<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
APACHE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[APACHE LOGO]
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------------------------------------------------------------
TO THE STOCKHOLDERS OF APACHE CORPORATION:
The 2000 annual meeting of stockholders of Apache Corporation, a Delaware
corporation, will be held on Thursday, May 4, 2000, 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 Company's annual meeting in
2003 and one director to serve until the Company's annual meeting in
2001; and
2. To transact any other business that may properly come before the meeting
or any adjournment thereof.
Holders of record of the Company's common stock as of the close of business on
March 15, 2000 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
stockholders entitled to vote at the annual meeting will be available for
examination by any Apache stockholder at 2000 Post Oak Boulevard, Suite 100,
Houston, Texas, for purposes relating to the annual meeting, during normal
business hours for a period of ten days before the meeting.
It is important that your shares are represented at the meeting. We encourage
you to designate the proxies named on the enclosed proxy card to vote your
shares on your behalf and per your instructions. This action does not limit your
right to vote in person or to attend the meeting.
By order of the Board of Directors
APACHE CORPORATION
/s/ C. L. PEPER
C. L. PEPER
Corporate Secretary
Houston, Texas
March 31, 2000
<PAGE> 3
PROXY STATEMENT TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General..................................................... 1
Purpose of the Annual Meeting............................... 1
Who Can Vote................................................ 1
How to Vote................................................. 2
Revoking a Proxy............................................ 2
Quorum and Votes Needed..................................... 2
How the Votes are Counted................................... 2
Election of Directors (Proposal No. 1)...................... 3
Nominees for Election as Directors.................... 4
Continuing Directors.................................. 5
Standing Committees and Meetings of the Board of
Directors............................................ 7
Director Compensation................................. 8
Securities Ownership and Principal Holders............ 9
Section 16(a) Beneficial Ownership Reporting
Compliance........................................... 11
Executive Officers of the Company..................... 12
Summary Compensation Table............................ 14
Option/SAR Grants Table............................... 15
Option/SAR Exercises and Year-End Value Table......... 17
The Management Development and Compensation Committee
Report on Executive Compensation..................... 18
Performance Graph..................................... 23
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements....................... 24
Compensation Committee Interlocks and Insider
Participation........................................ 25
Certain Business Relationships and Transactions....... 25
Independent Public Accountants.............................. 26
Stockholder Proposals....................................... 26
Solicitation of Proxies..................................... 26
</TABLE>
<PAGE> 4
APACHE CORPORATION
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
March 31, 2000
PROXY STATEMENT
GENERAL
This proxy statement contains information about the 2000 annual meeting of
stockholders of Apache Corporation. In this proxy statement "Apache" and "the
Company" both refer to Apache Corporation. This proxy statement and the enclosed
proxy card are being mailed to you by the Company's board of directors starting
on or about March 31, 2000.
PURPOSE OF THE ANNUAL MEETING
At the Company's annual meeting, stockholders will vote on the election of
directors as outlined in the accompanying notice of meeting, and on any other
business that properly comes before the meeting. As of the date of this proxy
statement, the Company is not aware of any business to come before the meeting
other than the election of directors.
WHO CAN VOTE
Only stockholders of record holding shares of Apache common stock at the close
of business on the record date, March 15, 2000, are entitled to receive notice
of the annual meeting and to vote the shares of Apache common stock they held on
that date. As of March 15, 2000, there were 113,582,831 shares of Apache common
stock issued and outstanding. Holders of Apache common stock are entitled to one
vote per share and are not allowed to cumulate votes in the election of
directors. The enclosed proxy card shows the number of shares that you are
entitled to vote.
Apache currently has outstanding two series of preferred stock -- the 5.68%
Cumulative Preferred Stock, Series B (the "Series B Preferred Stock") and the
Automatically Convertible Equity Securities, Conversion Preferred Stock, Series
C (the "Series C Preferred Stock"). Neither the holders of the depositary
shares, each representing 1/10th of a share of Series B Preferred Stock, nor the
holders of Apache's $2.015 depositary shares, each representing 1/50th of a
share of Series C Preferred Stock, are entitled to any voting rights, except
under certain circumstances relating to non-payment of dividends on the Series B
Preferred Stock or the Series C Preferred Stock. As of the date of this proxy
statement, all dividend payments on the Series B Preferred Stock and on the
Series C Preferred Stock were current.
1
<PAGE> 5
HOW TO VOTE
If your shares of Apache common stock are held by a broker, bank or other
nominee (in "street name"), you will receive instructions from them on how to
vote your shares.
If you hold shares of Apache common stock in your own name (as a "stockholder of
record"), you may give instructions on how your shares are to be voted by:
- marking, signing, dating and returning the enclosed proxy card in the
postage-paid envelope provided.
- using the toll-free telephone number or Internet voting site listed on
the enclosed proxy card. Specific directions for using the telephone and
Internet voting systems are shown on the proxy card.
When using telephone or Internet voting, the systems verify that you are a
stockholder through the use of a company number for Apache and a unique control
number for you. If you vote by telephone or Internet, please do not mail the
enclosed proxy card.
Whichever of these methods you use to transmit your instructions, your shares of
Apache common stock will be voted as you direct. If you sign and return the
enclosed proxy card or otherwise designate the proxies named on the proxy card
to vote on your behalf, but do not specify how to vote, your shares will be
voted FOR the election of the nominees for director. If other matters of
business not presently known are properly raised at the meeting, the proxies
will vote on the matters in accordance with their best judgment.
REVOKING A PROXY
You may revoke a proxy before it is voted by submitting a new proxy with a later
date (by mail, telephone or Internet), by voting at the meeting, or by filing a
written revocation with Apache's corporate secretary. Your attendance at the
annual meeting will not automatically revoke your proxy.
QUORUM AND VOTES NEEDED
The presence at the annual meeting, in person or by proxy, of the holders of a
majority of the shares of Apache common stock outstanding on the record date
will constitute a quorum, permitting the business of the meeting to be
conducted. The affirmative vote of a plurality of the votes cast at the annual
meeting is required for the election of directors.
HOW THE VOTES ARE COUNTED
Representatives of Norwest Bank Minnesota, N.A. will tabulate the votes and act
as inspectors of election. A properly signed proxy marked to "withhold"
authority for the election of one or more directors will be counted for quorum
purposes but not for voting purposes. If a broker indicates on a proxy that they
do not have discretionary authority to vote certain shares of Apache common
stock on a matter, those shares will not be considered present and entitled to
vote at the meeting.
2
<PAGE> 6
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 near as numerically possible, one-third of the
directors shall be elected at each annual meeting of stockholders. 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 present terms of directors Frederick M. Bohen, Stanley K. Hathaway, George
D. Lawrence Jr., Rodman D. Patton and Joseph A. Rice will expire at the 2000
annual meeting. Mr. Hathaway, who has served as a director since 1977, has
chosen not to stand for re-election and will retire from the Company's board of
directors effective as of the date of the 2000 annual meeting.
Mr. Bohen, Mr. Lawrence, Mr. Patton and Mr. Rice have been recommended by the
Company's nominating committee and nominated by the board of directors for
election by the stockholders to an additional three-year term. Charles J.
Pitman, a new director nominee, has been recommended by the Company's nominating
committee and nominated by the board of directors for election by the
stockholders to a one-year term.
If elected, Mr. Bohen, Mr. Lawrence, Mr. Patton and Mr. Rice will serve
beginning upon election until the annual meeting of stockholders in 2003. In
order to comply with the provisions of the Company's certificate of
incorporation, requiring that approximately one-third of the directors be
elected at each annual meeting, Mr. Pitman has been nominated for a term of one
year. If elected, Mr. Pitman will serve beginning upon his election until the
annual meeting of stockholders in 2001.
