<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Amerada Hess Corporation
................................................................................
(Name of Registrant as Specified in Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
................................................................................
2) Aggregate number of securities to which transaction applies:
................................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
................................................................................
4) Proposed maximum aggregate value of transaction:
................................................................................
5) Total fee paid:
................................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
................................................................................
2) Form, Schedule or Registration Statement No.:
................................................................................
3) Filing Party:
................................................................................
4) Date Filed:
................................................................................
<PAGE> 2
AMERADA HESS CORPORATION
1185 AVENUE OF THE AMERICAS
NEW YORK, N.Y. 10036
March 30, 1998
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 6,
1998, 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,
<TABLE>
<S> <C>
/s/ John B. Hess /s/ W.S.H. Laidlaw
Chairman of the Board President and
and Chief Executive Officer Chief Operating Officer
</TABLE>
/s/ 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 6, 1998, 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 6, 1998, at 2:00 P.M., local time, for the following purposes:
1. To elect five directors for the ensuing three-year term (pages 1 to 17
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 18); and
3. 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 16, 1998 will be
entitled to vote at the meeting.
By order of the Board of Directors,
Carl T. Tursi
Secretary
New York, New York
March 30, 1998
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 6, 1998, 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 30, 1998.
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 and the proposal
to ratify the selection of Ernst & Young LLP ("Ernst & Young") as independent
auditors for the fiscal year ending December 31, 1998.
Holders of record of Common Stock, par value $1.00 per share ("Common
Stock"), of the Corporation at the close of business on March 16, 1998 will be
entitled to vote at the Annual Meeting. Each share of Common Stock will be
entitled to one vote. On March 16, 1998, there were 91,387,005 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, five directors are to be elected to serve for a term
of three years and until their successors are elected and qualified. Mr. H.W.
McCollum, currently a director of the Corporation, will not be standing for
re-election at the Annual Meeting. 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.
1
<PAGE> 5
The following table presents information as of February 1, 1998 on the
nominees for election as directors of the Corporation and the directors
continuing in their respective terms of office:
NOMINEES FOR DIRECTOR
Class I
For Three-Year Term Expiring in 2001
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND BUSINESS EXPERIENCE AGE SINCE OTHER DIRECTORSHIPS
---- ----------------------- --- -------- -------------------
<S> <C> <C> <C> <C>
Nicholas F. Brady....... Chairman, Darby Overseas 67 1994 Christiana Companies, Inc.
Investments, Ltd. H.J. Heinz Company
(investment firm); Director or trustee of
Former Secretary of the various Templeton mutual
United States Department funds
of the Treasury;
Former Chairman of the
Board, Dillon, Read & Co.
Inc. (investment banking
firm)
J. Barclay Collins II... Executive Vice President and 53 1986 Dime Bancorp, Inc.
General Counsel
Leon Hess............... Chairman of the Executive 83 1968 --
Committee; Former Chairman
of the Board and Chief
Executive Officer of the
Corporation
Thomas H. Kean.......... President, Drew University; 62 1990 ARAMARK Corporation
Former Governor of the Bell Atlantic Corporation
State of New Jersey Beneficial Corporation
Fiduciary Trust Company
International
United HealthCare
Corporation
Frank A. Olson.......... Chairman of the Board and 65 1998 Cooper Industries Inc.
Chief Executive Officer, Fund American Enterprises
The Hertz Corporation Holdings, Inc.
Becton Dickinson and
Company
</TABLE>
2
<PAGE> 6
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class II
Term Expiring in 1999
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND BUSINESS EXPERIENCE AGE SINCE OTHER DIRECTORSHIPS
---- ----------------------- --- -------- -------------------
<S> <C> <C> <C> <C>
Edith E. Holiday......... Attorney; Former Assistant 45 1993 Beverly Enterprises, Inc.
to the President of the Hercules, Incorporated
United States and Secretary H.J. Heinz Company
of the Cabinet; Director or trustee of
Former General Counsel, various Franklin Templeton
United States Department mutual funds
of the Treasury
W. S. H. Laidlaw......... President and Chief Operating 42 1994 Premier Oil plc
Officer
Roger B. Oresman......... Consulting Partner, 77 1969 --
Milbank, Tweed,
Hadley & McCloy
(attorneys)
Robert N. Wilson......... Vice Chairman of the Board 57 1996 United States Trust
of Directors, Johnson & Corporation
Johnson
Robert F. Wright......... Former President and Chief 72 1981 --
Operating Officer of the
Corporation
</TABLE>
Class III
Term Expiring in 2000
<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, 69 1991 --
Metropolitan Life Insurance
Company
John B. Hess............. Chairman of the Board and 43 1978 --
Chief Executive Officer
William R. Johnson....... President and Chief Operating 49 1996 Cincinnati Financial
Officer and Director, Corporation
H.J. Heinz Company PNC Bank
John Y. Schreyer......... Executive Vice President and 58 1990 --
Chief Financial Officer
William I. Spencer....... Former President and Chief 80 1982 --
Administrative Officer,
Citicorp and Citibank, N.A.
