<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
APACHE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
APACHE CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
{APACHE LOGO}
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
March 29, 1994
FELLOW SHAREHOLDERS:
You are cordially invited to attend the annual meeting of shareholders of
Apache Corporation to be held on Thursday, May 5, 1994, at 10:00 a.m. (Houston
time) at the Doubletree Hotel at Post Oak, 2001 Post Oak Boulevard, Houston,
Texas.
At the annual meeting, shareholders will be asked to vote upon the election
of four directors to the board of directors and will transact all other business
that may properly come before the meeting. In addition to the scheduled items of
business, management will present a brief report to shareholders on the
Company's results and direction. I hope you will be able to attend.
Whether or not you plan to be present at the annual meeting, please be sure
to date, sign and promptly return the enclosed proxy card or voting instruction
card, using the postage-paid business reply envelope provided, to ensure that
your shares will be voted in accordance with your wishes.
{SIGNATURE}
RAYMOND PLANK
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
APACHE CORPORATION
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
TO THE SHAREHOLDERS OF APACHE CORPORATION:
The 1994 annual meeting of shareholders of Apache Corporation, a Delaware
corporation, will be held on Thursday, May 5, 1994, at 10:00 a.m. (Houston
time), at the Doubletree Hotel at Post Oak, 2001 Post Oak Boulevard, Houston,
Texas, for the following purposes:
1. To elect four directors to serve until the 1997 annual meeting of
shareholders; and
2. To transact all other business that may properly come before the
meeting or any adjournment thereof.
The board of directors of the Company has fixed the close of business on
March 17, 1994, as the record date for the determination of shareholders
entitled to notice of, and to vote at, the annual meeting. Only holders of
record of the Company's common stock at the close of business on the record date
are entitled to notice of, and to vote at, the annual meeting. The Company's
stock transfer books will not be closed. A complete list of shareholders
entitled to vote at the annual meeting will be available for examination by any
Apache shareholder at 2000 Post Oak Boulevard, Suite 100, Houston, Texas, for
purposes pertaining to the annual meeting, during normal business hours for a
period of ten days prior to the meeting.
You are cordially invited to attend the annual meeting. Whether or not you
expect to attend in person, you are urged to promptly sign, date and mail the
enclosed proxy card so that your shares may be represented and voted at the
annual meeting. You may revoke your proxy by following the procedures set forth
in the accompanying proxy statement.
By order of the Board of Directors
APACHE CORPORATION
{SIGNATURE}
ZURAB S. KOBIASHVILI
Secretary
Houston, Texas
March 29, 1994
<PAGE> 4
APACHE CORPORATION
SUITE 100, ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD
HOUSTON, TEXAS 77056-4400
March 29, 1994
PROXY STATEMENT
This proxy statement is being furnished in connection with the solicitation
of proxies by and on behalf of the board of directors of Apache Corporation (the
"Company"), a Delaware corporation, to be used at the 1994 annual meeting of
shareholders and at any adjournment or postponement thereof. This proxy
statement and the accompanying form of proxy were first mailed to the holders of
the Company's common stock, par value $1.25 per share, on or about March 29,
1994.
PURPOSE OF ANNUAL MEETING
Shareholders of the Company are scheduled to take action on the following
items at the annual meeting:
1. The election of four directors to serve until the 1997 annual
meeting; and
2. The transaction of all other business that may properly come before
the meeting or any adjournment thereof.
As of the date of this proxy statement, the Company is not aware of any
business to come before the annual meeting other than the election of directors.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
votes represented by the outstanding shares of common stock is necessary to
constitute a quorum at the annual meeting. The record date for determination of
shareholders entitled to notice of and to vote at the annual meeting is the
close of business on March 17, 1994. As of the record date, there were
61,223,553 shares of common stock issued and outstanding. Holders of shares of
common stock are entitled to one vote per share at the annual meeting and are
not allowed to cumulate votes in the election of directors. In accordance with
Delaware law, a shareholder entitled to vote for the election of directors can
withhold authority to vote for all nominees for directors or can withhold
authority to vote for certain nominees for directors.
All shares of common stock represented by properly executed proxies will be
voted in accordance with the instructions indicated unless the proxies have been
previously revoked. Proxies on which no voting instructions are indicated will
be voted FOR the election of the nominees for directors and in the best judgment
of the proxy holders on any other matter that may properly come before the
annual meeting.
REVOCABILITY OF PROXY
Shareholders have the unconditional right to revoke their proxies at any
time prior to the voting of their proxies at the annual meeting by (i) filing a
written revocation with the corporate secretary of the Company at the address
set forth above, (ii) giving a duly executed proxy bearing a later date, or
(iii) attending the annual meeting and voting in person. Attendance by
shareholders at the annual meeting will not of itself revoke their proxies.
SOLICITATION OF PROXIES
Solicitation of proxies for use at the 1994 annual meeting may be made in
person or by mail, telephone or telegram, by directors, officers and regular
employees of the Company. These persons will receive no special
<PAGE> 5
compensation for any solicitation activities. The Company has requested banking
institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of the Company common
stock for whom they hold of record, and the Company will, upon request,
reimburse reasonable forwarding expenses. The Company has retained Georgeson &
Company Inc. to assist in soliciting proxies from brokers, bank nominees and
other institutional holders for a fee not to exceed $10,000, plus expenses. All
costs of the solicitation will be borne by the Company.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
The Company's bylaws provide that the board of directors shall consist of a
minimum of seven and a maximum of 13 directors. The Company's certificate of
incorporation provides that as nearly as numerically possible, one-third of the
directors shall be elected at each annual meeting of shareholders. Unless
directors earlier resign or are removed, their terms are for three years, and
continue thereafter until their successors are elected and qualify as directors.
The affirmative vote of the holders of a plurality of the shares of common stock
present, in person or represented by proxy, at the annual meeting is required to
elect directors to the board of directors.
The terms of incumbent directors Frederick M. Bohen, Virgil B. Day, Stanley
K. Hathaway and Joseph A. Rice will expire at the 1994 annual meeting. Each of
Messrs. Bohen, Day, Hathaway and Rice has been recommended by the Company's
nominating committee and nominated by the board of directors for election by the
shareholders to an additional three-year term. If elected, each nominee will
serve commencing upon his election and qualification until the annual meeting of
shareholders in May 1997. Unless otherwise instructed, all proxies will be voted
in favor of these nominees. If one or more of the nominees is unwilling or
unable to serve, the proxies will be voted only for the remaining named
nominees. Proxies cannot be voted for more than four nominees. The board of
directors knows of no proposed nominee for director who is unwilling or unable
to serve.
INFORMATION ABOUT NOMINEES FOR
ELECTION AS DIRECTORS
Certain biographical information, including principal occupation and
business experience during the last five years, of each nominee for director is
set forth below. Unless otherwise stated, the principal occupation of each
nominee has been the same for the past five years.
<TABLE>
<CAPTION>
DIRECTOR
SINCE
--------
<S> <C>
FREDERICK M. BOHEN, 56, has been the executive vice president and chief operating 1981
officer of The Rockefeller University since 1990. He was senior vice president of
Brown University from 1983 to 1990, and served as vice president of finance and
operations at the University of Minnesota from 1981 to 1983. From 1977 to 1981,
Mr. Bohen worked with the U.S. Department of Health, Education and Welfare as
assistant secretary for management and budget. He is a director of the Student
Loan Marketing Association, a director of Oppenheimer and Company, and also a
director of the Mexico Equity Income Fund, Inc. Mr. Bohen is chairman of the
management development and compensation committee.
