<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Amerada Hess Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Amerada Hess Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
AMERADA HESS CORPORATION
1185 AVENUE OF THE AMERICAS
NEW YORK, N.Y. 10036
March 28, 1996
Dear Stockholder:
The Annual Meeting of Stockholders will be held at the Hess Office
Building, 1 Hess Plaza, Route 9, Woodbridge, New Jersey, on Wednesday, May 1,
1996, at 2:00 P.M., local time. The formal Notice of Annual Meeting and Proxy
Statement, which are contained in the following pages, outline the action to be
taken by the stockholders at the meeting.
You are cordially invited to attend this meeting. The Hess Office Building
may be reached, if you travel by car, from Exits 127 (northbound) and 130
(southbound) of the Garden State Parkway or Exit 11 of the New Jersey Turnpike
or, if you travel by train, from the Metropark station in Iselin, New Jersey.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING WHETHER OR
NOT YOU ARE PERSONALLY ABLE TO ATTEND. ACCORDINGLY, YOU ARE REQUESTED TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. YOUR COOPERATION WILL BE
APPRECIATED.
Sincerely yours,
John B. Hess W. S. H. Laidlaw
Chairman of the Board President and
and Chief Executive Officer Chief Operating Officer
Leon Hess
Chairman of the Executive Committee
<PAGE> 3
AMERADA HESS CORPORATION
1185 AVENUE OF THE AMERICAS
NEW YORK, N.Y. 10036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY 1, 1996, AT 2:00 P.M.
To the Stockholders:
The Annual Meeting of Stockholders of Amerada Hess Corporation will be held
at the Hess Office Building, 1 Hess Plaza, Route 9, Woodbridge, New Jersey, on
Wednesday, May 1, 1996, at 2:00 P.M., local time, for the following purposes:
1. To elect six directors for the ensuing three-year term (pages 1 to 18
of Proxy Statement);
2. To act upon the ratification of the selection by the Board of
Directors of Ernst & Young LLP as independent auditors (page 19);
3. To act upon a proposal to approve the adoption of the 1995 Long-Term
Incentive Plan (pages 19 to 25); and
4. To transact any other business which properly may be brought before
the meeting.
All stockholders are cordially invited to attend, although only
stockholders of record at the close of business on March 18, 1996 will be
entitled to vote at the meeting.
By order of the Board of Directors,
Carl T. Tursi
Secretary
New York, New York
March 28, 1996
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING FORM OF PROXY,
SO THAT IF YOU ARE UNABLE TO ATTEND THE MEETING YOUR SHARES MAY NEVERTHELESS BE
VOTED.
<PAGE> 4
AMERADA HESS CORPORATION
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Amerada Hess
Corporation (the "Corporation") for use at the Annual Meeting of Stockholders
(the "Annual Meeting") on May 1, 1996, at 2:00 P.M., local time.
The Corporation's principal executive office is located at 1185 Avenue of
the Americas, New York, New York 10036. The approximate date on which this Proxy
Statement is first being sent to stockholders is March 28, 1996.
You may revoke the proxy at any time prior to its use by delivering a
written notice to the Secretary of the Corporation, by executing a later-dated
proxy in a form permitted under Delaware law, or by attending the Annual Meeting
and voting in person. Proxies in the form enclosed, unless revoked prior to the
closing of polls for each matter upon which the stockholders will be entitled to
vote at the Annual Meeting, will be voted at the Annual Meeting in accordance
with the specifications made by you thereon or, in the absence of such
specifications, for the election of directors nominated herein, the proposal to
ratify the selection of Ernst & Young LLP ("Ernst & Young") as independent
auditors for the fiscal year ending December 31, 1996 and the proposal to
approve the adoption of the 1995 Long-Term Incentive Plan discussed herein.
Holders of record of Common Stock, par value $1.00 per share ("Common
Stock"), of the Corporation at the close of business on March 18, 1996 will be
entitled to vote at the Annual Meeting. Each share of Common Stock will be
entitled to one vote. On March 18, 1996, there were 92,998,755 shares of Common
Stock outstanding. There are no other voting securities of the Corporation
outstanding. A majority of the outstanding shares of Common Stock, present in
person or represented by proxy, will constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining the
presence of a quorum for the transaction of business.
ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected to serve for a term
of three years and until their successors are elected and qualified. It is
intended that proxies will be voted for the nominees set forth herein. Election
of directors shall be had by a plurality of the votes cast. Accordingly,
abstentions and broker non-votes will not affect tabulation of the vote for
directors. Although it is expected that all candidates will be able to serve, if
one or more are unable to do so, the proxy holders will vote the proxies for the
remaining nominees and for substitute nominees chosen by the Board of Directors
unless it reduces the number of directors to be elected.
The following table presents information as of February 1, 1996 on the
nominees for election as directors of the Corporation and the directors
continuing in their respective terms of office:
1
<PAGE> 5
NOMINEES FOR DIRECTOR
Class II
For Three-Year Term Expiring in 1999
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND BUSINESS EXPERIENCE AGE SINCE OTHER DIRECTORSHIPS
- ----------------------- --------------------------------------- --------- ---------------------------
<S> <C> <C> <C> <C>
Bernard T. Deverin..... Former Executive Vice President 70 1971 --
of the Corporation
Edith E. Holiday....... Attorney; Former Assistant to 43 1993 Bessemer Trust Company,
the President of the United N.A.
States and Secretary of the Bessemer Trust Company
Cabinet; of New Jersey
Former General Counsel, Beverly Enterprises, Inc.
United States Department of Hercules, Incorporated
the Treasury H.J. Heinz Company
W. S. H. Laidlaw....... President and Chief Operating 40 1994 Premier Oil plc
Officer
Roger B. Oresman....... Consulting Partner, 75 1969 --
Milbank, Tweed,
Hadley & McCloy
(Attorneys)
Richard B. Sellars..... Former Chairman of the Board 80 1980 --
and Chief Executive Officer,
Johnson & Johnson
Robert F. Wright....... Former President and Chief 70 1981 --
Operating Officer of the
Corporation
</TABLE>
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class III
Term Expiring in 1997
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND BUSINESS EXPERIENCE AGE SINCE OTHER DIRECTORSHIPS
- ----------------------- --------------------------------------- --------- ---------------------------
<S> <C> <C> <C> <C>
Peter S. Hadley........ Former Senior Vice President, 67 1991 --
Metropolitan Life Insurance
Company
John B. Hess........... Chairman of the Board and Chief 41 1978 --
Executive Officer
William A. Pogue....... Former Chairman of the Board 68 1989 Bethlehem Steel
and Chief Executive Officer, Corporation
CBI Industries, Inc. Nalco Chemical Company
(Company operating in diver-
sified businesses, including
construction of metal plate
structures and other con-
tracting services, industrial
gases, and oil transport and
storage)
Michael W. Press....... Executive Vice President; 48 1994 --
Former Senior Vice President,
BP Oil Company
John Y. Schreyer....... Executive Vice President and 56 1990 --
Chief Financial Officer
William I. Spencer..... Independent Consultant; 78 1982 --
Former President and Chief
Administrative Officer,
Citicorp and Citibank, N.A.
</TABLE>
2
<PAGE> 6
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE -- (Continued)
Class I
Term Expiring in 1998
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND BUSINESS EXPERIENCE AGE SINCE OTHER DIRECTORSHIPS
- ----------------------- --------------------------------------- --------- ---------------------------
<S> <C> <C> <C> <C>
Marco B. Bianchi....... Senior Vice President 56 1988 --
Nicholas F. Brady...... Chairman, Darby Overseas 65 1994 Christiana Companies, Inc.
Investments, Ltd. (Investment H.J. Heinz Company
firm); Director or trustee of 27
Former Secretary of the Templeton mutual funds
United States Department of
the Treasury;
Former Chairman of the Board,
Dillon, Read & Co. Inc.
(Investment banking firm)
J. Barclay Collins II.. Executive Vice President and 51 1986 Dime Bancorp, Inc.
General Counsel
Leon Hess.............. Chairman of the Executive 81 1968 --
Committee; Former Chairman of
the Board and Chief Executive
Officer of the Corporation
Thomas H. Kean......... President, Drew University; 60 1990 ARAMARK Corporation
Former Governor of the Bell Atlantic Corporation
State of New Jersey Beneficial Corporation
Fiduciary Trust Company
International
United HealthCare
Corporation
H. W. McCollum......... Chairman of the Finance 82 1969 --
Committee
</TABLE>
All of the nominees and directors named above have held substantially the
positions or former positions indicated for the past five years, except as
described below. On May 3, 1995, Mr. Leon Hess resigned as Chairman of the Board
and Chief Executive Officer, Mr. John B. Hess, formerly Senior Executive Vice
President of the Corporation, was elected Chairman of the Board and Chief
Executive Officer, and Mr. Laidlaw, formerly an Executive Vice President of the
Corporation and Managing Director of its wholly-owned British subsidiary,
Amerada Hess Limited, was elected President and Chief Operating Officer of the
Company. Mr. Brady served as Secretary of the United States Department of the
Treasury from 1988 to 1993. Prior to his election as a Director and Executive
Vice President of the Corporation in October 1994, Mr. Press was a Senior Vice
President of BP Oil Company, a unit of The British Petroleum Company p.l.c.
which is responsible for refining, marketing, supply and transportation of crude
oil and petroleum products. From 1990 until 1993, Ms. Holiday served as an
assistant to President Bush and prior thereto in several senior positions in the
United States Department of the Treasury. Mr. Hadley retired as Senior Vice
President of Metropolitan Life Insurance Company in May 1991 and was elected a
director of the Corporation in June 1991.
Leon Hess is John B. Hess' father. Leon Hess may be deemed to be a control
person of the Corporation by virtue of his stock ownership. See "Ownership of
Equity Securities by Management."
The Audit Committee of the Board of Directors is composed of William I.
Spencer, Chairman, Edith E. Holiday, Thomas H. Kean, William A. Pogue and
Richard B. Sellars. The Audit Committee met three times with respect to 1995
business, twice in 1995 and once in 1996. The Audit Committee reviews the audit
plan developed by the Corporation's independent auditors in connection with
their annual audit of the Corporation's financial statements, the results of
audits performed by the
3
<PAGE> 7
Corporation's independent auditors, the independent auditors' charges to the
Corporation, the response of management of the Corporation to management letters
issued by the Corporation's independent auditors, current accounting rules and
changes therein, the operations of the Corporation's internal audit department,
the Corporation's audited financial statements and the implementa-
tion of the Corporation's Business Practice Guide covering compliance with
applicable laws and Corporation policy. The Audit Committee also recommends the
selection of independent auditors to the Board of Directors each year.
The Board of Directors' Compensation and Incentive Awards Committee (the
"Compensation Committee") is composed of Nicholas F. Brady, Chairman, Peter S.
Hadley, William A. Pogue and William I. Spencer. The Compensation Committee,
which met two times in 1995, approves and administers the Corporation's
compensation policies for executive officers and approves the compensation of
the Chief Executive Officer and in connection therewith makes awards of
restricted Common Stock and book value appreciation units under the
Corporation's Executive Long-Term Incentive Compensation and Stock Ownership
Plan. The Compensation Committee also is authorized to make awards of options,
restricted stock and other stock and cash compensation permitted under the 1995
Long-Term Incentive Plan, the adoption of which is proposed for approval by the
stockholders of the Corporation at the Annual Meeting as further discussed
herein. The Board of Directors of the Corporation does not have a nominating
committee.
The Board of Directors met twelve times in 1995, and each director attended
at least 75% of the aggregate of all Board of Directors' meetings and all
meetings of committees of the Board of Directors on which he or she served
during 1995.
CERTAIN TRANSACTIONS AND OTHER INFORMATION
The Corporation retained Milbank, Tweed, Hadley & McCloy, of which Mr.
Oresman was a partner through 1990 and is currently a consulting partner, to
provide legal services in 1995. It is expected that the Corporation's dealings
with this firm will continue in 1996.
On October 12, 1995, Mr. Bernard T. Deverin filed a Form 4 reporting the
sale on September 4, 1995 of shares of Common Stock of the Corporation. This
sale should have been reported by October 10, 1995.
On February 13, 1996, Mr. J. Barclay Collins filed a Form 5 reporting four
sales in March 1995, one sale in April 1995 and one sale in September 1995 of
shares of Common Stock of the Corporation. The March sales should have been
reported by April 10, 1995, the April sale by May 10, 1995 and the September
sale by October 10, 1995.
See "Compensation Committee Interlocks and Insider Participation" under
"Executive Compensation and Other Information" with respect to transactions
involving the Corporation and Mr. Leon Hess.
4
<PAGE> 8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF COMPENSATION
The following table sets forth information on cash and other compensation
paid or accrued for each of the fiscal years ended December 31, 1995, 1994 and
1993 to each individual who served as Chief Executive Officer during 1995 and
the four most highly compensated executive officers other than the Chief
Executive Officer, for services in all capacities to the Corporation and its
subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
AWARDS PAYOUTS
------------------------ ----------
ANNUAL COMPENSATION
-------------------------------------- RESTRICTED SECURITIES
OTHER STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL ANNUAL AWARD(S)($) OPTIONS/ LTIP COMPENSATION($)
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ** SARS(#)*** PAYOUTS($) ****
- ------------------------ ---- --------- -------- --------------- ----------- ---------- ---------- ---------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------ ---- --------- -------- --------------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Hess,........... 1995 900,000 -- -- -- 149,000 -- 7,500
Chairman of the Board 1994 735,000 -- -- 990,000 -- -- 7,500
and Chief Executive 1993 735,000 -- -- -- -- -- 11,792
Officer
(from May 3, 1995)
Leon Hess,.............. 1995 300,000 -- -- -- -- -- 7,500
Chairman of the 1994 300,000 -- -- -- -- -- 7,500
Executive Committee 1993 300,000 -- -- -- -- -- 11,792
(Chief Executive
Officer through May
3, 1995)
W. S. H. Laidlaw,....... 1995 775,000 -- 798,837* -- 90,000 -- 7,500
President and Chief 1994 575,000 -- 203,000* 990,000 -- -- 7,500
Operating Officer 1993 575,000 -- 30,000* -- -- -- 11,792
J. Barclay Collins,..... 1995 600,000 -- -- -- 45,000 -- 7,500
Executive Vice 1994 550,000 -- -- 495,000 -- -- --
President and 1993 550,000 -- -- -- -- -- --
General Counsel
Michael W. Press,....... 1995 600,000 -- -- -- 45,000 -- 7,500
Executive Vice 1994 150,000+ -- 753,480* 1,178,125 -- -- --
President 1993 -- -- -- -- -- -- --
John Y. Schreyer,....... 1995 600,000 -- -- -- 45,000 -- 7,500
Executive Vice 1994 550,000 -- -- 495,000 -- -- 7,500
President and Chief 1993 550,000 -- -- -- -- -- 11,792
Financial Officer
</TABLE>
- ---------------
* In connection with Mr. Laidlaw's overseas employment through May 3, 1995,
the Corporation made payments on behalf of Mr. Laidlaw to United Kingdom
taxing authorities equal to the difference between Mr. Laidlaw's actual
United Kingdom income tax liability and a notional United States income tax
on his compensation. These disbursements made in 1994 (for several tax
years) and 1993, based on the average dollar-sterling exchange rate for
each such year, amounted to approximately $179,000 and $30,000,
respectively. Amounts withheld from Mr. Laidlaw's salary exceeded
disbursements to United Kingdom taxing authorities in 1995 by approximately
$11,000. Amounts shown in 1995 for Mr. Laidlaw and in 1994 for Mr. Press
include relocation allowances of $787,422 and $753,480, respectively, to
defray moving expenses and anticipated increased costs as a result of such
relocation. The amounts shown in column (e) for 1995 and 1994 for Mr.