</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
3
<PAGE> 7
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
Corporation. Mr. Johnson served in various senior executive positions at H.J.
Heinz Company prior to his election as its President and Chief Operating Officer
in 1996. Mr. Olson was elected to the Board in February 1998. He has served in a
variety of executive positions with The Hertz Corporation or its affiliates
since 1964.
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 and Robert N. Wilson. The
Audit Committee met three times in 1997. 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 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 implementation 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 Committee (the "Compensation
Committee") is composed of Nicholas F. Brady, Chairman, Peter S. Hadley, William
I. Spencer and Robert N. Wilson. The Compensation Committee, which met twice in
1997, approves and administers the Corporation's compensation policies for
executive officers and approves the compensation of the Chief Executive Officer,
and in connection therewith is authorized to make awards of options, restricted
stock and other stock and cash compensation permitted under the 1995 Long-Term
Incentive Plan. The Compensation Committee also made awards of restricted Common
Stock and book value appreciation units under the Corporation's Executive
Long-Term Incentive Compensation and Stock Ownership Plan, which expired at the
end of 1997.
The Employee Benefits and Pension Committee of the Board of Directors is
composed of William I. Spencer, Chairman, Peter S. Hadley, Edith E. Holiday,
Thomas H. Kean and Roger B. Oresman. This Committee, which met twice in 1997,
oversees the Corporation's benefit plans. It recommends to the Board of
Directors asset allocation targets and investment managers for the Employees'
Pension Plan and appoints investment managers for the Employees' Savings and
Stock Bonus Plan and the Savings and Stock Bonus Plan for Retail Operations
Employees.
The Directors and Board Affairs Committee of the Board of Directors is
composed of Nicholas F. Brady, Chairman, John B. Hess, Leon Hess, Edith E.
Holiday and Thomas H. Kean. This Committee met twice in 1997. It is responsible
for reviewing the size and composition of the Board, as well as appropriate
board practices and procedures, board meeting content, frequency and length, and
the composition and function of committees of the Board of Directors. This
Committee also recommends for election as directors qualified candidates
identified through various sources. Stockholders may suggest candidates by
writing to the Secretary of the Corporation, including a brief summary of each
candidate's qualifications.
The Board of Directors met ten times in 1997, and, except for Mr. Johnson,
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 1997. Mr. Johnson attended 70% of such meetings.
4
<PAGE> 8
CERTAIN TRANSACTIONS
The Corporation retained Milbank, Tweed, Hadley & McCloy, of which Mr.
Oresman is a consulting partner, to provide legal services in 1997. It is
expected that the Corporation's dealings with this firm will continue in 1998.
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. In early
1997, the Corporation entered into a settlement agreement terminating a contract
under which the Corporation sold crude oil to Southland, paying Southland
$576,000.
In 1997, the Corporation sold petroleum products to The Hertz Corporation,
of which Mr. Olson is Chairman of the Board and Chief Executive Officer, in the
aggregate amount of $1,347,901. These sales were made prior to Mr. Olson's being
elected a director of the Corporation and were made at competitive market
prices. The Corporation expects to continue to make such sales in 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
In February 1998, Mr. John B. Hess filed an amended Form 5 for 1996
reporting gifts of 400 shares in April 1996 to each of three trusts for the
benefit of his children, and Mr. Leon Hess, who serves as trustee of these
trusts, filed a Form 5 for 1996 to report the acquisition of these gifts by the
trusts. These gifts should have been reported on Forms 5 filed by Messrs. John
B. Hess and Leon Hess by February 14, 1997.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF COMPENSATION
The following table sets forth information on cash and other compensation
paid or accrued for each of the fiscal years ended December 31, 1997, 1996 and
1995 to the Chief Executive Officer and the four most highly compensated
executive officers other than the Chief Executive Officer, for services in all
capacities to the Corporation and its subsidiaries.
