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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ANADARKO PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SUZANNE SUTER
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
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[ANADARKO PETROLEUM CORPORATION LOGO]
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
March 18, 1996
TO THE STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders of
the Company which will be held in The Wyndham Hotel, Greenspoint, 12400
Greenspoint Drive, Houston, Texas, on Thursday, April 25, 1996, at 9:30 A.M.
The Notice of the Annual Meeting and Proxy Statement, which are attached,
provide information concerning the matters to be considered at the meeting. In
addition, the general operations of the Company will be discussed and
stockholders will be afforded the opportunity to ask questions.
We would appreciate your signing and returning your proxy in the enclosed
envelope as soon as possible, whether or not you plan to attend the meeting.
Please sign, date and return the enclosed proxy in the self-addressed,
postage-paid return envelope. If you do not return the signed proxy, your proxy
cannot be counted. We value your opinions and encourage you to participate in
this year's Annual Meeting by voting your proxy.
Very truly yours,
/s/ ROBERT J. ALLISON, JR.
ROBERT J. ALLISON, JR.
Chairman, President and
Chief Executive Officer
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[ANADARKO PETROLEUM CORPORATION LOGO]
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1996
Notice is hereby given that the Annual Meeting of Stockholders of Anadarko
Petroleum Corporation, a Delaware corporation (the "Company"), will be held in
The Wyndham Hotel, Greenspoint, 12400 Greenspoint Drive, Houston, Texas, on
Thursday, April 25, 1996, at 9:30 A.M., for the purpose of:
(1) Electing two Class I directors for terms of three years, each to
hold office until the expiration of his term and until his successor shall
have been elected and shall have qualified; and
(2) Transacting such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
A record date of March 1, 1996, has been fixed for determining stockholders
entitled to notice of, and to vote at, the Annual Meeting of Stockholders, and
only holders of Common Stock of record at the close of business on the record
date will be entitled to receive notice of, and to vote at, such meeting or any
adjournment or adjournments thereof.
Whether or not you expect to be present at the meeting, please sign, date
and return the enclosed proxy in the enclosed addressed envelope, which requires
no postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SUZANNE SUTER
SUZANNE SUTER
Corporate Secretary
Dated: March 18, 1996
Houston, Texas
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[ANADARKO PETROLEUM CORPORATION LOGO]
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1996
---------------------
GENERAL INFORMATION
This statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Anadarko Petroleum Corporation, a Delaware
corporation (the "Company" or "Anadarko"), of proxies for use at its Annual
Meeting of Stockholders to be held in The Wyndham Hotel, Greenspoint, 12400
Greenspoint Drive, Houston, Texas, on Thursday, April 25, 1996, at 9:30 A.M.,
for the purposes set forth in the accompanying notice of the meeting. Proxy
material is being mailed to holders of the Company's common stock, par value
$0.10 per share ("Common Stock"), on or about March 18, 1996.
A stockholder may, at any time prior to the meeting, revoke a proxy by
giving written notice of such revocation addressed to the Corporate Secretary of
the Company at P. O. Box 1330, Houston, Texas 77251-1330. Unless revoked prior
to its exercise, any proxy given pursuant to this solicitation will be voted at
the meeting. Also, a stockholder may attend the meeting and vote in person
whether or not the stockholder has previously given a proxy.
RECORD DATE AND VOTING AT THE MEETING
On March 1, 1996, the record date for the determination of stockholders
entitled to vote at the meeting, the Company had 59,065,329 shares of Common
Stock outstanding, each of which will be entitled to one vote at the meeting.
Votes cast by proxy or in person at the meeting will be tabulated by the
election inspectors appointed for the meeting. The holders of a majority of the
shares entitled to vote at the meeting, whether present in person or represented
by proxy, will constitute a quorum for the transaction of business at the
meeting. Proxy cards that are not signed or that are not returned are treated as
not voted for any purpose.
All elections for directors shall be decided by a plurality of the votes
cast in respect thereof. If no voting direction is indicated on the proxy card,
the shares will be considered votes for the nominees. In accordance with
Delaware law, a stockholder entitled to vote for the election of directors can
withhold authority to vote for all nominees for directors or can withhold
authority to vote for certain nominees for director.
Abstentions from voting with respect to proposals are treated as votes
against the particular proposal. If a broker indicates on a proxy that it does
not have discretionary authority as to certain shares to vote on a particular
proposal, those shares will not be considered as present and entitled to vote
with respect to that proposal.
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ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
The Board is divided into three classes of directors serving staggered
three-year terms. Class I and Class III each have two directors and Class II has
three directors.
At the meeting, the two Class I directors are to be elected for terms of
three years, each to hold office until the expiration of his term in 1999 and
until his successor shall have been elected and shall have qualified. It is the
intention of the persons named in the accompanying form of proxy to vote such
proxy, unless otherwise instructed, for the election of Messrs. Ronald Brown and
John R. Gordon for terms of three years. If either of these nominees should be
unable to serve, the proxies will be voted for the election of such other
persons as shall be determined by the persons named in the proxy, in accordance
with their judgment.
Messrs. Larry Barcus and James L. Bryan, Class III directors, were elected
by the stockholders in 1995 for terms of three years. Messrs. Conrad P. Albert,
Robert J. Allison, Jr. and Charles M. Simmons, Class II directors, were elected
by the stockholders in 1994 to each serve a three-year term.
INFORMATION ABOUT DIRECTORS
Certain information concerning the nominees for election as directors, and
those persons whose terms of office as directors will continue after the
meeting, is set forth below.