VIRGIL B. DAY, 78, has been a senior partner in the law firm of Vedder, Price, 1974
Kaufman, Kammholz & Day since 1974. He was the first labor counsel for General
Electric Company, where he subsequently held various management positions
involving employee and union relations, public affairs and government relations.
From 1961 until 1973, Mr. Day was a vice president of General Electric Company.
In 1971, he became chairman of the industry members of the U.S. Pay Board. Mr.
Day is a member of the management development and compensation committee.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
SINCE
--------
<S> <C>
STANLEY K. HATHAWAY, 69, has been a senior partner in the law firm of Hathaway, 1977
Speight, Kunz & Trautwein since 1976. From June through October 1975, he served
as the U.S. Secretary of the Interior. Mr. Hathaway was Governor of the State of
Wyoming from 1967 to 1975. He is a director of PacifiCorp and Key Bank-Shares of
Wyoming. Mr. Hathaway is chairman of the audit committee.
JOSEPH A. RICE, 69, retired in 1988 as chairman of the board, chief executive 1989
officer and a director of Irving Trust Company and Irving Bank Corporation,
having served in those capacities since 1984. From 1975 to 1984, he served as
president, chief operating officer and a director of those organizations. Mr.
Rice serves as a director of Avon Products, Inc. and Thiokol Corporation. Mr.
Rice is a member of the management development and compensation committee.
</TABLE>
CONTINUING DIRECTORS
Certain biographical information, including principal occupation and
business experience during the last five years, for each member of the board of
directors whose term is not expiring at the 1994 annual meeting is set forth
below. Unless otherwise stated, the principal occupation of each nominee has
been the same for the past five years.
<TABLE>
<CAPTION>
DIRECTOR EXPIRES
SINCE TERM
-------- -------
<S> <C> <C>
RANDOLPH M. FERLIC, 57, is retired. He was a practicing thoracic and 1986 1996
cardiovascular surgeon until his retirement in December 1993. He is the
founder of Surgical Services of the Great Plains, P.C., and served as its
president from 1974 to 1991. Dr. Ferlic is a member of the audit
committee, the executive committee, and the nominating committee.
EUGENE C. FIEDOREK, 62, has been president and managing director of EnCap 1988 1995
Investments L.C., an energy investment banking firm, Dallas, Texas, since
1988. For the ten years prior to 1988, Mr. Fiedorek was the managing
director of the Energy Banking Group of First RepublicBank Corp. in
Dallas, Texas. Mr. Fiedorek is a member of the audit committee.
W. BROOKS FIELDS, 75, is retired. He was president and chief executive 1973 1995
officer of Minnesota Racetrack, Inc., also known as Canterbury Downs, a
racetrack development company, from 1984 until 1990. Mr. Fields was
chairman of the board of Scottland, Inc., for which a plan of
reorganization pursuant to Chapter 11 of the Bankruptcy Code was
confirmed on June 14, 1990. From 1955 until 1984, he was the executive
vice president and a director of Burdick Grain Company, a grain
merchandising company. Mr. Fields is a member of the executive committee
and the nominating committee.
ROBERT V. GISSELBECK, 70, is the founder of Gisselbeck & Associates, a real 1982 1996
estate development company in Naples, Florida, and has served as its
president since 1960. Mr. Gisselbeck is a member of the audit committee.
WILLIAM J. JOHNSON, 59, is president and chief operating officer of the 1991 1996
Company and has served in that capacity since 1991. He was president,
chief executive officer and a director of TEX/CON Oil and Gas Company,
Houston, Texas, from 1989 to 1991, and was president-USA of BP
Exploration from 1987 through 1989. Mr. Johnson is a director of The
Western Company of North America and of Camco International.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR EXPIRES
SINCE TERM
-------- -------
<S> <C> <C>
JOHN A. KOCUR, 66, is engaged in the private practice of law. He served as 1977 1996
vice chairman of the board of directors of the Company from 1988 until
1991. Mr. Kocur was employed by the Company from 1969 until his
retirement in 1991, and served as president from 1979 until 1988. He is
chairman of the executive committee, chairman of the nominating
committee, and is a member of the management development and compensation
committee.
RAYMOND PLANK, 71, has been chairman of the board and chief executive 1954 1995
officer of the Company since 1979, and was president from 1954 until
1979. Mr. Plank is a member of the executive committee and a member of
the nominating committee.
JAY A. PRECOURT, 56, is a director, vice chairman of the board and chief 1992 1995
executive officer of Tejas Gas Corporation, an intrastate natural gas
pipeline company, and has served in that capacity since 1985. Until 1988,
Mr. Precourt was president of the Energy Related Group and senior
executive vice president of Hamilton Oil Corporation. He is a director of
Dresser Industries, Inc. and of Founders Funds, Inc. Mr. Precourt is a
member of the executive committee and the nominating committee.
</TABLE>
INFORMATION WITH RESPECT TO STANDING COMMITTEES OF
THE BOARD OF DIRECTORS AND MEETINGS
The board of directors held five meetings during 1993. The board of
directors has an audit committee, a management development and compensation
committee, an executive committee, and a nominating committee. Actions taken by
any of these committees are reported to the board of directors at the next
meeting. All directors attended at least 75 percent of the meetings of the board
of directors and of all committees of which they were members.
The audit committee members are Stanley K. Hathaway, chairman, Randolph M.
Ferlic, Eugene C. Fiedorek and Robert V. Gisselbeck. The audit committee reviews
with the independent accountants and internal auditors of the Company their
respective audit and review programs and procedures, and the scope and results
of their audits. It also examines professional services provided by the
Company's independent accountants and evaluates their costs and related fees.
Additionally, the audit committee reviews the Company's financial statements and
the adequacy of the Company's system of internal accounting controls. The audit
committee makes recommendations to the board of directors concerning the
Company's independent accountants and their engagement or discharge. During the
last fiscal year there were four meetings of the audit committee.
The management development and compensation committee members are Frederick
M. Bohen, chairman, Virgil B. Day, John A. Kocur and Joseph A. Rice. The
committee reviews the Company's management resources and structure, administers
the Company's compensation programs and retirement and stock purchase plans, and
administers and grants options under the Company's stock option plans. The
committee held five meetings during 1993.
The executive committee members are John A. Kocur, chairman, Randolph M.
Ferlic, W. Brooks Fields, Raymond Plank and Jay A. Precourt. The executive
committee is vested with the authority to exercise the full power of the board
of directors, within the policies established by the board of directors, in the
intervals between meetings of the board of directors. In addition to the general
authority vested in it, it may be vested with specific power and authority by
resolution of the board of directors. The executive committee did not meet
during 1993.
The nominating committee members are John A. Kocur, chairman, Randolph M.
Ferlic, W. Brooks Fields, Raymond Plank and Jay A. Precourt. The duties of the
nominating committee include recommending to the board of directors the slate of
director nominees submitted to the shareholders for election at the annual
4
<PAGE> 8
meeting, and proposing candidates to fill vacancies on the board of directors.
The nominating committee met two times during 1993. Shareholders wishing to
recommend candidates for consideration by the nominating committee should
forward written recommendations, together with appropriate biographical
information and details of qualifications, to the corporate secretary of the
Company. In order to be considered, recommendations must be received by the
deadline for submitting shareholder proposals set forth under the heading
"Shareholder Proposals."
DIRECTOR COMPENSATION
Employee directors do not receive additional compensation for serving on
the board of directors. Non-employee directors were paid an annual retainer of
$20,000 plus $1,000 for each board of directors or committee meeting attended
during 1993, together with reimbursement of expenses incurred in attending
meetings. Non-employee directors receive an annual retainer of $2,000 for each
committee of which they are members and the chairmen of each committee receive
an additional $4,000 annually for chairing their respective committees.