5
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- -------------------------------------
AWARDS PAYOUTS
------------------------ ----------
RESTRICTED SECURITIES
OTHER STOCK UNDERLYING ALL OTHER
ANNUAL AWARD(S)($) OPTIONS/ LTIP COMPENSATION($)
NAME AND PRINCIPAL POSITION YEAR SALARY($) 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,............ 1997 1,000,000 200,000 -- 2,737,500 150,000 -- 8,000
Chairman of the Board 1996 1,000,000 -- -- -- 105,000 -- 7,500
and Chief Executive 1995 900,000 -- -- -- 149,000 -- 7,500
Officer
W. S. H. Laidlaw,........ 1997 900,000 150,000 -- 2,190,000 120,000 -- 8,000
President and Chief 1996 900,000 -- 39,250 -- 70,000 -- 7,500
Operating Officer 1995 775,000 -- 798,837 -- 90,000 -- 7,500
J. Barclay Collins,...... 1997 650,000 75,000 -- 1,368,750 75,000 -- 8,000
Executive Vice 1996 650,000 -- -- -- 28,000 -- 7,500
President and 1995 600,000 -- -- -- 45,000 -- 7,500
General Counsel
John Y. Schreyer,........ 1997 650,000 75,000 -- 1,368,750 75,000 -- 8,000
Executive Vice 1996 650,000 -- -- -- 28,000 -- 7,500
President and Chief 1995 600,000 -- -- -- 45,000 -- 7,500
Financial Officer
Rene L. Sagebien,........ 1997 525,000 -- -- 547,500 30,000 -- 8,000
Senior Vice President 1996 500,000 -- -- -- 9,500 -- 7,500
1995 475,000 -- -- -- 11,500 -- 7,500
</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 1996 (for prior tax years),
based on the average dollar-sterling exchange rate for such year, amounted
to approximately $39,250. 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 include
relocation allowances of $787,422 to defray moving expenses and anticipated
increased costs as a result of such relocation. The amount shown for 1995
for Mr. Laidlaw also includes disbursements made in connection with his use
of an automobile.
** At December 31, 1997, 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, 70,000 shares, $3,841,250; Mr. Laidlaw, 60,000 shares,
$3,292,500; Mr. Collins, 35,000 shares, $1,920,625; Mr. Schreyer, 35,000
shares, $1,920,625 and Mr. Sagebien, 15,000 shares, $823,125. Additionally,
at December 31, 1997, Mr. Sagebien held 3,000 shares of restricted Common
Stock, subject to vesting pursuant to the Corporation's 1995 Long-Term
Incentive Plan, having a market value of $164,625 at such date. To the
extent paid on the Corporation's Common Stock 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 1997 pursuant to the Corporation's Executive Long-Term
Incentive Compensation and Stock Ownership Plan, 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 current value on the date of award, in the following amounts:
Mr. J.B. Hess, 50,000 units; Mr. Laidlaw, 40,000 units; Mr. Collins, 25,000
units; Mr. Schreyer, 25,000 units and Mr. Sagebien, 10,000 units. At
December 31, 1997, the named executives held book value appreciation units
under such plan in the following amounts and having the following aggregate
market values at such date: Mr. J.B. Hess, 70,000 units, $49,000; Mr.
Laidlaw, 60,000 units, $49,000; Mr. Collins, 35,000 units, $24,500; Mr.
Schreyer, 35,000 units, $24,500; and Mr. Sagebien, 15,000 units, $12,250.
Each book value appreciation unit entitles the holder to a cash payment
equal to the increase, if any, in the book value per share of Common Stock
over the five-year vesting period of the restricted stock.
*** Amounts shown in column (i) represent matching contributions of the
Corporation credited to the named executive officers under the Corporation's
Employees' Savings and Stock Bonus Plan.
