<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>
Devon Energy Corporation
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(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:
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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
DEVON ENERGY CORPORATION
20 North Broadway, Suite 1500
Oklahoma City, OK 73102-8260
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of Devon Energy Corporation, a
Delaware corporation ("Devon" or the "Company"), will be held in the Kiamichi
Room, on the second floor of The Westin Hotel, One North Broadway, Oklahoma
City, Oklahoma on May 18, 2000, at 10:00 a.m., local time, for the following
purposes:
1. To elect four directors for terms expiring in the year 2003; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on March 31, 2000 are
entitled to notice of and to vote at the meeting. A complete list of the
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose germane to the meeting, during ordinary
business hours, for a period of ten (10) days prior to the meeting at the
headquarters of the Company in Oklahoma City. The accompanying Proxy Statement
contains information regarding the matters to be considered at the meeting. For
reasons outlined in the attached Proxy Statement, the Board of Directors
recommends a vote "FOR" the election of directors nominated by the Board of
Directors.
IMPORTANT
YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE MEETING. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING, PLEASE VOTE IN ANY ONE OF THE FOLLOWING WAYS:
o USE THE TOLL-FREE TELEPHONE NUMBER SHOWN ON THE PROXY CARD;
o USE THE INTERNET WEBSITE SHOWN ON THE PROXY CARD; OR
o MARK, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
POSTAGE-PAID ENVELOPE. IT REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
BY ORDER OF THE BOARD OF DIRECTORS
Marian J. Moon
Senior Vice President and Corporate Secretary
Oklahoma City, Oklahoma
April 13, 2000
<PAGE> 3
DEVON ENERGY CORPORATION
PROXY STATEMENT
----------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 2000
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Devon to be used at the Annual Meeting
of Stockholders and any adjournment thereof (the "Meeting"). The Meeting will be
held on the 18th day of May, 2000. This Proxy Statement is first being sent to
the stockholders on or about April 13, 2000.
THE COMPANY
Devon is an independent energy company engaged primarily in oil and gas
exploration, development and production and in the acquisition of producing
properties. Devon currently owns oil and gas properties concentrated in four
operating divisions: the Northern Division, which encompasses properties in the
Permian Basin, Rocky Mountains and Mid-Continent; the Southern Division, which
encompasses properties in south Texas, the Gulf Coast area and offshore Gulf of
Mexico; Canada, which includes properties in the Western Canadian Sedimentary
Basin in Alberta and British Columbia; and the International Division, which
includes properties in Azerbaijan, Egypt, Qatar, Brazil, Australia and
Venezuela. At December 31, 1999, Devon's estimated proved reserves were 669.8
million barrels of oil equivalent ("MMBoe"), of which 47% were natural gas
reserves and 53% were oil and natural gas liquids ("NGLs") reserves. The present
value of pre-tax future net revenues discounted at 10% per annum assuming
essentially unescalated prices of such reserves was $3.6 billion. Devon is one
of the top 10 public independent oil and gas companies based in the United
States, as measured by oil and gas reserves. Unless otherwise indicated, all
dollar amounts in this Proxy Statement are expressed in U.S. dollars.
STRATEGY
Devon's primary objectives are to build production, cash flow and
earnings per share by (a) acquiring oil and gas properties, (b) exploring for
new oil and gas reserves, and (c) optimizing production from existing oil and
gas properties. Devon's management seeks to achieve these objectives by (a)
keeping debt levels low, (b) concentrating its properties in core areas to
achieve economies of scale, (c) acquiring and developing high profit margin
properties, (d) continually disposing of marginal and non-strategic properties,
and (e) balancing reserves between oil and gas.
During 1988, Devon expanded its capital base with its first issuance of
common stock to the public. This transaction began a substantial expansion
program that has continued through the subsequent years. Devon has used a
two-pronged strategy of acquiring producing properties and engaging in drilling
activities to achieve this expansion. Total proved reserves increased from 8.1
MMBoe at year-end 1987 to 669.8 MMBoe at year-end 1999.
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Devon's objective, however, is to increase value per share, not simply
to increase total assets. Reserves have grown from 1.31 barrels of oil
equivalent ("Boe") per share at year-end 1987 to 7.78 Boe per share at year-end
1999. At the same time, net debt (long-term debt less working capital and
marketable securities) has remained relatively low. At year-end 1999, Devon's
net debt was $1.47 per Boe.
On August 17, 1999, Devon completed a merger with PennzEnergy Company
("PennzEnergy"). PennzEnergy's domestic operations were focused in the Gulf of
Mexico, onshore Gulf Coast, east and west Texas, and New Mexico. It had
international operations located in Australia, Azerbaijan, Brazil, Egypt, Qatar
and Venezuela. The merger of PennzEnergy with Devon expanded Devon's reserves by
approximately 400 MMBoe, 13 million net acres of undeveloped leasehold and $3.2
billion of assets. The total consideration to PennzEnergy was 21.5 million
common shares and the assumption of $2.3 billion of PennzEnergy debt. At
year-end 1999, Devon's unused borrowing capacity was in excess of $435 million.
The PennzEnergy merger was completed less than a year after Devon's
merger with Northstar Energy Corporation ("Northstar"). The December 10, 1998,
combination of Devon and Northstar added 115 MMBoe of proved reserves and 1.8
million undeveloped acres, all in Canada.
In addition to the two mergers, Devon's exploration, drilling and
development efforts have also been significant contributors to Devon's growth
over the last three years. Excluding the pooled results of Northstar prior to
December 1998, Devon has spent approximately $492 million in its exploration,
drilling and development efforts from 1997 through 1999.
Since September 29, 1988, Devon's common stock (the "Common Stock") has
been traded on the American Stock Exchange (the "AMEX") under the symbol "DVN."
In addition, following the Northstar combination, a new class of exchangeable
shares (the "Exchangeable Shares") began trading on The Toronto Stock Exchange
under the symbol "NSX." These shares are essentially equivalent to Devon Common
Stock. However, because they are issued by Devon's wholly-owned subsidiary,
Northstar, they qualify as a domestic Canadian investment for Canadian
institutional stockholders. They are exchangeable at any time, on a one-for-one
basis, for common shares of Devon. The shares of Common Stock and the
Exchangeable Shares are together referred to herein as the "Voting Shares." All
holders of Common Stock and Exchangeable Shares are referred to herein as
"stockholders" of the Company.
The Company's mailing address is 20 North Broadway, Suite 1500,
Oklahoma City, OK 73102-8260. Its telephone number is (405) 235-3611.
All references in this Proxy Statement to Devon or the Company include
its predecessors and subsidiary corporations.
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<PAGE> 5
GENERAL INFORMATION
PURPOSE OF THE MEETING.
At the Meeting the stockholders will elect four directors for terms
expiring in the year 2003. The stockholders will also consider and vote upon
such other business as may properly come before the Meeting or any adjournment
thereof.
VOTING AT THE MEETING.
The Board of Directors has established March 31, 2000, as the record
date (the "Record Date") to determine stockholders entitled to notice of and to
vote at the Meeting.
Voting by Holders of Common Stock. At the close of business on the
Record Date, there were 82,112,321 shares of Common Stock outstanding, each of
which are entitled to one vote at the Meeting. The enclosed proxy is a means by
which a stockholder may authorize the voting of his or her shares of Common
Stock at the Meeting. Each proxy that is properly signed, dated and returned to
the Company in time for the Meeting, and not revoked, will be voted in
accordance with instructions contained therein. If no contrary instructions are
given, proxies will be voted "FOR" the four director nominees nominated by the
Board of Directors. A proxy may be revoked at any time prior to its exercise by
delivering a written notice of revocation or a later dated proxy to the
Corporate Secretary of the Company. In addition, a stockholder present at the
Meeting may revoke his or her proxy and vote in person. The Company has
furnished this Proxy Statement, the accompanying Notice of Meeting, the proxy
card and certain related materials to the holders of Common Stock.
Voting by Holders of Exchangeable Shares. As of the close of business
on the Record Date, there were also 4,336,092 Exchangeable Shares outstanding.
Each Exchangeable Share is entitled to one vote at the Meeting through a Voting
and Exchange Trust Agreement dated December 10, 1998, as amended on August 17,
1999 (the "Voting Agreement"). Under the Voting Agreement, CIBC Mellon Trust
Company (the "Trustee") is entitled to exercise certain voting rights on behalf
of holders of the Exchangeable Shares. The Trustee holds one share of Special
Voting Stock of the Company (the "Special Voting Share"). The Special Voting
Share is entitled to a number of votes equal to the number of Exchangeable
Shares outstanding from time to time that are held by persons other than the
Company. Pursuant to the Voting Agreement, each holder of Exchangeable Shares
(other than the Company) is entitled to give the Trustee voting instructions for
a number of votes equal to the number of such holder's Exchangeable Shares. A
voting direction card is a means by which a holder of Exchangeable Shares may
authorize the voting of his or her voting rights at the Meeting. The Trustee
will exercise each vote only as directed by the relevant holders on the voting
direction card. In the absence of instructions from a holder as to voting, the
Trustee will not exercise such votes. A holder may also instruct the Trustee to
give him or her a proxy entitling him or her to vote personally the relevant
number of votes or to grant to the Company's management a proxy to vote such
votes. The voting direction may be revoked at any time prior to its exercise by
delivering a written notice of revocation or a later dated voting direction card
to the Trustee. In addition, a holder of Exchangeable Shares present at the
Meeting may revoke his voting direction card and vote in person. The Trustee has
furnished (or caused the Company to furnish) this Proxy Statement, the
accompanying Notice of Meeting, the voting direction card and certain related
materials to the holders of Exchangeable Shares.
