<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:
<TABLE>
<S> <C>
[ ] 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-2.
</TABLE>
The Williams Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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
[WILLIAMS COMPANIES LOGO]
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 21, 1998, in the
Williams Resource Center, One Williams Center, 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 30, 1998
<PAGE> 3
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1998
To the Stockholders of
The Williams Companies, Inc.
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of The
Williams Companies, Inc. will be held in the Williams Resource Center, One
Williams Center, Tulsa, Oklahoma, on Thursday, May 21, 1998, at 11 a.m., local
time, for the following purposes:
1. To elect seven 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 1998; 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 27, 1998,
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 30, 1998
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 21, 1998
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 1998 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 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 $9,500 in fees, plus expenses and disbursements. This Proxy Statement
and accompanying proxy were first mailed to stockholders on or about March 31,
1998.
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, proposals to be
voted on at the Annual Meeting, other than the election of directors which
requires a plurality of the votes cast, 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, the laws of the State of Delaware under
whose laws the Company is incorporated, or other applicable law.
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.
Votes withheld from a nominee for election as a director or votes on other
matters that reflect abstentions or broker non-votes (i.e., shares as to which
the record owner has not received instructions from the beneficial owner of the
shares on a matter as to which, under the applicable rules of the New York Stock
Exchange, the
<PAGE> 5
record owner does not have authority to vote without such instruction), will be
treated as present at the Annual Meeting for the purpose of determining a quorum
but will not be counted as votes cast. A majority of the votes properly cast is
required to ratify the appointment of the auditor. Accordingly, abstentions will
be counted in tabulating the votes cast and, therefore, will have the same
effect as a vote against the appointment of the auditor. Broker non-votes will
not be counted in tabulating the votes cast.
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 27, 1998, will be entitled to receive notice of and to vote at
the Annual Meeting. The Company had 329,805,727 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 five 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.
Seven individuals, six of whom are currently directors of the Company, have
been nominated for election as directors at the Annual Meeting. Five have been
nominated for a three-year term, one has been nominated for a two-year term, and
one has been nominated for a one-year term, and seven directors will continue in
office to serve pursuant to their prior elections. 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, William E. Green, Frank T. MacInnis, Gordon R.
Parker, and Joseph H. Williams.
In order to maintain balance in the three classes of directors, as required
by the By-laws, Mr. Green, who was elected to the Board of Directors in January
1998, and Mr. MacInnis, who has been nominated for election to the Board of
Directors, are standing for election as a Class II director for a two-year term
expiring in May 2000 and as a Class I director for a one-year term expiring in
May 1999, respectively. The remaining nominees named have been nominated for
full three-year terms expiring in May 2001.
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, William E. Green, Frank T. MacInnis,
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, 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 1998 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 III
(TERM EXPIRES MAY 2001)
GLENN A. COX, AGE 68
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 1991. Mr. Cox is also a
director of BOk Financial Corporation, Helmerich & Payne, Inc. and Union Texas
Petroleum Holdings, Inc.
THOMAS H. CRUIKSHANK, AGE 66
Director since 1990. Mr. Cruikshank was Chairman of the Board and Chief
Executive Officer of Halliburton Company, a diversified oil field services,
engineering and construction company, until his retirement in 1995. He was an
executive of Halliburton for more than five years. Mr. Cruikshank is also a
director of The Goodyear Tire & Rubber Company, Seagull Energy Corporation and
Lehman Bros. Holdings, Inc.
PATRICIA L. HIGGINS, AGE 48
Director since 1995. Ms. Higgins is Vice President and Chief Information
Officer of the Aluminum Company of America, an integrated aluminum company, and
has been since 1997. She was President of Worldwide Communications Market Sector
Group of Unisys Corporation from 1995 to 1996 and a Group Vice President of
NYNEX from 1991 to 1994. Ms. Higgins is also a director of Fleet Bank N.A.
GORDON R. PARKER, AGE 62
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. He was
an executive of Newmont for more than five years. Mr. Parker is also a director
of Caterpillar, Inc. and Phelps Dodge Corporation.
JOSEPH H. WILLIAMS, AGE 64
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. He was an executive of the Company for more than five
years. Mr. Williams is also a director of The Prudential Life Insurance Company
of America, Flint Industries, Inc. and The Orvis Company, Inc.