6
<PAGE> 10
STOCK OPTIONS
In December 1997, the Compensation Committee approved two tranches of
awards of non-qualified stock options, one effective December 3, 1997 and the
other effective January 5, 1998, to certain officers and other employees under
the Corporation's 1995 Long-Term Incentive Plan (the "Incentive Plan"), approved
by the stockholders of the Corporation in 1996. These stock options are not
currently exercisable. No stock appreciation rights were granted to executive
officers in 1997. The following table sets forth information concerning
individual grants of stock options made under the Incentive Plan in respect of
the last fiscal year to each of the named executive officers, including those
awarded effective January 5, 1998:
OPTION/SAR GRANTS IN LAST FISCAL YEAR*
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE VALUE($)**
(a) (b) (c) (d) (e) (f)
---- ------------ ---------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John B. Hess,..................... 75,000 4.3 54.75 12/03/07 1,401,750
Chairman of the Board and 75,000 4.3 53.00 1/05/08 1,311,000
Chief Executive Officer
W. S. H. Laidlaw,................. 60,000 3.5 54.75 12/03/07 1,121,400
President and Chief Operating 60,000 3.5 53.00 1/05/08 1,048,800
Officer
J. Barclay Collins,............... 37,500 2.2 54.75 12/03/07 700,875
Executive Vice President 37,500 2.2 53.00 1/05/08 655,500
John Y. Schreyer,................. 37,500 2.2 54.75 12/03/07 700,875
Executive Vice President 37,500 2.2 53.00 1/05/08 655,500
Rene L. Sagebien,................. 15,000 0.9 54.75 12/03/07 280,350
Senior Vice President 15,000 0.9 53.00 1/05/08 262,200
</TABLE>
- ---------------
* Stock options awarded by the Compensation Committee effective December 3,
1997 become fully exercisable on December 3, 1998 and stock options awarded
effective January 5, 1998 become fully exercisable January 5, 1999, except
that in both cases options may become exercisable earlier in full in cases of
death, disability, normal retirement or change of control (as described in
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 3, 2007 and January 5, 2008, respectively, 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, using the Black-Scholes option pricing model. This model, like
all pricing models, requires certain assumptions, and therefore the amounts
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 for December 1997 option grants: expected
life of seven years for each option; volatility of 22.0% (based on historical
volatility of the Common Stock over the seven-year period ending November 30,
1997); risk-free rate of return of 5.86%; and dividend yield of 1.1%. The
following assumptions were made for purposes of this valuation for January
1998 option grants: expected life of seven years for each option; volatility
of 21.8% (based on historical volatility of the Common Stock over the
seven-year period ending December 31, 1997) risk-free rate of return of
5.57%; and dividend yield of 1.13%.
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:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS/ IN-THE-MONEY
ACQUIRED ON VALUE SARS AT FY-END(#) OPTIONS/SARS AT FY-END($)
NAME EXERCISE(#) REALIZED($) (EXERCISABLE/UNEXERCISABLE)* (EXERCISABLE/UNEXERCISABLE)
(a) (b) (c) (d) (e)
---- ----------- ----------- ---------------------------- ---------------------------
<S> <C> <C> <C> <C>
John B. Hess,................ -- -- 254,000/75,000 260,375/9,375
Chairman of the Board and
Chief Executive Officer
W. S. H. Laidlaw,............ -- -- 160,000/60,000 156,250/7,500
President and Chief
Operating Officer
J. Barclay Collins,.......... -- -- 73,000/37,500 78,125/4,688
Executive Vice President
John Y. Schreyer,............ -- -- 73,000/37,500 78,125/4,688
Executive Vice President
Rene L. Sagebien,............ -- -- 21,000/15,000 20,813/1,875
Senior Vice President
</TABLE>
- ---------------
* Excludes options granted January 5, 1998.
RETIREMENT PLANS
The following table shows the estimated annual 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 a trust established and funded by the Corporation, that
would otherwise be paid to participants under the Pension Plan but for certain
limitations on qualified plan benefits and compensation imposed by the Internal
Revenue Code of 1986, as amended (the "Code"), 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>
$ 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
1,000,000 240,000 320,000 400,000 480,000 560,000
1,200,000 288,000 384,000 480,000 576,000 672,000
1,400,000 336,000 448,000 560,000 672,000 784,000
</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 columns (c) and (d) of the Summary
Compensation Table) 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 benefits as required under the Pension
Plan. Covered compensation for the named executives as of December 31, 1997 was:
Mr. J. B. Hess: $1,033,333; Mr. Laidlaw: $908,333; Mr. Collins: $658,333; Mr.
Schreyer: $658,333; and Mr. Sagebien: $500,000.
8
<PAGE> 12
The years of credited service for the named executives under the Pension
Plan and, except for Mr. Schreyer, the supplemental plan as of February 1, 1998
are as follows: J. B. Hess, 20 years; W. S. H. Laidlaw, 16 years; J. B. Collins,
13 years; J. Y. Schreyer, 7 years; and R. L. Sagebien, 29 years. As of February
1, 1998, Mr. Schreyer had 33 years of credited service under the supplemental
plan pursuant to a determination of the Compensation Committee, which gave Mr.
Schreyer credit for 26 years of prior service with his previous employer for
purposes of determining benefits payable under the supplemental plan. However,
retirement benefits payable to Mr. Schreyer in connection with his prior
employment will be deducted from benefits payable under the supplemental plan.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Mr. Schreyer has an agreement with the Corporation which provides credit
for prior service and determines benefits payable under the Corporation's
nonqualified supplemental retirement plan, as more fully described above under
"Retirement Plans".
