<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 sec. 240.14a-11(c) or sec. 240.14a-12
THE LOUISIANA LAND AND EXPLORATION COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
THE LOUISIANA LAND AND EXPLORATION COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(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:
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<PAGE> 2
[LOGO]
THE LOUISIANA LAND AND EXPLORATION COMPANY
909 Poydras Street
P.O. Box 60350
New Orleans, Louisiana 70160
March 28, 1995
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The Louisiana Land and Exploration Company scheduled to be held on Thursday, May
11, 1995 at the Pan American Life Auditorium, 11th Floor, Pan American Life
Center, 601 Poydras Street, New Orleans, Louisiana commencing at 9:00 A.M.,
Central Daylight Time. Your Board of Directors and management look forward to
greeting personally those stockholders able to attend.
At the meeting, stockholders are being asked to elect a Board of eleven
Directors to serve for a term of one year, to consider and vote upon The
Louisiana Land and Exploration Company 1995 Stock Option Plan for Non-Employee
Directors and to transact such other business as may properly come before the
meeting.
It is important that your shares are represented at the meeting whether or
not you plan to attend. Accordingly, we request your cooperation by promptly
signing, dating and mailing the enclosed proxy in the envelope provided for your
convenience.
Sincerely,
/s/ H. LEIGHTON STEWARD
--------------------------------
H. Leighton Steward
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
THE LOUISIANA LAND AND EXPLORATION COMPANY
909 Poydras Street
P.O. Box 60350
New Orleans, Louisiana 70160
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
------------------------
To the Stockholders of
THE LOUISIANA LAND AND EXPLORATION COMPANY:
The Annual Meeting of Stockholders of The Louisiana Land and Exploration
Company (the "Company") will be held on Thursday, May 11, 1995 at 9:00 A.M.,
Central Daylight Time, in the Pan American Life Auditorium, 11th Floor, Pan
American Life Center, 601 Poydras Street, New Orleans, Louisiana, for the
following purposes:
(i) To elect a Board of Directors to serve until the next Annual
Meeting of Stockholders and until their successors are elected and qualify;
(ii) To consider and vote upon The Louisiana Land and Exploration
Company 1995 Stock Option Plan for Non-Employee Directors (the "1995
Plan"); and
(iii) To transact such other business as may properly come before the
meeting.
A copy of the Company's Annual Report to Stockholders for the year 1994 is
enclosed.
YOUR VOTE IS IMPORTANT. IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING
AND WISH YOUR STOCK TO BE VOTED, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED REPLY ENVELOPE ADDRESSED TO FIRST CHICAGO TRUST
COMPANY OF NEW YORK, P.O. BOX 8257, EDISON, NEW JERSEY 08818-9089.
SOLICITATION AND REVOCATION OF PROXIES
Proxies are being solicited on behalf of the Board of Directors of the
Company, and the Company will bear the cost of such solicitation. It is expected
that the solicitation of Proxies will be primarily by mail. Proxies may also be
solicited by officers and employees of the Company at no additional cost to the
Company, in person or by telephone, telegram or other means of communication.
The Company may reimburse custodians, nominees and fiduciaries holding Capital
Stock (as defined below) for their reasonable expenses in sending proxy material
to principals and obtaining their Proxy. In addition, the Company has engaged
D.F. King & Co., Inc., 77 Water Street, New York, New York, to assist in such
solicitation at an estimated fee of $9,500 plus disbursements. Any stockholder
giving a Proxy may revoke it at any time before it is exercised by written
notice to the Corporate Secretary of the Company or by voting in person at the
meeting.
It is expected that this Notice of Annual Meeting of Stockholders and Proxy
Statement will first be mailed to stockholders on or about March 28, 1995.
STOCKHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on March 15, 1995,
will be entitled to vote at the Annual Meeting. On that date there were
33,409,312 shares of the Capital Stock, par value $.15 per share, of the Company
("Capital Stock") outstanding and entitled to be voted at the Annual Meeting.
Each such share is entitled to one vote. Proxies marked as abstaining (including
proxies containing broker non-votes) on any
1
<PAGE> 4
matter to be acted upon by stockholders will be treated as present at the
meeting for purposes of determining a quorum but will not be counted as votes
cast on such matters.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table reflects the holdings of the only persons known to the
Company to own beneficially 5% or more of Capital Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL CLASS ON
OF BENEFICIAL OWNER OWNERSHIP MARCH 15, 1995
- ---------------------------------------------------------- -------------------- --------------
<S> <C> <C>
Fund American Enterprises Holdings, Inc................... 2,928,100 shares(1) 8.76%
The 1820 House
Main Street
Norwich, Vermont 05055
Metropolitan Life Insurance Company....................... 2,420,486 shares(2) 7.24%
One Madison Avenue
New York, New York 10010
FMR Corp.................................................. 1,719,560 shares(3) 5.15%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Based on a Form 4 dated October 7, 1994, filed with the Commission by Fund
American Enterprises Holdings, Inc. ("FAEH"), the parent of Fund American
Enterprises, Inc. ("FAE"). FAEH shares voting and dispositive power with
respect to 596,565 shares with FAE and 2,331,535 shares with its subsidiary
FFOG, Inc.
(2) Based on a Schedule 13G dated February 9, 1995, filed with the Commission by
Metropolitan Life Insurance Company ("Metropolitan"), which has sole voting
power with respect to 2,224,086 of such shares and sole dispositive power
with respect to all of such shares. Metropolitan has reported that its
subsidiary, State Street Research and Management Company, Inc. ("State
Street") is the beneficial owner of 2,405,386 shares (with respect to which
State Street has also filed a Schedule 13G with the Commission) of the total
shares identified in the table above.
(3) Based on a Schedule 13G dated February 13, 1995, filed with the Securities
and Exchange Commission (the "Commission") by FMR Corp., which has sole
voting power with respect to 19,384 of such shares and sole dispositive
power with respect to all of such shares.
2
<PAGE> 5
The following table sets forth the amount and percentage of Capital Stock
(including shares held for the account of Executive Officers in The LL&E Savings
Plan and The LL&E Dividend Reinvestment Plan) beneficially owned as of February
15, 1995, (March 10, 1995, in the case of Mr. Howson) by each nominee for
election as a Director of the Company, by each of the individuals named in the
Summary Compensation Table and by all Executive Officers and Directors of the
Company as a group. Beneficial ownership has been determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and does not
necessarily bear on the economic incidents of ownership or the right to transfer
such shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF
SHARES OF CAPITAL PERCENT
NAME OF INDIVIDUAL STOCK(1) OF CLASS
------------------------------------------------------ ----------------- --------
<S> <C> <C>
Leland C. Adams....................................... 9,750 *
Richard A. Bachmann................................... 40,854 *
John F. Greene........................................ 122,588 *
Robert E. Howson...................................... 500 *
Eamon M. Kelly........................................ 9,291 *
Kenneth W. Orce....................................... 5,000 *
Victor A. Rice........................................ 2,250 *
Orin R. Smith......................................... 8,650 *
H. Leighton Steward................................... 234,418 *
Arthur R. Taylor...................................... 10,250 *
W.R. Timken, Jr. ..................................... 100,123(2) *
Carlisle A.H. Trost................................... 6,521 *
Joel M. Wilkinson..................................... 46,078 *
John A. Williams...................................... 44,040 *
E.L. Williamson....................................... 105,651(3) *
All Directors and Executive Officers as a group (20
persons), including those named above............... 953,938 2.8%
</TABLE>
- ---------------
* Less than 1%
(1) Includes the following shares which Directors and Executive Officers had the
right to acquire upon the exercise of options within sixty (60) days from
February 15, 1995: Leland C. Adams -- 8,750 shares, Richard A.
Bachmann -- 17,750 shares, John F. Greene -- 74,400 shares, Eamon M.
Kelly -- 8,750 shares, Victor A. Rice -- 1,250 shares, Orin R.
Smith -- 6,250 shares, H. Leighton Steward -- 166,387 shares, Arthur R.
Taylor -- 8,750 shares, W.R. Timken, Jr. -- 8,750 shares, Carlisle A.H.
Trost -- 6,250 shares, Joel M. Wilkinson -- 34,900 shares, John A.
