Officer's performance in light of
those goals and objectives. The Committee shall have the sole authority to
approve, amend or terminate for the Chairman and/or the Chief Executive Officer
of the Company the following compensation levels based on this evaluation: (a)
annual base salary level, (b) annual incentive opportunity level, (c) long-term
incentive opportunity level, (d) employment
B-1
agreements or severance arrangements, and (e) any special or supplemental
benefits except as provided in Paragraph 6 of this Charter.
3. Other Executives. The Committee shall annually review and have the sole
authority to approve, amend or terminate for the executives of the Company,
other than the Chairman and/or the Chief Executive Officer, (a) the annual base
salary level, (b) the annual incentive opportunity level, (c) the long-term
incentive opportunity level, (d) employment agreements or severance
arrangements, and (e) any special or supplemental benefits except as provided in
Paragraph 6 below.
4. Directors. The Committee shall have the sole authority to approve,
amend or terminate for directors (a) the annual compensation, and (b) any
additional compensation for service on committees of the Board, service as a
committee chairman, service as presiding director of the executive sessions of
the Board, meeting fees or any other benefit payable by virtue of the director's
position as a member of the Board of Directors, except as provided in Paragraph
6 below.
5. Compensation and Benefit Plans. The Committee shall have the sole
authority to approve, amend or terminate incentive-compensation plans and any
qualified equity-based plans, including the approval, amendment or termination
of any tax-qualified plan or section 125 plan, except as provided in Paragraph 6
of this Charter. The Committee shall have the sole authority to appoint and
remove various plan Trustees, appoint and remove members of the Administrative
Committee; and to appoint and remove the Plan Administrator.
6. Ratification Required by the Board. The following shall be presented as
a recommendation to the full Board and approved by the full Board (i) any
action, including, but not limited to, the adoption or amendment of any
non-qualified equity compensation plan, that is required by law or regulation to
be submitted to the shareholders of the Company for approval, and (ii) any
approval, amendment or termination of change in control agreements/provisions
related to the directors or officers of the Company. In the event the
recommendation of the Committee is not approved by the Board, the recommended
action must be returned to the Committee for further consideration. Any future
Committee recommendation regarding such item must, again, be presented to the
Board for its approval.
For the purpose of this Charter, a "non-qualified equity compensation plan"
shall mean any plan that does not meet the requirements of Section 401(a) or 423
of the Internal Revenue Code, as amended or the definition of an "excess benefit
plan within the meaning of Section 3(36) of the Employee Retirement Security
Act.
7. Annual Report. The Committee shall produce an annual report on
executive compensation for inclusion in the Company's proxy statement.
8. Competitive Compensation Position. The Committee shall annually review
market data to assess the Company's competitive position for each component of
executive compensation (especially base salary, annual incentives, long-term
incentives, and supplemental executive benefit programs) by reviewing market
data for appropriate peer companies.
9. Cash Effect. The Committee shall monitor the cumulative cash effect on
the Company caused by bonus and other cash-based incentive plans of the Company,
especially in relation to the Company's net income for the applicable year(s).
10. Stock Ownership Policy. The Committee shall establish and monitor the
stock ownership policy with regard to the officers and directors of the Company
and monitor compliance with this policy.
11. Executive Session. The Committee shall determine which officers of the
Company or other visitors to invite to the Committee's meetings. In the sole
discretion of the Committee, the Committee may meet in executive session at any
time.
12. Report to the Board. Following each action by the Committee, the
Committee shall make a report to the full Board at the next regularly scheduled
meeting of the full Board.
B-2
13. Charter Review. The Committee shall review and reassess the adequacy
of this Charter annually and recommend any proposed changes to the Board for
approval. The Committee shall annually review its own performance by
distributing to its members a written self-assessment. The results of such self-
assessment shall be presented to the Board of Directors at its next meeting.
14. Delegation/Written Consent. The Committee may form and delegate
authority to subcommittees when it determines that such action is appropriate
under the circumstances; and the Committee may take action in the absence of a
meeting by unanimous written consent of all members.
15. Additional Activities. The Committee shall perform any other
activities consistent with this Charter, the Company's By-laws and applicable
law, as the Committee deems appropriate to carry out its assigned duties or as
requested by the Board.
B-3
APPENDIX C
ANADARKO PETROLEUM CORPORATION
NOMINATING AND CORPORATE
GOVERNANCE COMMITTEE CHARTER
ADOPTED BY THE BOARD OF DIRECTORS ON JANUARY 30, 2003
PURPOSE
The Nominating and Corporate Governance Committee (the "Committee") is
appointed by the Board of Directors (the "Board") to assist the Board in
identifying qualified individuals to become directors, recommend to the Board
qualified director nominees for election at the stockholders' annual meeting,
determine membership on the Board committees, recommend a set of Corporate
Governance Guidelines, conduct annual self-evaluations of the Board and the
Committee, and report annually to the Board on the Chief Executive Officer
("CEO") succession plan.
COMMITTEE MEMBERSHIP
The Committee members shall be appointed, and may be replaced, by the
Board. The Committee shall consist of no fewer than three directors. All members
of the Committee shall meet the independence standards as specified in the
Company's Corporate Governance Guidelines, which have been adopted by the Board.
MEETINGS
The Committee shall meet as often as necessary to carry out its
responsibilities. Any Committee member may request the Chairman of the Committee
to call a meeting. The Chairman of Committee shall report on any Committee
meeting held at the next regularly scheduled Board meeting following the
Committee meeting.
COMMITTEE GOALS AND RESPONSIBILITIES
1. The Committee shall recommend to the Board director nominees for
election at the stockholders' annual meeting.
2. Prior to nominating an existing director for re-election to the Board,
the Committee shall consider and review the existing director's:
a) Board and committee meeting attendance and performance;
b) length of Board service;
c) experience, skills and contributions that the existing director
brings to the Board; and
d) independence.
3. In the event that a director vacancy arises, the Committee shall seek
and identify a qualified director nominee to be recommended to the
Board for either appointment by the Board to serve the remainder of the
term of the director position that is vacant or election at the
stockholders' annual meeting.
4. A director nominee shall meet the director qualifications specified in
the Company's Corporate Governance Guidelines, including that the
director nominee possess personal and professional integrity, has good
business judgment, relevant experience and skills and will be an
effective director in conjunction with the full Board in collectively
serving the long-term interests of the Anadarko stockholders.
C-1
5. The Committee shall have the sole discretion and authority to retain
any search firm to assist in identifying director candidates, retain
outside counsel and/or any other internal or external advisors and
approve all related fees and retention terms.
6. The Committee shall review the Board's committee structure and
recommend to the Board for its approval directors to be appointed as
members on each Board committee. Prior to recommending the
re-appointment of a director to a Board committee, the Committee shall
review the existing director's independence, if required, skills, Board
committee meeting attendance, performance and contribution, and his or
her fulfillment of committee responsibilities. If a vacancy on a Board
committee occurs, the Committee shall recommend a director with
relevant experience and skills, and who is independent, if required by
the committee charter, to be appointed to fill the vacancy.
7. The Committee shall recommend to the Board for its approval the
Corporate Governance Guidelines. The Committee will review annually the
Corporate Governance Guidelines and recommend any proposed changes to
the Board for approval.
8. The Committee shall develop and recommend to the Board for its approval
an annual self-evaluation process for the full Board that will be
conducted and overseen by the Committee. The Committee shall report to
the full Board, following the end of each fiscal year, the results of
the annual self-evaluation, including any comments from the
self-evaluations. However, any comments from the self-evaluations
regarding individual directors shall be reported to the Chairman, CEO
and Presiding Director, and if necessary, to the relevant committee
chairman.
9. The Committee shall annually review its own performance by distributing
to its members a written self-assessment.
10. The Committee shall make an annual report to the Board on emergency as
well as expected CEO succession planning. The full Board will work with
the Committee to recommend and evaluate potential successors to the
CEO. The CEO should at all times make available his or her
recommendations and evaluations of potential CEO successors, along with
a review of any development plans recommended for such individuals.
11. All concerns regarding non-financial matters that are reported to the
Anonymous Reporting Hotline shall be reported to the Committee for
review and investigation.
12. The Committee shall review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board for approval.
C-2
APPENDIX D
ANADARKO PETROLEUM CORPORATION
CORPORATE GOVERNANCE GUIDELINES
ADOPTED BY THE BOARD OF DIRECTORS ON JANUARY 30, 2003
ROLE AND FUNCTIONS OF THE BOARD OF DIRECTORS
The role of the Board of Directors (the "Board") is to oversee and monitor
the Company's management in the interest and for the benefit of the Company's
stockholders. To fulfill its role the Board or a Board committee must perform
the following primary functions:
1. oversee the conduct of the Company's business to evaluate whether the
business is being properly managed;
2. review and, where appropriate, approve the Company's major financial
objectives, plans and actions;
3. review and, where appropriate, approve major changes in, and
determinations of other major issues respecting the appropriate
auditing and accounting principles and practices to be used in the
preparation of the Company's financial statements;
4. assess major risk factors relating to the Company and its
performance, and review measures to address and mitigate such risks;
5. evaluate regularly the performance and approve the compensation of
the CEO and, with the advice of the CEO, evaluate regularly the
performance of principal senior executives; and
6. plan for succession of the CEO and monitor management's succession
planning for other key executives.
