<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
KEITH E. BAILEY, CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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 18, 1995, 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,
Keith E. Bailey
Enclosures
March 29, 1995
<PAGE> 3
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1995
To the Stockholders of
The Williams Companies, Inc.
NOTICE IS HEREBY GIVEN that the 1995 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 18, 1995, at 11 a.m., local time, for
the following purposes:
1. To elect five directors of the Company;
2. To consider and act upon a proposal to ratify the appointment of
Ernst & Young LLP as the independent auditor of the Company for 1995; and
3. 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 24, 1995,
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 29, 1995
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 18, 1995
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 1995 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,
1995.
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, present in person or
represented by proxy, unless the proposal relates to matters on which more than
a majority vote is required under the Company's Restated Certificate of
Incorporation, as amended, 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 stock. Such shares are considered present at the
meeting when voted for other purposes and will count for
<PAGE> 5
purposes of determining the presence of a quorum. However, such nonvoted shares
have the legal effect of a vote against proposals on which voting instructions
are not received. 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 24, 1995, will be entitled to receive notice of and to vote at
the Annual Meeting. The Company had 91,028,261 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, as amended, 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.
Five individuals, all but one of whom are currently directors of the
Company, have been nominated for election as directors at the Annual Meeting.
Each has been nominated for a three-year term and ten 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: Ms. Patricia L. Higgins and Messrs. Glenn A.
Cox, Thomas H. Cruikshank, Gordon R. Parker and Joseph H. Williams. The nominees
named have been nominated for full three-year terms expiring in May 1998.
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 Ms. Patricia L. Higgins and
Messrs. Glenn A. Cox, Thomas H. Cruikshank, Gordon R. Parker and Joseph H.
Williams. 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 1995 Annual Meeting, their principal occupations during the
past five years, other directorships held and certain other information are set
forth below.
STANDING FOR ELECTION
CLASS III
(TERM EXPIRES MAY 1998)
GLENN A. COX, AGE 65
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.
2
<PAGE> 6
THOMAS H. CRUIKSHANK, AGE 63
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.
PATRICIA L. HIGGINS, AGE 45
Ms. Higgins is the President, Worldwide Communications Line of Business,
Unisys Corporation, an information management company applying information
services and technology expertise for business and government in approximately
100 countries, and has been since January 1995. She was a Group Vice President
of NYNEX from 1991 to 1994 and was employed by AT&T in various management-level
positions from 1977 to 1991. Ms. Higgins is also a director of Fleet Bank and
Transco Energy Company.
GORDON R. PARKER, AGE 59
Director since 1987. Mr. Parker was Chairman of the Board of Newmont Mining
Corporation, a company engaged in the exploration for, and the operation and
management of, precious metal properties, until his retirement in 1994. Mr.
Parker is also a director of Caterpillar, Inc. and Phelps Dodge Corporation.
JOSEPH H. WILLIAMS, AGE 61
Director since 1969. Mr. Williams is engaged in personal investments. He
was Chairman of the Board and Chief Executive Officer of the Company prior to
his retirement in 1994. Mr. Williams is also a director of The Prudential
Insurance Company of America.
DIRECTORS CONTINUING IN OFFICE
CLASS I
(TERM EXPIRES MAY 1996)
ROBERT J. LAFORTUNE, AGE 68
Director since 1978. Mr. LaFortune is self-employed and manages personal
interests and investments. He has been so employed for more than five years. He
is the former mayor of Tulsa. Mr. LaFortune is also a director of BOK Financial
Corporation.
KAY A. ORR, AGE 56
Director since 1991. Mrs. Orr served as Governor of Nebraska from 1987 to
1991. Mrs. Orr is also a director of ServiceMaster and VanCom.
JACK A. MACALLISTER, AGE 67
Director since May 1994. 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 55
Director since 1993. Mr. Meinig is President and Chief Executive Officer of
HM International, Inc., a privately owned diversified manufacturing and
management company, and has been for more than five years.
3
<PAGE> 7
CLASS II
(TERM EXPIRES MAY 1996)
HAROLD W. ANDERSEN, AGE 71
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 Avenor, Inc. and American Business
Information.
