<PAGE> 1
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 Section 240.14a-11(c) or
Section 240.14a-12
The Williams Companies, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 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:
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(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)
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(4) Proposed maximum aggregate value of transaction:
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / 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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<PAGE> 2
To the Stockholders of The Williams Companies, Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders of
The Williams Companies, Inc. to be held on Thursday, May 19, 1994, in the Adam's
Mark Hotel, 100 East 2nd Street, Tulsa, Oklahoma, commencing at 11 a.m., local
time. We look forward to greeting personally as many of our stockholders as
possible at the meeting.
The Notice of the Annual Meeting and Proxy Statement accompanying this
letter provide information concerning matters to be considered and acted upon at
the meeting. A report on the operations of the Company will be presented at the
meeting, followed by a question-and-answer and discussion period.
We know that most of our stockholders are unable personally to attend the
Annual Meeting. Proxies are solicited so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
meeting. Whether or not you plan to attend, please take a few minutes now to
sign, date and return your proxy in the enclosed postage-paid envelope.
Regardless of the number of shares you own, your vote is important.
Thank you for your continued interest in the Company.
Very truly yours,
/s/ KEITH E. BAILEY
KEITH E. BAILEY
Enclosures
March 25, 1994
<PAGE> 3
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1994
To the Stockholders of
The Williams Companies, Inc.
NOTICE IS HEREBY GIVEN that the 1994 Annual Meeting of Stockholders of The
Williams Companies, Inc. will be held in the Adam's Mark Hotel, 100 East 2nd
Street, Tulsa, Oklahoma, on Thursday, May 19, 1994, at 11 a.m., local time, for
the following purposes:
1. To elect eight directors of the Company;
2. To consider and act on a proposal to amend the Company's Restated
Certificate of Incorporation, as amended, to increase the authorized number
of shares of Common Stock.
3. To consider and act upon a proposal to ratify the appointment of
Ernst & Young as the independent auditor of the Company for 1994; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 18, 1994,
as the record date for the meeting, and only holders of Common Stock of record
at such time will be entitled to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
DAVID M. HIGBEE
Secretary
Tulsa, Oklahoma
March 25, 1994
EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY PROMPTLY SO THAT YOUR SHARES OF COMMON STOCK MAY
BE REPRESENTED AND VOTED AT THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR THIS
PURPOSE.
<PAGE> 4
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1994
This Proxy Statement is furnished by The Williams Companies, Inc. (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company to be used at the 1994 Annual Meeting of Stockholders
to be held at the time and place and for the purposes set forth in the foregoing
Notice of Annual Meeting of Stockholders, and at any and all adjournments of
said meeting. The term "Company" also includes subsidiaries where the context
requires.
SOLICITATION AND REVOCATION OF PROXIES AND VOTING
Execution and return of the enclosed proxy will not in any way affect a
stockholder's right to attend the Annual Meeting of Stockholders and to vote in
person, and a stockholder giving a proxy has the power to revoke it at any time
before it is exercised. The proxy may be revoked prior to its exercise by
delivering written notice of revocation to the Secretary of the Company, by
executing a later dated proxy or by attending the Annual Meeting and voting in
person. Properly executed proxies in the accompanying form, received in due time
and not previously revoked, will be voted at the Annual Meeting or any
adjournment thereof as specified therein by the person giving the proxy, but if
no specification is made the shares represented by proxy will be voted as
recommended by the Board of Directors.
The expenses of this proxy solicitation, including the cost of preparing
and mailing the Proxy Statement and proxy, will be paid by the Company. Such
expenses may also include the charges and expenses of banks, brokerage firms,
and other custodians, nominees or fiduciaries for forwarding proxies and proxy
material to beneficial owners of the Company's Common Stock. The Company expects
to solicit proxies primarily by mail, but directors, officers, employees and
agents of the Company may also solicit proxies in person or by telephone or by
other electronic means. In addition, the Company has retained Morrow & Co., Inc.
to assist in the solicitation of proxies for which the Company will pay an
estimated $8,500 in fees, plus expenses and disbursements. This Proxy Statement
and accompanying proxy were first mailed to stockholders on or about March 30,
1994.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting shall constitute a
quorum for the transaction of business. If a quorum is present, all proposals to
be voted on at the Annual Meeting will be decided by a majority of the votes
cast by the stockholders entitled to vote thereon unless the proposal relates to
matters on which more than a majority vote is required under the Company's
Restated Certificate of Incorporation, its By-laws or the laws of the State of
Delaware, under whose laws the Company is incorporated.
A stockholder may, with respect to the election of directors: (i) vote for
the election of all nominees named herein, (ii) withhold authority to vote for
all such nominees, or (iii) vote for the election of all such nominees other
than any nominees with respect to whom the vote is specifically withheld by
indicating in the space provided on the proxy. A stockholder may, with respect
to each other matter to be voted upon: (i) vote "FOR" the matter, (ii) vote
"AGAINST" the matter, or (iii) "ABSTAIN" from voting on the matter.
A proxy may indicate that all or a portion of the shares represented by
such proxy are not being voted with respect to a particular matter. This could
occur, for example, when a broker is not permitted to vote stock held in the
broker's name on certain matters in the absence of instructions from the
beneficial owner of such
<PAGE> 5
stock. Such shares are considered present at the meeting when voted for other
purposes and will count for purposes of determining the presence of a quorum.
However, such nonvoted shares have the legal effect of a vote against such
proposal. Abstaining from voting on a matter also has the legal effect of voting
against such matter.
As a matter of policy, proxies and voting tabulations that identify
individual stockholders are kept confidential. Such documents are only made
available to those who process the proxy cards, tabulate the vote and serve as
inspectors of election, none of whom are Company employees, and certain
employees of the Company responsible for the Annual Meeting. The vote of any
stockholder is not disclosed except as may be necessary to meet legal
requirements.
Only holders of the Company's Common Stock of record at the close of
business on March 18, 1994, will be entitled to receive notice of and to vote at
the Annual Meeting. The Company had 103,449,236 shares of Common Stock
outstanding on the record date, and each share is entitled to one vote.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for three
classes of directors of as nearly equal size as possible and further provides
that the total number of directors shall be determined by resolution adopted by
the affirmative vote of a majority of the Board of Directors, except that the
total number of directors may not be less than 5 nor more than 17. The term of
each class of directors is normally three years and the term of one class
expires each year in rotation.
Eight individuals, all but two of whom are currently directors of the
Company, have been nominated for election as directors at the Annual Meeting.
Four have been nominated for three-year terms and four for two-year terms as
noted below, and six directors will continue in office to serve pursuant to
their prior election. In accordance with the recommendation of the Nominating
Committee, the Board of Directors proposes that the following nominees be
elected: Messrs. Harold W. Andersen, Keith E. Bailey, Ralph E. Bailey, Ervin S.
Duggan, James C. Lewis, Jack A. MacAllister, James A. McClure and Peter C.