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General Procedures. The office of the Company's Corporate Secretary
appoints an inspector of election to tabulate all votes and to certify the
results of all matters voted upon at the Meeting. The Common Stock and the
Special Voting Share vote together as a single class (the "Voting Shares"). The
holders of a majority of the Voting Shares entitled to vote, present in person
or by proxy, constitute a quorum. Election of each director at the Meeting will
be by a plurality of votes cast at the meeting. Votes may be cast in favor of
the election of each director or withheld. The Company believes that brokers
that are member firms of the New York Stock Exchange ("NYSE") and who hold
Common Stock in street name for customers, but have not received instructions
from a beneficial owner, have the authority under the rules of the NYSE to vote
those shares with respect to the election of directors. In Canada, registrants
and their nominees may not exercise voting rights without instructions from a
beneficial owner. Therefore, no votes with respect to the Exchangeable Shares
will be cast without specific instructions to the Trustee.
Except as provided by law or the Company's Certificate of Incorporation
or Bylaws, the affirmative vote of the holders of a majority of the Voting
Shares, present in person or by proxy, entitled to vote at the Meeting is
required to take action with respect to any other matter that may properly be
brought before the Meeting. Shares cannot be voted at the Meeting unless the
holder of record is present in person or by proxy.
The Company will (i) count abstentions and broker non-votes for
purposes of determining the presence of a quorum at the Meeting; (ii) treat
abstentions as votes not cast but as shares represented at the Meeting for
determining results on actions requiring a majority vote; (iii) not consider
broker non-votes for determining actions requiring a majority vote; and (iv)
consider neither abstentions nor broker non-votes in determining results of
plurality votes.
The cost of solicitation of proxies will be borne by the Company.
Proxies may be solicited by mail or personally by directors, officers or regular
employees of the Company, none of whom will receive additional compensation
therefor. The Company has also retained Morrow & Co., Inc. to assist in
solicitation of proxies for a fee of $3,500, plus reimbursement of certain
expenses. Those holding shares of Common Stock of record for the benefit of
others ("Nominee Holders") are being asked to distribute proxy soliciting
materials to, and request voting instructions from, the beneficial owners of
such shares. The Company will reimburse Nominee Holders for their reasonable
out-of-pocket expenses.
Representatives of KPMG LLP are expected to be present at the Meeting.
They will have an opportunity to make a statement if they desire to do so, and
will be available to respond to stockholder questions.
Management's Ownership of Voting Shares. Devon's officers and directors
own or represent a total of 1,101,797 Voting Shares, or 1.27% of the total
86,448,413 Voting Shares entitled to be voted at the meeting, and intend to vote
all of such shares in favor of the election of the four nominees for director
named herein.
YOUR PROXY VOTE IS IMPORTANT. YOU ARE ASKED TO VOTE BY USING EITHER THE
TOLL-FREE TELEPHONE NUMBER SHOWN ON THE PROXY CARD; THE INTERNET WEBSITE SHOWN
ON THE PROXY CARD; OR BY RETURNING THE ACCOMPANYING PROXY CARD OR VOTING
DIRECTION CARD, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
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PRINCIPAL SECURITY OWNERSHIP
The table below sets forth as of March 31, 2000, the names and
addresses of each person known by management to own beneficially more than 5% of
the Company's outstanding Voting Shares, the number of Voting Shares
beneficially owned by each such stockholder and the percentage of outstanding
Voting Shares owned. The table also sets forth the number and percentage of
outstanding Voting Shares beneficially owned by the Company's Chief Executive
Officer ("CEO"), each of the Company's directors, the four most highly
compensated executive officers other than the CEO and by all officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES (1) CLASS
- - - - - - - - ---------------- ---------- ---------
<S> <C> <C>
Kerr-McGee Corporation 9,954,000 (2) 11.5%
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
Capital Research & Management Company 4,415,000 (3) 5.1%
333 South Hope Street
Los Angeles, CA 90071
J. Larry Nichols* 793,055 (4) 0.9%
Michael E. Gellert* 320,720 (5) 0.4%
James L. Pate* 231,028 (6) 0.3%
Darryl G. Smette 159,884 (7) 0.2%
H. Allen Turner 151,586 (8) 0.2%
John A. Hagg* 139,846 (9) 0.2%
Duke R. Ligon 95,475 (10) 0.1%
David M. Gavrin* 82,251 (11) 0.1%
J. Michael Lacey 71,149 (12) <0.1%
Michael M. Kanovsky* 42,674 (13) <0.1%
H. R. Sanders, Jr.* 28,997 (14) <0.1%
Thomas F. Ferguson* 9,000 (15) <0.1%
Henry R. Hamman* 2,013 <0.1%
Brent Scowcroft* 1,566 <0.1%
Moulton Goodrum, Jr.* 1,047 <0.1%
Robert B. Weaver* 523 <0.1%
Robert A. Mosbacher, Jr.* 223 <0.1%
William J. Johnson* -- --
All directors and officers of Devon
as a group (29 persons) 2,625,237 (16) 3.0%
</TABLE>
- - - - - - - - -------------------------------------
* Director. The business address of each director is 20 North Broadway, Suite
1500, Oklahoma City, Oklahoma 73102-8260.
(1) Shares beneficially owned includes shares of Common Stock, Exchangeable
Shares and shares of Common Stock issuable within 60 days of March 31,
2000.
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<PAGE> 8
(2) Kerr-McGee Corporation ("Kerr-McGee") has reported beneficial ownership
of these shares on Schedule 13G filed on August 27, 1999. Kerr-McGee
acquired these shares on December 31, 1996, in connection with a
transaction whereby Devon acquired the North American onshore oil and
gas exploration and production properties and businesses of Kerr-McGee
in exchange for 9,954,000 shares of Common Stock. On August 2, 1999
Kerr-McGee completed an offering of exchangeable notes which are due on
August 2, 2004 ("5.5% DECS due 2004"). These notes are exchangeable
into the Devon common shares owned by Kerr-McGee or, at Kerr-McGee's
option, the cash equivalent of the value of such Devon common shares.
Kerr-McGee reports sole voting and investment power with respect to
these shares.
(3) Capital Research and Management Company ("CRMC") has reported ownership
on Schedule 13G filed on February 10, 2000. CRMC is a registered
investment adviser. The number of shares reported includes 865,000
shares resulting from the assumed conversion of 865,000 shares of the
Kerr-McGee 5.5% DECS due 2004.
(4) Includes 42,965 shares owned of record by Mr. Nichols as Trustee of a
family trust, 78,624 shares owned by Mr. Nichols' wife, 12,570 shares
owned by Mr. Nichols as trustee of his children's trusts as to which he
exercises sole voting and investment power and 325,284 shares which are
deemed beneficially owned pursuant to stock options held by Mr.
Nichols.
(5) Includes 309,149 shares owned by Windcrest Partners, a limited
partnership, in which Mr. Gellert shares investment and voting power
and 9,000 shares which are deemed beneficially owned pursuant to stock
options held by Mr. Gellert.
(6) Includes 1,074 shares owned of record by Mr. Pate as Trustee of a
family trust, 223 shares owned by Mr. Pate's wife and 174,390 shares
which are deemed beneficially owned pursuant to stock options held by
Mr. Pate. In addition, the shares owned of record include 15,000 shares
of Restricted Stock granted to Mr. Pate as a result of the PennzEnergy
merger.
(7) Includes 151,884 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Smette.
(8) Includes 141,284 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Turner.
(9) Includes Exchangeable Shares that are convertible into 93,746 shares of
Common Stock and 32,000 shares that are deemed beneficially owned
pursuant to stock options held by Mr. Hagg.
(10) Includes 95,175 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Ligon.
(11) Includes 2,141 shares owned by Mr. Gavrin as co-trustee of the Mark
Sandler 1987 Trust, 9,249 shares owned by Mr. Gavrin's wife and 9,000
shares that are deemed beneficially owned pursuant to stock options
held by Mr. Gavrin.
(12) Includes 65,984 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Lacey.
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(13) Includes Exchangeable Shares that are convertible into 36,108 shares of
Common Stock and 4,410 shares that are deemed beneficially owned
pursuant to stock options held by Mr. Kanovsky.
(14) Includes 26,000 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Sanders.
(15) Includes 9,000 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Ferguson.
(16) Includes Exchangeable Shares that are convertible into 131,819 shares
of Common Stock and 1,523,440 shares that are deemed beneficially owned
pursuant to stock options held by officers and directors.
ELECTION OF DIRECTORS
Pursuant to provisions of the Company's Certificate of Incorporation
and Bylaws, the Board of Directors has fixed the number of directors at 14. The
Company's Certificate of Incorporation and Bylaws provide for three classes of
directors, serving staggered three-year terms, with Class I having four
directors, Class II having four directors and Class III having six directors.
The Board of Directors has nominated John A. Hagg, Henry Hamman, J. Larry
Nichols and Robert B. Weaver for re-election as directors for terms expiring at
the annual meeting in the year 2003, and in each case until their successors are
elected and qualified. Proxies cannot be voted for a greater number of persons
than the number of nominees named. The four nominees are presently directors of
the Company whose terms expire at the Meeting. Other directors who are remaining
on the Board will continue in office in accordance with their previous elections
until the expiration of their terms at the 2001 or 2002 annual meeting, as the
case may be.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR ELECTION
TO THE BOARD OF DIRECTORS.