In discharging these obligations, directors should be entitled to rely
reasonably on the honesty and integrity of their fellow directors and the
Company's executives and its outside advisors and auditors. The directors shall
be entitled to (i) have the Company purchase reasonable directors' and officers'
liability insurance on their behalf; (ii) the benefits of indemnification to the
fullest extent permitted by law under the Company's charter, by-laws and any
indemnification agreements; and (iii) exculpation as provided by state law and
the Company's charter.
The Board may discharge its responsibilities either directly or by
delegating them to its committees, except that the Board may not delegate any of
its responsibilities which, under applicable law or the Company's restated
certificate of incorporation, may not be delegated to a committee of the Board.
The Board and each Board committee shall have the full power and authority to
hire, at the expense of the Company, independent financial, accounting, legal or
other advisors, as necessary to fulfill their duties, without consulting or
obtaining the approval of any officer of the Company.
The Board should promote policies within the Company that encourage a
corporate culture of openness, honesty, fairness and accountability. These
policies also should apply to the Board and to relationships among and between
the Board, stockholders and employees. The Board should periodically review and
amend these policies if needed.
The Board should recognize that the actual management of the business and
affairs of the Company should be conducted by the CEO and other senior managers
under his or her supervision and that, in performing the management function,
the CEO and other senior managers are obliged to act in a manner that is
consistent with the oversight functions and powers of the Board and the
standards of the Company and to execute any specific plans, instructions or
directions of the Board.
D-1
DIRECTOR QUALIFICATIONS
Independence: The Board shall have a majority of directors who meet the
independence criteria adopted by the Board. The independence criteria are
discussed below under "Director Independence."
Qualifications: A director should possess personal and professional
integrity, have good business judgment, relevant experience and skills and be an
effective director in conjunction with the full Board in collectively serving
the long-term interests of the Company stockholders. Directors should be
committed to devoting sufficient time and energy to diligently performing their
duties as directors.
Size of Board: The Board shall determine the appropriate size of the Board
within the requirements of the Company's Charter and Bylaws.
Selection Process: In accordance with the policies and principles in its
charter, the Nominating and Corporate Governance Committee is responsible for
identifying and recommending potential director nominees to the Board for its
approval when there is a vacancy on the Board. The Chairman of the Nominating
and Corporate Governance Committee and the Chairman of the Board shall extend an
invitation to the potential director nominee to join the Board.
Annual Review of Independence and Qualifications: The Nominating and
Corporate Governance Committee shall distribute annually a self-evaluation to
the Board that includes an assessment of the directors' independence and
qualifications.
Resignation from the Board: An individual director should offer his or her
resignation in the event the director's principal occupation or business
association changes substantially from the position he or she held when
originally invited to join the Board. The Board should consider the continued
appropriateness of the director's membership on the Board under the changed
circumstances and then the Board should determine whether or not to accept the
director's resignation. Also a director should tender a resignation in the event
there is a substantial conflict of interest between the director and the Company
or the Board and such conflict cannot be resolved to the satisfaction of the
Board.
Retirement from the Board: A director shall retire from the Board at the
end of the calendar year in which he or she reaches 70 years of age.
Recusal when Conflict of Interest: Prior to any Board discussion or
decision related to any matter that potentially affects a director's personal,
business or professional interests, that director should (i) disclose the
existence of the potential conflict of interest to the Chairman of the Board and
(ii) if the Chairman of the Board (in consultation with legal counsel)
determines a conflict exists or the perception of a conflict is likely to be
significant, recuse himself or herself from any discussion or vote related to
the matter.
Limit on Number of Board Memberships: No director may serve on more than
three other public company boards. A director should advise the Chairman of the
Board and the Chairman of the Nominating and Corporate Governance Committee in
advance of accepting an invitation to serve on another public company board.
Term Limits: The Board does not believe it should establish term limits.
The Company and its stockholders both benefit from Board continuity and
stability and by allowing directors to focus on long-term business strategies
and results.
DIRECTOR INDEPENDENCE
A substantial majority of the Board and all members of the Audit, the
Compensation and Benefits, and the Nominating and Corporate Governance
Committees shall be independent. The Board must make an affirmative
determination whether or not a director is independent and disclose this
determination in the annual proxy statement.
The term independent is defined in accordance with the proposed New York
Stock Exchange ("NYSE") independence requirements, the Sarbanes-Oxley Act and
the Board's business judgment. A
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director is deemed to be independent if he or she does not have a direct or
indirect material relationship with the Company or any of its affiliates or with
any senior management member of the Company or any of its affiliates. In
determining the materiality of a relationship and the director's independence,
the Board shall be guided by the following independence standards:
A director shall be deemed to have a material relationship with the Company
and/or its affiliates and thus shall not be deemed independent if, within the
past five years:
- The director is or has been employed by the Company or its affiliates;
- An immediate family member (defined below) of the director is or has been
employed by the Company or any of its affiliates as an officer;
- The director is or has been affiliated with or employed by the Company's
or any of its affiliate's present or former independent auditor;
- An immediate family member of the director is or has been employed by the
Company's or any of its affiliate's present or former independent auditor
as a partner, principal or manager; or
- An executive officer of the Company serves on the compensation committee
of a company which employs the director, or which employs an immediate
family member of the director as an officer.
Other material relationships in which the director shall not be deemed to
be independent are:
- The director or an immediate family of the director is a director,
officer, general partner or large equity holder of a significant customer
of or supplier to the Company and/or its affiliates of nonprofessional
services and goods;
- The director or an immediate family member of the director is a director,
officer, general partner or large equity holder of a significant paid
adviser, paid consultant or other paid provider of professional services
to the Company or its affiliates, or to any senior management member of
the Company; or
- The director or an immediate family member of the director is a director,
officer or trustee of a charitable or tax-exempt organization to whom the
Company, one of its affiliates or any senior management member of the
Company or its affiliates makes substantial charitable contributions.
In the following circumstances, the material relationships shall be deemed
immaterial and thus the director shall remain independent:
- A director who serves as an Interim Chairman or Interim CEO of the
Company shall not be deemed a former employee for the purpose of
determining independence and as such, the director shall retain his
independent status when his service as Interim Chairman or Interim CEO
ends;
- The material relationship that is based on having an immediate family
member of the director serving as an officer of the Company or an officer
of a Company affiliate shall be deemed immaterial upon the death or
incapacitation of that immediate family member; or
- The material relationship that is based on the director's or the
director's immediate family member's connection to a significant
customer, supplier or provider of the Company or its affiliates shall be
deemed immaterial, if the Board in its business judgment determines that
the commercial transactions between the Company or one of its affiliates
and the significant customer, supplier or provider were conducted at
arm's length in the ordinary course of business and that such a
relationship is immaterial in light of all circumstances.
For any relationships not covered above, the determination of whether these
relationships are material or not and whether the director would be independent
or not, shall be made by the directors who satisfy the independence standards
set forth in this section. In making these determinations, the Board shall
examine all factors that may appear to affect independence, including
commercial, industrial, financial, banking, legal, accounting, charitable,
familial relationships and long-standing friendships.
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The Company and its affiliates shall not make any personal loans or
extensions of credit to directors or executive officers. All directors shall
only receive directors' fees as their compensation for Board and/or Board
committee service. The payment of consulting, advisory or other compensatory
fees to a director from the Company or one of its affiliates is prohibited and
shall negate the director's independence.
Each director has an affirmative obligation to inform the Board of any
material changes in his or her circumstances or relationships that may impact
his or her designation by the Board as "independent."
For the purposes of these independence standards guidelines, the terms:
- Affiliate means any corporation or other entity that controls, is
controlled by or is under common control with the Company, as evidenced
by the power to elect a majority of the Board or comparable governing
body of such entity;
- Immediate Family Member includes a person's spouse, parents, children,
siblings, mothers and fathers-in-law, sons and daughters in-law, brothers
and sisters in-law, and anyone (other than employees) who shares such
person's home; and
- Significant means payments to or from an entity where the payments exceed
five percent of the entity's annual gross revenues.
Under Section 162(m) of the Internal Revenue Code, as amended, a director
is an outside director if the director
- is not a current employee of the Company;
- is not a former employee of the company who receives compensation for
prior services (other than benefits under a tax-qualified retirement
plan) during the taxable year;
- has not been an officer of the company; and
- does not receive remuneration from the Company, either directly or
indirectly, in any capacity other than as a director.