Meinig. Messrs. Joseph W. Morris, David R. Williams, Jr. and John H. Williams,
currently directors of the Company, will retire at the 1994 Annual Meeting in
accordance with the Company's retirement policy for directors.
Messrs. Harold W. Andersen's and Ralph E. Bailey's normal retirement dates
are the Annual Meeting of Stockholders in 1996, and, if elected, they will not
serve a full three-year term but will retire at their normal retirement date in
1996. In order to maintain balance in the three classes of directors, as
required by the By-laws, Mr. Meinig, who was elected to the Board in July 1993,
and Mr. MacAllister, who is being nominated for election to the Board, are
standing for election as Class I directors for two-year terms expiring at the
Annual Meeting of Stockholders in 1996. Mr. Duggan, who is also being nominated
for election to the Board, is standing for election as a Class II director for a
three-year term expiring in May 1997. The remaining three nominees named above
have been nominated for full three-year terms expiring in May 1997.
The persons named as proxies in the accompanying proxy, who have been
designated by the Board of Directors, intend to vote, unless otherwise
instructed in such proxy, for the election of Messrs. Harold W. Andersen, Keith
E. Bailey, Ralph E. Bailey, Ervin S. Duggan, James C. Lewis, Jack A.
MacAllister, James A. McClure and Peter C. Meinig. Should any nominee named
herein become unable for any reason to stand for election as a director of the
Company, it is intended that the persons named in the proxy will vote for the
election of such other person or persons as the Nominating Committee may
recommend and the Board of Directors may propose to replace such nominee or, if
none, the Nominating Committee will recommend that the size of the Board be
reduced. The Company knows of no reason why any of the nominees will be
unavailable or unable to serve.
The names of the nominees and the directors whose terms of office will
continue after the 1994 Annual Meeting, their principal occupations during the
past five years, other directorships held and certain other information are set
forth below.
2
<PAGE> 6
STANDING FOR ELECTION
CLASS I
(TERM EXPIRES MAY 1996)
JACK A. MACALLISTER, AGE 66
Mr. MacAllister is Chairman Emeritus of U S WEST, Inc., a
telecommunications company. Mr. MacAllister retired as Chairman of the Board of
U S WEST in 1992. He served as the Chief Executive Officer of U S WEST from 1982
to 1990. Mr. MacAllister is also a director of TELUS Corporation/AGT Limited.
PETER C. MEINIG, AGE 54
Director since July 1993. Mr. Meinig is Chairman of ElectroCom Automation,
Inc. an Arlington, Texas, based company engaged in the design, manufacture and
integration of high-speed automated document processing systems and has been for
more than five years. Mr. Meinig is also President and Chief Executive Officer
of HM International, Inc., a privately owned diversified manufacturing and
management company.
CLASS II
(TERM EXPIRES MAY 1996)
HAROLD W. ANDERSEN, AGE 70
Director since 1988. Mr. Andersen is contributing editor and a director and
former Chairman and Chief Executive Officer of The Omaha World-Herald Company.
Mr. Andersen is also a director of McCaw Cellular Communications, Inc. and
Canadian Pacific Forest Products Limited.
RALPH E. BAILEY, AGE 70
Director since 1988. Retired Chairman and Chief Executive Officer of
Conoco, Inc. Mr. Bailey is currently Chairman of United Meridian Corporation, a
publicly traded independent oil and gas exploration and production company, and
Chairman and Chief Executive Officer of American Bailey Corporation, a private
holding company with interests in manufacturing and mining, and has been for
more than five years. Mr. Bailey is also a director of General Signal
Corporation and The Rowan Companies, Inc.
CLASS II
(TERM EXPIRES MAY 1997)
KEITH E. BAILEY, AGE 51
Director since 1988. Mr. Bailey was elected President of the Company
effective January 1, 1992, and Chief Executive Officer effective January 1,
1994. He was Executive Vice President of the Company from 1986 through 1991. Mr.
Bailey is also a director of BOK Financial Corporation, Northwest Pipeline
Corporation and Apco Argentina Inc.
ERVIN S. DUGGAN, AGE 54
Mr. Duggan is the President and Chief Executive Officer of the Public
Broadcasting Service (PBS), the network and program distribution company of
America's 346 public television stations. A former journalist and White House
aide, he was a Federal Communications Commissioner from 1990 until February
1994. From 1981 to 1990, Mr. Duggan managed Ervin S. Duggan Associates, a
provider of communications and consulting services to large corporate clients.
3
<PAGE> 7
JAMES C. LEWIS, AGE 61
Director since 1978. Mr. Lewis is Chairman of the Board of Optimus
Corporation, Tulsa, Oklahoma, an investment company, and has been for more than
five years. Mr. Lewis is also a director of CFT, Inc.
JAMES A. MCCLURE, AGE 69
Director since 1991. Mr. McClure is President of McClure, Gerard &
Neuenschwander, Inc., a Washington, D.C. based government relations consulting
firm, and is of counsel to the law firm of Givens, Pursley & Huntley, Boise,
Idaho. He was a U.S. Senator from Idaho from 1973 to 1990. Mr. McClure is also a
director of Boise Cascade Corporation, Idaho Power Company and Coeur d'Alene
Mines Corporation.
DIRECTORS CONTINUING IN OFFICE
CLASS III
(TERM EXPIRES MAY 1995)
GLENN A. COX, AGE 64
Director since 1992. Mr. Cox was President and Chief Operating Officer of
Phillips Petroleum Company, a company engaged in the exploration, production,
refining and marketing of petroleum and in the manufacture and distribution of a
wide variety of chemicals, until his retirement in December 1991. Mr. Cox is
also a director of BOK Financial Corporation, Helmerich & Payne, Inc. and Union
Texas Petroleum Holdings, Inc.
THOMAS H. CRUIKSHANK, AGE 62
Director since 1990. Mr. Cruikshank is Chairman of the Board and Chief
Executive Officer of Halliburton Company, a diversified oil field services,
engineering and construction company. He has been an executive of Halliburton
for more than five years. Mr. Cruikshank is also a director of The Goodyear Tire
& Rubber Company.
GORDON R. PARKER, AGE 58
Director since 1987. Mr. Parker is Chairman of the Board of Newmont Mining
Corporation, a company engaged in the exploration for, and the operation and
management of, precious metal properties. He has been an executive of Newmont
for more than five years. Mr. Parker is also Chairman and a director of Newmont
Gold Company.
JOSEPH H. WILLIAMS, AGE 60
Director since 1969. Mr. Williams was elected Chairman of the Board of the
Company in 1979. He served as Chief Executive Officer of the Company from 1979
through 1993. Mr. Williams is also a director of Northwest Pipeline Corporation.
CLASS I
(TERM EXPIRES MAY 1996)
ROBERT J. LAFORTUNE, AGE 67
Director since 1978. Mr. LaFortune is, and has been for more than five
years, an investor and an oil and gas operator. Mr. LaFortune is also a director
of BOK Financial Corporation.
