<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:
<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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(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):
-----------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[WILLIAMS 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 18, 2000, 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 Williams will be presented at the
meeting, followed by a question-and-answer and discussion period.
We know that most of our stockholders are unable to attend the Annual
Meeting in person. The Company solicits proxies 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 Williams.
Very truly yours,
/s/ KEITH E. BAILEY
Keith E. Bailey
Enclosures
March 27, 2000
<PAGE> 3
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2000
To the Stockholders of
The Williams Companies, Inc.
NOTICE IS HEREBY GIVEN that the 2000 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 18, 2000, at 11 a.m., local
time, for the following purposes:
1. To elect six 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 2000; 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, 2000,
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
Shawna L. Gehres
Secretary
Tulsa, Oklahoma
March 27, 2000
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.
2
<PAGE> 4
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2000
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 2000 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. A
stockholder giving a proxy has the power to revoke it at any time before it is
exercised. A stockholder may revoke the proxy 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.
Williams will pay the expenses of this proxy solicitation, including the
cost of preparing and mailing the Proxy Statement and proxy. 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 April 4,
2000.
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 record owner does not have authority to vote without such
instruction), will be treated as present at the
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<PAGE> 5
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 made available
only 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, 2000, will be entitled to receive notice of and to vote at
the Annual Meeting. The Company had 441,540,962 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.
Six individuals, all of whom are currently directors of the Company, have
been nominated for election as directors at the Annual Meeting. Four have been
nominated for a three-year term and two have been nominated for a two-year term.
Seven directors will continue in office to serve pursuant to their prior
elections. Pursuant to the Company's retirement policy for Directors, Mr. Jack
A. MacAllister will retire in conjunction with the 2000 Annual Meeting of
Stockholders. In accordance with the recommendation of the Nominating Committee,
the Board of Directors proposes that the following nominees be elected: Ms.
Janice D. Stoney and Messrs. Keith E. Bailey, Hugh M. Chapman, William E. Green,
W. R. Howell, and James C. Lewis.
In order to maintain balance in the three classes of directors, as required
by the By-laws, Mr. Chapman and Ms. Stoney, who were elected to the Board of
Directors in July, 1999, are standing for election as Class I directors for
two-year terms expiring in May 2002. The remaining nominees have been nominated
for full three-year terms expiring in May 2003.
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. Janice D. Stoney and Messrs.
Keith E. Bailey, Hugh M. Chapman, William E. Green, W. R. Howell, James C.
Lewis. 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 2000 Annual Meeting, their principal occupations during the
past five years, other directorships held, and certain other information are set
forth below.
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STANDING FOR ELECTION
CLASS I
(TERM EXPIRES MAY 2002)
HUGH M. CHAPMAN, AGE 67
Director since 1999. Mr. Chapman is a retired Chairman of the Board of
Nations Bank South, a commercial bank holding company, where he served from 1992
through 1999. He also serves as a director of SCANA Corporation, West Point
Stevens, and Print Pack, Inc.
JANICE D. STONEY, AGE 59
Director since 1999. Ms. Stoney retired as Executive Vice President of U S
WEST Communications, Inc., in 1992. She also serves on the board of directors of
Whirlpool Corporation and Bridges Investment Fund.
CLASS II
(TERM EXPIRES MAY 2003)
KEITH E. BAILEY, AGE 57
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 Chairman of the Board of Williams
Communications Group, Inc.
WILLIAM E. GREEN, AGE 63
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. He also serves as Vice President, General Counsel, and Secretary of
Information Network Radio, Inc.
W. R. HOWELL, AGE 64
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 1996. He is also a director of
Exxon Corporation, Warner-Lambert Company, Bankers Trust, Halliburton Company,
and Central Southwest and Chairman of the Board of Trustees of Southern
Methodist University, Dallas, Texas.
JAMES C. LEWIS, AGE 67
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.
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DIRECTORS CONTINUING IN OFFICE
CLASS III
(TERM EXPIRES MAY 2001)
GLENN A. COX, AGE 70
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 Helmerich & Payne, Inc.
THOMAS H. CRUIKSHANK, AGE 68
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 1996. He was an
executive of Halliburton for more than five years. Mr. Cruikshank is also a
director of The Goodyear Tire & Rubber Company, and Lehman Bros. Holdings, Inc.
PATRICIA L. HIGGINS, AGE 50
Director since 1995. Ms. Higgins is Chairman and Chief Executive Officer of
The Research Board and has been since 1999. From 1997 to 1999, she was Vice
President and Chief Information Officer of the Aluminum Company of America, an
integrated aluminum company. She was President of Worldwide Communications
Market Sector Group of Unisys Corporation from 1995 to 1997 and a Group Vice
President of NYNEX from 1991 to 1995. Ms. Higgins is also a director of Fleet
Bank N.A.
GORDON R. PARKER, AGE 64
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 66
Director since 1969. He was Chairman of the Board 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 Insurance Co. of
America.
CLASS I
(TERM EXPIRES MAY 2002)
FRANK T. MACINNIS, AGE 53
Mr. MacInnis is Chairman of the Board and Chief Executive Officer of EMCOR
Group, Inc., one of the world's largest electrical and mechanical construction
groups, and has been since 1994. Mr. MacInnis is also Chairman of the Board of
ComNet Communications, Inc. He is also a director of UTT Corporation and a
former director of Portec, Inc., and MAPCO Inc.
PETER C. MEINIG, AGE 60
Director since 1993. Mr. Meinig is Chairman and Chief Executive Officer of
HM International, Inc., a privately owned diversified manufacturing and
management company, and has held executive positions with
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<PAGE> 8
HM International for more than five years. He also serves as Chairman of Windsor
Food Company, Ltd. And Ninth House, 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 14 meetings during 1999. 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, Thomas H.
Cruikshank, James C. Lewis, Peter C. Meinig, Gordon R. Parker, 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 1999.
Audit Committee. Members: Peter C. Meinig, Chairman, Glenn A. Cox, William
E. Green, Patricia L. Higgins, Frank T. MacInnis, and Janice D. Stoney.
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.
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
1999, the Audit Committee met five times.
Nominating Committee. Members: Gordon R. Parker, Chairman, Hugh M. Chapman,
W.R. Howell, Jack A. MacAllister, Frank T. MacInnis, 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 1999, the
Nominating Committee met four 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 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
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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, William E. Green, Patricia L. Higgins, W.R. Howell, James C. Lewis, 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 that 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 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 1999, the Compensation Committee met six times.
Compensation of Directors. Employee directors receive no additional
compensation for service on the Board of Directors or Committees of the Board.