Laidlaw also include disbursements made in connection with his use of an
automobile.
** At December 31, 1995, the named executives each held shares of restricted
Common Stock, subject to vesting pursuant to the Corporation's Executive
Long-Term Incentive Compensation and Stock Ownership Plan, in the following
amounts and having the following aggregate market values at such date: Mr.
J. B. Hess, 20,000 shares, $1,060,000; Mr. Laidlaw, 20,000 shares,
$1,060,000; Mr. Collins, 10,000 shares, $530,000; Mr. Press, 25,000 shares,
$1,325,000; and Mr. Schreyer, 10,000 shares, $530,000. To the extent paid
on the Corporation's Common Stock
5
<PAGE> 9
generally, dividends accrue on shares of restricted stock and are held in
escrow until vesting, at which time they are paid, together with interest
accrued thereon at short-term market rates, to the named executives. In
addition to shares of restricted stock awarded in 1994, the named
executives were awarded tandem book value appreciation units, which are
subject to vesting pursuant to this Plan together with related shares of
restricted stock and which had no value on the date of award, in the
following amounts: Mr. J. B. Hess, 20,000 units; Mr. Laidlaw, 20,000 units;
Mr. Collins, 10,000 units; Mr. Press, 25,000 units; and Mr. Schreyer,
10,000 units. At December 31, 1995, the named executives held book value
appreciation units in the same respective amounts, all of which had no
value at such date. Each book value appreciation unit entitles the holder
to a cash payment equal to the increase, if any, in the book value per
share of Common Stock over the vesting period of the restricted stock.
*** The option grants shown in the table were made subject to the requisite
approval of the 1995 Long-Term Incentive Plan by the stockholders of the
Corporation and on such other terms as more fully discussed herein.
**** Amounts shown in column (i) represent matching contributions of the
Corporation credited to the named executive officers under the
Corporation's Employees' Savings and Stock Bonus Plan.
+ Mr. Press commenced employment with the Corporation on October 1, 1994. His
annualized salary for that year was $600,000.
6
<PAGE> 10
STOCK OPTIONS
In December 1995, the Board of Directors adopted, and the Compensation
Committee granted non-qualified stock options to executive officers under, the
1995 Long-Term Incentive Plan (the "Incentive Plan"), all subject to the
approval of the Incentive Plan by the stockholders of the Corporation at the
Annual Meeting. None of these stock options are currently exercisable. No stock
appreciation rights were granted in 1995. The following table sets forth
information concerning individual grants of stock options made under the
Incentive Plan during the last fiscal year to each of the named executive
officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR*
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE VALUE($)**
(a) (b) (c) (d) (e) (f)
- ---------------------------------- ----------- ---------------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
John B. Hess,..................... 50,000 5.7 49.75 12/18/05 808,500
Chairman of the Board and 33,000 3.8 54.75 12/18/05 469,590
Chief Executive Officer 33,000 3.8 59.75 12/18/05 413,160
(from May 3, 1995) 33,000 3.8 64.75 12/18/05 363,000
Leon Hess,........................ -- -- -- -- --
Chairman of the Executive
Committee (Chief Executive
Officer through May 3, 1995)
W. S. H. Laidlaw,................. 30,000 3.4 49.75 12/18/05 485,100
President and Chief Operating 20,000 2.3 54.75 12/18/05 284,600
Officer 20,000 2.3 59.75 12/18/05 250,400
20,000 2.3 64.75 12/18/05 220,000
J. Barclay Collins,............... 15,000 1.7 49.75 12/18/05 242,550
Executive Vice President 10,000 1.2 54.75 12/18/05 142,300
10,000 1.2 59.75 12/18/05 125,200
10,000 1.2 64.75 12/18/05 110,000
Michael W. Press,................. 15,000 1.7 49.75 12/18/05 242,550
Executive Vice President 10,000 1.2 54.75 12/18/05 142,300
10,000 1.2 59.75 12/18/05 125,200
10,000 1.2 64.75 12/18/05 110,000
John Y. Schreyer,................. 15,000 1.7 49.75 12/18/05 242,550
Executive Vice President 10,000 1.2 54.75 12/18/05 142,300
10,000 1.2 59.75 12/18/05 125,200
10,000 1.2 64.75 12/18/05 110,000
</TABLE>
- ---------------
* Stock options awarded by the Compensation Committee effective December 18,
1995 become fully exercisable on December 18, 1996, except that options may
become exercisable earlier in full in cases of death, disability, normal
retirement or change of control (as described below), but in no event earlier
than the date of stockholders' approval of the Incentive Plan. At the
discretion of the Compensation Committee, upon early retirement of an
awardee, options not then exercisable may become exercisable in proportion to
the amount of time elapsed in the non-exercisability period to the early
retirement date. Such options remain exercisable until December 18, 2005,
except in cases of death, disability, retirement or other termination of
employment, in which case options remain exercisable only for certain
specified periods thereafter. If an awardee's employment terminates prior to
such options becoming exercisable, such options will be forfeited.
** The Grant Date Present Values shown in the above table have been determined,
as permitted under applicable rules of the Securities and Exchange
Commission, pursuant to the Black-Sholes option pricing model. This model,
like all pricing models, requires certain assumptions, and therefore the
amount shown should not necessarily be considered indicative of the present
value of the amounts that may actually be realized. The following assumptions
were made for purposes of this valuation: expected life of seven years for
each option; volatility of 21.2% (based on historical volatility of the
Common Stock over the seven-year period ending December 31, 1995); risk-free
rate of return of 5.68%; and dividend yield of 1.2%.
7
<PAGE> 11
The following table sets forth information as to the named executives
regarding the values of unexercised options under the Incentive Plan as of the
end of the last fiscal year, none of which were exercisable as of such date:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
SHARES UNEXERCISED OPTIONS/ OPTIONS/SARS AT
ACQUIRED ON VALUE SARS AT FY-END(#) FY-END($)
NAME EXERCISE(#) REALIZED($) (ALL UNEXERCISABLE) (ALL UNEXERCISABLE)
(a) (b) (c) (d) (e)
- ------------------------------------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
John B. Hess,........................ -- -- 149,000 162,500
Chairman of the Board and Chief
Executive Officer
(from May 3, 1995)
Leon Hess,........................... -- -- -- --
Chairman of the Executive Committee
(Chief Executive Officer through
May 3, 1995)
W. S. H. Laidlaw,.................... -- -- 90,000 97,500
President and Chief Operating
Officer
J. Barclay Collins,.................. -- -- 45,000 48,750
Executive Vice President
Michael W. Press,.................... -- -- 45,000 48,750
Executive Vice President
John Y. Schreyer,.................... -- -- 45,000 48,750
Executive Vice President
</TABLE>
RETIREMENT PLANS
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Corporation's Employees'
Pension Plan (the "Pension Plan"), a qualified defined benefit pension plan, as
well as a nonqualified supplemental plan that provides benefits, paid from the
general assets of the Corporation, that would otherwise be paid to participants
under the Pension Plan but for certain limitations under the Internal Revenue
Code of 1986, as amended (the "Code"), on qualified plan benefits and
compensation, based on remuneration that is covered under the Pension Plan and
supplemental plan and years of service:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 72,000 $ 96,000 $ 120,000 $ 144,000 $ 168,000
500,000 120,000 160,000 200,000 240,000 280,000
600,000 144,000 192,000 240,000 288,000 336,000
700,000 168,000 224,000 280,000 336,000 392,000
800,000 192,000 256,000 320,000 384,000 448,000
900,000 216,000 288,000 360,000 432,000 504,000
1,100,000 264,000 352,000 440,000 528,000 616,000
</TABLE>
A participant's remuneration covered by the Pension Plan and the
supplemental plan is twelve times the participant's average monthly compensation
(as reported on an annual basis in column (c) of the Summary Compensation Table
or the related footnote) in the 36 consecutive months (or the number of
consecutive months of employment, if fewer) of highest compensation during the
60 months immediately preceding the participant's retirement date. Benefits
shown are computed as a straight life annuity beginning at age 65 and do not
reflect the offset for a portion of social security
8
<PAGE> 12
benefits as required under the Pension Plan. Covered compensation for the named
executives (other than Mr. Leon Hess) as of December 31, 1995 was: Mr. J. B.
Hess: $790,000; Mr. Laidlaw: $641,667; Mr. Collins: $566,667; Mr. Press:
$600,000; and Mr. Schreyer: $566,667.
Since April 1, 1985, Mr. Leon Hess has been receiving annual pension
benefits under the Pension Plan of $120,391 as required under Section 401(a)(9)
of the Internal Revenue Code. The years of credited service for the named
executives under the Pension Plan and, except for Messrs. Leon Hess, Press and
Schreyer, the supplemental plan as of February 1, 1996, are as follows: John B.
Hess, 18 years; Leon Hess, 63 years; W. S. H. Laidlaw, 14 years; J. B. Collins,
11 years; Michael W. Press, 1 year; and John Y. Schreyer, 5 years. As of
February 1, 1996, Mr. Schreyer had 31 years and Mr. Press had 25 years of
credited service under the supplemental plan pursuant to determinations of the
Compensation Committee, which gave Messrs. Schreyer and Press credit for 26
years and 24 years, respectively, of prior service with their prior employers
for purposes of determining benefits payable under the supplemental plan.
However, retirement benefits payable to Messrs. Schreyer and Press in connection
with their prior employment will be deducted from benefits payable under the
supplemental plan. Mr. Leon Hess is ineligible to receive benefits under the
supplemental plan.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Mr. Press and Mr. Schreyer have agreements with the Corporation which
provide credit for prior service and determine benefits payable under the
Corporation's nonqualified supplemental retirement plan, as more fully described
above under "Retirement Plans". In addition, Mr. Press' agreement provides that
during the three-year period commencing October 1, 1994, either the Corporation
or Mr. Press may declare that his employment arrangement is not satisfactory, in
which event Mr. Press will receive as severance pay a lump sum payment equal to
two times his then annual salary, less any required deductions.
Awards granted to employees, including the named executive officers, in
December 1995 are subject to accelerated vesting and cash-out upon the
occurrence of a Change of Control, as described more fully under "Proposal to
Approve the Adoption of 1995 Long-Term Incentive Plan -- Description of the
Incentive Plan -- Change of Control Provisions."
DIRECTORS' COMPENSATION
Each director who is not an employee of the Corporation or any of its
subsidiaries receives an annual fee of $50,000 for membership on the Board of
Directors and a fee of $1,000 for each Board of Directors' and Stockholders'
meeting attended. Each such director receives an additional annual fee of $4,000
for membership on each committee of the Board of Directors on which such
director serves and a fee of $1,000 for each committee meeting attended, except
that each such director who is a member of the Executive Committee receives an
additional annual fee of $75,000, but no fee for each meeting attended. The
members of the Executive Committee are Leon Hess, Chairman, Nicholas F. Brady,
John B. Hess, Thomas H. Kean, W. S. H. Laidlaw, Michael W. Press, John Y.
Schreyer, William I. Spencer and Robert F. Wright. Messrs. L. Hess, J. B. Hess,
Laidlaw, Press and Schreyer are employees of the Corporation and receive no
additional compensation for serving on any committee of the Board of Directors.
Mr. Wright received a fee of $56,250 for service on the Executive Committee
following his retirement as an employee of the Corporation. In addition, Mr.
Brady received fees of $2,000 for attending as an alternate two meetings of a
committee of which he was not a member and Mr. Sellars received a fee of $1,000
for attending as an alternate one meeting of a committee of which he was not a
member.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until his resignation from the Compensation Committee on December 6, 1995,
Leon Hess served as member and as Chairman of the Compensation Committee during
1995. Mr. Leon Hess also served as Chief Executive Officer of the Corporation
through May 3, 1995 and for the remainder of the year as Chairman of the
Executive Committee and continues to serve in that position.
9
<PAGE> 13
Mr. Leon Hess owns 11 1/2%, and owns a 50% equity interest in another
corporation which owns 34%, of the capital stock of Galaxie Corporation, of
which Southland Oil Co. ("Southland") is a wholly-owned subsidiary. From January
1, 1995 through December 31, 1995, the Corporation sold $22,009,000 of crude oil
to Southland at competitive market prices.
Mr. Leon Hess owns 50% of the capital stock of Mississippi Valley Gas
Company ("Mississippi Valley"), of which Mississippi Energies Inc. is a
wholly-owned subsidiary. Prior to 1995 the Corporation, Southland, Mississippi
Energies Inc. and Capitol Street Corporation, a wholly-owned subsidiary of
Galaxie Corporation, participated with unrelated third parties in the drilling
of two oil and gas development wells in Mississippi, in one of which the
above-named parties own undivided interests of 40%, 13%, 13% and 13%,
respectively, and in one of which they own undivided interests of 45%, 15%, 15%
and 15%, respectively. The Corporation also participated in the construction of
a gathering system in which the above-named parties own undivided interests of
40%, 13%, 13% and 13%, respectively. Pursuant to the terms of its
participations, the Corporation expended $105,000 for operating expenses in 1995
in connection with the operation of these wells. The Corporation sold its share
of natural gas produced from these wells during 1995 to Mississippi Valley for
$99,000. The Corporation believes that the terms of its participation in each of
these wells and the gathering system and the prices and terms of its sales of
natural gas production therefrom are at least as favorable to it as those it
would have received if all participants and the purchaser of such natural gas
production were unrelated third parties.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Corporation is
responsible for approving and administering the Corporation's compensation
policies for executive officers and approving the compensation of the Chief
Executive Officer of the Corporation. The following report was prepared by the
Compensation Committee after its meeting on February 7, 1996 and the
Compensation Committee reported to the Board of Directors at its meeting held
March 6, 1996.