NOMINEES FOR ELECTION
RONALD BROWN -- Mr. Brown resides in Rancho Santa Fe, California, and is
engaged in personal investments. He retired as Executive Vice President of
Compass Bank, Houston, Texas in 1992. He had served in that position from 1991
when River Oaks Bank was acquired by Compass Bank. Prior to 1991 he was Vice
Chairman and President of River Oaks Bank, a banking association.
AGE AT END BECAME A PROPOSED
OF 1996 DIRECTOR TERM EXPIRES
- ---------- -------- ------------
63 1986 1999
JOHN R. GORDON -- Mr. Gordon has been President of Deltec Asset Management
Corporation, a New York investment management company, since January 1988. He is
a director of Deltec Asset Management Corporation, a registered investment
company.
AGE AT END BECAME A PROPOSED
OF 1996 DIRECTOR TERM EXPIRES
- ---------- -------- ------------
48 1988 1999
DIRECTORS CONTINUING IN OFFICE
CONRAD P. ALBERT -- Mr. Albert resides in New York and is engaged in
personal investments. He was Executive Vice President of Manufacturers Hanover
Trust Company, a banking corporation, New York, New York, from September 1983
through 1991. Mr. Albert is also a director of Deep Tech International.
AGE AT END BECAME A PRESENT
OF 1996 DIRECTOR TERM EXPIRES
- ---------- -------- ------------
50 1986 1997
ROBERT J. ALLISON, JR. -- Mr. Allison has been Chairman of the Board and
Chief Executive Officer of the Company since October 1, 1986. Mr. Allison was
elected President of the Company in January 1993.
AGE AT END BECAME A PRESENT
OF 1996 DIRECTOR TERM EXPIRES
- ---------- -------- ------------
57 1985 1997
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LARRY BARCUS -- Mr. Barcus is Chairman of L. G. Barcus and Sons, Inc.,
Kansas City, Kansas, a general contractor with operations nationwide.
AGE AT END BECAME A PRESENT
OF 1996 DIRECTOR TERM EXPIRES
- ---------- -------- ------------
59 1986 1998
JAMES L. BRYAN -- Mr. Bryan has been Senior Vice President Operations of
Dresser Industries, Inc. ("Dresser"), an oilfield services company with
executive offices in Dallas, Texas, since February 1994. In May 1990, Mr. Bryan
was elected Vice President-Operations of Dresser.
AGE AT END BECAME A PRESENT
OF 1996 DIRECTOR TERM EXPIRES
- ---------- -------- ------------
60 1986 1998
CHARLES M. SIMMONS -- Mr. Simmons is retired and resides in Fort Worth,
Texas, where he is engaged in personal investments. Mr. Simmons is also a
director of Photoprotective Technologies, Inc., a registered investment company.
AGE AT END BECAME A PRESENT
OF 1996 DIRECTOR TERM EXPIRES
- ---------- -------- ------------
70 1986 1997
COMMITTEES OF THE BOARD
The Board has a standing Executive Committee, Audit Committee and
Compensation and Benefits Committee (the "Compensation Committee"). The Board
does not currently have a nominating committee. Mr. Allison is Chairman and
Messrs. Brown and Bryan are members of the Executive Committee. Mr. Bryan is
Chairman and Messrs. Albert and Barcus are members of the Audit Committee. Mr.
Gordon is Chairman and Messrs. Brown and Simmons are members of the Compensation
Committee. During 1995, the Audit Committee met three times, the Compensation
Committee met four times and the Executive Committee met once.
The Executive Committee reviews and, where appropriate, approves corporate
action with respect to the conduct of the business of the Company between Board
meetings. Actions taken by the Executive Committee are regularly submitted to
the Board at its next meeting for review by the full Board.
The Audit Committee recommends to the Board each year the appointment of
independent auditors for the following year. The Audit Committee considers the
independence of such auditors; reviews the fees for audit and nonaudit services;
reviews the plan, scope and results of the independent audit; reviews the
recommendations resulting from such audit and the responses of management to
such recommendations; reviews the plan, scope and results of the Company's
internal audit group's activities; reviews the recommendations resulting from
internal audits; and reviews the accounting controls of the Company that the
Audit Committee or the Board may deem necessary or desirable. This Committee
also reviews the annual financial statements issued by the Company to its
security holders and makes recommendations as to accounting and auditing
policies which, in its judgment, should receive the attention of the Board.
The Compensation Committee considers and approves certain remuneration
arrangements between the Company and its officers, including executive officers'
salaries; adopts or makes recommendations to the Board regarding the adoption of
compensation and employee benefit plans in which officers and certain key
employees of the Company and certain subsidiaries are eligible to participate;
and grants bonuses, stock options, restricted stock and other benefits pursuant
to Company plans. This Committee also reviews and makes recommendations with
respect to the election of officers of the Company, and when appropriate,
recommends the election to the Board of a Chief Executive Officer.
MEETINGS
During 1995, the Board met four times. Each incumbent director of the
Company, during his term as a director in 1995, attended at least 75% of the
aggregate number of meetings of the Company's Board and Committees of which he
was a member.