Nonemployee directors receive an annual retainer of $12,000 in cash and 750
shares of Common Stock. They also receive a committee retainer of $4,000 for
serving on the Audit, Nominating or Compensation Committees. Chairmen of the
Audit, Nominating and Compensation Committees receive an additional annual
retainer of $2,500. Nonemployee directors also receive $1,000 for each Board
meeting attended, $500 for each Audit, Nominating or Compensation Committee
meeting attended and $750 for each Executive Committee meeting attended.
Under the Company's 1996 Stock Plan for Non-Employee Directors, a
nonemployee 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 1999.
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.
On September 30, 1999, at the equity offering of Williams Communications
Group, Inc. ("WCG"), nonemployee directors serving at the time of the equity
offering received a one-time grant of ten-year options to purchase 10,000 shares
of WCG Class A Common Stock at a price equal to the initial public offering
price. These options were vested upon grant.
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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 five other
most highly-compensated executive officers of the Company for the three fiscal
years ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------------------
--------------------------------- RESTRICTED STOCK
STOCK OPTION SHARES
NAME AND BONUS AWARDS ------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY (YR. EARNED)(1) (YR. EARNED)(2)(3) WMB(4) WCG(5) COMPENSATION(6)
- ------------------ ---- -------- --------------- ------------------ -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Keith E. Bailey................ 1999 $902,595 $ -0- $ 662,540(7) 50,000 100,000 $ 10,905
Chairman, President and 1998 675,000 300,000 450,000(7) 50,000 12,800
Chief Executive Officer 1997 675,000 325,000 337,509(7) 100,000 10,131
John C. Bumgarner, Jr. ........ 1999 $401,442 $210,806 $1,028,583(8) 20,000 50,000 $ 10,905
Senior Vice President, 1998 375,000 131,250 1,707,375(9)(10) 20,000 12,800
Corporate Development 1997 325,000 113,750 48,750 40,000 10,131
& Planning
Howard E. Janzen............... 1999 $451,538 $226,616 $ 97,122(11) 10,000 300,000 $ 10,905
President and Chief Executive 1998 400,000 126,000 2,609,000(12) 30,000 12,050
Officer, Williams 1997 300,000 105,000 45,000 60,000 10,131
Communications Group, Inc.
Jack D. McCarthy............... 1999 $391,817 $196,589 $ 84,253 20,000 50,000 $ 10,905
Senior Vice President, 1998 375,000 131,250 1,707,375(9)(10) 20,000 12,800
Finance & Corporate Chief 1997 320,000 112,000 48,000 40,000 10,131
Financial Officer
Brian E. O'Neill............... 1999 $353,846 $237,575 $ -0- 20,000 50,000 $1,217,558(13)(14)
President, Williams Gas 1998 340,000 119,000 51,000 20,000 57,543(13)
Pipeline 1997 340,000 119,000 51,000 40,000 54,874(13)
William G. von Glahn........... 1999 $351,153 $172,157 $ 73,783 20,000 50,000 $ 10,905
Senior Vice President and 1998 300,000 105,000 1,305,000(9) 20,000 10,815
General Counsel 1997 250,000 87,500 37,500 40,000 10,131
</TABLE>
- ---------------
(1) Excludes executive incentive compensation program awards converted to
deferred stock amounts that are included in the Restricted Stock Awards
column.
(2) Amounts reported in this column include the dollar value of the Company's
deferred and restricted stock awards under the terms of the Company's 1996
Stock Plan and Williams Communications Group, Inc. deferred stock awards
under the terms of the Williams Communications Group, Inc. 1999 Stock Plan
as of the date such awards were granted. Conversion of executive incentive
compensation program awards to deferred stock is based on the 52-week
average stock price for the award year, except as noted in footnote 11.
Receipt of deferred stock is deferred for approximately three years.
(3) The total number of the Company's restricted shares held and the aggregate
closing market value at December 31, 1999, were as follows: Mr. Bailey,
374,086 shares valued at $11,433,003. The total number of the Company's and
Williams Communications Group, Inc. deferred shares held, respectively, and
the aggregate closing market value at December 31, 1999, were as follows:
Mr. Bailey, 71,328 shares valued at $2,179,962; Mr. Bumgarner, 82,220
shares valued at $5,569,099 and 14,493 shares valued at $419,391; Mr.
Janzen, 6,508 shares valued at $198,901 and 98,152 shares valued at
$2,840,274; Mr. McCarthy, 53,843 shares valued at $1,645,577; Mr. O'Neill,
51,549 shares valued at $1,575,466 and Mr. von Glahn, 47,125 shares valued
at $1,440,258. Aggregate market value was calculated using $30.5625 per
share, the closing price of the Company's Common Stock and $28.9375 per
share, the closing price of Williams Communications Group, Inc. Common
Stock reported in the table entitled "New York Stock Exchange Composite
Transactions" contained in The Wall
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<PAGE> 11
Street Journal for December 31, 1999. Dividends are paid on the Company's
restricted shares, and dividend equivalents are paid on the Company's deferred
stock at the same time and at the same rate as dividends paid to stockholders
generally; dividend equivalents are not paid on Williams Communications
Group, Inc. deferred stock.
(4) Adjusted to reflect stock splits.
(5) The Company's Common Stock is designated WMB. Effective with the initial
public offering of Williams Communications Group, Inc. on September 30,
1999, certain employees of Williams received awards denominated in Williams
Communications Group, Inc. Common Stock (WCG).
(6) 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 footnotes 13 and 14.
(7) Represents 14,722 shares of restricted stock valued at the 52-week average
stock price for week ending December 26, 1997 ($22.9255, adjusted for a
stock split at the end of 1997) awarded in 1998 as 1997 incentive
compensation; and 14,742 shares of restricted stock valued at the 52-week
average stock price for week ending December 25, 1998 ($30.5260) awarded in
1999 as 1998 incentive compensation and 16,679 shares of restricted stock
valued at the 52-week average stock price for the week ending December 31,
1999 ($39.7250) awarded in 2000 as 1999 incentive compensation instead of
awards of cash and deferred stock provided under the executive incentive
compensation program applicable to other executive officers. Also
represents 8,122 shares of restricted stock awarded in 1999 to Mr. Bailey
to correct the number of shares awarded in 1994, 1995 and 1996 when the
conversion to restricted shares was based on incorrect valuation methods.
The restrictions on Mr. Bailey's restricted stock awards lapse in April
2002.