RALPH E. BAILEY, AGE 71
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.
CLASS II
(TERM EXPIRES MAY 1997)
KEITH E. BAILEY, AGE 52
Director since 1988. Mr. Bailey was elected Chairman of the Board of the
Company on May 19, 1994. He 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 to 1992. Mr. Bailey is also a
director of BOK Financial Corporation, Northwest Pipeline Corporation, Transco
Energy Company and Apco Argentina Inc.
ERVIN S. DUGGAN, AGE 55
Director since May 1994. Mr. Duggan is President and Chief Executive
Officer of the Public Broadcasting Service, the network and program distribution
company of America's 346 public television stations. He was a Federal
Communications Commissioner from 1990 until 1994. From 1981 to 1990, Mr. Duggan
managed Ervin S. Duggan Associates, a provider of communications and consulting
services to large corporate clients.
JAMES C. LEWIS, AGE 62
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 70
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 and Coeur d'Alene Mines Corporation.
---------------------
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 13 meetings during 1994. No director attended
less than 75 percent of the Board and Committee meetings. The Board has
established standing committees to consider designated
4
<PAGE> 8
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: Keith E. Bailey, Chairman, Glenn A. Cox,
Robert J. LaFortune, James C. Lewis, Peter C. Meinig and Joseph 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 four times in 1994.
Audit Committee. Members: Robert J. LaFortune, Chairman, Ervin S. Duggan,
James C. Lewis, James A. McClure, Peter C. Meinig 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 Audit
Services 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 1994, the Audit
Committee met four times.
Nominating Committee. Members: Harold W. Andersen, Chairman, Ralph E.
Bailey, Thomas H. Cruikshank, James A. McClure, Kay A. Orr, Gordon R. Parker and
Joseph 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 1994, 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 on 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.
Compensation Committee. Members: Thomas H. Cruikshank, Chairman, Ralph E.
Bailey, Glenn A. Cox, Jack A. MacAllister 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 action taken by management in accordance with the salary
guidelines for executives and establishes the performance
5
<PAGE> 9
objectives for variable compensation for executives. It also approves stock
option grants for all executives named herein. See the "Compensation Committee
Report on Executive Compensation" elsewhere herein. During 1994, 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 a
Committee retainer (with the exception of the Executive Committee) of $4,000 for
each Committee assignment held, and an additional fee for attending Board and
Committee meetings (with the exception of Executive Committee meetings) of
$1,000 and $500, respectively. Members of the Executive Committee do not receive
an annual retainer but do receive a $750 meeting fee. Chairmen of the Audit,
Nominating and Compensation Committees are paid an additional annual fee of
$2,500.
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 1994.
Under the Company's 1988 Stock Option Plan for Nonemployee 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.
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.
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 five other most highly compensated executive
officers of the Company for the three fiscal years ended December 31, 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL ALL OTHER
COMPENSATION LONG-TERM COMPENSATION COMPENSATION(1)
--------------------- --------------------------------------- ---------------
AWARDS PAYOUTS
------------------------ ----------
RESTRICTED
NAME AND PRINCIPAL STOCK STOCK LTIP
POSITION(2) YEAR SALARY BONUS AWARDS(3)(4) OPTIONS PAYOUTS(5)
- ---------------------------- ---- -------- -------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Keith E. Bailey 1994 $550,000 (6) $ 1,202,750 (6) 50,000 0 $ 13,500
Chairman, President and 1993 450,000 $283,500 303,750 40,000 $ 573,375 17,961