Awards granted to employees under the Incentive Plan, including the named
executive officers, are subject to accelerated vesting and cash-out upon the
occurrence of a Change of Control, as defined in the Incentive Plan.
DIRECTORS' COMPENSATION
Each director who is not an employee of the Corporation or any of its
subsidiaries receives an annual fee of $55,000 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, John Y. Schreyer, William I.
Spencer and Robert F. Wright. Messrs. L. Hess, J. B. Hess, Laidlaw and Schreyer
are employees of the Corporation and receive no additional compensation for
serving on any committee of the Board of Directors.
In addition, in an effort to increase the commonality of interests of
outside directors and stockholders, in 1997 the Board of Directors approved a
plan to award each non-employee director 200 shares of Common Stock of the
Corporation each year commencing in 1998. Such awards were made in January 1998
from treasury shares purchased by the Corporation in the open market.
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 December 3, 1997 and the
Compensation Committee reported to the Board of Directors at its meeting held
March 4, 1998.
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 consist of
cash salary, cash bonuses, stock option awards, 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 1997, independent consultants were retained to
continue to study the Corporation's compensation policies and develop strategies
to relate a greater portion of compensation to performance.
9
<PAGE> 13
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; and
- an objective of targeting total cash compensation at the 75th percentile
as shown in a survey (the "Survey") of a group of companies compiled by
an independent consultant, in recognition of the Corporation's need to
remain competitive in attracting and retaining talented executives to
work as part of a small management team functioning in a demanding
corporate and market environment. For 1997 the survey comprised over 300
industrial companies with revenues comparable to the Corporation (which
group included 5 companies also included in Standard & Poor's Oil
(Domestic Integrated) - 500 Stock Index discussed under "Performance
Graph").
Cash Compensation -- Bonus. Historically, cash bonuses were not routinely
paid, but were occasionally utilized to reward extraordinary effort by an
individual or performance that was particularly beneficial to the Corporation.
Although such cash bonuses were granted on a discretionary basis primarily to
reward individual contribution and thus were not necessarily tied to any
particular measure or level of corporate performance, such bonuses were
generally awarded more liberally following periods of superior performance by
the Corporation.
However, for 1997, the Compensation Committee began reviewing the
feasibility of a performance-based cash incentive program for executive officers
in order to relate a greater portion of total cash compensation to performance.
In recognition of the fact that the salary component of total cash compensation
for most of the named executive officers was already at competitive levels, and
as a first step in implementing an annual cash incentive program, the
Compensation Committee awarded discretionary bonuses in lieu of salary increases
to most of the named executive officers in 1997.
Increases in total cash compensation for executive officers, including the
named executive officers, averaged 8.12% in 1997. Increases in total cash
compensation, including salary increases in respect of promotions, on an
annualized basis over the preceding five years ending in 1997 averaged 5.93%.
Long-Term Compensation -- 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 adopted by the Board of Directors at its December
1995 board meeting and approved by stockholders at the 1996 annual meeting. The
Incentive Plan 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
10
<PAGE> 14
providing incentives to maximize shareholder value. The Incentive Plan initially
reserved for issuance 4,500,000 shares, of which approximately 600,000 remain
available for future awards.
Awards under the Incentive Plan to executive officers have been primarily
option-based, as the Compensation Committee determined 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. The Compensation Committee's reliance on stock options for a
significant portion of long-term compensation reflects a growing trend toward
greater use of stock options by large industrial companies.
Long-Term Compensation -- Restricted Stock Plan. 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 and 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) have been awarded from time
to time 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 higher returns to stockholders. 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 objective and
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. It was originally contemplated that the
1,500,000 shares of Common Stock authorized under the Restricted Stock Plan
would be awarded by December 31, 1991. However, the Corporation did not make use
of all the authorized shares until December 31, 1997. The Restricted Stock Plan
expired on December 31, 1997.
Long-Term Compensation -- 1997 Awards. For 1997, the Compensation
Committee approved a program of long-term compensation for its executive
officers consisting of stock options, restricted stock and book value
appreciation units. In 1995 and 1996, long-term compensation for executive
officers was principally (and in the case of named executive officers,
exclusively) option-based, and more than 60% of the options were granted at
premiums ranging from 10% to 30% in excess of the fair market value of Common
Stock on the grant date. While such compensation can provide significant
incentives for an employee over the long term, the Committee believes it tends
not to provide sufficient incentives for an employee to remain with his employer
in the short term. A key consideration in developing the compensation program
for 1997 was the retention of executive officers and other key employees. As a
result of continuing improvement in the general economy, hiring and compensation
practices, particularly in the oil industry, have become highly competitive. The
Compensation Committee considered it necessary to retain the services of
executive officers and other key employees whose continued services are
essential to complete the implementation of the strategic initiatives begun in
1995 to increase returns on capital employed and enhance profitability.