CLASS II
(TERM EXPIRES MAY 2000)
WILLIAM E. GREEN, AGE 61
Director since January 1998. Mr. Green is founder of William Green &
Associates, a Palo Alto, California, law firm and has been with the firm since
1974. Mr. Green is also of-counsel to Arnelle, Hastie, McGee, Willis & Greene in
San Francisco and serves as General Counsel for Douglas Broadcasting, Inc. and
Personal Achievement Radio, Inc.
3
<PAGE> 7
CLASS I
(TERM EXPIRES MAY 1999)
FRANK T. MACINNIS, AGE 50
Mr. MacInnis is Chairman of the Board, President, and Chief Executive
Officer of EMCOR Group, Inc., one of the world's largest electrical and
mechanical construction groups, and has been since 1994. He served as Chairman
of the Board, President and Chief Executive Officer of Comstock Group, Inc. from
1989 to 1994. Mr. MacInnis is also Chairman of the Board of ComNet
Communications, Inc. and a Director of PORTEC, Inc.
DIRECTORS CONTINUING IN OFFICE
CLASS I
(TERM EXPIRES MAY 1999)
ROBERT J. LAFORTUNE, AGE 71
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.
JACK A. MACALLISTER, AGE 70
Director since 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.
PETER C. MEINIG, AGE 58
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.
KAY A. ORR, AGE 59
Director since 1991. Mrs. Orr served as Governor of Nebraska from 1987 to
1991. Mrs. Orr is also a director of the Consumer Services Board of
ServiceMaster.
CLASS II
(TERM EXPIRES MAY 2000)
KEITH E. BAILEY, AGE 55
Director since 1988. Mr. Bailey was elected Chairman of the Board of the
Company in 1994. He was elected President of the Company in 1992 and Chief
Executive Officer in 1994. He served as Executive Vice President of the Company
from 1986 to 1992. Mr. Bailey is also a director of BOk Financial Corporation,
Northwest Pipeline Corporation, Transcontinental Gas Pipe Line Corporation,
Texas Gas Transmission Corporation, Williams Holdings of Delaware, Inc. and Apco
Argentina Inc.
W. R. HOWELL, AGE 62
Director since 1997. Mr. Howell is Chairman Emeritus of J. C. Penney
Company, Inc., a major retailer. He was Chairman of the Board and Chief
Executive Officer of J. C. Penney from 1983 to 1995. He is also a director of
Exxon Corporation, Warner-Lambert Company, Bankers Trust, Halliburton Company
and Chairman of the Board of Trustees of Southern Methodist University, Dallas,
Texas.
4
<PAGE> 8
JAMES C. LEWIS, AGE 65
Director since 1978. Mr. Lewis is Chairman of the Board of Optimus
Corporation, an investment company, and has been for more than five years. Mr.
Lewis is also a director of CFT, Inc.
---------------------
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 it on a regular basis and by participating in Board and Committee meetings.
The Board of Directors held 12 meetings during 1997. 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: 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 did not meet in 1997.
Audit Committee. Members: Robert J. LaFortune, Chairman, Patricia L.
Higgins, James C. Lewis, 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 in
excess of $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 and management 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
1997, the Audit Committee met four times.
Nominating Committee. Members: Kay A. Orr, Chairman, Thomas H. Cruikshank,
W.R. Howell, Jack A. MacAllister, 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 1997, the
Nominating Committee met three times.
Qualifications considered by the Nominating Committee for director
candidates include an attained position of leadership in the candidate's field
of endeavor, business and financial experience, demonstrated
5
<PAGE> 9
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, Glenn A.
Cox, Patricia L. Higgins, W.R. Howell, Jack A. MacAllister and Gordon R. Parker.
The members of the Compensation Committee are nonemployee directors and are
not eligible to participate in any of the plans or programs which the Committee
administers. 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 objectives for
variable compensation for executives. It also approves stock option grants for
the executive officers named herein. See the "Compensation Committee Report on
Executive Compensation" elsewhere herein. During 1997, the Compensation
Committee met four 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 $12,000 in cash
and 750 shares of Common Stock 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 for Executive Committee
membership 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 Company's 1996 Stock Plan for Non-Employee Directors, a director
may elect to receive all or any part of cash fees in the form of Common Stock or
deferred stock. Deferred stock may be deferred to any subsequent year or until
such individual ceases to be a director. Dividend equivalents are paid on
deferred shares and may be received in cash or reinvested in additional deferred
shares. Seven directors elected to defer fees under this plan in 1997.