Executive Compensation Policies. The Corporation's executive compensation
policies are designed to attract and retain executives and motivate them to
achieve the Corporation's business goals through a combination of cash and
stock-based compensation. The key elements of executive compensation
traditionally have consisted of cash salary, occasional discretionary cash
bonuses and restricted stock awards. The Compensation Committee also takes into
account the full compensation package afforded to each executive, including
retirement benefits and other benefits generally available to all eligible
employees such as the Corporation's matching contributions under the Employees'
Savings and Stock Bonus Plan, and group life insurance and health benefits. In
1995, independent consultants were retained to study the Corporation's
compensation policy and develop a plan to relate a greater portion of
compensation to performance. The Incentive Plan, discussed below, was formulated
as a result of the study.
Cash Compensation -- Salary. Cash salary traditionally has been the
primary element of executive compensation. In determining salary levels for
executive officers, the Compensation Committee considers the following
subjective and quantitative factors:
- job level and responsibility;
- recent corporate performance, including results of operations, success in
implementing corporate strategy and long-term goals and development of
future strategies;
- individual performance, particularly as related to special projects or
for extraordinary contributions; and
- an objective of keeping total cash compensation at the 75th percentile or
better as shown in a survey of a group of companies compiled by an
independent consultant comprising at least 54
10
<PAGE> 14
industrial companies with sales in excess of $1.5 billion (which group
includes three companies also included in Standard & Poor's Oil (Domestic
Integrated) Stock Index discussed under "Performance Graph"), in
recognition of the Corporation's need to remain competitive in attracting
and retaining talented executives to work as part of a lean management
team functioning in a demanding corporate and market environment.
The salary increase for executive officers, including the named executive
officers, averaged 10.3% in 1995. This followed a year in which no increases
were given because the Corporation had experienced a significant operating loss.
Salary increases, including increases in respect of promotions, on an annualized
basis over the preceding four years ending in 1995 averaged 4.1%.
Cash Compensation -- Bonus. Cash bonuses generally have not been paid, but
have occasionally been utilized to reward extraordinary effort by an individual
or performance that was particularly beneficial to the Corporation.
Although cash bonuses are granted on a discretionary basis primarily to
reward individual contribution and thus are not necessarily tied to any
particular measure or level of corporate performance, such bonuses have
generally been awarded more liberally following periods of superior performance
by the Corporation. No cash bonuses have been paid since 1991. The Compensation
Committee will review the Corporation's bonus policy in the context of its
overall evaluation of compensation policies.
Restricted Stock. Under the Corporation's Executive Long-Term Incentive
Compensation and Stock Ownership Plan (the "Restricted Stock Plan") approved by
stockholders of the Corporation in 1981, restricted shares of the Corporation's
Common Stock together with book value appreciation units (each representing the
increase, if any, in the Corporation's book value per share of Common Stock over
the vesting period) were awarded to attract and retain key management and
executive employees and to provide incentives for such employees to work for the
Corporation's long-term growth and return to stockholders. Although the
Restricted Stock Plan gives the Compensation Committee discretion to determine
the terms of vesting and payment, in the past these awards generally have had a
five-year vesting period, assuring that individuals who vest in such shares and
units have been participants in long-term corporate efforts. In selecting
employees to participate in the Restricted Stock Plan and in determining the
amount of an award to be granted, the Compensation Committee has considered a
number of subjective factors, including the functions and responsibilities of
the employee, the employee's past and potential contribution to the
profitability and growth of the Corporation, the value of the employee's
services, and the amount and timing of prior awards. The Restricted Stock Plan
originally had 1,500,000 shares of Common Stock and an equal number of book
value appreciation units available for grant; at year-end 1995, the Restricted
Stock Plan had 176,000 shares of Common Stock and 176,000 book value
appreciation units available for grant. The Restricted Stock Plan will expire in
1997. Awards of 17,000 shares and 17,000 book value appreciation units were made
in 1995, prior to the adoption of the Incentive Plan. These awards were made in
connection with the hiring of executives. No awards were made to executive
officers.
Other Benefit Plans. The Corporation has adopted certain broad-based
employee benefit plans in which executive officers are permitted to participate
on the same terms as other eligible employees of the Corporation, subject to
applicable limits imposed on contributions and benefits under the Code. In
addition to group life insurance and health benefit plans, the Corporation has
adopted the Employees' Savings and Stock Bonus Plan, approved by stockholders in
1981, under which participants can elect to invest on a pre-tax or after-tax
basis up to 5% of salary in several funds, one of which invests in Common Stock,
and the Corporation provides matching contributions for each participant, all of
which are invested in Common Stock. The Corporation believes that this matching
structure helps to align the financial interests of all participants with those
of stockholders to encourage them to work toward enhancing the value of the
Common Stock.
11
<PAGE> 15
In 1994 and 1995 the Corporation also provided relocation allowances to
certain executive officers. These allowances were made as an inducement to
relocate and to defray moving expenses as well as anticipated increased costs
associated with living in the New York metropolitan area.
Incentive Plan. The Incentive Plan was developed to align senior
management's compensation more closely with the interests of stockholders. The
guiding principle was to develop a program that would be:
- stock-based
- performance-oriented
- accounting and cost efficient
- competitive with that of other major companies
- clear, concise and understandable to stockholders
The Incentive Plan was presented to the Compensation Committee at its
December 6, 1995 meeting. The Compensation Committee determined to recommend the
Incentive Plan to the Board of Directors for its adoption, and the Board later
adopted the Incentive Plan, in each case subject to stockholder approval of the
Incentive Plan at the Annual Meeting. The Incentive Plan, which is more fully
described in this Proxy Statement, is a broad-based plan that provides the
Compensation Committee with authority to grant various types of stock-based and
other compensation, including performance awards, stock options, restricted
stock, deferred stock, dividend equivalents and stock appreciation rights. The
Compensation Committee believes that a plan of this type affords the
Compensation Committee the flexibility to design compensation packages that
provide appropriate remuneration to attract and retain talented executives,
while at the same time providing incentives to maximize shareholder value.
The Incentive Plan reserves for issuance 4.5 million shares or 4.8% of the
outstanding shares of the Corporation's Common Stock. This number was selected
after a review of institutional investor guidelines and industry norms. The
annual share utilization under the Incentive Plan is expected to approximate 1%
of the shares outstanding per year, which is also consistent with those
guidelines and norms. The Incentive Plan also authorizes the Compensation
Committee to permit "cashless exercises" of stock options, a method of exercise
in which an optionee surrenders Common Stock owned by such optionee in payment
of the exercise price. The Compensation Committee believes that one of the
benefits of this feature is that it will result in reduced dilution to existing
stockholders because fewer shares will be outstanding following such exercise
than would be if the optionee exercised by cash payment.
For the first tranche of awards under the Incentive Plan, the Compensation
Committee decided on a program that would be primarily option-based, as this
would align executive and stockholder interests most closely, and would be most
accounting efficient in that no charge to earnings is recorded upon the grant of
stock options. Subject to stockholder approval of the Incentive Plan, the
Compensation Committee awarded the five most highly compensated executive
officers of the Corporation only stock options, two-thirds of which are
exercisable at premiums to the market price on the date of grant. The date of
grant was established as December 18, 1995 in order to allow the market to take
into account, either positively or negatively, a planned announcement by the
Corporation of its intention to take a charge to its 1995 earnings in connection
with the adoption of Financial Accounting Standard No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
Compensation Committee's reliance on stock options reflects a growing trend
toward greater use of stock options by large industrial companies.
Subject to stockholder approval of the Incentive Plan, the Compensation
Committee determined to grant to management just below the level of the five
most highly compensated executive officers a
12
<PAGE> 16
combination of stock options, two-thirds of which are exercisable at premiums to
the market on the date of grant, and rights to restricted stock which vest in
three years and are intended to retain their services. The proportions of stock
options and rights to restricted stock awarded to this level of management in
aggregate were approximately 82% stock options and 18% restricted stock. For
other levels of management the Compensation Committee determined to grant rights
to restricted stock with the same vesting period in order to retain their
services. While the grants made in 1995 aggregated 1,074,500 shares or 1.16% of
outstanding shares, it is not anticipated that restricted stock will be awarded
each year. In 1995, rights to 202,500 shares of restricted stock were awarded.
The stock option awards to the five most highly compensated executive officers
were determined based on the same methodology as used for the Chief Executive
Officer, discussed below.
Based on survey results of other such plans, one-third of the premium
options were granted at a premium of 10% to market on date of grant, one-third
at a 20% premium to market on the date of grant and one-third at a 30% premium
to market on the date of grant. The Compensation Committee's intention in
granting premium options was to provide greater incentive for maximizing
shareholder value, since the executive only realizes the full value of the award
in the event of significant appreciation in stock price. The performance-based
nature of the options will permit any compensation paid in respect of these
options to any executive in a fiscal year in excess of $1 million to be
deductible for Federal income tax purposes. While the restricted stock is not
performance-based, none of the recipients is among the five most highly paid
executive officers (the group with respect to which deductibility of
compensation may be limited), and in any event it is not anticipated that future
recipients of restricted stock under the Incentive Plan would have compensation
in excess of $1 million in any fiscal year.
Compensation of the Chief Executive Officer. Mr. Leon Hess was Chairman of
the Board and Chief Executive Officer in February 1995 when the Compensation
Committee approved the compensation of the Chief Executive Officer. Recognizing
his significant ownership position in the Corporation, he had requested his
compensation remain at below market levels and the Compensation Committee
approved this request for 1995. His annual salary has been kept at $300,000
since 1987. Also at his request, Mr. Leon Hess has received no awards under the
Restricted Stock Plan or under the Incentive Plan nor has he received any other
type of long-term incentive compensation. The Compensation Committee believes
that Mr. Leon Hess' compensation is at a level far below that of his
counterparts in similarly sized companies and that which may otherwise have been
warranted.
At the time of its February 1995 meeting, Mr. John B. Hess was Senior
Executive Vice President. Therefore, the Compensation Committee did not formally
approve his compensation. Mr. John B. Hess' cash compensation was set pursuant
to executive compensation policies previously approved by the Compensation
Committee.
Mr. John B. Hess' salary for 1995 was established by reference to a
comparison of cash compensation of the second highest paid officer of companies
in the Corporation's peer group comprising the Standard & Poor's Oil (Domestic
Integrated) Stock Index, and by reference to a similar comparison for the third
highest ranking officer by function in a survey of industrial companies with
revenues between $1.5 billion and $5 billion. Although Mr. John B. Hess' salary
of $900,000 exceeded the cash compensation at the 75th percentile for those
positions in both surveys, cash compensation constitutes a smaller portion of
total compensation for those positions at most companies included in both
surveys. Moreover, Mr. John B. Hess' salary increase in 1995 followed three
successive years in which he received no salary increases. The increase was
deemed appropriate in view of the substantially increased responsibilities Mr.
John B. Hess had assumed and was expected to continue to assume. Mr. John B.
Hess received no further increase upon his election as Chief Executive Officer
in May 1995. His cash compensation was less than the cash compensation at the
75th percentile for chief executive officers in both these surveys.
13
<PAGE> 17
In making awards of stock options to Mr. John B. Hess under the Incentive
Plan in December 1995, following his election as Chairman of the Board and Chief
Executive Officer, as well as awards to the other named executive officers, the
Compensation Committee did not rely on any particular measure of the
Corporation's past performance to determine award levels, but rather on
comparative analyses of peer compensation in order to gauge competitive levels
of performance-based compensation and with the objective to provide incentives
to a new management team to improve returns to stockholders. The Compensation
Committee relied on data compiled by an independent management consultant, the
primary source of which was a survey of 21 companies in petroleum and related
industries with revenues ranging from $3 to $20 billion (the "Petrochemical
Company Survey"). The Compensation Committee's objective was to grant a
combination of market and premium options, the total present value of which
(based on expected option values derived from the consultant's pricing model)
would provide long-term incentive compensation at the 75th percentile of such
compensation for chief executive officers in the Petrochemical Company Survey.
Based on this methodology, the Compensation Committee awarded Mr. John B. Hess
50,000 shares at an exercise price of $49.75, the closing market price on
December 18, 1995, and 33,000 shares each at exercise prices of 110%, 120% and
130% of such grant date price.
The Compensation Committee concluded that the total of Mr. John B. Hess'
cash salary and the grant date present value of his long-term incentive
compensation was reasonable compared with that of his peers. Mr. John B. Hess'
1995 total compensation was approximately 16% below the 75th percentile total
compensation for chief executive officers in the Petrochemical Company Survey,
and 6% above that in the survey of industrial companies with sales in excess of
$1.5 billion noted above. Moreover, in keeping with the Compensation Committee's
objective to better align senior management's compensation more closely with
stockholders' interests, approximately 69% of Mr. John B. Hess' 1995 total
compensation as shown in the Summary Compensation Table is performance-based.
Nicholas F. Brady
Peter S. Hadley
William A. Pogue
William I. Spencer
14
<PAGE> 18
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return, assuming reinvestment of dividends, on the Corporation's Common Stock
with the cumulative total return, assuming reinvestment of dividends, of the
Standard & Poor's 500 Stock Index, which includes the Corporation, and the
cumulative total return, assuming reinvestment of dividends, of Standard &
Poor's Oil (Domestic Integrated) Stock Index, a published industry index which
includes the Corporation, as of each December 31 over a five-year period
commencing on December 31, 1990 and ending on December 31, 1995:
TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)
YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
S&P OIL
(DOMESTIC
MEASUREMENT PERIOD AMERADA HESS S&P 500 STOCK INTEGRATED) S
(FISCAL YEAR COVERED) CORPORATION INDEX TOCK INDEX
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 103.65 130.47 93.48
1992 101.77 140.41 95.47
1993 101.04 154.56 100.59
1994 103.49 156.60 105.54
1995 121.67 215.45 120.16
</TABLE>
15
<PAGE> 19
OWNERSHIP OF VOTING SECURITIES BY CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the most recent practicable date,
information as to the ownership of more than 5% of any class of the
Corporation's voting securities by beneficial owners known by the Corporation to
hold more than 5% of any such class:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF
OF BENEFICIAL BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP(a) OF CLASS
- ------------------------ ----------------------------------- ------------ --------
<S> <C> <C> <C>
Common Stock............ Leon Hess 11,894,467(b) 12.79
c/o Amerada Hess Corporation
1185 Avenue of the Americas
New York, New York 10036
Common Stock............ FMR Corp. 12,969,403(c) 13.94
Edward C. Johnson 3d
Abigail P. Johnson
c/o FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock............ Wellington Management Company 4,866,860(d) 5.23
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(a) The information in the above table and in the notes thereto, other than
with respect to Mr. Leon Hess, was obtained, with respect to FMR Corp., from the
Schedule 13G filed with the Securities and Exchange Commission in February 1996
by FMR Corp. and, with respect to Wellington Management Company ("Wellington"),
from the Schedule 13G filed with the Securities and Exchange Commission in
February 1996 by Wellington. Information with respect to Mr. Leon Hess is as of
February 1, 1996 and with respect to FMR Corp. and Wellington is as of December
31, 1995.