Chief Executive Officer 1992 385,000 207,900 207,900 0 (7) 0 17,382
Roy A. Wilkens 1994 $356,600 $ 0 $15,237,474 (8) 0 $1,623,075(10) $ 13,500
Former President, Williams 1993 315,000 349,606 652,188 (9) 0 0 17,961
Telecommunications 1992 290,000 26,390 0 0 0 17,382
Group
Brian E. O'Neill 1994 $304,600 $109,000 $ 82,000 16,600 0 $ 13,500
President, Williams
Natural 1993 267,250 96,210 108,236 16,600 0 15,603
Gas and Northwest 1992 249,000 81,000 70,000 16,600 0 15,093
Pipeline
Lloyd A. Hightower 1994 $271,600 $ 70,200 $ 90,000 16,600 0 $ 13,500
President, Williams Field 1993 215,748 81,599 86,513 14,934 $ 41,700 17,961
Services Group 1992 171,500 63,736 25,725 10,800 0 17,382
Stephen L. Cropper 1994 $271,600 $ 80,500 $ 81,000 16,600 0 $ 13,500
President, Williams Pipe 1993 220,212 96,893 109,005 16,600 $ 312,750 17,961
Line and Williams 1992 195,850 75,000 65,000 16,600 0 17,382
Energy Ventures
Joseph H. Williams 1994 $332,219 $ 0 $ 0 1,334 0 $ 13,500
Former Chairman of 1993 720,000 486,000 486,000 80,000 $1,042,500 2,017,961
the Board 1992 685,100 369,954 369,954 73,400 0 17,382
</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 and allocations made by the Company to the accounts of the named
executive officers under the bonus employee stock ownership component of
the Plan. For Mr. Williams, the 1993 amount includes a $2,000,000
retirement differential payment.
(2) Mr. Williams retired as Chairman of the Board at the May 1994 shareholders
meeting and Mr. Bailey was elected to succeed him in that capacity.
Williams Telecommunications Group, Inc. was sold on January 5, 1995. Mr.
Wilkens is no longer employed by the Company.
(3) Awards reported in this column include the dollar value of incentive awards
converted to deferred stock (restricted stock in the case of Mr. Bailey for
1994) under the terms of the Company's 1990 Stock Plan. Awards converted to
deferred stock are done so based on the 52 week average stock price for the
award year. Receipt of deferred stock is deferred for three years. The
restrictions on the restricted stock award to Mr. Bailey will lapse in
one-third increments in 2002, 2003 and 2004.
(4) The total number of restricted shares held and the aggregate market value
at December 31, 1994, were as follows: Mr. Bailey, 65,000 shares valued at
$1,633,125 and Mr. Wilkens, 20,000 shares valued at $502,500, excluding,
with respect to Mr. Bailey, the 22,000 shares of restricted stock
referenced in footnote (6) below. Dividends are paid on the restricted
shares at the same time and at the same rate as dividends paid to
stockholders generally.
7
<PAGE> 11
The total number of shares of deferred stock held and the aggregate market
value at December 31, 1994, were as follows: Mr. Bailey, 23,776 shares
valued at $597,372; Mr. Wilkens, 519,040 shares valued at $13,040,880; Mr.
O'Neill, 18,190 shares valued at $457,024; Mr. Hightower, 8,105 shares
valued at $203,638; Mr. Cropper, 10,914 shares valued at $274,214.
Aggregate market value is calculated by using $25.125 per share, the
closing price of the Company's Common Stock on the New York Stock Exchange
Composite Transactions on December 30, 1994.
(5) The amounts shown, except for Mr. Wilkens, represent payment in 1993 of
long-term awards made in 1990 and valued at $26.0625 per share, 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) Represents 25,000 shares of restricted stock valued at the market price on
date of grant ($26) awarded in January 1994 and 22,000 shares of restricted
stock valued at December 31, 1994 ($25.125), awarded in 1995 as 1994
incentive compensation in lieu of the cash and deferred stock incentive
compensation received by other executive officers.
(7) Mr. Bailey received a special stock option award in 1991 upon being named
President of the Company. As a result, he did not receive a stock option
award in 1992.
(8) Represents the payment of 512,184 deferred shares valued at the market
price on the date of grant ($29.75). The payment was made upon termination
of the Williams Telecommunications Group, Inc. Long-Term Equity Incentive
Plan. Because of his participation in the Equity Plan, Mr. Wilkens did not
participate in the Company's stock option plan and only participated to a
limited extent in the bonus plan.