Under the 1996 Stock Plan for Non-Employee Directors, all nonemployee
directors receive an annual stock option grant of 4,000 shares of the Company's
Common Stock. The options are exercisable on the date of grant and remain
exercisable for ten years so long as the director remains a director of the
Company. The exercise price is equal to the fair market value of the stock on
the date of grant as defined by the Plan.
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 of 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, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
------------------------- --------------------------
RESTRICTED
STOCK
NAME AND PRINCIPAL BONUS AWARDS(2)(3) STOCK ALL OTHER
POSITION YEAR SALARY(1) (YR. EARNED) (YR. EARNED) OPTIONS(4) COMPENSATION(5)
------------------ ---- --------- ------------ ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Bailey 1997 $675,000 $325,000 $337,509(6) 100,000 $ 9,600
Chairman, President and 1996 675,000 275,000 675,356(6) 150,002 9,914
Chief Executive Officer 1995 572,000 250,000 573,950(6) 150,002 13,740
Stephen L. Cropper 1997 $350,000 $122,500 $ 52,500 60,000 $ 9,600
Chairman, President, 1996 310,250 136,006 58,288 60,002 9,914
and Chief Executive Officer, 1995 290,000 194,516 51,221 75,002 13,740
Williams Energy Group
Brian E. O'Neill 1997 $340,000 $119,000 $ 51,000 40,000 $54,343(7)
Chairman and President, 1996 326,000 163,876 70,233 60,002 53,743(7)
Williams Interstate Natural 1995 313,600 239,640 70,560 45,000 58,483(7)
Gas Systems, Inc.
John C. Bumgarner, Jr. 1997 $325,000 $113,750 $ 48,750 40,000 $ 9,600
Senior Vice President, 1996 307,450 161,412 69,176 60,002 9,914
Corporate Development 1995 279,450 246,712 312,846(8) 75,002 13,740
& Planning
Jack D. McCarthy 1997 $320,000 $112,000 $ 48,000 40,000 $ 9,600
Senior Vice President, 1996 269,950 141,724 60,739 60,002 9,914
Finance and Chief 1995 235,450 123,612 52,976 60,002 13,740
Financial Officer
</TABLE>
- ---------------
(1) Messrs. Bumgarner and O'Neill have elected to defer a portion of their
salary in the form of deferred stock. Under this elective deferral, Mr.
Bumgarner has been credited with 21,222 deferred shares and Mr. O'Neill has
been credited with 1,654 deferred shares. Such deferred shares are also
reflected in the amounts shown in footnote 3. Such amounts credited include
deferred shares representing the value of both deferred salary and
reinvested dividends on such shares.
(2) Amounts reported in this column include the dollar value of deferred and
restricted stock awards under the terms of the Company's 1996 Stock Plan and
1990 Stock Plan as of the date such awards were granted. Executive incentive
compensation program awards converted to deferred stock are based on the
52-week average stock price for the award year. Receipt of deferred stock is
deferred for approximately three years.
(3) The total number of restricted shares held and the aggregate market value at
December 31, 1997, were as follows: Mr. Bailey, 336,500 shares valued at
$9,590,250 and Mr. Bumgarner, 30,000 shares valued at $855,000. The total
number of shares of deferred stock held and the aggregate market value at
December 31, 1997, were as follows: Mr. Bailey, 71,328 shares valued at
$2,032,848; Mr. Cropper, 27,110 shares valued at $772,635; Mr. O'Neill,
60,458 shares valued at $1,723,053; Mr. Bumgarner, 81,332 shares valued at
$2,317,962; and Mr. McCarthy, 8,210 shares valued at $233,985. Aggregate
market value was calculated using $28.50 per share, the closing price of the
Company's Common Stock reported in the table entitled "New York Stock
Exchange Composite Transactions" contained in The Wall Street Journal for
December 31, 1997. Dividends are paid on the restricted shares, and dividend
equivalents are paid on deferred stock at the same time and at the same rate
as dividends paid to stockholders generally.