(b) Mr. Leon Hess has sole voting and dispositive power over these shares.
(c) This amount includes 1,252,702 shares as to which such beneficial owner
has sole voting power, 10,900 shares as to which it has shared voting power,
12,958,503 shares as to which it has sole dispositive power and 10,900 shares as
to which it has shared dispositive power. FMR Corp. controls Fidelity Management
& Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp. and a
registered investment adviser, which is the beneficial owner of 11,159,301
shares of Common Stock of the Corporation as a result of acting as investment
adviser to various registered investment companies. FMR Corp. also controls
Fidelity Management Trust Company, a wholly-owned bank subsidiary which is the
beneficial owner of 1,583,802 shares of Common Stock of the Corporation.
Members of the Edward C. Johnson 3d family and trusts for their benefit are
the predominant owners of Class B shares of Common Stock of FMR Corp.,
representing approximately 49% of the voting power of FMR Corp. These Johnson
family members, through their ownership of voting common stock and the execution
of a family shareholders' voting agreement, may be deemed, under the Investment
Company Act of 1940, to form a controlling group with respect to FMR Corp. The
number of shares reported in the table above with respect to such beneficial
owner includes 30,900 shares owned directly by Mr. Johnson or in Johnson family
trusts. Mr. Johnson has sole voting and dispositive power over 20,000 shares,
and shared voting and dispositive power over 10,900 shares.
16
<PAGE> 20
Of the shares reported in the table above with respect to such beneficial
owner, 195,400 shares are beneficially owned by Fidelity International Limited
("FIL"), a Bermudian joint stock company and an investment adviser to various
foreign investment companies and certain institutional investors. FIL has sole
voting and dispositive power over these shares. A partnership controlled by Mr.
Edward C. Johnson 3d and members of his family owns shares of FIL stock having
47.22% of the voting power of FIL voting stock. Mr. Johnson is also the chairman
of FIL. FIL currently operates as an entity independent of FMR Corp. and
Fidelity. FMR Corp. and FIL are of the view that they are not acting as a group
for purposes of Section 13(d) under the Securities Exchange Act of 1934 and that
they are not otherwise required thereunder to attribute to each other securities
beneficially owned by each other. However, FMR Corp. made its 13G filing on a
voluntary basis as if all of the shares are beneficially owned by FMR Corp. and
FIL on a joint basis.
(d) This amount includes 1,386,890 shares as to which such beneficial owner
has shared voting power and 4,866,860 shares as to which it has shared
dispositive power. Wellington, in its capacity as investment adviser, may be
deemed the beneficial owner of 4,866,860 shares of Common Stock that are owned
by numerous investment counseling clients.
OWNERSHIP OF EQUITY SECURITIES BY MANAGEMENT
The table below sets forth as to each director and named executive officer,
and all directors and executive officers as a group, information regarding their
ownership of equity securities of the Corporation on February 1, 1996, except as
otherwise noted. The persons listed below each have sole voting and investment
power as to all shares indicated except as set forth in the footnotes to the
table. Where no information appears in the column "Percent of Outstanding Shares
of Common Stock Owned", the securities held represent less than one percent of
the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL OUTSTANDING
OWNERSHIP OF SHARES OF
COMMON COMMON
NAME STOCK(a) STOCK OWNED
-------- ------------ -----------
<S> <C> <C>
Marco B. Bianchi....................................... 16,551 --
Nicholas F. Brady...................................... 1,000 --
J. Barclay Collins II.................................. 13,032 --
Bernard T. Deverin..................................... 28,636 --
Peter S. Hadley........................................ 1,035(b) --
John B. Hess........................................... 1,555,146(c) 1.67
Leon Hess.............................................. 9,676,471 10.40
2,217,996(d) 2.39
Edith E. Holiday....................................... 1,000 --
Thomas H. Kean......................................... 1,000 --
W. S. H. Laidlaw....................................... 62,005(e) --
H. W. McCollum......................................... 93,009 --
Roger B. Oresman....................................... 75,211(f) --
William A. Pogue....................................... 1,000 --
Michael W. Press....................................... 25,149 --
John Y. Schreyer....................................... 25,023 --
Richard B. Sellars..................................... 3,400 --
William I. Spencer..................................... 500 --
Robert F. Wright....................................... 120,089 --
All directors and executive officers as a group........ 14,038,386 15.09
</TABLE>
- ---------------
(a) These figures include 1,526 shares vested in the name of Mr. Bianchi,
231 shares vested in the name of Mr. Collins, 10,541 shares vested in
the name of Mr. J. B. Hess, 5,005 shares vested in the name of Mr.
Laidlaw, 7,490 shares vested in the name of Mr. McCollum, 149 shares
vested in the name of Mr. Press, 2,023 shares vested in the name of Mr.
Schreyer, and 76,598 shares vested for all executive officers and
directors as a group under the Corporation's Employees'
17
<PAGE> 21
Savings and Stock Bonus Plan, as to which these individuals and the
group have investment power but generally do not have voting power,
except with respect to shares purchased with each such individual's own
contributions, which will be voted by the plan trustee in accordance
with such individual's written instructions; and 5,000 shares held in
escrow under the Corporation's Executive Long-Term Incentive
Compensation and Stock Ownership Plan for Mr. Bianchi, 10,000 shares
held in escrow under said Plan for Mr. Collins, 20,000 shares held in
escrow under said Plan for Mr. J. B. Hess, 20,000 shares held in escrow
under said Plan for Mr. Laidlaw, 25,000 shares held in escrow under said
Plan for Mr. Press, 10,000 shares held in escrow under said Plan for Mr.
Schreyer, and 124,000 shares held in escrow under said Plan for all
executive officers and directors as a group, as to which these
individuals and the group have voting power but not investment power.
These amounts exclude shares of Common Stock underlying stock options
awarded under the Incentive Plan, pursuant to Rule 13d-3(b)(1) under the
Securities Exchange Act of 1934, as amended, because the holders of such
options do not have the right to acquire beneficial ownership of such
securities within 60 days of the date as of which information is
provided.
(b) Mr. Hadley holds these shares jointly with his wife and shares voting
and investment power.
(c) This figure includes 1,280,094 shares held by a family corporation, the
preferred stock of which is held by a trust of which Mr. J. B. Hess is
trustee and 33 1/3% of the common stock of which is owned by Mr. J. B.
Hess. The preferred stock of such corporation has 99% of the total
voting power of all classes of stock of such corporation. As trustee Mr.
J. B. Hess has voting power and investment power with respect to such
preferred stock. Mr. J. B. Hess' mother is the beneficiary of this trust
and Mr. Leon Hess has a remainder interest therein. This figure also
includes 65,063 shares held by a trust for the benefit of Mr. J. B. Hess
and his children, of which Mr. J. B. Hess is trustee. This figure
excludes 21,614 shares held by a trust of which Mr. J. B. Hess is the
beneficiary.
(d) This figure includes 175,218 shares held by five corporations
(including that referred to in note (e) below) of which Mr. Leon Hess is
an officer, director and owner of voting preferred stock having at least
80% of the total voting power of all classes of stock and 26,186 shares
held by five trusts of which Mr. Leon Hess is trustee. It also includes
2,016,592 shares held by Hess Foundation, Inc. of which Mr. Leon Hess is
an officer and a director. It excludes 107,286 shares held by Capitol
Street Corporation, in which Mr. Hess indirectly owns an equity interest
as described in "Compensation Committee Interlocks and Insider
Participation" under "Executive Compensation and Other Information." Mr.
Hess disclaims beneficial ownership of such shares. Mr. Leon Hess'
address is in care of the Corporation, 1185 Avenue of the Americas, New
York, New York 10036.
(e) Mr. Laidlaw also owns the common stock of a corporation, the preferred
stock of which is owned by Mr. Leon Hess, which owns 35,000 shares of
Common Stock. The preferred stock has more than 92% of the total voting
power of all classes of stock of this corporation.
(f) This figure includes 65,194 shares held in trusts (including 21,614
shares held in the trust referred to in the last sentence of note (c)
above) of which Mr. Oresman is a co-trustee and with respect to which he
has shared voting and investment power.
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<PAGE> 22
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Based on the recommendation of its Audit Committee, the Board of Directors
has selected the firm of Ernst & Young as the independent auditors of the
Corporation for the fiscal year ending December 31, 1996. Ernst & Young has
acted for the Corporation in such capacity since November 1, 1971. The Board
proposes that the stockholders ratify such selection at the Annual Meeting.
If the stockholders do not ratify the selection of Ernst & Young, the
selection of independent auditors will be reconsidered by the Board of
Directors.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting and will be afforded the opportunity to make a statement if they desire
and will be available to respond to appropriate questions.
PROPOSAL TO APPROVE THE ADOPTION OF 1995 LONG-TERM INCENTIVE PLAN
After a review of the Corporation's compensation policies by an independent
consultant and upon such consultant's recommendation, on December 6, 1995 the
Board of Directors adopted the 1995 Long-Term Incentive Plan, and the
Compensation Committee granted Awards to certain officers and other employees
thereunder, all subject to the requisite approval of the Incentive Plan within
one year by the Corporation's stockholders. If such approval is not obtained,
the Incentive Plan and all Awards theretofore made thereunder will be void and
of no force or effect.
The Board of Directors recommends a vote FOR the proposal to approve the
adoption of the Incentive Plan. Approval of the adoption of the Incentive Plan
requires the affirmative vote of a majority of the shares of Common Stock
present or represented and entitled to vote at the Annual Meeting. Abstentions
will be counted as present for purposes of this vote, and therefore will have
the same effect as a vote against the Incentive Plan. Broker non-votes, if any,
will not be counted as present and entitled to vote on this proposal.
DESCRIPTION OF THE INCENTIVE PLAN
The following summary description of the Incentive Plan herein is qualified
in its entirety by reference to the full text of the Incentive Plan attached as
Appendix A to this Proxy Statement.
Purpose. The purpose of the Incentive Plan is to promote the identity of
interests between stockholders and employees of the Corporation by encouraging
and creating appropriate levels of ownership of Common Stock of the Corporation
by officers and other salaried employees. The Incentive Plan will provide
meaningful long-term incentive opportunities for officers and other employees
who are responsible for the success of the Corporation and its subsidiaries and
who are in a position to make significant contributions toward its objectives.
These incentives are particularly evident in the stock options granted to
certain officers and other employees under the Incentive Plan in December 1995,
two-thirds of which had exercise prices at premiums to the closing market price
on the date of grant.
Administration. The Incentive Plan will be administered by the
Compensation Committee, or such other committee of the Board as may succeed to
the functions and responsibilities of the Compensation Committee. The
Compensation Committee may delegate to officers or managers of the Corporation
or its subsidiaries the authority to perform administrative functions. The
Compensation Committee has full and final authority to select and designate
Incentive Plan participants, to determine the type, amount and conditions of
awards to be granted under the Incentive Plan ("Awards"), and to make all
determinations in connection therewith which may be necessary or advisable.
Unless authority is specifically reserved to the Board under the terms of the
Incentive Plan, or applicable law, the Compensation Committee will have sole
discretion in exercising such authority under the Incentive Plan.
Eligibility. Awards may be granted only to individuals who are officers or
other salaried employees (including without limitation employees who are also
directors) of the Corporation or its subsidiaries, as that term is defined in
the Incentive Plan. No Award may be granted to any member of the Compensation
Committee. Although the Incentive Plan does not further limit the number of
eligible employees or further specify the basis for their participation, it is
anticipated that the
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<PAGE> 23
Compensation Committee will make Awards principally to those employees who have
made, and are expected to continue to make, significant contributions to the
growth and profitability of the Corporation and whose service the Corporation
wishes to retain. The approximate number of employees who are expected to be
eligible is 175 and the number of employees to whom Awards were made in December
1995 is 112.
Shares Subject to Awards. The shares subject to Awards will be shares of
the Common Stock of the Corporation, $1.00 par value per share, and such other
securities of the Corporation as may be substituted for the shares of Common
Stock (the "Shares"). The total number of Shares reserved and available for
Awards under the Incentive Plan is 4,500,000. The Compensation Committee has the
authority to determine the number of and time at which the Shares shall be
deemed to be subject to Awards and therefore counted against the number of the
Shares reserved and available under the Incentive Plan. If any Shares to which
an Award relates are forfeited or the Award is settled or terminates without a
distribution of Shares, any Shares counted against the number of Shares
available under the Incentive Plan with respect to such Award will, to the
extent of any such forfeiture, settlement or termination, again be available for
Awards under the Incentive Plan. The Incentive Plan also provides that the
aggregate number of the Shares authorized under the Incentive Plan will be
subject to appropriate adjustment in the event the Compensation Committee
determines that any dividend or other distribution, recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event, affects the Shares such that an adjustment is determined
by the Compensation Committee to be appropriate in order to prevent the dilution
or enlargement of the rights of the participants under the Incentive Plan.
Terms of Awards. Awards may be granted on the terms and conditions
described in the Incentive Plan. In addition, the Compensation Committee may
generally impose on any Award or the exercise thereof, at the date of grant or
thereafter, such additional terms and conditions, not inconsistent with the
provisions of the Incentive Plan, as the Compensation Committee determines,
including without limitation the acceleration of vesting of any Awards or terms
requiring forfeiture of Awards in the event of termination of employment by any
awardee. Payment to be made by the Corporation or a subsidiary upon the grant or
exercise of an Award may be made in such forms as the Compensation Committee
determines, including without limitation, cash, shares of Common Stock, other
Awards, or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. Generally, only services may be required
as consideration for the grant of any Award. If the terms and conditions imposed
by the Compensation Committee on any Award are not complied with or achieved by
a participant such Award will, unless otherwise provided under the Incentive
Plan or determined by the Compensation Committee in accordance with the
Incentive Plan, be forfeited by the participant. Set forth below are the
specific types of Awards authorized to be made by the Compensation Committee
under the Incentive Plan:
- Performance Awards. The Compensation Committee is authorized to grant
performance awards conditioned upon the achievement of specified
performance criteria. These Awards are intended to be "qualified
performance-based compensation" within the meaning of section 162(m) of
the Code and will be paid solely on account of the attainment of one or
more preestablished, objective performance goals within the meaning of
section 162(m) of the Code and the regulations thereunder. Until
otherwise determined by the Compensation Committee, the performance goal
will be the attainment of preestablished levels of any of net income,
market price per share, return on equity, return on capital employed or
cash flow. A performance award will be denominated in Shares and may be
payable in cash, Shares, other Awards, or other property, and have such
other terms as are determined by the Compensation Committee.