It is the intention of the persons named in the proxy to vote proxies
"FOR" the election of the four nominees. In the event that any of the nominees
should fail to stand for election, the persons named in the proxy intend to vote
for substitute nominees designated by the Board of Directors, unless the Board
of Directors reduces the number of directors to be elected.
INFORMATION ABOUT NOMINEES AND DIRECTORS
NOMINEES FOR RE-ELECTION AS DIRECTORS FOR TERMS EXPIRING IN 2003
John A. Hagg, age 52, was elected to the Board of Directors in 1998.
Mr. Hagg is Chairman of the Board of Devon's Canadian subsidiary, Northstar
Energy Corporation. In 1985, Mr. Hagg became Chairman and President of Northstar
Energy Corporation. Mr. Hagg is a Director of Berry Petroleum Company. He is a
past Director of the Canadian Association of Petroleum Producers, the Petroleum
Communication Foundation, the Calgary Chamber of Commerce and past Chairman of
Junior Achievement of Southern Alberta. He is currently a director of the
Canadian Venture
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Exchange. Mr. Hagg obtained his bachelor's degree from the University of Alberta
and a master's degree from Stanford University.
Henry R. Hamman, age 62, was elected to the Board of Directors in 1999.
He has been President of Hamman Oil and Refining Company since 1965. Hamman Oil
and Refining Company is an independent, family-owned business involved in oil
and gas exploration and production in the Louisiana and Texas Gulf Coasts as
well as south Texas, west Texas and Michigan. Mr. Hamman was previously a
Director of PennzEnergy Company from 1998 to 1999 and served on the Compensation
and Audit Committees.
J. Larry Nichols, age 57, is a co-founder of Devon. He has been a
director since 1971, President since 1976 and Chief Executive Officer since
1980. He is a member of the Executive Committee of the Board. Mr. Nichols serves
as Vice President of the Independent Petroleum Association of America, Vice
Chairman of the Natural Gas Supply Association and President of the Oklahoma
Nature Conservancy. In addition, Mr. Nichols is a Director of the Domestic
Petroleum Council, the Independent Petroleum Association of New Mexico, the
Oklahoma Independent Petroleum Association and the National Petroleum Council.
Mr. Nichols serves on the Board of Governors of the American Stock Exchange. He
also serves as a Director of New York Stock Exchange listed companies Smedvig
asa and CMI Corporation. Mr. Nichols holds a geology degree from Princeton
University and a law degree from the University of Michigan. He served as a law
clerk to Mr. Chief Justice Earl Warren and Mr. Justice Tom Clark of the U.S.
Supreme Court.
Robert B. Weaver, age 61, was elected to the Board of Directors in
1999. He served as an energy finance specialist of the Chase Manhattan Bank,
N.A., where he was in charge of its worldwide energy group from 1981 until his
retirement in 1994. Mr. Weaver was previously a Director of PennzEnergy Company
beginning in 1998, was Chairman of the Audit Committee and served on the
Compensation Committee.
DIRECTORS WHOSE TERMS EXPIRE IN THE YEAR 2002
Michael E. Gellert, age 68, has been a director of Devon since 1971 and
is a member of the Compensation and Stock Option Committee. Mr. Gellert is a
General Partner of Windcrest Partners, a private investment partnership in New
York City. He has held that position since April 1967. From January 1958 until
his retirement in October 1989, Mr. Gellert served in executive capacities with
Drexel Burnham Lambert Incorporated and its predecessors in New York City. In
addition to serving as a Director of Devon, Mr. Gellert also serves on the
Boards of High Speed Access Corporation, Humana Inc., Premier Parks Inc., Seacor
Smit Inc. and Smith Barney World Funds. Mr. Gellert is also a member of the
Putnam Trust Company Advisory Board to the Bank of New York.
William J. Johnson, age 65, was elected to the Board of Directors in
1999. Mr. Johnson is a private consultant for the oil and gas industry. He is
President and a director of JonLoc Inc., an oil and gas company of which he and
his family are sole shareholders. He also serves as a Director of Tesoro
Petroleum Corp. From 1991 to 1994, Mr. Johnson was President, Chief Operating
Officer and a Director of Apache Corporation.
Michael M. Kanovsky, age 51, was elected to the Board of Directors in
1998. Mr. Kanovsky has been on the Board of Directors of Northstar Energy
Corporation, Devon's Canadian subsidiary, since 1982. Mr. Kanovsky is President
of Sky Energy Corporation, a privately held energy
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corporation. He is a Director of ARC Resources Ltd., Bonavista Petroleum
Corporation, Cabre Exploration Ltd., and Vanguard Oil Corporation. Mr. Kanovsky
was Chairman of Taro Industries Ltd., Vice Chairman of Precision Drilling Inc.
and a past Director of the Canadian Association of Oilwell Drilling Contractors.
Mr. Kanovsky obtained his bachelor's degree in mechanical engineering from
Queen's University in Kingston, Ontario, and his master's degree from the Ivey
School of Business.
Robert A. Mosbacher, Jr., age 48, was elected to the Board of Directors
in 1999. He is President of Mosbacher Energy Company, Vice Chairman of Mosbacher
Power Group and serves on the Board of Directors of Chase Bank of Texas, N.A.
Mr. Mosbacher was previously a Director of PennzEnergy Company beginning in 1998
and served on the Executive Committee.
James L. Pate, age 64, was named Chairman of the Board of Directors of
Devon in 1999 and serves as Chairman of the Executive Committee of the Board of
Directors. He was previously Chairman of the Board of PennzEnergy Company. Mr.
Pate was Chief Executive Officer of PennzEnergy from 1990 until December 1998
and was President from 1990 until December 1997. Mr. Pate served as a Director
of PennzEnergy from 1989 until the merger and was Chairman of the Executive
Committee. Mr. Pate is also Chairman of the Board and Chief Executive Officer of
Pennzoil-Quaker State Company and a Director of Bowater Incorporated.
H. R. Sanders, Jr., age 67, has been a director of Devon since 1981. He
served as Devon's Executive Vice President from 1981 until his retirement in
1997. Prior to joining Devon, Mr. Sanders was associated with RepublicBank
Dallas, N.A. He served from 1970 to 1981 as its Senior Vice President with
direct responsibility for independent oil and gas producer and mining loans. Mr.
Sanders is a former member of the Independent Petroleum Association of America,
Texas Independent Producers and Royalty Owners Association and Oklahoma
Independent Petroleum Association. He also is a past Director of Triton Energy
Corporation.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Thomas F. Ferguson, age 63, has been a Director of Devon since 1982 and
is the Chairman of the Audit Committee. He is the Managing Director of United
Gulf Management Ltd., a wholly-owned subsidiary of Kuwait Investment Projects
Company KSC. Mr. Ferguson represents United Gulf Management Ltd. on the boards
of various companies in which it invests, including Baltic Transit Bank in
Latvia and Tunis International Bank in Tunisia. Mr. Ferguson is a Canadian
qualified Certified General Accountant and was formerly employed by the
Economist Intelligence Unit of London as a Financial Consultant.
David M. Gavrin, age 65, has been a director of Devon since 1979, and
serves as the Chairman of the Compensation and Stock Option Committee. He is a
Director of United American Energy Corp., an independent power producer, and
MetBank Holding Corporation. For the 11 years prior to 1990 he was a General
Partner of Windcrest Partners and for 14 years prior to that he was an officer
of Drexel Burnham Lambert Incorporated.
Moulton Goodrum, Jr., age 65, was elected to the Board of Directors in
February 2000. Mr. Goodrum is a partner with the law firm of Baker Botts L.L.P.
in Houston, Texas. He joined the firm in 1961 and became a partner in 1969. He
formerly headed the firm's corporate department and served on the firm's
Executive Committee for 10 years. Mr. Goodrum was a Casenote Editor of the Texas
Law Review, a member of Chancellors and a Quizmaster. In 1960, he served as law
clerk to
9
<PAGE> 12
Honorable John R. Brown, United States Court of Appeals, Fifth Circuit, and in
1985 he served as Adjunct Professor to the Law School at the University of Texas
at Austin. Mr. Goodrum received his undergraduate degree with honors and a Juris
Doctorate with highest honors from the University of Texas.
Brent Scowcroft, age 75, was elected to the Board of Directors in 1999.
Lieutenant General Scowcroft is President of The Scowcroft Group, Inc., a
consulting firm that assists corporations engaged in international expansion and
investment. General Scowcroft was previously a Director of PennzEnergy Company
beginning in 1993. He also served as a member of PennzEnergy's Executive
Committee. General Scowcroft served as Assistant to the President for National
Security Affairs to Presidents Ford and Bush. General Scowcroft is also a
Director of QUALCOMM Incorporated, Pennzoil-Quaker State, and Expert Driven.Com.
CHAIRMAN EMERITUS
John W. Nichols, age 85, a co-founder of Devon, retired from the Board
and was named Chairman Emeritus in 1999. He was Chairman of the Board of
Directors from the time Devon began operations in 1971, until 1999. He is a
founding partner of Blackwood & Nichols Co., which developed the conventional
reserves in the Northeast Blanco Unit of the San Juan Basin. Mr. Nichols is a
non-practicing Certified Public Accountant.