7
<PAGE> 11
(4) Adjusted to reflect stock splits.
(5) 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, except as noted in Note 7.
(6) Represents 39,300 shares of restricted stock valued at December 31, 1995
($14.6045) awarded in 1996 as 1995 incentive compensation and 36,200 shares
of restricted stock valued at December 31, 1996 ($18.6563) awarded in 1997
as 1996 incentive compensation and 14,722 shares of restricted stock valued
at December 31, 1997 ($22.9255) awarded in 1998 as 1997 incentive
compensation instead of the cash and deferred stock incentive compensation
received by other executive officers, in each case adjusted to reflect stock
splits. The restrictions on Mr. Bailey's restricted stock awards lapse in
2002.
(7) Includes an annual payment of $44,743 from Transcontinental Gas Pipe Line
Corporation, a subsidiary of the Company, under the terms of a separation of
employment agreement between Mr. O'Neill and Transco Energy Company, dated
November 24, 1987.
(8) Includes 30,000 shares of restricted stock (adjusted to reflect stock
splits) valued at the market price on date of grant ($8.3335) and awarded as
a special bonus in 1995.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information concerning the grant of
stock options during the last fiscal year to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)(2)
-----------------------------------------------------
NUMBER PERCENT OF TOTAL
OF OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR (PER SHARE) DATE PRESENT VALUE(3)
---- ------- ---------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Keith E. Bailey 33,332 0.50% $22.6875 03/20/07 $265,656
33,334 0.50 23.0000 07/26/07 251,338
33,334 0.50 27.3750 11/20/07 290,006
------- ---- --------
100,000 1.50% $807,000
======= ==== ========
Stephen L. Cropper 20,000 0.30% $22.6875 03/20/07 $159,400
20,000 0.30 23.0000 07/26/07 150,800
20,000 0.30 27.3750 11/20/07 174,000
------- ---- --------
60,000 0.90% $484,200
======= ==== ========
Brian E. O'Neill 13,332 0.20% $22.6875 03/20/07 $106,256
13,334 0.20 23.0000 07/26/07 100,538
13,334 0.20 27.3750 11/20/07 116,006
------- ---- --------
40,000 0.60% $322,800
======= ==== ========
John C. Bumgarner, Jr. 13,332 0.20% $22.6785 03/20/07 $106,256
13,334 0.20 23.0000 07/26/07 100,538
13,334 0.20 27.3750 11/20/07 116,006
------- ---- --------
40,000 0.60% $322,800
======= ==== ========
Jack D. McCarthy 13,332 0.20% $22.6875 03/20/07 $106,256
13,334 0.20 23.0000 07/26/07 100,538
13,334 0.20 27.3750 11/20/07 116,006
------- ---- --------
40,000 0.60% $322,800
======= ==== ========
</TABLE>
- ---------------
(1) Adjusted to reflect the two-for-one stock split on December 29, 1997.
(2) Options granted in 1997 vested in February 1998 pursuant to a provision for
accelerated vesting, as discussed in the Compensation Committee Report on
Executive Compensation included herein. The Company granted these options
under its 1996 Stock Plan.
8
<PAGE> 12
(3) The grant date present value is determined using the Black-Scholes option
pricing model. The present value, as of the date of grant, calculated using
the Black-Scholes model, is based on assumptions about future stock price
volatility and dividend yield. The model does not take into account that the
stock options are subject to vesting restrictions and that executives cannot
sell their options. The calculations assume an expected volatility of 23
percent, a risk-free rate of return of 6.1 percent, a dividend yield of 2.4
percent and an exercise date at the end of the contractual term in 2007. The
actual value, if any, that may be realized by an executive will depend on
the market price of the Company's Common Stock on the date of exercise. The
dollar amounts shown are not intended to forecast possible future
appreciation in the Company's stock price.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides certain information on stock option exercises
in 1997 by the named executive officers and the value of such officers'
unexercised options at December 31, 1997 (all options have been adjusted to
reflect stock splits):
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE ------------------------------ ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE
---- --------------- ---------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Bailey............. 55,200 $ 783,150 935,406 100,000 $26,659,071 $2,850,000
Stephen L. Cropper.......... 0 0 368,940 60,000 10,514,790 1,710,000
Brian E. O'Neill............ 0 0 254,404 40,000 7,250,514 1,140,000
John C. Bumgarner, Jr. ..... 0 0 232,074 40,000 6,614,109 1,140,000
Jack D. McCarthy............ 114,208 1,060,926 0 40,000 0 1,140,000
</TABLE>
- ---------------
(1) Based on the closing price of the Company's Common Stock reported in the
table entitled "New York Stock Exchange Composite Transactions" contained in
The Wall Street Journal for December 31, 1997 ($28.50), less the exercise
price. The values shown reflect the value of options accumulated over
periods of up to ten years. Such values had not been realized at that date
and may not be realized. In the event the options are exercised, their value
will depend upon the value of the Company's Common Stock on the date of
exercise.