Williams -- 30,300 shares, E.L. Williamson -- 72,525 shares, all Directors
and Executive Officers as a group -- 567,312 shares.
(2) Includes 14,873 shares owned by a trust of which Mr. Timken is the advisor;
51,300 shares owned by various trusts of which Mr. Timken is a co-trustee or
co-advisor; and 1,000 shares owned by a charitable trust of which Mr. Timken
is a member. Mr. Timken disclaims beneficial interest in 5,000 of such
shares owned by members of his family living in his own home and 19,200 of
such shares owned by a trust of which his wife is a co-trustee.
(3) Includes 16,295 shares owned by a company in which Mr. Williamson and his
wife are the majority shareholders.
3
<PAGE> 6
I. ELECTION OF DIRECTORS
Eleven Directors are to be elected, each Director to hold office until the
next Annual Meeting of Stockholders and until their successor is elected and
qualifies. The persons named as proxies on the enclosed Proxy have been
designated by the Board of Directors and intend to vote, unless otherwise
directed, for the nominees listed below. All of such nominees, other than Robert
E. Howson, are now serving as Directors and were elected at the 1994 Annual
Meeting. A majority of shares present at the meeting cast in favor of a nominee
is required for the election of each of the nominees listed below. Messrs.
Leland C. Adams, a director since 1988, and E.L. Williamson, a director since
1971, have reached retirement age and will not stand for reelection.
<TABLE>
<CAPTION>
POSITION, PRINCIPAL
SERVED AS OCCUPATION, BUSINESS
NAME OF DIRECTOR EXPERIENCE AND OTHER
NOMINEE AGE SINCE DIRECTORSHIPS HELD
- -------------------------------- --- --------- -----------------------------------------
<S> <C> <C> <C>
Richard A. Bachmann............. 50 1989 Executive Vice President, Finance and
Administration, of the Company since May
1985; Chief Financial Officer of the
Company since 1981.
John F. Greene.................. 54 1989 Executive Vice President, Exploration and
Production, of the Company since May
1985.
Robert E. Howson................ 63 -- Chairman of the Board and Chief Executive
Officer of McDermott International, Inc.
and McDermott Incorporated since 1988;
Chairman of the Board and Chief Executive
Officer of J. Ray McDermott, S.A. since
January 1995; Director of McDermott
International, Inc., McDermott
Incorporated, J. Ray McDermott, S.A. and
Whitney Holding Corporation.
Eamon M. Kelly(2)(3)............ 58 1986 President of Tulane University; Director
Emeritus of Hibernia Corp.; Director of
Gabelli Enterprises; Director of Zapata
Corporation from 1984 to 1986.
Kenneth W. Orce(4)(5)........... 51 1994 Partner of the law firm of Cahill Gordon
& Reindel, New York, since 1976.
Victor A. Rice(1)(2)............ 54 1993 Chairman of the Board of Directors and
Chief Executive Officer of Varity
Corporation since 1980 and a Director of
Varity Corporation since 1978; Director
of Comptek Research, Inc., International
Murex Technologies, Inc. and American
Precision Industries.
Orin R. Smith(1)(4)(5).......... 59 1991 Chairman and Chief Executive Officer of
Engelhard Corporation since January 1995;
President and Chief Executive Officer of
Engelhard Corporation since May 1984, and
Director of Engelhard Corporation or its
predecessor company (Engelhard Minerals &
Chemicals Corporation) since 1979;
Director of Vulcan Materials Company, The
Summit Bancorporation and Perkin-Elmer
Corporation.
</TABLE>
(Table continued on following page)
4
<PAGE> 7
<TABLE>
<CAPTION>
POSITION, PRINCIPAL
SERVED AS OCCUPATION, BUSINESS
NAME OF DIRECTOR EXPERIENCE AND OTHER
NOMINEE AGE SINCE DIRECTORSHIPS HELD
- -------------------------------- --- --------- -----------------------------------------
<S> <C> <C> <C>
H. Leighton Steward(3)(4)....... 60 1985 Chairman of the Board and Chief Executive
Officer of the Company since January 1,
1989; President of the Company since
January 1985; Chief Operating Officer of
the Company from January 1985 through
December 1988; Director of First Commerce
Corporation and the First National Bank
of Commerce.
Arthur R. Taylor(1)(3)(5)....... 59 1982 Chairman of Arthur Taylor & Company
(private investment firm) since 1977;
President, Muhlenberg College since 1992;
Dean of the Graduate School of Business,
Fordham University, from 1985 to 1992;
Chairman of The Entertainment Channel
from 1981 to 1983; Director of
Pitney-Bowes, Inc., Nomura Pacific Basic
Fund, Inc., Jakarta Growth Fund, Inc.,
Japan OTC Equity Fund, Inc. and Korea
Equity Fund, Inc.
W.R. Timken, Jr.(2)(4)(5)....... 56 1972 Chairman of the Board of Directors of The
Timken Company; Director of Trinova
Corporation and Diebold, Inc.
Carlisle A.H. Trost(1)(2)....... 64 1990 Former Chief of Naval Operations for the
United States Navy (1986-1990); Director
of Lockheed Corporation, General Public
Utilities Corporation, General Public
Utilities (Nuclear) and General Dynamics
Corporation.
</TABLE>
- ---------------
(1) Compensation Committee member. Mr. Taylor is Chairman of the Committee.
(2) Audit Committee member. Admiral Trost is Chairman of the Committee.
(3) Executive Committee member. Mr. Steward is Chairman of the Committee.
(4) Nominating Committee member. Mr. Smith is Chairman of the Committee.
(5) Finance Committee member. Mr. Timken is Chairman of the Committee.
DIRECTORS' COMPENSATION, COMMITTEES AND MEETING ATTENDANCE
During the last fiscal year, the Board of Directors held eight meetings.
Directors who are not Officers of the Company receive an annual retainer of
$30,000 for their services as Directors, and each such Director receives $1,000
for each Board meeting attended. Each non-employee member of the Audit
Committee, the Nominating Committee, the Compensation Committee, the Finance
Committee and the Executive Committee receives $1,000 for attendance at each
Committee meeting. In addition, the Chairman of each of the Audit Committee, the
Compensation Committee and the Finance Committee receives an annual retainer of
$5,000. Each non-employee Director may elect to defer all or a portion of the
compensation otherwise payable to him. Amounts deferred in 1994 accrued interest
at a fixed rate of 18% per annum for participants who are age 55 and over by the
end of the plan year or a fixed rate of 15% per annum for participants who are
below age 55 by the end of the plan year. These rates were pursuant to an
arrangement similar to that in effect in 1994 for certain Company employees. The
Board of Directors has modified the deferral arrangements so that amounts
deferred after January 1, 1995 accrue interest at a fixed rate of 10% per annum.
Any Director who at the time of retirement has either completed four years
of service as a non-employee Director and is at least seventy years of age or
has completed ten or more years of service as a non-employee
5
<PAGE> 8
Director is eligible for an annual retirement benefit under the Company's
Directors' Retirement Plan (the "Directors' Plan") equal to the annual Board
retainer fee (excluding meeting and committee fees) in effect at the time of
retirement or as it may be increased from time to time, commencing on the later
of the Director's retirement or the Director's attaining age seventy. Payments
continue until the Director's death or, in the case of a Director retiring
before reaching age seventy, until payments have been made for a period equal to
the period of the Director's service as a non-employee Director. In the event of
a "Change of Control" of the Company (as defined in the Directors' Plan),
Directors will be credited with a period of service equal to the greater of the
period of such Director's service as a non-employee Director or ten years.
Directors eligible to receive benefits under The LL&E Pension Plan after the
effective date of the Directors' Plan (March 1, 1987) are not eligible to
participate in the Directors' Plan.
The Louisiana Land and Exploration Company 1990 Stock Option Plan for
Non-Employee Directors (the "1990 Plan"), which was adopted by vote of the
stockholders at the 1990 Annual Meeting and expired in May 1994, provided for an
annual grant of an option to purchase 2,500 shares of Capital Stock to each
member of the Board of Directors of the Company who was not an employee of the
Company or of any affiliate of the Company. Options granted under the 1990 Plan
generally are exercisable in two equal annual installments commencing on the
first anniversary of the date of grant, and may be exercised until their
expiration ten years from the date of grant (unless such options expire at an
earlier date following the non-employee Director's termination of service). The
option price per share of Capital Stock payable upon the exercise of an option
under the 1990 Plan is the Fair Market Value (as defined) of Capital Stock on
the date the option was granted. If a non-employee Director who was
participating in the 1990 Plan ceases to be a Director on account of retirement
(and such participant is otherwise eligible for benefits under the Directors'
Plan), death or disability, or if a "Change of Control" of the Company (as
defined in the 1990 Plan) occurs, all of such participant's options outstanding
for six months or more become immediately and fully exercisable.