KAY A. ORR, AGE 55
Director since 1991. Mrs. Orr served as Governor of Nebraska from 1987 to
1991. Mrs. Orr is also a director of ServiceMaster, a company that provides
services to homeowners.
------------------------
4
<PAGE> 8
COMMITTEES, MEETINGS AND DIRECTOR COMPENSATION
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. However, the
Board is not involved in the day-to-day operations of the Company. The Board is
kept informed of the Company's business through discussions with the Chief
Executive Officer and other officers, by reviewing analyses and reports provided
to them on a regular basis and by participating in Board and Committee meetings.
The Board of Directors held eleven meetings during 1993. No director
attended less than 75 percent of the Board and Committee meetings. The Board has
established standing committees to consider designated matters. The Committees
of the Board are Executive, Audit, Nominating and Compensation. In accordance
with the By-laws of the Company, the Board of Directors annually elects from its
members the members and chairman of each committee.
Executive Committee. Members: Joseph H. Williams, Chairman, Keith E.
Bailey, Glenn A. Cox, Robert J. LaFortune, James C. Lewis, and John H. Williams.
The Executive Committee is authorized to act for the Board of Directors in
the management of the business and affairs of the Company, except as such
authority may be limited from time to time by the laws of the State of Delaware.
The Executive Committee met two times in 1993.
Audit Committee. Members: Robert J. LaFortune, Chairman, James C. Lewis,
Joseph W. Morris and Kay A. Orr.
The Audit Committee is composed of nonemployee directors. The Audit
Committee annually considers the qualifications of the independent auditor of
the Company and makes recommendations to the Board on the engagement of the
independent auditor. The Audit Committee meets on a scheduled basis with
representatives of the independent auditor and is available to meet at the
request of the independent auditor. During meetings, the Audit Committee
receives reports regarding the Company's books of accounts, accounting
procedures, financial statements, audit policies and procedures and other
matters within the scope of the Committee's duties. It reviews the plans for and
results of audits of the Company and its subsidiaries. It reviews and approves
the independence of the independent auditor. It considers and authorizes the
fees for both audit and nonaudit services of the independent auditor, and the
Committee or its Chairman must authorize in advance any nonaudit services,
except for services with a fee of less than $50,000.
The Audit Committee also meets with representatives of the Company's
Internal Audit Department. It reviews the results of the internal audits,
compliance with the Company's written policies and procedures and the adequacy
of the Company's system of internal accounting controls. It meets with the
financial and accounting officers of the Company and the executive officers of
subsidiary companies to review various aspects of their operations. During 1993,
the Audit Committee met five times.
Nominating Committee. Members: Harold W. Andersen, Chairman, Thomas H.
Cruikshank, James A. McClure, Kay A. Orr, David R. Williams, Jr. and John H.
Williams.
The Nominating Committee is composed of nonemployee directors. The
Nominating Committee is responsible for recommending candidates to fill
vacancies on the Board as such vacancies occur, as well as the slate of nominees
for election as directors by the stockholders at each Annual Meeting of
Stockholders. Additionally, the Committee recommends to the Board the individual
to be the Chairman of the Board and Chief Executive Officer. During 1993, the
Nominating Committee met four times.
Qualifications for director candidates include an attained position of
leadership in the candidate's field of endeavor, business and financial
experience, demonstrated exercise of sound business judgment, expertise relevant
to the Company's lines of business and the ability to serve the interests of all
stockholders. The Committee will consider director candidates submitted to it by
other directors, employees and stockholders. As a requisite to consideration,
each recommendation must be accompanied by biographical material of the proposed
candidate, as well as an indication that the proposed candidate would be willing
to serve as a director if elected. Recommendations with supporting material may
be sent to the attention of the Corporate Secretary.
5
<PAGE> 9
Compensation Committee. Members: Thomas H. Cruikshank, Chairman, Ralph E.
Bailey, Glenn A. Cox, James C. Lewis, Joseph W. Morris and Gordon R. Parker.
The members of the Compensation Committee are nonemployee directors and are
ineligible to participate in any of the plans or programs which are administered
by the Committee. The Compensation Committee approves the standard for setting
salary ranges for executive officers of the Company, reviews and approves the
salary budgets for all other officers of the Company and of each subsidiary and
specifically reviews and approves the compensation of the senior executives of
the Company. It reviews all action taken by management in accordance with the
salary guidelines for executives and establishes the performance objectives for
variable compensation. It also approves stock option grants for all employees.
During 1993, the Compensation Committee met five times.
Compensation of Directors. Employee directors receive no additional
compensation for service on the Board of Directors or Committees of the Board.
Directors who are not employees receive an annual retainer of $24,000 and an
additional fee for attending Board and Committee meetings (with the exception of
Audit Committee meetings) of $1,000 and $700, respectively. Members of the Audit
Committee receive an additional annual retainer of $7,000 but no separate
meeting fee. Chairmen of the Audit, Nominating and Compensation Committees are
paid an additional annual fee of $2,500, $1,500 and $1,500, respectively.
All directors are reimbursed for reasonable out-of-pocket expenses incurred
in attending meetings of the Board or any Committee or otherwise by reason of
their being a director.
Under the terms of a Plan for Election to Defer Director Fees, a director
may defer all or part of such fees to any subsequent year or until such
individual ceases to be a director. Interest on deferred amounts accrues monthly
at prime interest rates. Three directors elected to defer fees in 1993.
Under the Company's 1988 Stock Option Plan for Non-Employee Directors, all
nonemployee directors receive an annual stock option grant of 2,000 shares of
the Company's Common Stock. The options vest after six months. The exercise
price is equal to the market value of the stock on the date of grant rounded
down to the next lower dollar per share if such value is not an even multiple of
one dollar.
6
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid by the Company and its subsidiaries to the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company for the three fiscal years ended December 31, 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS
--------------------------
ANNUAL COMPENSATION SECURITIES PAYOUTS
RESTRICTED UNDERLYING ----------
NAME AND PRINCIPAL -------------------- STOCK STOCK LTIP ALL OTHER
POSITION(2) YEAR SALARY BONUS AWARDS(3)(4) OPTIONS PAYOUTS(5) COMPENSATION(1)
- ------------------------------- ---- -------- -------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph H. Williams 1993 $720,000 $486,000 $486,000 80,000 $1,042,500 $ 2,017,961
Chairman of the Board 1992 685,100 369,954 369,954 73,400 0 17,382
1991 645,100 362,869 362,869 88,200 0
Keith E. Bailey 1993 $450,000 $283,500 $303,750 40,000 $ 573,375 $ 17,961
President, Chief 1992 385,000 207,900 207,900 0 0 17,382
Executive Officer and 1991 285,600 137,100 845,700(6) 68,200 0
Director
Roy A. Wilkens 1993 $315,000 $349,606(7) $652,188(8) 0(7) 0 $ 17,961
President, Williams 1992 290,000 26,390 0 0 0 17,382
Telecommunications 1991 256,100 57,477 0 0 0
Group, Inc.