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 five nominees. The board of directors knows of no nominee
for director who is unwilling or unable to serve.
3
<PAGE> 7
NOMINEES FOR ELECTION AS DIRECTORS
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, 62, retired in September 1999 as 1981
executive vice president and chief operating officer of The
Rockefeller University, having served in those capacities
since 1990, and continues as senior advisor to the president
of the university. 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. Mr. Bohen was with the U.S. Department of
Health, Education and Welfare as assistant secretary for
management and budget from 1977 to 1981. He is a director of
American Council of Learned Societies and chairman of its
finance committee. Mr. Bohen is chairman of the management
development and compensation committee and chairman of the
stock option plan committee.
GEORGE D. LAWRENCE JR., 49, is a private investor, and 1996
joined the Company's board of directors in May 1996.
Formerly, he was president, chief executive officer and a
director of The Phoenix Resource Companies, Inc. from 1990
until May 1996, when Phoenix became a wholly-owned
subsidiary of the Company. Mr. Lawrence is a member of the
executive committee and the management development and
compensation committee.
RODMAN D. PATTON, 56, joined the Company's board of 1999
directors in December 1999. Mr. Patton has nearly 30 years
experience in oil and gas investment banking and corporate
finance activity, most recently serving as managing director
of the Merrill Lynch Energy Group since 1993. Previously, he
was with First Boston and Eastman Dillon, Union Securities
(later Blyth Eastman Dillon). Mr. Patton was appointed to
the audit committee in February 2000.
CHARLES J. PITMAN, 57, retired from BP Amoco plc in late --
1999, having served as president -- Middle
East/Caspian/Egypt/India and business unit leader for new
business development -- Middle East/Caspian since December
1998. Prior to the merger of British Petroleum and Amoco
Corporation, he served as chairman and president of Amoco
Eurasia Petroleum Company from 1997 to 1998, and was
president of Amoco Egypt Oil Company from 1992 to 1996. Mr.
Pitman is the sole member of Shaker Mountain Energy
Associates LLC, a consulting company formed in September
1999.
JOSEPH A. RICE, 75, retired in 1988 as chairman of the 1989
board, chief executive officer and a director of Irving
Trust Company and Irving Bank Corporation, having served in
those capacities since 1984. Mr. Rice served as president,
chief operating officer and a director of those
organizations from 1975 to 1984. He was a director of Avon
Products, Inc. from 1982 to May 1997. Mr. Rice is a member
of the management development and compensation committee and
the stock option plan committee.
</TABLE>
4
<PAGE> 8
CONTINUING DIRECTORS
Biographical information, including principal occupation and business experience
during the last five years, for each continuing member of the board of directors
whose term is not expiring at the 2000 annual meeting is set forth below. Unless
otherwise stated, the principal occupation of each director has been the same
for the past five years.
<TABLE>
<CAPTION>
DIRECTOR TERM
SINCE EXPIRES
<S> <C> <C>
RAYMOND PLANK, 77, has been chairman of the Company's 1954 2001
board of directors since 1979, and chief executive
officer of the Company since 1966, and served as the
Company's president from 1954 to 1979. Mr. Plank is a
member of the executive committee and the nominating
committee.
G. STEVEN FARRIS, 52, has been president and chief 1994 2002
operating officer of the Company since May 1994, and was
elected to the Company's board of directors in December
1994. He was senior vice president of the Company from
1991 to 1994, and vice president -- exploration and
production from 1988 to 1991. Prior to that, Mr. Farris
was vice president of finance and acquisitions for Terra
Resources, Inc., a Tulsa, Oklahoma oil and gas company,
from 1983 to 1988, and executive vice president for
Robert W. Berry, Inc., a Tulsa, Oklahoma oil and gas
company, from 1978 to 1983.
RANDOLPH M. FERLIC, 63, retired in December 1993 from 1986 2002
his practice as a thoracic and cardiovascular surgeon.
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, 68, is a private investor. Formerly, 1988 2001
he was managing director of EnCap Investments L.C., a
Dallas, Texas energy investment banking firm, from 1988
until March 1999, when EnCap was acquired by El Paso
Energy. Mr. Fiedorek was the managing director of the
Energy Banking Group of First RepublicBank Corp. in
Dallas, Texas from 1978 to 1988. He is a director of
Aviva Petroleum Corporation, Dallas, Texas. Mr. Fiedorek
is a member of the audit committee.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
DIRECTOR TERM
SINCE EXPIRES
<S> <C> <C>
A. D. FRAZIER, JR., 55, became, in April 1997, president 1997 2002
and chief executive officer of INVESCO, Inc., a U.S.
affiliate of AMVESCAP, PLC, a London-based independent
global investment management firm. He joined INVESCO in
November 1996 as executive vice president and a director
of INVESCO, PLC. Mr. Frazier was chief operating officer
of the Atlanta Olympic Games Committee from 1991 to
October 1996, and served as executive vice president,
North American Banking Group, of First Chicago Corporation
and First National Bank of Chicago from 1982 to 1991. He
is also a director of AMVESCAP, PLC; Magellan Health
Services, Inc., Atlanta, Georgia; Rock-Tenn Company, a
Norcross, Georgia manufacturer of packaging and paperboard
products; and R.J. Reynolds Tobacco Holdings, Inc.,
Winston-Salem, North Carolina. Mr. Frazier is a member of
the management development and compensation committee and
the stock option plan committee.
JOHN A. KOCUR, 72, is engaged in the private practice of 1977 2002
law. He served as vice chairman of the Company's board of
directors from 1988 to 1991. Mr. Kocur was employed by the
Company from 1969 until his retirement in 1991, and served
as the Company's president from 1979 to 1988. He is
chairman of the executive committee, chairman of the
nominating committee, and a member of the management
development and compensation committee.
MARY RALPH LOWE, 53, has been president and chief 1996 2001
executive officer of Maralo, LLC, (formerly Maralo, Inc.),
a Houston, Texas independent oil and gas exploration and
production company, and ranching operation, since 1988,
and a member of its board of directors since 1975. Ms.
Lowe is a member of the audit committee and the nominating
committee.
F. H. MERELLI, 63, has been chairman of the board and 1997 2001
chief executive officer of Key Production Company, Inc., a
Denver, Colorado independent oil and gas exploration and
production company, since 1991 and served as Key's
president from 1991 until September 1999. Formerly, he
served as the Company's president and chief operating
officer from 1988 to 1991. Prior to that, he was president
of Terra Resources, Inc., a Tulsa, Oklahoma oil and gas
company, from 1979 to 1988. Mr. Merelli is a member of the
executive committee.
</TABLE>
6
<PAGE> 10
STANDING COMMITTEES AND MEETINGS
OF THE BOARD OF DIRECTORS
The board of directors has an audit committee, a management development and
compensation committee, a stock option plan committee, an executive committee,
and a nominating committee. Actions taken by these committees are reported to
the board of directors at the next board meeting. During 1999, each of the
Company's directors attended at least 75 percent of all meetings of the board of
directors and of all committees of which they were members, except Stanley K.