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VOTING SECURITIES AND PRINCIPAL HOLDERS
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock beneficially
owned, or as to which there is a right to acquire beneficial ownership within 60
days of February 29, 1996, by each continuing director, each nominee for
director, and all directors and executive officers of the Company as a group as
of February 29, 1996. No director, nominee for director or officer of the
Company owns and has the right to acquire more than 1% of the outstanding Common
Stock. All directors and officers of the Company as a group own beneficially, or
have the right to acquire, within 60 days of February 29, 1996, approximately
2.9% of the outstanding Common Stock.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-----------------------------------
NUMBER
OF SHARES
SHARES EXERCISABLE TOTAL PERCENT
TITLE NAME OF BENEFICIALLY WITHIN BENEFICIAL OF
OF CLASS BENEFICIAL OWNER OWNED(1) 60 DAYS OWNERSHIP CLASS
- --------------------- ------------------------------ ------- --------- --------- -----
Common Stock......... Robert J. Allison, Jr. 202,382 370,000 572,382 *
Common Stock......... Charles G. Manley 32,815 87,000 119,815 *
Common Stock......... Michael E. Rose 24,278 48,000 72,278 *
Common Stock......... John N. Seitz 19,691 90,267 109,958 *
Common Stock......... Charles K. Abernathy 32,597 99,000 131,597 *
Common Stock......... Conrad P. Albert 12,000(2) 18,000 30,000(2) *
Common Stock......... Larry Barcus 1,000 40,000 41,000 *
Common Stock......... Ronald Brown 2,672(3) 40,000 42,672(3) *
Common Stock......... James L. Bryan 1,000 40,000 41,000 *
Common Stock......... John R. Gordon 11,309 40,000 51,309 *
Common Stock......... Charles M. Simmons 10,000 40,000 50,000 *
Common Stock......... All directors and executive 457,421 1,241,133 1,698,554 2.9
officers as a group, including
the above-named (19 persons)
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* Less than one percent.
(1) The directors and officers have sole voting and dispositive power of all
shares beneficially owned. Included are beneficially owned and
undistributed shares of Common Stock held in the Anadarko Employee Savings
Plan. The 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 29, 1996.
(2) Mr. Albert disclaims beneficial ownership of the 1,000 shares held in his
wife's name.
(3) Mr. Brown disclaims beneficial ownership of the 50 shares held in his
wife's name.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to persons known to be the
beneficial owner of more than 5% of the Company's outstanding Common Stock:
AMOUNT
AND
NATURE OF PERCENT
BENEFICIAL OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------ --------------------------------------------- --------- ----
Common Stock............ Sonatrach Petroleum 6,000,000(1) 10.2%
Investment Corporation (Ireland) Limited
10, rue du Sahara
Hydra, Algiers, Algeria
Common Stock............ J.P. Morgan & Co. Incorporated 3,763,200(2) 6.4%
60 Wall Street
New York, NY 10260
Common Stock............ Merrill Lynch Growth 3,300,000(3) 5.6%
Fund for Investment & Retirement
800 Shudders Mill Road
Plainsboro, NJ 08536
- ---------------
(1) According to information contained in a Schedule 13D filed with the
Securities and Exchange Commission (the "Commission"), dated May 11, 1993.
(2) According to information contained in a Schedule 13G filed with the
Commission, dated December 29, 1995.
(3) Merrill Lynch & Co., Inc. and affiliates may be deemed to be the beneficial
owner of common stock of the Company according to information contained in
a Schedule 13G filed with the Commission, dated January 25, 1996.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company purchases oilfield services of companies including Dresser
Industries, Inc. and its affiliates and subsidiaries. In 1995, the aggregate
amount paid to Dresser Industries, Inc. and its affiliates and subsidiaries was
approximately $2,782,000. Mr. Bryan, a director of the Company, is Senior Vice
President Operations of Dresser Industries, Inc.
During 1989, Anadarko Algeria Corporation ("Anadarko Algeria"), a
wholly-owned subsidiary of the Company, entered into an agreement with
Sonatrach, an Algerian entreprise nationale ("Sonatrach"), which gives Anadarko
Algeria the right to explore for and produce liquid hydrocarbons in Algeria.
Sonatrach is wholly-owned by the People's Democratic Republic of Algeria and
owns 99.9% of the capital stock of Sonatrach Petroleum Investment Corporation
(Ireland) Limited. In 1995, approximately $432,000 was paid to Sonatrach for
charges related to equipment usage. As of December 31, 1995, a total of
approximately $146.7 million in exploration costs had been incurred by Anadarko
Algeria of which approximately $40.9 million was incurred in 1995.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer
of $35,000 for serving on the Board of Directors, plus $1,250 for attendance at
each meeting of the Board. In addition, non-employee directors receive an annual
retainer of $3,000 for serving on the Audit or the Compensation Committee, plus
$1,250 for each committee meeting attended. Non-employee directors who serve as
a Chairman of a committee receive an additional annual retainer of $3,000. All
directors are reimbursed for expenses incurred in attending Board and committee
meetings. Employees of the Company who are also directors do not receive a
retainer or fees for Board and committee meetings attended.
The Anadarko Petroleum Corporation 1988 Stock Option Plan for Non-Employee
Directors (the "1988 Plan") was amended in 1994 to permit non-employee directors
to receive a portion of their retainer and/or
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meeting fees in common stock. Under the 1988 Plan each non-employee director
receives an initial grant of 10,000 options which vest equally over a two-year
period. In addition, on October 27th of each year, each non-employee director is
granted an option to purchase 5,000 shares of Common Stock at the fair market
value on such date. All outstanding options granted under the 1988 Plan are
options which do not constitute incentive stock options ("ISOs") within the
meaning of the Internal Revenue Code of 1986, as amended (the "Code") ("NQOs").