Robert W. Keener 1993 $304,008 $121,603 $136,803 16,600 $ 328,388 $ 17,961
Former President, 1992 291,000 168,000 75,000 16,600 0 17,382
Northwest Pipeline 1991 275,800 111,644 80,000 24,000 0
Corporation
Brian E. O'Neill 1993 $267,250 $ 96,210 $108,236 16,600 0 $ 15,603
President, Williams 1992 249,000 81,000 70,000 16,600 0 15,093
Natural Gas Company 1991 236,000 113,300 77,900 20,000 0
and Northwest
Pipeline Corporation
</TABLE>
- ---------------
(1) Consists of contributions made by the Company to the Investment Plus Plan, a
defined contribution plan, on behalf of each of the named executive
officers ($14,150 each in 1993, except for Mr. O'Neill whose contribution
was $11,792) and allocations made by the Company to the accounts of the
named executive officers under the Bonus Employee Stock Ownership Plan
($3,811 each in 1993) based on the closing price of the Common Stock on the
New York Stock Exchange Composite Transactions on December 31, 1993
($24.375)). Amounts for 1991 are omitted as permitted by Securities and
Exchange Commission rules. For Mr. Williams, the amount includes a
$2,000,000 retirement differential payment made in December 1993.
(2) Effective January 1, 1994, Mr. Williams resigned as Chief Executive Officer
of the Company and Mr. Bailey was elected to succeed him in that capacity.
Also effective such date, Mr. Keener resigned as President of Northwest
Pipeline Corporation and Mr. O'Neill was elected to succeed him. Mr.
O'Neill remains President of Williams Natural Gas Company.
(3) Awards reported in this column include the dollar value of awards converted
to deferred stock under the terms of the Company's 1990 Stock Plan. Such
awards are converted to deferred stock based on the 52 week average stock
price for the award year. Receipt of deferred stock is deferred for three
years.
(4) The total number of restricted shares held and the aggregate market value at
December 31, 1993, were as follows: Mr. Bailey, 40,000 shares valued at
$975,000 and Mr. Wilkens, 20,000 shares valued at $487,500. Dividends are
paid on the restricted shares at the same time and at the same rate as
dividends paid to
7
<PAGE> 11
stockholders generally. The total number of shares of deferred stock held
and the aggregate market value at December 31, 1993, were as follows: Mr.
Williams, 62,193 shares valued at $1,515,945; Mr. Bailey, 31,400 shares
valued at $765,375; Mr. Wilkens, 6,856 shares valued at $167,115; Mr.
Keener, 14,490 shares valued at $353,194; and Mr. O'Neill, 15,221 shares
valued at $371,012. Dividend equivalents are paid on deferred stock at the
same time and at the same rate as dividends paid to stockholders generally.
Aggregate market value is calculated using $24.375 per share, the closing
price of the Company's Common Stock on the New York Stock Exchange
Composite Transactions on December 31, 1993.
(5) The amounts shown represent payment of long-term awards made in 1990 which
were valued at $26.0625, the average of the high and low prices of the
Company's Common Stock reported as New York Stock Exchange Composite
Transactions on December 13, 1993, the date of payment.
(6) Includes 40,000 shares of restricted stock valued at the market price on
date of grant ($18).
(7) Mr. Wilkens participates in the Williams Telecommunications Group, Inc.
Long-term Equity Incentive Plan (the "Equity Plan") and has not
participated in the Company's stock option plan, and has only participated
to a limited extent in the bonus plan, since adoption of the Equity Plan.
The amounts shown, except for $157,500 earned in 1993 under the Company's
bonus plan, represent the award made pursuant to the terms of the Equity
Plan. Awards under the Equity Plan, if any, depend on the amount by which
incremental book value exceeds the targeted rate of return for the award
year, subject to various adjustments. None of the other named executive
officers participate in the Equity Plan.
(8) Includes 10,000 shares of restricted stock valued at the market price on
the date of grant ($20) and 10,000 shares of restricted stock valued at the
market price on the date of grant ($27.50).
8
<PAGE> 12
STOCK OPTIONS
The following table provides certain information concerning the grant of
stock options under the Company's 1990 Stock Plan to the named executive
officers in 1993:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS(1) AT ASSUMED ANNUAL
---------------------------------------------------------------- RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR (PER SHARE) DATE 0% 5%
- ------------------- ------------ ---------------- ----------- ---------- --- --------------
<S> <C> <C> <C> <C> <C> <C>
Joseph H. Williams 26,666 3.2% $ 22.00 03/10/03 $ 0 $ 369,591
26,666 3.2 27.00 07/09/03 0 453,589
26,668 3.2 27.00 11/12/03 0 453,623
------------ --- --- --------------
80,000 9.6% $ 0 $ 1,276,803
------------ --- --- --------------
------------ --- --- --------------
Keith E. Bailey 13,332 1.6% $ 22.00 03/10/03 $ 0 $ 184,782
13,334 1.6 27.00 07/09/03 0 226,811
13,334 1.6 27.00 11/12/03 0 226,811
------------ --- --- --------------
40,000 4.8% $ 0 $ 638,404
------------ --- --- --------------
------------ --- --- --------------
Roy A. Wilkens 0(3) N/A N/A N/A N/A N/A
Robert W. Keener 5,532 0.7% $ 22.00 03/10/03 $ 0 $ 76,674
5,534 0.7 27.00 07/09/03 0 94,133
5,534 0.7 27.00 11/12/03 0 94,133
------------ --- --- --------------
16,600 2.1% $ 0 $ 264,940
------------ --- --- --------------
------------ --- --- --------------
Brian E. O'Neill 5,532 0.7% $ 22.00 03/10/03 $ 0 $ 76,674
5,534 0.7 27.00 07/09/03 0 94,133
5,534 0.7 27.00 11/12/03 0 94,133
------------ --- --- --------------
16,600 2.1% $ 0 $ 264,940
------------ --- --- --------------
------------ --- --- --------------
All Optionees 273,020 32.7% $ 22.00 03/10/03 $ 0 $ 3,784,057
279,158 33.4 27.00 07/09/03 0 4,748,478
283,170 33.9 27.00 11/12/03 0 4,816,722
------------ --- --- --------------
835,348 100% $ 0 $ 13,349,257(4)
------------ --- --- --------------
------------ --- --- --------------
All Stockholders N/A N/A N/A N/A $ 0 $1,647,514,053(5)
Optionee Gain as
Percentage of all
Stockholders'
Gain N/A N/A N/A N/A N/A 0.8%
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION
FOR OPTION TERM(2)
-----------------
NAME 10%
- ------------------- --------------
<S> <C>
Joseph H. Williams $ 932,777
1,144,771
1,144,857
--------------
$ 3,222,405
--------------
--------------
Keith E. Bailey $ 466,353
572,429
572,429
--------------
$ 1,611,211
--------------
--------------
Roy A. Wilkens N/A
Robert W. Keener $ 193,509
237,575
237,575
--------------
$ 668,659
--------------
--------------
Brian E. O'Neill $ 193,509
237,575
237,575
--------------
$ 668,659
--------------
--------------
All Optionees $ 9,550,240
11,984,253
12,156,488
--------------
$ 33,690,981(4)
--------------
--------------
All Stockholders $4,158,011,658(5)
Optionee Gain as
Percentage of all
Stockholders'
Gain 0.8%
</TABLE>
- ---------------
(1) Options generally become exercisable in three equal annual installments
beginning within one year after grant. Options generally expire ten years
after grant.