Consequently, the Compensation Committee determined to grant awards, the
value of which would be weighted approximately 50% in restricted stock and 50%
in options. All options were granted at the market value on the grant date, as
the Compensation Committee determined, based on analysis by its independent
consultant, that competitors do not rely solely on premium options over an
extended period of years. Restricted stock was granted with five-year vesting to
promote the retention of key executives over the long term. All awards were
targeted to provide total compensation for executive officers at approximately
the 75th percentile in the Survey. The performance-based nature of the options
will permit any compensation paid in respect of the options to a named executive
in a fiscal year in excess of $1 million to be deductible by the Corporation for
Federal income tax purposes. Such excess compensation in respect of restricted
stock awards, however, will not be deductible. The Compensation Committee
believes it necessary to design executive compensation packages that it deems in
the best interests of the Corporation even if such packages are not fully
deductible.
11
<PAGE> 15
In December 1997, the Compensation Committee approved awards on a
discretionary basis of 190,000 shares of restricted stock under the Restricted
Stock Plan and 280,000 shares of restricted stock under the Incentive Plan, of
which 190,000 shares and 15,000 shares, respectively, were to executive
officers. The Compensation Committee also approved awards on a discretionary
basis of an aggregate of 872,500 options in December 1997 and awards of 862,500
options in January 1998, in each case with an exercise price equal to the fair
market value of the Common Stock on the grant date, of which 312,500 options and
312,500 options, respectively, were to executive officers. The Compensation
Committee also approved awards on a discretionary basis of 262,500 book value
appreciation units, of which 197,500 were 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 executive officers can generally elect to invest on a pre-tax
or after-tax basis up to 5% of salary in seven funds, one of which invests in
Common Stock, and the Corporation provides matching contributions up to 5% of
salary 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.
Compensation of the Chief Executive Officer. Mr. John B. Hess' salary for
1997 was established by reference to a comparison of total cash compensation of
the chief executive officers in the Survey. Mr. John B. Hess' combined salary
and bonus for 1997 was well below the total cash compensation at the 75th
percentile for chief executive officers in the Survey.
In approving the awards of stock options, restricted stock and book value
appreciation units shown in the Summary Compensation Table to Mr. John B. Hess
for 1997, as well as awards to the other named executive officers, the
Compensation Committee did not rely on a measure of the Corporation's past
performance to determine award levels. Rather, the Compensation Committee
examined comparative analyses of peer compensation in order to gauge competitive
levels of long-term compensation and designed a long-term compensation package
that would at once contain a significant performance-based component, in the
form of options and book value appreciation units, to encourage the chief
executive officer to improve returns to stockholders, and a component, in the
form of restricted stock, to provide a strong long-term incentive. The total
present value of such long-term compensation (based on expected option values
derived from the consultant's pricing model) was targeted to provide total
compensation within a range of the 75th percentile of such compensation for
chief executive officers in the Survey.
The Compensation Committee concluded that the total of Mr. John B. Hess'
1997 cash compensation and the grant date present value of his long-term
compensation was reasonable compared with that of his peers and appropriate in
view of the critical corporate initiatives he has undertaken and is continuing
to implement.
Nicholas F. Brady
Peter S. Hadley
William I. Spencer
Robert N. Wilson
12
<PAGE> 16
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) - 500 Stock Index, a published industry index
which includes the Corporation, as of each December 31 over a five-year period
commencing on December 31, 1992 and ending on December 31, 1997:
TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)
YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
S&P OIL
(DOMESTIC
AMERADA INTEGRATED) -
MEASUREMENT PERIOD HESS S&P 500 500 STOCK
(FISCAL YEAR COVERED) CORPORATION STOCK INDEX INDEX
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 99.29 110.08 105.36
1994 101.69 111.53 110.55
1995 119.55 153.45 125.86
1996 131.98 188.68 159.17
1997 126.49 251.63 189.38
</TABLE>
13
<PAGE> 17
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 11,763,229(b) 12.9
c/o Amerada Hess Corporation
1185 Avenue of the Americas
New York, New York 10036
Common Stock............ FMR Corp. 5,757,938(c) 6.3
Edward C. Johnson 3d
Abigail P. Johnson
c/o FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock............ Alpine Capital L.P., et al. 5,729,200(d) 6.3
c/o J. Taylor Crandall
201 Main Street, Suite 3100
Fort Worth, Texas 76102
Common Stock............ Dodge & Cox 4,971,116(e) 5.4
One Sansome St., 35th Fl.