BOARD MEETINGS
The Board expects to have four regularly scheduled meetings each year. Upon
adequate notice, unscheduled meetings may be called throughout the year as the
need arises. The Chairman of the Board shall consult with other Board members in
determining the times and duration of the Board meetings.
Meeting Attendance: Directors are expected to attend regularly Board and
committee meetings on which they serve. Directors also are expected to convene
and devote an adequate amount of time and effort to discharge properly their
responsibilities.
Board Materials: Information and data that are important to the Board's
understanding of the business to be conducted at a Board or committee meeting
should be distributed in writing to the directors before the meeting if
possible. Directors are expected review these materials in advance of the
meeting. A director may request that the CEO or appropriate member of senior
management present to the Board specific information as it relates to the
Company and its operations.
Board Meeting Agenda: The Chairman of the Board shall establish the agenda
for each Board meeting. Each director shall be furnished with a copy of the
agenda in advance of the Board meeting if possible, and if advance distribution
is not possible, then the agenda shall be distributed at the Board meeting. Each
director may suggest the inclusion of agenda items. Each director can bring up,
at any Board meeting, subjects that are not on the agenda for that meeting.
Non-Management Executive Session of Directors: The non-management
directors shall meet in executive session after each regularly scheduled Board
meeting or more frequently, if necessary. The non-management directors shall
elect a "Presiding Director" to preside at these non-management executive
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sessions. The name of the Presiding Director shall be disclosed in the annual
proxy statement, together with a system for interested parties to communicate
directly with the "Presiding Director."
BOARD COMMITTEES
The Board shall have at all times an Audit Committee, a Compensation and
Benefits Committee and a Nominating and Corporate Governance Committee. All
members of these Committees shall be independent directors as determined by the
Board in accordance with the aforementioned independence criteria. Committee
members shall be appointed by the Board upon recommendation (after consultation
with the Chairman) of the Nominating and Corporate Governance Committee. In
making any committee appointments, consideration should be given to the periodic
rotation of a committee member; however, such rotation is within the Board's
discretion.
The Audit Committee, Compensation and Benefits Committee and the Nominating
and Corporate Governance Committee each shall have a written charter that sets
forth the committee's structure, membership qualifications, purposes,
responsibilities, and procedures for appointing and removing committee members.
The charters also shall provide that each committee annually evaluates its
performance.
Each committee chairman, in consultation with the committee members, shall
determine the frequency and length of the committee meetings consistent with any
requirements set forth in the committee's charter. Each committee chairman, in
consultation with the appropriate members of the committee and management, shall
develop the committee's agenda. Each committee shall report to the Board its
activities, findings and recommendations after each committee meeting.
The Board may, from time to time, establish or maintain additional
committees of the Board, including an Executive Committee. If an Executive
Committee is established, it will have the powers and authority as specified in
the Company's by-laws.
Each committee shall have the full power and authority to hire independent
legal, financial or other advisors as it may deem necessary, without consulting
with or obtaining the pre-approval of any Company officer or the Board.
Any director may attend any committee meetings, whether or not he or she is
a member of that committee, providing that he or she has obtained pre-approval
to attend from the committee chair or a majority of the committee.
CHAIRMAN OF THE BOARD
The Board will appoint the Chairman of the Board who can be an employee of
the Company. The Chairman will chair all regular sessions of the Board and (with
input from the CEO to the extent not inappropriate) set the agenda for Board
meetings, subject to the right of each Board member to suggest the inclusion of
item(s) on any agenda.
DIRECTOR ACCESS TO OFFICERS, EMPLOYEES AND INDEPENDENT ADVISERS
Directors are encouraged to keep themselves informed with regard to the
Company and its operations. Directors shall have full and free access to Company
officers and employees. Any meetings or contacts that a director wishes to
initiate may be arranged through the CEO, the Corporate Secretary or directly by
the director. Directors shall use their judgment to ensure that any such contact
is not disruptive to the Company's business operations and shall, to the extent
that it is not inappropriate, copy the CEO on any written communications between
a director and a Company officer or employee.
The Board shall approve any director's request to have senior Company
officers and other personnel regularly attend the Board meetings. Directors will
also have access to the Company's independent advisors following consultation
with the CEO to the extent not inappropriate.
D-5
DIRECTOR COMPENSATION
All directors shall receive directors' fees as their only compensation for
Board and/or Board committee service. Directors' fees shall be in the form of
cash, company stock, including options and restricted stock, or combination
thereof, as well as any additional benefits regularly given to all directors.
The exact amount and form of director compensation shall be determined and
reviewed annually by the Compensation and Benefits Committee in accordance with
the policies and principles set forth in its charter.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
All new directors shall receive an orientation package. The package will
include a copy of the Company's by-laws and charter, the Code of Business
Conduct and Ethics, the Corporate Governance Guidelines, all SEC filings for the
current year and last preceding calendar year, press releases issued during the
current calendar year and any other pertinent information. The new director will
attend a meeting with the CEO and Chief Financial Officer to be briefed on the
Company's strategic plans, its significant financial, accounting and risk
management issues and current significant exploration and development projects.
All directors must receive annual director education in subjects relevant
to the duties of a director, including the study of corporate governance best
practices or ethics. This education may be as a result of a program planned by
the Company or by the director attending a pre-approved seminar, with all
expenses paid by the Company.
CEO EVALUATION AND MANAGEMENT SUCCESSION
The Compensation and Benefits Committee shall conduct an annual review of
the CEO's performance and compensation, as set forth in its charter. The
executive session of the Board shall review the Compensation and Benefits
Committee's report in order to ensure that the CEO is providing the best long
and short-term leadership for the Company.
The Nominating and Corporate Governance Committee shall make an annual
report to the Board on emergency as well as expected CEO succession planning.
The entire Board shall work with the Nominating and Corporate Governance
Committee to nominate and evaluate potential successors to the CEO. The CEO
shall provide the Committee with his or her recommendations and evaluations of
potential successors, along with a review of any development plans recommended
for such individuals.
ANNUAL SELF-EVALUATIONS
The Nominating and Corporate Governance Committee shall have responsibility
for conducting and overseeing the annual self-evaluations for the Board and
reporting the results to the Board following the end of each fiscal year. The
evaluations will be based on such objective and subjective criteria, as the
Board deems appropriate.
CODE OF BUSINESS CONDUCT AND ETHICS
The Board shall adopt and maintain the Code of Business Conduct and Ethics
(the "Code") for the directors, officers and employees of the Company in
compliance with the proposed NYSE requirements. The Code shall be posted on the
Company's website. The purpose of the Code shall be to focus the directors,
officers and employees on areas of ethical risk, provide guidance in recognizing
and dealing with ethical issues, provide mechanisms to report unethical conduct,
and help foster a culture of honesty and accountability.
Each director shall act at all times in accordance with the requirements of
the Code. Waivers of the Code for any officer or director may only be made by
the Board of the Company or by a Board committee composed of independent
directors. Any waiver for an officer or director must be posted on the Company
website and communicated to stockholders.
D-6
REPORTS OF ACCOUNTING CONCERNS
Any reports of concerns regarding accounting, internal auditing controls or
other audit matters shall be reported to the Chief Governance Officer, the
General Counsel and the Chairman of the Audit Committee. These reports are
confidential and may be anonymous. The Board shall be notified of these reports
at every quarterly Board meeting or sooner, if necessary.
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APPENDIX E
ANADARKO PETROLEUM CORPORATION
CODE OF BUSINESS CONDUCT AND ETHICS
JANUARY 2003
Anadarko Petroleum Corporation has been built by hard work, prudent
risk-taking and high standards of conduct and ethics. It is the responsibility
of every Anadarko director, officer and employee to maintain our commitment to
these basic principles so that we can continue to provide value to our
stockholders and maintain our reputation. We want to continue to be the kind of
company that can attract and retain the best people in our industry. It is the
intent of this Code of Business Conduct and Ethics to inspire continuing
dedication to the fundamental principles of honesty, loyalty, fairness and
forthrightness that have made Anadarko a leader.
Please review these policies and return to them for guidance when you are
in doubt as to the right course of conduct. If your questions are not answered
by this Code, STOP; take advantage of the Company's open door policy; and, only
when you are comfortable that your contemplated action complies with high
ethical standards, proceed. We must take responsibility for our own conduct.
In addition to fulfilling our own duty to the Company, we must protect the
Company from the harmful conduct of others. We must prevent illegal or unethical
practices from taking root in our corporate culture. If we cannot prevent such
practices, we must report the violations to someone that can. Even if the
actions reported are those of our supervisors or managers, if they are illegal
or unethical, they are against the policy of Anadarko. No harassment or
retribution against those who report such actions in good faith will be
tolerated.
