Exhibit 10.1
APACHE CORPORATION
NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN
As Amended and Restated May 1, 2003; Effective July 1, 2003
PURPOSE
The purpose of the Non-Employee Directors' Compensation Plan (the "PLAN") is to
set forth certain of the compensation arrangements for members of the board of
directors (the "BOARD") of Apache Corporation ("APACHE") who are not also
employees of Apache ("NON-EMPLOYEE DIRECTORS"). The Plan supersedes the
Directors' Deferred Compensation Plan; however, all elections previously made
thereunder, until terminated or modified, shall remain in effect in respect of
the Plan. The Plan does not supersede or amend in any way any other arrangements
relating to Non-Employee Directors including specifically, without limitation,
the Equity Compensation Plan for Non-Employee Directors, the Outside Directors'
Retirement Plan, indemnification provisions of Apache's charter or bylaws, or
policies with respect to reimbursement of expenses.
PLAN PROVISIONS
1. BOARD RETAINER. Each Non-Employee Director shall be paid, as soon as
practicable following accrual, the Board retainer fees set forth below:
(a) $10,000.00 shall be paid to each Non-Employee Director at the end
of each calendar quarter during which such Non-Employee Director served
as a member of Apache's Board ("CASH RETAINER FEE");
(b) $2,500.00 in value of Apache common stock, par value $1.25 per
share ("STOCK"), shall be paid from Apache's treasury shares to each
Non-Employee Director at the end of each calendar quarter during which
such Non-Employee Director served as a member of Apache's Board ("STOCK
RETAINER FEE"). The number of shares of Stock shall be determined by
dividing $2,500.00 by the per share closing price of the Stock as
reported on The New York Stock Exchange, Inc. Composite Transactions
Reporting System (the "Composite Tape") as of the trading day prior to
the last trading day of the relevant calendar quarter, with any
fractional shares to be paid to the director in cash; and
(c) In the event that a Non-Employee Director serves as a member of
Apache's Board for less than an entire calendar quarter, the fees
payable pursuant to Sections 1 (a) and (b) hereof shall be prorated on
the basis of the number of weeks served during such calendar quarter.
-1-
2. COMMITTEE RETAINERS. Each Non-Employee Director serving on any committee of
Apache's Board shall be paid, as soon as practicable, the committee retainer fee
("COMMITTEE RETAINER FEE") set forth below:
(a) $500.00 shall be paid to each Non-Employee Director at the end of
each calendar quarter in respect of each committee on which such
Non-Employee Director served during such quarter;
(b) $1,000.00 shall be paid to each Non-Employee Director at the end of
each calendar quarter in respect of each committee on which such
Non-Employee Director served as chairperson during such quarter; and
(c) In the event that a Non-Employee Director serves on any committee
of Apache's Board and/or as chairperson of any committee of Apache's
board for less than an entire calendar quarter, the fees payable
pursuant to Sections 2 (a) and (b) hereof shall be prorated on the
basis of the number of weeks served during such calendar quarter.
3. ATTENDANCE FEES. Each Non-Employee Director shall receive the attendance fee
("ATTENDANCE FEE") set forth below, such fee to be paid at each such meeting or
as soon thereafter a practicable:
(a) $1,500.00 shall be paid for each meeting of the Board or of any
committee thereof attended in person; and
(b) $1,000.00 shall be paid for each meeting of the Board or of any
committee thereof attended by teleconference, video conference, or
other similar means.
4. OPTIONAL DEFERRAL OF FEES.
(a) DEFERRABLE FEES. A Non-Employee Director may defer all or any
portion of any unpaid Cash Retainer Fee, Stock Retainer Fee, Committee
Retainer Fee, and Attendance Fee, all of which are paid to Non-Employee
Directors with respect to their services performed as a director on the
Board ("DEFERRABLE FEES"). No other payments to Non-Employee Directors
may be deferred including, without limitation, any expense
reimbursement, any award under Apache's Equity Compensation Plan for
Non-Employee Directors, or benefits payable under Outside Directors'
Retirement Plan.
(b) FORM OF DEFERRAL. Any Cash Retainer Fees and Committee Retainer
Fees may be deferred in the form of cash or in the form of Stock. Any
Stock Retainer Fees may be deferred only in the form of Stock. Any
Attendance Fees may be deferred only in the form of cash, except as set
forth in Section 4(e) hereof. Any Cash Retainer Fees, Stock Retainer
Fees and/or Committee Retainer Fees which are deferred in the form of
Stock by a Non-Employee Director shall not be issued until such
deferral is terminated; however, Apache shall at all times have
reserved from its treasury shares for issuance pursuant hereto to
deferring Non-Employee Directors a number of shares at least equal to
the number of shares of Stock issuable pursuant to the terms of the
Plan.