INFORMATION ABOUT EXECUTIVE OFFICERS
The positions held by the executive officers of the Company are as
follows:
Donald A. Garner, age 42, was appointed to the position of President
and Chief Operating Officer of Northstar Energy Corporation, Devon's Canadian
subsidiary, in January 1999. Mr. Garner previously served as Northstar's
Executive Vice President and Chief Operating Officer. Prior to his employment
with Northstar, Mr. Garner held a variety of management positions with Imperial
Oil/Exxon, most recently having had executive responsibility for the OilSands
Business Unit. He is currently a Director of the Alberta Chamber of Resources, a
past Director of Syncrude Canada Limited and former President of OSLO Alberta.
Mr. Garner received his bachelor's degree in mechanical engineering from the
University of Saskatchewan.
J. Michael Lacey, age 54, was elected to the position of Senior Vice
President of Exploration and Production in September 1999. Mr. Lacey joined
Devon as Vice President of Operations and Exploration in 1989. Prior to his
employment with Devon, Mr. Lacey served as General Manager in Tenneco Oil
Company's Mid-Continent and Rocky Mountain Divisions. He is a registered
professional engineer, and a member of the Society of Petroleum Engineers and
the American Association of Petroleum Geologists. Mr. Lacey holds both
undergraduate and graduate degrees in petroleum engineering from the Colorado
School of Mines.
Duke R. Ligon, age 58, was elected to the position of Senior Vice
President - General Counsel in September 1999. Mr. Ligon joined Devon as Vice
President - General Counsel in 1997. In addition to Mr. Ligon's primary role of
managing Devon's corporate legal matters (including litigation), he has direct
involvement with Devon's governmental affairs and its merger and acquisition
activities. Prior to joining Devon, Mr. Ligon practiced energy law for 12 years,
most recently as a partner at the law firm of Mayer, Brown & Platt in New York
City. In addition, he was
10
<PAGE> 13
a Senior Vice President and Managing Director for investment banking at Bankers
Trust Company in New York for 10 years. Mr. Ligon also served for three years in
various positions with the U. S. Departments of the Interior and Treasury, as
well as the Department of Energy. Mr. Ligon holds an undergraduate degree in
chemistry from Westminster College and a law degree from the University of Texas
School of Law.
Marian J. Moon, age 49, was elected to the position of Senior Vice
President - Administration in September 1999. In connection with her recent
appointment, Ms. Moon is responsible for Human Resources, Office Administration
and Information Technology at Devon. She will continue with her duties as
Corporate Secretary, which include corporate governance, SEC compliance and
stock exchange matters. Ms. Moon has been with Devon for 16 years, serving in
various capacities including Manager of Corporate Finance. Prior to joining
Devon, Ms. Moon was employed for 11 years by Amarex, Inc., an Oklahoma City
based oil and natural gas production and exploration firm, where she served most
recently as Treasurer. Ms. Moon is a member of the American Society of Corporate
Secretaries. She is a graduate of Valparaiso University.
John Richels, age 49, was appointed in January 1999 to the position of
Chief Executive Officer of Northstar Energy Corporation, Devon's Canadian
subsidiary. Mr. Richels served as Northstar's Executive Vice President and Chief
Financial Officer from 1996 to 1998, and was on its Board of Directors from 1993
to 1996. Prior to joining Northstar, Mr. Richels was Managing Partner, Chief
Operating Partner and a member of the Executive Committee of the Canadian based
national law firm, Bennett Jones. Mr. Richels also served, on a secondment from
Bennett Jones, as General Counsel of the XV Olympic Winter Games Organizing
Committee in Calgary, Alberta. Mr. Richels has previously served as a director
of a number of publicly traded companies and is a member of the Board of
Governors of the Canadian Association of Petroleum Producers. He holds a
bachelor's degree in economics from York University and a law degree from the
University of Windsor.
Darryl G. Smette, age 52, was elected to the position of Senior Vice
President - Marketing in September 1999. Mr. Smette previously held the position
of Vice President - Marketing and Administrative Planning since 1989. He joined
Devon in 1986 as Manager of Gas Marketing. His marketing background includes 15
years with Energy Reserves Group, Inc./BHP Petroleum (Americas), Inc., most
recently as Director of Marketing. He is also an oil and gas industry
instructor, approved by the University of Texas Department of Continuing
Education. Mr. Smette is a member of the Oklahoma Independent Producers
Association, Natural Gas Association of Oklahoma, and the American Gas
Association. He holds an undergraduate degree from Minot State College and a
master's degree from Wichita State University.
H. Allen Turner, age 47, was elected to the position of Senior Vice
President - Corporate Development in September 1999. Mr. Turner previously held
the position of Vice President - Corporate Development and has been responsible
for Devon's corporate finance, capital formation and merger and acquisitions
activities since 1982. In 1981 he served as Executive Vice President of Palo
Pinto/Harken Drilling Programs. For the six prior years he was associated with
Merrill Lynch with various responsibilities including Regional Tax Investments
Manager. He is a member of the Petroleum Investor Relations Association. He has
served on the Capital Markets Committee of the Independent Petroleum Association
of America and as Chairman of the IPAA Oil and Gas Symposium. Mr. Turner is a
member of the Financial Executives Institute and is a graduate of Duke
University.
11
<PAGE> 14
William T. Vaughn, age 53, was elected to the position of Senior Vice
President - Finance in September 1999. Mr. Vaughn previously served as Devon's
Vice President of Finance in charge of commercial banking functions, accounting,
tax and information services since 1987. Prior to that, he was Controller of
Devon from 1983 to 1987. Mr. Vaughn's previous experience includes serving as
Controller with Marion Corporation for two years and employment with Arthur
Young & Co. for seven years, most recently as Audit Manager. He is a Certified
Public Accountant and a member of the American Institute of Certified Public
Accountants and the Oklahoma Society of Certified Public Accountants. He is a
graduate of the University of Arkansas with a Bachelor of Science degree.
OTHER OFFICERS
Rick D. Clark, age 52, was elected to the position of Vice President
and General Manager, Northern Division in September 1999. Mr. Clark previously
served as Production/Operations Manager since joining Devon in 1995. As such, he
was responsible for the company's drilling and production activities. Prior to
joining Devon, Mr. Clark was employed by Patrick Petroleum Company where he
served since 1988 as Executive Vice President, Operations and Corporate
Development. Prior to 1988, Mr. Clark worked in various production engineering,
reservoir engineering, financial and managerial capacities for Ladd Petroleum
Corporation and Conoco Inc. He is a member of the Society of Petroleum
Engineers. Mr. Clark holds a professional degree in Petroleum Engineering from
the Colorado School of Mines.
Danny J. Heatly, age 44, was elected to the position of Vice President
- - - - - - - - - Accounting in September 1999. Mr. Heatly previously served as Devon's
Controller since 1989. Prior to joining Devon, Mr. Heatly was associated with
Peat Marwick Main & Co. (now KPMG LLP) in Oklahoma City. There he served for 10
years with various duties, including Senior Audit Manager. He is a Certified
Public Accountant and a member of the American Institute of Certified Public
Accountants and the Oklahoma Society of Certified Public Accountants. He
graduated with a Bachelor of Accountancy degree from the University of Oklahoma.
R. Alan Marcum, age 33, was elected to the position of Controller in
September 1999. Mr. Marcum has been with Devon since 1995, most recently having
held the position of Assistant Controller. He is responsible for revenue, joint
interest and operations accounting for Devon. Prior to joining Devon, Mr. Marcum
was employed by KPMG Peat Marwick (now KPMG LLP) as a Senior Auditor, with
responsibilities including special engagements involving due diligence work,
agreed upon procedures and SEC filings. He holds a Bachelor of Science degree
from East Central University, where he majored in Accounting and Finance. He is
a Certified Public Accountant and a member of the Oklahoma State Society of
Certified Public Accountants.
Gary L. McGee, age 50, was elected to the position of Vice President -
Government Relations in September 1999. Mr. McGee previously served as Devon's
Treasurer since his election in 1983. Previously he had served as Devon's
Controller. Mr. McGee is a member of the Petroleum Association of Wyoming and
the Mid-Continent Oil & Gas Association of Oklahoma. He served as Vice President
of Finance with KSA Industries, Inc., a private holding company with various
interests including oil and gas exploration. Mr. McGee also held various
accounting positions with Adams Resources and Energy Company and Mesa Petroleum
Company. He received his accounting degree from the University of Oklahoma.
12
<PAGE> 15
William A. Van Wie, age 54, was elected to the position of Vice
President and General Manager, Southern Division in September 1999. Mr. Van Wie
previously served as Senior Vice President and General Manager, Offshore, for
PennzEnergy. Mr. Van Wie began his career in 1974 as a geologist for Tenneco Oil
Company's Frontier Projects Group. Following the sale of Tenneco's Gulf of
Mexico properties to Chevron in 1988, he joined that company as Division
Geologist. In 1992, he moved to Pennzoil Exploration and Production Company as
Vice President/Exploitation Manager. He then served as Manager of Offshore
Exploration for Amerada Hess Corporation, before he re-joined Pennzoil in 1997.
He is an active member of the American Association of Petroleum Geologists,
serves on the organization's Industry Liaison Committee, and is also a member of
the National Ocean Industries Association. Mr. Van Wie received his Bachelor of
Science degree in geology from St. Lawrence University in Canton, New York and a
master's degree and Ph.D. in geology from the University of Cincinnati.