(8) The amount includes retention awards of 14,642 deferred shares of the
Company's Common Stock awarded on July 23, 1999, and valued at $604,898 and
14,493 deferred shares of Williams Communications Group, Inc. Common Stock
valued at $333,339 which were awarded at the initial public offering (IPO)
of Williams Communications Group, Inc. on September 30, 1999.
(9) Includes the Company's deferred stock awarded on May 21, 1998 for retention
purposes to the following individuals (market values at date of grant are
noted as follows): Mr. Bumgarner, 40,000 shares valued at $1,277,500 that
vested in January 2000; Mr. McCarthy, 40,000 shares valued at $1,277,500;
and Mr. von Glahn, 40,000 shares valued at $1,277,500.
(10) Includes the Company's deferred stock awarded on July 31, 1998 for
termination of employment agreement, respectively to the following
individuals (market values at date of grant are noted as follows): Mr.
Bumgarner, 12,000 shares valued at $385,500; and Mr. McCarthy, 12,000
shares valued at $385,500.
(11) Amount reported is the dollar value of an executive incentive compensation
program award of Williams Communications Group, Inc. deferred stock under
the terms of the Williams Communications Group, Inc. 1999 Stock Plan as of
December 31, 1999, the date of award. Conversion of the award to deferred
stock was based on the three-month average stock price since inception of
Williams Communications Group, Inc. Common Stock on September 30, 1999
($28.4290). Receipt of deferred stock is deferred for approximately three
years.
(12) This amount includes the Company's deferred stock award of 80,000 shares
granted for retention purposes on May 21, 1998 under The Williams
Companies, Inc. 1996 Stock Plan with a value of $2,555,000. These deferred
shares were converted at the completion of the equity offering of Williams
Communications Group, Inc. on September 30, 1999, to 130,870 Williams
Communications Group, Inc. deferred shares under the Williams
Communications Group, Inc. 1999 Stock Plan. Twenty-five percent of these
deferred shares (32,718) vested on that date.
(13) 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.
(14) As part of a separation agreement with the Company, Mr. O'Neill received a
cash payment of $1,161,910.
10
<PAGE> 12
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following tables provide certain information concerning the grant of
the Company's stock options and Williams Communications Group, Inc. stock
options during the last fiscal year to the named executive officers:
WILLIAMS OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-----------------------------------------------------------------------------
NUMBER PERCENT OF TOTAL
OF WMB OPTIONS GRANTED EXERCISE GRANT DATE
DATE OPTIONS TO EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED GRANTED FISCAL YEAR (PER SHARE) DATE VALUE(2)
- ---- ------- ------- ----------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Bailey........... 3/18/99 25,000 0.49% $39.9375 03/18/09 $393,500
9/16/99 25,000 0.49% 40.5000 09/16/09 427,500
------- ---- --------
50,000 0.98% $821,000
John C. Bumgarner, Jr. ... 3/18/99 10,000 0.20% $39.9375 03/18/09 $157,400
9/16/99 10,000 0.20% 40.5000 09/16/09 171,000
------- ---- --------
20,000 0.40% $328,400
Howard E. Janzen.......... 3/18/99 10,000 0.20% $39.9375 03/18/09 $157,400
------- ---- --------
10,000 0.20% $157,400
Jack D. McCarthy.......... 3/18/99 10,000 0.20% $39.9375 03/18/09 $157,400
9/16/99 10,000 0.20% 40.5000 09/16/09 171,000
------- ---- --------
20,000 0.40% $328,400
Brian E. O'Neill.......... 3/18/99 10,000 0.20% $39.9375 12/31/04 $115,500
9/16/99 10,000 0.20% 40.5000 12/31/04 125,700
------- ---- --------
20,000 0.40% $241,200
William G. von Glahn...... 3/18/99 10,000 0.20% $39.9375 03/18/09 $157,400
9/16/99 10,000 0.20% 40.5000 09/16/09 171,000
------- ---- --------
20,000 0.40% $328,400
</TABLE>
- ---------------
(1) Options granted in 1999 were granted subject to an accelerated vesting
provision as discussed in the Compensation Committee Report on Executive
Compensation included herein. Those awarded in March 1999 vested on April
15, 1999 and those awarded in September 1999 were vested upon grant pursuant
to such accelerated vesting. The Company granted these options under its
1996 Stock Plan.
(2) The grant date present value is determined using the Black-Scholes option
pricing model and 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, except for Mr. O'Neill's, assume an
expected volatility of 27 percent "weighted-average," a risk-free rate of
return of 6 percent "weighted-average," a dividend yield of 1.54 percent and
an exercise date at the end of the contractual term in 2009. Mr. O'Neill's
calculations assume an expected volatility of 28 percent "weighted average,"
a risk-free rate of return of 5.6 percent "weighted average," a dividend
yield of 1.54 percent and an exercise date of 2004. 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.
11
<PAGE> 13
WILLIAMS COMMUNICATIONS GROUP, INC. OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------
NUMBER PERCENT OF TOTAL
OF WCG OPTIONS GRANTED EXERCISE GRANT DATE
DATE OPTIONS TO EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED GRANTED FISCAL YEAR(1) (PER SHARE) DATE VALUE(2)
- ---- ------- ------- ----------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Bailey............ 9/30/99 100,000(3) 1.31% $23.000 9/30/09 $1,735,000
John C. Bumgarner, Jr. .... 9/30/99 50,000(3) 0.66% $23.000 9/30/09 $ 867,500
Howard E. Janzen........... 9/30/99 75,000(4) 0.98% $23.000 9/30/09 $1,301,250
9/30/99 225,000(4) 2.95% $23.000 9/30/09 $3,903,750
------- ---- ----------
300,000 3.93% $5,205,000
Jack D. McCarthy........... 9/30/99 50,000(3) 0.66% $23.000 9/30/09 $ 867,500
Brian E. O'Neill........... 9/30/99 50,000(3) 0.66% $23.000 12/31/04 $ 655,000
William G. von Glahn....... 9/30/99 50,000(3) 0.66% $23.000 9/30/09 $ 867,500
</TABLE>
- ---------------
(1) The total number of options granted to employees in the fiscal year excludes
715,750 options converted from Williams stock at the time of the equity
offering to Williams Communications Group, Inc. common stock under the terms
of the Williams Communications Group, Inc. 1999 Stock Plan.