(2) The dollar amounts shown result from calculations using 0 percent, 5 percent
and 10 percent appreciation rates set by the Securities and Exchange
Commission compounded annually and, therefore, 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 a present
value with reasonable accuracy.
(3) Mr. Wilkens participates in the Williams Telecommunications Group, Inc.
Long-term Equity Incentive Plan and does not participate in the Company's
stock option plan.
(4) No gain to the optionees is possible without an increase in stock price,
which will benefit all stockholders commensurately. A zero percent gain in
stock price will result in zero dollars for the optionee.
(5) The potential realizable value for all stockholders was calculated based on
the number of shares outstanding at year end and the weighted average
exercise price for stock options awarded in 1993 ($25.37).
9
<PAGE> 13
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides certain information on stock option exercises
in 1993 by the named executive officers and the value of such officers'
unexercised options at December 31, 1993:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL
SHARES FISCAL YEAR-END YEAR-END(1)
ACQUIRED VALUE ---------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph H. Williams......... 313,664 $3,498,358 -- 158,334 -- $ 693,266
Keith E. Bailey............ 1,750 28,875 156,764 62,736 $ 1,401,833 192,276
Roy A. Wilkens............. 20,200 212,900 35,800 -- 373,225 --
Robert W. Keener........... 90,528 1,021,972 -- 35,669 -- 166,486
Brian E. O'Neill........... -- -- 73,665 34,335 604,322 155,757
</TABLE>
- ---------------
(1) Based on the closing price on the New York Stock Exchange Composite
Transactions of the Company's Common Stock on December 31, 1993 ($24.375),
less the exercise price. The values shown reflect the value of options
accumulated over periods of up to ten years. Such values have not been
realized and may not be realized. The options have not been exercised and
may never be exercised. In the event the options are exercised, their value
will depend upon the fair market value of the Company's Common Stock on the
date of exercise.
RETIREMENT PLAN
The Company's Pension Plan is a noncontributory, tax-qualified defined
benefit plan subject to the Employee Retirement Income Security Act of 1974. The
Pension Plan generally includes salaried employees of the Company who have
completed one year of service. Except as noted below, executive officers of the
Company participated in the Pension Plan on the same terms as other full-time
employees.
The normal retirement benefit is a monthly annuity determined by averaging
compensation during the four calendar years of employment with the highest
average monthly compensation within the ten calendar years preceding retirement.
Covered compensation includes amounts in the Bonus and Restricted Stock Awards
(as to deferred stock only) columns of the Summary Compensation Table. Normal
retirement age is 65. Early retirement may be taken with reduced benefits
beginning as early as age 55. At retirement, employees are entitled to receive a
single-life annuity or one of several optional forms of settlement having an
equivalent actuarial value to the single-life annuity.
The Internal Revenue Code of 1986, as amended (the "Code"), currently
limits the pension benefits which can be paid from a tax-qualified defined
benefit plan, such as the Pension Plan, to highly compensated individuals. These
limits prevent such individuals from receiving the full pension benefit based on
the same formula as is applicable to other employees. As a result, the Company
has adopted an unfunded Supplemental Retirement Plan to provide a supplemental
retirement benefit equal to the amount of such reduction to every employee whose
benefit payable under the Pension Plan is reduced by Code limitations, including
the executive officers named in the Summary Compensation Table.
10
<PAGE> 14
The following schedule illustrates projected annual retirement benefits
based on the formula in effect for service after January 1, 1987, payable under
both the tax-qualified and the supplemental retirement plans based on various
levels of final average annual remuneration and years of service. The benefits
are not subject to deduction for any offset amounts:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
$ 400,000......................... $108,205 $143,626 $178,857 $214,143 $ 249,455
600,000......................... 163,706 217,626 271,358 325,143 378,956
800,000......................... 219,206 291,626 363,858 436,143 508,456
1,000,000......................... 274,705 365,626 456,357 547,143 637,955
1,200,000......................... 330,206 439,626 548,858 658,143 767,456
1,400,000......................... 385,706 513,626 641,358 769,143 896,956
1,600,000......................... 441,205 587,626 733,857 880,143 1,026,455
</TABLE>
As of December 31, 1993, the years of credited service under the Pension
Plan for the executive officers named in the Summary Compensation Table were:
Mr. Williams, 34; Mr. Bailey, 20; Mr. Wilkens, 16; Mr. Keener, 20; and Mr.
O'Neill, 6. Mr. Keener has a contract with a subsidiary of the Company which
credits him with approximately 13 years of additional credited service for
pension purposes for prior industry or related service.
EMPLOYMENT AGREEMENTS
As authorized by the Board of Directors, the Company has separate
employment agreements with each of the executive officers named in the Summary
Compensation Table and certain other individuals. Each agreement is for a term
of thirty months, renewing monthly on an "evergreen" basis unless terminated
under various termination options.
The agreements provide that if the Company terminates the agreement, other
than for cause, as defined, for disability, as defined, or on less than thirty
months' notice or the executive terminates the agreement for breach by the
Company, including good reason, as defined, then, subject to the duty to
mitigate, as provided, the executive shall be entitled to receive damages for
breach of the agreement, consisting of (i) a cash payment equal to the
executive's compensation, including incentive compensation, that would have been
paid during the thirty-month notice period, assuming certain increases; (ii) an
increase in the executive's retirement benefits based upon an additional five
years of age and credited service; (iii) continuation of the executive's
participation in insurance and other fringe benefit plans of the Company, or the
provision of equivalent benefits, for a period of five years; and (iv) payment
of an amount equal to nonvested contributions to certain other benefit plans of
the Company. The Company does not believe that any of such payments would
constitute "parachute payments" as defined in Section 280G of the Code and,
therefore, would not be subject to the excise tax imposed under the Code.
However, in the event the payments are determined to be subject to such tax, the
agreements provide that the Company will pay an additional cash amount
sufficient to pay such tax.
11
<PAGE> 15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of independent outside directors. The Committee is responsible
for overseeing and administering the Company's executive compensation program.