Vincent W. White, age 42, was elected to the position of Vice President
- - - - - - - - - Communications and Investor Relations in September 1999. He has primary
responsibility for the Company's investor communications, media relations and
employee communications. Mr. White had previously served as Devon's Director of
Investor Relations since 1993. Prior to joining Devon, he served as Controller
of Arch Petroleum Inc. and was an auditor with KPMG Peat Marwick (now KPMG LLP).
Mr. White is a Certified Public Accountant and a member of the Petroleum
Investor Relations Association, the National Investor Relations Institute and
the American Institute of Certified Public Accountants. Mr. White received his
Bachelor of Accounting Degree from the University of Texas at Arlington.
Dale T. Wilson, age 40, was elected Treasurer in September 1999. Prior
to joining Devon, Mr. Wilson was employed in the banking industry for 17 years.
His banking experience includes 15 years with Bank of America, most recently in
Dallas as a Managing Director of its Energy Finance Group. Mr. Wilson has been
active in oil and gas trade associations, including the Permian Basin Petroleum
Association, the New Mexico Oil & Gas Association and the Texas Independent
Producers & Royalty Owners Association. He is a 1982 graduate of Baylor
University with a Bachelor of Business degree in Finance and Accounting.
MEETINGS AND COMMITTEES OF THE BOARD
During 1999, the Board of Directors of the Company held four regular
meetings and two special meetings. All directors attended (a) at least five of
the six meetings of the Board of Directors, and (b) all of the meetings held by
committees of the Board on which they served. The Board of Directors has
standing audit, compensation and stock option, nominating and dividend
committees.
The Audit Committee, which consists of Messrs. Ferguson (Chairman),
Kanovsky and Weaver, meets with the Company's independent public accountants and
reviews the consolidated financial statements of the Company on a regular basis.
The functions of the Audit Committee consist of recommending independent
accountants to the Board of Directors; approving the nature and scope of
services performed by the independent accountants and reviewing the range of
fees for such services; conferring with the independent accountants and
reviewing the results of their audit; reviewing the Company's accounting and
financial controls and providing assistance to the Board of Directors with
respect to the corporate and reporting practices of the Company. The Board of
Directors, as recommended by the Audit Committee, has selected KPMG LLP to serve
as the
13
<PAGE> 16
Company's independent public accountants for the fiscal year ending December 31,
2000. The Audit Committee met two times during 1999.
The Compensation and Stock Option Committee, which consists of Messrs.
Gavrin (Chairman), Gellert, Johnson and Weaver, determines the nature and amount
of compensation of all executive officers of the Company who are also directors
and the amount and terms of stock options granted to all employees. In addition,
this committee provides guidance to and makes recommendations to management
regarding employee benefit programs. The Compensation and Stock Option Committee
held two meetings in 1999.
The Nominating Committee, which consists of Messrs. Gellert (Chairman),
Hamman, Mosbacher and Sanders, recommends to the Board of Directors nominees to
fill vacancies as they occur among the Directors; and prior to each annual
meeting of stockholders, a slate of nominees for election or re-election as
Directors by the stockholders of the Company at the annual meeting. The
Nominating Committee was formed in August, 1999 and did not meet in 1999.
The Dividend Committee declares dividends on Common Stock. However,
such Committee may not declare dividends more or less than the amount last
declared by the full Board of Directors. In 1999 the Dividend Committee, which
consisted of Mr. Larry Nichols (Chairman) and Mr. Pate, acted by written consent
four times.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding annual and
long-term compensation during 1997, 1998 and 1999 for the Chief Executive
Officer ("CEO") and the four most highly compensated executive officers, other
than the CEO, who were serving as executive officers of the Company on December
31, 1999.
14
<PAGE> 17
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
(1)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AWARDS OF ALL OTHER
NAME POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
-------------------------
(# OF SHARES)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Larry Nichols President & CEO 1999 $ 450,000 $ 900,600 70,000 $ 9,600 (3)
1998 $ 450,000 $ 450,600 80,000 (2) $ 9,600 (3)
1997 $ 400,000 $ 500,600 -- (2) $ 4,800 (3)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
J. Michael Lacey Senior Vice President 1999 $ 267,200 $ 250,600 35,000 $ 9,600 (3)
1998 $ 260,000 $ 125,600 40,000 (2) $ 9,600 (3)
1997 $ 220,000 $ 125,600 -- (2) $ 4,800 (3)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
Duke R. Ligon Senior Vice President 1999 $ 226,000 $ 225,600 35,000 $ 9,600 (3)
1998 $ 220,000 $ 125,600 40,000 (2) $ 9,600 (3)
1997 $ 175,000 $ 125,550 30,000 $ 67,540 (4)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
Darryl G. Smette Senior Vice President 1999 $ 226,000 $ 250,600 35,000 $ 9,600 (3)
1998 $ 220,000 $ 125,600 40,000 (2) $ 27,761 (5)
1997 $ 176,000 $ 125,600 -- (2) $ 4,800 (3)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
H. Allen Turner Senior Vice President 1999 $ 226,000 $ 250,600 35,000 $ 9,600 (3)
1998 $ 220,000 $ 125,600 40,000 (2) $ 79,884 (6)
1997 $ 176,000 $ 125,600 -- (2) $ 4,800 (3)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No awards of restricted stock or payments under long-term incentive
plans were made by the Company to any of the named executives in any
period covered by the table.
(2) Annual option grants for 1997, which normally would have been made in
December 1997 were not made until January 1998. Annual Option grants
for 1998 were made at the usual time in December 1998.
(3) These amounts represent Company matching contributions to the Devon
Energy Incentive Savings Plan.
(4) Mr. Ligon joined the Company on February 7, 1997. The amount shown
includes $62,740 of expenses reimbursed to Mr. Ligon by the Company to
relocate from New York to Oklahoma City and $4,800 of Company matching
contributions to the Devon Energy Incentive Savings Plan.
(5) Includes $9,600 of Company matching contributions to the Devon Energy
Incentive Savings Plan and a one-time payment of $18,161 for unused
vacation time.
(6) Includes $9,600 of Company matching contributions to the Devon Energy
Incentive Savings Plan and a one-time payment of $70,284 for unused
vacation time.
15
<PAGE> 18
OPTION GRANTS IN 1999
The following tables set forth information concerning options to
purchase Common Stock granted in 1999 to the five individuals named in the
Summary Compensation Table. The material terms of such options appear in the
following tables and the footnotes thereto.
<TABLE>
<CAPTION>
- - - - - - - - ---------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------
PERCENT OF TOTAL EXERCISE
OPTIONS OPTIONS GRANTED IN PRICE PER EXPIRATION GRANT DATE
NAME GRANTED 1999 SHARE (1) DATE PRESENT VALUE (2)
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. Larry Nichols 70,000 (3) 6% $30.9375 12/08/2009 $751,170
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------
J. Michael Lacey 35,000 (4) 3% $30.9375 12/08/2009 $375,585
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------
Duke R. Ligon 35,000 (5) 3% $30.9375 12/08/2009 $375,585
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------
Darryl G. Smette 35,000 (4) 3% $30.9375 12/08/2009 $375,585
- - - - - - - - ---------------------------------------------------------------------------------------------------------------------
H. Allen Turner 35,000 (4) 3% $30.9375 12/08/2009 $375,585
=====================================================================================================================
</TABLE>
(1) Exercise price is the fair market value on the date of grant, which is
the closing price of Common Stock on the date of grant as reported by
the American Stock Exchange.
(2) The grant date present value is an estimation of the possible future
value of the option grant based upon the Black-Scholes Option Pricing
Model. The following assumptions were used in the model: volatility (a
measure of the historic variability of a stock price) - 34.2%;
risk-free interest rate (the interest paid by zero-coupon U.S.
government issues with a remaining term equal to the expected life of
the options) - 6.0% per annum; annual dividend yield - 0.6%; and
expected life of the options - four years from grant date. The option
value estimated using this model does not necessarily represent the
value to be realized by the named officers.
(3) These options were granted on December 9, 1999. Options with respect to
60,284 shares immediately vested and were exercisable on December 9,
1999, 20 shares vest and become exercisable on December 9, 2000, and
one-third of the remaining 9,696 shares vest and become exercisable on
each December 9 of 2001, 2002 and 2003.
(4) These options were granted on December 9, 1999. Options with respect to
25,284 shares immediately vested and were exercisable. However, 80% of
the unexercised portion of such options are subject to forfeiture upon
the officer's voluntary termination or termination for cause prior to
December 9, 2000. This percentage decreases 20% in each subsequent
year. After December 9, 2003, none of the 9,716 options are subject to
forfeiture. Of the remaining options, 20 shares vest and become
exercisable on December 9, 2000, and one-third of the remaining 9,696
shares vest and become exercisable on each December 9 of 2001, 2002 and
2003.
(5) These options were granted on December 9, 1999. Options with respect to
25,175 shares immediately vested and were exercisable. However, 80% of
the unexercised portion of such
16
<PAGE> 19
options are subject to forfeiture upon the officer's voluntary
termination or termination for cause prior to December 9, 2000. This
percentage decreases 20% in each subsequent year. After December 9,
2003, none of the 9,825 options are subject to forfeiture. Of the
remaining options, 129 shares vest and become exercisable on December
9, 2000, and one-third of the remaining 9,696 shares vest and become
exercisable on each December 9 of 2001, 2002 and 2003.