All outstanding options under the 1988 Plan are exercisable no earlier than one
year from the date of grant and expire ten years from the date of grant. Options
may not be awarded or granted after October 26, 1998, or the earlier termination
of the 1988 Plan.
The Company has a Director Retirement Income Plan for its non-employee
directors. Directors having ten or more years of service on the Board and having
attained age 65 will be eligible to receive retirement income equal to 60% of
the director's annual retainer fee in effect as of the director's retirement
date from the Board. Directors having less than ten years of service will accrue
a benefit of 6% per year of service of the director's annual retainer fee in
effect as of such director's retirement. Such retirement income will become
payable on the later of the director's retirement date or age 65 and will be
payable in equal installments on a monthly basis during the life of the director
with 120 months of payments guaranteed.
The Company's Director Deferred Compensation Plan (the "Director Deferred
Plan") allowed non-employee directors to defer all or part of their director
annual retainer fee and provided unfunded benefit payments in amounts related to
the amount of compensation deferred, age of the director at the time the
compensation was deferred and accrued interest at 20% per annum. The Director
Deferred Plan provides in-service payments during the time the director is a
member of the Board and payments upon retirement, death, disability or the
attainment of age 65. There have been no deferrals under the Director Deferred
Plan since 1990.
COMPENSATION AND BENEFITS COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised entirely of independent outside
directors and is responsible for establishing and administering the executive
compensation programs of the Company. These programs are designed to promote the
Company's strategic objectives, thereby enhancing stockholder value. This report
describes the compensation decisions made by the Compensation Committee during
1995 with respect to Anadarko's executive officers.
COMPENSATION PHILOSOPHY OF THE COMPANY
The key elements of Anadarko's executive compensation programs include base
salary, performance-based annual bonus and long-term stock incentive plans.
These plans have been developed to attract, reward and retain key personnel
critical to the long-term success of the Company. Anadarko's compensation
programs are designed to provide executive officers total compensation levels
above the average of the Company's competitive market with the opportunity to be
within the top quartile of a select peer group of comparable public oil and gas
companies, to the extent that Company and executive performance on an individual
and collective basis so warrant. In 1995, Mr. Allison's total compensation was
within the top quartile of the select peer group.
Section 162(m) of the Code limits the deductibility to the Company of
compensation in excess of $1 million paid to the Chief Executive Officer and the
next four highest paid officers during any fiscal year, unless such compensation
meets certain performance-based requirements. In structuring the Company's
compensation programs and in determining the appropriateness of awards, the
Compensation Committee's primary consideration is the achievement of the
Company's strategic business goals, taking into consideration competitive
practice, market economics and other factors. To the extent fulfilling these
goals is consistent with favorable tax treatment under section 162(m) of the
Code, the Compensation Committee is committed to making awards that qualify for
the performance-based deduction. The Company believes that the compensation paid
for 1995 pursuant to the Annual Incentive Bonus Plan (the "Incentive Plan") and
the 1993 Stock
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Incentive Plan (the "1993 Plan") is deductible based on final regulations
regarding section 162(m) which were issued by the Internal Revenue Service in
December 1995.
The Performance Graph, contained in this proxy statement, compares
Anadarko's stock price performance over a five-year period against the S&P 500
Index and the Dow Jones Oil-Secondary Index (a published index for the oil and
gas industry). The Dow Jones Oil-Secondary Index provides a meaningful
comparison of Anadarko's total stockholder return against a consistent
representation of oil and gas companies with whom Anadarko competes for
investment dollars. The majority of these companies are also included in the
select peer group (referred to above) against which the Compensation Committee
annually reviews the total compensation and stock ownership of its executive
officers. The analysis of this select peer group focuses more specifically on
those companies which are similar in asset size and key business segments (oil
and gas exploration and production) and are considered the potential competitors
for the Company's executive talent.
BASE SALARY
Anadarko strives to be the best managed company within the oil and gas
industry and structures its compensation programs to match pay with performance.
In this context, Anadarko's base salaries are targeted to be above the industry
average, taking into account scope of responsibilities and internal
relationships. Individual base salaries are determined by members of the
Compensation Committee based on their subjective evaluation of the executive's
performance and the length of time the executive has been in the position. Base
compensation is reviewed annually by the Compensation Committee and adjusted
accordingly to reflect each executive officer's contribution to the performance
of the Company. In addition, the Compensation Committee monitors the aggregate
number of executive officers in an effort to insure that the organization
continues to be managed on an efficient, cost-effective basis.
Base salaries for executive officers, including Mr. Allison, were frozen
for 1995, except for one executive officer who received a promotional increase.
ANNUAL INCENTIVE BONUS
For 1995, executive officers were eligible to receive annual bonus
incentives under the Company's Incentive Plan. The Incentive Plan puts a
significant portion of the executive's compensation at risk by linking their
potential annual compensation to the Company's achievement of specific
performance goals. These goals are established by the Compensation Committee in
writing at the beginning of each calendar year.
Under the Incentive Plan, a total bonus target is established for each
individual executive officer and other key employees, which in 1995 ranged from
15% of base salary up to 60% of base salary. This target is based upon the
individual's position, level of responsibility and ability to impact the
Company's success. The individual target is adjusted based on the Company's
achievement of the pre-established performance goals. Individuals may receive up
to 150% of their bonus target if the Company exceeds the specified goals and,
conversely, individuals may receive a reduced bonus or no bonus payment if the
Company does not attain the specified goals.
For 1995, the performance goals established by the Compensation Committee
included financial, operational and relative stock price performance criteria.