(9) Represents 10,000 shares of restricted stock valued at the market price on
the date of the first grant ($20) and 10,000 shares of restricted stock
valued at the market price on the date of the second grant ($27.50) and a
$177,188 incentive award converted to 6,856 deferred shares.
(10) Represents the payment made upon termination of the Williams
Telecommunications Group, Inc. Founders Award Plan.
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 1994:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM(2)
----------------------------------------------------- ----------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR (PER SHARE) DATE 0% 5% 10%
- ------------------------- ---------- ------------- ----------- ---------- --- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Keith E. Bailey 16,666 2.08% $ 25.00 03/24/04 $ 0 $ 262,490 $ 662,474
16,667 2.09 30.00 07/23/04 0 315,006 795,016
16,667 2.09 28.00 11/17/04 0 294,006 742,015
--------- ---------- --- -------------- --------------
50,000 6.26% $ 0 $ 871,502 $ 2,199,505
========= ========== === ============== ==============
Roy A. Wilkens 0(3) N/A N/A N/A N/A N/A N/A
Brian E. O'Neill 5,533 0.69% $ 25.00 03/24/04 $ 0 $ 87,145 $ 219,937
5,533 0.69 30.00 07/23/04 0 104,574 263,924
5,534 0.69 28.00 11/17/04 0 97,620 246,374
--------- ---------- --- -------------- --------------
16,600 2.07% $ 0 $ 289,339 $ 730,235
========= ========== === ============== ==============
Lloyd A. Hightower 5,533 0.69% $ 25.00 03/24/04 $ 0 $ 87,145 $ 219,937
5,533 0.69 30.00 07/23/04 0 104,574 263,924
5,534 0.69 28.00 11/17/04 0 97,620 246,374
--------- ---------- --- -------------- --------------
16,600 2.07% $ 0 $ 289,339 $ 730,235
========= ========== === ============== ==============
Stephen L. Cropper 5,533 0.69% $ 25.00 03/24/04 $ 0 $ 87,145 $ 219,937
5,533 0.69 30.00 07/23/04 0 104,574 263,924
5,534 0.69 28.00 11/17/04 0 97,620 246,374
--------- ---------- --- -------------- --------------
16,600 2.07% $ 0 $ 289,339 $ 730,235
========= ========== === ============== ==============
Joseph H. Williams(4) 0 0.00% $ 25.00 03/24/04 $ 0 $ 0 $ 0
667 0.08 30.00 07/23/04 0 12,606 31,816
667 0.08 28.00 11/17/04 0 11,766 29,695
--------- ---------- --- -------------- --------------
1,334 0.16% $ 0 $ 24,372 $ 61,511
========= ========== === ============== ==============
All Optionees 262,624 32.88% $ 25.00 03/24/04 $ 0 $ 4,136,328 $ 10,439,304
266,196 33.33 30.00 07/23/04 0 5,031,104 12,697,549
269,859 33.79 28.00 11/17/04 0 4,760,313 12,014,123
--------- ---------- --- -------------- --------------
798,679 100.00% $ 0(5) $ 13,927,745(5) $ 35,150,976(5)
========= ========== === ============== ==============
All Stockholders N/A N/A N/A N/A $ 0 $1,584,885,932(6) $3,999,950,210(6)
Optionee Gain as
Percentage of all
Stockholders' Gain N/A N/A N/A N/A N/A 0.9% 0.9%
</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 (the "SEC"), 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.
9
<PAGE> 13
(3) Mr. Wilkens participated in the Williams Telecommunications Group, Inc.
Long-Term Equity Incentive Plan and did not receive stock option awards.
(4) Mr. Williams received stock options in 1994 as a Director of the Company.
(5) 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.
(6) 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 1994 ($27.68).