An incentive compensation plan for directors was adopted in May 1989, under
which non-employee directors were each awarded 10,000 compensation units upon
becoming a director or upon effectiveness of the plan if already a director. The
plan was terminated in May 1992, subject to the outstanding rights of directors
thereunder, and no additional grants will be made under the plan. Vesting in the
compensation units occurred at a rate of one-third per year, and vesting credit
was given for time served on the board prior to the creation of the plan. Three
years from the date of grant or upon retirement from the board, whichever first
occurs, directors receive a per-unit amount equal to any increase in the market
price of the Company's stock since the date of the award. While outstanding,
compensation units accumulate dividend equivalent amounts each time a dividend
was paid on the Company's common stock, and these dividend equivalent amounts
are reinvested in additional compensation units. Only one group of compensation
units, awarded to Mr. Kocur in 1991, remains outstanding and is scheduled to
settle in 1994.
Non-employee directors are eligible to participate in the Apache
Corporation Director's Deferred Compensation Plan under which they can elect to
defer receipt of all or any portion of their retainers or meeting fees. Deferred
amounts are maintained in separate accounts and are credited interest equal to
the Company's rate of return on its short-term marketable securities. Amounts
are paid out upon the director's retirement in two lump sums or ratably over ten
years. One director elected to defer a portion of his fees during 1993.
An unfunded retirement plan for non-employee directors was established in
December 1992. The plan is administered by the management development and
compensation committee and pays retired non-employee directors benefits equal to
two-thirds of the annual retainer for a period based on length of service.
Payments are made on an annual basis, for a maximum of ten years, and are paid
from the general assets of the Company. In the event of the director's death
prior to receipt of all benefits payable under the plan, the remaining payments
are made to the director's surviving spouse. There were no benefits paid under
this plan during 1993.
In February 1994, the Company established an equity compensation plan for
non-employee directors which is administered by the management development and
compensation committee. Each non-employee director will be awarded 1,000
restricted shares of the Company's common stock every five years, beginning July
1, 1994. The shares will vest at a rate of 200 shares annually, with unvested
shares forfeited upon retirement from the board. Awards are made from treasury
stock and are automatic and non-discretionary. New directors will receive
1,000-share awards on the July 1 next succeeding their election to the board.
All shares awarded under the plan have full dividend and voting rights. The plan
expires July 1, 2009, with a maximum of 50,000 shares that may be awarded during
the term of the plan.
Mr. Kocur, who was an executive officer of the Company until his retirement
in 1991, also served the Company in a non-executive, consulting capacity during
1993. See "Compensation Committee Interlocks and Insider Participation."
5
<PAGE> 9
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth, as of February 28, 1994, the beneficial
ownership of each director or nominee for director of the Company, the chief
executive officer, the four other most highly compensated executive officers,
one former executive officer, and all directors and executive officers of the
Company as a group. All ownership information is based upon filings made by such
persons with the Securities and Exchange Commission ("Commission") or upon
information provided to the Company.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE PERCENT
OF OF
BENEFICIAL CLASS
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING
- ------------------ --------------------------------------------- ------------ -----------
<S> <C> <C> <C>
Common Stock,
par value $1.25 Frederick M. Bohen........................... 2,833 *
Virgil B. Day................................ 124,006(2)(3) *
Randolph M. Ferlic........................... 214,213(4) *
Eugene C. Fiedorek........................... 3,000 *
W. Brooks Fields............................. 25,788(5) *
Robert V. Gisselbeck......................... 33,893 *
Stanley K. Hathaway.......................... 5,721 *
William J. Johnson........................... 112,641(7)(8) *
John A. Kocur................................ 41,472(6)(8) *
Raymond Plank................................ 170,868(7)(8) *
Jay A. Precourt.............................. 2,000 *
Joseph A. Rice............................... 4,000 *
G. Steven Farris............................. 43,219(7)(8) *
Mark A. Jackson.............................. 27,696(7)(8) *
Bijan Mossavar-Rahmani....................... 26,073(8) *
George J. Morgenthaler....................... 1,302 *
All officers and directors as a group
(including the above-named persons).......... 1,031,430(7)(8) 1.68
</TABLE>
- ---------------
* Represents less than one percent of the outstanding shares.
(1) All ownership is sole and direct unless otherwise noted. Inclusion of any
shares not owned directly shall not be construed as an admission of
beneficial ownership. Fractional shares have been rounded to the nearest
whole share.
(2) Includes 1,100 shares owned by Mrs. Day.
(3) Includes 1,000 shares owned by Mr. Day's grandchildren.
(4) Includes 12,500 shares owned indirectly by Dr. Ferlic through his interest
in Surgical Services of the Great Plains, P.C. Employee Benefit Trust, and
5,500 shares owned directly by Ferlic Investments, Ltd. in which Dr. Ferlic
owns a 36-percent interest.
(5) Includes 10,368 shares owned by Mrs. Fields.
(6) Includes 3,940 shares owned by Mrs. Kocur.
(7) Includes the following shares issuable upon the exercise of outstanding
stock options which are exercisable within 60 days: Mr. Johnson -- 108,750;
Mr. Plank -- 2,500; Mr. Farris -- 15,875; Mr. Jackson -- 18,750; and all
officers and directors as a group -- 208,500.
(8) Includes units held by the trustee of the Company's 401(k)
Retirement/Savings Plan equivalent to the following shares: Mr. Johnson --
2,891; Mr. Kocur -- 2,342; Mr. Plank -- 3,046; Mr. Farris -- 12,844; Mr.
Jackson -- 4,946; Mr. Mossavar-Rahmani -- 6,158; and all officers and
directors as a group -- 71,696.
6
<PAGE> 10
The following table sets forth the only persons known to the Company, as of
February 28, 1994, to be the owner of more than five percent of the Company's
common stock, according to reports filed with the Commission:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE PERCENT
OF OF
BENEFICIAL CLASS
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ------------------ ---------------------------------------------- ---------- -----------
<S> <C> <C> <C>
Common Stock,
par value $1.25 FMR Corp...................................... 7,682,752(1) 12.55
82 Devonshire Street
Boston, MA 02109-3614
The Equitable Companies Incorporated.......... 5,488,281(2) 8.96
787 Seventh Avenue
New York, NY 10019
First Interstate Bancorp...................... 3,451,515(3) 5.64
633 West 5th Street
Los Angeles, CA 90071
</TABLE>
- ---------------
(1) According to information contained in a Schedule 13G filed with the
Commission, dated February 11, 1994.
(2) According to information contained in a Schedule 13G filed with the
Commission, dated February 9, 1994.
(3) According to information contained in a Schedule 13G filed with the
Commission, dated February 11, 1994.
In February 1990, Bijan Mossavar-Rahmani, president and a former employee
of Apache International, Inc., was granted 250 shares of Apache International's
common stock, representing five percent of the outstanding shares of Apache
International, pursuant to the terms of the Apache International Common Stock
Award Plan. No voting rights relating to the Company's common stock are
associated with such stock.
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors and officers, as well as beneficial owners of
ten percent or more of the Company's common stock, to report their holdings and
transactions in the Company's securities. Based solely on written
representations from the Company's directors and officers and a review of the
copies of reports furnished to the Company pursuant to Section 16(a), it appears
that James R. Bauman, an officer of the Company during 1993, filed one late
report and, as a result, failed to report on a timely basis one transaction
involving the disposition of a security convertible into the Company's common
stock; Mark A. Jackson, an officer of the Company during 1993, filed one late
report and, as a result, failed to report on a timely basis transactions
involving exempt periodic acquisitions under the Company's 401(k) plan; and
Bijan Mossavar-Rahmani, an officer of Apache International during 1993, filed
one late report and, as a result, failed to report on a timely basis
transactions involving exempt periodic acquisitions under the Company's 401(k)
plan.