Hathaway, who attended 64 percent.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1999 MEMBERSHIP ROSTER
- ------------------------------------------------------------------------------------------------------------------
NAME BOARD AUDIT MD&C STOCK OPTION EXECUTIVE NOMINATING
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frederick M. Bohen X X* X*
- ------------------------------------------------------------------------------------------------------------------
G. Steven Farris X
- ------------------------------------------------------------------------------------------------------------------
Randolph M. Ferlic X X X X
- ------------------------------------------------------------------------------------------------------------------
Eugene C. Fiedorek X X
- ------------------------------------------------------------------------------------------------------------------
A. D. Frazier, Jr. X X X
- ------------------------------------------------------------------------------------------------------------------
Stanley K. Hathaway X X*
- ------------------------------------------------------------------------------------------------------------------
John A. Kocur X X X* X*
- ------------------------------------------------------------------------------------------------------------------
George D. Lawrence Jr. X X X
- ------------------------------------------------------------------------------------------------------------------
Mary Ralph Lowe X X X
- ------------------------------------------------------------------------------------------------------------------
F. H. Merelli X X
- ------------------------------------------------------------------------------------------------------------------
Rodman D. Patton X
- ------------------------------------------------------------------------------------------------------------------
Raymond Plank X* X X
- ------------------------------------------------------------------------------------------------------------------
Joseph A. Rice X X X
- ------------------------------------------------------------------------------------------------------------------
No. of Meetings in 1999 8 6 5 5 0 2
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Chairperson
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.
The management development and compensation committee reviews the Company's
management resources and structure, and administers the Company's compensation
programs and retirement, stock purchase and similar plans. The duties of the
stock option plan committee include the award and administration of option
grants under the Company's stock option plans.
The executive committee is vested with the authority to exercise the full power
of the board of directors, within established policies, in the intervals between
meetings of the board of directors. In addition to the general authority vested
in it, the executive committee may be vested with specific power and authority
by resolution of the board of directors.
7
<PAGE> 11
The duties of the nominating committee include recommending to the board of
directors the slate of director nominees submitted to the stockholders for
election at the annual meeting, and proposing qualified candidates to fill
vacancies on the board of directors without regard to race, sex, age, religion
or physical disability.
Stockholders wishing to recommend candidates for consideration by the nominating
committee should forward written recommendations, together with appropriate
biographical information and details of qualifications, to Apache's corporate
secretary. In order to be considered, recommendations must be received by the
deadline for submitting stockholder proposals set forth under the heading
"Stockholder Proposals."
DIRECTOR COMPENSATION
Employee directors do not receive additional compensation for serving on the
board of directors or any committee of the board. During 1999, non-employee
directors received an annual retainer of $30,000, of which $10,000 value was
paid in the form of shares of Apache common stock; plus $1,000 for each board of
directors or committee meeting attended, 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. In addition,
the chairman of each committee receives $4,000 annually for chairing their
respective committees.
Under the terms of the Company's non-employee directors' compensation plan, as
amended in 1998, non-employee directors can elect to defer receipt of all or any
portion of their retainers or meeting attendance fees and, subject to certain
parameters, can defer those amounts in the form of cash or in the form of shares
of Apache common stock. Amounts deferred in the form of cash accrue interest
equal to the Company's rate of return on its short-term marketable securities;
amounts deferred in the form of Apache common stock accrue dividends as if the
stock were issued and outstanding when such dividends were payable. All deferred
amounts, as well as accrued interest and dividends, are maintained in a separate
memorandum account for each participating non-employee director. Amounts are
paid out in cash and/or shares of common stock, as applicable, upon the
non-employee director's retirement or other termination of his or her
directorship, or on a specific date, in a lump sum or in annual installments
over a ten-year (or shorter) period. Three non-employee directors deferred a
portion of their fees during 1999.
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 benefits
are payable to the director's surviving spouse or designated beneficiary until
the earlier of the termination of the payment period or the death of the
surviving spouse or designated beneficiary. Benefits were paid under this plan
to three former directors who retired from the Company's board of directors
during 1997 and 1998.
The Company established an equity compensation plan for non-employee directors
in February 1994, 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 vest at a rate of 200 shares of common stock annually, with
unvested shares forfeited at the time the non-employee director ceases to be a
8
<PAGE> 12
member of the board. Awards are made from shares of common stock held in the
Company's treasury, and are automatic and non-discretionary. New non-employee
directors will receive awards of 1,000 shares of common stock on the July 1 next
succeeding their election to the board. All shares of common stock awarded under
the plan have full dividend and voting rights. The plan expires July 1, 2009,
with a maximum of 50,000 shares of common stock that may be awarded during the
term of the plan. As of July 1, 1999, an award of 1,000 shares of common stock
was made to each of six non-employee directors.
SECURITIES OWNERSHIP AND PRINCIPAL HOLDERS
The following tables set forth, as of February 29, 2000, 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,
and all directors and executive officers of the Company as a group. All
ownership information is based upon filings made by those persons with the
Securities and Exchange Commission (the "SEC") and upon information provided to
the Company.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
AMOUNT AND PERCENT OF
NATURE 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 8,840(2)(3) *
- ----------------------------------------------------------------------------------------------------------------
G. Steven Farris 173,536(4)(5) *
--------------------------------------------------------------------------------------
Randolph M. Ferlic 241,651(2)(6) *
--------------------------------------------------------------------------------------
Eugene C. Fiedorek 8,751(2) *
--------------------------------------------------------------------------------------
A. D. Frazier, Jr. 2,856(2) *
--------------------------------------------------------------------------------------
Stanley K. Hathaway 9,819(2) *
--------------------------------------------------------------------------------------
John A. Kocur 41,881(2) *
--------------------------------------------------------------------------------------
George D. Lawrence Jr. 21,606(2)(3)(7) *
--------------------------------------------------------------------------------------
Mary Ralph Lowe 34,651(2) *
--------------------------------------------------------------------------------------
F. H. Merelli 8,566(2)(3)(5) *
--------------------------------------------------------------------------------------
Rodman D. Patton 5,011 *
--------------------------------------------------------------------------------------
Raymond Plank 370,433(4)(5) *
--------------------------------------------------------------------------------------
Joseph A. Rice 7,751(2) *
--------------------------------------------------------------------------------------
Roger B. Plank 178,522(4)(5) *
--------------------------------------------------------------------------------------
Lisa A. Floyd 58,435(4)(5) *
--------------------------------------------------------------------------------------
Z. S. Kobiashvili 32,425(4) *
--------------------------------------------------------------------------------------
All directors, nominees, and executive
officers as a group (including the above named
persons) 1,410,714(4)(5) 1.24
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents less than one percent of outstanding shares of common stock.
(1) All ownership is sole and direct unless otherwise noted. Inclusion of any
common 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 restricted common shares awarded under the Company's equity
compensation plan for non-employee directors.
(footnotes continued on following page)
9
<PAGE> 13
(3) Includes the following common share equivalents related to retainer fees
deferred under the Company's non-employee directors' compensation plan: Mr.
Bohen -- 3,989; Mr. Lawrence -- 619; and Mr. Merelli -- 619.
(4) Includes the following common shares issuable upon the exercise of
outstanding employee stock options which are exercisable within 60 days: Mr.
Farris -- 51,774; Mr. Raymond Plank -- 177,400; Mr. Roger Plank -- 98,250;
Ms. Floyd -- 52,125; Mr. Kobiashvili -- 32,425; and all directors and
executive officers as a group -- 586,647.
(5) Includes units held by the trustee of the Company's 401(k) Savings Plan
equivalent to the following common shares: Mr. Farris -- 18,365; Mr.
Merelli -- 6,825; Mr. Raymond Plank -- 1,360; Mr. Roger Plank -- 14,940; Ms.
Floyd -- 6,310; and all directors and executive officers as a
group -- 79,108.
(6) Includes 17,500 common shares owned indirectly by Dr. Ferlic through his
interest in Surgical Services of the Great Plains, P.C. Employee Benefit
Trust, and 6,000 common shares owned directly by Ferlic Investments, Ltd. in
which Dr. Ferlic owns a 36-percent interest. Also includes a total of 5,400
common shares held by Dr. Ferlic's daughters, son and grandchildren, as to
which he disclaims beneficial ownership.