(2) The grant date present value is determined using the Black-Scholes option
pricing model and 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, except for Mr. O'Neill's, assume an
expected volatility of 59.9 percent, a risk-free rate of return of 6.36
percent, a dividend yield of 0 percent and an exercise date at the end of
the contractual term in 2009. Mr. O'Neill's calculations assume an expected
volatility of 59.9 percent, a risk-free rate of return of 6.03 percent, a
dividend yield of 0 percent and an exercise date of 2004. The actual value,
if any, that may be realized by an executive will depend on the market price
of the Williams Communications Group, Inc. Common Stock on the date of
exercise. The dollar amounts shown are not intended to forecast possible
future appreciation in Williams Communications Group, Inc. stock price.
(3) Options will cliff vest on September 30, 2004. Williams Communications
Group, Inc. granted these stock options under the Williams Communications
Group, Inc. 1999 Stock Plan as Williams Communications Group, Inc. Board of
Directors' compensation.
(4) Options were granted under the Williams Communications Group, Inc. 1999
Stock Plan and will vest as follows: 75,000 in thirds on September 30, 2000,
September 30, 2001 and September 30, 2002, respectively and 225,000 will
cliff vest on September 30, 2004.
12
<PAGE> 14
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following tables provide certain information on stock option exercises
of the Company's stock and Williams Communications Group, Inc. stock,
respectively, in 1999 by the named executive officers and the value of such
officers' unexercised options at December 31, 1999.
AGGREGATED OPTION EXERCISES OF THE COMPANY'S STOCK IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Bailey........... 0 $ 0 350,002 0 $2,708,358 $0
John C. Bumgarner, Jr. ... 70,000 $ 856,871 10,000 0 $ 0 $0
Howard E. Janzen.......... 74,808 $2,233,935 180,004 0 $1,554,437 $0
Jack D. McCarthy.......... 40,000 $ 585,830 40,000 0 $ 3,750 $0
Brian E. O'Neill.......... 0 $ 0 334,404 0 $5,356,857 $0
William G. von Glahn...... 25,000 $ 640,969 95,504 0 $ 464,042 $0
</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, 1999 ($30.5625 per share), 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 on the market price of the Company's Common Stock on the
date of exercise.
AGGREGATED OPTION EXERCISES OF WILLIAMS COMMUNICATIONS GROUP, INC. STOCK IN LAST
FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Bailey................ 0 $0 0 100,000 $0 $ 593,750
John C. Bumgarner, Jr. ........ 0 $0 0 50,000 $0 $ 296,875
Howard E. Janzen............... 0 $0 0 300,000 $0 $1,781,250
Jack D. McCarthy............... 0 $0 0 50,000 $0 $ 296,875
Brian E. O'Neill............... 0 $0 0 50,000 $0 $ 296,875
William G. von Glahn........... 0 $0 0 50,000 $0 $ 296,875
</TABLE>
- ---------------
(1) Based on the closing price of Williams Communications Group, Inc. Common
Stock reported in the table entitled "New York Stock Exchange Composite
Transactions" contained in The Wall Street Journal for December 31, 1999
($28.9375 per share), 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 on the market price of the
Williams Communications Group, Inc. 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 participate in the pension plan on the same terms as other full-time
employees.
13
<PAGE> 15
Effective April 1, 1998, the Company converted its pension plan from a
final average pay plan to a cash balance pension plan. Each participant's
accrued benefit as of that date was converted to a beginning account balance.
Account balances are credited with an annual Company contribution and quarterly
interest allocations. Each year the Company allocates to an employee's pension
account an amount equal to a percentage of eligible compensation. Such
percentage is based upon the employee's age according to the following table:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF ELIGIBLE PAY GREATER
AGE ALL ELIGIBLE PAY THAN THE SOCIAL SECURITY WAGE BASE
- --- ---------------- ----------------------------------
<S> <C> <C> <C>
<30.......................... 4.5 % + 1 %
30-39........................ 6 % + 2 %
40-49........................ 8 % + 3 %
50+.......................... 10 % + 5 %
</TABLE>
For employees, including the executive officers named in the Summary
Compensation Table, who were active employees and plan participants on March 31,
1998, and April 1, 1998, the percentage of all eligible pay is increased by an
amount equal to the sum of 0.3 percent multiplied by the participant's total
years of service prior to March 31, 1998. Interest is credited to account
balances quarterly at a rate determined annually in accordance with the terms of
the plan. The normal retirement benefit is a monthly annuity based on an
individual's account balance as of benefit commencement. The plan defines
eligible compensation to include salary and bonuses. Normal retirement age is
65. Early retirement may begin as early as age 55. At retirement, employees are
entitled to receive a single-life annuity or one of several optional forms of
payment having an equivalent actuarial value to the single-life annuity.
Participants who were age 50 or older as of March 31, 1998, were
grandfathered under a transitional provision that gives them the greater of the
benefit payable under the cash balance formula or the final average pay formula
based on all years of service and compensation. Mr. Bailey, Mr. Bumgarner, Mr.
McCarthy, Mr. O'Neill, and Mr. von Glahn are covered under this grandfather
provision.
The Internal Revenue Code of 1986, as amended, 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 retirement plan to provide a supplemental retirement
benefit equal to the amount of such reduction to every employee, including the
executive officers named in the Summary Compensation Table, whose benefit
payable under the pension plan is reduced by Internal Revenue Code limitations.
Total estimated annual benefits payable at normal retirement age under the
cash balance formula from both the tax qualified and the supplemental retirement
plans are as follows:
<TABLE>
<S> <C>
Keith E. Bailey............................................. $689,364
John C. Bumgarner, Jr. ..................................... 267,149
Howard E. Janzen............................................ 504,840
Jack D. McCarthy............................................ 175,041
Brian E. O'Neill............................................ 84,346
William G. von Glahn........................................ 223,869
</TABLE>
The following schedule illustrates projected annual retirement benefits
under the final average pay formula, payable from both the tax qualified and the
supplemental retirement plans based on various levels of
14
<PAGE> 16
final average annual compensation 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, 1999, the years of credited service under the pension
plan for the executive officers named in the Summary Compensation Table, who are
grandfathered under the final average pay formula, were: Mr. Bailey, 26; Mr.
Bumgarner, 23; Mr. McCarthy, 13; Mr. O'Neill, 25; Mr. von Glahn, 14.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL SEVERANCE PLAN
As authorized by the Board of Directors, the Company previously had
separate employment agreements with certain of the executive officers named in
the Summary Compensation Table and certain other individuals. In 1998, the
Company and all but one of the executive officers entered into agreements to
terminate these employment agreements. In early 2000, the remaining employment
agreement was terminated in connection with the retirement of the executive
officer.