The financial criteria included (1) net income, and (2) cash flow, both of which
were measured against internal objectives. The operational criteria included the
comparison of (1) Anadarko's average five-year reserve replacement measured
against an internal objective, and (2) Anadarko's average five-year worldwide
cost of finding measured against the most recent available industry average
five-year worldwide cost of finding. The stock price performance criteria
included the comparison of Anadarko's relative stock price performance for 1995
as measured against the relative average stock price performance of a select
group of peer companies for the same period. Each performance goal, including
the specific criteria for such goal, was assigned a weight by the Compensation
Committee based upon its relative importance in increasing stockholder value.
1995 was a very successful year for Anadarko's exploration and production
operations -- both internationally and domestically. The Company's strong
drilling program in Algeria resulted in Anadarko increasing
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its estimate of discovered reserves in Algeria to 1.5 billion barrels (gross)
based on the results of several delineation wells and an additional discovery.
Anadarko's continued drilling efforts in the U.S. and offshore Gulf of Mexico
also produced significant results. For the 14th consecutive year, Anadarko more
than replaced annual production volumes with proved reserves of natural gas,
crude oil, condensate and natural gas liquids. This reserve replacement is equal
to 226% of 1995 production, which was 39.6 million energy equivalent barrels
(EEBs), and is among the best operating performances in the Company's history.
Anadarko recorded total reserves of 526 million EEBs at the end of 1995, which
represents an increase of 10% over year-end 1994. In addition, Anadarko's
worldwide five-year cost of finding for 1991 through 1995 was $3.39 per EEB and
continues to be better than the most recently published industry worldwide
five-year average for the period 1990 through 1994. The Company's financial
performance for the year exceeded the 1995 budget. Anadarko's relative stock
performance for the year exceeded the relative average stock performance of the
peer companies. The Company's overall performance, as measured against the
financial, operational and relative stock price performance goals established by
the Compensation Committee, produced the maximum Corporate Performance Rating
under the Incentive Plan. As a result, the Compensation Committee approved a
bonus for Mr. Allison under the Company's Incentive Plan which represents 150%
of his 60% bonus target. In recognition of Mr. Allison's significant
contribution to Anadarko's overall success, the Compensation Committee also
awarded him a special bonus of $257,000. The payment of this bonus is deferred
until his retirement from the Company.
STOCK PLANS
The Company believes equity-based programs encourage long-term strategic
management and enhancement of stockholder value. To align the interests of
executive officers with those of stockholders, the Company may grant certain
stock-based awards under the 1993 Plan. Anadarko has established stock ownership
guidelines for executive officers of two and one-half times base salary for Vice
Presidents, three times base salary for Senior Vice Presidents and five times
base salary for the Chief Executive Officer. The Compensation Committee believes
stock ownership is important to place executive officers in the same position as
stockholders with a commitment to the long-term success of Anadarko.
The Compensation Committee periodically reviews competitive market data to
determine appropriate stock awards based on the executive's position and the
market value of the stock. In addition, the Compensation Committee considers
previous stock grants when determining grant size for executive officers. The
1993 Plan provides for various stock-based awards, however the Compensation
Committee continues to award stock options to ensure that the interests of
executives and stockholders are aligned. Stock options only produce value for
the executive if there is an increase in stock price which results in a
corresponding increase in value to the stockholder. Stock options are granted on
an annual basis at the fair market value of the Common Stock on the date of
grant. For 1995, the Compensation Committee granted Mr. Allison 60,000 stock
options.
SUMMARY
Anadarko's compensation strategy is to provide total compensation
commensurate with the Company's achievement of specific operational, financial
and strategic objectives and the long-term appreciation of Anadarko's stock
price. The Company believes a significant portion of executive compensation
should be directly and materially linked to the creation of value for our
stockholders. The Compensation Committee believes the design of the Company's
total executive compensation program provides executives the incentive to
maximize long-term operational performance consistent with sound financial
controls and high standards of integrity. It is the Compensation Committee's
belief that this focus will ultimately be reflected in Anadarko's stock price
and stockholder return.
The Compensation and Benefits Committee of the Board of Directors consists of
the following:
Mr. John R. Gordon
Mr. Ronald Brown
Mr. Charles M. Simmons
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The following table sets forth information with respect to the Chief
Executive Officer and the four most highly compensated executive officers of the
Company as to whom the total annual salary and bonus for the fiscal year ended
December 31, 1995, exceeded $100,000:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------- ------------------------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
PRINCIPAL COMPENSA- RESTRICTED OPTIONS/ LTIP COMPENSA-
NAME POSITION YEAR SALARY($) BONUS($) TION(1)($) STOCK(2)($) SARS(3)(#) PAYOUTS($) TION(4)($)
- -------------- ----------- ---- --------- -------- ---------- ----------- ---------- ---------- ---------
Robert J.
Allison, Jr. Chairman, President 1995 825,000 1,000,000(5) 0 0 60,000 0 316,741
and Chief
Executive Officer
Chairman, President 1994 825,000 743,000 0 0 60,000 0 192,180
and Chief
Executive Officer
Chairman, President 1993 750,000 675,000 0 0 60,000 0 219,371
and Chief
Executive Officer
Charles G.
Manley Senior Vice President, 1995 280,000 148,000 0 0 24,000 0 108,817
Administration
Senior Vice President, 1994 280,000 148,000 0 0 24,000 0 77,626
Administration
Senior Vice President, 1993 245,000 130,000 0 593,438 24,000 0 80,726
Administration
Michael E.