AGGREGATE OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUES
The following table sets forth information for the five individuals
named in the Summary Compensation Table concerning the exercise of options to
purchase Common Stock in 1999 and unexercised options to purchase Common Stock
held at December 31, 1999.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
AT 12/31/99 OPTIONS AT 12/31/99 (1)
- - - - - - - - -------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
ACQUIRED UPON
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - - - - - - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Larry Nichols 34,000 $ 767,125 325,284 12,716 $1,832,175 $ 19,950
- - - - - - - - -------------------------------------------------------------------------------------------------------------------------------
J. Michael Lacey 65,100 $1,069,937 65,984 12,716 $ 90,163 $ 19,950
- - - - - - - - -------------------------------------------------------------------------------------------------------------------------------
Duke R. Ligon -- $ -- 85,175 19,825 $ 125,077 $ 19,686
- - - - - - - - -------------------------------------------------------------------------------------------------------------------------------
Darryl G. Smette 2,300 $ 29,037 174,284 12,716 $1,304,113 $ 19,950
- - - - - - - - -------------------------------------------------------------------------------------------------------------------------------
H. Allen Turner -- $ -- 176,284 12,716 $1,342,363 $ 19,950
===============================================================================================================================
</TABLE>
(1) The value is based on the aggregate amount of the excess of $32.875
(the closing price as reported by the American Stock Exchange for
December 31, 1999) over the relevant exercise price for outstanding
options that were exercisable and in-the-money at year-end.
COMPENSATION PURSUANT TO PLANS
Long-term Incentive Plans. Devon has outstanding stock options issued
to certain of its directors, executive officers and employees under five
separate stock option plans. Three of such plans were adopted by Devon
stockholders in 1988, 1993 and 1997 (the "1988 Plan," the "1993 Plan" and the
"1997 Plan," respectively). The Company has also outstanding stock options which
it assumed from Northstar in connection with the Northstar Combination (the
"Northstar Plan") and options assumed from PennzEnergy in connection with the
PennzEnergy Merger (the "PennzEnergy Plan"). Options granted under the 1988
Plan, the 1993 Plan, the Northstar Plan and the PennzEnergy Plan remain
exercisable by the owners of such options, but no new options will be granted
under any of such plans. At December 31, 1999, 13 participants held options
granted under the 1988 Plan, 22 participants held options granted under the 1993
Plan, 118 participants held options granted under the Northstar Plan and 1,383
held options granted under the PennzEnergy Plan.
Effective May 21, 1997, Devon stockholders adopted the 1997 Plan and
reserved two million shares of Common Stock for issuance thereunder to
directors, officers and employees. On December 9, 1998, Devon stockholders voted
to increase the number of shares available under the
17
<PAGE> 20
1997 plan to three million. On August 17, 1999, Devon stockholders voted to
increase the number of shares available under the 1997 plan to six million. The
exercise price of options granted under the 1997 Plan may not be less than the
estimated fair market value of the stock on the date of grant (plus 10% if the
grantee owns or controls more than 10% of the total voting stock of Devon prior
to the grant). Options granted are exercisable during a period established for
each grant, which period may not exceed 10 years from the date of grant. Under
the 1997 Plan, the grantee must pay the exercise price in cash or in Common
Stock, or a combination thereof, at the time the option is exercised. The 1997
Plan expires on March 25, 2007. As of December 31, 1999, 205 participants held
options granted under the 1997 Plan.
The Company has no other plans that provide compensation intended to
serve as incentive for performance to occur over a period longer than one fiscal
year.
Retirement Plan. Devon maintains a defined benefit retirement plan (the
"Basic Plan") which provides benefits based upon past and future employment
service with Devon. Each eligible employee who retires is entitled to receive
annual retirement income, computed as a percentage of "final average
compensation" (which consists of the average of the highest three consecutive
years' salaries, wages, and bonuses out of the last ten years), and credited
years of service up to 25 years. Contributions by employees are neither required
nor permitted under the Basic Plan. Benefits are computed based on straight-life
annuity amounts and are reduced by Social Security benefits. All of the
executive officers participate in the Basic Plan.
The following table sets forth the credited years of service under
Devon's Basic Plan for each of the five individuals named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
CREDITED
YEARS OF SERVICE
NAME OF INDIVIDUAL (THROUGH DECEMBER 31, 1999)
<S> <C>
J. Larry Nichols 30 years
J. Michael Lacey 11 years
Duke R. Ligon 3 years
Darryl G. Smette 13 years
H. Allen Turner 18 years
</TABLE>
Supplemental Retirement Plan. Devon also has a non-qualified deferred
compensation plan (the "Supplemental Plan"), the purpose of which is to provide
supplemental retirement income to certain selected key management and highly
compensated employees because their annual compensation is greater than the
maximum annual compensation that can be considered in computing their benefits
under the Basic Plan. An employee must be selected by the Compensation and Stock
Option Committee in order to be eligible for participation in the Supplemental
Plan. All of the five individuals named in the Summary Compensation Table have
been selected to participate in the Supplemental Plan. Each eligible
participant's supplemental retirement income will equal 65% of his final average
compensation, multiplied by a fraction, the numerator of which is his credited
years of service (not to exceed 20) and the denominator of which is 20 (or less,
if so determined by the Committee), less any offset amounts. Offset amounts are
(i) retirement benefits payable to the participant under the Basic Plan, (ii)
benefits due to the participant under Social Security, and (iii) any benefits
which are paid to the participant under the Company's long-term disability plan.
The Supplemental Plan is currently unfunded.
18
<PAGE> 21
In general, benefits will be paid when the participant retires from the
Company. However in the event that the participant's employment with the Company
is terminated (i) within two years of the acquisition by the Company of reserves
or assets which results in the reserves or assets of the Company increasing by
at least 20%, or (ii) within two years of a change of control of the Company,
then the participant shall be 100% vested in his benefit and shall be entitled
to receive the actuarial equivalent of such benefit earned as of the date of
termination of employment. "Change of Control" is defined in the Supplemental
Plan as being an event which results in an entity or group acquiring either (i)
30% or more of the Company's outstanding voting securities, or (ii) less than
30% of the outstanding voting securities, but which a majority of the Board of
Directors has determined has caused a change of control. If the participant is
terminated within two years following a change of control or the acquisition of
reserves or assets that results in the reserves or assets increasing by at least
20%, the participant's benefit will be paid in a single lump sum payment.
Otherwise, the participant's benefit will be paid for the life of the
participant. The participant may elect to provide a 50% survivor benefit for his
or her beneficiary.
The following table illustrates estimated annual benefits payable upon
retirement under the Basic Plan and the Supplemental Plan to participants in
specified compensation and years of service classifications, assuming a normal
retirement in 1999 at age 65.
<TABLE>
<CAPTION>
======================================================================================================
FINAL AVERAGE
COMPENSATION YEARS OF SERVICE
-------------------------------------------------------------
15 20 25 or more
- - - - - - - - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 250,000 $109,789 $146,385 $146,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 300,000 $134,164 $178,885 $179,885
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 350,000 $158,539 $211,385 $211,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 400,000 $182,914 $243,885 $243,885
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 450,000 $207,289 $276,385 $276,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 500,000 $231,664 $308,885 $308,885
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 550,000 $256,039 $341,385 $341,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 600,000 $280,414 $373,885 $373,885
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 650,000 $304,789 $406,385 $406,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 700,000 $329,164 $438,885 $438,885
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 750,000 $353,539 $471,385 $471,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 800,000 $377,914 $503,885 $503,885
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 850,000 $402,289 $536,385 $536,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 900,000 $426,664 $568,885 $568,885
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 950,000 $451,039 $601,385 $601,385
- - - - - - - - ------------------------------------------------------------------------------------------------------
$ 1,000,000 $475,414 $633,885 $633,885
======================================================================================================
</TABLE>
19
<PAGE> 22
SEVERANCE AGREEMENTS
Pursuant to severance agreements, each of the five individuals named in
the Summary Compensation Table is entitled to certain compensation ("Severance
Payment") in the event that his employment with the Company is terminated (a)
within two years of the acquisition by the Company of reserves or assets which
result in the reserves or assets of the Company increasing by at least 20% or
(b) within two years of a change in control of the Company. "Change of Control"
is defined in the agreements as being an event which results in an entity or
group acquiring either (i) 30% or more of the Company's outstanding voting
securities, or (ii) less than 30% of the outstanding voting securities, but
which a majority of the Board of Directors determines has caused a change of
control. In either case the Severance Payment would be approximately equal to
two times the individual's annual compensation.
EMPLOYMENT AGREEMENT
The Company has an Employment Agreement with Duke R. Ligon dated
February 7, 1997, which has an initial term of two years and, unless sooner
terminated, shall automatically renew for an additional two-year term. The
Employment Agreement provides that Mr. Ligon will be paid a base salary at the
minimum annual rate of $200,000 and will be eligible to participate in other
incentive compensation and benefit arrangements provided to other employees of
the Company. The Employment Agreement also provides that Mr. Ligon will be
eligible to participate in the Company's stock option plans and shall be granted
a non-qualified stock option to purchase at least 30,000 shares of the Company's
Common Stock at a price not less than fair market value on the date of grant.
Mr. Ligon was granted an option to purchase 30,000 shares on February 10, 1997,
at an exercise price of $32.81. One-third of these options vest on each of the
first, second and third anniversaries of the grant date.