During 1992, The Louisiana Land and Exploration Company Foundation pledged
to contribute $50,000 per year for six years for the endowment of the Evelyn and
John G. Phillips Distinguished Chair in Mathematics at Tulane University. Mr.
Phillips, former Chairman of the Board and Chief Executive Officer of the
Company, retired at the 1993 Annual Meeting following many years of
distinguished service to the Company. In addition, the Company regularly makes
charitable contributions to a number of universities, including Tulane
University ($15,000 in 1994) and Muhlenberg College ($10,000 in 1994). Company
Director Eamon M. Kelly is President of Tulane University, and Company Director
Arthur R. Taylor is President of Muhlenberg College.
The Board has five standing committees: the Executive Committee; the
Compensation Committee; the Audit Committee; the Finance Committee; and the
Nominating Committee.
The Compensation Committee administers The Louisiana Land and Exploration
Company 1988 Long-Term Stock Incentive Plan, determines the compensation
policies for Company Officers, and recommends to the entire Board of Directors
the salaries of the three most senior Officers of the Company. During 1994, the
Compensation Committee held five meetings.
The principal functions of the Audit Committee are: to receive reports
prepared by the Company's internal auditors; to recommend the selection,
retention or termination of independent auditors; to review arrangements and
proposals for the overall scope of the annual audit with management and the
independent auditors; and to discuss matters of concern to the Audit Committee
with the independent auditors and management relating to the annual financial
statements and results of the audit. During 1994, the Company's Audit Committee
held four meetings.
The principal functions of the Finance Committee are: to review all major
financings of the Company (including the issuance of securities); to recommend
the size, timing, pricing and terms of any such financing; to review the
Company's financial policies, capitalization and forecasted capitalization; to
evaluate investment programs; to review the Company's continuing financial
arrangements; and such additional duties as may from time to time be assigned to
the Finance Committee by the Board of Directors in respect of specific financing
programs undertaken by the Company. During 1994, the Company's Finance Committee
held three meetings.
6
<PAGE> 9
The Nominating Committee establishes criteria for the selection of
Directors, seeks out and interviews Director candidates and recommends to the
Board those Director candidates who shall stand for election at the Annual
Meeting of Stockholders and who shall fill interim vacancies. During 1994, the
Company's Nominating Committee held two meetings.
During 1994, each of the incumbent Directors attended at least 75% of the
aggregate of the meetings of the Board of Directors and committees on which they
served.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors and persons who own more than 10% of a
registered class of the Company's equity securities to file initial reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Such Officers, Directors and
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company and written representations from the
Company's Executive Officers and Directors, all persons subject to the reporting
requirements of Section 16(a) filed the required reports on a timely basis.
7
<PAGE> 10
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth the compensation paid by the Company for
services rendered during each of the last three fiscal years to or for the
accounts of the Chief Executive Officer and the other four most highly
compensated Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION --------------------- --------
---------------------------------- NUMBER
OTHER OF ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
SATION AWARD(S) OPTIONS/ PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2)(3) SARS(2) ($) ($)(4)
- -------------------------------- ---- -------- -------- -------- -------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Leighton Steward............. 1994 $565,000 0 $ 15,300 0 15,000 $ 98,501 $283,736
Chairman of the Board, 1993 $543,846 $140,000 $107,283 $120,563 13,500 $152,677 $243,524
President 1992 $510,000 0 $ 13,275 0 37,500 $126,044 $164,083
and Chief Executive Officer
Richard A. Bachmann............. 1994 $350,000 0 $ 9,775 0 8,600 $ 65,667 $ 68,991
Executive Vice President, 1993 $340,385 $ 75,000 $102,383 $120,563 8,600 $100,330 $ 64,350
Finance and Administration 1992 $325,000 0 $ 8,825 0 22,500 $ 85,006 $ 35,274
Chief Financial Officer, and
Director
John F. Greene.................. 1994 $350,000 0 $ 9,775 0 8,600 $ 65,667 $158,803
Executive Vice President, 1993 $340,385 $ 75,000 $102,383 $120,563 8,600 $100,330 $132,746
Exploration and Production, 1992 $325,000 0 $ 8,825 0 22,500 $ 85,006 $106,744
and Director
John A. Williams................ 1994 $219,000 0 $352,001 0 3,700 $ 30,488 $ 55,276
Vice President 1993 $213,615 $ 25,000 $373,574 $ 89,781 3,700 $ 43,622 $ 49,722
1992 $205,000 $ 20,000 $225,756 0 11,200 $ 35,175 $ 37,567
Joel M. Wilkinson............... 1994 $204,000 0 $ 3,875 0 3,400 $ 23,453 $ 27,424
Vice President 1993 $199,385 $ 25,000 $ 3,725 0 3,400 $ 34,898 $ 24,419
1992 $192,000 $ 20,000 $ 3,325 0 9,000 $ 29,313 $ 21,020
</TABLE>
- ---------------
(1) "Other Annual Compensation" includes: (i) the reimbursement to Mr. Williams
in 1992 of $72,297 for costs incurred in connection with his transfer to
London under The LL&E Relocation Program and in 1994, 1993 and 1992, payment
of $347,101, $333,308 and $148,996, respectively, under The LL&E Expatriate
Program; (ii) tax assistance payments in connection with the grants of
Restricted Stock for 1993 performance made to Messrs. Steward, Bachmann,
Greene and Williams in the amounts of $92,833, $92,833, $92,833 and $35,441,
respectively; and (iii) cash dividends paid on Performance Shares.
(2) Under The 1988 Long-Term Stock Incentive Plan, restrictions lapse in the
event of a "Change of Control" (as defined).
(3) Messrs. Steward, Bachmann, Greene and Williams had an aggregate total of
3,000, 3,000, 3,000 and 1,333 shares, respectively, in Restricted Stock
holdings with December 31, 1994 values of $109,125, $109,125, $109,125 and
$48,488, respectively. The Restricted Stock has a three year vesting
schedule in which one-third of the shares will vest each year beginning one
year from the date of grant. Dividends are payable on Restricted Stock if
and to the extent dividends are paid on the Company's Capital Stock
generally.
(4) "All Other Compensation" includes the following: (i) Company contributions
and allocations in 1994 to its defined contribution plans for the benefit of
Messrs. Steward, Bachmann, Greene, Williams and Wilkinson in the amounts of
$62,336, $31,814, $33,302, $21,236 and $19,639, respectively; (ii) interest
accrued during 1994 in excess of 120% of the applicable federal interest
rate with respect to 1986 through 1994 salary and bonus deferrals as
follows: Mr. Steward $215,401, Mr. Bachmann $33,601, Mr. Greene $121,853,
Mr. Williams $31,482, and Mr. Wilkinson $5,535; and (iii) the dollar value
of insurance premiums paid by the Company with respect to group term life
insurance for the benefit of Messrs. Steward, Bachmann, Greene, Williams and
Wilkinson in the amounts of $6,000, $3,576, $3,648, $2,558 and $2,250,
respectively.
8
<PAGE> 11
Stock Option Grants and Exercises
The following table sets forth information concerning individual grants of
stock options under The 1988 Long-Term Stock Incentive Plan made during the last
completed fiscal year to each of the named Executive Officers. The Company did
not grant any stock appreciation rights ("SARs") in 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------------
NUMBER % OF TOTAL
OF OPTIONS/SARS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE GRANT DATE
OPTIONS/SARS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED YEAR ($/SH) DATE VALUE($)(2)
----------------------- ------------ ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
H. Leighton Steward.... 15,000 6.0% $ 36 03/09/04 $147,199
Richard A. Bachmann.... 8,600 3.4% $ 36 03/09/04 $ 84,394
John F. Greene......... 8,600 3.4% $ 36 03/09/04 $ 84,394
John A. Williams....... 3,700 1.5% $ 36 03/09/04 $ 36,309
Joel M. Wilkinson...... 3,400 1.4% $ 36 03/09/04 $ 33,365
</TABLE>
- ---------------
(1) Fifty percent of the shares granted vested on 3/9/95 and the other fifty
percent vest on 3/9/96.