7
<PAGE> 11
EXECUTIVE OFFICERS OF THE COMPANY
Certain biographical information concerning the executive officers of the
Company is set forth below. Biographical information concerning Raymond Plank
and William J. Johnson is set forth above under the caption "Continuing
Directors."
JAMES R. BAUMAN, 58, has been vice president--business development since
1988. He was vice president corporate development of the Company from 1986 to
1988, and vice president--Wyoming operations of the Company from 1983 to 1986.
G. STEVEN FARRIS, 46, has been a senior vice president since 1991, and had
been vice president--exploration and production of the Company since 1988. He
was vice president--finance and acquisitions of Terra Resources, Inc., a Tulsa,
Oklahoma oil and gas company, from 1983 to 1988, and executive vice president of
Robert W. Berry, Inc., a Tulsa, Oklahoma oil and gas company, from 1978 to 1983.
MARK A. JACKSON, 38, has been vice president and chief accounting officer
since January 1994, and had been vice president and controller of the Company
since 1988. From 1984 to 1988, he was employed by Maxus Energy Corporation, a
Dallas-based oil and gas company, in various positions, the latest of which was
assistant controller.
ZURAB S. KOBIASHVILI, 51, has been vice president, general counsel and
corporate secretary of the Company since March 1994. From March 1991 through
February 1994, he was with Falcon Seaboard Resources, Inc., a privately-held
company involved in the development, construction and operation of electric
cogeneration power plants, and in oil and gas exploration and production,
initially as a legal consultant and from July 1993 as vice president and general
counsel. Mr. Kobiashvili was vice president and general counsel, Conquest
Exploration Company, from 1984 to 1991.
CLYDE E. MCKENZIE, 46, has been vice president and treasurer of the Company
since 1988. He was vice president--acquisitions of the Company, from 1987 to
1988. Prior to that, Mr. McKenzie was senior vice president and manager, Energy
Banking Group, First Interstate Bank of Denver, from 1983 to 1987.
JOHN L. MORAN, 48, has been vice president--technology and chief geologist
since October 1993, and had been vice president--exploration and production
services of the Company since 1991. He was exploration manager of the Company's
Midcontinent Region from 1984 to 1991. Prior to that, Mr. Moran was senior vice
president of exploration for Geodyne Resources from 1978 to 1984.
ROGER B. PLANK, 37, has been vice president--external affairs since May
1993, and had been vice president--corporate communications of the Company since
1987. He was director, corporate communications of the Company, from 1985 to
1987, and was an investment representative for Apache Programs, Inc., a wholly
owned subsidiary of the Company, from 1981 to 1985. Roger Plank is the son of
Raymond Plank.
ROGER B. RICE, 49, has been vice president--human resources and
administration since December 1993, and had been vice president--human resources
of the Company since 1992. He was managing consultant, Barton Raben, Inc., an
executive search firm, from 1989 to 1992. Mr. Rice was a partner in Chancellor
Properties, a real estate consulting firm, from 1985 to 1989, and was vice
president--administration for Superior Oil Company from 1982 to 1985.
8
<PAGE> 12
SUMMARY COMPENSATION TABLE
The table below summarizes the annual and long-term compensation paid to
the individuals listed below for all services rendered to the Company and its
subsidiaries during the last three fiscal years, in accordance with Commission
rules relating to disclosure of executive compensation. The persons included in
this table are the Company's chief executive officer, the four other most highly
compensated executive officers who were serving as executive officers at the end
of the last completed fiscal year, and an individual who would have been one of
the four other most highly compensated executive officers but for the fact that
he was not serving as an executive officer of the Company at the end of the last
completed fiscal year.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION --------------- PAYOUTS
---------------------------------- AWARDS ------------
OTHER --------------- ALL
ANNUAL SECURITIES OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) OPTIONS/SARS(#) ($)(2)
- ----------------------------- ---- ------- ------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Raymond Plank................ 1993 650,000 283,200 0 45,000(3) 104,879(4)
Chairman of the Board and 1992 650,015 250,000 0 50,000(3) 114,426(4)
Chief Executive Officer 1991 450,000 557,088(5) 0
William J. Johnson........... 1993 350,016 153,700 0 20,000(3) 60,908(4)
President and Chief 1992 350,016 151,000 0 35,000(3) 65,618(4)
Operating Officer 1991 242,625 350,000(6) 300,000
G. Steven Farris............. 1993 235,420 103,900 0 10,000(3) 42,703(4)
Senior Vice President 1992 225,000 141,000 37,283(7) 15,500(3) 367,409(8)
1991 205,000 86,828 24,000
Bijan Mossavar-Rahmani(9).... 1993 220,000 0 39,846(7) 0 906,116(10)
President of Apache 1992 220,000 122,000 3,770(7) 0 47,117(11)
International, Inc. 1991 220,000 112,365 0
George J. Morgenthaler(12)... 1993 196,458 0 29,861(7) 8,000(3) 800,077(13)
Former Senior Vice 1992 205,000 122,000 16,451(7) 14,100(3) 109,863(14)
President and 1991 193,125 88,528 22,000
General Counsel
Mark A. Jackson.............. 1993 180,000 78,600 0 8,000(3) 31,212(4)
Vice President and 1992 160,000 103,000 34,614(7) 11,000(3) 91,877(15)
Controller 1991 145,000 68,334 17,000
</TABLE>
- ---------------
(1) Includes amounts awarded under the Company's incentive compensation plan
and special achievement bonuses for performance in the year indicated.
(2) Omitted for fiscal year 1991 in accordance with transitional provisions of
Commission rules on executive compensation.
(3) Options awarded during 1993 and 1992 were granted on May 6, 1993 and May 7,
1992, respectively, under the terms of the 1990 Stock Incentive Plan. There
were no adjustments or amendments during the last fiscal year to the
exercise price of stock options or the base price of stock appreciation
rights previously awarded to any of the named executive officers.
(4) Represents Company contributions under the Company's 401(k)
Retirement/Savings Plan and related Non-Qualified Retirement/Savings Plan.
(5) Includes $232,088 awarded under the Company's incentive compensation plan
and a special achievement bonus of $325,000.
(6) Represents a starting bonus. See "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements."
(7) Reimbursement for the payment of taxes on all reimbursed relocation
expenses and relocation payments.
(footnotes continued on following page)
9
<PAGE> 13
(8) Includes $259,871 paid in connection with the Key Explorationist
Participation Plan; $39,470 in Company contributions under the Company's
401(k) Retirement/Savings Plan and related Non-Qualified Retirement/Savings
Plan; $18,569 in aggregate relocation and temporary living expenses
reimbursed in connection with the Company's move to Houston, Texas; a
one-time relocation payment equal to $37,500; and reimbursed qualified real
estate expenses equal to $12,000.
(9) Effective March 15, 1994, Mr. Mossavar-Rahmani's status changed from
employee to consultant, and he will continue to serve the Company as
president of Apache International, Inc. in his consulting capacity.
Pursuant to the terms of Mr. Mossavar-Rahmani's consulting agreement, no
amounts were paid under the Company's incentive compensation plan relating
to 1993. See footnote (10) below and "Employment Contracts and Termination
of Employment and Change-in-Control Arrangements."