(7) Includes 18,750 common shares issuable upon the exercise of outstanding
stock options which are fully exercisable. See "Certain Business
Relationships and Transactions".
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF CLASS
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP(2) OUTSTANDING
<S> <C> <C> <C>
$2.015
Depositary Shares(1) G. Steven Farris 1,610 *
Randolph M. Ferlic 4,320(3) *
Eugene C. Fiedorek 3,185 *
Mary Ralph Lowe 3,000 *
Raymond Plank 7,025 *
All directors, nominees and executive
officers as a group (including the
above named persons) 19,140 *
</TABLE>
* Represents less than one percent of outstanding depositary shares.
(1) Each depositary share represents 1/50th of a share of Series C Preferred
Stock.
(2) All ownership is sole and direct unless otherwise noted. Inclusion of any
depositary shares not owned directly shall not be construed as an admission
of beneficial ownership.
(3) Includes a total of 2,580 depositary shares held by Dr. Ferlic's daughters
and son, as to which he disclaims beneficial ownership. Also includes 130
depositary shares owned indirectly by Dr. Ferlic through his interest in
Surgical Services of the Great Plains, P.C. Employee Benefit Trust.
10
<PAGE> 14
The following table sets forth the only persons known to the Company, as of
February 29, 2000, to be the owners of more than five percent of outstanding
shares of the Company's equity securities, according to reports filed with the
SEC:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF CLASS
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
<S> <C> <C> <C>
Common Stock, FMR Corp. 9,825,436(1)(2) 8.65
par value $1.25 82 Devonshire St.
Boston, Massachusetts 02109
$2.015 Wells Fargo & Company 405,605(4) 5.86
Depositary Shares(3) 420 Montgomery Street
San Francisco, California 94104
</TABLE>
(1) Per Schedule 13G filed with the SEC, dated February 14, 2000.
(2) Does not include 1,101,082 shares held by Fidelity Management Trust Company
("FMTC") as trustee of the Company's 401(k) Savings Plan. FMTC is a
wholly-owned subsidiary of FMR Corp.
(3) Each depositary share represents 1/50th of a share of Series C Preferred
Stock.
(4) Per Schedule 13G filed with the SEC, dated February 10, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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. To the Company's knowledge, based on information furnished
to it and contained in reports provided pursuant to Section 16(a), as well as
written representations that no other reports were required for 1999, it appears
that Mr. Plank, the Company's chairman and chief executive officer, filed two
late reports, one relating to a purchase of Apache's $2.015 depositary shares
and the other concerning a sale of common shares by the trustee of a charitable
unitrust over which Mr. Plank does not have investment control. Mr. Frazier, a
director of the Company, also filed two late reports, each relating to a
purchase of common shares made with additional cash investments through the
Company's dividend reinvestment plan.
11
<PAGE> 15
EXECUTIVE OFFICERS OF THE COMPANY
Biographical information concerning the executive officers of the Company is set
forth below. Biographical information concerning Raymond Plank and G. Steven
Farris is set forth above under the caption "Continuing Directors."
<TABLE>
<S> <C>
- ---------------------------------------------------------
MICHAEL S. BAHORICH, 43, was appointed vice
president -- exploration and production technology in
January 1999, having been vice president -- exploration
technology since December 1997 and the Company's chief
geophysicist since 1996. From 1981 until he joined the
Company, Mr. Bahorich held positions of increasing
responsibility at Amoco Corporation in Denver, Colorado
and Tulsa, Oklahoma, most recently as a resource manager
for Amoco's mid-continent business unit.
MATTHEW W. DUNDREA, 46, was appointed vice president and
treasurer in July 1997, having been the Company's
treasurer since March 1996 and assistant treasurer since
1994. Prior to that, he was assistant treasurer from 1991
to 1994, manager -- cash management from 1986 to 1991,
and manager -- economic analysis from 1984 to 1986, for
Union Texas Petroleum Holdings, Inc., Houston, Texas.
ROBERT J. DYE, 44, was appointed vice
president -- investor relations in May 1997, having been
director of investor relations since 1995. Prior to that,
Mr. Dye held positions of increasing responsibility in
the corporate planning area since joining the Company in
1992. Formerly, he was planning manager for the offshore
division of BP Exploration, Houston, Texas, from 1988 to
1992.
LISA A. FLOYD, 42, has been vice president -- business
development and E&P services since December 1998, having
been vice president -- business development since
September 1997, and vice president -- technical services
since January 1995. Ms. Floyd has held positions of
increasing responsibility in the reservoir engineering
area since joining the Company in 1984.
ZURAB S. KOBIASHVILI, 57, has been vice president and
general counsel of the Company since 1994. From 1991 to
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 1993 as vice
president and general counsel. Mr. Kobiashvili was vice
president and general counsel for Conquest Exploration
Company, Houston, Texas, from 1984 to 1991.
ANTHONY R. LENTINI, 50, has been vice president -- public
and international affairs since January 1995. Prior to
joining the Company, he was vice president of public
affairs for Mitchell Energy & Development Corp., The
Woodlands, Texas, from 1988 through 1994.
</TABLE>
12
<PAGE> 16
<TABLE>
<S> <C>
- ---------------------------------------------------------
THOMAS L. MITCHELL, 39, was appointed vice president and
controller in July 1997, having been the Company's
controller and chief accounting officer since February
1996. He held various positions in the Company's natural
gas marketing operation from 1990 through 1995, and
served as accounting manager for the Company's Gulf Coast
operations from 1989 to 1990. Prior to joining the
Company, Mr. Mitchell was a manager with Arthur Andersen
& Co., an independent public accounting firm, from 1982
through 1988.
CHERI L. PEPER, 46, was appointed corporate secretary of
the Company in May 1995, having been assistant secretary
since 1992. Prior to joining the Company, she was
assistant secretary for Panhandle Eastern Corporation
(subsequently PanEnergy Corp.) since 1988.
ROGER B. PLANK, 43, was appointed vice president and
chief financial officer in July 1997, having been vice
president -- planning and corporate development since
March 1996 and vice president -- corporate planning since
1994. Prior to that, he was the Company's vice
president -- external affairs from 1993 to 1994, and vice
president -- corporate communications from 1987 to 1993.
The Company's chairman and chief executive officer is Mr.
Plank's father.
DANIEL L. SCHAEFFER, 50, was appointed vice
president -- human resources in July 1997, having been
director of human resources since 1990. He was director
of training and organizational development for the
Company from 1987 to 1990.