(2) Based on the Black-Scholes Option Pricing Model using a five-year
weighted-average dividend yield (2.56%), volatility based on stock price
data over the five years preceding the grant (0.2667) in order to estimate
the values that might occur over the course of the option term. The yield
and volatility were also reviewed in light of known changes in dividend
policy or corporate restructurings that could have an effect in the future.
For the risk-free rate (5.85%), the Company used the yield on U.S. Treasury
Strips with a time to maturity that approximates the average time held
before exercise, adjusted for the vesting period, of six years (6 years).
The Company does not believe that the values estimated by the Black-Scholes
model, or any other model, will necessarily be indicative of the values to
be realized by an executive.
The following table sets forth information concerning each exercise of
stock options (or tandem SARs) and freestanding SARs during the last completed
fiscal year by each of the named Executive Officers and the fiscal year-end
value of unexercised options and SARs.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
TOTAL NO. OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
SHARES OPTIONS HELD AT FY-END SARS AT FY-END($)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
H. Leighton Steward.......... 17,100 $198,788 158,887 21,750 $ 703,258 $ 5,625
Richard A. Bachmann.......... 7,937 $119,593 13,450 12,900 $ 0 $ 3,225
John F. Greene............... 12,421 $175,026 70,100 12,900 $ 270,938 $ 3,225
John A. Williams............. -- -- 28,450 5,550 $ 114,688 $ 1,388
Joel M. Wilkinson............ -- -- 33,200 5,100 $ 140,438 $ 1,275
</TABLE>
9
<PAGE> 12
Long-Term Stock Incentive Plan Awards
The following table sets forth information regarding each award of
Performance Shares made to a named Executive Officer in the last completed
fiscal year under The 1988 Long-Term Stock Incentive Plan.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
PERIOD UNDER NON-STOCK PRICE-BASED PLANS
UNTIL ----------------------------------
NUMBER MATURATION THRESHOLD TARGET MAXIMUM
OF OR (NO. OF (NO. OF (NO. OF
NAME SHARES(1) PAYOUT(2) SHARES) SHARES) SHARES)
---------------------------------- ----- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
H. Leighton Steward............... 5,000 3 years 833 5,000 7,500
Richard A. Bachmann............... 2,900 3 years 483 2,900 4,350
John F. Greene.................... 2,900 3 years 483 2,900 4,350
John A. Williams.................. 1,300 3 years 216 1,300 1,950
Joel M. Wilkinson................. 1,100 3 years 183 1,100 1,650
</TABLE>
- ---------------
(1) Performance Shares awarded under The 1988 Long-Term Stock Incentive Plan.
(2) Payout of awards are conditioned upon achieving one or more specified levels
of three criteria which are weighted equally: the three year average of the
Company's working capital return on total capital employed; the three year
average of the increase in the value of proved reserves; and the three year
average of total shareholder return relative to pre-determined peer
companies. If none of the specified levels are met, no awards are payable.
Pension Plans
The following table shows the estimated benefits payable to a covered
participant at normal retirement age under the Company's qualified defined
benefit plan, as well as non-qualified supplemental pension plans that provide
benefits that would otherwise be denied participants by reason of certain
Internal Revenue Code limitations on qualified plan benefits, based on
remuneration that is covered under the plans and years of service with the
Company and its subsidiaries:
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
AVERAGE --------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$200,000.................. $ 60,000 $ 80,000 $100,000 $120,000 $140,000 $160,000
$300,000.................. $ 90,000 $120,000 $150,000 $180,000 $210,000 $240,000
$400,000.................. $120,000 $160,000 $200,000 $240,000 $280,000 $320,000
$450,000.................. $135,000 $180,000 $225,000 $270,000 $315,000 $360,000
$500,000.................. $150,000 $200,000 $250,000 $300,000 $350,000 $400,000
$550,000.................. $165,000 $220,000 $275,000 $330,000 $385,000 $440,000
$600,000.................. $180,000 $240,000 $300,000 $360,000 $420,000 $480,000
$650,000.................. $195,000 $260,000 $325,000 $390,000 $455,000 $520,000
$700,000.................. $210,000 $280,000 $350,000 $420,000 $490,000 $560,000
</TABLE>
A participant's remuneration covered by the Company's pension plans is his
or her average base salary (as reported in the Summary Compensation Table) less
elected deferrals for the three plan years during the last ten years of the
participant's career for which such average is the highest. Pension plan
benefits in the Table are determined on the basis of a ten-year certain and life
annuity. The benefits shown are displayed before the application of the pension
plans' offset against social security. As of January 1, 1995, Messrs. Steward,
Bachmann, Greene, Williams and Wilkinson have accrued 12, 13, 9, 8, and 7 years,
respectively, under the pension plans. The Company has also agreed to supplement
pension payments for Mr. Steward as if he had been in the employ of the Company
since the date he joined a former employer (1962). The benefits will be reduced
by the amount of any similar benefits paid Mr. Steward by his former
10
<PAGE> 13
employer. Covered compensation (base salary less elected deferrals) for Messrs.
Steward, Bachmann, Greene, Williams and Wilkinson for the year ended December
31, 1994, was $565,000, $298,000, $311,000, $219,000 and $204,000, respectively.
Termination of Employment Arrangements and Certain Transactions
The Company has entered into agreements with Messrs. Steward, Bachmann and
Greene which provide that in the event of an "involuntary termination" (other
than for "cause") following a "Change in Control" of the Company (as such terms
are defined in such agreements), each such Executive Officer shall be entitled
to receive from the Company an amount in cash equal to twice the sum of such
Executive Officer's highest annual salary and bonus award during the preceding
three years.
Pursuant to the Company's Special Termination Benefit Plan (the
"Termination Plan"), the Company provides severance benefits in the event of
"involuntary termination" of eligible employees within 18 months following a
"Change of Control" of the Company (as defined below), in an amount equal to six
months' base pay (as of the date of the "Change of Control") or, in the case of
employees with six years or more of service to the Company, an amount equal to
one month's base pay for each year of service not to exceed twelve months' base
pay. Messrs. Williams and Wilkinson are eligible, and Messrs. Steward, Bachmann
and Greene are not eligible, for severance benefits under the Termination Plan.
A "Change in Control" is deemed to have occurred for purposes of the
Termination Plan if (i) thirty percent (30%) or more of the Company's
outstanding securities entitled to vote in elections of directors are
beneficially owned, directly or indirectly, by any person, entity or group; (ii)
individuals currently constituting the Board of Directors (or the successors of
such individuals nominated by a Board of Directors of the Company on which such
individuals or such successors constituted a majority) cease to constitute a
majority of such Board; or (iii) a majority of the Board of Directors determines
that an event effecting an actual change in control of the Company has occurred
or is likely to occur; and, in addition to an event described in (i), (ii) or
(iii) occurring, a majority of the Board of Directors of the Company in office
prior to such event occurring determines at any time not later than six (6)
months following such event that it would be in the best interest of the Company
for the Termination Plan to become effective.
Pursuant to the Company's Special Severance Plan (the "Severance Plan"),
the Company provides severance benefits in the event of "involuntary
termination" of a covered employee as a result of a reduction in the Company's
workforce (i) in the form of a one-time cash payment with a maximum amount of 53
weeks of base salary less applicable withholding taxes required by law, and (ii)
premium payments and administrative charges associated with the continuation of
the covered employee's group health benefits for a period up to six months. All
active employees are covered by the Severance Plan, subject to certain
exceptions provided in the Severance Plan. Messrs. Steward, Bachmann, Greene,
Williams and Wilkinson are eligible for severance benefits under the Severance
Plan unless a Change in Control (as defined in the above agreements) has
occurred, in which case such individuals would be covered by the terms of the
agreements referred to in the preceding three paragraphs.
Kenneth W. Orce, a Director of the Company, is a partner of the law firm
Cahill Gordon & Reindel, which firm currently provides, and in 1994 provided,
legal services to the Company.