COMPENSATION POLICY
The executive compensation program of the Company is designed to serve the
interests of the Company and its stockholders by aligning executive compensation
with stockholder objectives and to encourage and reward management initiatives
and performance. Specifically, the executive compensation program seeks to:
(i) implement compensation practices which allow the Company to
attract and retain highly qualified executives and maintain a competitive
position in the executive marketplace with employers of comparable size and
in similar lines of business;
(ii) enhance the compensation potential of executives who are in the
best position to contribute to the development and success of the Company
by providing flexibility to compensate individual performance; and
(iii) directly align the interests of executives with the interests of
stockholders through compensation opportunities in the form of Common Stock
ownership.
These objectives are met through a program comprised of base salary, annual
cash bonus and deferred stock opportunities directly tied to operating
performance, and long-term incentive opportunities primarily in the form of
stock options and the selective use of restricted stock. Compensation decisions
under the executive compensation program are made by the Committee.
COMPENSATION PROGRAM
Base Salary. Base salary ranges for the Company's executive officers,
including those named in the Summary Compensation Table, are targeted at between
the 50th and 75th percentile of salary survey results. For this purpose, the
Company compares itself to a group of natural gas transmission companies which
are basically the same companies utilized by Standard & Poor's for the S&P
Natural Gas Pipelines and Distributors Index used by the Company in the
performance graph appearing elsewhere herein. In addition, general compensation
survey information supplied by nationally known compensation consulting firms
and other information concerning compensation levels and stock option grants,
such as compensation and stock option award information disclosed in proxy
statements of other companies, are used by the Committee in making compensation
decisions. While the Committee did not retain a compensation consulting firm for
specific advice on base salary recommendations, the Committee had available to
it survey results from such sources. In practice, primarily because of the
number of years in their current positions, all but three of the Company's
executive officers are at salary levels below the midpoint in their respective
salary ranges.
The Committee considers base salary adjustments for the Company's executive
officers annually. Base salary increases in 1993 for the Company as a whole,
excluding adjustment increases, were targeted at 4.5 percent. This target was
arrived at after a review of survey data. Within this framework, base salary
increases for the Company's executive officers ranged from 4 to 5.6 percent. The
average 1993 pay adjustment for such officers was 4.8 percent and is
approximately equal to the average salary increases for all salaried employees
in 1993. Specific increases for individual executive officers involve
consideration of certain subjective factors, principally the performance of such
executive over the prior compensation period.
Cash Bonus and Deferred Stock. Executive officers are eligible each year
for cash bonuses and deferred stock awards. To the extent such awards are
earned, they are paid from an award pool created by applying a performance
factor to a dollar amount equal to a percentage of each participant's base
salary. The percentage of base salary used for this purpose has been fixed by
the Committee for each level of management eligible to receive awards. The
highest percentage of base salary used for this purpose is 45 percent for the
Chief Executive Officer and President of the Company and lesser levels (down to
10 percent) for other executives.
12
<PAGE> 16
The performance factor is a percentage applied to the dollar amount so derived
to determine the award pools. Performance factors are based on financial results
relative to preestablished performance targets.
The performance targets for cash bonuses and deferred stock awards are set
by the Committee at a threshold, plan and stretch level in January of each year.
The plan level represents the projected level of performance for the plan year
as submitted by the respective business units and as approved by the Board in
January of the plan year. Threshold and stretch targets represent the
Committee's subjective assessment of performance below which there should be no
bonus (the threshold target) and performance at which the full bonus potential
should be paid (the stretch target.) If actual performance is at plan level, 50
percent of the award pools become available for cash bonuses and deferred stock
awards. Performance at levels above or below plan results in award pools
representing a linear increase/decrease from plan to stretch and from plan to
threshold target levels depending upon where actual performance falls. Where
actual results exceed the stretch target, the performance factor applied is
within the sole discretion of the Committee, although, in no event, may the
performance factor exceed 150 percent of the award potential. Notwithstanding
the financial performance measures used to determine the award pools, the
Committee may apply other qualitative, nonfinancial measures in arriving at
final award pools. Such nonfinancial measures could include business decisions,
innovative achievements and completion of capital projects, among other things.
Except in unusual circumstances, there are no awards for performance below the
threshold level.
The performance factor for cash bonuses for 1993 was tied to net income
attributable to Common Stock (80 percent) and corporate operating expense (20
percent) for the Company's executives and operating profit of the individual
operating companies for executives in these units. The performance factor for
deferred stock awards for 1993 was based on the consolidated financial
performance of the Company and was tied to net income attributable to Common
Stock. Cash bonuses are designed to reward individual business unit performance.
Deferred stock awards are viewed as the compensation vehicle for consolidated
performance. The Committee chose to tie performance to net income for the
Company's executives for cash bonus purposes and for all executives for deferred
stock purposes because of the correlation in the benefit to stockholders
generally of performance at the net income line. The Committee also believed it
to be important that a portion of the cash bonus for the Company's executives be
related to their ability to manage operating expenses. The cash bonus for
executives in individual business units is tied to operating performance of the
respective units to directly align bonuses to the performance of each unit
without regard to the performance of any other business unit.
Once the size of the award pool is determined, cash bonuses and deferred
stock awards are made to executive officers from the award pool based on the
Committee's assessment of individual performance. The Committee considers
certain subjective factors in making individual awards from the award pool,
although financial performance is the primary factor in determining the size of
the award pool.
Deferred stock cannot be sold or otherwise disposed of until the applicable
deferral period lapses, which is three years from the award date. The value of
this award is at risk during the deferral period, since it follows the stock
price.
Long-term Compensation. The Company's 1990 Stock Plan, approved by the
stockholders in 1990, permits the Committee to grant different types of
stock-based awards, including deferred stock discussed above. The 1990 Stock
Plan provides for stock option awards giving executives the right to purchase
Common Stock over a ten-year period at the market value per share of the
Company's Common Stock as of the date the option is granted. Options generally
become exercisable in three equal annual installments beginning within one year
after grant. The Committee's objective with respect to stock option awards is to
provide a long-term component to overall compensation which aligns the interests
of executives with the interests of stockholders through stock ownership.
Compensation opportunities in the form of stock options serve this purpose.
The Committee has established stock option award targets for each level of
management participating in the stock option program. The target levels were
established in 1989 and were based on the recommendations of an outside
compensation consultant. The consultant recommended target levels for stock
options ranging from 73,400 shares for the Chief Executive Officer to 3,400
shares for director level employees. The Committee was advised that the
consultant's recommendations were based on an analysis of competitive
13
<PAGE> 17
market practices. In making decisions on stock option awards, the Committee has
available to it information on previous stock option awards granted to executive
officers. Stock option awards are not tied to preestablished corporate
performance targets.