Rose Senior Vice President, 1995 280,000 148,000 0 81,250 24,000 0 101,312
Finance
Senior Vice President, 1994 280,000 148,000 0 0 24,000 0 74,078
Finance
Senior Vice President, 1993 245,000 130,000 0 593,438 24,000 0 78,911
Finance
John N.
Seitz Senior Vice President, 1995 258,333 165,000 0 0 24,000 0 70,721
Exploration
Vice President, 1994 250,000 130,000 0 113,625 18,000 0 43,485
Exploration
Vice President, 1993 220,000 100,000 0 395,625 18,000 0 42,894
Exploration
Charles K.
Abernathy Vice President, 1995 228,000 80,000 0 0 18,000 0 93,325
Offshore
Vice Pres. Operations- 1994 228,000 90,000 0 0 18,000 0 67,485
International/
Offshore
Vice Pres. Operations- 1993 218,000 82,000 0 395,625 18,000 0 63,170
International/
Gulf of Mexico
- ---------------
(1) No executive officer had perquisites in excess of $50,000 or 10% of salary
plus bonus.
(2) As of December 31, 1995, the number of restricted shares held by each
executive officer and corresponding value on December 31, 1995 was for Mr.
Manley, 6,000 shares valued at $324,750; Mr. Rose, 8,000 shares valued at
$433,000; Mr. Seitz, 5,334 shares valued at $288,703; and Mr. Abernathy
4,000 shares valued at $216,500. Dividends will be paid on unvested shares.
The restricted stock awarded in 1993 vested 20% on May 10, 1993 and will
vest 20% per year each May 10th thereafter. The restricted stock awarded to
Mr. Seitz in 1994 will vest 33% per year each April 28th beginning in 1995.
The restricted stock awarded to Mr. Rose in 1995 will vest 33% per year each
April 27th beginning in 1996.
(3) No stock appreciation rights ("SARs") are outstanding.
(4) This column includes (a) Company contributions to the Anadarko Employee
Savings Plan and Executive Benefit Equalization Plan; (b) interest earned
above 120% of the applicable federal rate on deferred compensation under the
Executive Deferred Compensation Plan; (c) payments under the Annual Override
Bonus Plan ("ORRI"); and (d) the value of Company paid split-dollar
insurance premiums. The 1995 amounts for items (a), (b), (c) and (d) for
each of the individuals named in the table are for Mr. Allison, $94,080,
$78,416, $75,222 and $69,023; Mr. Manley, $25,680, $44,422, $16,184 and
$22,531; Mr. Rose, $25,680, $40,518, $15,748 and $19,366; Mr. Seitz,
$23,300, $13,676, $19,143 and $14,602; and Mr. Abernathy, $19,080, $32,943,
$24,698 and $16,604, respectively. No deferrals have been made under the
Executive Deferred Compensation Plan since 1990. Grants under the ORRI were
discontinued after 1986; however, awards that were previously made will
continue to produce payments to the recipients in accordance with the
provisions of the Plan.
(5) Includes $743,000 paid under the Company's Incentive Plan and a special
bonus of $257,000, the payment of which is deferred until Mr. Allison's
retirement from the Company.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------- AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES
SECURITIES OPTIONS/SARS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN PRICE(2) EXPIRATION -------------------------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
- ---------------------- ------------- ------------ -------- ---------- ----- -------------- --------------
Robert J. Allison,
Jr.................. 60,000 13.0% $41.4375 10/26/05 $ 0 $ 1,563,588 $ 3,962,442
Charles G. Manley..... 24,000 5.2% $41.4375 10/26/05 $ 0 $ 625,435 $ 1,584,977
Michael E. Rose....... 24,000 5.2% $41.4375 10/26/05 $ 0 $ 625,435 $ 1,584,977
John N. Seitz......... 24,000 5.2% $41.4375 10/26/05 $ 0 $ 625,435 $ 1,584,977
Charles K.
Abernathy........... 18,000 3.9% $41.4375 10/26/05 $ 0 $ 469,077 $ 1,188,733
Above Optionees Gain
as % of all
Stockholders Gain... N/A N/A N/A N/A N/A 0.2% 0.2%
All Stockholders(4)... 59,016,045 $ 0 $1,969,424,807 $4,990,733,526
- ---------------
(1) No SARs were granted in 1995. Stock options granted on October 26, 1995 were
granted under the Company's 1993 Plan. Fifty percent of the options become
fully exercisable on October 26, 1996 and 50 percent become fully
exercisable on October 26, 1997. In the event of a "Change of Control" (as
defined by the Plan) the Compensation Committee can take any one or more of
the following actions: (i) provide for the acceleration of vesting; (ii)
provide for the purchase of the option by the Company; (iii) make such
adjustment as deemed appropriate; or (iv) cause such option to be assumed,
or new rights substituted therefor, by the acquiring or surviving
corporation.
(2) The exercise price equals the fair market value of the Common Stock on the
date of grant.
(3) The dollar amounts under these columns are the results of calculation at 0%
and at the 5% and 10% rates set by the Commission and are not intended to
forecast possible future appreciation, if any, of the Company's stock price.
The Company did not use an alternative formula for a grant date valuation,
as the Company is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors.