REPORT ON EXECUTIVE COMPENSATION
Compensation Committee
The Compensation Committee (the "Committee") is responsible for determining
the compensation of Company Officers other than the salaries of the three most
senior Officers of the Company, which are determined by the Board of Directors
based upon the Committee's recommendation. The Committee also administers The
Louisiana Land and Exploration Company 1988 Long-Term Stock Incentive Plan.
The Committee is composed of five non-employee Directors: Messrs. Adams,
Rice, Smith, Taylor and Trost. Decisions and recommendations by the Committee
are made on the basis of an assessment of corporate performance and a review of
supporting data, including historical compensation data of other companies
11
<PAGE> 14
within the industry. The Committee regularly utilizes the services of
independent consultants specializing in executive compensation. Although actions
with respect to various programs are taken at different times, consideration of
each is made in the context of the overall compensation package provided by the
Company.
The Committee has reviewed the 1993 tax law changes and proposed Internal
Revenue Service regulations regarding the limitation on the deductibility of
annual non-excludible compensation payments in excess of one million dollars to
each of the five highest paid executive officers. The Committee believes that
compensation to be paid in 1995 will not exceed one million dollars in
non-excluded compensation to any of the named executives.
Compensation Philosophy
The Company's executive compensation program is designed to provide
competitive levels of pay and assist the Company in attracting and retaining
qualified executives. The Committee is committed to the objectives of linking
executive compensation to corporate performance and providing incentives which
align the interests of the Company executives with the interests of its
stockholders. This philosophy underlies executive compensation policies designed
to integrate rewards with the attainment of annual and long-term performance
goals, reward significant corporate performance and recognize individual
initiatives and achievements.
The Committee's objective is to set executive compensation at levels
competitive with others in the Company's industry. However, it is performance
which most significantly influences an individual executive's compensation
level. As a result, actual compensation levels in any particular year may be
above or below those of the Company's competitors, depending upon the Company's
performance. The executive compensation program is comprised of salary, annual
cash incentives and long-term, stock-based incentives. The following is a
discussion of each of the elements of the executive compensation program along
with a description of the decisions and actions taken by the Committee with
regard to 1994 compensation:
Base Salary
Salary ranges for each executive position are established by the Company
based on appropriate external comparisons, internal responsibilities and
relationships to other corporate positions. External comparisons are based upon
survey data compiled and analyzed by an executive compensation consultant firm
and include more than twenty (20) independent oil and gas companies. Most of the
companies identified in the Company's performance graph (the "Performance Peer
Group") are participants in the survey. The analysis and subsequent
recommendations are based on this survey rather than the Performance Peer Group
in order to be more statistically sound and representative of the industry. An
internal analysis of this data is conducted and the salary ranges for each
executive's position (minimum, midpoint, maximum) are recommended to the
Committee based upon a third quartile target of the appropriate survey data. The
midpoint of the salary range represents the "targeted" salary of the survey
data. The salary ranges developed are part of an executive salary program which
is reviewed with the Committee by the Chief Executive Officer. The program
recommendations are based on financial and operational results, individual
contributions to corporate performance and the historical compensation data of
other companies within the industry. Individual executives' salaries might be
set above or below the midpoint (target) of the salary range for their positions
depending upon the assessment of their contributions to corporate performance.
The Committee meets without the Chief Executive Officer to evaluate his
performance and develop recommendations as to adjustments to his salary. The
Committee's recommendations with respect to the salaries of the Company's top
three Executive Officers are presented to the Board of Directors.
The salaries paid to Mr. Steward and the other executives in 1994 were
approved in May 1993. Despite the successful acquisition efforts of 1993, senior
management felt that, in view of the difficult industry climate in May 1994,
salary action for executives would not be appropriate. The Compensation
Committee and Board concurred with senior management's recommendation.
Accordingly, there were no salary increases granted to executive management in
1994.
12
<PAGE> 15
Annual Incentive
The annual incentive plan is a cash bonus program. It is designed to reward
significant corporate accomplishments and individual initiatives which
contributed to the attainment of targeted goals relating to reserve replacement,
rates of return, return on working capital employed, increase in earnings per
share, stockholder return, and maintenance of the Company's credit rating. If
the Committee determines that corporate results are such that a bonus program is
warranted, then each executive's accomplishments are assessed as to their impact
on corporate results. The threshold for any payment is "significant
achievement"; specifically, contributions must be above and beyond normal
expectations. However, if the Committee determines that there have been
significant accomplishments which warrant recognition, then bonuses can be
awarded under the annual incentive plan whether or not all of the targeted goals
are achieved. The actual bonus amount received by an executive is determined as
a percent of salary within a pre-established range assigned to the position. The
target is based on the median of the target percentages used by companies who
participate in the same survey used for base salary data. The actual bonus can
range from 0 to 150% of the executive's assigned target percentage depending
upon performance. The Chief Executive Officer meets with the Committee to review
corporate results, the individual executives' contributions and his
recommendations as to annual incentive payments. The Committee evaluates the
Chief Executive Officer's contributions.
After reviewing overall corporate results as measured against the
pre-established goals set by the Committee, senior management determined that
the level of accomplishments necessary to warrant a recommendation of a general
bonus program was not met, although there were some notable accomplishments. The
Committee concurred that there should be no general bonus program based on 1994
performance.
Long-Term Incentives
The 1988 Long-Term Stock Incentive Plan (the "Plan") was approved by
stockholders in 1988 for the purpose of "promoting the interests of the Company
and its stockholders by (i) attracting and retaining executives and other key
employees of outstanding ability; (ii) strengthening the Company's capability to
develop, maintain and direct a competent management team; (iii) motivating
executives and other key employees, by means of performance-related incentives,
to achieve longer-range performance goals; (iv) providing incentive compensation
opportunities which are competitive with those of other major corporations; and
(v) enabling such employees to participate in the long-term growth and financial
success of the Company."
Although the Plan authorizes the use of a variety of stock related forms of
compensation, the Company's practice is to grant non-qualified stock options and
Performance Shares. Restricted Stock has been utilized to recognize exceptional
efforts. Previous awards were considered when determining whether or not to
grant additional options, Performance Shares or Restricted Stock in 1994. The
granting of stock options is normally considered annually except when special
events or circumstances warrant otherwise. The options are granted to employees
based upon their potential impact on corporate results and on their performance.
Options are granted at market value and vest over a two-year period. The maximum
number of options considered for a regular grant is calculated as a percentage
of salary divided by the current market value of the stock. The percentage of
salary selected is determined with the objective of placing the Company's
executives at the median level of opportunity relative to long-term (stock)
incentives among the companies in the same survey utilized for base salary data
and annual incentive opportunity percentage comparisons. The actual award amount
may range from 0 to 100% of the resulting number of options, depending upon the
assessment of the prior year's performance. Performance Shares are granted in
conjunction with option grants to Executive Officers of the Company. Grants are
made at a ratio of three (3) options for each Performance Share. The percentage
payout of the Performance Shares is based on results of a three-year cycle and a
minimum threshold must be met before any Performance Shares are earned. Target
awards for each of the executives
13
<PAGE> 16
are established at the beginning of each performance cycle and payout is based
upon the following performance criteria:
1. One-third based upon the Company's 3-year average working capital
return on total capital employed.
2. One-third based upon the Company's 3-year average increase in value
of proved reserves.
3. One-third based upon the Company's 3-year average total stockholder
return (stock appreciation plus dividend yield) relative to the Peer
Performance Group reviewed and approved annually by the Committee.
The actual percentage payout can range from 0% to 150% depending upon the level
of results obtained for each of the specified criteria.
In March 1994, a regular stock option grant was made to Executive Officers
and key employees of the Company based on 1993 accomplishments, specifically the
two major acquisitions of (1) NERCO Oil and Gas, Inc. and (2) T-Block reserves
in the North Sea. For Officers, the grant was comprised of the normal ratio of
three (3) options for each Performance Share.