(10) Includes $39,876 in Company contributions under the Company's 401(k)
Retirement/Savings Plan and related Non-Qualified Retirement/Savings Plan;
$23,740 in aggregate relocation and temporary living expenses reimbursed in
connection with the Company's move to Houston, Texas; and a one-time
relocation payment equal to $36,667. Also includes, pursuant to the terms
of Mr. Mossavar-Rahmani's consulting agreement, a one-time payment of
$565,833 and the accrual of monthly amounts aggregating approximately
$240,000 to be paid in 1994 and 1995, as described under "Employment
Contracts and Termination of Employment and Change-in-Control
Arrangements."
(11) Includes $40,462 in Company contributions under the Company's 401(k)
Retirement/Savings Plan and related Non-Qualified Retirement/Savings Plan;
and $6,655 aggregate relocation and temporary living expenses reimbursed in
connection with the Company's move to Houston, Texas.
(12) Mr. Morgenthaler resigned effective November 10, 1993. His reported 1993
salary reflects 10.5 months of base salary prior to resignation. Pursuant
to the terms of Mr. Morgenthaler's consulting agreement, no amounts were
paid under the Company's incentive compensation plan relating to 1993. See
footnote (13) below. Stock options that were unexercisable as of November
10, 1993, were forfeited on that date. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements."
(13) Includes $37,402 in Company contributions under the Company's 401(k)
Retirement/Savings Plan and related Non-Qualified Retirement/Savings Plan;
and $675 aggregate relocation and temporary living expenses reimbursed in
connection with the Company's move to Houston, Texas. Also includes,
pursuant to the terms of Mr. Morgenthaler's consulting agreement, a
one-time payment of $352,000 and the accrual of monthly amounts aggregating
approximately $410,000 to be paid in 1994 and 1995, as described under
"Employment Contracts and Termination of Employment and Change-in-Control
Arrangements."
(14) Includes $36,519 in Company contributions under the Company's 401(k)
Retirement/Savings Plan and related Non-Qualified Retirement/Savings Plan;
$31,286 in aggregate relocation and temporary living expenses reimbursed in
connection with the Company's move to Houston,Texas; a one-time relocation
payment equal to $34,167; and reimbursed qualified real estate expenses
equal to $7,891.
(15) Includes $28,580 in Company contributions under the Company's 401(k)
Retirement/Savings Plan and related Non-Qualified Retirement/Savings Plan;
$29,011 in aggregate relocation and temporary living expenses reimbursed in
connection with the Company's move to Houston, Texas; a one-time relocation
payment equal to $26,667; and reimbursed qualified real estate expenses
equal to $7,619.
10
<PAGE> 14
OPTION/SAR GRANTS TABLE
The table below provides supplemental information relating to the Company's
grants of options during the previous fiscal year to the executive officers
named in the Summary Compensation Table above, including the relative size of
each grant, and each grant's exercise price and expiration date. Also included
in compliance with Commission rules on disclosure of executive compensation is
information relating to the estimated present value of the options granted,
based upon principles of the Black-Scholes option pricing model. The
Black-Scholes model utilizes numerous arbitrary assumptions about financial
variables such as interest rates, stock price volatility and future dividend
yield. Neither the option values reflected in the table nor the assumptions
utilized in arriving at the values should be considered indicative of future
stock performance.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
NUMBERS PERCENT
OF OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR GRANT
OPTIONS/SARS EMPLOYEES BASE DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(1)(2) YEAR ($/SH)(3) DATE VALUE($)(4)
- --------------------------------- ------------ ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Raymond Plank.................... 45,000 17.01 26.625 5/6/2003 577,800
William J. Johnson............... 20,000 7.56 26.625 5/6/2003 256,800
G. Steven Farris................. 10,000 3.78 26.625 5/6/2003 128,400
Bijan Mossavar-Rahmani........... 0 N/A N/A N/A N/A
George J. Morgenthaler........... 8,000(5) 3.02 26.625 5/6/2003 102,720
Mark A. Jackson.................. 8,000 3.02 26.625 5/6/2003 102,720
</TABLE>
- ---------------
(1) Number of shares granted May 6, 1993, under the terms of the 1990 Stock
Incentive Plan (the "Incentive Plan"). Options are generally nontransferable
and become exercisable ratably over four years. The options were granted for
a term of ten years, subject to earlier termination in certain events
related to termination of employment, and are not intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code. The
exercise price and any withholding tax requirements may be paid by cash
and/or delivery of already-owned shares of the Company's common stock.
Options granted under the Incentive Plan are subject to appropriate
adjustment in the event of a reorganization, stock split, stock dividend,
combination of shares, merger, consolidation or other recapitalization of
the Company.
If there is a change in control of the Company, the management development
and compensation committee may accelerate the exercise date of any
outstanding options; make any outstanding options fully vested and
exercisable; grant a cash bonus award to any option holder in an amount
necessary to pay the exercise price of all or any portion of the options
then held by the option holder; pay cash to any or all option holders (in
exchange for the cancellation of their outstanding options) in an amount
equal to the difference between the exercise price of the options and the
greater of the tender offer price for the underlying stock or the fair
market value of the stock on the date of the cancellations or make any
other adjustments or amendments to the outstanding options.
A change in control occurs when a person, partnership or corporation acting
in concert, or any or all of them, acquires more than 20 percent of the
Company's outstanding voting securities; a change in control shall not occur
if, prior to the acquisition of more than 20 percent of the Company's voting
securities, the Company's board of directors by majority vote designates the
person, partnership or corporation as an approved acquirer and resolves that
a change in control will not have occurred.
(2) There were no adjustments or amendments during 1993 to the exercise price of
stock options or the base price of stock appreciation rights previously
awarded to any of the named executive officers.
(3) Based on the closing market price per share of the Company's common stock on
the date of grant, as reported on The New York Stock Exchange, Inc.
Composite Transactions Reporting System.
(4) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options, using the following assumptions: volatility--31.34
percent; risk free interest rate--6.35 percent; dividend
(footnotes continued on following page)
11
<PAGE> 15
yield--1.10 percent; and time of exercise--end of term. There were no
adjustments made to the model for non-transferability or risk of forfeiture.
The actual value, if any, an executive may realize will depend on the excess
of the market price over the exercise price on the date the option is
exercised. There is no assurance the value realized by an executive will be
at or near the value estimated by the Black-Scholes model.
(5) Forfeited upon Mr. Morgenthaler's resignation effective November 10, 1993.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The table below provides supplemental information relating to the value
realized upon the exercise of stock options and the settlement of stock
appreciation rights ("SARs") during the last fiscal year by the executive
officers named in the Summary Compensation Table above and the number and
intrinsic value of stock options and SARs held at year end. Year-end values are
based arbitrarily on the Company's stock price at December 31, 1993, do not
reflect the actual amounts, if any, which may be realized upon the future
exercise of remaining stock options and settlement of remaining SARs, and should
not be considered indicative of future stock performance.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END
ACQUIRED AT FY-END(#) -------------------
ON VALUE --------------- EXERCISABLE/
EXERCISE REALIZED EXERCISABLE/ UNEXERCISABLE
NAME (#)(1) ($)(2) UNEXERCISABLE ($)(3)
- -------------------------- -------- -------- --------------- -------------------
<S> <C> <C> <C> <C>
Raymond Plank
Options.............. 10,000 145,000 2,500/ 82,500 18,438/ 276,563
SARs................. 0 0 0/ 50,000(4) 0/ 187,500
William J. Johnson
Options.............. 0 0 108,750/146,250 1,027,031/1,156,094
SARs................. 0 0 0/100,000(4) 0/ 962,500
G. Steven Farris
Options.............. 10,000 196,250 15,875/ 33,625 144,078/ 201,234
SARs................. 0 0 0/0 0/0
Bijan Mossavar-Rahmani
Options.............. 0 0 0/0 0/0
SARs................. 0 0 0/0 0/0
George J. Morgenthaler
Options(5)........... 18,500 270,075 7,275/0(7) 40,059/0
SARs................. 0(6) 0(6) 15,000/0(6) 0/ 56,250
Mark A. Jackson
Options.............. 5,000 72,813 18,750/ 27,250 130,219/ 152,031
SARs................. 0 0 0/ 10,000(4) 0/ 37,500
</TABLE>
- ---------------
(1) Number of shares with respect to which stock options were exercised or SARs
were settled during 1993.