San Francisco, CA 94104
Common Stock............ Ark Asset Management Co., Inc. 4,626,550(f) 5.05
One New York Plaza, 29th Floor
New York, NY 10004
</TABLE>
- ---------------
(a) The information in the above table and in the notes thereto was
obtained, with respect to FMR Corp. et al, Dodge & Cox, and Ark Asset Management
Co., Inc., from Schedules 13G filed by such reporting persons with the
Securities and Exchange Commission in February 1998 and with respect to Alpine
Capital L.P. et al., from a Schedule 13D filed by such reporting persons in
January 1998. Information with respect to Mr. Leon Hess is as of February 1,
1998, with respect to Alpine Capital L.P. et al. is as of January 22, 1998 and
with respect to FMR Corp. et al., Dodge & Cox and Ark Asset Management Co., Inc.
is as of December 31, 1997.
(b) Mr. Leon Hess has sole voting and dispositive power over these shares.
(c) These shares represent the total number of shares reported as
beneficially owned in a joint filing on Schedule 13G by the above listed
reporting persons. These shares include 412,938 shares as to which one or more
of such beneficial owners have sole voting power, 12,700 shares as to which one
or more of them have shared voting power, 5,745,238 shares as to which one or
more of them have sole dispositive power and 12,700 shares as to which one or
more of them have 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
5,155,900 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 559,838 shares of Common Stock of the Corporation.
14
<PAGE> 18
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. Mr. Johnson 3d
owns 12.0% and Abigail Johnson owns 24.5% of the aggregate outstanding voting
stock of FMR Corp. Mr. Johnson 3d is Chairman of FMR Corp. and Abigail P.
Johnson is a Director of FMR Corp. Members of the Johnson family, through their
ownership of voting common stock and the execution of a shareholders' voting
agreement among the Johnson family group and all other Class B shareholders, 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 owners includes 42,200 shares owned directly by Mr.
Johnson or in Johnson family trusts.
(d) These shares represent the total number of shares reported as
beneficially owned by several reporting persons in a joint filing on Schedule
13D dated January 22, 1998. The shares reported consist of: 4,737,000 shares
beneficially owned by Alpine Capital L.P. ("Alpine"), as to which it has sole
voting and dispositive power; 500,000 shares beneficially owned by Keystone,
Inc. ("Keystone"), as to which it has sole voting and dispositive power; 396,700
shares beneficially owned by Robert M. Bass in his individual capacity, as to
which he has sole voting and dispositive power; 84,500 shares beneficially owned
by The Anne T. and Robert M. Bass Foundation (the "Foundation"), as to which it
has sole voting and dispositive power; and 11,000 shares beneficially owned by
The Robert Bruce Management Company, Inc. Defined Benefit Pension Trust (the
"Trust"), as to which it has sole voting and dispositive power. Additional
reporting persons included in this filing are Robert W. Bruce III, who
beneficially owns 4,832,500 of the reported shares, as to 4,821,500 of which he
has shared voting and dispositive power solely in his capacity as one of the two
general partners of Alpine and in his capacity as a principal of The Robert
Bruce Management Co. Inc. which has shared investment discretion over shares
owned by the Foundation, and as to 11,000 of which he has sole voting and
dispositive power solely in his capacity as trustee of the Trust; Algenpar,
Inc., a corporation which beneficially owns 4,737,000 shares, as to which it has
shared voting and dispositive power solely in its capacity as one of the two
general partners of Alpine; J. Taylor Crandall, who beneficially owns 4,821,500
shares, as to which he has shared voting and dispositive power solely in his
capacity as President and sole shareholder of Algenpar, Inc. and in his capacity
as a director of the Foundation; Anne T. Bass, who beneficially owns 84,500
shares, as to which she has shared voting and dispositive power solely in her
capacity as a director of the Foundation; and Robert M. Bass, who beneficially
owns 981,200 shares, as to 896,700 of which he has sole voting and dispositive
power solely in his capacity as President and sole director of Keystone and his
individual ownership of shares as stated above, and as to 84,500 of which he has
shared voting and dispositive power solely in his capacity as a director of the
Foundation.
(e) This amount includes 4,510,926 shares as to which such beneficial owner
has sole voting power and 55,700 shares as to which such beneficial owner has
shared voting power. Such beneficial owner has sole dispositive power with
respect to all shares reported above.