Corporate leaders must set a personal example of honesty, respect and
loyalty. Leaders must help to develop a corporate culture in which openness and
communication is combined with prudent risk-taking and constant improvement of
our business practices. We should learn from our mistakes as well as our
successes.
Whether interacting with stockholders, board members or employees, or with
customers, suppliers, competitors or the community at large, let the principles
expressed in this Code be your guide. You should represent our Company with
honor, integrity and your best effort. Let us uphold these standards so that the
reputation of Anadarko Petroleum Corporation becomes the standard that other
companies emulate.
<Table>
Robert J. Allison, Jr., John N. Seitz,
Chairman President and Chief Executive Officer
</Table>
E-1
ANADARKO PETROLEUM CORPORATION
CODE OF BUSINESS CONDUCT AND ETHICS
OUR CODE APPLIES TO EVERY DIRECTOR, OFFICER (INCLUDING OUR CHIEF EXECUTIVE
OFFICER, CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER), AND EMPLOYEE OF
ANADARKO PETROLEUM CORPORATION. THE TERM EMPLOYEE INCLUDES ANY INDIVIDUAL THAT
IS PAID ON THE ANADARKO PAYROLL.
To further the Company's fundamental principles of honesty, loyalty,
fairness and forthrightness, we have established the Anadarko Code of Business
Conduct and Ethics. Our Code strives to deter wrongdoing and promote the
following six objectives:
1. Honest and ethical conduct;
2. Avoidance of conflicts of interest;
3. Full, fair, accurate, timely and transparent disclosure;
4. Compliance with the applicable government and self-regulatory
organization laws, rules and regulations;
5. Prompt internal reporting of Code violations; and
6. Accountability for compliance with the Code.
Below, we discuss situations that require application of our fundamental
principles and promotion of our objectives. If there is a conflict between this
Code and a specific procedure you should consult the Legal department for
guidance.
ACCOUNTABILITY FOR COMPLIANCE WITH THE CODE
Each of the Company's directors, officers and employees is expected to:
Understand. Anadarko expects YOU to understand the requirements of your
position including Company expectations and governmental rules and regulations
that apply to your position.
Comply. Anadarko expects YOU to comply with this Code and all applicable
laws, rules and regulations.
Report. Anadarko expects YOU to report any violation of this Code of which
you become aware.
Accountable. Anadarko holds YOU accountable for complying with the Code.
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TABLE OF CONTENTS
<Table>
Accounting Policies......................................... E-4
Amendments and Modifications of this Code................... E-4
Anonymous Reporting......................................... E-4
Anti-boycott and U.S. Sanctions Laws........................ E-4
Antitrust and Fair Competition Laws......................... E-4
Bribery..................................................... E-5
Compliance with Laws, Rules and Regulations................. E-5
Computer and Information Systems............................ E-6
Confidential Information Belonging to Others................ E-6
Confidential and Proprietary Information.................... E-6
Conflicts of Interest....................................... E-7
Corporate Communications.................................... E-8
Corporate Opportunities and Use and Protection of Company
Assets.................................................... E-8
Discipline for Noncompliance with this Code................. E-8
Disclosure Policies and Controls............................ E-9
Environment, Health and Safety.............................. E-9
Fair Dealing with Others.................................... E-9
Filing of Government Reports................................ E-9
Foreign Corrupt Practices Act............................... E-9
Insider Trading or Stock Tipping............................ E-10
Intellectual Property: Patents, Copyrights and Trademarks... E-11
Investor Relations and Public Affairs....................... E-11
Non-Retaliation for Reporting............................... E-11
Patents, Copyrights, and Trademarks......................... E-12
Political Contributions..................................... E-12
Prohibited Substances....................................... E-12
Public Affairs.............................................. E-12
Record Retention............................................ E-12
Relations Among Employees: Respect and Contribution......... E-13
Reporting of Code Violations................................ E-13
Waivers..................................................... E-13
Conclusion.................................................. E-14
</Table>
E-3
ACCOUNTING POLICIES
Anadarko and each of our subsidiaries will make and keep books, records and
accounts, which in reasonable detail accurately and fairly present the
transactions and disposition of the assets of our Company.
All directors, officers, employees and other persons are prohibited from
directly or indirectly falsifying or causing to be false or misleading any
financial or accounting book, record or account. You and others are expressly
prohibited from directly or indirectly manipulating an audit, and from
destroying or tampering with any record, document or tangible object with the
intent to obstruct a pending or contemplated audit, review or federal
investigation. The commission of, or participation in, one of these prohibited
activities or other illegal conduct will subject the perpetrator to federal
penalties, as well as punishment of up to and including termination of
employment. For more information on our accounting procedures and processes see
the Anadarko Intranet.
No director, officer or employee of the Company may directly or indirectly:
- Make or cause to be made a materially false or misleading statement, or
- Omit to state, or cause another person to omit to state, any material
fact necessary to make statements made not misleading
in connection with the audit of financial statements by independent accountants,
the preparation of any required reports whether by independent or internal
accountants, or any other work which involves or relates to the filing of a
document with the Securities and Exchange Commission ("SEC").
AMENDMENTS AND MODIFICATIONS OF THIS CODE
There shall be no amendment or modification to this Code except by a vote
of the Board of Directors or a designated board committee that will ascertain
whether an amendment or modification is appropriate.
In case of any amendment or modification of this Code that applies to an
officer or director of the Company, the amendment or modification shall be
posted on the Company's website within two days of the board vote or shall be
otherwise disclosed as required by applicable law or New York Stock Exchange
rules. Notice posted on the website shall remain there for a period of 12 months
and shall be retained in the Company's files as required by law.
ANONYMOUS REPORTING
If you wish to report a suspected violation of this Code anonymously, you
may call the Anadarko Anonymous Reporting Hotline at 1-877-781-2434. Anadarko
will not disclose the identity of any employee who reports a violation of this
Code without his or her permission, unless disclosure is unavoidable during an
investigation.
ANTI-BOYCOTT AND U.S. SANCTIONS LAWS
We must comply with anti-boycott laws, which prohibit Anadarko from
participating in, and require us to report to the authorities any request to
participate in, a boycott of a country or businesses within a country. If you
receive such a request, report it to the Vice President of your division. We
will also not engage in business with any government, entity, organization or
individual where doing so is prohibited by applicable laws. For more information
on these laws contact the Legal department.
ANTITRUST AND FAIR COMPETITION LAWS
The purpose of antitrust laws in the United States and most other countries
is to provide a level playing field to economic competitors and to promote fair
competition. No director, officer or employee, under any circumstances or in any
context, may enter into any understanding or agreement, whether express or
implied, formal or informal, written or oral, with an actual or potential
competitor, which would
E-4
illegally limit or restrict in any way either party's actions, including the
offers of either party to any third party. This prohibition includes any action
relating to prices, costs, profits, products, services, terms or conditions of
sale, market share or customer or supplier classification or selection.
It is our policy to comply with all U.S. antitrust laws. This policy is not
to be compromised or qualified by anyone acting for or on behalf of our Company.
You must understand and comply with the antitrust laws as they may bear upon
your activities and decisions. Anti-competitive behavior in violation of
antitrust laws can result in criminal penalties, both for the individual
involved and for the Company. Accordingly, any question regarding compliance
with antitrust laws or your responsibilities under this policy should be
directed to the Legal department. Any director, officer or employee found to
have knowingly participated in violating the antitrust laws will be subject to
disciplinary action, up to and including termination of employment.
Below are some scenarios that are prohibited and scenarios that could be
prohibited for antitrust reasons. These scenarios are not an exhaustive list of
all prohibited and possibly prohibited antitrust conduct. When in doubt about
any situation, whether it is discussed below or not, you should consult with the
Legal department.
The following scenarios are prohibited for antitrust or anti-competition
reasons:
- Proposals or execution of any agreements or understanding -- express or
implied, formal or informal, written or oral -- with any competitor
regarding any aspect of competition between Anadarko and the competitor
for sales to third parties.
- Proposals or execution of any agreements or understanding with customers
which restrict the price or other terms at which the customer may resell
or lease any product to a third party.
- Proposals or execution of any agreements or understanding with suppliers
which restrict the price or other terms at which Anadarko may resell or
lease any product or service to a third party.
The following business arrangements could raise anti-competition or
antitrust law issues. Before entering into them, you must consult with the Legal
department:
- Exclusive arrangements for the purchase or sale of products or services.
- Bundling of goods and services.
- Technology licensing agreements that restrict the freedom of the licensee
or licensor.
- Agreements to add an Anadarko employee to another entity's Board of
Directors.
BRIBERY
You are strictly forbidden from offering, promising, or giving money,
gifts, loans, rewards, favors or anything of value to any governmental official,
employee, agent or other intermediary (either inside or outside the United
States) which is prohibited by law. Those paying a bribe may subject the Company
and themselves to civil and criminal penalties. When dealing with government
customers or officials, no improper payments will be tolerated. If you receive
any offer of money or gifts that is intended to influence a business decision,
then it should be reported to your supervisor or the General Counsel
immediately.