</TABLE>
13
<PAGE> 17
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 SEC rules
relating to disclosure of executive compensation. The persons included in this
table are the Company's chief executive officer and the four other most highly
compensated executive officers who were serving as executive officers of the
Company at year-end 1999.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- AWARDS
OTHER -----------------------------
ANNUAL RESTRICTED SECURITIES ALL OTHER
SALARY BONUS COMPEN- STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) SATION($) AWARDS($) OPTIONS/SARS(#) ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond Plank 1999 743,750 550,000 0 0 50,000(2) 97,050(3)
Chairman of the Board and 1998 750,000 65,000 0 0 42,700(2) 134,988(3)
Chief Executive Officer 1997 750,000 374,900 0 0 24,900(2) 138,708(3)
- ---------------------------------------------------------------------------------------------------------------------------------
G. Steven Farris 1999 555,001 550,000 8,005(5) 168,758(6) 50,000(2) 92,377(3)(4)
President and Chief Operating Officer 1998 529,178 60,000 6,855(5) 0 35,600(2) 109,406(3)(4)
1997 491,680 245,700 4,752(5) 0 16,600(2) 99,606(3)(4)
- ---------------------------------------------------------------------------------------------------------------------------------
Roger B. Plank 1999 265,000 196,300 1,389(5) 0 15,950(2) 43,276(3)(4)
Vice President and 1998 254,383 80,400 1,500(5) 0 21,300(2) 48,316(3)(4)
Chief Financial Officer 1997 226,670 113,300 902(5) 0 32,000(2) 42,490(3)(4)
- ---------------------------------------------------------------------------------------------------------------------------------
Lisa A. Floyd 1999 241,250 180,900 989(5) 0 10,600(2) 38,496(3)(4)
Vice President -- Business 1998 214,670 72,300 1,054(5) 0 13,200(2) 40,284(3)(4)
Development and E&P Services 1997 197,500 100,000 1,157(5) 0 26,100(2) 38,328(3)(4)
- ---------------------------------------------------------------------------------------------------------------------------------
Z. S. Kobiashvili 1999 240,000 177,800 5,275(5) 0 10,850(2) 47,448(3)(4)
Vice President and General Counsel 1998 230,417 50,100 4,250(5) 0 13,800(2) 55,027(3)(4)
1997 218,333 107,800 5,340(5) 0 7,000(2) 52,132(3)(4)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes amounts awarded under the Company's incentive compensation plans
for performance in the year indicated.
(2) Shares of the Company's common stock subject to options awarded during 1999,
1998 and 1997. These stock options were granted on September 22, 1999, May
5, 1999, September 17, 1998, April 29, 1998, July 17, 1997 and May 1, 1997
under the terms of the 1995 Stock Option Plan or the 1998 Stock Option Plan.
There were no adjustments or amendments during the last fiscal year to the
exercise price of stock options previously granted to any of the named
executive officers.
(3) Includes Company contributions under the Company's 401(k) Savings Plan, the
Company's Money Purchase Retirement Plan, and related Non-Qualified
Retirement/Savings Plan for 1999, 1998 and 1997, respectively, in the
following amounts: Mr. Raymond Plank -- $97,050, $134,988 and $138,708; Mr.
Farris -- $73,200, $92,985 and $88,222; Mr. Roger Plank -- $39,948, $44,722
and $40,329; Ms. Floyd -- $36,126, $37,760 and $35,556; and Mr.
Kobiashvili -- $34,812, $44,846 and $39,340.
(4) Includes premium for executive life insurance benefits for 1999, 1998 and
1997, respectively, in the following amounts: Mr. Farris -- $19,177, $16,421
and $11,384; Mr. Roger Plank -- $3,328, $3,594 and $2,161; Ms.
Floyd -- $2,370, $2,524 and $2,772; and Mr. Kobiashvili -- $12,636, $10,181
and $12,792.
(5) Amounts reimbursed for the payment of taxes relating to executive life
insurance benefits.
(6) On December 17, 1998, the Company's board of directors granted a conditional
stock award to Mr. Farris for a total of 100,000 shares of the Company's
common stock. The award is composed of five periodic installments,
commencing on January 1st of each of the next five years, and vesting on the
fifth anniversary following the applicable commencement date (subject to
acceleration under specific circumstances). To receive each installment,
which is payable 40 percent in cash and 60 percent in stock, Mr. Farris must
be employed by the
(footnotes continued on following page)
14
<PAGE> 18
Company on the applicable commencement and vesting dates. For December 31,
1998, the last business day preceding the January 1, 1999 commencement date,
the per share closing price of the Company's common stock was $25.3125. Mr.
Farris has all voting, dividend and liquidation rights for each installment
of shares as of the applicable commencement date listed below:
6,667 shares commencing January 1, 1999, vesting January 1, 2004
13,333 shares commencing January 1, 2000, vesting January 1, 2005
20,000 shares commencing January 1, 2001, vesting January 1, 2006
26,667 shares commencing January 1, 2002, vesting January 1, 2007
33,333 shares commencing January 1, 2003, vesting January 1, 2008
OPTION/SAR GRANTS TABLE
The table below provides supplemental information relating to the Company's
grants of options during 1999 to the executive officers named in the Summary
Compensation Table above, including the relative size of each grant, and each
grant's exercise price and expiration date. There were no stock appreciation
rights ("SARs") granted during the last fiscal year. Also included, in
compliance with SEC rules on disclosure of executive compensation, is
information relating to the estimated present value of the options granted,
based upon principles of the Black-Scholes option pricing model. The
Black-Scholes model utilizes numerous arbitrary assumptions about financial
variables such as interest rates, stock price volatility and future dividend
yield. Neither the option values reflected in the table nor the assumptions
utilized in arriving at the values should be considered indicative of future
stock performance.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------
NUMBERS OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1)(2) FISCAL YEAR ($/SH)(3) DATE ($)(4)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Raymond Plank 25,000/0 2.95/0 33.3125 05/05/2009 301,000
25,000/0 2.95/0 41.5000 09/22/2009 395,025
- ---------------------------------------------------------------------------------------------------------------------------------
G. Steven Farris 25,000/0 2.95/0 33.3125 05/05/2009 301,000
25,000/0 2.95/0 41.5000 09/22/2009 395,025
- ---------------------------------------------------------------------------------------------------------------------------------
Roger B. Plank 7,950/0 0.94/0 33.3125 05/05/2009 95,718
8,000/0 0.94/0 41.5000 09/22/2009 126,408
- ---------------------------------------------------------------------------------------------------------------------------------
Lisa A. Floyd 5,300/0 0.62/0 33.3125 05/05/2009 63,812
5,300/0 0.62/0 41.5000 09/22/2009 83,745
- ---------------------------------------------------------------------------------------------------------------------------------
Z. S. Kobiashvili 5,400/0 0.64/0 33.3125 05/05/2009 65,016
5,450/0 0.64/0 41.5000 09/22/2009 86,115
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This column sets forth the number of shares of the Company's common stock
subject to options granted on May 5, 1999 under the terms of the 1995 Plan
and on September 22, 1999 under the terms of the 1998 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 specific circumstances 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.
(footnotes continued on following page)
15
<PAGE> 19
Options granted under the 1995 Plan and the 1998 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 stock option plan 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 participant in an amount
necessary to pay the exercise price of all or any portion of the options
then held by the participant; pay cash to any or all participants (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 SARs granted during 1999. There were no adjustments or
amendments during 1999 to the exercise price of stock options previously
granted to any of the named executive officers. The 1995 Plan, the 1998 Plan
and the 1990 Stock Incentive Plan were amended in December 1998 to remove
unused provisions allowing for the repricing of outstanding stock options.
(3) The exercise price is the closing 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) The grant date present value is based on the Black-Scholes option pricing
model adapted for use in calculating the fair value of executive stock
options, using the following assumptions for the grants made May 5, 1999 and
September 22, 1999, respectively: volatility -- 33.57 and 34.13 percent;
risk free rate of return -- 5.32 and 5.96 percent; dividend yield -- 0.84
and 0.67 percent; and expected option life -- five years. 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.