- Dividend Equivalents. The Compensation Committee is authorized to grant
dividend equivalents, representing an amount equal to the dividend
regularly paid on a share of the Corporation's Common Stock. The
Compensation Committee may provide that dividend
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<PAGE> 24
equivalents will be paid or distributed when accrued or be reinvested in
additional Shares or Awards, or otherwise reinvested.
- Restricted Stock. The Compensation Committee is authorized to grant
restricted stock, subject to such restrictions as the Compensation
Committee may impose, including (but not limited to) restrictions on the
right to vote or receive dividends on restricted stock. Generally,
restricted stock must vest either (i) in full at the expiration of a
period of not less than three years from the date of grant or (ii)
proportionally over a vesting period of not less than three years from
the date of grant, except that restricted stock may vest earlier in cases
of death, disability or retirement, as the Compensation Committee shall
determine, or on a Change of Control as provided in the Incentive Plan.
The Compensation Committee is not permitted otherwise to accelerate the
vesting of restricted stock. However, the Incentive Plan permits the
Compensation Committee to award a limited number of Shares, discussed
below, of special restricted stock without regard to these vesting
requirements. Performance-based restricted stock will be forfeited unless
preestablished performance criteria specified by the Compensation
Committee are met during the applicable restriction period. Except as
otherwise determined by the Compensation Committee, upon termination of
employment (as determined by the Compensation Committee) during the
applicable restriction period, restricted stock that is at that time
subject to restrictions will be forfeited and returned to the
Corporation. Unless otherwise determined by the Compensation Committee,
cash dividends and other distributions made or paid with respect to the
Shares underlying an Award of restricted stock or performance-based
restricted stock will be held in escrow, and may (but need not) be
reinvested as determined by the Compensation Committee and such dividends
and other distributions will be paid to the participant, together with
interest or other earnings thereon, if any, at the time the Shares are
delivered to the participant.
- Deferred Stock. The Compensation Committee is authorized to grant to
participants deferred stock to be delivered upon expiration of the
deferral period specified by the Compensation Committee. Deferred stock
will be subject to such restrictions as the Committee may impose.
Generally, deferred stock must vest in full at the end of a period of not
less than three years from the date of grant, except that such deferred
stock may vest earlier in cases of death, disability or retirement, as
the Compensation Committee shall determine, or upon a Change of Control
as provided in the Incentive Plan. The Compensation Committee is not
permitted otherwise to accelerate the vesting of deferred stock. However,
the Incentive Plan permits the Compensation Committee to award a limited
number of Shares, discussed below, of special deferred stock without
regard to these vesting requirements. Except as otherwise determined by
the Compensation Committee, upon termination of employment (as determined
by the Compensation Committee) during the applicable deferral period, all
deferred stock that is at that time subject to deferral will be
forfeited.
- Non-qualified and Incentive Stock Options. The Compensation Committee is
authorized to grant either non-qualified stock options or incentive stock
options. The Compensation Committee will determine the exercise price per
share purchasable under an option, which, except as may be otherwise
required in connection with anti-dilution adjustments or the surrender
and substitution of Awards as permitted under the Incentive Plan, shall
not be less than the fair market value of a Share on the date of grant.
The Compensation Committee is not otherwise permitted to reduce the
exercise price of an outstanding option. The Compensation Committee will
determine the time or times at which an option may be exercised in whole
or in part, the methods by which such exercise price may be paid or
deemed to be paid, the form of such payment, and the methods by which
Shares will be delivered or deemed to be delivered to participants.
Options will expire not later than ten years after the date of grant.
Incentive stock options will comply in all respects with section 422 of
the Code.
- Stock Appreciation Rights. The Compensation Committee is authorized to
grant stock appreciation rights that confer on the awardee to whom they
are granted the right to receive, upon exercise thereof, for each share
covered by such rights the excess of the fair market value of one
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<PAGE> 25
Share on the date of exercise over the base price of the stock
appreciation rights as determined by the Compensation Committee as of the
date of grant, which base price, except as may be otherwise required in
connection with anti-dilution adjustments or the surrender and
substitution of Awards as permitted under the Incentive Plan, will not be
less than the fair market value of a Share on the date of grant. The
Compensation Committee is not otherwise permitted to reduce the base
price of an outstanding stock appreciation right.
- Other Stock-Based Awards. The Compensation Committee is authorized to
grant to participants such other Awards that are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on or
related to, Shares.
Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Incentive Plan may, in the discretion of the Compensation Committee,
be granted either alone or in addition to or in tandem with any other Award
granted under the Incentive Plan or any award granted under any other plan of
the Corporation, any subsidiary, or any business entity to be acquired by the
Corporation. Generally, Awards may not be granted in substitution for another
Award under the Incentive Plan, or retroactively in tandem with another Award
under the Incentive Plan at an exercise or base price lower than that of the
previously granted Award. However, the Incentive Plan permits the Compensation
Committee to grant a limited number, discussed below, of such substitute and
retroactive tandem Awards, all subject to the terms of the Incentive Plan.
Limitation on the Number of Awards. In addition to the aggregate limit on
the number of Shares that may be made subject to Awards under the Incentive
Plan, Awards are also subject to the following limitations:
- Performance-Based Awards. The maximum number of shares underlying
performance-based Awards in any year may not exceed, in the aggregate,
500,000 Shares. The maximum amount payable in respect of such Awards in
any year may not exceed 1,000,000 Shares in the aggregate to all
participants and 100,000 Shares in the case of any individual
participant.
- Stock Options and Stock Appreciation Rights. Awards of stock options and
stock appreciation rights in any year, in the aggregate, may not exceed
1,000,000 underlying Shares. Each individual participant may not receive
in any year Awards of options or stock appreciation rights exceeding
250,000 underlying Shares.
- Restricted Stock. A maximum of 1,000,000 Shares in the aggregate may be
made subject to grants of restricted stock under the Incentive Plan.
- Certain Special Awards. A maximum of 225,000 Shares may be made subject
to Awards of special restricted stock, special deferred stock, permitted
substitute Awards and permitted retroactive tandem Awards, in the
aggregate.
Change of Control Provisions. The Incentive Plan provides for acceleration
of vesting or exercisability of Awards upon the occurrence of a Change of
Control. A Change of Control will generally be deemed to occur in the following
circumstances:
- the acquisition of 20% or more of the outstanding voting stock of the
Corporation by any person or entity, other than acquisitions by Hess
family members or Hess-related entities;
- the persons serving as directors of the Corporation as of December 6,
1995, and those replacements or additions subsequently approved by a
majority vote of the Board, ceasing to make up at least a majority of the
Board;
- approval by the stockholders of the Corporation of a merger,
consolidation or reorganization in which the stockholders of the
Corporation prior to the merger own 51% or less of the surviving
corporation; or
- approval by the stockholders of the Corporation of a complete liquidation
or dissolution of the Corporation or sale of all or substantially all of
the assets of the Corporation, other than to a corporation more than 51%
of which is owned after such sale by stockholders of the Corporation
prior to the sale.
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<PAGE> 26
Upon acceleration of vesting or exercisability following a Change of
Control, awards will generally be cashed out at a price per share equal to the
highest price paid for a Share on the securities exchange in which the
Corporation's shares are then primarily traded, or in a transaction in
connection with such Change of Control, in the 60-day period preceding such
Change of Control.
Nontransferability. A participant's rights in any Award may not be
pledged, encumbered or hypothecated to or in favor of any party (other than the
Corporation or a Subsidiary), nor be subject to any liability of any participant
to any party. Unless otherwise determined by the Compensation Committee, no
Award subject to any restriction will be assignable or transferable by a
participant otherwise than by will or the laws of descent and distribution.
Changes to the Incentive Plan and Awards. The Board may amend, suspend or
terminate the Incentive Plan without the consent of stockholders or
participants, except that any such amendment, suspension, or termination will be
subject to the approval of the Corporation's stockholders within one year after
such Board action if such stockholder approval is required by any applicable
law, regulation or stock exchange rule, or if the Board in its discretion
determines that obtaining such stockholder approval is for any reason advisable.
The Compensation Committee may, unless expressly prohibited by the Incentive
Plan, also waive any conditions or rights under, or amend, suspend, or
terminate, any Award theretofore granted and any Award agreement relating
thereto. However, without the consent of an affected participant, no such
amendment, suspension, waiver, or termination of the Incentive Plan or any Award
after the initial stockholder approval of the Incentive Plan may materially
impair the rights of any participant under any Award theretofore granted to such
participant.
Federal Income Tax Consequences. The following is a brief and general
summary of certain federal income tax consequences applicable to transactions
under the Incentive Plan. Of course, the consequences of transactions depend on
a variety of factors, including an employee's tax status.
- Incentive Stock Options. An optionee will not realize any income upon
the grant of an incentive stock option or, assuming requirements of the
Incentive Plan and the Code are met, upon exercise thereof. If the Shares
are disposed of by the optionee more than two years after the date of
grant of the incentive stock option, and more than one year after such
Shares are transferred to the optionee, any gain or loss realized upon
such disposition will be a long-term capital gain or loss, and the
Corporation (or a subsidiary) will not be entitled to any income tax
deduction in respect of the option or its exercise. If the Shares are
disposed of by the optionee within either such period in a taxable
transaction, the excess, if any, of the amount realized (up to the fair
market value of such shares on the exercise date) over the exercise price
will be compensation taxable to the optionee as ordinary income, and the
Corporation will generally be entitled to a deduction equal to the amount
of ordinary income realized by the optionee. If the amount realized upon
the disqualifying disposition exceeds the fair market value of the Shares
on the exercise date, the excess will be a short-term capital gain. If
the exercise price exceeds the amount realized upon such disqualifying
disposition, the difference will be a short-term capital loss.
- Non-Qualified Stock Options. Upon the grant of a non-qualified stock
option, an optionee will not realize any income. Generally, at the time a
non-qualified stock option is exercised, the optionee will realize
compensation taxable as ordinary income, and the Corporation will
generally be entitled to a deduction, in an amount equal to the
difference between the fair market value on the exercise date of the
Shares of Common Stock acquired pursuant to such exercise and the
exercise price. Upon a subsequent disposition of the Shares, the optionee
will realize either long-term or short-term capital gain or loss,
depending upon the holding period of the Shares.
- Stock Appreciation Rights. Upon the grant of a stock appreciation right,
an optionee will not realize any income. Generally, at the time a stock
appreciation right is exercised, an optionee will realize compensation
taxable as ordinary income, and the Corporation will generally be
entitled to a deduction, in an amount equal to any cash received (before
applicable withholding) plus the fair market value on the exercise date
of any Shares of Common Stock received.
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- Restricted and Deferred Stock. An employee will not realize any income
upon the award of restricted stock or deferred stock. Generally, unless
an employee has made an election under Section 83(b) of the Code, at the
time the terms and conditions (if any) applicable to restricted stock or
deferred stock are satisfied, an employee will realize compensation
taxable as ordinary income, and the Corporation will generally be
entitled to a deduction, equal to the then fair market value of the
Shares received by the employee, together with accrued dividends, if any,
and interest thereon, if any.
BENEFITS TO EXECUTIVE OFFICERS AND OTHER EMPLOYEES UNDER THE INCENTIVE PLAN
The total amount of benefits or amounts to be received by executive
officers and other employees under the Incentive Plan is not determinable at
this time because the Compensation Committee has awarded only a portion of the
Shares authorized for award under the Incentive Plan. As previously stated, the
Compensation Committee made Awards, effective December 18, 1995, of
non-qualified stock options and rights to receive restricted stock, all subject
to requisite stockholder approval of the Incentive Plan at the Annual Meeting.
The table below discloses the number of shares of Common Stock underlying these
Awards and the dollar value thereof:
NEW PLAN BENEFITS (1995 AWARDS)
1995 LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
DOLLAR VALUE* NUMBER OF RESTRICTED
NAME OR GROUP ($) OPTIONS STOCK
- -------------------------------------------------------- ------------- --------- ---------
<S> <C> <C> <C>
John B. Hess, Chairman of the Board and Chief Executive
Officer............................................... 2,054,250 149,000 --
Leon Hess, Chairman of the Executive Committee (Chief
Executive Officer through May 3, 1995)................ -- -- --
W. S. H. Laidlaw, President and Chief Operating
Officer............................................... 1,240,100 90,000 --
J. B. Collins, Executive Vice President................. 620,050 45,000 --
M. W. Press, Executive Vice President................... 620,050 45,000 --
J. Y. Schreyer, Executive Vice President................ 620,050 45,000 --
All executive officers as a group....................... 7,281,760 456,000 20,000
All non-executive officer directors as a group.......... -- -- --
All non-executive officer employees as a group.......... 14,816,175 416,000 182,500
</TABLE>
- ---------------
* The dollar values of the stock options shown with respect to the named
executive officers in the table above is the present value of such options on
the date of grant, as shown under the Table "Option/SAR Grants in Last Fiscal
Year" under "Elections of Directors -- Executive Compensation and Other
Information," using the methodology and based on the assumptions stated in
that table, and the dollar values of stock options with respect to all
executive officers and all non-executive officer employees are calculated
using the same methodology and assumptions. The dollar value with respect to
shares of restricted stock shown in the table is calculated by multiplying the
applicable number of shares by the closing market price per share of the
Corporation's Common Stock on the date of grant.
The closing market price of a share of the Corporation's Common Stock on
March 18, 1996 was $54.75.
Stock options awarded by the Compensation Committee effective December 18,
1995 become fully exercisable on December 18, 1996, except that options may
become exercisable earlier in full in cases of death, disability, normal
retirement or Change of Control (as described above), but in no event earlier
than the date of stockholders' approval of the Incentive Plan. At the discretion
of the Compensation Committee, upon early retirement of an awardee, options not
then exercisable may become exercisable in proportion to the amount of time
elapsed in the non-exercisability period to the
24
<PAGE> 28
early retirement date. Such options remain exercisable until December 18, 2005,
except in cases of death, disability, retirement or other termination of
employment, in which case options remain exercisable only for certain specified
periods thereafter. Of the total options awarded to each optionee, one-third are
exercisable at $49.75, the closing price of the Corporation's Common Stock on
December 18, 1995, two-ninths are exercisable at $54.75, or 110% of such price,
two-ninths are exercisable at $59.75, or 120% of such price, and two-ninths are
exercisable at $64.75 or 130% of such price. If an awardee's employment
terminates prior to such options becoming exercisable, such options will be
forfeited.