(2) These options subsequently vested in February 1998 pursuant to a provision
for accelerated vesting, as discussed in the Compensation Committee Report
on Executive Compensation included herein.
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 participate 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
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 that 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
9
<PAGE> 13
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.
The following schedule illustrates projected annual retirement benefits
based on the formula effective June 11, 1996, 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 $109,022 $145,363 $181,703 $218,044 $ 254,385
600,000 164,522 219,363 274,203 329,044 383,885
800,000 220,022 293,363 366,703 440,044 513,385
1,000,000 275,522 367,363 459,203 551,044 642,885
1,200,000 331,022 441,363 551,703 662,044 772,385
1,400,000 386,522 515,363 644,203 773,044 901,885
1,600,000 442,022 589,363 736,703 884,044 1,031,385
1,800,000 497,522 663,363 829,203 995,044 1,160,885
</TABLE>
As of December 31, 1997, the years of credited service under the Pension
Plan for the executive officers named in the Summary Compensation Table were:
Mr. Bailey, 24; Mr. Cropper, 23; Mr. O'Neill, 10; Mr. Bumgarner, 21; and Mr.
McCarthy, 11.
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.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed 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 that 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 ownership of
Common Stock or Common Stock equivalents.
These objectives are met through a program comprised of base salary; annual
cash bonus and deferred stock opportunities directly tied to individual
performance as well as consolidated and operating company performance; and
long-term incentive opportunities primarily in the form of stock options and the
selective use of deferred and restricted stock. Compensation decisions with
respect to those executives named in the Summary Compensation Table 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, were targeted at the
50th percentile of salary survey results. For this purpose, the Company uses
compensation survey information relevant to companies of similar size and to
companies in similar industries supplied by nationally known compensation
consulting firms. Other information concerning overall compensation levels and
forms, such as total cash compensation and stock option award information is
also used by the Committee in making compensation decisions.
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 1997, the merit increase budget approved
for executive employees was 4.0 percent. This target was arrived at after a
review of survey data indicating that estimated 1997 base salary increases for
executives would range from 4.0 to 4.3 percent. Within this framework, base
salary increases for the Company's executive officers ranged from 0 to 4
percent, excluding adjustment increases. The average 1997 merit increase for
such officers was 3.4 percent. 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. The bonus arrangement for Mr. Bailey is
discussed elsewhere herein. The other executive officers of the Company,
including those named in the Summary Compensation Table, are eligible each year
for cash and deferred stock bonuses. Each executive officer has a maximum target
opportunity that is a percentage of base salary that can be earned if stretch
performance targets are met. The target opportunity percentages vary by level of
management. The percentages of base salary used for this purpose range from 20
percent for manager level participants to 100 percent for executive officers.
Maximum bonus targets are set as a percentage of base salary such that the
combined base salary and maximum bonus approximate the 75th percentile of total
annual compensation (base salary plus annual bonus) relative to survey data on
comparably sized companies and companies in similar industries, when stretch
performance is achieved. The four components of the award formula are personal
performance, performance to plan,
11
<PAGE> 15
performance to peers and shareholder return. Awards are earned based on the
extent to which preestablished performance targets are achieved. Each component
is weighted, with the sum of the weights for the four components totaling one.
The components are weighted differently for each level of management depending
on the Committee's subjective judgment as to the particular level of
management's ability to influence performance for a given award component. An
executive officer's award for a given year is the sum of the product of (i) the
percentage actual performance bears to targeted performance (the "performance
factor"); (ii) the applicable weight of the component; (iii) the target
opportunity percentage; and (iv) the participant's base salary, for each of the
four components.