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides certain information on stock option exercises
in 1994 by the named executive officers and the value of such officers'
unexercised options at December 31, 1994:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Bailey....................... 4,500 $67,500 188,332 76,668 $1,651,895 $ 29,858
Roy A. Wilkens........................ 0 0 35,800 0 400,075 0
Brian E. O'Neill...................... 0 0 91,398 33,202 772,600 60,870
Lloyd A. Hightower.................... 0 0 13,508 30,158 79,212 40,398
Stephen L. Cropper.................... 0 0 67,776 33,202 515,249 60,870
Joseph H. Williams.................... 0 0 80,533 79,137 501,365 270,671
</TABLE>
- ---------------
(1) Based on the closing price on the New York Stock Exchange Composite
Transactions of the Company's Common Stock on December 30, 1994 ($25.125),
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
columns of the Summary Compensation Table (as to deferred stock only and
restricted stock in the case of Mr. Bailey). 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
10
<PAGE> 14
employee whose benefit payable under the Pension Plan is reduced by Code
limitations, including the executive officers named in the Summary Compensation
Table.
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.......................... $108,489 $143,842 $179,060 $214,305 $249,455
600,000.......................... 163,989 217,842 271,560 325,305 378,956
800,000.......................... 219,489 291,842 364,060 436,305 508,456
1,000,000.......................... 274,989 365,842 456,560 547,305 637,955
1,200,000.......................... 330,489 439,842 549,060 658,305 767,456
1,400,000.......................... 385,989 513,842 641,560 769,305 896,956
</TABLE>
As of December 31, 1994, the years of credited service under the Pension
Plan for the executive officers named in the Summary Compensation Table were:
Mr. Bailey, 21; Mr. Wilkens, 17; Mr. O'Neill, 7; Mr. Hightower, 21; and Mr.
Cropper, 20.
EMPLOYMENT AGREEMENTS
As authorized by the Board of Directors, the Company has separate
employment agreements with certain 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, 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.
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:
11
<PAGE> 15
(i) implement compensation practices which allow the Company to
attract and retain 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 growth 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 the
50th 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 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 levels of stock option awards, 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 relatively short period of time
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 each of the Company's
executive officers annually. The Committee also approves annually a merit
increase budget for all officers. For 1994, the merit increase budget approved
was 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 1.4 to 4.8 percent, excluding adjustment increases. The
average 1994 merit increase for such officers was 3.8 percent and is
approximately equal to the average merit increases for all salaried employees in
1994. Specific increases for individual executive officers involve consideration
of certain subjective factors, principally the performance of such executive
over the prior compensation period.
Base salary adjustments in 1994 were also impacted by a decision to
eliminate an allowance historically paid to executive officers in lieu of
various perquisites, the primary component of which was an automobile allowance.
This allowance had ranged from $42,150 per year for the Chairman and Chief
Executive Officer down to $3,000 per year for certain other officers. A one-time
gross up of individual base salaries and range midpoints in the amount of this
perquisite allowance was made effective January 1, 1994.
Cash Bonus and Deferred Stock. In 1994, the Committee approved a special
bonus arrangement for Mr. Bailey discussed elsewhere herein. The other 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 percentages of base salary used for this purpose range from 40
percent to 20 percent for the cash bonuses and 30 percent to 10 percent for the
deferred stock awards. 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.
12
<PAGE> 16
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, except in unusual
circumstances, the performance factor may not exceed 100 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 significant business decisions, innovative achievements and timely
completion of capital projects within budgeted ranges, among other things.
Except in unusual circumstances, there are no awards for performance below the
threshold level.
The performance factor for cash bonuses for 1994 was tied to net income
attributable to Common Stock (90 percent) and corporate operating expense (10
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 1994 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 the value is tied to 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 resulting target levels for stock options range
from 50,000 shares for the Chairman, President and 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 market
practices. In making decisions on stock option awards, the Committee has
available to it information
13
<PAGE> 17
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. Generally, the
Committee uses 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 approved a merit increase for Mr. Bailey in 1994 of 4
percent. The recommendation was based primarily on a subjective evaluation of
Mr. Bailey's performance in 1993, consideration of other actions taken as
described below and a review of market salary data. The Committee also approved
a promotional adjustment of 8.8 percent as a result of his election as the
Company's Chief Executive Officer. Mr. Bailey's 1994 base salary further
reflects the one-time adjustment for elimination of the Company's perquisite
allowance discussed previously. Mr. Bailey's base salary is at the low end of
the range of salary survey results. With respect to his salary, the Committee
approved a special structure designed to move away from cash compensation and
tie his compensation more directly to the Company's performance by weighting it
more heavily in the form of stock. This objective was achieved by determining
the difference between what was believed to be a market-competitive Chief
Executive Officer salary and his actual salary, multiplying the difference by
eight (the number of years until he reaches age 60), converting the result to a
present value and dividing the outcome by the Company's stock price. The
calculation resulted in an award of 25,000 shares of restricted stock to Mr.