The Company has established The Williams Companies, Inc. Change in Control
Severance Plan, which covers certain employees of the Company, including the
executive officers named in the Summary Compensation Table. The plan provides
severance benefits if, within two years following a change in control of the
Company, a participant's employment is terminated (i) involuntarily other than
for cause, death, disability, or the sale of a business, or (ii) voluntarily for
good reason. The severance benefit is a lump sum payment equal to 100 percent of
the participant's annual base salary plus 100 percent of the participant's
monthly base salary for each completed year of service, subject to a maximum
severance benefit equal to 200 percent of the participant's annual base salary.
If necessary, a participant is also entitled to receive a corresponding gross-up
payment sufficient to compensate for the amount of any excise tax imposed by
Internal Revenue Code Section 4999, and for any taxes imposed on such additional
payment. Amounts payable under the plan are in lieu of any payments that may
otherwise be payable under any other severance plan or program.
15
<PAGE> 17
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 1999, the merit increase budget approved
for executive employees was 4.1 percent. This target was arrived at after review
of survey data indicating that estimated 1999 base salary increases for
executives would range from 4.0 to 4.6 percent. Within this framework, base
salary increases for the Company's executive officers ranged from 0 to 5
percent, excluding adjustment increases. The average 1999 merit increase for
such officers was 3.95 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 senior 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 components of the award formula are personal
performance, business performance, stockholder
16
<PAGE> 18
return and, for executives in some business units, performance relative to the
performance of their peers. 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 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 components.
The performance targets for the business performance and performance to
peers components are set by the Committee at threshold, target and stretch
levels at the beginning of each year. The target 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 target, the performance factor used to calculate
the award is normally 50 percent. Performance above or below target results in
awards representing a linear increase/decrease from target to stretch and from
target to threshold depending upon where actual performance falls. Where results
exceed stretch, the performance factor applied is within the sole discretion of
the Committee. In 1999, the Committee approved a super-stretch target that
provided an additional 25 percent opportunity resulting in a potential
performance factor of 125 percent of the award. Except in unusual circumstances,
there are no awards for performance below threshold.
The personal performance assessment for each executive officer is based on
an 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 business
performance factor for 1999 was tied to both energy income applicable to common
shareholders and Williams Communications Group, Inc. earnings before income
taxes, depreciation and amortization for the Company's executives and operating
profit, or earnings before income taxes, depreciation and amortization of the
individual operating companies for executives in these units. 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 under this program 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 have the option to defer all or a portion of the
remaining cash bonus award into 100 percent vested deferred stock for up to five
years from the award date. Senior executives also have an opportunity to defer
all or a portion of the remaining cash bonus award and their base salary for an
elective period in the form of 100 percent vested deferred stock.
Deferred stock cannot be sold or otherwise disposed of until the applicable
deferral period lapses. Dividend equivalents are paid on deferred stock or
reinvested in additional 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 1999 were granted subject to
an accelerated vesting provision which provided that if the average stock price,
for five out of 10 consecutive business days, reached a level that was 1.33
times the average stock price on the first business day of the award year, the
options vested immediately. (This acceleration feature is the equivalent of a 10
percent increase in stock price compounded for three years.) Stock options
granted in March 1999 vested on April 15, 1999 and those awarded in September
1999 were vested upon grant pursuant
17
<PAGE> 19
to such accelerated vesting. The Committee's objective with respect to stock
option awards is to provide a long-term component to overall compensation that
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 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 and
deferred stock, which is not distributed to the executive until the applicable
restriction period lapses. Restricted and deferred stock that is not vested 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 and deferred 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.
In 1999, the Committee established the Williams Communications Group, Inc.
1999 Stock Plan to provide for issuance of stock option and deferred stock
awards of Williams Communications Group, Inc. stock. Stock option awards from
this plan give executives the right to purchase WCG common stock over a ten-year
period at the market value per share of WCG common stock, as defined by the
plan, as of the date the award is granted. Stock option awards from this plan
will generally be subject to three-year (one-third per year) graded vesting
schedule. Awards made in 1999 from this plan were not subject to an accelerated
vesting provision. Effective with the equity offering of Williams Communications
Group, Inc., Mr. Janzen's stock awards are denominated in WCG stock granted from
this plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
The full Board meets in executive session 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.
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 1999 and awarded in January 2000 was 16,679 shares of restricted
stock. This award represents seventy-three 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 awarded
to Mr. Bailey 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. 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.
A stock option grant of 50,000 shares was also approved for Mr. Bailey in
1999. 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. In addition, Mr.
Bailey received a stock option grant of 100,000 shares of Williams
Communications Group, Inc. stock.
18
<PAGE> 20
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 with respect to existing compensation commitments. The
Committee believes that approximately $495,000 of Mr. Bailey's compensation and
approximately $370,000 of Mr. Janzen's compensation, otherwise deductible for
1999, exceeded the deductibility limit.
THE COMPENSATION COMMITTEE
Thomas H. Cruikshank, Chairman
Glenn A. Cox
William E. Green
Patricia L. Higgins
W. R. Howell
James C. Lewis
Jack A. MacAllister
Gordon R. Parker
19
<PAGE> 21
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,
1995. The graph assumes an investment of $100 at the beginning of the period.
CUMULATIVE FIVE-YEAR TOTAL STOCKHOLDER RETURN
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Williams Co. Inc. 100.00 180.12 237.38 369.03 412.15 410.34
S&P 500 Index 100.00 137.54 165.41 225.49 289.93 350.93
S&P Natural Gas 100.00 141.44 182.98 221.78 243.04 289.44
</TABLE>
20
<PAGE> 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares 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>
Wells Fargo & Company(1).................................... 39,762,320 9.15%
420 Montgomery Street
San Francisco, California 94104
Capital Resource and Management Company(2).................. 31,923,850 7.30%
333 South Hope Street
Los Angeles, California 90071
Putnam Investments, Inc.(3)................................. 23,864,850 5.50%
One Post Office Square
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) A filing with the Securities and Exchange Commission on February 10, 2000,
indicates that Wells Fargo & Company is a Parent Holding Company in
accordance with Section 240.13d-1(b)(ii)(G).
(2) A filing with the Securities and Exchange Commission on February 10, 2000,
indicates that Capital Research and Management Company, an investment
adviser under Section 203 of the Investment Advisors Act of 1940, is deemed
to be the beneficial owner of 31,923,850 shares of the Company's Common
Stock as a result of acting as investment advisor to various investment
companies registered under Section 8 of the Investment Company Act of 1940.
(3) A filing with the Securities and Exchange Commission on February 10, 2000,
indicates that Wells Fargo & Company is a Parent Holding Company in
accordance with Section 240.13d-1(b)(ii)(G).