(footnotes continued on following page)
16
<PAGE> 20
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 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 held at year end. Year-end values are based
arbitrarily on the closing price of the Company's common stock for December 31,
1999, do not reflect the actual amounts, if any, which may be realized upon the
future exercise of remaining stock options, 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>
SHARES NUMBER OF SECURITIES UNDERLYING
ACQUIRED ON VALUE UNEXERCISED OPTIONS/SARS AT
EXERCISE REALIZED FY-END(#)(3)
NAME (#)(1) ($)(2) EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Raymond Plank 5,000 90,000 166,725 105,675
G. Steven Farris 90,501 1,608,736 42,874 91,725
Roger B. Plank 10,000 255,000 89,700 54,650
Lisa A. Floyd 7,000 141,250 44,925 40,075
Z. S. Kobiashvili 0 0 30,125 26,425
VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FY-END($)(3)(4)
NAME EXERCISABLE UNEXERCISABLE
<S> <C> <C>
Raymond Plank 1,267,389 229,036
G. Steven Farris 160,311 190,417
Roger B. Plank 1,034,350 204,919
Lisa A. Floyd 268,111 145,389
Z. S. Kobiashvili 241,017 84,777
</TABLE>
(1) Number of shares with respect to which stock options were exercised during
1999.
(2) Fair market value on date of exercise minus the exercise price of stock
options.
(3) There were no SARs settled or outstanding at any time during the last fiscal
year for any of the named executive officers.
(4) Based on the closing price of $36.9375 per share of the Company's common
stock as reported on The New York Stock Exchange, Inc. Composite
Transactions Reporting System for December 31, 1999.
17
<PAGE> 21
THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
This report is issued by the management development and compensation committee
of the board of directors to set out the executive compensation policies and
programs of the Company.
The objective of the Company's executive compensation program is to attract and
retain executives capable of leading the Company in a complex, competitive and
changing industry. A capable, highly-motivated senior management is an integral
part of the Company's continued success. The Company's financial performance is
in large part due to the talent and efforts of the Company's executive officers.
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.
BASE SALARY
The committee believes that the most effective way to compete in the executive
labor market is to offer executives a competitive 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 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 to establish a logical 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 about the identified
companies from independent compensation resources. Finally, easily-compared
positions are priced in terms of salary ranges by reviewing the comparative
industry data and other surveys to establish relative salary ranges for all key
executive positions in the Company. Base salaries are targeted to fall at or
above the median of executive salaries paid by comparable companies, and for
1999 they generally correspond to that practice. The committee sets each
executive's salary taking into account the individual's contribution to the
Company's success, how well the individual's responsibilities are fulfilled, the
individual's specific performance, growth in qualifications for the individual's
job, and other relevant aspects of performance.
Base salaries of all executives are generally reviewed every 15 to 24 months.
Salary adjustments are made 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. However, changes in
the circumstances of a particular executive can prompt an interim compensation
adjustment. In mid-1998, the committee retained the services of an outside
compensation consultant, who was proposed by management and approved by the
committee, to review the base salaries of the Company's executives and confirm
that the salaries are competitive with those of comparable companies. That
review included comparative data from part, but not all, of the companies
comprising the Secondary Oils Index reflected in the stock performance chart set
forth below. The exclusion from the review of some of the companies in the Index
was due to their integrated operations or operations in diversified industries.
Based on the factors discussed above and taking into consideration the outside
consultant's July 1998 report on their review, plus additional compensation data
available to the Company from other sources, five of the Company's officers
received increases in compensation during 1999 to reflect market changes and
increased responsibilities. However, only one of the executives named in the
Summary Compensation Table, Lisa Floyd, received an increase in base salary
during 1999.
18
<PAGE> 22
INCENTIVE BONUS
Executives, other than the Company's chief executive officer ("CEO") and the
Company's president (separate plan described below), are eligible to receive an
incentive bonus tied directly to the Company's achievement of specified
financial, operational and strategic objectives and the executive's achievement
of personal objectives. In the early months of the year, the committee
establishes a listing of corporate objectives based on those submitted by senior
management. The objectives are approved by both the committee and the full board
of directors and, in 1999, 75 percent of each executive's bonus depended upon
the Company's achievement of these specified objectives. Additionally, each
executive officer submits to his or her superior for approval personal goals
relating to financial strategies, operational improvements, program or project
enhancements, or other objectively determinable criteria. The achievement of
personal goals accounts for the remaining 25 percent of the executive's eligible
bonus. This incentive compensation plan effectively correlates a large portion
of executive compensation to predetermined corporate objectives and other
objectively determinable goals, all designed to translate into value for the
Company's stockholders. Committee policy provides for bonuses to be targeted at
50 percent of each executive's base salary and to exceed 50 percent if the
Company's performance warrants.
Executive bonuses paid in 2000 were based on management's achievement during
1999 of specific corporate objectives established by the committee (a) to
substantially grow the Company in the aggregate, (b) to attain substantial
increases in reserves and production growth while maintaining an acceptable
ratio of debt to capitalization, and (c) to implement strict cost control
measures throughout the Company. Additionally, the committee approved ten
operational, financial and administrative strategic objectives considered
critical to the Company's success and to maximizing stockholder value. The
Company has elected not to detail the individual items within the specified
strategic corporate objectives as disclosure of such information could provide a
competitive advantage to one or more of the Company's peers; however, the
objectives were annualized for incentive purposes and were broad enough to have
potential impact beyond 1999. To emphasize the growth objective, the committee
approved a bonus potential above the 50 percent target if the Company acquired
or brought under its management assets valued in excess of $1 billion while
maintaining an acceptable debt-to-capitalization ratio of 45 percent or less.
With the achievement of this important strategic objective and a very high
achievement level of all other major specified objectives setting the stage for
the Company's very successful year, the committee recommended and the full board
of directors unanimously approved an incentive bonus payment of 73.5 percent of
base salary for executive officers participating in the corporate plan.
The CEO and the president are each eligible to receive an incentive bonus under
a separate incentive compensation plan, which functions and is administered in
the same way as the plan described above except that their performance goals are
tied directly to the Company's annual financial and operational results,
including the performance of the Company's common stock, all as compared to the
results of a group of its peer companies. The goals include earnings,
production, finding costs, reserves and ratio of debt to capitalization. The
committee determined to pay the CEO and the president bonuses of 73.3 percent
and 72.8 percent of base salary, respectively, in recognition of their
leadership and for the Company's outstanding operational and financial
achievements during 1999.
In addition to the Company's incentive compensation plans, 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 (a) reflect the
19
<PAGE> 23
committee's decision to reward any executive whose extraordinary effort has
substantially benefited the Company and its stockholders during the year, (b)
are awarded only in exceptional circumstances, and (c) are in amounts relative
to the benefit provided to the Company. A special achievement bonus was paid to
one of the executive officers named in the Summary Compensation Table in
recognition of his leadership during 1999 in the following area: Steven Farris
in connection with the acquisition of properties from Shell Offshore, the
largest single transaction in the Company's history.
LONG-TERM INCENTIVES
Long-term incentives in forms relating to the Company's common stock serve to
align the interests of executive officers with the Company's stockholders by
tying a significant portion of each executive's total long-term compensation to
the continued growth of the Company and appreciation of its common stock. In
1999, the Company's executive officers received stock option grants under the
Company's 1995 and 1998 Stock Option Plans, both of which were amended in
December 1998 to remove unused provisions allowing for the repricing of
outstanding stock options. The grants of stock options made in 1999 to the
Company's officers named in the Summary Compensation Table presented above are
reflected in the Option/SAR Grants Table. Stock options and conditional grants
awarded to executives are proportionate to each officer's base salary and
benefit them only if stockholders also benefit from appreciating stock prices.
Individual stock option grants are targeted at the 50th percentile of similar
plans maintained by comparable companies, taking into account options previously
granted, vest over four years, and have an exercise price equal to the per share
closing price of the Company's common stock on the date of grant.
In May 1997, the Company's stockholders approved the 1996 Share Price
Appreciation Plan (the "Appreciation Plan"), under which conditional grants were
made to the Company's executive officers in October 1996. The conditional grants
under the Appreciation Plan were intended to provide specific individual
incentives toward achieving significant share price appreciation for the
Company's common stock based on attainment of price goals of $50 and $60 per
share prior to January 1, 2000. Although the Company achieved virtually all of
the ambitious operational and financial targets upon which the $50 and $60
prices were based, the price goals were not attained prior to January 1, 2000
and all such conditional grants terminated automatically under the terms of the
Appreciation Plan.