The performance targets for the performance to plan and performance to
peers components are set by the Committee at threshold, plan and stretch levels
at the beginning of each year. The plan level represents a targeted level of
performance for the plan year as submitted by the respective business units and
as approved by the Committee in January of the plan year. Threshold and stretch
levels 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 performance is
at plan, the performance factor used to calculate the award is normally 50
percent. Performance above or below plan results in awards representing a linear
increase/decrease from plan to stretch and from plan to threshold depending upon
where actual performance falls. Where results exceed stretch, 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. Except in unusual circumstances, there are no awards for
performance below threshold.
The personal performance assessment for each executive officer is based on
a subjective analysis of the individual's performance with consideration given
to such factors as significant business decisions, innovative achievements and
timely completion of projects within budgeted ranges, among other things. The
performance to plan performance factor for 1997 was tied to net income
attributable to Common Stock for the Company's executives and operating profit
and/or revenue of the individual operating companies for executives in these
units. The performance to peers performance factor was tied to consolidated
return on equity for the Company's executives and either return on equity,
return on assets, revenue, operating profit or consolidated return on equity of
the individual operating companies for executives in these units. Shareholder
return performance was tied to stock price performance and dividends. The
Committee retains the discretion to adjust reported performance to allow for
extraordinary, nonrecurring factors.
Once the award is determined for each executive officer as described above,
70 percent of the award is paid in cash and 30 percent is deferred and paid in
stock. The 30 percent mandatory deferred portion vests approximately three years
from the award date. Deferred stock is normally forfeited if the executive
terminates employment for any reason other than retirement, disability or death
prior to the end of the deferral period. Executive officers also have the option
to defer all or a portion of the cash award. Participants who elect to defer all
or a portion of the cash award may elect to defer for up to five years from the
award date. Deferred stock cannot be sold or otherwise disposed of until the
applicable deferral period lapses. Dividend equivalents are paid on deferred
stock. The value of the deferred award is at risk during the deferral period
since the value is tied to the stock price.
Long-term Compensation. The Company's 1996 Stock Plan, approved by the
stockholders in 1996, permits the Committee to grant different types of
stock-based awards, including deferred stock awards discussed above. The 1996
Stock Plan also 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 defined by the 1996 Stock Plan, as of the date
the option is granted. Stock option awards made in 1997 would have cliff vested
on January 20, 2002. However, 1997 stock options vested in February 1998
pursuant to a provision for accelerated vesting before such date if the Common
Stock price reaches 1.61 times the average stock price on the first business day
of January in the award year, for five out of ten consecutive business days. 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.
12
<PAGE> 16
The Committee has established stock option award targets for each level of
management participating in the stock option program. The target levels for
annual stock option grants have been established based on competitive market
practices and range from 50,000 shares for the Chairman, President and Chief
Executive Officer to 1,500 shares for manager-level employees. In making
decisions on stock option awards, the Committee has available to it information
on previous stock option awards granted to its executive officers. Stock option
awards are not tied to preestablished performance targets.
The 1996 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. 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 in a way that aligns the executive's interests with those of
the other stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
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 review of Mr.
Bailey's performance for compensation purposes.
At Mr. Bailey's request, the Committee did not change Mr. Bailey's base
salary in 1997. Mr. Bailey's 1997 base salary is at the low end of survey data
for similar size companies.
As previously mentioned, a special incentive compensation program has been
designed for Mr. Bailey. As a result, Mr. Bailey does not participate in the
cash bonus and deferred stock programs applicable to other executive officers
previously described. In order 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
award earned in 1997 and paid in January 1998 was 14,722 shares of restricted
stock. This award represents 50 percent of the award potential based on the
level of targeted earnings and stock performance achieved and a subjective
evaluation of Mr. Bailey's performance. The restricted stock vests in 2002. The
restricted stock is forfeited to the extent Mr. Bailey terminates employment
prior to the lapse of the restriction period whether due to resignation,
voluntary retirement without prior Board consent or termination for cause. The
Committee also awarded Mr. Bailey a cash bonus of $325,000 for what the
Committee deemed to be particularly outstanding performance in 1997. Under Mr.