Shares of restricted stock, rights to which were awarded effective December
18, 1995, fully vest on December 18, 1998, except that such Shares are subject
to earlier vesting in full in cases of death, disability, normal retirement or
Change of Control (as described above), but in no event earlier than the date of
stockholders' approval of the Incentive Plan. At the discretion of the
Compensation Committee, upon early retirement, restricted stock may vest in
proportion to the amount of time elapsed in the vesting period to the early
retirement date. If the Incentive Plan is approved by stockholders, Shares of
restricted stock will be issued and held in escrow by an escrow agent together
with dividends thereon, if any, and interest earned on such dividends, if any.
An awardee will have the right to vote Shares of restricted stock held in
escrow. Upon vesting, Shares of restricted stock, together with any accumulated
dividends and interest, if any, will be delivered to each awardee. If an
awardee's employment terminates prior to vesting, Shares of restricted stock,
and all accumulated dividends and interest relating thereto, will be forfeited.
OTHER MATTERS
The Board of Directors knows of no other matters to come before the
meeting. Should any unanticipated business properly come before the meeting, the
persons named in the enclosed form of proxy will vote in accordance with their
best judgment.
The cost of preparing and mailing this Proxy Statement and the accompanying
proxy and the cost of solicitation of proxies on behalf of the Board of
Directors will be borne by the Corporation. Solicitation will be made by mail.
Some personal solicitation may be made by directors, officers
and employees without special compensation, other than reimbursement for
expenses. In addition, D. F. King & Co. has been retained to aid in the
solicitation. The fees of said organization for this solicitation are not
expected to exceed $20,000, exclusive of expenses.
Proposals which stockholders wish to include in the Corporation's proxy
materials relating to the 1997 Annual Meeting of Stockholders must be received
by the Corporation no later than November 28, 1996.
It is important that proxies be returned promptly. Stockholders are urged
to date and sign the enclosed proxy and return it promptly in the accompanying
envelope.
By order of the Board of Directors,
CARL T. TURSI
Secretary
New York, New York
March 28, 1996
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<PAGE> 29
APPENDIX A
AMERADA HESS CORPORATION
1995 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE. The purpose of this Long-Term Incentive Plan (the
"Plan") of Amerada Hess Corporation (together with any successor thereto, the
"Corporation") is (a) to promote the identity of interests between shareholders
and employees of the Corporation by encouraging and creating significant
ownership of Common Stock of the Corporation by officers and other salaried
employees of the Corporation and its subsidiaries; (b) to enable the Corporation
to attract and retain qualified officers and employees who contribute to the
Corporation's success by their ability, ingenuity and industry; and (c) to
provide meaningful long-term incentive opportunities for officers and other
employees who are responsible for the success of the Corporation and who are in
a position to make significant contributions toward its objectives.
SECTION 2. DEFINITIONS. In addition to the terms defined elsewhere in the
Plan, the following shall be defined terms under the Plan:
2.01. "Award" means any Performance Award, Option, Stock Appreciation
Right, Restricted Stock, Deferred Stock, Dividend Equivalent, or Other
Stock-Based Award, or any other right or interest relating to Shares or cash,
granted to a Participant under the Plan.
2.02. "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
2.03. "Board" means the Board of Directors of the Corporation.
2.04. "Change of Control" and related terms are defined in Section 9.
2.05. "Code" means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
2.06. "Committee" means the Compensation and Incentive Awards Committee of
the Board, or such other Board committee as may be designated by the Board to
administer the Plan, or any subcommittee of either; provided, however, that the
Committee, and any subcommittee thereof, shall consist of three or more
directors (or such lesser number as may be permitted by applicable law or rule),
each of whom is a "disinterested person" within the meaning of the applicable
provisions of Rule 16b-3 under the Exchange Act and an "outside director" within
the meaning of Section 162(m)(3)(C) of the Code and Treasury Regulation Section
1.162-27(e)(3), as amended from time to time.
2.07. "Corporation" is defined in Section 1.
2.08. "Covered Employee" has the same meaning as set forth in section
162(m) of the Code, and successor provisions.
2.09. "Deferred Stock" means a right, granted to a Participant under
Section 6.05, to receive Shares at the end of a specified deferral period.
2.10. "Dividend Equivalent" means a right, granted to a Participant under
Section 6.03, to receive cash, Shares, other Awards, or other property equal in
value to dividends paid with respect to a specified number of Shares.
2.11. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and any rules and regulations
thereunder.
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<PAGE> 30
2.12. "Fair Market Value" means, with respect to Shares, Awards, or other
property, the fair market value of such Shares, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee. Unless otherwise determined by the Committee, the Fair
Market Value of Shares as of any date shall be the closing sales price on that
date of a Share as reported in the New York Stock Exchange Composite Transaction
Report; provided, that if there were no sales on the valuation date but there
were sales on dates within a reasonable period both before and after the
valuation date, the Fair Market Value is the weighted average of the closing
prices on the nearest date before and the nearest date after the valuation date.
The average is to be weighted inversely by the respective numbers of trading
days between the selling dates and the valuation date.
2.13. "Incentive Stock Option" means an Option that is intended to meet the
requirements of Section 422 of the Code.
2.14. "Non-Qualified Stock Option" means an Option that is not intended to
be an Incentive Stock Option.
2.15. "Option" means a right, granted to a Participant under Section 6.06,
to purchase Shares, other Awards, or other property at a specified price during
specified time periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
2.16. "Other Stock-Based Award" means a right, granted to a Participant
under Section 6.08, that relates to or is valued by reference to Shares.
2.17. "Participant" means a person who has been granted an Award under the
Plan.
2.18. "Performance Award" means a right, granted to a Participant under
Section 6.02, to receive cash, Shares, other Awards, or other property the
payment of which is contingent upon achievement of performance goals specified
by the Committee.
2.19. "Performance-Based Restricted Stock" means Restricted Stock that is
subject to a risk of forfeiture if specified performance criteria are not met
within the restriction period.
2.20. "Permitted Retroactive Tandem Award" means an Award retroactively
granted in tandem with another Award theretofore granted under the Plan at an
exercise price or base price less than that of such other previously granted
Award as provided in Section 7.03, subject to the maximum Share limitation set
forth in Section 7.02.4.
2.21. "Permitted Substitute Award" means an Award granted in substitution
for another Award theretofore granted under the Plan as provided in Section
7.03, subject to the maximum Share limitation set forth in Section 7.02.4.
2.22. "Plan" is defined in Section 1.
2.23. "Restricted Stock" means Shares granted to a Participant under
Section 6.04, that are subject to certain restrictions and to a risk of
forfeiture.
2.24. "Rule 16b-3" means Rule 16b-3, as from time to time amended and
applicable to Participants, promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act.
2.25. "Shares" means the Common Stock, $1.00 par value per share, of the
Corporation and such other securities of the Corporation as may be substituted
for Shares or such other securities pursuant to Section 10.
2.26. "Special Deferred Stock" means Deferred Stock granted under
Subsection 6.05(i)(b), subject to the maximum Share limitation set forth in
Section 7.02.4.
2.27. "Special Restricted Stock" means Restricted Stock granted under
Subsection 6.04(i)(b), subject to the maximum Share limitation set forth in
Section 7.02.4.
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2.28. "Stock Appreciation Right" means a right, granted to a Participant
under Section 6.07, to be paid an amount measured by the appreciation in the
Fair Market Value of Shares from the date of grant to the date of exercise of
the right, with payment to be made in cash, Shares, other Awards, or other
property as specified in the Award or determined by the Committee.
2.29. "Subsidiary" means any corporation (other than the Corporation) with
respect to which the Corporation owns, directly or indirectly, 50% or more of
the total combined voting power for all classes of stock. In addition, any other
related entity may be designated by the Board or the Committee as a Subsidiary,
provided the Board or the Committee determines that the Corporation has a
substantial ownership interest in such entity.
2.30. "Year" means a calendar year.
SECTION 3. ADMINISTRATION.
3.01. Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select and designate Participants;
(ii) to designate Subsidiaries;
(iii) to determine the type or types of Awards to be granted to each
Participant;
(iv) to determine the number of Awards to be granted, the number of
Shares to which an Award will relate, the terms and conditions of any Award
granted under the Plan (including, but not limited to, any exercise price,
grant price, or purchase price, any restriction or condition, any schedule
for lapse of restrictions or conditions relating to transferability or
forfeiture, exercisability, or settlement of an Award, and waivers or
accelerations thereof, and waiver of performance conditions relating to an
Award, based in each case on such considerations as the Committee shall
determine), and all other matters to be determined in connection with an
Award;
(v) to determine whether, to what extent, and under what circumstances
an Award may be settled, or the exercise price of an Award may be paid, in
cash, Shares, other Awards, or other property, or an Award may be
cancelled, forfeited, or surrendered;
(vi) to determine whether, to what extent, and under what
circumstances cash, Shares, other Awards, or other property payable with
respect to an Award will be deferred either automatically, at the election
of the Committee, or pursuant to an agreement between the Corporation and
the Participant;
(vii) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(viii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument
hereunder; and
(x) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
3.02. Manner of Exercise of Committee Authority. Unless authority is
specifically reserved to the Board under the terms of the Plan, or applicable
law, the Committee shall have sole discretion in exercising such authority under
the Plan. Any action of the Committee with respect to the Plan shall be final,
conclusive, and binding on all persons, including the Corporation, Subsidiaries,
Participants, any person claiming any rights under the Plan from or through any
Participant, and shareholders. The
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express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Corporation or any Subsidiary the authority, subject to such terms as the
Committee shall determine, to perform administrative functions under the Plan.
3.03. Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Corporation or any
Subsidiary, the Corporation's independent certified public accountants, or any
executive compensation consultant or other professional retained by the
Corporation to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Corporation acting on behalf of
the Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Corporation acting
on their behalf, shall, to the extent permitted by law, be fully indemnified and
protected by the Corporation with respect to any such action, determination, or
interpretation.
SECTION 4. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided
in Section 10, the total number of Shares reserved and available for Awards
under the Plan shall be 4.5 million shares. For purposes of this Section 4, the
number of and time at which Shares shall be deemed to be subject to Awards and
therefore counted against the number of Shares reserved and available under the
Plan shall be the earliest date at which the Committee can reasonably estimate
the number of Shares to be distributed in settlement of an Award or with respect
to which payments will be made; provided, however, that, subject to the
requirements of Rule 16b-3, the Committee may adopt procedures for the counting
of Shares relating to any Award for which the number of Shares to be distributed
or with respect to which payment will be made cannot be fixed at the date of
grant to ensure appropriate counting, avoid double counting (in the case of
tandem or substitute awards), and provide for adjustments in any case in which
the number of Shares actually distributed or with respect to which payments are
actually made differs from the number of Shares previously counted in connection
with such Award.
If any Shares to which an Award relates are forfeited or the Award is
settled or terminates without a distribution of Shares (whether or not cash,
other Awards, or other property is distributed with respect to such Award), any
Shares counted against the number of Shares reserved and available under the
Plan with respect to such Award shall, to the extent of any such forfeiture,
settlement or termination, again be available for Awards under the Plan;
provided, however, that such Shares shall be available for issuance only to the
extent that the related award would be exempt under Rule 16b-3.
SECTION 5. ELIGIBILITY. Awards may be granted only to individuals who are
officers or other salaried employees (including employees who are also
directors) of the Corporation or a Subsidiary; provided, however, that no Award
shall be granted to any member of the Committee.
SECTION 6. SPECIFIC TERMS OF AWARDS.
6.01. General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 11.02),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including without limitation the
acceleration of vesting of any Awards or terms requiring forfeiture of Awards in
the event of termination of employment by the Participant. Except as provided in
Sections 7.03 or 7.04, only services may be required as consideration for the
grant of any Award.
6.02. Performance Awards. Subject to the provisions of Sections 7.01 and
7.02, the Committee is authorized to grant Performance Awards to Participants on
the following terms and conditions:
(i) Awards and Conditions. A Performance Award shall confer upon the
Participant rights, valued as determined by the Committee, and payable to,
or exercisable by, the Participant to
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whom the Performance Award is granted, in whole or in part, as determined
by the Committee, conditioned upon the achievement of performance criteria
determined by the Committee.
(ii) Other Terms. A Performance Award shall be denominated in Shares
and may be payable in cash, Shares, other Awards, or other property, and
have such other terms as shall be determined by the Committee.
6.03. Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Participants. The Committee may provide that Dividend Equivalents
shall be paid or distributed when accrued or shall be deemed to have been
reinvested in additional Shares or Awards, or otherwise reinvested.
6.04. Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Issuance and Restrictions.
(a) Restricted Stock (other than Special Restricted Stock) shall be
subject to such restrictions on transferability and other restrictions as
the Committee may impose (including, without limitation, limitations on the
right to vote such Restricted Stock or the right to receive dividends
thereon), which restrictions shall lapse either: (x) in full with respect
to all Shares underlying such Award of Restricted Stock at the expiration
of a period not less than three years from the date of grant of such Award;
or (y) proportionally in equal installments of the Shares underlying such
Award of Restricted Stock over a period not less than three years from the
date of grant of such Award, as the Committee shall determine, except that
such restrictions may lapse earlier in the event of death, disability or
retirement of an awardee, on such terms as the Committee shall determine,
or in accordance with Section 9 hereof. The Committee shall not have the
authority to otherwise accelerate the vesting of an Award of Restricted
Stock under this Section 6.04(i)(a).
(b) Special Restricted Stock shall be subject to such restrictions on
transferability and other restrictions as the Committee may impose
(including, without limitation, limitations on the right to vote Special
Restricted Stock or the right to receive dividends thereon) which
restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
shall determine.
(ii) Forfeiture. Performance-Based Restricted Stock shall be
forfeited unless preestablished performance criteria specified by the
Committee are met during the applicable restriction period. Except as
otherwise determined by the Committee, upon termination of employment (as
determined under criteria established by the Committee) during the
applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and returned to the Corporation;
provided, however, that to the extent consistent with Section 6.04(i)(a)
above, the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case after the award has been
made, that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations
resulting from specified causes.
(iii) Certificates of Shares. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, the Corporation or an escrow agent acting on behalf of
the Corporation shall retain physical possession of the certificates, and
the Participant shall deliver a stock power to the Corporation or such
agent, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends. Unless otherwise determined by the Committee, cash
dividends and other distributions made or paid with respect to the Shares
underlying an Award of Restricted Stock or Performance-Based Restricted
Stock shall be held in escrow, and may (but need not be)
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reinvested as determined by the Committee. Such dividends and other
distributions shall be paid to the Participant, together with interest or
other earnings thereon (if any), at the time the Shares are delivered to
the Participant. Shares distributed in connection with a stock split or
stock dividend, and other property distributed as a dividend or other
distribution, shall be subject to restrictions and a risk of forfeiture to
the same extent as the Restricted Stock or Performance-Based Restricted
Stock with respect to which such stock or other property has been
distributed.