If the Company terminates Mr. Ligon's employment other than for cause
or by reason of his death or disability, or if Mr. Ligon terminates for good
reason within 24 months following a change of control, the Company shall pay Mr.
Ligon a cash lump sum payment equal to his earned but unpaid base salary plus
his base salary otherwise payable to him for the remainder of his employment
term. "Change of Control" is defined in the agreement as being an event which
results in an entity or group acquiring either (i) 30% or more of the Company's
outstanding voting securities, or (ii) less than 30% of the outstanding voting
securities, but which a majority of the Board of Directors determines has caused
a change of control. Any amounts paid to Mr. Ligon under his employment
agreement would offset any Severance Payment due him under his severance
agreement.
20
<PAGE> 23
DIRECTOR COMPENSATION
Non-management directors of Devon receive an annual retainer of
$30,000, payable quarterly, plus $2,000 for each Board meeting attended.
Directors participating in a telephonic meeting will receive a fee of $1,000. In
addition, Directors serving as chairmen of the standing committees of the Board
of Directors will receive an additional $3,000 per year. Committee members who
attend the meetings of their standing committee which requires travel will
receive $2,000 per meeting. Committee members who attend the meetings that do
not require travel will receive $1,000 per meeting.
Non-management directors are eligible to receive stock options in
addition to their cash remuneration. Such directors are eligible to receive
stock option grants of up to 3,000 shares immediately after each annual meeting
of stockholders at an exercise price equal to the fair market value of the
Common Stock on that date. Any unexercised options will expire ten years after
the date of grant. The Compensation and Stock Option Committee, which awards
options to non-management directors, may elect to grant awards that are less
than the 3,000 shares maximum. However, the Compensation and Stock Option
Committee has no other discretion regarding the award of stock options to
non-management directors. 1997 was the first year in which directors were
eligible to receive stock options. The following table sets forth information
concerning options granted to non-management directors in 1999:
<TABLE>
<CAPTION>
- - - - - - - - --------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS IN 1999
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
PERCENT OF TOTAL EXERCISE
OPTIONS OPTIONS GRANTED IN PRICE PER EXPIRATION GRANT DATE
NAME GRANTED (1) 1999 SHARE DATE PRESENT VALUE (2)
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Thomas F. Ferguson 3,000 0.2% $31.50 (3) 5/19/2009 $36,681
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
David M. Gavrin 3,000 0.2% $31.50 (3) 5/19/2009 $36,681
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
Michael E. Gellert 3,000 0.2% $31.50 (3) 5/19/2009 $36,681
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
Moulton Goodrum, Jr. -- -- -- -- --
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
Henry R. Hamman -- -- -- -- --
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
William J. Johnson -- -- -- -- --
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
Michael M. Kanovsky 3,000 0.2% $31.50 (3) 5/19/2009 $36,681
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
Robert A. Mosbacher -- -- -- -- --
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
James L. Pate -- -- -- -- --
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
H.R. Sanders, Jr. 3,000 0.2% $31.50 (3) 5/19/2009 $36,681
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
Brent Scowcroft -- -- -- -- --
- - - - - - - - ------------------------------------------------------------------------------------------------------------------------
Robert B. Weaver -- -- -- -- --
========================================================================================================================
</TABLE>
21
<PAGE> 24
(1) The options were granted on May 19, 1999, and immediately became vested
and exercisable on the date of grant.
(2) The grant date present value is an estimation of the possible future
value of the option grant based upon the Black-Scholes Option Pricing
Model. The following assumptions were used in the model: volatility -
35.1%; risk-free interest rate - 5.5% per annum; annual dividend yield
- 0.6%; and expected life of the options - five years from grant date.
The option value estimated using this model does not necessarily
represent the value to be realized by the named directors.
(3) Exercise price is the fair market value on the date of grant that is
the closing price of Common Stock on the date of grant as reported by
the American Stock Exchange.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors
(the "Committee") establishes the general compensation policies of the Company.
The Committee meets in November or December of each year to establish specific
compensation levels for the CEO and to review the executive officers'
compensation in general. (The compensation for executive officers other than the
CEO is determined by the CEO.)
The Committee's goal in setting executive compensation is to motivate,
reward and retain management talent who support the Company's goals of
increasing absolute and per share value for stockholders. This goal is carried
out through awards of base salary, annual cash bonuses and stock options.
The Committee generally believes that the total cash compensation of
its CEO and other executive officers should be similar to the total cash
compensation of similarly situated executives of peer group public companies
within the oil and gas industry. Further, a significant portion of the complete
compensation package should be tied to the Company's success in achieving
long-term growth in per share earnings, cash flow, reserves and stock price.
Base Salary. A competitive base salary is considered vital to support
the continuity of management and is consistent with the long-term nature of the
oil and gas business. The Committee believes that the base salaries of the
executive officers should be similar to the base salaries of executive officers
of similar companies within the oil and gas industry. Therefore, no performance
criteria are applied to the base salary portion of the total compensation.
Performance of the Company versus its peers is, however, given significant
weight in the cash bonus and stock option portions of compensation.
The CEO's base salary for 1999 was based upon information available to
the Committee at its December 1998 meeting. At that meeting the Committee
established a peer group of 10 companies to which Devon should be compared. This
peer group included companies that are similar to Devon in total revenues,
balance sheet ratios, oil and gas reserves and overall oil and gas operations.
(The industry group index in the Performance Graph included in this proxy
statement includes, but is not limited to, the companies used for this
compensation analysis. In its analysis, the Committee specifically focused on
those companies that are most similar to Devon in size, financial structure and
operations, believing that the most direct comparisons would not necessarily
include all of the more than 200 companies included in the industry group index
used for the performance graph.)
22
<PAGE> 25
A review of the base salaries for the highest-paid executive at each of
these peer companies revealed that the 1998 base salary of Devon's CEO was at
the low end of the range of all base salaries in the group, and only 80% of the
average base salary for the group. As a result of this finding, the Committee
considered increasing the CEO's base salary for 1999. However, in light of low
oil and gas prices at the time, the expectation that prices would continue to be
low well into 1999, and after consultation with the CEO, the Committee did not
increase the CEO's base salary.
The Committee advised the CEO that similar caution should be used in
evaluating the base salaries of the other executive officers of the Company.
Cash Bonuses. The Committee believes that the officers' cash bonuses
should be tied to Devon's success in meeting its corporate goals and budgets and
in achieving growth in comparison to those of the Company's industry peers and
to the individual officers' contribution to such success. Cash bonuses for
calendar year 1999 were set at the December 1999 Committee meeting. In setting
the cash bonus for the CEO for the calendar year 1999, the Committee reviewed
the performance of the peer group of 9 oil and gas companies. (Due to the
significant increase in size and scope of Devon's operations during 1999 was a
result of the merger with PennzEnergy, an entirely new group of peer companies
was used for the comparison.)
The Committee reviewed Devon's growth over the last three years,
compared with the peer group average on a number of different measures, notably,
change in earnings per share, cash flow per share, reserves per share and stock
price. Devon's growth in all of these measures exceeded that of the peer group
average for the years reviewed. The Committee also noted the CEO's efforts in
initiating and closing the merger with PennzEnergy. As a result of this
analysis, the Committee awarded the CEO a cash bonus of $900,000. This award
resulted in his total cash compensation for 1999 being 90% of the average total
1998 cash compensation for the highest-paid executives of the companies in the
peer group.
The Committee advised the CEO that similar criteria should be used in
establishing cash bonuses for the other executive officers.
Stock Options. The Committee desires to reward key management and
professional employees for long-term strategic management practices and
enhancement of stockholder value by awarding stock options. Stock options are
granted at an option price equal to the fair market value of the Common Stock on
the grant date. The grant of these options and the optionees' holdings of
unexercised options and/or ownership of exercised option shares is designed to
closely align the interests of the executive officers with those of the
stockholders. The ultimate value of the stock options will depend on the
continued success of the Company, thereby creating a continuing incentive for
executive officers to perform long after the initial grant.
The Committee considered stock option grants in connection with 1999
Company performance at its meeting in December, 1999. Stock options were awarded
to the CEO and other executive officers at this meeting.
The award of options is based generally upon the same criteria as that
used for the award of cash bonuses; that is, more options are awarded if the
Company performs well in relationship to its peers, and less or none are awarded
if the Company does not perform well. In addition, the Committee wants to
encourage executives to maintain ownership of Company stock and/or unexercised
options. Although there are no specific ownership criteria used in awarding
options,
23
<PAGE> 26
long-term ownership is viewed favorably. The Committee noted that Devon's
officers as a group still retained 32.5% of all options (both vested and
unvested) that had been granted to them through year-end 1999.
The Committee generally seeks to award no more than 2% of the
outstanding shares in any one year, and further desires to keep the total number
of shares under option and available for option to less than 10% of the total
shares outstanding. As of December 8, 1999, there were 4,519,083 shares under
option (including options on 3,305,083 shares granted by Northstar and
PennzEnergy and assumed by Devon) and 4,839,700 shares available for option,
which were 5.2% and 5.6%, respectively, of total shares on a fully diluted
basis.
Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code limits the tax deduction to $1 million for compensation paid to any
one executive officer, unless certain requirements are met. The Committee may
award compensation which is not deductible under Section 162(m) if it believes
that such awards would be in the best interest of the Company or its
stockholders.