The Company prohibits improper payments in all of its activities, whether
these activities are with governments or in the private sector.
COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Anadarko's goal and intention is to comply with the laws, rules and
regulations by which we are governed. In fact, we strive to comply not only with
requirements of the law but also with recognized compliance practices. All
illegal activities or illegal conduct are prohibited whether or not they are
specifically set forth in this Code.
E-5
Where law does not govern a situation or where the law is unclear or
conflicting, you should discuss the situation with your supervisor and
management should seek advice from the Legal department. Business should always
be conducted in a fair and forthright manner. Directors, officers and employees
are expected to act according to high ethical standards.
COMPUTER AND INFORMATION SYSTEMS
For business purposes, officers and employees are provided telephones and
computer workstations and software, including network access to computing
systems such as the Internet and e-mail, to improve personal productivity and to
efficiently manage proprietary information in a secure and reliable manner. You
must obtain the permission from the Information Technology Services department
to install any software on any Company computer or connect any personal laptop
to the Company network. As with other equipment and assets of the Company, we
are each responsible for the appropriate use of these assets. Except for limited
personal use of the Company's telephones and computer/e-mail, such equipment may
be used only for business purposes. Officers and employees should not expect a
right to privacy of their e-mail. All e-mails on Company equipment are subject
to monitoring by the Company. Please access the Anadarko Intranet for guidelines
for use of e-mail and Internet services and other related procedures.
CONFIDENTIAL INFORMATION BELONGING TO OTHERS
You must respect the confidentiality of information, including, but not
limited to, trade secrets and other information given in confidence by others,
including but not limited to partners, suppliers, contractors, competitors or
customers, just as we protect our own confidential information. However, certain
restrictions about the information of others may place an unfair burden on
Anadarko's future business. For that reason, directors, officers and employees
should coordinate with the Legal department to ensure appropriate agreements are
in place prior to receiving any confidential third-party information. These
agreements must reflect a balance between the value of the information received
and the logistical and financial costs involved in both maintaining
confidentiality of the information and also limiting Anadarko's business
opportunities. In addition, any confidential information that you may possess
from an outside source, such as a previous employer, must not, so long as such
information remains confidential, be disclosed to or used by Anadarko.
Unsolicited confidential information submitted to Anadarko should be refused,
returned to the sender where possible and deleted, if received via the Internet.
CONFIDENTIAL AND PROPRIETARY INFORMATION
It is Anadarko's policy to ensure that all operations, activities and
business affairs of the Company and our business associates are kept
confidential to the greatest extent possible. Confidential information includes
all non-public information that might be of use to competitors, or that might be
harmful to the Company or its customers if disclosed. Confidential and
proprietary information about Anadarko or its business associates belongs to the
Company, must be treated with strictest confidence and is not to be disclosed or
discussed with others.
Unless otherwise agreed to in writing, confidential and proprietary
information includes any and all methods, inventions, improvements or
discoveries, whether or not patentable or copyrightable, and any other
information of a similar nature disclosed to the directors, officers or
employees of the Company or otherwise made known to us as a consequence of or
through employment or association with the Company (including information
originated by the director, officer or employee). This can include, but is not
limited to, information regarding the Company's business, products, processes,
and services. It also can include information relating to research, development,
inventions, trade secrets, intellectual property of any type or description,
data, business plans, marketing strategies, engineering, contract negotiations,
contents of the Company Intranet; and, business methods or practices.
The following are examples of information that is not considered
confidential:
- Information that is in the public domain to the extent such information
is readily available;
E-6
- Information that becomes generally known to the public other than by
disclosure by the Company or a director, officer or employee; or
- Information you receive from a party, which is under no legal obligation
of confidentiality with the Company with respect to such information.
We have exclusive property rights to all confidential and proprietary
information regarding Anadarko or our business associates. The unauthorized
disclosure of this information could destroy its value to the Company and give
others an unfair advantage. You are responsible for safeguarding Company
information and complying with established security controls and procedures. All
documents, records, notebooks, notes, memoranda and similar repositories of
information containing information of a secret, proprietary, confidential or
generally undisclosed nature relating to the Company or our operations and
activities made or compiled by the director, officer or employee or made
available to you prior to or during the term of your association with the
Company, including any copies thereof, unless otherwise agreed to in writing,
belong to the Company and shall be held by you in trust solely for the benefit
of the Company, and shall be delivered to the Company by you on the termination
of your association with us or at any other time we request.
CONFLICTS OF INTEREST
Conflicts of interest can arise in virtually every area of our operations.
A "conflict of interest" exists whenever an individual's private interests
interfere or conflict in any way (or even appear to interfere or conflict) with
the interests of the Company. We must strive to avoid conflicts of interest. We
must each make decisions solely in the best interest of the Company. Any
business, financial or other relationship with suppliers, customers or
competitors that might impair or appear to impair the exercise of our judgment
solely for the benefit of the Company is prohibited.
Here are some examples of conflicts of interest:
Family Members. Actions of family members may create a conflict of
interest. For example, gifts to family members by a supplier of the Company are
considered gifts to you and must be reported. Doing business for the Company
with organizations where your family members are employed or which are partially
or fully owned by your family members or close friends may create a conflict or
the appearance of a conflict of interest. For purposes of the Code "family
members" includes any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, and adoptive relationships.
Gifts, Entertainment, Loans, or Other Favors. Directors, officers and
employees shall not seek or accept personal gain, directly or indirectly, from
anyone soliciting business from, or doing business with the Company, or from any
person or entity in competition with us. Examples of such personal gains are
gifts, non-business-related trips, gratuities, favors, loans, and guarantees of
loans, excessive entertainment or rewards. However, you may accept gifts of a
nominal value. Other than common business courtesies, directors, officers,
employees and independent contractors must not offer or provide anything to any
person or organization for the purpose of influencing the person or organization
in their business relationship with us.
Directors, officers and employees are expected to deal with advisors or
suppliers who best serve the needs of the Company as to price, quality and
service in making decisions concerning the use or purchase of materials,
equipment, property or services. Directors, officers and employees who use
Anadarko advisors, suppliers or contractors in a personal capacity are expected
to pay market value for materials and services provided.
E-7
Outside Employment. Officers and employees may not participate in outside
employment, self-employment, or serve as officers, directors, partners or
consultants for outside organizations, if such activity:
1. reduces work efficiency;
2. interferes with your ability to act conscientiously in our best
interest; or
3. requires you to utilize our proprietary or confidential procedures,
plans or techniques.
You must inform your supervisor of any outside employment, including the
employer's name and expected work hours.
Mineral interest in properties. Any interest held by you or any of your
family members residing in your household in oil, gas or coal properties,
royalties or other mineral interests, or interests in companies either owning
mineral interests or providing services or materials to the Company must be
disclosed in writing.
Reporting Conflicts of Interest or Potential Conflicts of Interest. You
should report any actual or potential conflict of interest involving yourself or
others of which you become aware to your supervisor, the General Counsel or the
Chief Governance Officer. Officers should report any actual or potential
conflict of interest involving yourself or others of which you become aware to
the General Counsel, Chief Governance Officer or to the Chairman of the
Nominating and Corporate Governance Committee of the Board of Directors.
Directors should report any actual or potential conflict of interest involving
yourself or others of which you become aware to the Chairman of the Nominating
and Corporate Governance Committee of the Board of Directors.
CORPORATE COMMUNICATIONS
See INVESTOR RELATIONS AND PUBLIC AFFAIRS.
CORPORATE OPPORTUNITIES AND USE AND PROTECTION OF COMPANY ASSETS
You are prohibited from:
1. taking for yourself, personally, opportunities that are discovered
through the use of Company property, information or position;
2. using Company property, information or position for personal gain; or
3. competing with the Company.
You have a duty to Anadarko to advance its legitimate interests when the
opportunity to do so arises.
You are personally responsible and accountable for the proper expenditure
of Company funds, including money spent for travel expenses or for customer
entertainment. You are also responsible for the proper use of property over
which you have control, including both Company property and funds and property
that customers or others have entrusted to your custody. Company assets must be
used only for proper purposes.
Company property should not be misused. Company property shall not be sold,
loaned or given away regardless of condition or value, without proper
authorization. Each director, officer and employee should protect our assets and
ensure their efficient use. Theft, carelessness and waste have a direct impact
on the Company's profitability. All of our assets should be used only for
legitimate business purposes.
DISCIPLINE FOR NONCOMPLIANCE WITH THIS CODE
Disciplinary actions for violations of this Code of Business Conduct and
Ethics can include oral or written reprimands, suspension or termination of
employment or a potential civil lawsuit against the you.