Bailey that will vest in one-third increments beginning in 2002. The restricted
stock is forfeited if Mr. Bailey voluntarily terminates before age 60 or is
terminated by the Board for cause.
In 1994, the Committee approved a special incentive compensation program
for Mr. Bailey. As a result, Mr. Bailey does not participate in the cash bonus
and deferred stock programs applicable to other executive officers and
previously described herein. Consistent with the Committee's efforts to weight
Mr. Bailey's base compensation more heavily in the form of stock, the incentive
compensation program approved for him pays out entirely in restricted stock to
the extent earned. The maximum award potential under the program is equal to 100
percent of base salary. The amount of the award earned and paid is determined by
the Committee giving consideration to three equally weighted performance
components: net income attributable to Common Stock compared to a preestablished
target; stock performance compared to the stock performance of a peer group; and
a subjective evaluation of performance. Any award earned is paid in the form of
restricted stock (versus cash and deferred stock, the receipt of which is
deferred three years) and will vest in one-third annual installments beginning
in 2002. The restricted stock awards are forfeited on voluntary termination.
The full Board meets in executive session in November of each year to
review Mr. Bailey's performance. The session is conducted without Mr. Bailey
present, and the meeting is chaired by the Chairman of the Compensation
Committee. The results of this performance review, which are shared with Mr.
Bailey, are used by the Compensation Committee in making its subjective review
of Mr. Bailey's performance for compensation purposes.
A stock option grant of 50,000 shares was also approved for Mr. Bailey in
1994. This award represents 100 percent of the target for stock option awards
previously established by the Committee for the Chairman, President and Chief
Executive Officer position. The specific award, relative to the target, was
based on a subjective analysis of Mr. Bailey's performance.
14
<PAGE> 18
OTHER MATTERS
New Section 162(m) of the 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 COMPENSATION COMMITTEE
Thomas H. Cruikshank, Chairman
Ralph E. Bailey
Glenn A. Cox
Jack A. MacAllister
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 Index for the period of
five fiscal years commencing January 1, 1990:
[GRAPH]
<TABLE>
<CAPTION>
The Williams
Measurement Period Companies, S&P Natural
(Fiscal Year Covered) Inc. S&P 500 Gas
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 70.30 96.89 87.53
1991 108.69 126.42 76.10
1992 116.20 136.05 84.06
1993 148.67 149.76 99.81
1994 157.92 151.74 95.21
</TABLE>
The Company's interstate natural gas pipelines contributed approximately 45
percent of 1994 operating profit. The Company's gathering and processing
activities, substantially all of which are nonregulated, contributed
approximately 38 percent of 1994 operating profit. The Company also owns and
operates an interstate petroleum products pipeline (approximately 18 percent of
1994 operating profit). The majority of the Company's telecommunications assets
were sold in January 1995. The results of operations of the assets sold are
reported as discontinued operations in the Company's 1994 Consolidated Financial
Statements. These discontinued operations generated approximately 36 percent of
the Company's net income in 1994. As a result
15
<PAGE> 19
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 the SEC 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 Index which is reflected in the graph
above, and this will be particularly true over future periods with the sale of
certain telecommunications assets referenced 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 SEC.