Bailey's leadership and direction, the Company continued to grow both its energy
and communications businesses and introduced performance initiatives designed to
increase efficiency of operations and increase responsiveness to customer needs.
Also in 1997, the Company's Common Stock appreciated in value approximately 52
percent.
A stock option grant of 50,000 shares was also approved for Mr. Bailey in
1997. 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.
OTHER MATTERS
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 executive officers, except compensation
constituting performance-based compensation, as defined by the Code, is not
subject to the $1 million limit. The Committee generally intends to grant awards
under the 1996 Stock Plan consistent with the terms of Section 162(m) so that
such awards will not be subject to the $1 million limit. In other respects, the
Committee expects to take actions in the future that may be necessary to
preserve the deductibility of executive compensation to the extent reasonably
practicable and consistent with other objectives of the Company's compensation
program. In doing so, the Committee may utilize alternatives such as deferring
compensation to qualify compensation for deductibility and may rely on
grandfathering provisions
13
<PAGE> 17
with respect to existing compensation commitments. The Committee believes that
approximately $176,000 of Mr. Bailey's compensation, otherwise deductible for
1997, exceeded the deductibility limit.
The Compensation Committee
Thomas H. Cruikshank, Chairman
Glenn A. Cox
Patricia L. Higgins
W. R. Howell
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 (assuming reinvestment of dividends) 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,
1993:
<TABLE>
<CAPTION>
The Williams
Measurement Period Companies, S&P Natural
(Fiscal Year Covered) Inc. S&P 500 Gas
<S> <C> <C> <C>
12/31/92 100.00 100.00 100.00
12/31/93 127.95 110.08 118.73
12/31/94 135.91 111.53 113.28
12/31/95 244.81 153.45 160.20
12/31/96 322.63 188.68 212.90
12/31/97 501.55 251.63 251.19
</TABLE>
14
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of share of Common Stock of the
Company and the percentage represented by such number of each person who is
known to the Company to own beneficially 5 percent or more of the Company's
Common Stock. The Company obtained certain information in the table from filings
made with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF PERCENT
NAME AND ADDRESS COMMON STOCK OF CLASS
---------------- ------------ --------
<S> <C> <C>
The Capital Group Companies, Inc.(1)........................ 22,989,900 7.2%
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- ---------------
(1) Filings with the Securities and Exchange Commission indicate that Capital
Research and Management Company, a wholly owned subsidiary of The Capital
Group Companies, Inc., beneficially owns 15,974,600 shares of the Company's
Common Stock and that these Shares are included in the 22,989,900 shares
beneficially owned by Capital Research and Management Company. Such filings
indicate that neither The Capital Group Companies, Inc. nor Capital Research
and Management Company have investment power or voting power over any of
these securities.
The following table sets forth, as of March 27, 1998, 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 nominees and executive officers as a group.
<TABLE>
<CAPTION>
SHARES
UNDERLYING
SHARES OF OPTIONS
COMMON STOCK EXERCISABLE PERCENT
OWNED DIRECTLY WITHIN OF
NAME OF INDIVIDUAL OR GROUP OR INDIRECTLY(1)(2) 60 DAYS(3) TOTAL CLASS
--------------------------- ------------------- ----------- --------- -------
<S> <C> <C> <C> <C>
Keith E. Bailey................................ 738,498 1,035,406 1,773,904 *
John C. Bumgarner, Jr.......................... 567,236 272,074 839,310 *
Glenn A. Cox................................... 7,500(4) 32,008 39,508 *
Stephen L. Cropper............................. 89,438 428,940 518,378 *
Thomas H. Cruikshank........................... 5,457 46,006 51,463 *
William E. Green............................... 0 0 0 *
Patricia L. Higgins............................ 2,510 23,382 25,892 *
W. R. Howell................................... 3,761 4,000 7,761 *
Robert J. LaFortune............................ 45,907(4) 28,006 73,913 *
James C. Lewis................................. 71,924 1,334 73,258 *
Jack A. MacAllister............................ 16,455 16,004 32,459 *
Frank T. MacInnis.............................. 0 0 0 *
Jack D. McCarthy............................... 147,110 40,000 187,110 *
Peter C. Meinig................................ 12,702(4) 26,008 38,710 *
Brian E. O'Neill............................... 64,274 294,404 358,678 *
Kay A. Orr..................................... 5,157 40,006 45,163 *
Gordon R. Parker............................... 9,277 58,006 67,283 *
Joseph H. Williams............................. 557,422(4) 20,008 577,430 *
All directors and executive officers as a group
(22 persons)................................. 2,673,450 2,980,401 5,653,851 2.0%
</TABLE>
- ---------------
* Less than 1 percent.