Compensation Committee
Leland C. Adams
Victor A. Rice
Orin R. Smith
Arthur R. Taylor
Carlisle A.H. Trost
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Capital Stock
to the S&P 500 Index and to the LL&E Peer Group for the five year period ended
December 31, 1994. The LL&E Peer Group consists of companies who are engaged in
the same line of business as LL&E and were selected on the basis of
comparability of market capitalization. The LL&E Peer Group, which includes the
Company, Anadarko Petroleum Corporation, Apache Corporation, Burlington
Resources, Maxus Energy Corporation, Noble Affiliates, Inc., Oryx Energy Company
and Santa Fe Energy Resources, Inc., is the same as that used for performance
measurement in connection with executive compensation programs. The graph
assumes a $100 investment in each of the LL&E Capital Stock, the S&P 500 Index
and the LL&E Peer Group on December 31, 1989.
<TABLE>
<CAPTION>
Measurement Period LL&E Capital S & P 500 LL&E Peer
(Fiscal Year Covered) Stock Index Group
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 97.63 96.89 82.83
1991 74.76 126.42 70.29
1992 83.74 136.05 76.14
1993 100.43 149.76 86.81
1994 93.32 151.74 74.15
</TABLE>
II. 1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors of the Company unanimously approved and adopted the
1995 Stock Option Plan for Non-Employee Directors (the "1995 Plan"), to be
effective on May 11, 1995, the date of the 1995 Annual Meeting, subject to the
approval and ratification at the 1995 Annual Meeting by the holders of a
majority of the shares of Capital Stock present or represented and entitled to
vote at such meeting. The 1995 Plan is substantially similar to the 1990 Stock
Option Plan for Non-Employee Directors, which was approved by a majority of the
stockholders in 1990 and expired following the 1994 Annual Meeting.
In the opinion of the Board of Directors of the Company the 1995 Plan will
benefit the Company and its stockholders by (i) attracting and retaining the
services of experienced and knowledgeable non-employee Directors, (ii)
increasing the ownership interest in the Company of such non-employee Directors
whose services are considered essential to the Company's sustained success and
growth, and (iii) enabling such non-employee Directors to participate in the
long-term growth and financial success of the Company.
The full text of the 1995 Plan is set forth in Exhibit A to this Proxy
Statement. The following description of the 1995 Plan is qualified by reference
to the text thereof.
Eligibility. Members of the Board of Directors of the Company who are not
employees of the Company or of any affiliate of the Company ("Participants")
shall be eligible to participate in the 1995 Plan. Assuming
15
<PAGE> 18
each of the current non-employee Directors and nominees for Director is elected
at the Annual Meeting, eight Directors will be eligible to participate in the
1995 Plan.
Administration. The 1995 Plan is intended to be self-effectuating to the
maximum extent possible. Within the limitations of the 1995 Plan, the 1995 Plan
is administered by the Board of Directors of the Company, excluding the
Participants (the "Plan Administrators"), which may amend or discontinue the
1995 Plan, provided that the approval of stockholders will be required in order
to change the number of shares subject to issuance (other than as described
under Shares Subject to the 1995 Plan below, the class of non-employee Directors
eligible to participate in the 1995 Plan or the number of shares which may be
covered by any option granted to any Participant in the 1995 Plan (hereinafter
referred to as an "Option"), or to increase materially the benefits accruing to
Participants under the 1995 Plan. In no event may the 1995 Plan be amended more
than once every six months (except to comport with changes in the Internal
Revenue Code) to change the designation of the class of non-employee Directors
eligible to receive Options under the 1995 Plan, the timing of the grants for
any Participant, the amount of Options or other securities to be granted to
individual Participants, or the provisions governing the option price per share.
Shares Subject to the 1995 Plan. A maximum of 150,000 shares of Capital
Stock may be issued pursuant to the 1995 Plan. If an Option expires, or is
terminated or cancelled prior to its exercise, the shares covered by such Option
will be available for future grants. Either authorized but unissued shares or
treasury shares may be issued by the Company under the 1995 Plan. In the event
of any change in the outstanding shares of Capital Stock, by reason of any stock
dividend or stock split, recapitalization, merger, consolidation, spinoff,
combination or exchange of shares or other corporate change, or any
distributions to capital stockholders other than normal cash dividends,
appropriate adjustment will be made to the number of outstanding Options and the
option price thereof, and to the number or kind of shares reserved for issuance
under the 1995 Plan.
Transferability. No Options may be assigned or transferred, except by will
or the laws of descent and distribution. During the lifetime of a Participant,
Options may be exercised only by such Participant.
Terms, Conditions and Exercisability of Options. Under the 1995 Plan, each
Participant shall automatically be granted each year following the Annual
Meeting at which Directors are elected, an Option to purchase 2,500 shares of
Capital Stock. Assuming each of the current non-employee Directors and nominees
for Director is elected at the Annual Meeting, Options to purchase an aggregate
of 20,000 shares of Capital Stock will be granted to such Participants as a
group following the Annual Meeting. Options generally are exercisable in two
equal annual installments commencing on the first anniversary of the date of
grant, and may be exercised until their expiration ten years from the date of
grant (unless such Options expire at an earlier date following the Participant's
termination of service). If a Participant ceases to be a Director on account of
retirement (and such Director is otherwise eligible for benefits under the
Company's Directors' Retirement Plan), death or disability, or at or within two
years following a Change of Control of the Company (as defined for purposes of
the 1995 Plan), all of the Participant's Options shall become immediately and
fully exercisable.
The option price per share of Capital Stock payable upon the exercise of an
Option is the average of the high and low sales prices of Capital Stock as
reported for New York Stock Exchange -- Composite Transactions on the day the
Option is granted or, if Capital Stock did not trade on such date, on the first
day prior thereto on which Capital Stock was traded. The average of the high and
low prices of shares of Capital Stock as reported on the New York Stock
Exchange -- Composite Transactions on March 15, 1995, was $35 3/8 per share. The
option price may be paid in cash, in shares of Capital Stock owned by the
Participant, or in a combination of cash and shares owned by the Participant.
Change of Control. Upon and following a Change of Control (as defined for
purposes of the 1995 Plan), all Options will immediately become exercisable in
full, and a Participant will be entitled to elect (subject to the approval of
the Plan Administrators) to surrender such Options to the Company and receive a
cash payment equal to the excess of (a) the higher of (i) if a successful tender
offer accompanied the Change of Control, the highest gross amount of cash and
the fair market value of property or other consideration paid or payable for a
share acquired during such tender offer, or (ii) the highest average trading
price of Capital Stock
16
<PAGE> 19
during the 10-day period preceding the Participant's election, over (b) the
option price for the shares covered by the surrendered Options; provided that
such election will not be available unless the Option has been outstanding for
at least six months.
Duration of Plan. If the 1995 Plan is approved by the Company's
stockholders, it will remain in effect until terminated by action of the Plan
Administrators or the Company's stockholders, but such termination will not
affect the terms of any then outstanding Options.
Federal Income Tax Consequences. Options are non-qualified stock options
for federal income tax purposes. The grant of an Option under the 1995 Plan will
not result in the recognition of taxable income to a Participant or in a
deduction to the Company.
Upon exercise of an Option, a Participant will generally recognize
compensation income in an amount equal to the excess of the fair market value of
the Capital Stock on the date of exercise over the option price. However, if the
Option has been outstanding for less than six months on the date of exercise,
the taxable event will generally be deferred until the date which is six months
after the date of grant (with the taxable amount based on the excess of the fair
market value of the Capital Stock at that time over the option price), unless
the Participant files a special election with the Internal Revenue Service,
within 30 days after the date of exercise, to recognize compensation income at
the date of exercise in an amount equal to the excess of the fair market value
of the Capital Stock on the date of exercise over the option price. The Company
will be entitled to a deduction in an amount equal to the compensation income
recognized by the Participant.
Gain or loss upon a subsequent sale of any Capital Stock received upon the
exercise of an Option is taxed as capital gain or loss (long-term or short-term,
depending upon the holding period of the Capital Stock sold). The Participant's
tax basis in the stock acquired upon the exercise of an Option will be the sum
of the amount paid for the Capital Stock and the amount recognized as
compensation income on account of the Option exercise.
The following table sets forth summary information concerning the
hypothetical value of option grants for a single year to all eligible directors
under the Plan, based on the assumption that such grants had been made on May
13, 1994.
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING DOLLAR
GROUP OPTIONS(1) VALUE(2)
-------------------------------------------------------------- ---------- ---------
<S> <C> <C>
Non-employee directors as a group (eight persons)............. 20,000 $ 224,880
</TABLE>
- ---------------
(1) Number of shares acquirable with each annual option grant.