(4) Shares owned by all Stockholders on December 31, 1995. No gain to optionee
is possible without an increase in stock appreciation which will benefit all
stockholders commensurately. A zero percent gain in stock price appreciation
will result in no appreciation for the optionee.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
YEAR-END YEAR-END
SHARES (#) ($)
ACQUIRED VALUE -------------- -------------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE*
- -------------------------------- ----------- -------- -------------- -------------------
Robert J. Allison, Jr. ......... 0 $ 0 390,000/90,000 $7,989,375/$849,375
Charles G. Manley............... 0 $ 0 87,000/36,000 $1,269,750/$339,750
Michael E. Rose................. 39,000 $691,627 48,000/36,000 $ 339,000/$339,750
John N. Seitz................... 0 $ 0 89,600/33,000 $1,494,350/$324,563
Charles K. Abernathy............ 0 $ 0 99,000/27,000 $1,749,596/$254,812
- ---------------
* Computed based upon the difference between aggregate fair market value on
December 29, 1995 ($53.0625) and aggregate exercise price.
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PENSION PLAN TABLE
The Company has a defined benefit Retirement Plan (the "Retirement Plan")
covering all United States employees of the Company. The following table shows
the estimated single life annuity payable upon retirement at various levels of
compensation based on the Retirement Plan benefit formula in effect on December
31, 1995.
YEARS OF SERVICE
-----------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- --------------------------------- --------- --------- --------- ----------- -----------
$ 250,000....................... $ 66,000 $ 88,000 $ 110,000 $ 132,000 $ 154,000
300,000....................... 80,000 106,000 133,000 159,000 186,000
400,000....................... 107,000 142,000 178,000 213,000 249,000
500,000....................... 134,000 178,000 223,000 267,000 312,000
600,000....................... 161,000 214,000 268,000 321,000 375,000
700,000....................... 188,000 250,000 313,000 375,000 438,000
800,000....................... 215,000 286,000 358,000 429,000 501,000
900,000....................... 242,000 322,000 403,000 483,000 564,000
1,000,000....................... 269,000 358,000 448,000 537,000 627,000
1,100,000....................... 296,000 394,000 493,000 591,000 690,000
1,200,000....................... 323,000 430,000 538,000 645,000 753,000
1,300,000....................... 350,000 466,000 583,000 699,000 816,000
1,400,000....................... 377,000 502,000 628,000 753,000 879,000
1,500,000....................... 404,000 538,000 673,000 807,000 942,000
1,600,000....................... 431,000 574,000 718,000 861,000 1,005,000
1,700,000....................... 458,000 610,000 763,000 915,000 1,068,000
1,800,000....................... 485,000 646,000 808,000 969,000 1,131,000
1,900,000....................... 512,000 682,000 853,000 1,023,000 1,194,000
2,000,000....................... 539,000 718,000 898,000 1,077,000 1,257,000
The Retirement Plan provides benefits based on a length of service and a
final average pay formula including the Salary and Bonus columns of the Summary
Compensation Table. Messrs. Allison, Manley, Rose, Seitz and Abernathy,
respectively, have 22, 22, 18, 18 and 21 years of accrued service under the
Plan. An employee becomes vested in his benefit under the Retirement Plan at
completion of five years of vesting service, as defined in the Retirement Plan.
The benefits payable under the Retirement Plan are subject to certain
limitations under the Code. For certain employees who may be affected by such
limits, the Company has a Retirement Restoration Plan (the "Restoration Plan")
to maintain total benefits upon retirement at approximately the levels shown in
the table above. The supplemental benefits provided under the Restoration Plan
will not be accorded certain of the favorable tax treatments that apply to
benefits paid under the existing Retirement Plan. Benefits under the Restoration
Plan are payable solely from the general assets of the Company.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Company has Key Employee Contracts of Employment (the "Severance
Contracts") with all current executive officers. The Severance Contracts provide
that in the event of a change in control, as defined in the Severance Contracts,
such individuals will receive certain benefits in the event of the termination
of their employment within five years of the effective date of such change in
control. Such benefits are provided unless such termination of employment is (i)
because of the death or retirement, except in certain circumstances, of the
executive, (ii) by the Company for cause or disability, or (iii) by the
executive other than for good reason (as defined in the Severance Contracts).
Generally, benefits payable under the terms of the Severance Contracts include a
lump-sum cash payment equal to (i) 2.9 times the highest total annualized
compensation paid during the three years ending with the year of such
participant's termination from the
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Company (including base salary and the amount or value of any bonuses); (ii) the
amount of Company matching contributions which would have been made on the
participant's behalf had he continued to participate in the Anadarko Employee
Savings Plan and the Savings Restoration Plan for up to an additional three
years; (iii) the present value of the additional normal retirement benefit which
would have been received by the employee based on continued service through
normal retirement date and assuming an annual 6% increase in base salary; (iv)
the present value of the amounts of deferred compensation which would have been
received by the employee based on continued service through age 65 under each
deferred compensation agreement to which the participant was a party; and (v)
the value of any investments credited to the employee under the Savings
Restoration Plan. In addition, the Severance Contracts provide for a
continuation of various health care, disability and life insurance plans and
certain other benefits for a period of up to three years; and the payment of all
legal fees and expenses incurred by the employee in obtaining or enforcing any
right or benefit provided by the Severance Contracts. The Severance Contracts
also obligate the Company to pay an employee such cash amount as may be
necessary to restore any benefit diminution resulting directly or indirectly
from the assessment of any special excise taxes under section 280G of the Code
in respect to benefits provided under the Severance Contracts. In consideration
of these benefits the employee agrees, in the event a person seeks to effect a
change in control, not to leave the employ of the Company and to render services
commensurate with his position until such person has abandoned or terminated his
efforts or the change in control has occurred. The employee also agrees to
retain, in confidence, any and all confidential information known to him
concerning the Company and its business so long as such information is not
otherwise publicly disclosed. No amounts have been paid under the Severance
Contracts.