(2) Fair market value on date of exercise minus the exercise price of stock
options or the base price of SARs.
(3) Based on the closing market price of $23.375 per share of the Company's
common stock as reported on The New York Stock Exchange, Inc. Composite
Transactions Reporting System for December 31, 1993.
(4) These SARs do not have a discretionary exercise feature, but settle on a
date specified at the time of grant.
(5) Mr. Morgenthaler resigned effective November 10, 1993. Those stock options
that were unexercisable as of November 10, 1993 were forfeited on that
date.
(6) SARs relating to 15,000 shares were settled January 3, 1994, with a value
realized of $101,063.
(7) Options with respect to 7,275 shares were exercised January 20, 1994, with a
value realized of $56,428.
12
<PAGE> 16
THE MANAGEMENT DEVELOPMENT
AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The management development and compensation committee of the board of
directors has furnished the following report on the Company's executive
compensation policies and programs for inclusion in this proxy statement:
The Company's successful financial performance during the past year is
directly attributable to the talent and efforts of the Company's executive
officers, and a capable, highly-motivated senior management is crucial to the
Company's continued success. The Company's executive compensation program
attracts and retains executives who are capable of leading the Company in a
complex, competitive and changing industry. The program ties a significant
portion of executive compensation to the Company's success, and is primarily
comprised of a base salary, an incentive bonus and a long-term incentive
component.
The committee believes that the most effective way to compete in the
executive labor market is to offer executives an attractive, but not
over-priced, base salary. To achieve this balance, the committee analyzes each
executive's compensation using a four-step process. First, the key executive
positions within the Company are defined carefully in terms of scope and
responsibility, job complexity, knowledge and experience required, and other
relevant factors. Second, the positions are ranked internally on the basis of
these definitions, establishing a logical value relationship among them. Third,
the committee identifies the Company's direct competitors which it believes
share comparable operations, employee composition, and capitalization, and
obtains comparative compensation data from independent, national executive
compensation consultants with expertise in salary and incentive plan structure,
who are proposed by management and approved by the committee. The committee does
not gather comparative data from all companies comprising the Secondary Oils
Index reflected in the stock performance chart set forth below, many of which
have integrated operations or operate in diversified industries. Finally,
easily-compared positions are priced in terms of salary ranges by reviewing the
comparative industry data and other surveys, and this process establishes
relative salary ranges for all key executive positions in the Company. Base
salaries are targeted to fall within, and for the last year generally correspond
to, the 50th to 75th percentiles of executive salaries paid by comparable
companies. The committee agrees upon each executive's salary within this range,
taking into account the individual's specific performance and contribution to
the Company's success, how well the individual's responsibilities are fulfilled,
growth in qualifications for the individual's job, the individual's
accomplishment of the personal goals discussed below, and other relevant aspects
of performance.
Base salaries of all executives are generally reviewed every 12 to 24
months and adjusted within updated, market-confirmed salary ranges according to
the committee's assessment of the executive's individual performance and the
performance of the Company as a whole. Mr. Johnson's salary is reviewed annually
pursuant to the terms of his employment agreement. The employment agreements of
Mr. Plank, Mr. Johnson and Mr. Mossavar-Rahmani contain prohibitions on the
reduction of their salaries below their initial amounts. See "Employment
Contracts and Termination of Employment and Change-in-Control Arrangements."
Changes in the circumstances of a particular executive can prompt an interim
compensation adjustment.
In 1993, the committee retained the services of an outside compensation
consultant to review the base salaries paid to the Company's executives in order
to determine whether the salaries correspond to the 50th to 75th percentile
target range of comparable companies. As a result of that review, seven
executives received interim increases in compensation to reflect market changes
and increased responsibilities resulting from internal corporate restructuring.
Mr. Farris and Mr. Jackson are the only executives named in the Summary
Compensation Table who received an increase in base salary as a result of this
review.
The second component of the Company's executive compensation program is an
annual incentive bonus. Executives are eligible to receive a cash bonus tied
directly to the Company's annual financial performance and achievement of the
executive's personal objectives. In the early months of each year, the committee
establishes annual corporate performance hurdles for such factors as earnings
per share, reserve replacement, debt reduction, cash flow and other
performance-related measures. Executives also submit personal goals relating to
cost reduction, operational improvements or other objectively determinable
goals. Personal goals
13
<PAGE> 17
must be approved by each executive's superior and the committee as a whole. Mr.
Plank, as the Company's most senior executive officer, prepares his personal
goals with the consultation of the committee, and periodically reports on his
progress toward the achievement of his goals to the committee throughout the
year. Corporate performance hurdles are approved by both the committee and the
board of directors. In 1993, 75 percent of each executive's bonus depended upon
the Company's achievement of its specified corporate performance hurdles, with
intermediate hurdles ranging from zero if the minimum hurdles established were
not met, to a full 75 percent if the highest performance hurdles were achieved.
The remaining 25 percent of each executive's bonus depended upon the percentage
of the executive's personal goals which he successfully accomplished. This
incentive compensation plan effectively correlates a large portion of executive
compensation to predetermined, objectively determinable financial and managerial
goals designed to translate into shareholder value. Committee policy provides
for bonuses ranging up to 50 percent of each executive's salary; one-third of
potential executive compensation depends upon goal achievement under the
incentive compensation plan.
Executive bonuses paid in 1994 were based on management's achievement
during 1993 of minimum pre-determined corporate performance hurdles established
by the committee relating to earnings per share, reserve replacement, total cash
flow and debt to equity. The committee initially set the earnings per share
hurdle at $.85 per share. However, during the third quarter, the committee
determined that, due to an impending charge to earnings of approximately $.16
per share relating to international impairments and changes in federal tax laws,
the earnings hurdle would be reduced to $.69 per share, thereby offsetting the
effects of the charge to earnings. The Company achieved the adjusted earning
threshold of $.69 per share despite a precipitous decline in oil prices during
the third and fourth quarters. Through drilling, exploitation and acquisition
efforts, management successfully replaced in excess of 200 percent of the
reserves depleted through production during the year, in large part through the
acquisition of 17.3 million Boe of reserves in two acquisitions from Hall-
Houston Oil Company and 21.6 million Boe of reserves through the successful
acquisition of Hadson Energy Resources Corporation. Through increased production
efforts, management successfully generated a record $225 million in cash flow
from operating activities over the year. Finally, notwithstanding expenditures
of $325 million in 74 separate acquisitions and $219 million of drilling
expenditures during the year, the Company finished the year with a
debt-to-equity ratio well below the prescribed 50-percent hurdle. Management's
achievement of these corporate performance hurdles during the year represented
attainment of 89.6 percent of the corporate performance portion of the incentive
compensation plan. The actual bonus amounts paid depended upon each executive's
achievement of his personal goals, which represented the remaining 25 percent of
the incentive compensation plan.