-2-
(c) NUMBER OF SHARES. For any Cash Retainer Fees, Stock Retainer Fees,
and/or Committee Retainer Fees deferred in the form of Stock, the
number of shares of Stock shall be determined by dividing the amount of
such fees by the per share closing price of the Stock as reported on
the Composite Tape as of the trading day prior to the last trading day
of the relevant calendar quarter, with any fractional shares to be
deferred in the form of cash.
(d) ELECTION TO DEFER. A Non-Employee Director's election to defer
("ELECTION") all or any portion of Deferrable Fees shall be effected by
execution of a Directors' Deferred Compensation Agreement between the
participating director and Apache ("AGREEMENT"), a copy of the form of
which is attached hereto as Exhibit A. An Agreement must be executed by
the deferring Non-Employee Director and provided to Apache's Corporate
Secretary on or before December 31 of the year prior to the year for
which deferral is elected. Once executed, an Agreement shall be
irrevocable with respect to the year made, the form of deferral, and
the Deferrable Fees designated for deferral (the "DEFERRED
COMPENSATION"), and shall remain in effect with respect to all
subsequent years until the Agreement is terminated or amended. All
elections to defer Deferrable Fees previously made in respect of the
Directors' Deferred Compensation Plan shall constitute valid Elections
in respect of the Plan. Upon full or partial termination of deferral by
a Non-Employee Director, the cash and/or Stock shall be paid and/or
issued to such Non-Employee Director pursuant to the terms of such
Non-Employee Director's Agreement.
(e) ELECTION TO SWITCH FORM OF DEFERRED COMPENSATION.
(i) With respect to the year-end balance of Deferred
Compensation in the form of cash ("YEAR-END CASH BALANCE") in his or
her Memorandum Account (as defined below), a Non-Employee Director may
make an annual election to switch all or any portion of his or her
Year-End Cash Balance to the form of Stock, effective as of the first
business day of the following year. Such election shall be made by
executing a new Agreement and providing it to Apache's Corporate
Secretary on or before December 31 of the year prior to the year for
which the election is to be effective. Once executed, an Agreement
shall be irrevocable with respect to the portion of the Non-Employee
Director's Year-End Cash Balance to be switched. Such election shall
pertain only to the Year-End Cash Balance for the year stated in the
new Agreement. To make such an election for any subsequent Year-End
Cash Balance, the Non-Employee Director shall execute another new
Agreement as set forth above.
(ii) The number of shares of Stock shall be determined by
dividing the portion of the Non-Employee Director's Year-End Cash
Balance to be switched by the per share closing price of the Stock as
reported on the Composite Tape for the first trading day of the year
for which the election is effective, with any fractional shares
remaining in the form of cash. Such shares of Stock shall be maintained
in the Non-Employee Director's Memorandum account and shall accrue
dividends pursuant to Section 4(g) hereof.
(iii) Non-Employee Directors may not switch Deferred
Compensation in the form of Stock to the form of cash.
-3-
(f) TERMINATION OR MODIFICATION OF ELECTION. Any termination of an
Election shall be made in writing and provided to Apache's Corporate
Secretary on or before December 31 of the year prior to the year for
which the termination is to be effective. Any modification or amendment
of an Election shall be made by executing a new Agreement which shall
supersede any previous Agreement. Such new Agreement must be executed
by the deferring Non-Employee Director and provided to Apache's
Corporate Secretary on or before December 31 of the year prior to the
year for which the amended Election is to be effective. Upon
termination or modification of an Election, all Deferred Compensation
payable to the Non-Employee Director terminating or modifying the
Election shall be paid in accordance with the provisions of such
Non-Employee Director's then effective Agreement, as modified or
amended.
(g) DIVIDENDS AND INTEREST; NO VOTING. All Deferrable Fees deferred by
a Non-Employee Director in the form of and payable in Stock, and any
portion of a Non-Employee Director's Year-End Cash Balance switched to
the form of Stock, shall accrue dividends denominated in the cash value
thereof as if such Stock were issued and outstanding as and when
dividends are payable in respect of such Stock. All Deferrable Fees
deferred by a Non-Employee Director in the form of and payable in cash,
plus all previously accrued dividends and interest, shall accrue
interest at the end of each calendar quarter or as of and through the
date of payment of Deferred Compensation, as appropriate. The rate of
interest per annum shall equal (i) the annual rate of interest earned
by Apache's short-term marketable securities portfolio, or (ii) an
equivalent index or market rate for similar investments in short-term
marketable securities, divided by the number of days elapsed in the
relevant period. Non-Employee Directors shall have no right to vote any
Stock which constitutes Deferred Compensation prior to the date on
which share certificates representing such Stock are issued.