(f) This amount includes 3,500,250 shares as to which such beneficial owner
has sole voting power and 4,626,550 shares as to which such beneficial owner has
sole dispositive power. Such beneficial owner has no shared voting or
dispositive power with respect to any shares reported above.
15
<PAGE> 19
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, 1998. 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>
Nicholas F. Brady...................................... 1,200 --
J. Barclay Collins II.................................. 108,428 --
Peter S. Hadley........................................ 1,257(b) --
John B. Hess........................................... 1,856,191(c) 2.0
Leon Hess.............................................. 9,637,071 10.6
2,126,158(d) 2.3
Edith E. Holiday....................................... 1,200 --
William R. Johnson..................................... 1,200 --
Thomas H. Kean......................................... 2,200 --
W. S. H. Laidlaw....................................... 262,282(e) --
H.W. McCollum.......................................... 93,409 --
Frank A. Olson......................................... 1,000 --
Roger B. Oresman....................................... 10,437 --
Rene L. Sagebien....................................... 41,148 --
John Y. Schreyer....................................... 112,013 --
William I. Spencer..................................... 700 --
Robert N. Wilson....................................... 1,900 --
Robert F. Wright....................................... 120,289 --
All directors and executive officers as a group........ 14,659,440 15.9
</TABLE>
- ---------------
(a) These figures include 427 shares vested in the name of Mr. Collins,
11,234 shares vested in the name of Mr. J. B. Hess, 5,282 shares vested
in the name of Mr. Laidlaw, 7,890 shares vested in the name of Mr.
McCollum, 1,648 shares vested in the name of Mr. Sagebien, 2,713 shares
vested in the name of Mr. Schreyer, and 42,581 shares vested for all
executive officers and directors as a group under the Corporation's
Employees' 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 35,000
shares held in escrow under the Restricted Stock Plan for Mr. Collins,
70,000 shares held in escrow under said Plan for Mr. J. B. Hess, 60,000
shares held in escrow under said Plan for Mr. Laidlaw, 15,000 shares
held in escrow under said plan and 3,000 shares held in escrow under the
Incentive Plan for Mr. Sagebien, 35,000 shares held in escrow under the
Restricted Stock Plan for Mr. Schreyer, and 275,000 shares held in
escrow under said Plan and 42,000 shares held in escrow under the
Incentive 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 also include shares underlying options
to purchase Common Stock of the Corporation, exercisable within 60 days
of the date as of which this information is provided, awarded under the
Incentive Plan in the following amounts: Mr. Collins, 73,000 shares, Mr.
John B. Hess, 254,000 shares, Mr. Laidlaw, 160,000 shares, Mr. Schreyer,
73,000 shares, Mr. Sagebien, 21,000 shares and all executive officers
and directors as a group, 704,500 shares. Holders of stock options do
not have the right to vote or any other right of a stockholder with
respect to shares of Common Stock underlying such options until such
options are exercised.
16
<PAGE> 20
(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 64,141 shares held by a trust for the benefit of Mr. J. B. Hess
and his children, of which Mr. J. B. Hess is trustee.
(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 29,840 shares
held by five trusts of which Mr. Leon Hess is trustee. It also includes
1,921,100 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, a wholly-owned subsidiary of Galaxie Corporation, in
which Mr. Hess indirectly owns an equity interest as described above in
"Certain Transactions." 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.
17
<PAGE> 21
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, 1998. 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.
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 1999 Annual Meeting of Stockholders must be received
by the Corporation no later than November 30, 1998.
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 30, 1998
18
<PAGE> 22
AMERADA HESS CORPORATION
P R O X Y
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 6, 1998
The undersigned hereby 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 6, 1998, 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 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 AND FOR PROPOSAL 2 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 reverse side.)
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES, AND A VOTE FOR
PROPOSAL 2.
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1. Election of the following nominees FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
as Directors for three-year terms listed below / / for all nominees listed below / / / /
expiring in 2001
Nominees: N.F.Brady, J.B. Collins II, L. Hess, T.H. Kean, F.A. Olson
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW.)
Exceptions
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2. Ratification of the selection of Ernst & Young LLP
as independent auditors for fiscal year ending
December 31, 1998. FOR / / AGAINST / / ABSTAIN / /
Change of Address and
or Comments Mark Here / /
NOTE: Please sign as name appears hereon. Joint
owners should each sign. When signing as attorney,
prosecutor, administrator, trustee or guardian,
please give full title as such.
Dated:
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Signature(s)
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Signature(s)
VOTES MUST BE INDICATED
(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE (X) IN BLACK OR BLUE INK. /X/
ENCLOSED POSTAGE PREPAID ENVELOPE)
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