The final principal component of the committee's executive compensation
program consists of long-term incentive stock options on the Company's common
stock. Options effectively align the interests of executive officers with the
Company's shareholders by tying a significant portion of each executive's total
long-term compensation to the continued growth of the Company and appreciation
of its shares. Individual grants are proportionate to each executive's base
salary and are targeted at the 50th percentile of similar plans within
comparable companies, taking into account options previously granted. All
options vest over four years and are exercisable at the market price for shares
of the Company's common stock on the original date of issuance. Options granted
to executives benefit the executive only if shareholders benefit from
appreciating stock prices.
In 1993, the Company's executives received stock option grants under the
Company's 1990 Stock Incentive Plan. The grants to the Company's officers and
former officers named in the Summary Compensation Table presented above are
reflected in the Option/SAR Grants Table.
In addition to the Company's regular executive compensation program, the
committee may elect to award a special achievement bonus to an executive officer
who has rendered services during the year that substantially exceed those
normally required. Special achievement bonuses reflect the committee's decision
to reward any executive who, through extraordinary effort, has substantially
benefitted the Company and its shareholders during the year. Special achievement
bonuses are paid only in exceptional circumstances and are in amounts relative
to the benefit provided to the Company. No special achievement bonuses were paid
during 1993 to any executive officers.
14
<PAGE> 18
The compensation paid Raymond Plank, the Company's chief executive officer,
is reflected in the Summary Compensation Table above. Mr. Plank's last base
salary adjustment was effective January 1, 1992; his bonus paid in 1994, like
those paid other executives, was based on the Company's 1993 performance, as
discussed above. Mr. Plank's 1993 base salary was within the committee's
percentile targets and took into account: an active role in Company management;
the Company's financial performance during 1992; challenges and expectations for
the Company in 1993; leadership of successful acquisitions; Mr. Plank's
recognized stature as a spokesman for the oil and gas industry; his role as a
Company founder; and 39 years of service as the Company's senior executive
officer. Mr. Plank's bonus represented 87 percent of his eligible bonus amount
under the incentive compensation plan, reflecting the Company's achievement of
89.6 percent of the corporate performance hurdles and Mr. Plank's accomplishment
of 89 percent of his personal goals.
As an active chief executive officer, Mr. Plank oversees several major
business units that report directly to him. The president, vice president and
treasurer, vice president and chief accounting officer, vice president of
business development, senior vice president and general counsel, vice president
of external affairs, and the general auditor all report to Mr. Plank. He
constructively guides and develops senior management.
Mr. Plank leads the Company's aggressive acquisition program, maintaining
sound business relationships with management of many of the nation's large oil
and gas companies. These relationships are important to the Company's
acquisition approach, which emphasizes privately negotiated transactions that
develop and achieve mutual business benefit. Without this effort, the Company
would be more reliant upon public bidding for packaged oil and gas properties,
potentially bringing less rewarding results.
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") imposes a limit,
with certain exceptions, on the amount that a publicly held corporation may
deduct in any year for the compensation paid or accrued with respect to its five
most highly compensated executive officers. While the committee cannot predict
with certainty how the Company's compensation might be affected, the committee
intends to try to preserve the tax deductibility of all executive compensation
while maintaining the Company's compensation programs as described in this
report.
According to information provided to the committee by its independent
compensation consultant, the amount of the Company's cash compensation paid to
all of its executive officers during 1993 was in approximately the 75th
percentile of all comparable companies. During 1993, the Company's common stock
reached its ten-year high in trading on the New York Stock Exchange. As shown on
the Performance Graph following this report, the shareholders have enjoyed a
rewarding cumulative annual return over the last five years, outperforming both
the Standard & Poor's Composite 500 Stock Index and the Dow Jones Secondary Oils
Stock Index. These are visible measures of management's enhancement of
shareholder value. Viewed in light of the Company's performance, the committee
believes that its current executive compensation policy is successful in
providing shareholders with talented, dedicated executives at competitive
compensation levels.
February 8, 1994 Management Development and
Compensation Committee
Frederick M. Bohen
Virgil B. Day
John A. Kocur
Joseph A. Rice
15
<PAGE> 19
PERFORMANCE GRAPH
The following stock price performance graph is included in accordance with
the Commission's executive compensation disclosure rules and is intended to
allow shareholders to review the Company's executive compensation policies in
light of corresponding shareholder returns, expressed in terms of the
appreciation of the Company's common stock relative to two broad-based stock
performance indices. The information is included for historical comparative
purposes only and should not be considered indicative of future stock
performance. The graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's common stock with the cumulative total
return of the Standard & Poor's Composite 500 Stock Index and of the Dow Jones
Secondary Oils Stock Index from December 31, 1988 through December 31, 1993.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
_________________________________________________________________________________________
Year Ended December 31, 1988 1989 1990 1991 1992 1993
_________________________________________________________________________________________
Apache Corporation 100 238 193 213 257 323
_________________________________________________________________________________________
S & P's Composite 500 Stock Index 100 132 128 166 179 197
_________________________________________________________________________________________
DJ Secondary Oils Stock Index 100 136 113 111 112 124
_________________________________________________________________________________________
</TABLE>
16
<PAGE> 20
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Raymond Plank serves the Company under an employment contract entered
into on December 3, 1975, and amended and restated in 1990. The agreement has an
undefined term and is terminable at will by the board of directors. Mr. Plank's
annual compensation under the contract is determined by the board of directors,
but may not be less than $450,000. If Mr. Plank's service as director and chief
executive officer is terminated by the board of directors, Mr. Plank will serve
as consultant to the Company for the remainder of his life at an annual
compensation equal to 50 percent of his then-current annual compensation and
will receive health, dental and vision benefits for himself and his dependents
during his life. Pursuant to the contract, and in exchange for surrendering life
insurance coverage, an annuity was purchased for Mr. Plank which pays $31,500
annually until 2008. Mr. Plank has agreed not to render service to any
competitor for the entire period covered by the agreement. Upon Mr. Plank's
death, an amount equal to two times his then-current annual compensation shall
be paid to his surviving spouse or estate in equal monthly installments over
five years.
Mr. Johnson serves as president and chief operating officer of the Company
pursuant to a five-year employment contract entered into during March 1991.
Under the agreement, Mr. Johnson's starting base salary is $350,000, subject to
review annually by the board of directors. Pursuant to the agreement, Mr.
Johnson received a $350,000 starting bonus during 1991. The agreement provides
that Mr. Johnson will receive an annual retirement benefit for 20 years after
retirement equal to two-thirds of his salary, less (i) the sum of any payments
which he receives under the retirement plans of the Company and Mr. Johnson's
former employers, and (ii) social security benefits. In the event of Mr.
Johnson's death during retirement, his spouse will continue to receive 50
percent of Mr. Johnson's retirement benefits. After retirement, Mr. Johnson and
his spouse will receive health, dental and vision benefits for the remainder of
his life. If Mr. Johnson's employment is terminated without cause, he will
receive 125 percent of his base salary for two years or until the expiration of
the contract, whichever occurs later.
Pursuant to an agreement, effective March 15, 1994, between Bijan
Mossavar-Rahmani and the Company, Mr. Mossavar-Rahmani's status with Apache
International, Inc. changed from employee to consultant, and he resigned as a
director of Apache International and all positions as a director and officer of
its subsidiaries, except for his position as an officer of Apache Cote d'Ivoire,
Inc. and as a director of Compagnie des Energies Nouvelles de Cote d'Ivoire.
Commencing March 16, 1994 and continuing through September 16, 1995, Mr.