(2) Amounts shown in this column are based upon a hypothetical grant date of May
13, 1994, at the then current fair market value of the Company's Common
Stock ($41.25). The hypothetical dollar value was calculated by using the
same assumptions and pricing model that was used for employees in the
Option/SAR Grants in Last Fiscal Year table. The Company does not believe
that the values estimated by the model, or any other model, will necessarily
be indicative of the values to be realized by a director.
The affirmative vote of the holders of a majority of the shares of the
Capital Stock present or represented and entitled to vote is required to approve
the adoption of the 1995 Plan. As of the record date, Directors and Officers of
the Company had the power to vote approximately 1.2% of the outstanding shares
of Capital Stock. ALL THE DIRECTORS AND OFFICERS HAVE EXPRESSED THE INTENT TO
VOTE IN FAVOR OF THE ADOPTION OF THE 1995 PLAN AND THE BOARD OF DIRECTORS
RECOMMEND THAT THE STOCKHOLDERS VOTE FOR THE ADOPTION OF THE 1995 PLAN.
17
<PAGE> 20
OTHER MATTERS
No business other than the election of a Board of Directors of the Company
and the adoption of the 1995 Plan is expected to come before the meeting, but
should any other matters requiring a vote of stockholders arise, including any
question as to an adjournment of the meeting, the persons named on the enclosed
Proxy will vote thereon according to their best judgment in the interests of the
Company. All shares represented by valid Proxies, unless otherwise specified,
will be voted in the election of Directors for the nominees named above;
provided, however, that in the event any of such nominees should withdraw or
otherwise become unavailable for reasons not presently known, the persons named
as Proxies will vote for the election of other persons in their place.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick LLP as the firm of
independent accountants to audit the accounts of the Company and its
subsidiaries for the year ending December 31, 1995. This firm expects to have a
representative at the meeting who will have the opportunity to make a statement
and who will be available to answer questions.
STOCKHOLDER PROPOSALS
The Company will not consider including a stockholder's proposal for action
at its 1996 Annual Meeting of Stockholders in the proxy material to be mailed to
its stockholders in connection with such meeting unless such proposal is
received at the principal office of the Company no later than November 28, 1995.
By order of the Board of Directors,
/s/ FREDERICK J. PLAEGER, II
-----------------------------------
Frederick J. Plaeger, II
General Counsel and Corporate
Secretary
Dated: March 28, 1995
YOUR VOTE IS IMPORTANT. STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE
ANNUAL MEETING AND WHO WISH TO HAVE THEIR STOCK VOTED ARE REQUESTED TO SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
18
<PAGE> 21
EXHIBIT A
THE LOUISIANA LAND AND EXPLORATION COMPANY
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of the 1995 Stock Option Plan for Non-Employee Directors (the
"Plan") of The Louisiana Land and Exploration Company (the "Company") is to
promote the interests of the Company and its stockholders by attracting and
retaining the services of experienced and knowledgeable non-employee directors,
to increase the ownership interest in the Company of such non-employee directors
whose services are considered essential to the Company's sustained success and
growth and to enable such non-employee directors to participate in the long-term
growth and financial success of the Company.
2. PARTICIPATION IN THE PLAN
Members of the Board of Directors of the Company who are not employees of
the Company or of any affiliate of the Company shall be participants in the Plan
("Participants").
3. ADMINISTRATION
(a) This Plan shall be, to the maximum extent possible, self-effectuating.
Within the limitations of the Plan, the Board of Directors of the Company,
excluding the Participants (the "Plan Administrators"), shall administer the
Plan and interpret, construe and implement the provisions of the Plan. The Plan
Administrators may suspend, revise, amend or discontinue the Plan, provided that
without approval of the stockholders, no revision or amendment shall change the
number of shares subject to the Plan (except as provided in Section 4), the
designation of the class of non-employee directors eligible to receive options,
or the number of shares that may be covered by option grants to any Participant
under the Plan, or materially increase the benefits accruing to Participants
under the Plan. The Plan shall be interpreted and administered at all times in
compliance with all applicable laws, rules and regulations. The Plan
Administrators' decisions are binding upon all parties.
(b) Except to comport with changes in the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), in no event shall the Plan be amended or
revised more than once every six months to change (i) the designation of the
class of non-employee directors eligible to receive options under the Plan; (ii)
the timing of the grants for any Participant; (iii) the amount of options or
other securities to be granted to individual Participants, or (iv) the
provisions governing the option price per share. No discretion concerning
decisions regarding the Plan shall be afforded to any person who is not a
disinterested person.
4. SHARES RESERVED
(a) There shall be reserved for issuance pursuant to the Plan a total of
one hundred fifty thousand (150,000) shares of the Company's capital stock, $.15
par value ("Capital Stock"). When options are exercised, the Company may either
issue unissued shares of Capital Stock or transfer issued shares of Capital
Stock held in its treasury. If an option expires, or is terminated or cancelled
prior to its exercise, such shares shall be available for future grants under
the Plan.
(b) In the event of any change in the outstanding shares of Capital Stock
by reason of any stock dividend or stock split, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other corporate
change, or any distributions to capital stockholders other than normal cash
dividends, the Plan Administrators shall make such substitution or adjustment,
if any, as they deem to be equitable, as to (i) the number or kind of shares of
Capital Stock or other securities issued or reserved for issuance pursuant to
the Plan, including the number of outstanding stock options and the option price
thereof; or (ii) other assets provided to Participants pursuant to the Plan. Any
such substitution or adjustment by the Plan Administrators shall be made with a
view toward preserving the economic benefit of the options to the Participant.
(c) No fractional shares of Capital Stock shall be issued. In lieu thereof,
the cash value of such fraction shall be paid.
<PAGE> 22
5. TERMS, CONDITIONS AND FORMS OF OPTIONS
Each Participant will be automatically granted each year on the first
trading day following the Company's Annual Meeting of Stockholders at which
directors are elected, an option to purchase two thousand five hundred (2,500)
shares of Capital Stock. To the extent there are insufficient shares available
for grant, the options to all Participants for that year will be reduced
proportionately.
(a) Non-statutory stock options. All options granted under the Plan shall
be non-statutory options not entitled to special tax treatment under Section 422
of the Code.
(b) Option price. The option price per share of Capital Stock payable upon
the exercise of each option shall be the Fair Market Value of the Capital Stock
on the day the option is granted. For purposes of this Plan, Fair Market Value
shall be the average of the high and low sales prices of the Capital Stock as
reported for the New York Stock Exchange -- Composite Transactions on that day
or, if the stock did not trade on the applicable date, then the average of the
high and low sales prices on the first date prior thereto on which the stock was
traded ("Fair Market Value").
(c) Payment. Upon exercise, the option price shall be paid (i) in cash;
(ii) in Capital Stock having a Fair Market Value on the date of exercise equal
to such option price; or (iii) in a combination of cash and Capital Stock.
Payment in shares of Capital Stock may be accomplished by actual tendering or
through attestation.
(d) Exercisability. Subject to Sections 5(e) and 6 hereof, options shall
become exercisable in two equal annual installments commencing on the first
anniversary of the date of grant. Each option granted under the Plan shall
expire ten years from the date of grant.