E-8
The violation of laws, rules or regulations, which can subject the Company to
fines and other penalties, may result in your criminal prosecution.
DISCLOSURE POLICIES AND CONTROLS
The continuing excellence of the Company's reputation is dependent upon our
full and complete disclosure of important information about the Company that is
used in the securities marketplace. Our financial and non-financial disclosures
and filings with the SEC must be transparent, accurate and timely. Proper
reporting of reliable, truthful and accurate information is a complex process
involving cooperation between many departments and disciplines. We must all work
together to insure that reliable, truthful and accurate information is disclosed
to the public.
The Company shall disclose to the SEC, current security holders and the
investing public information that is required, and any additional information
that may be necessary to ensure the required disclosures are not misleading or
inaccurate. The Company requires you to participate in the disclosure process,
which is overseen by the Disclosure Committee and the CEO and CFO. The
disclosure process is designed to record, process, summarize and report material
information as required by all applicable laws, rules and regulations.
Participation in the disclosure process is a requirement of a public company,
and full cooperation and participation by members of the Disclosure Committee,
CEO, CFO and, upon request, other employees in the disclosure process is a
requirement of this Code.
Officers and employees must fully comply with their disclosure
responsibilities in an accurate and timely manner or be subject to discipline of
up to and including termination of employment.
ENVIRONMENT, HEALTH AND SAFETY
Anadarko is committed to managing and operating our worldwide assets in a
manner that is protective of human health and safety and the environment. It is
our policy to comply, in all material respects, with applicable health, safety
and environmental laws and regulations. Each employee is also expected to comply
with our policies, programs, standards and procedures. Please see related
procedures on the Anadarko Intranet.
FAIR DEALING WITH OTHERS
No director, officer or employee should take unfair advantage of anyone
through manipulation, concealment, abuse of privileged information,
misrepresentation of material facts or any other unfair-dealing practice.
FILING OF GOVERNMENT REPORTS
Any reports or information provided, on our behalf, to federal, state,
local or foreign governments should be true, complete and accurate. Any
omission, misstatement or lack of attention to detail could result in a
violation of the reporting laws, rules and regulations.
FOREIGN CORRUPT PRACTICES ACT
The United States Foreign Corrupt Practices Act prohibits giving anything
of value, directly or indirectly, to foreign government officials or foreign
political candidates in order to obtain, retain or direct business. Accordingly,
corporate funds, property or anything of value may not be, directly or
indirectly, offered or given by you or an agent acting on our behalf, to a
foreign official, foreign political party or official thereof or any candidate
for a foreign political office for the purpose of influencing any act or
decision of such foreign person or inducing such person to use his influence or
in order to assist in obtaining or retaining business for, or directing business
to, any person.
You and our agents are also prohibited from offering or paying anything of
value to any foreign person if it is known or there is a reason to know that all
or part of such payment will be used for the above-
E-9
described prohibited actions. This provision includes situations when
intermediaries, such as affiliates, or agents, are used to channel payoffs to
foreign officials.
The Foreign Corrupt Practices Act also contains significant internal
accounting control and record-keeping requirements that apply to the Company's
domestic and international operations. For more information on the Foreign
Corrupt Practices Act, please consult the Anadarko Foreign Corrupt Practices Act
Compliance Manual and related procedures posted on the Anadarko Intranet or
contact the Legal department.
INSIDER TRADING OR STOCK TIPPING
Directors, officers and employees who are aware of material, nonpublic
information (an "insider") from or about the Company, are not permitted,
directly or through family members or other persons or entities, to:
- Buy or sell securities (or derivatives relating to such securities) of
Anadarko, including transfers in or out of the Anadarko stock funds in
the Employee Savings Plan (other than pursuant to a pre-approved trading
plan that complies with the SEC Rule 10b5-1), or
- Pass on, tip or disclose material, nonpublic information to others
outside the Company including family and friends.
Such buying, selling or trading of securities may be punished by discipline
of up to and including termination of employment; civil actions, including
penalties of up to three times the amount of profit gained or loss avoided by
the inside trade or stock tip; or criminal actions, including jail time.
Examples of information that may be considered material, non-public
information in some circumstances are:
- Undisclosed annual, quarterly or monthly financial results, a change in
earnings or earnings projections, or unexpected or unusual gains or
losses in major operations.
- Undisclosed negotiations and agreements regarding mergers, concessions,
joint ventures, acquisitions, divestitures, business combinations or
tender offers.
- An undisclosed increase or decrease in dividends on the Company's common
stock.
- Undisclosed major regulatory changes.
- Undisclosed major management changes.
- Undisclosed information as to results of significant drilling and
exploration activity.
- A substantial contract award or termination that has not been publicly
disclosed.
- A major lawsuit or claim that has not been publicly disclosed.
- The gain or loss of a significant customer or supplier that has not been
publicly disclosed.
- An undisclosed filing of a bankruptcy petition by the Company or a
significant subsidiary.
- Information that is considered confidential.
- Any other undisclosed information that could affect our stock price.
Another Company's Securities. The same policy also applies to securities
issued by another company if you have acquired material, nonpublic information
relating to such company in the course of your employment or affiliation with
Anadarko.
Trades Following Disclosure. When material information has been publicly
disclosed, each insider must continue to refrain from buying or selling the
securities in question until the third business day after the information has
been publicly released to allow the markets time to absorb the information.
E-10
INTELLECTUAL PROPERTY: PATENTS, COPYRIGHTS AND TRADEMARKS
Except as otherwise agreed to in writing between the Company and an officer
or employee, all intellectual property you conceive or develop during the course
of your employment shall be the sole property of Anadarko. The term intellectual
property includes any invention, discovery, concept, idea, or writing whether
protectable or not by any United States or foreign copyright, trademark, patent,
or common law including, but not limited to designs, materials, compositions of
matter, machines, manufactures, processes, improvements, data, computer
software, writings, formula, techniques, know-how, methods, as well as
improvements thereof or know-how related thereto concerning any past, present,
or prospective activities of the Company. Officers and employees must promptly
disclose in writing to the Company any intellectual property developed or
conceived either solely or with others during the course of your employment and
must render any and all aid and assistance, at our expense to secure the
appropriate patent, copyright, or trademark protection for such intellectual
property.
Works of authorship including literary works such as books, articles, and
computer programs; musical works, including any accompanying words; dramatic
works, including any accompanying music; pantomimes and choreographic works;
pictorial, graphic, and sculptural works; motion pictures and other audiovisual
works; sound recordings; and architectural works are protected by United States
and foreign copyright law as soon as they are reduced to a tangible medium
perceptible by humans with or without the aid of a machine. A work does NOT have
to bear a copyright notice in order to be protected and without the copyright
owner's permission, no one may make copies of the work, create derivative works,
distribute the work, perform the work publicly, or display the work publicly.
We have agreements in place, which grant employees permission to make use
of copyrighted works under certain conditions provided that the limitations of
those agreements are followed. You are authorized to make partial photocopies of
certain works pursuant to our agreement with the Copyright Clearance Center.
Copyright laws may protect items posted on a website. Unless a website
grants permission to download the Internet content you generally only have the
legal right to view the content. If you do not have permission to download and
distribute specific website content you should contact the Legal department.
If you are unclear as to the application of this Intellectual Property
Policy or if questions arise, please consult with the Legal department.
INVESTOR RELATIONS AND PUBLIC AFFAIRS
It is very important that the information disseminated about the Company be
both accurate and consistent. For this reason, the Investor Relations department
and the Public Affairs department are responsible for the Company's internal and
external communications. The Investor Relations department is responsible for
public communications with stockholders, analysts and other interested members
of the financial community. The Public Affairs department is responsible for our
marketing and advertising activities and communication with employees, the
media, local communities and government officials. The Public Affairs department
serves as the spokesperson in both routine and crisis situations. In some cases
where information about a non-routine incident should be made available to the
media before someone from the Public Affairs department has arrived, field
personnel who have been trained in crisis response are authorized to speak for
us until someone from the Public Affairs department is available to handle media
inquiries.
NON-RETALIATION FOR REPORTING
In no event will we take or threaten any action against you as a reprisal
or retaliation for making a complaint or disclosing or reporting information in
good faith. However, if a reporting individual was involved in improper activity
the individual may be appropriately disciplined even if he or she was the one
who disclosed the matter to the Company. In these circumstances, we may consider
the conduct of the
E-11
reporting individual in promptly reporting the information as a mitigating
factor in any disciplinary decision.
We will not allow retaliation against an employee for reporting a possible
violation of this Code in good faith. Retaliation for reporting a federal
offense is illegal under federal law and prohibited under this Code. Retaliation
for reporting any violation of a law, rule or regulation or a provision of this
Code is prohibited. Retaliation will result in discipline up to and including
termination of employment and may also result in criminal prosecution.