The 1990 Stock Plan also provides for the issuance of restricted stock,
which the executive cannot sell or otherwise dispose of until the applicable
restriction period lapses. Restricted stock is normally forfeited if the
executive terminates employment for any reason other than retirement, disability
or death prior to the lapsing of applicable restrictions. To date, the Committee
has used restricted stock awards primarily to provide, on a selective basis, a
vehicle for tying an element of compensation to the executive's willingness to
remain with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee recommended an increase in Mr. Williams' cash compensation
for 1993 of 5.1 percent. The recommendation was based primarily on a subjective
evaluation of Mr. Williams' performance in 1992 and review of market salary
data. In granting the increase, the Committee took into consideration the
Company's operating performance for the year, and, specifically, the increases
in net income during the year. Mr. Williams' base salary is at the high end of
the range of salary survey results reflective, in part, of the fact he has
served as the Company's Chief Executive Officer since 1979.
The Committee approved a cash bonus and a deferred stock award for Mr.
Williams for 1993 equal, in each case, to 150 percent of eligible amounts based
on the Company's financial performance (net income attributable to Common Stock
and corporate operating expense) relative to the targets established for such
performance and a subjective evaluation of Mr. Williams' performance. The level
of the awards reflect the fact that the Company's performance exceeded the net
income stretch target established by the Committee. As previously discussed,
performance beyond the stretch target does not result in a linear increase in
award pools from plan. If such were the case, 1993 performance would have
resulted in award pools representing 170 percent of award potential. Also as
previously discussed, the award pools for cash bonuses and deferred stock awards
are arrived at based primarily on how actual performance compares to
preestablished performance targets. Once the award pools are determined, the
amount an individual executive receives is based on a subjective evaluation of
that executive's performance during the award year, although no award may exceed
150 percent of the individual executive's award potential.
A stock option grant of 80,000 shares was also approved for Mr. Williams in
1993. This award represents 109 percent of the target for stock option awards
previously established by the Committee for the Chairman and Chief Executive
Officer position. The specific award, relative to the target, was based on a
subjective analysis of Mr. Williams' performance.
OTHER MATTERS
New Section 162(m) of the Internal Revenue Code places a $1 million per
person limitation on the tax deduction the Company may take for compensation
paid to its Chief Executive Officer and its four other highest paid employees,
unless, in general, the compensation constitutes performance-based compensation
as defined by the Code. To the extent that any executive compensation exceeds
this limitation, it is expected that such cases will represent isolated,
nonrecurring situations arising from special circumstances. The Committee would
expect to take actions in the future that may be necessary to preserve the
deductibility of executive compensation to the extent possible.
The Committee authorized the accelerated vesting of certain deferred stock
awards into December 1993 for the executive officers of the Company, including
those named in the Summary Compensation Table. Such awards would have otherwise
vested in January 1995. The purpose for authorizing an acceleration of payment
was to enable both the Company and the individual executives to take advantage
of the more favorable tax treatment afforded such actions in 1993.
The Committee also approved a retirement differential payment to Mr.
Williams made in December 1993. The payment was approved to partially compensate
Mr. Williams for the salary and benefits he will
14
<PAGE> 18
forego and for relinquishing certain contract rights in taking retirement on a
timetable that will permit the Company to implement an orderly and seamless
transition at the Chief Executive Officer level and to facilitate a cost saving
consolidation of the Chairman's position with that of the President. The timing
of the payment was predicated on the tax savings that could be realized by both
Mr. Williams and the Company by making such payment in 1993.
THE COMPENSATION COMMITTEE
Thomas H. Cruikshank, Chairman
Ralph E. Bailey
Glenn A. Cox
James C. Lewis
Joseph W. Morris
Gordon R. Parker
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the Company's cumulative total
stockholder return on its Common Stock with the cumulative total return of the
S&P Corporate-500 Stock Index and the S&P Natural Gas Pipelines and Distributors
Index for the period of five fiscal years commencing January 1, 1989:
(GRAPH)
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
The Williams Companies, Inc. 100 131.52 92.46 142.95 152.83 195.54
S&P 500 100 131.69 127.60 166.47 179.15 197.21
S&P Natural Gas Pipelines 100 155.51 136.12 118.34 130.72 155.20
and Distributors
15
<PAGE> 19
The Company's natural gas pipelines and related activities contributed
approximately 65 percent of 1993 operating profit. The Company also owns and
operates an interstate petroleum products pipeline (approximately 13 percent of
1993 operating profit) and has a substantial investment in telecommunications
(approximately 22 percent of 1993 operating profit). As a result of this asset
mix, the Company does not believe there is a published industry or line of
business index that is appropriate for comparing stockholder returns. The
Company elected not to construct its own peer group for comparative purposes, as
permitted under Securities and Exchange Commission rules, because just as there
is no published industry or line of business index in which the Company fits,
there are no other entities with asset mixes similar to the Company's from which
to construct a peer group. In management's judgment, the closest comparative
group is represented by the S&P Natural Gas Pipelines and Distributors Index
which is reflected in the graph above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the only person
known to the Company who owns, or may be deemed to own, beneficially more than 5
percent of the Common Stock of the Company. Information contained in this table
is based on the Schedule 13G filed by such person with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT OF COMMON AS A PERCENTAGE
STOCK BENEFICIALLY OF COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OUTSTANDING
- ------------------------------------------------------------ ------------------ ---------------
<S> <C> <C>
FMR Corp.................................................... 6,122,627 5.9%
82 Devonshire Street
Boston, MA 02109
</TABLE>
The Schedule 13G filed by FMR Corp. indicates that they have sole voting
power with respect to 371,167 shares and sole dispositive power with respect to
all 6,122,627 shares.
16
<PAGE> 20
The following table sets forth, as of March 18, 1994, the amount of the
Company's Common Stock beneficially owned by each of its directors, each of the
executive officers named in the Summary Compensation Table and by all directors
and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
----------------------------------------------
SOLE OPTIONS
VOTING AND EXERCISABLE OTHER PERCENT
INVESTMENT WITHIN BENEFICIAL OF
NAME OF INDIVIDUAL OR GROUP POWER 60 DAYS OWNERSHIP CLASS
- -------------------------------------------------------- ---------- ----------- --------- -------
<S> <C> <C> <C> <C>
Harold W. Andersen...................................... 3,906 2,000 -- *
Keith E. Bailey......................................... 79,581 179,498 580 *
Ralph E. Bailey......................................... 5,000 11,332 -- *
Glenn A. Cox............................................ 2,000 2,666 -- *
Thomas H. Cruikshank.................................... 600 7,332 -- *
Robert W. Keener........................................ 38,330 19,070 -- *
Robert J. LaFortune..................................... 400 5,332 10,000 *
James C. Lewis.......................................... 4,000 11,332 -- *
James A. McClure........................................ 320 5,332 -- *
Peter C. Meinig......................................... 1,000 666 2,150 *
Joseph W. Morris........................................ 1,100 11,332 -- *
Brian E. O'Neill........................................ 29,097 36,832 -- *
Kay A. Orr.............................................. 700 5,332 -- *
Gordon R. Parker........................................ 2,000 11,332 -- *
Roy A. Wilkens.......................................... 84,490 35,800 -- *
David R. Williams, Jr. ................................. -- 11,332 -- *
John H. Williams........................................ 402,034 1,332 4,862 *
Joseph H. Williams...................................... 327,957 80,533 -- *
All directors and executive officers
as a group (24 persons)............................... 982,515 725,771 17,592 1.7%
</TABLE>
- ---------------
* Less than 1 percent.