The Employee Severance Pay Plan (the "Severance Plan") covers all of the
Company employees who are not covered by the Employment Contracts. The Severance
Plan provides that, in the event of a change in control, as defined in the
Severance Plan, employees will have certain benefits provided to them in the
event of the termination of their employment within three years after the
effective date of such change in control. Benefits are provided unless
termination of employment is (i) because of the death or retirement, except in
certain circumstances, of the employee; (ii) by the Company for cause or
disability; or (iii) by the employee other than for good reason, as defined in
the Severance Plan. The Severance Plan provides benefits that include a lump sum
cash payment based on salary and service ranging from a minimum of three months
to a maximum of two years salary; and a continuation of employee's medical and
dental insurance for six months. No amounts have been paid under the Severance
Plan.
In the event of a "Change of Control", under the terms of Company's
existing stock option plans, except for the 1993 Plan, all outstanding options
which were granted at least six months prior to the date of the "Change of
Control" shall be surrendered to the Company and the optionee shall receive a
cash payment in an amount equal to the number of shares of Common Stock subject
to the options multiplied by the difference between the fair market value of a
share of Common Stock on the date determined to be the date of cancellation and
surrender of such options and the option price. Under the 1993 Plan in the event
of a "Change of Control" the Compensation Committee can take one or more of the
following actions: (i) provide for the acceleration of vesting; (ii) provide for
the purchase of the option by the Company; (iii) make such adjustment as deemed
appropriate; or (iv) cause such option to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation.
12
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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, 1990 and that
all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ANADARKO PETROLEUM CORP, S&P 500 AND DOW JONES OIL -- SECONDARY
[CRC VELOX]
ANADARKO
MEASUREMENT PERIOD PETROLEUM DOW JONES OIL S&P 500
(FISCAL YEAR COVERED) CORPORATION -- SECONDARY INDEX
1990 100 100 100
1991 82 98 130
1992 102 99 141
1993 159 110 155
1994 135 106 157
1995 192 123 214
Assumes $100 Invested on December 31, 1990.
* Total Return Assumes Reinvestment of Dividends
Total Return Data Provided by S&P's Compustat Services Inc. and Dow Jones &
Company Inc.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP served as the Company's independent auditors during
1995 and was appointed by the Board to serve in that capacity for 1996.
Representatives of KPMG Peat Marwick LLP will be present at the meeting to
respond to appropriate questions from stockholders and to make a statement if
they desire to do so.
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 furnished to the Company during
its most recent fiscal year and Forms 5 furnished to the Company with respect to
its most recent fiscal year, the Company believes that all transactions by
reporting persons were reported on a timely basis.
OTHER MATTERS
It is not expected that any other matters will come before the meeting.
However, if any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying form of proxy to vote such
proxy in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
The Company received a stockholder proposal regarding board diversity. The
proposal was withdrawn as a result of the Board adopting the resolution below.
The Company has always had a policy to select the most qualified candidates for
Board positions and not to limit such selection either by gender or race. The
Board resolution adopted reaffirms that policy.
UNANIMOUSLY RESOLVED: That the Company take reasonable steps to ensure
that qualified women and qualified persons from minority racial groups are
in the pool from which the Board member nominees are chosen.
Any proposal which a stockholder may desire to present to the 1997 Annual
Meeting of Stockholders must be received by the Company on, or prior to,
November 18, 1996.
PROXY SOLICITATION
The cost of preparing, assembling and mailing the material in connection
with the solicitation of proxies will be borne by the Company. It is expected
that the solicitation of proxies will be primarily by mail but solicitations may
also be made personally or by telephone or telegraph by officers and other
employees of the Company. In addition, the Company has engaged Chemical Mellon
Shareholder Services, L.L.C., 450 West 33rd Street, New York, New York 10001 to
assist in such solicitation at an estimated fee of $5,000 plus disbursements.
It is important that the proxies be returned promptly. All stockholders,
whether or not they expect to attend in person, are urged to sign, date and
return the accompanying form of proxy in the enclosed addressed envelope, which
requires no postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Suzanne Suter
SUZANNE SUTER
Corporate Secretary
Dated: March 18, 1996
Houston, Texas
14
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ANADARKO PETROLEUM CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
April 25, 1996
The undersigned stockholder hereby appoints ROBERT J. ALLISON,
P 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
R directors, unless such authority is withheld, and on all other matters
which may come before the 1996 Annual Meeting of Stockholders of
Anadarko Petroleum Corporation to be held on Thursday, April 25, 1996
O at 9:30 A.M. or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO
X VOTE. 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
Y NEED TO BE CHECKED.
THIS PROXY MUST BE SIGNED AND RETURNED TO BE COUNTED.
(Continued and to be signed on other side)
19
Please mark
your votes as
indicated in
this example /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
---
Item 1 - ELECTION OF CLASS I DIRECTORS
Ronald Brown and John R. Gordon
FOR WITHHELD
FOR ALL
/ / / /
Withheld For: (Write that nominee's name in the space provided below.)
_____________________________________________________________________________
Signature(s)_________________________________________Date________________, 1996
Please mark, date and sign as your name appears above. If shares are held
jointly, each stockholder named should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
Return signed proxy in the enclosed envelope.