(h) MEMORANDUM ACCOUNT. Apache will maintain a separate Deferred
Compensation memorandum account ("MEMORANDUM ACCOUNT") for each
deferring Non-Employee Director. All Deferred Compensation and accrued
dividends and interest accumulated in each Memorandum Account will be
classified in the same category as other unsecured creditors and
accounts payable of Apache, and neither the deferring Non-Employee
Director nor his or her beneficiary or estate shall have any property
interest whatsoever in any specific assets of Apache. All distributions
from a Memorandum Account of Deferred Compensation deferred in the form
of cash, and of accrued interest and dividends, shall be paid in cash.
All distributions from a Memorandum Account of Deferred Compensation
deferred in the form of Stock, and any portion of a Non-Employee
Director's Year-End Cash Balance switched to the form of Stock, shall
be made by issuance of shares of Stock.
(i) TERMINATION OF DIRECTORSHIP. Upon retirement or other termination
of a Non-Employee Director's directorship with Apache, or on a date
specifically designated in a Non-Employee Director's Agreement, any
balance in such Non-Employee Director's Memorandum Account shall be
paid in cash and/or Stock, as applicable, (a) in a lump sum, or (b) in
annual installments over a ten-year period (or over such shorter period
as designated in the deferring Non-Employee Director's Agreement)
beginning with the first business day of the calendar year immediately
following retirement or other termination of such Non-Employee
Director's directorship.
-4-
(j) ASSIGNMENT AND TRANSFER. The right of the deferring Non-Employee
Director or any other person to receive payments under the Plan shall
not be assigned, transferred, pledged, or encumbered, except by will or
by the laws of descent and distribution. Upon the death of a deferring
Non-Employee Director, any balance remaining in such Non-Employee
Director's Memorandum Account at the time of death shall be paid in
cash and/or Stock, as applicable, in a lump sum to his or her
designated beneficiary or, if there is no designated beneficiary, to
his or her estate as soon as practicable after such Non-Employee
Director's death.
(k) ADJUSTMENTS IN STOCK. In the event of any merger, consolidation,
liquidation, dissolution, recapitalization, or reorganization of
Apache, split, subdivision, or consolidation of shares of Stock, the
payment of a stock dividend, or any other material change in Apache's
capital structure, the number of shares of Stock shown in each
deferring Non-Employee Director's Memorandum Account shall be adjusted
to reflect that number of shares of Stock or such cash, securities, or
other property to which such Non-Employee Director would have been
entitled if, immediately prior thereto, such Non-Employee Director had
been the holder of record of the number of shares of Stock shown in the
Memorandum Account. Notwithstanding the foregoing, the issuance by
Apache of Stock, rights, options, or warrants to acquire Stock, or
securities convertible or exchangeable into Stock in consideration of
cash, property, labor, or services, whether or not for fair value,
shall not result in an adjustment pursuant to this paragraph.
5. AMENDMENT OF PLAN. The Plan may be amended from time to time or terminated by
vote of the Board. Upon such amendment or termination, Non-Employee Directors
shall not be entitled to receive pursuant to the Plan any compensation or other
rights or benefits not accrued hereunder prior to the time of amendment or
termination hereof; provided, however, that no such Plan amendment or
termination shall impair any rights of Non-Employee Directors to amounts
previously accrued pursuant to the Plan or accumulated in such Non-Employee
Director's Memorandum Account.
6. SUCCESSORS AND ASSIGNS. The Plan is binding upon Apache and its successors
and assigns. The Plan shall continue in effect from year to year unless and
until revoked by the Board. Any such revocation shall operate only prospectively
and shall not affect the rights and obligations under elections previously made.
7. DEFINED TERMS. Except when otherwise indicated by the context, the definition
of any term herein in the singular shall also include the plural, and the
masculine gender shall also include the feminine gender.
8. GOVERNING LAW. The Plan and all Agreements hereunder shall be construed in
accordance with and governed by the laws of the State of Texas.
Dated May 1, 2003; Effective July 1, 2003
ATTEST: APACHE CORPORATION
/s/ Cheri L. Peper /s/ Jeffrey M. Bender
- ---------------------------- --------------------------------
Cheri L. Peper Jeffrey M. Bender
Corporate Secretary Vice President, Human Resources
-5-