21
<PAGE> 23
The following table sets forth, as of February 29, 2000, 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
OWNED DIRECTLY WITHIN PERCENT
NAME OF INDIVIDUAL OR GROUP OR INDIRECTLY(1)(2) 60 DAYS(3) TOTAL OF CLASS
- --------------------------- ------------------- ----------- --------- --------
<S> <C> <C> <C> <C>
Keith E. Bailey................................ 1,893,951(4) 350,002 2,243,953 *
John C. Bumgarner, Jr. ........................ 1,058,144(4) 10,000 1,068,144 *
Hugh M. Chapman................................ 2,821 2,000 4,821 *
Glenn A. Cox................................... 9,000(4) 40,008 49,008 *
Thomas H. Cruikshank........................... 11,134 52,008 63,142 *
William E. Green............................... 3,939 8,000 11,939 *
Patricia L. Higgins............................ 5,394 31,382 36,776 *
W. R. Howell................................... 7,546 12,000 19,546 *
Howard E. Janzen............................... 176,812 180,004 356,816 *
James C. Lewis................................. 73,036(4) 9,334 82,370 *
Jack A. MacAllister............................ 36,835 12,000 48,835 *
Frank T. MacInnis.............................. 6,217 6,667 12,884 *
Jack D. McCarthy............................... 253,151 40,000 293,151 *
Peter C. Meinig................................ 16,364(4) 34,008 50,372 *
Gordon R. Parker............................... 31,070 48,006 79,076 *
Janice D. Stoney............................... 3,666 2,000 5,666 *
William G. von Glahn........................... 193,313 95,504 288,817 *
Joseph H. Williams............................. 555,722(4) 28,008 583,730 *
All directors and executive officers as a group
(23 persons)(5).............................. 4,769,119 1,596,575 6,365,694 2.0%
</TABLE>
- ---------------
* Less than 1 percent.
(1) Includes shares held under the terms of incentive and investment plans as
follows: Mr. Bailey, 623,778, including 178,364 over which he has sole
voting and investment power; Mr. Bumgarner, 415,696, including 224,958 over
which he has sole voting and investment power; Mr. Janzen, 62,775, including
59,043 over which he has sole voting and investment power; Mr. McCarthy,
99,720, including 43,756 over which he has sole voting and investment power;
Mr. O'Neill, 93,662, including 80 over which he has sole voting and
investment power; and Mr. von Glahn, 60,099, including 15,130 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, 6,586; William E. Green, 2,909; Patricia L. Higgins, 5,394; W.R.
Howell, 3,785; James C. Lewis, 6,864; Jack A. MacAllister, 5,217; Peter C.
Meinig, 6,914; and Janice D. Stoney, 666.
(3) The Securities and Exchange Commission deems a person to have beneficial
ownership of all shares that 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. Bailey, 27,800; Mr. Bumgarner,
70,000; Mr. Cox, 8,250 shares; Mr. Lewis, 18,100 shares; Mr. Meinig, 6,450
shares; and Mr. Williams, 24,600 shares. Each individual has voting and
investment power over such shares.
(5) Does not include security ownership of Mr. Brian E. O'Neill, who retired on
January 1, 2000, and no longer serves as an executive officer.
22
<PAGE> 24
No director or officer of the Company owns beneficially any securities of
the Company's subsidiaries other than directors' qualifying shares and shares in
Williams Communications Group, Inc. as shown in the next table.
The following table sets forth, as of February 29, 2000, the amount of
Class A Common Stock of Williams Communications Group, Inc., a majority owned
subsidiary of the Company, 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
SHARES OF UNDERLYING
CLASS A COMMON OPTIONS
STOCK OWNED EXERCISABLE PERCENT
DIRECTLY WITHIN OF
NAME OF INDIVIDUAL OR GROUP OR INDIRECTLY(1) 60 DAYS(2) TOTAL CLASS
- --------------------------- ---------------- ----------- ------- -------
<S> <C> <C> <C> <C>
Keith E. Bailey.......................... 0 0 0 *
John C. Bumgarner, Jr. .................. 41,796 0 41,796 *
Hugh M. Chapman.......................... 3,000 10,000 13,000 *
Glenn A. Cox............................. 5,000 10,000 15,000 *
Thomas H. Cruikshank..................... 5,000 10,000 15,000 *
William E. Green......................... 5,000 10,000 15,000 *
Patricia L. Higgins...................... 0 10,000 10,000 *
W. R. Howell............................. 5,000 10,000 15,000 *
Howard E. Janzen......................... 123,318 0 123,318 *
James C. Lewis........................... 5,000 10,000 15,000 *
Jack A. MacAllister...................... 5,000 10,000 15,000 *
Frank T. MacInnis........................ 5,000 10,000 15,000 *
Jack D. McCarthy......................... 0 0 0 *
Peter C. Meinig.......................... 5,000 10,000 15,000 *
Gordon R. Parker......................... 5,000 10,000 15,000 *
Janice D. Stoney......................... 5,000 10,000 15,000 *
William G. von Glahn..................... 303 0 303 *
Joseph H. Williams....................... 5,000 10,000 15,000 *
All directors and executive officers as a
group (23 persons)(3).................. 224,729 130,000 354,729 *
</TABLE>
- ---------------
* Less than 1 percent.
(1) Includes shares held under the terms of incentive and investment plans as
follows: Mr. Bumgarner, 14,493; Mr. Janzen, 101,872, including 303 over
which he has sole voting and investment power.
(2) The Securities and Exchange Commission deems a person to have beneficial
ownership of all shares that 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.
(3) Does not include security ownership of Mr. Brian E. O'Neill, who retired on
January 1, 2000, and no longer serves as an executive officer.
23
<PAGE> 25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK OPTION LOAN PROGRAM
1985, 1990, AND 1996 STOCK PLAN AND 1996 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
The stock option loan programs for The Williams Companies, Inc. 1996 Stock
Plan, The Williams Companies, Inc. 1996 Stock Plan for Non-Employee Directors,
The Williams Companies, Inc. 1990 Stock Plan, and The Williams Companies, Inc.
1985 Stock Plan provide that loans using stock certificates as collateral may be
either for a three- or five-year term. Interest payments are due annually during
the term of the loan and interest rates are based on the minimum applicable
federal rates required to avoid imputed income. The principal amount is due at
the end of the loan term, provided, however, that a participant may request,
prior to the end of a loan term, a new loan that may be granted at the
discretion of the company. Participants who leave the company during the loan
period are required to pay the loan balance and any accrued interest within 30
days of termination.