PATENTS, COPYRIGHTS, AND TRADEMARKS
See INTELLECTUAL PROPERTY.
POLITICAL CONTRIBUTIONS
You shall refrain from making any use of Company, personal or other funds
or resources on behalf of the Company for political or other purposes which are
improper or prohibited by the applicable federal, state, local or foreign laws,
rules or regulations. Company contributions or expenditures in connection with
election campaigns will be permitted where allowed by federal, state, local or
foreign election laws, rules and regulations.
You are encouraged to participate actively in the political process. We
believe that individual participation is a continuing responsibility of those
who live in a free state.
PROHIBITED SUBSTANCES
We have policies prohibiting the use of alcohol, illegal drugs or other
prohibited items, including legal drugs which affect the ability to perform
one's work duties, while on Company premises. We also prohibit the possession or
use of alcoholic beverages, firearms, weapons or explosives on our property
unless authorized by an Executive Officer of the Company. The Company also
prohibits you from reporting to work while under the influence of alcohol or
illegal drugs. We also perform pre-employment and random drug testing on certain
employees. For the procedures on prohibited substances you should see the
Anadarko Intranet.
PUBLIC AFFAIRS
See INVESTOR RELATIONS.
RECORD RETENTION
We have detailed document retention policies to systematically establish
retention periods for records created or received in the normal course of
business. A record is information, regardless of physical format, which has been
created or received in the transaction of the Company's business. Physical
format of a record includes hard copy, electronic, magnetic tape, disk, audio,
video, optical image, etc. Each corporate department and division office is
responsible for the maintenance, retrieval, transfer, and destruction of its
records in accordance with the established filing procedures, records retention
schedules and procedures.
The alteration, destruction or falsification of corporate documents or
records may constitute a criminal act. Destruction or alteration of documents
with the intent to obstruct a pending or anticipated official government
proceeding is a criminal act and could result in large fines and a prison
sentence of up to 20 years. Document destruction or falsification in other
contexts can result in a violation of the federal securities laws or the
obstruction of justice laws.
Before any destruction of any documents or records, you must consult the
procedures posted on the Anadarko Intranet. You are required to review, follow
and abide by the terms of this policy and related procedures. If the policy or
procedure is not clear, questions arise, or there is a pending or anticipated
official proceeding, then the General Counsel must approve any document
destruction.
E-12
RELATIONS AMONG EMPLOYEES: RESPECT AND CONTRIBUTION
We function as a team. Your success as part of this team depends on your
contribution and ability to inspire the trust and confidence of your coworkers
and supervisors. Respect for the rights and dignity of others and a dedication
to the good of our Company are essential.
A cornerstone of Anadarko's success is the teamwork of its directors,
officers and employees. We must each respect the rights of others while working
as a team to fulfill our objectives. To best function as part of a team, you
must be trustworthy and dedicated to high standards of performance. The
relationships between business groups also require teamwork.
To facilitate respect and contribution among employees, we have implemented
the following employment policies:
- To hire, pay and assign work on the basis of qualifications and
performance.
- Not to discriminate on the basis of race, religion, ethnicity, national
origin, color, gender, age, citizenship, veteran's status, marital status
or disability.
- To attract and retain a highly talented workforce.
- To encourage skill growth through training and education and promotional
opportunities.
- To encourage an open discussion between all levels of employees and to
provide an opportunity for feedback from the top to the bottom and from
the bottom to the top.
- To prohibit any sexual, physical, verbal or any other kind of harassment
by others while an employee is on the job.
- To make the safety and security of our employees while at Company
facilities a priority.
- To recognize and reward additional efforts that go beyond our
expectations.
- To respect all workers' rights to dignity and personal privacy by not
disclosing employee information, including protected health information,
unnecessarily.
REPORTING OF CODE VIOLATIONS
You should be alert and sensitive to situations that could result in
actions that might violate federal, state, or local laws or the standards of
conduct set forth in this Code. If you believe your own conduct or that of a
fellow employee may have violated any such laws or this Code, you have an
obligation to report the matter.
Generally, you should raise such matters first with an immediate
supervisor. However, if you are not comfortable bringing the matter up with your
immediate supervisor, or do not believe the supervisor has dealt with the matter
properly, then you should raise the matter with the Vice President in charge of
your division or, if a law, rule or regulation is in question, then consult with
the General Counsel. The most important point is that possible violations should
be reported and we support all means of reporting them.
Directors and officers should report any potential violations of this Code
to the Chief Governance Officer or the Nominating and Corporate Governance
Committee of the Board of Directors.
WAIVERS
There shall be no waiver of any part of this Code for any director or
officer except by a vote of the Board of Directors or a designated board
committee that will ascertain whether a waiver is appropriate under all the
circumstances. In case a waiver of this Code is granted to a director or
officer, the notice of such waiver shall be posted on our website within five
days of the Board of Director's vote or shall be otherwise disclosed as required
by applicable law or New York Stock Exchange rule. Notices posted on our website
shall remain there for a period of 12 months and shall be retained in our files
as required by law.
E-13
A waiver for a specific event arising under the "Conflicts of Interest"
section of this Code may be granted to an employee that is not a director or
officer on the approval of two of the following officers: the Vice President in
charge of the division or department for which the employee works; the General
Counsel; and, the Chief Governance Officer. No other waivers of this Code are
permitted.
CONCLUSION
This Code is an attempt to point all of us at Anadarko in the right
direction, but no document can achieve the level of principled compliance that
we are seeking. In reality, each of us must strive every day to maintain our
awareness of these issues and to comply with the Code's principles to the best
of our abilities. We must always ask:
Does it feel right?
Is this action ethical in every way?
Is this action in compliance with the law?
Could my actions create an appearance of impropriety?
Am I trying to fool anyone, including myself, about the propriety of
this action?
We cannot expect perfection, but we do expect good faith. If you act in bad
faith or fail to report illegal or unethical behavior, then you will be subject
to disciplinary procedures. We hope that you agree that the best course of
action is to be honest, forthright and loyal at all times.
E-14
APPENDIX F
ANADARKO PETROLEUM CORPORATION
CODE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER
AND CHIEF ACCOUNTING OFFICER
In my role as Chief Executive Officer ("CEO"), Chief Financial Officer
("CFO") or Chief Accounting Officer ("CAO") of Anadarko Petroleum Corporation
(the "Company"), I have adhered to and advocated to the best of my knowledge and
ability the following principles and responsibilities governing professional
conduct and ethics:
1. Act with honesty and integrity, avoiding actual or apparent
conflicts of interest in personal and professional relationships. A
"conflict of interest" exists when an individual's private
interests interfere or conflict in any way (or even appear to
interfere or conflict) with the interests of the Company.
2. Provide constituents with information that is accurate, complete,
objective, relevant, timely and understandable. If I am the CEO or
CFO I shall review the annual and quarterly reports before
certifying and filing them with the SEC.
3. Comply with all applicable laws, rules and regulations of federal,
state and local governments, and other appropriate private and
public regulatory agencies.
4. Act in good faith, responsibly, with due care, competence and
diligence, without misrepresenting material facts or allowing my
independent judgement to be subordinated.
5. Respect the confidentiality of information acquired in the course
of business except when authorized or otherwise legally obligated
to disclose the information. I acknowledge that confidential
information acquired in the course of business is not to be used
for personal advantage.
6. Proactively promote ethical behavior among employees at the Company
and as a responsible partner with industry peers and associates.
7. Maintain control over and responsibly manage all assets and
resources employed or entrusted to me by Anadarko.
8. Report illegal or unethical conduct by any director, officer or
employee that has occurred, is occurring or may occur, including
any potential violations of this Code or the Anadarko Code of
Business Conduct and Ethics. Such report shall be made to the Chief
Governance Officer or the Nominating and Corporate Governance
Committee of the Board of Directors and shall include conduct of a
financial or non-financial nature.
9. Comply with this Code and the Anadarko Code of Business Conduct and
Ethics. I understand that if I violate any part of this Code, I
will be subject to disciplinary action.
I understand that this Code is subject to all applicable laws, rules and
regulations. This Code incorporates by reference the Anadarko Code of Business
Conduct and Ethics that applies to all directors, officers and employees.
I understand that if there is a conflict between this Code and a Company
policy or procedure, the Anadarko Code of Business Conduct and Ethics, or any
applicable law, rule or regulation, then I must consult with the Legal
Department for guidance.
F-1
I understand that there shall be no waiver of, modification of, or change
to any part of this Code except by a vote of the Board of Directors or a
designated Board committee. In the event that a waiver of, modification of, or a
change to this Code is granted, then the notice of the waiver, modification
and/or change shall be posted on the Company's website within five business days
of the Board of Director's or designated Board committee's vote or shall be
disclosed otherwise as required by applicable law or NYSE or SEC rules. Notices
posted on the Company website shall remain there for a period of 12 months and
shall be retained in the Company's files as required by law.