No director or officer of the Company owns beneficially any securities of
the Company's subsidiaries other than directors' qualifying shares.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who beneficially own more than 10
percent of the Company's stock to file certain reports with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange concerning their
beneficial ownership of the Company's equity securities. The SEC regulations
also require that a copy of all such Section 16(a) forms filed must be furnished
to the Company by the executive officers, directors and greater than 10 percent
stockholders.
Based on a review of the copies of such forms and amendments thereto
received by the Company, or written representations that no filings were
required, the Company believes that during 1993 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than 10
percent stockholders were met with the exception of two reports. Mr. Keith E.
Bailey and Mr. Stephen L. Cropper, the President of one of the Company's
subsidiaries, did not timely file reports relating, in each case, to a single
transaction.
17
<PAGE> 21
PROPOSAL TO INCREASE AUTHORIZED NUMBER
OF SHARES OF COMMON STOCK
The Board of Directors of the Company has adopted a resolution proposing
and declaring advisable an amendment to the Company's Restated Certificate of
Incorporation, as amended, to increase the authorized number of shares of Common
Stock, $1 par value, from 120,000,000 shares to 240,000,000 shares. The number
of authorized shares of Preferred Stock, $1 par value, would remain unchanged.
The proposed increase in the authorized Common Stock would be accomplished by
amending the first paragraph of Article FOURTH of the Restated Certificate of
Incorporation to read as follows:
FOURTH: The total number of shares of capital stock which the Company
shall have authority to issue is 270,000,000 shares, consisting of
240,000,000 shares of Common Stock, par value $1.00 per share (the "Common
Stock"), and 30,000,000 shares of Preferred Stock, par value $1.00 per
share (the "Preferred Stock").
In September 1993, the Board of Directors declared a two-for-one stock
split, distributed on November 5, 1993, in the form of a stock dividend. In
connection with the distribution, the Company issued 51,924,872 new shares of
Common Stock, thereby reducing the number of authorized shares of Common Stock
available for future issuance from 61,211,858 shares to 9,286,986 shares,
including authorized but unissued shares reserved for issuance under the terms
of various stock-based employee benefit plans. If the proposed amendment is
approved, the number of shares available for future issuance will be
129,286,986.
The Company has no present plans, understandings or agreements for the
issuance or use of the proposed additional shares of Common Stock. However, the
Board of Directors believes the proposed increase is important to provide needed
financial flexibility to issue additional shares without the expense and delay
associated with calling a special meeting of stockholders for such purpose. An
expanded capital base will provide the Company with additional shares for
possible equity financings, opportunities for expanding the Company's business
through investments and acquisitions, stock splits or stock dividends, executive
and employee stock plans and for other purposes.
Authorized but unissued shares of the Company's Common Stock may be issued
at such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate. Such action can be taken without
further authorization from the stockholders unless otherwise required by
applicable laws or the rules of a stock exchange on which the Company's Common
Stock may be listed. The New York Stock Exchange, on which the Company's Common
Stock is currently listed, requires stockholder approval as a prerequisite to
listing shares in certain instances, including acquisitions where the potential
issuance of stock could result in an increase in the number of shares of common
stock outstanding by 20 percent or more.
The affirmative vote of the holders of a majority of the Company's
outstanding Common Stock is required to approve the proposed increase in the
authorized shares. The Board of Directors recommends a vote FOR the proposed
increase in the number of authorized shares of Common Stock.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed, subject to stockholder approval, the firm of Ernst & Young,
independent public accountants, as the independent auditor of the Company for
calendar year 1994. The firm of Ernst & Young and its predecessor has served the
Company in this capacity for many years. Management recommends a vote "FOR" the
ratification of Ernst & Young as auditors for 1994.
A representative of Ernst & Young will be present at the Annual Meeting of
Stockholders and will be available to respond to appropriate questions. Although
the audit firm has indicated that no statement will be made, an opportunity for
a statement will be provided.
18
<PAGE> 22
STOCKHOLDER PROPOSALS FOR 1995
In order for a stockholder proposal to be considered for inclusion in the
Company's 1995 Proxy Statement, such proposal must be received by the Company no
later than December 2, 1994. The proposal should be sent to the attention of the
Corporate Secretary.
GENERAL
The Company knows of no matters to be presented at the meeting other than
those included in the Notice. Should any other matter requiring a vote of
stockholders arise, including a question of adjourning the meeting, the persons
named in the accompanying proxy will vote thereon according to their best
judgment, in what they consider the best interests of the Company. The enclosed
proxy confers discretionary authority to take action with respect to any
additional matters which may come before the meeting.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold. Whether or not you plan to attend, please sign,
date and return the enclosed proxy promptly. For your convenience, a return
envelope is enclosed requiring no additional postage if mailed within the United
States.
By Order of the Board of Directors
DAVID M. HIGBEE
Secretary
Tulsa, Oklahoma
March 25, 1994
19
<PAGE> 23
THE WILLIAMS COMPANIES, INC.
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting of Stockholders, May 19, 1994
P The undersigned stockholder of The Williams Companies, Inc. hereby
R appoints JOSEPH H. WILLIAMS, KEITH E. BAILEY and J. FURMAN LEWIS, jointly
O and severally with full power of substitution, as proxies to represent and
X vote all of the shares of Common Stock the undersigned is entitled to vote at
Y the Annual Meeting of Stockholders of The Williams Companies, Inc. to be
held on the 19th day of May, 1994, and at any and all adjournments thereof,
on all matters coming before said meeting.
Election of Directors, Nominees: Change of Address
Harold W. Andersen, Keith E. Bailey, _________________________________
Ralph E. Bailey, James C. Lewis, _________________________________
Jack A. MacAllister, James A. McClure _________________________________
and Peter C. Meinig. _________________________________
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card.)
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any
boxes if you wish to vote in accordance with the Board of
Directors' recommendations. The proxy cannot be voted unless you SEE REVERSE
sign and return this card. SIDE
- -------------------------------------------------------------------------------
/X/ Please mark your
votes as in this
example.
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR proposals 1, 2 and 3.
FOR WITHHELD
1. Election of Directors. / / / /
(see reverse)
For, except vote withheld from the following nominee(s):
________________________________________________________
FOR AGAINST ABSTAIN
2. Amendment of the Company's Restated / / / / / /
Certificate of Incorporation, as
amended, to increase the authorized Change of Address
number of shares of Common Stock. on Reverse Side / /
FOR AGAINST ABSTAIN
3. Ratification of Ernst & Young as / / / / / /
auditors for 1994.
4. In the discretion of one or more of said proxies upon any other business as
may properly come before the meeting and any adjournments thereof.
SIGNATURE(S)__________________________________________DATE_____________________
The Signor hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