In recognition of his past contributions and expected future contributions to
the Company, Steven Farris, the Company's president and chief operating officer,
was granted a conditional stock award for a total of 100,000 shares of the
Company's common stock in December 1998. The award is composed of five periodic
installments, commencing on January 1, 1999 and on January 1st of each of the
next four years (2000 through 2003). Each installment vests on the fifth
anniversary following the applicable commencement date (subject to acceleration
under specific circumstances), and is payable 40 percent in cash and 60 percent
in the form of stock. To receive each installment, Mr. Farris must be employed
by the Company on the applicable commencement and vesting dates (see footnote 6
to the Summary Compensation Table presented above). In the event Mr. Farris
elects to terminate his employment with the Company or his employment is
terminated for cause, any unvested installments will be forfeited.
20
<PAGE> 24
CHIEF EXECUTIVE OFFICER
Raymond Plank, the Company's CEO, directs Apache's intensive, on-going programs
to monitor, analyze and respond creatively to the changes and new requirements
in the oil and gas industry. His activities include leadership in implementing
the Company's capital expenditure programs, and maintenance of sound business
relationships with the management of many of the nation's large oil and gas
companies. These relationships are important to Apache's strategic alliances and
to its acquisition approach, which emphasizes privately negotiated transactions
that develop and achieve mutual business benefits. Mr. Plank has also been
responsible for the Company's developing interest and successful exploration
efforts going forward in international areas such as Egypt, Australia, Poland
and China. As an active chief executive, he oversees all of the Company's major
business units and guides and develops Apache's senior management. Reporting
directly to Mr. Plank are the president and chief operating officer, the vice
president and chief financial officer, and the vice president and general
counsel.
Mr. Plank's base salary, incentive bonus and long-term incentives are determined
in the same manner as is the compensation for the Company's other executive
officers and are reflected in the Summary Compensation Table above. His last
base salary adjustment was effective January 1, 1996, and his bonus paid in 2000
was based on the Company's 1999 performance, as discussed above. Mr. Plank, as
the Company's most senior executive officer, prepares his personal goals in
consultation with the committee and periodically reports to the committee on his
progress toward achievement of those goals. Mr. Plank's employment agreement
prohibits the reduction of his salary below a specified amount. See "Employment
Contracts and Termination of Employment and Change-in-Control Arrangements."
Mr. Plank's 1999 base salary was within the committee's percentile targets and
took into account the following: Mr. Plank's active role in the Company's
management and leadership of successful acquisitions; the Company's financial
performance during 1998; the challenges and expectations for the Company in
1999; Mr. Plank's recognized stature as a spokesman for the oil and gas
industry; and his role as a Company founder and his 45 years of service as the
Company's senior executive officer. Mr. Plank's bonus paid in 2000 represented
73.3 percent of his base salary as noted above.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
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 tax year commencing on or after January 1, 1994, for the compensation paid
or accrued with respect to its chief executive officer and its four most highly
compensated executive officers (other than the chief executive officer). In
December 1995, the Internal Revenue Service issued final regulations
implementing the legislation, with the regulations effective as of January 1,
1994. Certain performance-based compensation is specifically exempt from the
limit if it meets the requirements contained in these final regulations. The
committee continues to review the Company's compensation plans based upon these
regulations and, from time to time, determines what further actions or changes
to the Company's compensation plans, if any, are appropriate. The Company
anticipates no loss of deductibility attributable to compensation paid or
accrued in 2000.
Grants of stock options made under the Company's 1990 Stock Incentive Plan, 1995
Stock Option Plan and 1998 Stock Option Plan qualify as "performance-based"
under the regulations. The Company's existing incentive compensation plans and
special achievement bonuses do not
21
<PAGE> 25
currently meet the requirements of the regulations, although they are designed
to reward the contribution and performance of employees and to provide a
meaningful incentive for achieving the Company's goals, which in turn enhances
stockholder value. While the committee cannot predict with certainty how the
Company's compensation policies may be further impacted by OBRA, it is
anticipated that executive compensation paid or accrued pursuant to any of the
Company's compensation plans that do not meet the requirements of the
regulations will not result in any significant loss of tax deductions in the
foreseeable future.
SUMMARY
According to information provided to the committee in July 1998 by its
independent compensation consultant, the amount of the Company's cash
compensation paid to all of its executive officers during 1999 was competitive
and slightly above the median for comparable companies. As shown on the
Performance Graph following this report, the cumulative total return on the
Company's common stock has substantially equaled that of the Dow Jones Secondary
Oil Index over the last five years. In view of the Company's competitive
performance, the committee believes that its current executive compensation
policy is successful in providing stockholders with talented, dedicated
executives at competitive compensation levels.
March 20, 2000 Management Development and Compensation
Committee
Frederick M. Bohen
A. D. Frazier, Jr.
John A. Kocur
George D. Lawrence Jr.
Joseph A. Rice
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<PAGE> 26
PERFORMANCE GRAPH
The following stock price performance graph is included in accordance with the
SEC's executive compensation disclosure rules and is intended to allow
stockholders to review the Company's executive compensation policies in light of
corresponding stockholder 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 stockholder 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, 1994 through December 31, 1999.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED DECEMBER 31, 1999
[GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Apache Corporation 100 119 143 144 105 155
S&P's Composite 500 Stock 100 138 169 226 290 351
DJ Secondary Oils Stock Index 100 116 143 151 111 125
</TABLE>
23
<PAGE> 27
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Raymond Plank serves the Company under an employment agreement entered into
in December 1975, amended and restated in December 1990 and amended in April
1996. The agreement has an undefined term and is terminable at will by the
Company's board of directors. Mr. Plank's annual compensation under the
agreement is determined by the board of directors, but may not be less than
$450,000. If his service as director and chief executive officer is terminated
by the board of directors, Mr. Plank will serve as advisor and consultant to the
Company for the remainder of his life at annual compensation equal to 50 percent
of his then-current annual compensation and will receive health, dental and
vision benefits for himself, his spouse and his eligible dependents during the
remainder of his life. Pursuant to the agreement and in exchange for
surrendering life insurance coverage, an annuity was purchased for Mr. Plank
that pays $31,500 annually until 2008. Mr. Plank has agreed not to render
service to any of the Company's competitors for the entire period covered by the
agreement. Upon Mr. Plank's death, a total of $750,000 shall be paid (a) to his
designee in equal monthly installments over ten years, or (b) if he has made no
designation, in a lump sum to his estate.
Mr. Farris serves the Company pursuant to an employment agreement, dated June 6,
1988, under which he receives a current annual salary of $550,000. The agreement
has an undefined term and may be terminated by either the Company or Mr. Farris
on 30 days advance written notice. If Mr. Farris' employment is terminated
without cause, or if he terminates his employment within 30 days of a reduction
in his salary without a proportionate reduction in the salaries of all other
Company executives, Mr. Farris will receive, for 36 months thereafter, (a) an
amount equal to his base salary as it existed 60 days prior to termination and
(b) 50 percent of the maximum amount for which he qualified under the Company's
incentive compensation plan, calculated on his base compensation as it existed
60 days prior to termination. In the event of Mr. Farris' death during the
36-month period, the amounts described above shall be paid to his heirs or
estate. Mr. Farris has agreed not to render service to any of the Company's
competitors for the term of his employment or, unless he is terminated without
cause, for 36 months thereafter.