(1) Includes shares held under the terms of incentive and investment plans as
follows: Mr. Bailey, 593,636, including 171,086 over which he has sole
voting and investment power; Mr. Bumgarner, 327,675, including 216,343 over
which he has sole voting and investment power; Mr. Cropper, 60,721,
including
15
<PAGE> 19
33,611 over which he has sole voting and investment power; and Mr. O'Neill,
72,729, including 12,271 over which he has sole voting and investment power.
(2) Includes shares held under the terms of compensation plans over which
directors have no voting or investment power as follows: Thomas H.
Cruikshank, 3,657; Patricia L. Higgins, 2,510; James C. Lewis, 3,252; Jack
A. MacAllister, 1,410; Peter C. Meinig, 3,252; and Kay A. Orr, 2,078.
(3) The Securities and Exchange Commission deems a person to have beneficial
ownership of all shares which that person has the right to acquire within 60
days. The shares indicated represent stock options granted under the
Company's Stock Plans. Shares subject to option cannot be voted.
(4) Includes shares held in trust as follows: Mr. Cox, 7,500 shares; Mr.
LaFortune, 43,194 shares; Mr. Meinig, 6,450 shares; and Mr. Williams, 24,600
shares. Each individual has voting and investment power over such shares.
No director or officer of the Company owns beneficially any securities of
the Company's subsidiaries other than directors' qualifying shares.
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 1998. 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 1998.
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.
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 with
respect to 1997, the Company is not aware of any late filings.
STOCKHOLDER PROPOSALS FOR 1999
In order for a stockholder proposal to be considered for inclusion in the
Company's 1999 Proxy Statement, such proposal must be received by the Company no
later than December 1, 1998. The proposal should be addressed to the Secretary,
The Williams Companies, Inc., One Williams Center, Tulsa, Oklahoma 74172. Upon
receipt of any such proposal, the Company will determine whether or not to
include such proposal in the Proxy Statement in accordance with applicable law.
It is suggested that such proposals be sent by certified mail, return receipt
requested.
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.
16
<PAGE> 20
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 30, 1998
17
<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
COMMAND FINANCIAL PRESS CORP. - NEW YORK (212) 274-0070 REV 02.0 11:40 3/23/98 BG/NM 11793 PROXY, 2
WILLIAMS COMPANIES - PROXY CARD (FIRST CHICAGO/REGULAR)
- ----------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK YOUR 1296
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 FOR AGAINST ABSTAIN
------- ------- ------- ------- -------
f. Election of 2. Ratification of Ernst & 3. In the direction of one or
Directors. Young LLP as auditors more of said proxies upon
(see reverse) -------- ------- for 1998. ------- ------- ------- any other business as may
For, except vote withheld from the following properly come before the
nominee(s): meeting and any adjournments
thereof.
------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Change of address.-------
See reverse side.
-------
The signer hereby revokes all
proxies heretofore given by the
SIGNATURE(S) DATE 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.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 22
PROXY
THE WILLIAMS COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 21, 1998
The undersigned stockholder of The Williams Companies, Inc. hereby appoints
KEITH E. BAILEY, JACK D. McCARTHY and WILLIAM G. VON GLAHN, 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 21st
day of May, 1998, and at any and all adjournments thereof, on all matters
coming before said meeting.
<TABLE>
<CAPTION>
<S> <C>
Election of Directors, Nominees: (change of address/comments)
Glenn A. Cox
Thomas H. Crulkshank ----------------------------
William E. Green
Patricia L. Higgins ----------------------------
Frank T. MacInnis
Gordon R. Parker ----------------------------
Joseph H. Williams (If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
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 sign, date and return this card.
-----------
SEE REVERSE
SIDE
-----------