6.05. Deferred Stock. The Committee is authorized to grant Deferred Stock
to Participants, on the following terms and conditions:
(i) Award and Restrictions.
(a) Delivery of Shares will occur upon expiration of the deferral
period specified for Deferred Stock (other than Special Deferred Stock) by
the Committee (or, if permitted by the Committee, as elected by the
awardee), which deferral period shall not expire earlier than three years
after the date of grant of such Award of Deferred Stock, except that such
deferral period may expire earlier in the event of death, disability or
retirement of an awardee, on such terms as the Committee shall determine,
or in accordance with Section 9 hereof. In addition, Deferred Stock shall
be subject to such other restrictions as the Committee may impose, which
other restrictions shall lapse at the expiration of such deferral period.
The Committee shall not have the authority to otherwise accelerate the
expiration of the deferral period for an Award of Deferred Stock under
Section 6.05(i)(a).
(b) Delivery of Shares will occur upon expiration of the deferral
period specified for Special Deferred Stock by the Committee (or, if
permitted by the Committee, by the awardee). In addition, Special Deferred
Stock shall be subject to such restrictions as the Committee may impose,
which restrictions may lapse at the expiration of the deferral period or at
earlier specified times, separately or in combination, in installments, or
otherwise, as the Committee shall determine.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment (as determined under criteria established by
the Committee) during the applicable deferral period or portion thereof (as
provided in the Award Agreement evidencing the Deferred Stock), all
Deferred Stock that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be forfeited; provided,
however, that to the extent consistent with Section 6.05(i)(a) above, the
Committee may provide, by rule or regulation or in any Award Agreement, or
may determine in any individual case, that restrictions or forfeiture
conditions relating to Deferred Stock will be waived in whole or in part in
the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Deferred Stock.
6.06. Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that,
except as provided in Section 7.03 or Section 10, such exercise price shall
be not less than the Fair Market Value of a Share on the date of grant of
such Option (or such higher exercise price as may be required under Section
422 of the Code). On and after the date of grant of an Option hereunder,
the Committee shall not have the authority to amend such Option to reduce
the exercise price thereof, except as provided in Sections 7.03 or 10.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part, the
methods by which such exercise price may be paid or deemed to be paid, the
form of such payment, including, without limitation, cash, Shares, other
Awards or awards issued under other Corporation plans, or other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis, such as
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through "cashless exercise" arrangements), and the methods by which Shares
will be delivered or deemed to be delivered to Participants. Options shall
expire not later than ten years after the date of grant.
(iii) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, including but not limited to the
requirement that no Incentive Stock Option shall be granted more than ten
years after the effective date of the Plan. Anything in the Plan to the
contrary notwithstanding, no term of the Plan relating to Incentive Stock
Options shall be interpreted, amended, or altered, nor shall any discretion
or authority granted under the Plan be exercised, so as to disqualify
either the Plan or any Incentive Stock Option under Section 422 of the
Code. In the event a Participant voluntarily disqualifies an Option as an
Incentive Stock Option, the Committee may, but shall not be obligated to,
make such additional Awards or pay bonuses as the Committee shall deem
appropriate to reflect the tax savings to the Corporation which result from
such disqualification.
6.07. Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Participants on the following terms and conditions:
(i) Right to Payment. A Stock Appreciation Right shall confer on the
Participant to whom it is granted a right to receive, upon exercise
thereof, the excess of (A) the Fair Market Value of one Share on the date
of exercise (or, if the Committee shall so determine in the case of any
such right, other than one related to an Incentive Stock Option, the Fair
Market Value of one Share at any time during a specified period before or
after the date of exercise or the Change of Control Price as defined in
Section 9.03) over (B) the base price of the Stock Appreciation Right as
determined by the Committee as of the date of grant of the Stock
Appreciation Right, which, except as provided in Section 7.03, shall be not
less than the Fair Market Value of one Share on the date of grant. On and
after the date of grant of a Stock Appreciation Right hereunder, the
Committee shall not have the authority to reduce the base price of such
Stock Appreciation Right, except as provided in Sections 7.03 or 10 hereof.
(ii) Other Terms. The Committee shall determine the time or times at
which a Stock Appreciation Right may be exercised in whole or in part, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by which Shares will be delivered or deemed to be
delivered to Participants, and any other terms and conditions of any Stock
Appreciation Right. Limited Stock Appreciation Rights that may be exercised
only upon the occurrence of a Change of Control (as such term is defined in
Section 9.02) or as otherwise defined by the Committee) may be granted
under this Section 6.07. Stock Appreciation Rights shall expire not later
than ten years after the date of grant.
6.08. Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares,
as deemed by the Committee to be consistent with the purposes of the Plan,
including without limitation, Shares awarded purely as a "bonus" and not subject
to any restrictions or conditions, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Shares, purchase rights, and
Awards valued by reference to book value of Shares or the value of securities of
or the performance of specified Subsidiaries. The Committee shall determine the
terms and conditions of such Awards, which may include performance criteria.
Shares delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6.08 shall be purchased for such consideration, paid for at
such times, by such methods, and in such forms, including, without limitation,
cash, Shares, other Awards, or other property, as the Committee shall determine.
SECTION 7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
7.01. Performance-Based Awards. Performance Awards, Performance-Based
Restricted Stock, and certain Other Stock-Based Awards subject to performance
criteria are intended to be "qualified
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performance-based compensation" within the meaning of section 162(m) of the Code
and shall be paid solely on account of the attainment of one or more
preestablished, objective performance goals within the meaning of section 162(m)
and the regulations thereunder. Until otherwise determined by the Committee, the
performance goal shall be the attainment of preestablished levels of net income,
market price per share, return on equity, return on capital employed or cash
flow.
The payout of any such Award to a Covered Employee may be reduced, but not
increased, based on the degree of attainment of other performance criteria or
otherwise at the discretion of the Committee.
7.02. Maximum Awards. The maximum Share amounts in this Section 7.02 are
subject to adjustment under Section 10 and are subject to the Plan maximum under
Section 4.
7.02.1. Performance-Based Awards. All Participants in the aggregate
may not receive in any Year Performance Awards, Performance-Based
Restricted Stock and Other Stock-Based Awards subject to performance
criteria exceeding, in the aggregate, 500,000 underlying Shares. The
maximum amount payable in respect of such Awards in any Year may not exceed
1,000,000 Shares (or the then equivalent Fair Market Value thereof) in the
aggregate to all Participants and 100,000 Shares (or the then equivalent
Fair Market Value thereof) in the case of any individual Participant.
7.02.2. Stock Options and SARS. All Participants in the aggregate may
not receive in any Year Awards of Options and Stock Appreciation Rights, in
the aggregate, exceeding 1,000,000 underlying Shares. Each individual
Participant may not receive in any Year Awards of Options or Stock
Appreciation Rights exceeding 250,000 Shares.
7.02.3. Restricted Stock. A maximum of 1,000,000 Shares may be made
subject to Awards of Restricted Stock in the aggregate under the Plan.
7.02.4. Special Restricted Stock, Special Deferred Stock, Permitted
Substitute Awards and Permitted Retroactive Tandem Awards. A maximum of
225,000 Shares may be made subject to Awards of Special Restricted Stock,
Special Deferred Stock, Permitted Substitute Awards and Permitted
Retroactive Tandem Awards, in the aggregate, under the Plan.
7.03. Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to or in tandem with any other Award granted under
the Plan or any award granted under any other plan of the Corporation, any
Subsidiary, or any business entity to be acquired by the Corporation or a
Subsidiary, or any other right of a Participant to receive payment from the
Corporation or any Subsidiary. No Award may be granted in substitution for any
other Award theretofore granted under the Plan, other than Permitted Substitute
Awards, and no Award may be retroactively granted in tandem with any other Award
theretofore granted under the Plan at an exercise or base price less than that
of such other previously granted Award, other than Permitted Retroactive Tandem
Awards. If a Permitted Substitute Award is granted, the Committee shall require
the surrender of the other Award or award for which the Permitted Substitute
Award is substituted in consideration for the grant of the Permitted Substitute
Award. Awards granted in addition to or in tandem with other Awards or awards
may be granted either as of the same time as or a different time from the grant
of such other Awards or awards, except as otherwise provided above with respect
to certain retroactive tandem Awards. The per Share exercise price of any
Option, base price of any Stock Appreciation Right, or purchase price of any
other Award conferring a right to purchase Shares:
(i) which is a Permitted Substitute Award shall be not less than the
lesser of the Fair Market Value of a Share at the date such Permitted
Substitute Award is granted or such Fair Market Value at that date reduced
to reflect the Fair Market Value at that date of the Award or award
required to be surrendered by the Participant as a condition to receipt of
the Permitted Substitute Award; or
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(ii) which is a Permitted Retroactive Tandem Award shall be not less
than the lesser of the Fair Market Value of a Share at the date of grant of
the later Award or at the date of grant of the earlier Award or award.
7.04. Exchange Provisions. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Shares, other
Awards (subject to Section 7.03), or other property based on such terms and
conditions as the Committee shall determine and communicate to the Participant
at the time that such offer is made.
7.05. Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall
the term of any Option or a Stock Appreciation Right granted in tandem therewith
exceed a period of ten years from the date of its grant (or such shorter period
as may be required under Section 422 of the Code).
7.06. Form of Payment Under Awards. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Corporation or a
subsidiary upon the grant or exercise of an Award may be made in such forms as
the Committee shall determine, including without limitation, cash, Shares, other
Awards, or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. Such payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments denominated in
Shares.
7.07. Loan Provisions. With the consent of the Committee, and subject to
compliance with applicable laws and regulations, the Corporation may make,
guarantee, or arrange for, a loan or loans to a Participant with respect to the
exercise of any Option or other payment in connection with any Award, including
the payment by a Participant of any or all federal, state, or local income or
other taxes due in connection with any Award. Subject to such limitations, the
Committee shall have full authority to decide whether to make a loan or loans
hereunder and to determine the amount, terms, and provisions of any such loan or
loans, including the interest rate to be charged in respect of any such loan or
loans, whether the loan or loans are to be with or without recourse against the
borrower, the terms on which the loan is to be repaid and conditions, if any,
under which the loan or loans may be forgiven. Nothing in this Section shall be
construed as implying that the Committee shall or will offer such loans.
SECTION 8. GENERAL RESTRICTIONS APPLICABLE TO AWARDS.
8.01. Restrictions Under Rule 16b-3.
8.01.1. Six-Month Holding Period. Unless a Participant could
otherwise transfer an equity security, derivative security, or Shares
issued upon exercise of a derivative security granted under the Plan
without incurring liability under Section 16(b) of the Exchange Act, (i) an
equity security issued under the Plan, other than an equity security issued
upon exercise or conversion of a derivative security granted under the
Plan, shall be held for at least six months from the date of acquisition;
(ii) with respect to a derivative security issued under the Plan, at least
six months shall elapse from the date of acquisition of the derivative
security to the date of disposition of the derivative security (other than
upon exercise or conversion) or its underlying equity security; and (iii)
any Award in the nature of a Stock Appreciation Right must be held for six
months from the date of grant to the date of cash settlement.
8.01.2. Nontransferability. Awards which constitute derivative
securities (including any option, stock appreciation right, or similar
right) shall not be transferable by a Participant except by will or the
laws of descent and distribution (except pursuant to a beneficiary
designation authorized under Section 8.02) or, if then permitted under Rule
16b-3, pursuant to a qualified domestic relations order as defined under
the Code or Title I of the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder, and, in the case of an Incentive Stock
Option or, if then required by Rule 16b-3, any other derivative security
granted under the Plan,
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shall be exercisable during the lifetime of a Participant only by such
Participant or his legal representative.
8.01.3. Compliance with Rule 16b-3. It is the intent of the
Corporation that this Plan comply in all respects with Rule 16b-3 in
connection with any Award granted to a person who is subject to Section 16
of the Exchange Act. Accordingly, if any provision of this Plan or any
Award Agreement does not comply with the requirements of Rule 16b-3 as then
applicable to any such person, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements with
respect to such person.
8.02. Limits on Transfer of Awards; Beneficiaries. No right or interest of
a Participant in any Award shall be pledged, encumbered or hypothecated to or in
favor of any party (other than the Corporation or a Subsidiary), or shall be
subject to any lien, obligation, or liability of such Participant to any party
(other than the Corporation or a Subsidiary). Unless otherwise determined by the
Committee (subject to the requirements of Section 8.01.2), no Award subject to
any restriction shall be assignable or transferable by a Participant otherwise
than by will or the laws of descent and distribution (except to the Corporation
under the terms of the Plan); provided, however, that a Participant may, in the
manner established by the Committee, designate a beneficiary or beneficiaries to
exercise the rights of the Participant, and to receive any distribution, with
respect to any Award, upon the death of the Participant. A beneficiary,
guardian, legal representative, or other person claiming any rights under the
Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award Agreement applicable to such Participant or
Agreement applicable to such, except to the extent the Plan and such Award
Agreement or agreement otherwise provide with respect to such persons, and to
any additional restrictions deemed necessary or appropriate by the Committee.
8.03. Registration and Listing Compliance. The Corporation shall not be
obligated to deliver any Award or distribute any Shares with respect to any
Award in a transaction subject to regulatory approval, registration, or any
other applicable requirement of federal or state law, or subject to a listing
requirement under any listing or similar agreement between the Corporation and
any national securities exchange, until such laws, regulations, and contractual
obligations of the Corporation have been complied with in full, although the
Corporation shall be obligated to use its best efforts to obtain any such
approval and comply with such requirements as promptly as practicable.
8.04. Share Certificates. All certificates for Shares delivered under the
Plan pursuant to any Award or the exercise thereof shall be subject to such
stop-transfer order and other restrictions as the Committee may deem advisable
under applicable federal or state laws, rules and regulations thereunder, and
the rules of any national securities exchange on which Shares are listed. The
Committee may cause a legend or legends to be placed on any such certificates to
make appropriate reference to such restrictions or any other restrictions that
may be applicable to Shares, including under the terms of the Plan or any Award
Agreement. In addition, during any period in which Awards or Shares are subject
to restrictions under the terms of the Plan or any Award Agreement, or during
any period during which delivery or receipt of an Award or Shares has been
deferred by the Committee or a Participant, the Committee may require the
Participant to enter into an agreement providing that certificates representing
Shares issuable or issued pursuant to an Award shall remain in the physical
custody of the Corporation or such other person as the Committee may designate.
SECTION 9. CHANGE OF CONTROL PROVISIONS. Notwithstanding any other
provision of the Plan, the following acceleration and valuation provisions shall
apply in the event of a "Change of Control" as defined in this Section 9.