On December 17, 1998, Mr. Farris was granted a conditional stock award, the
basic provisions of which are discussed above in the footnotes to the Summary
Compensation Table and under the caption "Long-Term Incentives" in the report on
executive compensation. Under the terms of the agreement for this award, the
vesting of one or more of the five periodic installments is subject to
acceleration under specific circumstances. Those circumstances generally relate
to (a) termination of Mr. Farris' employment other than for cause, (b) his death
or total disability, (c) an individual other than Mr. Raymond Plank or Mr.
Farris becoming the Company's chief executive officer, and (d) merger,
acquisition or other "change-in-control" of the Company.
In addition to the foregoing, the Company has established an income continuance
plan. The plan provides that 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.
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<PAGE> 28
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Frederick M. Bohen, John A. Kocur, A. D. Frazier, Jr., George D. Lawrence Jr.
and Joseph A. Rice served on the management development and compensation
committee of the Company's board of directors for all of 1999.
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 an employment agreement in place at the time of his retirement, Mr.
Kocur receives health, dental and vision benefits throughout his life.
Mr. Lawrence, a member of the committee since May 1997 and a director of the
Company since May 1996, is the former president and chief executive officer of
The Phoenix Resource Companies, Inc. ("Phoenix"). See "Certain Business
Relationships and Transactions." Pursuant to the terms of his employment
agreement with Phoenix, Mr. Lawrence received medical and dental benefits
through December 1997. Since that time, he has purchased medical and dental
coverage through the Company.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS
George D. Lawrence Jr., a member of the Company's board of directors and the
former president and chief executive officer of Phoenix, joined Apache's board
in conjunction with the Company's acquisition of Phoenix by a merger (the
"Merger") on May 20, 1996, through which Phoenix became a wholly-owned
subsidiary of Apache. Merger consideration totaled $396.3 million, consisting of
approximately 12,190,000 shares of Apache's common stock valued at $26.00 per
share, $14.9 million of net value associated with Phoenix stock options assumed
by Apache, and $64.5 million in cash.
Upon consummation of the Merger, Apache assumed Phoenix stock options that
remained outstanding on May 20, 1996, including those granted to Mr. Lawrence
pursuant to Phoenix's 1990 Employee Stock Option Plan. As of February 29, 2000,
there is an option outstanding and exercisable by Mr. Lawrence covering a total
of 18,750 shares of Apache common stock at an exercise price of $24.83 per
share.
In the ordinary course of business, Apache paid to Maralo, LLC ("Maralo") during
1999 approximately $81,000 for Apache's proportionate share of workover costs
and routine expenses relating to nine oil and gas wells in which Apache owns
interests and for which Maralo is operator, and the Company received
approximately $346,000 in 1999 for its proportionate share of revenues from
those wells, of which approximately $141,000 was paid directly to Apache by
Maralo or related entities. During 1999, Apache paid approximately $4,900 to
Maralo relating to four oil and gas wells in which Maralo owns royalty interests
and of which the Company is operator. Effective December 1, 1999, Maralo paid
the Company $900,000 to purchase Apache's interests (ranging from ten to 44
percent) in certain oil and gas leases located in the Nash Draw Field, Eddy
County, New Mexico, for which Maralo is operator. Also during 1999, Maralo sub-
leased certain office space from Apache, for which Maralo paid Apache
approximately $64,000. Mary Ralph Lowe, a member of Apache's board of directors,
is president, chief executive officer and the sole stockholder of Maralo.
In the ordinary course of business, Key Production Company, Inc. ("Key") paid to
Apache during 1999 approximately $3 million for Key's proportionate share of
drilling and workover costs,
25
<PAGE> 29
mineral interests, and routine expenses relating to 380 oil and gas wells in
which Key owns interests and of which Apache is the operator. Key received
approximately $6.3 million in 1999 for its proportionate share of revenues from
those interests, of which approximately $4.2 million was paid directly to Key by
Apache or related entities. F. H. Merelli, a member of the Company's board of
directors, is chairman of the board, president and chief executive officer of
Key.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP was the Company's independent public accounting firm for the
fiscal year 1999 and has been selected to continue in that capacity for 2000.
Representatives of Arthur Andersen LLP 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.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the SEC and the Company's
bylaws. Should a stockholder wish to have a proposal appear in the Company's
proxy statement for next year's annual meeting, under the regulations of the
SEC, it must be received by the Company's corporate secretary (at 2000 Post Oak
Boulevard, Suite 100, Houston, Texas 77056-4400) on or before November 30, 2000.
SOLICITATION OF PROXIES
Solicitation of proxies for use at the 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 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 shares of the Company's
common stock for whom they are record holder, and the Company will, upon
request, reimburse reasonable forwarding expenses. The Company has retained
Georgeson Shareholder Communications Inc. to assist in soliciting proxies from
brokers, bank nominees and other institutional holders for a fee not to exceed
$7,500, plus expenses. All costs of the solicitation will be borne by the
Company.
By order of the Board of Directors
APACHE CORPORATION
/s/ C. L. PEPER
C. L. PEPER
Corporate Secretary
NOTE: STOCKHOLDERS ARE REQUESTED TO PROMPTLY VOTE THEIR SHARES USING ONE OF THE
METHODS EXPLAINED ON PAGE 1 OF THIS PROXY STATEMENT.
26
<PAGE> 30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 4, 2000
AND PROXY STATEMENT
[APACHE LOGO]
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
(LOGO)Printed on recycled paper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 31
APACHE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 4, 2000
10:00 A.M.
DOUBLETREE HOTEL AT POST OAK
2001 POST OAK BOULEVARD
HOUSTON, TEXAS
- --------------------------------------------------------------------------------
APACHE CORPORATION - 2000 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Randolph M. Ferlic, Eugene C. Fiedorek and F. H.
Merelli as Proxies, with the power of substitution, and authorizes them to
represent the undersigned at the annual meeting of stockholders to be held May
4, 2000, or any adjournment thereof, and to vote all the shares of common stock
of Apache Corporation held of record by the undersigned on March 15, 2000, as
designated on the reverse side.
This Proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS.
See reverse side for voting instructions.
<PAGE> 32
------------------------------
COMPANY #
CONTROL #
------------------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY TELEPHONE-TOLL FREE-1-800-240-6326-QUICK***EASY***IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 noon (central time) on May 3, 2000.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
o Follow the simple instructions provided.
VOTE BY INTERNET-HTTP://www.eproxy.com/apa/-QUICK***EASY***IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 noon (central time) on May 3, 2000.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
provided or return it to Apache Corporation, c/o Shareowner ServicesSM, P.O. Box
64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
o Please detach here o
<TABLE>
<S> <C> <C> <C>
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEM 1.
1. Election of directors -- director nominees:
01 Frederick M. Bohen 04 Charles J. Pitman [ ] Vote FOR [ ] Vote WITHHELD
02 George D. Lawrence Jr. 05 Joseph A. Rice all nominees from all nominees
03 Rodman D. Patton (except as marked)
-----------------------------------------------
(Instructions: To withhold authority to vote for any individual nominee,
write the number(s) of the nominee(s) in the box to the right.)
-----------------------------------------------
2. The Proxies are authorized to vote in their best judgment upon such other business as may properly come
before the meeting.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE.
Address Change? Mark Box [ ] Date
Indicate change below: ------------
-----------------------------------------------
-----------------------------------------------
Signature(s) In Box
Please sign exactly as your name(s) appear on Proxy.
If held in joint tenancy, all persons must sign. Trustees,
administrators, etc. should include title and authority.
Corporations should provide full name of corporation
and title of authorized officer signing the proxy.
</TABLE>