Mossavar-Rahmani's primary duties will consist of commercializing certain of
Apache International's assets and continuing negotiations relating to the Ivory
Coast project as required and directed by the Company. He will receive monthly
payments of $13,333 during the consulting period for an aggregate of
approximately $240,000. Additionally, in March 1994, Mr. Mossavar-Rahmani
received a one-time consulting payment of $565,833. During the consulting
period, he will receive medical, dental, vision, life insurance and disability
benefits on the same terms as are extended to the Company's executives. Mr.
Mossavar-Rahmani's change in status is the result of the Company's refocus of
its international operations, eliminating the need for a full-time
administrative president and is intended to give him the flexibility to pursue
an agenda of special international marketing projects on the Company's behalf.
Prior to March 16, 1994, Mr. Mossavar-Rahmani served Apache International
pursuant to an employment agreement which provided for the payment by the
Company of one year's base salary in the event his employment was terminated
without cause. The agreement had an undefined term and was terminable at will by
the board of directors. Mr. Mossavar-Rahmani's salary was set by the board of
directors but was not to be less than $200,000. Additionally, he participated in
the Apache International Common Stock Award Plan under which participants,
limited to certain officers and employees of Apache International, were issued
shares of Apache International common stock that were to be repurchased upon the
occurrence of specified events. These events include the retirement, death or
termination of employment of the participant or a change of control of Apache
International. The repurchase price was to be determined through valuation of
Apache International and its subsidiaries, with certain adjustments. The plan
awarded five percent of the outstanding shares of Apache International to Mr.
Mossavar-Rahmani and reserved an additional three percent of the stock for other
Apache International employees. Under the plan, if (i) Mr. Mossavar-Rahmani's
employment
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was terminated without cause, or (ii) Apache International ceased to actively
pursue oil and gas exploration, with either event occurring prior to the earlier
of January 1, 1994, or the expenditure of $40 million in Apache International
exploration activities, he was to receive the greater of the value of his Apache
International common stock or $2 million, less any previous payments made under
the plan. Voluntary termination, consensual change of status, or death would
result in Mr. Mossavar-Rahmani receiving only the value of his Apache
International common stock. Pursuant to the terms of his consulting agreement,
the Company and Mr. Mossavar-Rahmani have agreed to defer the appraisal of his
rights pursuant to the plan until September 16, 1995, or another mutually
agreeable date. The consulting agreement also provides the framework for the
valuation of his interests with additional details to be agreed upon at a later
date.
Mr. Morgenthaler resigned as the Company's senior vice president, general
counsel and corporate secretary on November 10, 1993. Pursuant to a consulting
agreement effective on that date, he agreed to serve as a temporary,
non-executive employee during a transition period from November 11, 1993 through
December 15, 1993, and received compensation at the rate of $17,083 per month
prorated by day. At the Company's request, Mr. Morgenthaler has agreed to serve
the Company in a non-executive, consulting capacity through December 15, 1995,
and will receive payments of $17,083 per month, or an aggregate of approximately
$410,000. Additionally, on December 22, 1993, he received a one-time consulting
payment of $352,000. During the consulting period, Mr. Morgenthaler also
receives medical, dental, vision, life insurance and disability benefits on the
same terms as are extended to the Company's executives.
In addition to the foregoing, the Company has established an income
continuance plan, pursuant to which all officers of the Company, including the
officers named in the Summary Compensation Table, and all employees who have
either reached the age of 40, served the Company for more than ten years, or
have been designated for participation based upon special skills or experience,
will receive monthly payments approximating their monthly income and continued
medical and health benefits from the Company for up to two years if their
employment is terminated as a result of a "change in control" of the Company, as
defined in the plan.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Frederick M. Bohen, Virgil B. Day, John A. Kocur and Joseph A. Rice served
on the management development and compensation committee of the Company for the
past fiscal year.
Mr. Kocur, a member of the committee since September 1991 and a director of
the Company since 1977, retired as an executive officer in June 1991. Pursuant
to the terms of the employment agreement in place at the time of his retirement,
Mr. Kocur served the Company in a non-executive, consulting capacity until May
1993, and received a fee of $60,000 during 1993. Additionally, Mr. Kocur and his
spouse receive health, dental and vision benefits throughout his life.
Following the resignation of the Company's senior vice president and
general counsel in November 1993, Mr. Kocur agreed to provide consulting
services to the legal department until a new general counsel could be recruited.
As a consultant during the interim period ending in March 1994, Mr. Kocur
received an amount equal to his monthly base salary in effect at the time of his
retirement in 1991, or approximately $125,000, which was paid at the conclusion
of the arrangement.
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<PAGE> 22
TRANSACTIONS WITH OFFICERS AND DIRECTORS
The law firm of Vedder, Price, Kaufman, Kammholz & Day, of which Mr. Day, a
continuing director of the Company, is a senior partner, was retained by the
Company during 1993 to provide certain legal services.
Mr. Kocur, who was an executive officer of the Company until his retirement
in 1991, also served the Company in a non-executive, consulting capacity during
1993. See "Compensation Committee Interlocks and Insider Participation."
Mr. Morgenthaler, who is one of the persons named in the Summary
Compensation Table above, serves the Company as a consultant pursuant to an
agreement effective November 10, 1993. See "Employment Contracts and Termination
of Employment and Change-in-Control Arrangements."
Mr. Mossavar-Rahmani, who is one of the persons named in the Summary
Compensation Table above, serves the Company as a consultant pursuant to an
agreement dated March 15, 1994. See "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements."
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. was the Company's independent public accounting firm
for 1993 and has been selected to continue in that capacity in 1994.
Representatives of Arthur Andersen & Co. will be present at the annual meeting
and will have an opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Commission and the
Company's bylaws. Should a shareholder wish to have a proposal appear in the
Company's proxy statement for next year's annual meeting, under the regulations
of the Securities and Exchange Commission, it must be received by the corporate
secretary (at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400) on
or before December 1, 1994.
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<PAGE> 23
OTHER BUSINESS
All items of business intended to be brought before the meeting are set
forth in this proxy statement. Management knows of no other business to be
presented. If other matters of business not presently known to management are
properly raised at the meeting, the proxies will vote on the matters in
accordance with their best judgment.
By order of the Board of Directors
APACHE CORPORATION
/s/ ZURAB S. KOBIASHVILI
----------------------------------
ZURAB S. KOBIASHVILI
Secretary
NOTE: Shareholders are requested to sign, date and promptly return the
enclosed proxy card, using the postage-paid business reply envelope provided.
Printed on recycled paper.
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NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
MAY 5, 1994
AND PROXY STATEMENT
{APACHE LOGO}
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
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<PAGE> 25
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PROXY
APACHE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Raymond Plank, William J. Johnson and
W. Brooks Fields as Proxies, with the power of substitution, and
authorizes them to represent and to vote at the annual meeting of
shareholders to be held May 5, 1994, or any adjournment thereof,
all the shares of common stock of Apache Corporation held of
record by the undersigned on March 17, 1994, as designated below.
1. Election of directors -- director nominees:
Frederick M. Bohen, Virgil B. Day, Stanley K. Hathaway and
Joseph A. Rice
<TABLE>
<S> <C> <C>
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
above to vote for all nominees
(except as indicated below)
</TABLE>
Instruction: to withhold authority to vote for any of the
above nominees, write the nominee's name(s) on this line.
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2. The Proxies are authorized to vote in their best judgment
upon such other business as may properly come before the meeting.
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<PAGE> 26
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This Proxy when properly executed, will be voted in the manner
directed by the undersigned shareholder. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS.
Please sign exactly as name appears below. When shares are
held by joint tenants, both should sign. If acting as attorney,
executor, trustee, or in any other representative capacity, sign
name and title.
Dated , 1994
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Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING
THE ENCLOSED ENVELOPE.
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