(e) Termination of Service. If a Participant ceases to be a director, (i)
due to his retirement under circumstances entitling him to benefits under the
Company's Retirement Plan for Directors; (ii) due to his death or disability; or
(iii) at the time of or within two years following a Change of Control, as
defined in Section 6 hereof (other than a termination for cause), all of his
outstanding options, to the extent not already exercisable in full, shall be
immediately and fully exercisable at the time of his termination of service. In
the event of a cessation of service as a director pursuant to the preceding
sentence other than by reason of death, the Participant's options may be
exercised by the Participant until their expiration date determined pursuant to
the last sentence of Section 5(d) hereof. If the Participant ceases to be a
director due to his death or dies following cessation of his service as a
director under circumstances described in the first sentence of this Section
5(e), the Participant's options shall be exercisable for a one-year period
following the Participant's death, but not beyond the expiration date of the
applicable option pursuant to the last sentence of Section 5(d) hereof. If a
Participant becomes an employee, service as an employee shall be treated as
though service as a Participant, except that such director will no longer be
eligible for future option grants under the Plan. If a Participant's service as
a director ceases as a result of a failure to be reelected (whether or not such
Participant was nominated for reelection) (other than under circumstances
described in the first sentence of this Section 5(e)), all options shall remain
exercisable, to the extent then exercisable, for a period of three months
following such cessation, but not beyond the expiration date of the applicable
option pursuant to the last sentence of Section 5(d) hereof. If the
Participant's service as a director ceases as a result of a voluntary
termination (other than under circumstances described in the first sentence of
this Section 5(e)) or for cause, all such options shall be cancelled on the date
his service ceases. For purposes of this Section 5(e), "disability" shall mean
long-term disability as determined under the principles that apply under the
Company's Group Long Term Disability Plan then in effect. In addition, for
purposes of this Section 5(e), a Participant shall be deemed to have been
terminated for cause only if he is terminated on account of an act of fraud or
intentional misrepresentation, or on account of an act of embezzlement,
misappropriation, or conversion of assets or opportunities of the Company or any
of its subsidiaries.
(f) Non-transferability of options. No option shall be assignable or
transferable except by will or the laws of descent and distribution, and no
right or interest of any Participant shall be subject to any lien, obligation or
liability of the Participant. During the lifetime of the Participant, options
may be exercised only by the Participant. At the request of the Participant,
shares of Capital Stock received upon exercise of an
2
<PAGE> 23
option may be issued in or transferred into the name of the Participant and
another person jointly with the right of survivorship.
(g) Withholding. The Participant may be required to pay to the Company the
amount of any taxes that may be required to be withheld with respect to a stock
option exercise, or, in lieu thereof, the Company shall have the right to retain
the number of shares of Capital Stock whose Fair Market Value equals the amount
required to be withheld.
6. CHANGE OF CONTROL
In order to maintain the Participants' rights in the event of Change of
Control of the Company, as hereinafter defined, upon a Change of Control, (i)
each option will immediately become exercisable in full; and (ii) each option
will provide the Participant with the right to elect, subject to the approval of
the Plan Administrators and the applicable requirements of Rule 16b-3 or any
successor rule promulgated under the Securities Exchange Act of 1934, as amended
from time to time, to surrender the option to the Company and receive in payment
therefor an amount in cash equal to the excess of the higher of (a) if a
successful tender offer accompanied the Change of Control, the highest gross
amount of cash and the fair market value of property or other consideration paid
or payable per share for the shares acquired during such tender offer or (b) the
highest Fair Market Value of the shares during the ten days preceding exercise
of this election, over the purchase price for the shares covered by the option
as to which the surrender is made. The election described in (ii) above may be
made during the period beginning on the first day following the Change of
Control and ending on the thirtieth day following such date; provided, however,
that no election may be made after the option's expiration or termination or
within six months from grant. A "Change of Control" shall be deemed to have
occurred if (i) absent prior approval by the Plan Administrators, thirty percent
(30%) or more of the Company's outstanding securities entitled to vote in
elections of directors shall be beneficially owned, directly or indirectly, by
any person, entity or group; or (ii) individuals currently constituting the
Board of Directors (or the successors of such individuals nominated by a Board
of Directors on which such individuals or such successors constituted a
majority) cease to constitute a majority of the Board of Directors.
7. LIMITATION OF RIGHTS
A Participant shall have no rights as a stockholder with respect to the
shares covered by his options until certificates for such shares are issued.
Nothing contained in this Plan (or in any other document related to this Plan or
to any option) shall confer upon any Participant the right to continue to serve
as a director of the Company.
8. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective immediately on the date of the Company's
Annual Meeting of Stockholders at which the Plan is approved and, as of the
first trading day following that date, the first grants will be made to
Participants. The Plan shall remain in effect until terminated by action of the
Plan Administrators or the Company's stockholders, but such termination shall
not affect the terms of any then outstanding options.
9. GOVERNING LAW
The validity, construction, interpretation, and effect of the Plan and
rights relating to the Plan shall be determined solely in accordance with the
laws of the State of Maryland.
3
<PAGE> 24
CAHILL GORDON & REINDEL
80 Pine Street
New York, New York 10005
March 28, 1995
Re: The Louisiana Land and Exploration
Company -- 1995 Proxy Material
Dear Sir or Madam:
On behalf of and as counsel for the Louisiana Land and Exploration
Company, a Maryland corporation (the "Company"), there is transmitted herewith,
via the EDGAR system, for filing pursuant to Rule 14a-6(b) of the General Rules
and Regulations under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), the Company's definitive Notice of Annual Meeting of
Stockholders and Proxy Statement and the definitive Form of Proxy, each in the
EDGAR version of the form in which it is being sent today to stockholders of
the Company entitled to vote at its forthcoming Annual Meeting of Stockholders.
Payment of the required filing fee in the amount of $125.00 as prescribed by
Rule 14a-6(i)(1) of the General Rules and Regulations under the Exchange Act
was made by wire transfer earlier today.
Pursuant to Rule 14a-3(c) of the General Rules and Regulations under
the Exchange Act seven copies of the Company's Annual Report to Stockholders
for 1994 being sent today to stockholders of the Company with the definitive
proxy materials referred to above have been filed with the Securities and
Exchange Commission today under separate cover.
Any questions with respect to this filing should be directed to the
undersigned at (212) 701-3064.
Very truly yours,
/s/ SAHIR C. SURMELI
Sahir C. Surmeli
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street N.W.
Washington, D.C. 20549
Attention: Document Control -- EDGAR
cc: Frederick J. Plaeger, II, Esq.
John Schuster, Esq.
<PAGE> 25
PROXY
THE LOUISIANA LAND AND EXPLORATION COMPANY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE LOUISIANA LAND
AND EXPLORATION COMPANY
Proxy for the Annual Meeting of Stockholders at 9 o'clock A.M.,
Central Daylight Time, May 11, 1995; Pan American Life
Auditorium, 11th Floor, Pan American Life Center,
601 Poydras Street, New Orleans, Louisiana
The undersigned hereby appoints H. LEIGHTON STEWARD, RICHARD A.
BACHMANN AND JOHN F. GREENE, and each of them, with power of substitution, as
Proxies of the undersigned to vote all shares of stock which the undersigned is
entitled in any capacity to vote at the above-stated Annual Meeting and at all
adjournments and postponements thereof in the election of directors, the
adoption of the 1995 Stock Option Plan for Non-Employee Directors and, in their
discretion, upon such other matters as may properly be brought before the
meeting. This proxy revokes all prior proxies given by the undersigned.
All properly signed proxies will be voted as directed. ALL ABSTAIN
votes will be counted in determining the existence of a quorum at the Annual
Meeting, but will not be voted in favor of the proposal as to which such
ABSTAIN vote was directed. If no direction is made, this proxy will be voted
FOR the election of the director nominees designated on the reverse side and
FOR the adoption of the 1995 Stock Option Plan for Non-Employee Directors.
Receipt of the Notice of Annual Meeting and Proxy Statement is hereby
acknowleded.
(continued and to be signed on reverse side)
<PAGE> 26
<TABLE>
<S> <C>
/ X / Please mark your
votes as in this example
THE DIRECTORS RECOMMEND A VOTE FOR ITEMS 1 AND 2.
1. Election of Directors FOR WITHHOLD Richard A. Bachmann, John F. Greene, Robert E. Howson,
/ / / / Eamon M. Kelly, Kenneth W. Orce, Victor A. Rice,
Orin R. Smith, H. Leighton Steward, Arthur R. Taylor,
W.R. Timken, Jr. and Carlisle A.H. Trost.
(You may withhold a vote for any individual nominee
by marking the "FOR" box and writing that nominee's
name on the line provided below)
___________________________________________________
2. Adoption of the 1995 Stock Option Plan for
Non-Employee Directors
FOR AGAINST ABSTAIN
/ / / / / /
Please sign, date and mail this proxy card promptly using the enclosed
envelope. Joint partners should EACH sign. Please sign EXACTLY as
your name(s) appear(s) on this card. When signing as attorney,
trustee, executor, administrator, guardian or corporate officer,
please give your FULL title below.
_____________________________________________________________________
_____________________________________________________________________
SIGNATURE(S) DATE
</TABLE>