<TABLE>
<CAPTION>
AS A PERCENTAGE
AMOUNT OF OF COMMON
NAME AND ADDRESS OF COMMON STOCK STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING
---------------------------------- ------------------ ---------------
<S> <C> <C>
FMR Corp................................................... 7,350,095 8.1%
82 Devonshire Street
Boston, MA 02109
</TABLE>
The Schedule 13G filed by FMR Corp. indicates that it has sole voting power
with respect to 140,667 shares and sole dispositive power with respect to all
7,350,095 shares.
The following table sets forth, as of March 24, 1995, 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 who were serving in such capacities at such
date.
<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 4,001 -- *
Keith E. Bailey......................................... 184,804 218,331 580 *
Ralph E. Bailey......................................... 5,000 13,333 -- *
Glenn A. Cox............................................ 2,000 4,667 -- *
Stephen L. Cropper...................................... 23,099 84,376 -- *
Thomas H. Cruikshank.................................... 600 9,333 -- *
Ervin S. Duggan......................................... -- 667 -- *
Lloyd A. Hightower...................................... 74,125 27,619 -- *
Robert J. LaFortune..................................... 400 7,333 10,000 *
James C. Lewis.......................................... 4,000 13,333 -- *
Jack A. MacAllister..................................... 3,000 667 -- *
James A. McClure........................................ 320 7,333 -- *
Peter C. Meinig......................................... 1,000 2,667 2,150 *
Brian E. O'Neill........................................ 29,604 107,998 -- *
Kay A. Orr.............................................. 1,000 7,333 -- *
Gordon R. Parker........................................ 2,000 13,333 -- *
Joseph H. Williams...................................... 295,539 132,335 -- *
All directors and executive officers as a group (24
persons).............................................. 962,815 813,811 13,336 2.0%
</TABLE>
- ---------------
* Less than 1 percent.
16
<PAGE> 20
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 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 1994 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than 10
percent stockholders were met with the exception of four reports. Mrs. Kay A.
Orr, a director, and Messrs. Stephen L. Cropper, President of one of the
Company's subsidiaries, James R. Herbster, Senior Vice President of the Company,
and Gary R. Belitz, Controller of the Company, did not timely file reports
relating, in each case, to a single transaction.
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 LLP,
independent public accountants, as the independent auditor of the Company for
calendar year 1995. The firm of Ernst & Young LLP and its predecessor has served
the Company in this capacity for many years. Management recommends a vote "FOR"
the ratification of Ernst & Young LLP as auditors for 1995.
A representative of Ernst & Young LLP 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.
STOCKHOLDER PROPOSALS FOR 1996
In order for a stockholder proposal to be considered for inclusion in the
Company's 1996 Proxy Statement, such proposal must be received by the Company no
later than December 1, 1995. 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 29, 1995
17
<PAGE> 21
P R O X Y
THE WILLIAMS COMPANIES, INC.
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting of Stockholders, May 18, 1995
The undersigned stockholder of The Williams Companies, Inc. hereby
appoints KEITH E. BAILEY, J. FURMAN LEWIS and JACK D. McCARTHY, jointly and
severally with full power of substitution, as proxies to represent and vote all
of the shares of Common Stock the undersigned is entitled to vote at the Annual
Meeting of Stockholders of The Williams Companies, Inc. to be held on the 18th
day of May, 1995, and at any and all adjournments thereof, on all matters
coming before said meeting.
Change of Address
Election of Directors, Nominees:
____________________________________
Glenn A. Cox,
Thomas H. Cruikshank, ____________________________________
Patricia L. Higgins,
Gordon R. Parker and ____________________________________
Joseph H. Williams
____________________________________
(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' RECOMMENDATINS. THE PROXY CANNOT BE
VOTED UNLESS YOU SIGN AND RETURN THIS CARD.
/SEE REVERSE
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 and 2.
FOR WITHHELD
1. Election of
Directors.
(see reverse)
FOR AGAINST ABSTAIN
2. Ratification of Ernst
& Young LLP as
auditors for 1995.
3. In the discretion of one or
more of said proxies upon any
other business as may property
come before the meeting and
any adjournments thereof.
For, except vote withheld from the following nominee(s):
________________________________________________________
The Signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
SIGNATURE(S)_________________________________ DATE_____________
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.