<TABLE>
<CAPTION>
TOTAL LARGEST
INTEREST AMOUNT AMOUNT
INTEREST OVER TERM DUE DURING OUTSTANDING
NAME RATE OF LOAN 1999 3/17/00
- ---- -------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Keith E. Bailey...................... 6.28% $ 50,641.92 $ 171,408.39 $ 163,416.67
Keith E. Bailey...................... 6.58% $ 71,656.20 $ 232,131.21 $ 220,823.30
Keith E. Bailey...................... 6.42% $ 67,673.84 $ 266,050.00 $ 253,385.89
Keith E. Bailey...................... 6.80% $ 36,162.67 $ 113,593.31 $ 107,886.57
Keith E. Bailey...................... 6.80% $ 49,588.48 $ 254,269.42 $ 241,495.31
Keith E. Bailey...................... 6.80% $ 59,459.20 $ 233,464.78 $ 221,735.86
Keith E. Bailey...................... 5.68% $ 406,609.84 $ 1,513,046.80 $ 1,448,880.39
Keith E. Bailey...................... 5.57% $1,026,811.18 $ 3,892,296.43 $ 3,730,257.20
Keith E. Bailey...................... 5.54% $1,670,829.99 $ 6,366,043.21 $ 6,102,372.51
------------- -------------- --------------
Total...................... $3,439,433.31 $13,042,303.55 $12,490,253.70
Gary R. Belitz....................... 5.70% $ 56,325.48 $ 348,163.93 $ 333,349.59
Gary R. Belitz....................... 4.47% $ 25,296.52 $ 197,071.41 $ 190,418.04
Gary R. Belitz....................... 4.67% $ 10,876.32 $ 131,404.83 $ 127,936.10
Gary R. Belitz....................... 4.67% $ 5,709.29 $ 47,228.89 $ 45,982.19
Gary R. Belitz....................... 4.98% $ 45,200.31 $ 310,471.11 $ 305,724.07
------------- -------------- --------------
Total...................... $ 143,407.92 $ 1,034,340.17 $ 1,003,409.99
John C. Bumgarner, Jr. .............. 5.91% $ 203,927.62 $ 1,218,159.86 $ 1,164,524.12
John C. Bumgarner, Jr. .............. 5.42% $ 559,102.89 $ 3,624,884.74 $ 3,477,833.04
John C. Bumgarner, Jr. .............. 5.42% $ 373,329.60 $ 2,333,503.43 $ 2,322,252.40
------------- -------------- --------------
Total...................... $1,136,360.11 $ 7,176,548.03 $ 6,964,609.56
James R. Herbster.................... 6.74% $ 17,864.37 $ 56,582.87 $ 53,763.73
James R. Herbster.................... 6.49% $ 119,416.00 $ 391,883.22 $ 373,038.37
James R. Herbster.................... 5.93% $ 77,115.43 $ 275,508.89 $ 263,339.42
------------- -------------- --------------
Total...................... $ 214,395.80 $ 723,974.98 $ 690,141.52
Howard E. Janzen..................... $ -- $ 10,547.35(1) $ --
Howard E. Janzen..................... 5.70% $ 80,997.64 $ 500,669.57 $ 479,366.12
Howard E. Janzen..................... 5.69% $ 87,092.51 $ 323,543.31 $ 309,799.39
Howard E. Janzen..................... 5.77% $ 38,864.87 $ 142,486.55 $ 136,353.38
Howard E. Janzen..................... 4.71% $ 25,451.88 $ 112,692.14 $ 109,149.80
Howard E. Janzen..................... 4.71% $ 27,328.23 $ 120,999.99 $ 117,196.48
Howard E. Janzen..................... 4.71% $ 54,070.99 $ 239,407.68 $ 231,882.15
Howard E. Janzen..................... 4.83% $ 114,621.70 $ 492,021.37 $ 479,460.09
Howard E. Janzen..................... 5.37% $ 101,999.39 $ 391,455.23 $ 384,189.54
------------- -------------- --------------
Total...................... $ 530,427.21 $ 2,333,823.19 $ 2,247,396.95
</TABLE>
24
<PAGE> 26
<TABLE>
<CAPTION>
TOTAL LARGEST
INTEREST AMOUNT AMOUNT
INTEREST OVER TERM DUE DURING OUTSTANDING
NAME RATE OF LOAN 1999 3/17/00
- ---- -------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
James C. Lewis....................... 5.57% $ 185,868.67 $ 676,048.90 $ --
------------- -------------- --------------
Total...................... $ 185,868.67 $ 676,048.90 $ --
Jack D. McCarthy..................... 6.23% $ 107,056.32 $ 365,091.26 $ 348,196.90
Jack D. McCarthy..................... 6.23% $ 108,144.83 $ 368,803.35 $ 351,737.22
Jack D. McCarthy..................... 6.23% $ 106,111.35 $ 361,868.69 $ 345,123.43
Jack D. McCarthy..................... 5.59% $ 28,721.07 $ 120,963.89 $ 115,910.96
Jack D. McCarthy..................... 5.59% $ 29,013.10 $ 122,193.79 $ 117,089.50
Jack D. McCarthy..................... 5.59% $ 28,467.56 $ 119,896.15 $ 114,887.84
Jack D. McCarthy..................... 6.42% $ 97,467.41 $ 323,130.26 $ 307,749.12
Jack D. McCarthy..................... 6.42% $ 100,999.44 $ 334,839.89 $ 318,901.35
Jack D. McCarthy..................... 6.42% $ 66,565.13 $ 220,681.05 $ 210,176.50
Jack D. McCarthy..................... 5.59% $ 26,566.90 $ 125,456.13 $ 120,215.53
Jack D. McCarthy..................... 5.59% $ 27,529.63 $ 130,002.40 $ 124,571.91
Jack D. McCarthy..................... 5.59% $ 18,143.80 $ 85,679.99 $ 82,100.90
Jack D. McCarthy..................... 4.83% $ 301,392.00 $ 1,295,562.16 $ 1,260,716.27
Jack D. McCarthy..................... 6.21% $ 8,504.25 $ -- $ 63,691.84
Jack D. McCarthy..................... 6.21% $ 12,452.27 $ -- $ 93,260.22
Jack D. McCarthy..................... 6.21% $ 7,340.67 $ -- $ 54,977.30
Jack D. McCarthy..................... 6.80% $ 17,328.98 $ -- $ 124,604.27
Jack D. McCarthy..................... 6.80% $ 31,942.00 $ -- $ 186,714.91
Jack D. McCarthy..................... 6.80% $ 32,266.77 $ -- $ 188,613.35
Jack D. McCarthy..................... 6.80% $ 31,300.96 $ -- $ 182,967.77
------------- -------------- --------------
Total...................... $1,187,314.42 $ 3,974,169.01 $ 4,712,207.09
William G. von Glahn................. 5.83% $ 64,363.20 $ 389,454.40 $ --
William G. von Glahn................. 5.83% $ 1,287.26 $ 7,789.09 $ 7,450.52
William G. von Glahn................. 5.83% $ 1,287.26 $ 7,789.09 $ 7,450.52
William G. von Glahn................. 5.83% $ 6,296.40 $ 38,098.75 $ 36,442.76
William G. von Glahn................. 5.91% $ 6,240.96 $ 37,280.27 $ --
William G. von Glahn................. 6.23% $ 11,961.60 $ 67,987.23 $ 64,841.14