/s/ JOHN N. SEITZ
--------------------------------------
John N. Seitz
Chief Executive Officer
/s/ MICHAEL E. ROSE
--------------------------------------
Michael E. Rose
Chief Financial Officer
/s/ DIANE L. DICKEY
--------------------------------------
Diane L. Dickey
Chief Accounting Officer
February 24, 2003
F-2
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1. Mark Here [ ]
for Address
Change or
Comments
FOR WITHHELD
FOR ALL
Item 1-ELECTION OF DIRECTORS [ ] [ ]
NOMINEES:
01 Conrad P. Albert
02 Robert J. Allison, Jr.
03 John W. Poduska, Sr.
04 John N. Seitz
Withheld For: (Write that nominee's name in the space provided below.)
- ----------------------------------------------------------------------
PLEASE VOTE YOUR PROXY
"By checking the box to the right, I consent to future
access of the Annual Report, Proxy Statements, prospectuses [ ]
and other communications electronically via the Internet. I
understand that the Company may no longer distribute printed
materials to me for any future shareholder meeting until
such consent is revoked. I understand that I may revoke my
consent at any time by contacting the Company's transfer
agent, Mellon Investor Services, Ridgefield Park, NJ and
that costs normally associated with electronic access, such
as usage and telephone charges, will be my responsibility.
Please disregard if you have previously provided your
consent decision."
SIGNATURE SIGNATURE DATE
--------------------------- -------------------- -------
PLEASE SIGN AS YOUR NAME APPEARS ABOVE. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 4PM EASTERN TIME
THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
INTERNET TELEPHONE MAIL
http://www.eproxy.com/apc 1-800-435-6710
Use the Internet to vote Use any touch-tone Mark, sign and date
your proxy. Have your telephone to vote your your proxy card
proxy card in hand when proxy. Have your proxy and
you access the web site. OR card in hand when you OR return it in the
You will be prompted to call. You will be enclosed postage-paid
enter your control prompted to enter your envelope.
number, located in the control number, located
box below, to create and in the box below, and
submit an electronic then follow the
ballot. directions given.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
YOU CAN VIEW THE 2002 ANNUAL REPORT ON FORM 10-K AND
PROXY STATEMENT ON THE INTERNET AT WWW.ANADARKO.COM
PROXY
ANADARKO PETROLEUM CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF THE STOCKHOLDERS
APRIL 24, 2003
THE WOODLANDS WATERWAY MARRIOTT
1601 LAKE ROBBINS DRIVE
THE WOODLANDS, TX, 77380
The undersigned stockholder hereby appoints ROBERT J. ALLISON, JR. AND SUZANNE
SUTER, and any one of them, with power of substitution and revocation, the
attorneys of the undersigned to vote all shares registered in the name of the
undersigned for the election of directors (unless such authority is withheld)
and on all other matters which may come before the 2003 Annual Meeting of
Stockholders of Anadarko Petroleum Corporation to be held on Thursday, April 24,
2003 at 8:00 a.m. (CDT) or any adjournment thereof.
Please vote on any item as indicated on the reverse side, The shares represented
by this proxy will be voted as directed by the stockholder. If you wish to vote
in accordance with the Board of Directors' recommendations, please sign the
reverse side; no boxes need to be checked.
(Continued, and to be marked, dated and signed, on the other side)
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
OR
2. Call TOLL-FREE 1-800-435-6710 on a Touch-Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this
call.
OR
3. To Vote by Internet at our Internet Address: http://www.eproxy.com/apc
PLEASE VOTE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1. Mark Here [ ]
for Address
Change or
Comments
FOR WITHHELD
FOR ALL
Item 1-ELECTION OF DIRECTORS [ ] [ ]
NOMINEES: PLEASE VOTE YOUR PROXY
01 Conrad P. Albert
02 Robert J. Allison, Jr.
03 John W. Poduska, Sr.
04 John N. Seitz
Withheld For: (Write that nominee's name in the space provided below.)
- ----------------------------------------------------------------------
SIGNATURE SIGNATURE DATE
--------------------------- -------------------- -------
PLEASE SIGN AS YOUR NAME APPEARS ABOVE. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 4PM EASTERN TIME
THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
INTERNET TELEPHONE MAIL
http://www.eproxy.com/apc 1-800-435-6710
Use the Internet to vote Use any touch-tone Mark, sign and date
your proxy. Have your telephone to vote your your proxy card
proxy card in hand when proxy. Have your proxy and
you access the web site. OR card in hand when you OR return it in the
You will be prompted to call. You will be enclosed postage-paid
enter your control prompted to enter your envelope.
number, located in the control number, located
box below, to create and in the box below, and
submit an electronic then follow the
ballot. directions given.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
YOU CAN VIEW THE 2002 ANNUAL REPORT ON FORM 10-K AND
PROXY STATEMENT ON THE INTERNET AT WWW.ANADARKO.COM
PROXY
ANADARKO PETROLEUM CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF THE STOCKHOLDERS
APRIL 24, 2003
THE WOODLANDS WATERWAY MARRIOTT
1601 LAKE ROBBINS DRIVE
THE WOODLANDS, TX, 77380
The undersigned stockholder hereby appoints ROBERT J. ALLISON, JR. AND SUZANNE
SUTER, and any one of them, with power of substitution and revocation, the
attorneys of the undersigned to vote all shares registered in the name of the
undersigned for the election of directors (unless such authority is withheld)
and on all other matters which may come before the 2003 Annual Meeting of
Stockholders of Anadarko Petroleum Corporation to be held on Thursday, April 24,
2003 at 8:00 a.m. (CDT) or any adjournment thereof.
Please vote on any item as indicated on the reverse side, The shares represented
by this proxy will be voted as directed by the stockholder. If you wish to vote
in accordance with the Board of Directors' recommendations, please sign the
reverse side; no boxes need to be checked.
(Continued, and to be marked, dated and signed, on the other side)
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
OR
2. Call TOLL-FREE 1-800-435-6710 on a Touch-Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this
call.
OR
3. To Vote by Internet at our Internet Address: http://www.eproxy.com/apc
PLEASE VOTE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1. Mark Here
for Address [ ]
Change or
Comments
FOR WITHHELD
FOR ALL
Item 1-ELECTION OF DIRECTORS [ ] [ ]
NOMINEES: PLEASE VOTE YOUR PROXY
01 Conrad P. Albert
02 Robert J. Allison, Jr.
03 John W. Poduska, Sr.
04 John N. Seitz
Withheld For: (Write that nominee's name in the space provided below.)
- ---------------------------------------------------------------------
SIGNATURE SIGNATURE DATE
---------------------- ---------------------- -----------
PLEASE SIGN AS YOUR NAME APPEARS ABOVE. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 4PM EASTERN TIME
THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
<Table>
- ----------------------------------- ------------------------------------ -----------------------
INTERNET TELEPHONE
HTTP://WWW.EPROXY.COM/APC 1-800-435-6710 MAIL
Use the Internet to vote your Use any touch-tone telephone to Mark, sign and date
proxy. Have your proxy card in OR vote your proxy. Have your proxy OR your proxy card
hand when you access the web card in hand when you call. You will and
site. You will be prompted to enter be prompted to enter your control return it in the
your control number, located in number, located in the box below, enclosed postage-paid
the box below, to create and and then follow the directions given. envelope.
submit an electronic ballot.
- ----------------------------------- ------------------------------------ -----------------------
</Table>
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
YOU CAN VIEW THE 2002 ANNUAL REPORT ON FORM 10-K AND
PROXY STATEMENT ON THE INTERNET AT WWW.ANADARKO.COM
PROXY
ANADARKO PETROLEUM CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF THE STOCKHOLDERS
APRIL 24, 2003
THE WOODLANDS WATERWAY MARRIOTT
1601 LAKE ROBBINS DRIVE
THE WOODLANDS, TX, 77380
The undersigned stockholder hereby appoints ROBERT J. ALLISON, JR. AND SUZANNE
SUTER, and any one of them, with power of substitution and revocation, the
attorneys of the undersigned to vote all shares registered in the name of the
undersigned for the election of directors (unless such authority is withheld)
and on all other matters which may come before the 2003 Annual Meeting of
Stockholders of Anadarko Petroleum Corporation to be held on Thursday, April 24,
2003 at 8:00 a.m. (CDT) or any adjournment thereof.
Please vote on any item as indicated on the reverse side, The shares represented
by this proxy will be voted as directed by the stockholder. If you wish to vote
in accordance with the Board of Directors' recommendations, please sign the
reverse side; no boxes need to be checked.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
OR
2. Call TOLL-FREE 1-800-435-6710 on a Touch-Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this
call.
OR
3. To Vote by Internet at our Internet Address: http://www.eproxy.com/apc
PLEASE VOTE