9.01. Acceleration and Cash-Out Rights. In the event of a "Change of
Control," as defined in Section 9.02, automatically in the case of all
Participants:
(i) The performance criteria of all Performance Awards,
Performance-Based Restricted Stock, and Other Stock-Based Awards shall be
deemed fully achieved and all such Awards shall be
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<PAGE> 39
fully earned and vested, subject only to the restrictions on dispositions
of equity securities set forth in Section 8.01.1 and legal restrictions on
the issuance of Shares set forth in Sections 8.03 and 8.04;
(ii) Any Option, Stock Appreciation Right, and other Award in the
nature of a right that may be exercised which was not previously
exercisable and vested shall become fully exercisable and vested, subject
only to the restrictions on disposition of equity securities set forth in
Section 8.01.1 and legal restrictions on the issuance of Shares set forth
in Sections 8.03 and 8.04;
(iii) The restrictions, deferral limitations, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse
and such Awards shall be deemed fully vested, subject only to the
restrictions on dispositions of equity securities set forth in Section
8.01.1 and legal restrictions on the issuance of Shares set forth in
Sections 8.03 and 8.04;
(iv) All outstanding Awards shall be cancelled and a Participant
holding any such Award shall be paid in cash therefor on the basis of the
"Change of Control Price" (as defined in Section 9.03) as of the date that
the Change of Control occurs, or such other date as the Committee may
determine prior to the Change of Control; provided, however, that this
Section 9.01 (iv) shall not apply in the case of any Award if (a) the
cancellation of and payment for such Award would cause the Participant to
incur actual short-swing profits liability under Section 16(b) of the
Exchange Act or (b) initial shareholder approval of the Plan has not been
obtained; and
(v) To the extent Section 9.01(iv) of this Section 9 does not apply
and at any time after the Change of Control the Shares are no longer
readily tradeable on an established exchange, a Participant shall, as of
the date on which the Change of Control occurs, be entitled to receive
consistent with Rule 16b-3, and the Corporation shall use its best efforts
to compel and obligate the surviving or resulting corporation in the Change
of Control and/or the other party to the agreement or transaction resulting
in the Change of Control to grant to the Participant, substitute Options,
Stock Appreciation Rights and/or Restricted Stock, as the case may be, in
respect of the shares of common stock or other capital stock of such
surviving or resulting corporation, or such other party involved in the
Change of Control, on such terms and conditions, as to the number of
shares, pricing, vesting, exercisability and otherwise, which shall
substantially preserve the value, rights and benefits of any affected
Options, Stock Appreciation Rights and/or Restricted Stock, as the case may
be, previously granted hereunder.
9.02. Change of Control. For purposes of Section 9.01, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either the then (i) outstanding shares of Common
Stock of the Corporation (the "Outstanding Corporation Common Stock") or
(ii) combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
"Outstanding Voting Securities") provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
by the Corporation or any of its subsidiaries, (ii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any of its subsidiaries, (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
51% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Corporation Common Stock and
Outstanding Voting Securities immediately prior to such acquisition in
substantially the same proportions as their ownership, immediately prior to
such acquisition, of the Outstanding Corporation Common Stock and
Outstanding Voting Securities, as the case may be, or (iv) any acquisition
by one or
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<PAGE> 40
more Hess Entity (for this purpose a "Hess Entity" means (A) Mr. Leon Hess
or any of his children, (B) any spouse of any person described in Section
9.02(a)(iv)(A) above, (C) any affiliate (as such term is defined in Rule
12b-2 under the Exchange Act) of any person described in Section
9.02(a)(iv)(A) above, (D) the Hess Foundation Inc., or (E) any persons
comprising a group controlled (as such term is defined in such Rule 12b-2)
by one or more of the foregoing persons or entities described in this
Section 9.02 (a)(iv)); or
(b) Individuals who, as of the effective date of the Plan, constitute
the Board (the "Incumbent Board") ceasing for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the effective date of the Plan whose
election, or nomination for election by the Corporation's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual threatened
solicitation of proxies or consents; or
(c) Approval by the shareholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 51% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Corporation Common Stock and Outstanding Voting Securities, as
the case may be; or
(d) Approval by the shareholders of the Corporation of (i) a complete
liquidation or dissolution of the Corporation or (ii) the sale or other
disposition of all or substantially all of the assets of the Corporation,
other than to a corporation, with respect to which following such sale or
other disposition, more than 51% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Voting Securities immediately
prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Corporation Common Stock and Outstanding
Voting Securities, as the case may be. The term "the sale or other
disposition of all or substantially all of the assets of the Corporation"
shall mean a sale or other disposition transaction or series of related
transactions involving assets of the Corporation or of any direct or
indirect subsidiary of the Corporation (including the stock of any direct
or indirect subsidiary of the Corporation) in which the value of the assets
or stock being sold or otherwise disposed of (as measured by the purchase
price being paid therefor or by such other method as the Board determines
is appropriate in a case where there is no readily ascertainable purchase
price) constitutes more than two-thirds of the fair market value of the
Corporation (as hereinafter defined). The "fair market value of the
Corporation" shall be the aggregate market value of the then Outstanding
Corporation Common Stock (on a fully diluted basis) plus the aggregate
market value of the Corporation's other outstanding equity securities. The
aggregate market value of the shares of Outstanding Corporation Common
Stock shall be determined by multiplying the number of shares of such
Common Stock (on a fully diluted basis) outstanding on the date of the
execution and delivery of a definitive agreement with respect to the
transaction or series of related transactions (the "Transaction Date") by
the average closing price
A-12
<PAGE> 41
of the shares of Outstanding Corporation Common Stock for the ten trading
days immediately preceding the Transaction Date. The aggregate market value
of any other equity securities of the Corporation shall be determined in a
manner similar to that prescribed in the immediately preceding sentence for
determining the aggregate market value of the shares of Outstanding
Corporation Common Stock or by such other method as the Board shall
determine is appropriate.
9.03. Change of Control Price. For purposes of this Section 9, "Change of
Control Price" means the highest price per share paid in any transaction
reported on the securities exchange or trading system on which the Shares are
then primarily listed or traded, or paid or offered in any transaction related
to a Change of Control of the Corporation at any time during the preceding
60-day period as determined by the Committee, except that in the case of
Incentive Stock Options and Stock Appreciation Rights relating thereto, such
price shall be based only on transactions reported for the date on which the
Committee decides to cash out such Awards.
SECTION 10. ADJUSTMENT PROVISIONS. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Shares, or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event, affects the
Shares such that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the rights of Participants under
the Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of Shares which may thereafter be
issued in connection with Awards (ii) the number and kind of Shares issued or
issuable in respect of outstanding Awards, and (iii) the exercise price, base
price, or purchase price relating to any Award or, if deemed appropriate, make
provision for a cash payment with respect to any outstanding Award; provided,
however, in each case, that, with respect to Incentive Stock Options, no such
adjustment shall be authorized to the extent that such authority would cause the
Plan to violate Section 422(b)(1) of the Code. In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence) affecting the
Corporation or any Subsidiary or the financial statements of the Corporation or
any Subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.
SECTION 11. CHANGES TO THE PLAN AND AWARDS.
11.01. Changes to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan without the consent of shareholders or
Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the
Corporation's shareholders within one year after such Board action if such
shareholder approval is required by any federal or state law or regulation or
the rules of any stock exchange on which the Shares may be listed in order to
maintain compliance therewith, or if the Board in its discretion determines that
obtaining such shareholder approval is for any reason advisable; provided,
however, that, without the consent of an affected Participant, no amendment,
alteration, suspension, discontinuation, or termination of the Plan after
initial shareholder approval of the Plan may materially impair the rights of
such Participant under any Award theretofore granted to him.
11.02. Changes to Awards. The Committee may, unless otherwise expressly
prohibited by the Plan, waive any conditions or rights under, or amend, alter,
suspend, discontinue, or terminate, any Award theretofore granted and any Award
Agreement relating thereto; provided, however, that, without the consent of an
affected Participant, no such amendment, alteration, suspension,
discontinuation, or termination of any Award after initial shareholder approval
of the Plan may materially impair the rights of such Participant under such
Award.
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<PAGE> 42
SECTION 12. GENERAL PROVISIONS.
12.01. No Rights to Awards. No Participant or employee shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants and employees.
12.02. No Shareholder Rights. No Award shall confer on any Participant any
of the rights of a shareholder of the Corporation unless and until Shares are
duly issued or transferred to the Participant in accordance with the terms of
the Award.
12.03. Tax Withholding. To the extent and in the manner permitted by
applicable law, the Corporation or any Subsidiary is authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including
from a distribution of Shares, or any payroll or other payment to a Participant,
amounts or withholding and other taxes due with respect thereto, its exercise,
or any payment thereunder, and to take such other action as the Committee may
deem necessary or advisable to enable the Corporation and Participants to
satisfy obligations for the payment of withholding taxes and other tax
liabilities relating to any Award. This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of the Participant's tax obligations.
12.04. No Right to Employment. Nothing contained in the Plan or any Award
Agreement shall confer, and no grant of an Award shall be construed as
conferring, upon any employee any right to continue in the employment of the
Corporation or any Subsidiary or to interfere in any way with the right of the
Corporation or any Subsidiary to terminate such employment at any time or
increase or decrease such employee's compensation from the rate in existence at
the time of granting of an Award.
12.05. Unfunded Status of Awards. The Plan is intended to constitute an
unfunded incentive and deferred compensation plan for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended. With respect to any payments not yet made to a Participant pursuant to
an Award the Plan constitutes a mere promise to make the benefit payments
provided for herein, and nothing contained in the Plan or any Award shall give
any such Participant any rights that are greater than those of a general
creditor of the Corporation; provided, however, that the Committee may authorize
the creation of trusts or make other arrangements to meet the Corporation's
obligations under the Plan to deliver cash, Shares, other Awards, or other
property pursuant to any award, which trusts or other arrangements shall be
consistent with the unfunded status of the Plan.
12.06. Other Compensatory Arrangements. The Corporation or any Subsidiary
shall be permitted to adopt other or additional compensation arrangements (which
may include arrangements which relate to Awards), and such arrangements may be
either generally applicable or applicable only in specific cases.
12.07. Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determined
whether cash, other Awards, or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
12.08. Governing Law. The validity, construction, and effect of the Plan,
any rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.
SECTION 13. EFFECTIVE DATE. The Plan shall become effective December 6,
1995, subject to approval of the Plan within one year after such date by the
affirmative vote of the holders of a majority of the Shares present or
represented and entitled to vote (and the affirmative vote of a majority of the
Shares voting) at a meeting of the Corporation's shareholders, or any
adjournment thereof. If such approval is not obtained, the Plan and all Awards
theretofore made thereunder shall be void ab initio and of no force or effect.
A-14
<PAGE> 43
Please mark
your votes /X/
like this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
1. Election of the following nominees as Directors for three-year term expiring
in 1999:
B.T. Deverin, E.E. Holiday, W.S.H. Laidlaw,
R.B. Oresman, R.B. Sellars, R.F. Wright
FOR WITHHOLD AUTHORITY
all nominees to vote for all nominees
/ / / /
WITHHOLD FOR THE FOLLOWING ONLY
(Write the name of the nominee(s) in the space below)
_____________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2
2. Ratification of the selection of Ernst & Young LLP as independent auditors
for fiscal year ending December 31, 1996.
FOR AGAINST ABSTAIN
/ / / / / /
FOR PROPOSAL 3
3. Approval of the adoption of 1995 Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
Signature(s)______________________________________ Date________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
PROXY
AMERADA HESS CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 1, 1996
The undersigned appoints JOHN B. HESS, W.S.H. LAIDLAW and LEON HESS, or any
of them, proxies, each with power of substitution, to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Stockholders of Amerada
Hess Corporation to be held at its offices, 1 Hess Plaza, Route 9, Woodbridge,
New Jersey, on May 1, 1996, at 2:00 p.m., local time, and all adjournments
thereof, as directed on the reverse side of this card and, in their discretion,
upon any other matters which may properly come before the Meeting or any
adjournment thereof.
The undersigned hereby revokes any proxy heretofore given to vote said
shares, and hereby ratifies all that said proxies may do at the Meeting or at
any adjournment thereof.
PLEASE INDICATE ON THE REVERSE SIDE OF THIS CARD HOW YOUR STOCK IS TO BE
VOTED.
IF NOT OTHERWISE SPECIFIED, SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1,
FOR PROPOSAL 2 AND FOR PROPOSAL 3 ON THE REVERSE SIDE OF THIS CARD.
Receipt of Notice of the Meeting and of the Proxy Statement is hereby
acknowledged.
(Continued and to be signed on the other side)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 44
Please mark
your votes /X/
like this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
1. Election of the following nominees as Directors for three-year term expiring
in 1999:
B.T. Deverin, E.E. Holiday, W.S.H. Laidlaw,
R.B. Oresman, R.B. Sellars, R.F. Wright
FOR WITHHOLD AUTHORITY
all nominees to vote for all nominees
/ / / /
WITHHOLD FOR THE FOLLOWING ONLY
(Write the name of the nominee(s) in the space below)
_________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2
2. Ratification of the selection of Ernst & Young LLP as independent auditors
for fiscal year ending December 31, 1996.
FOR AGAINST ABSTAIN
/ / / / / /
FOR PROPOSAL 3
3. Approval of the adoption of 1995 Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
Signature(s)______________________________________________ Date________________
NOTE: Please sign as name appears hereon. Return in the enclosed envelope not
later than April 25, 1996.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
CONFIDENTIAL VOTING INSTRUCTIONS
AMERADA HESS CORPORATION
EMPLOYEES' SAVINGS AND STOCK BONUS PLAN
FOR ANNUAL MEETING OF STOCKHOLDERS
OF AMERADA HESS CORPORATION, MAY 1, 1996
NOTE: Members of the Amerada Hess Corporation Employees' Savings and Stock
Bonus Plan (the "Plan") may instruct the Plan Trustee how to vote the
shares credited to their Plan accounts that were purchased with
employee contributions and with cash dividends on those shares. (This
does not apply to shares derived from employer matching contributions.)
To: CHEMICAL BANK, as Trustee of the Plan
The undersigned instructs the Trustee to vote all full and fractional shares
credited to his or her account in the Amerada Hess Corporation Common Stock Fund
in the Plan at the Annual Meeting of Stockholders of Amerada Hess Corporation to
be held at its offices, 1 Hess Plaza, Route 9, Woodbridge, New Jersey, on May 1,
1996, at 2:00 p.m., local time, and all adjournments thereof, as directed on the
reverse side of this card.
PLEASE INDICATE ON THE REVERSE SIDE OF THIS CARD HOW YOUR STOCK IS TO BE
VOTED.
Receipt of Notice of the Meeting and of the Proxy Statement is hereby
acknowledged.
(Continued and to be signed on the other side)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