William G. von Glahn................. 6.23% $ 11,662.56 $ 66,287.49 $ 63,220.11
William G. von Glahn................. 5.54% $ 23,156.31 $ 147,046.79 $ 140,956.34
William G. von Glahn................. 5.54% $ 744.58 $ 4,550.04 $ --
William G. von Glahn................. 5.54% $ 744.58 $ 4,550.04 $ --
William G. von Glahn................. 5.54% $ 32,907.60 $ 208,969.20 $ 200,314.05
William G. von Glahn................. 5.59% $ 32,418.94 $ 152,049.60 $ --
William G. von Glahn................. 5.59% $ 648.38 $ 2,925.42 $ --
William G. von Glahn................. 5.59% $ 648.38 $ 2,925.42 $ --
William G. von Glahn................. 5.59% $ 3,431.31 $ 16,049.66 $ 15,379.25
William G. von Glahn................. 5.59% $ 3,619.26 $ 16,894.37 $ 16,188.68
William G. von Glahn................. 5.39% $ 4,632.86 $ 40,469.79 $ 38,836.63
William G. von Glahn................. 5.39% $ 4,831.80 $ 42,156.00 $ 40,454.83
William G. von Glahn................. 5.39% $ 3,092.09 $ 20,976.86 $ 20,130.32
William G. von Glahn................. 5.39% $ 99.42 $ 649.74 $ --
William G. von Glahn................. 5.39% $ 99.42 $ 649.74 $ --
William G. von Glahn................. 5.48% $ 76,281.60 $ 489,427.21 $ 469,364.09
William G. von Glahn................. 5.57% $ 55,700.00 $ 211,140.04 $ 202,350.08
William G. von Glahn................. 5.54% $ 113,547.84 $ 432,629.58 $ 414,710.79
William G. von Glahn................. 5.28% $ 40,757.26 $ 181,835.08 $ 176,949.26
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
TOTAL LARGEST
INTEREST AMOUNT AMOUNT
INTEREST OVER TERM DUE DURING OUTSTANDING
NAME RATE OF LOAN 1999 3/17/00
- ---- -------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
William G. von Glahn................. 5.82% $ 200,208.00 $ 706,868.91 $ 696,447.13
William G. von Glahn................. 5.98% $ 45,448.00 $ 154,490.29 $ 153,917.53
William G. von Glahn................. 6.20% $ 551.17 $ 3,858.92 $ 3,890.23
William G. von Glahn................. 6.20% $ 551.17 $ 3,858.92 $ 3,890.23
William G. von Glahn................. 5.74% $ 6,485.13 $ 68,247.52 $ 68,760.35
William G. von Glahn................. 6.20% $ 18,494.68 $ 80,394.08 $ 81,046.36
------------- -------------- --------------
Total...................... $ 772,199.03 $ 3,608,299.54 $ 2,922,991.20
Grand Total.......................... $7,609,406.48 $32,569,507.37 $31,031,010.01
</TABLE>
- ---------------
(1) Represents $10,547.35 of additional interest that Mr. Janzen was
undercharged in 1998 for this loan. The amount was paid in 1999.
John C. Bumgarner a Senior Vice President of the Company, owns real estate
and leases a portion of it to subsidiaries of the Company for use as office
space. In 1999, payments under these leases approximated $900.000. These leases
remain in place, and the Company expects its subsidiaries to make similar
payments approximating $75,000 per month for the term of the leases.
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 2000. 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 2000.
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 1999, the Company is not aware of any late filings.
STOCKHOLDER PROPOSALS FOR 2001
In order for a stockholder proposal to be considered for inclusion in the
Company's 2001 Proxy Statement, such proposal must be received by the Company no
later than December 1, 2000. 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.
26
<PAGE> 28
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 that 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
Shawna L. Gehres
Secretary
Tulsa, Oklahoma
March 27, 2000
27
<PAGE> 29
THE WILLIAMS COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 18, 2000
<TABLE>
<S> <C> <C>
P The undersigned stockholder of The Williams Companies, Inc. hereby appoints KEITH E. BAILEY, JACK D. MCCARTHY and
R WILLIAM G. VON GLAHN, jointly and severally with full power of substitution, as proxies to represent and to vote all of the
O shares of Common Stock the undersigned is entitled to vote at the Annual Meeting of Stockholders of The Williams Companies,
X Inc. to be held on the 18th day of May, 2000 and at any and all adjournments thereof, on all matters coming before said
Y meeting.
Election of Directors. Nominees: (change of address/comments)
Keith E. Bailey
------------------------------------
Hugh M. Chapman
------------------------------------
William E. Green
------------------------------------
W.R. Howell
------------------------------------
James C. Lewis
------------------------------------
Janice D. Stoney
------------------------------------
(If you have written in the above space,
please mark the corresponding box on
the reverse side of this card)
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes
if you wish to vote in accordance with the Board of Directors' recommendations.
[SEE REVERSE SIDE]
</TABLE>
[FOLD AND DETACH HERE]
<PAGE> 30
Please mark your
votes as indicated
[X] 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.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1. Election of FOR WITHHELD 1. Ratification of FOR AGAINST ABSTAIN 3. In the discretion of one or more of said
Directors. Ernst & Young LLP as proxies upon any other business as may
(See Reverse) [ ] [ ] auditors for 2000 [ ] [ ] [ ] properly come before the Meeting or any
adjournments thereof.
For, except vote withheld from
the following nominee(s):
---------------------------------
Change of address,
see reverse side
SIGNATURE(S) Date The signer hereby revokes all proxies heretofore
-------------------------------------- -------------- given by the signer to vote at said meeting or any
NOTE: Please sign exactly as name appears hereon. Joint owners should adjournment thereof.
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
</TABLE>
[FOLD AND DETACH HERE]