Submission of Compensation Plans to Stockholders. On August 17, 1999
the Company submitted a proposal to the Devon stockholders to increase the
number of shares available for grant under the 1997 Plan from three million to
six million shares. This amendment was approved by the stockholders. This
amendment was submitted in connection with the PennzEnergy merger. After the
combination of the two companies, Devon has more than doubled its employees. The
stock option plan amendment permits Devon to have sufficient stock options
available for future grants to employees and directors. The Committee has no
present intention of submitting any other compensation plans to the stockholders
for approval that would result in the issuance of more than 5% of the Company's
outstanding Common Stock.
We believe that the Company has an appropriate compensation structure
that properly rewards and motivates its executive officers to build stockholder
value.
As to Compensation of As to Compensation of Executive Officers
the CEO other than the CEO
David M. Gavrin, Chairman J. Larry Nichols
Michael E. Gellert
William J. Johnson
Robert B. Weaver
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee is composed of four independent,
non-employee directors, Messrs. Gavrin, Gellert, Johnson and Weaver. These
directors have no interlocking relationships as defined by the Securities and
Exchange Commission.
24
<PAGE> 27
PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
stockholder return on its Common Stock for the five-year period from December
31, 1994 to December 31, 1999, with the cumulative total return of the Standard
& Poor's 500 stock index and the Stock Index by Standard Industrial
Classification Code ("SIC Code") for Crude Petroleum and Natural Gas. The SIC
Code for Crude Petroleum and Natural Gas is 1311. The identities of the 200+
companies included in the index will be provided upon request.
CUMULATIVE TOTAL RETURN*
THE COMPANY, S&P 500, AND SIC CODE INDEX
FOR CRUDE PETROLEUM AND NATURAL GAS
[GRAPH]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
---------------------------------------------------------------------------
COMPANY/INDEX/MARKET 12/30/1994 12/29/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
- - - - - - - - -------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Devon Energy Corp 100.00 140.48 192.50 214.44 171.97 185.32
Crude Petroleum & Natural Gas 100.00 109.98 146.24 148.22 118.73 145.03
S&P Composite 100.00 137.58 169.17 225.61 290.09 351.13
</TABLE>
Assumes $100 invested on January 1, 1995, in Devon Energy Corporation Common
Stock, S&P 500 Index and SIC Code Index for Crude Petroleum and Natural Gas.
* Total return assumes reinvestment of dividends.
CERTAIN TRANSACTIONS
In 1996, upon becoming Chief Financial Officer of Northstar, John
Richels executed a non-interest-bearing note in favor of Northstar in the
principal amount of CN$250,000 (approximately US$165,000). This loan was made to
assist Mr. Richels in making the transition from private legal practice to
industry. The loan is due and payable upon the earlier of Mr. Richels' voluntary
resignation of employment from Northstar and December 31, 2000. The largest
balance on this note during 1999 was CN$212,000.
25
<PAGE> 28
Effective with the August 17, 1999 merger between the Company and
PennzEnergy, the Company entered into an agreement with its Chairman, James L.
Pate, for an annual salary of $200,000, plus normal business expenses, for
serving as the Chairman of the Board of the Company. Mr. Pate also received
15,000 restricted shares of the Company's Common Stock on the date of the
merger. One-third of the restricted shares will become unrestricted on each May
1 of 2000, 2001 and 2002, or earlier in the event of Mr. Pate's death,
disability or removal as Chairman of the Board of the Company.
The Company has a three year Consulting Agreement with Brent
Scowcroft, a director of the Company. Mr. Scowcroft provides a consulting
service primarily related to international projects and investments. In exchange
for these services, the Company will pay Mr. Scowcroft an annual retainer of
$100,000. The Consulting Agreement expires on May 31, 2002.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for inclusion in the
Company's Proxy Statement for the 2001 Annual Meeting of Stockholders of the
Company must present the proposal to the Secretary of the Company not later than
December 14, 2000. Only those proposals that comply with the requirements of
Rule 14a-8 promulgated under the Securities Exchange Act of 1934 will be
included in the Company's Proxy Statement for the 2001 Annual Meeting. Written
notice of stockholder proposals submitted outside the process of Rule 14a-8 for
consideration at the 2001 Annual Meeting of Stockholders (but not included in
the Company's Proxy Statement) must be received by the Corporate Secretary of
the Company between March 4, 2001 and March 24, 2001 in order to be considered
timely, subject to any provisions of the Company's Bylaws. The chairman of the
meeting may determine that any proposal for which the Company did not receive
timely notice shall not be considered at the meeting. If in the discretion of
the Chairman any such proposal is to be considered at the meeting, the persons
designated in the Company's Proxy Statement shall be granted discretionary
authority with respect to the untimely stockholder proposal.
OTHER MATTERS
The Board of Directors of the Company knows of no other matter to come
before the Meeting other than that set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. However, if any other matters should
properly come before the Meeting, it is the intention of the persons named in
the accompanying proxy to vote such proxies, as they deem advisable in
accordance with their best judgment.
26
<PAGE> 29
Your cooperation in giving this matter your immediate attention and in
returning your proxy promptly will be appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
Marian J. Moon
Senior Vice President and Corporate Secretary
April 13, 2000
27
<PAGE> 30
DEVON ENERGY
CORPORATION
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
<TABLE>
<CAPTION>
VOTE BY TELEPHONE VOTE BY INTERNET
- - - - - - - - ----------------- -----------------
<S> <C>
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/dvn
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE at anytime! Go to http://www.eproxyvote.com/dvn at anytime!
DO NOT RETURN YOUR PROXY CARD IF YOUR ARE VOTING BY TELEPHONE OR INTERNET
</TABLE>
DETACH HERE
[X] Please mark
votes as in
this example.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER SPECIFIED BELOW
BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS ARE NOT GIVEN. THIS
PROXY WILL BE VOTED "FOR" THE NOMINEES LISTED IN ITEM 1.
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors. 2. OTHER MATTERS:
NOMINEES: (01) John A. Hagg, (02) Henry R. Hamman, In their discretion, to vote with respect to any other
(03) J. Larry Nichols and (04) Robert B. Weaver matters that may come before the meeting or any
adjournment thereof, including matters incident to its
conduct.
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ] I RESERVE THE RIGHT TO REVOKE THE PROXY AT ANY TIME BEFORE
---------------------------------------- THE EXERCISE THEREOF.
You may withhold your vote for a particular nominee by
marking this box and naming the nominee for which your vote
is being withheld.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
Please sign exactly as your name appears at left, indicat-
ing your official position or representative capacity, if
applicable. If shares are held jointly, each owner should
sign.
Signature: Date: Signature: Date:
----------------------------------- ------------------ ----------------------------- -----------------
</TABLE>
<PAGE> 31
DETACH HERE
PROXY
DEVON ENERGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Devon Energy Corporation, a Delaware corporation,
hereby nominates and appoints James L. Pate and J. Larry Nichols or either one
of them, with full power of substitution, as true and lawful agents and proxies
to represent the undersigned and vote all shares of Stock of Devon Energy
Corporation owned by the undersigned in all matters coming before the Annual
Meeting of Stockholders (or any adjournment thereof) of Devon Energy Corporation
to be held in the Kiamichi Room, Second Floor, The Westin Hotel, One North
Broadway, Oklahoma City, Oklahoma, on Thursday, May 18, 2000, at 10:00 a.m.,
local time. The Board of Directors recommends a vote "FOR" the matters set forth
on the reverse side.
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.
- - - - - - - - ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- - - - - - - - ----------- -----------
<PAGE> 32
DEVON ENERGY
CORPORATION
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
DETACH HERE
- - - - - - - - --------------------------------------------------------------------------------
[X] Please mark
votes as in
this example.
WHEN PROPERLY EXECUTED, THE TRUSTEE WILL CAST A NUMBER OF VOTES AT THE
MEETING EQUAL TO THE NUMBER OF EXCHANGEABLE SHARES OF RECORD OWNED BY THE
UNDERSIGNED IN THE MANNER SPECIFIED BELOW.
IF NO INSTRUCTIONS ARE GIVEN, NO VOTES WILL BE CAST ON BEHALF OF THE
UNDERSIGNED.
1. Election of Directors.
NOMINEES:(01) John A. Hagg, (02) Henry R. Hamman,
(03) J. Larry Nichols and (04) Robert B. Weaver
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]
----------------------------------
You may withhold your vote for
a particular nominee by marking this
box and naming the nominee for which
your vote is being withheld.
Please sign exactly as your name appears
at left, indicating your official
position or representative capacity, if
applicable. If shares are held jointly,
each owner should sign.
Signature: Date: Signature: Date:
----------------- ----- ------------------- -----
<PAGE> 33
DETACH HERE
- - - - - - - - --------------------------------------------------------------------------------
DEVON ENERGY CORPORATION
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF DEVON ENERGY CORPORATION
The undersigned holder of Exchangeable Shares of Northstar Energy Corporation
hereby directs CIBC Mellon Trust Company (the "Trustee") to cast a number of
votes equal to the number of Exchangeable Shared owned by the undersigned in
accordance with the instructions indicated on the reverse side hereof at the
Annual Meeting of Stockholders (or any adjournment thereof) in the Kiamichi
Room, Second Floor, The Westin Hotel, One North Broadway, Oklahoma City,
Oklahoma, on Thursday, May 18, 2000, at 10:00 a.m., local time. The Board of
Directors recommends a vote "FOR" the matters set forth on the reverse side.
PLEASE SIGN ON THE REVERSE SIDE OF THIS CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
- - - - - - - - ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- - - - - - - - ----------- -----------
