<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
ANADARKO PETROLEUM CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SUZANNE SUTER
--------------------------------------------------------------------------------
(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
[ANADARKO LOGO]
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
March 20, 1995
TO THE STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders of
the Company which will be held in The Wyndham Hotel, Greenspoint, 12400
Greenspoint Drive, Houston, Texas, on Thursday, April 27, 1995, at 9:30 A.M.
The Notice of the Annual Meeting and Proxy Statement, which are attached,
provide information concerning the matters to be considered at the meeting. In
addition, the general operations of the Company will be discussed and
stockholders will be afforded the opportunity to ask questions.
We would appreciate your signing and returning your proxy in the enclosed
envelope as soon as possible, whether or not you plan to attend the meeting.
Please sign, date and return the enclosed proxy in the self-addressed,
postage-paid return envelope. If you do not return the signed proxy, your proxy
cannot be counted. We value your opinions and encourage you to participate in
this year's Annual Meeting by voting your proxy.
Very truly yours,
/s/ ROBERT J. ALLISON, JR.
----------------------------------
ROBERT J. ALLISON, JR.
Chairman, President and Chief
Executive Officer
<PAGE> 3
[ANADARKO LOGO]
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 1995
Notice is hereby given that the Annual Meeting of Stockholders of Anadarko
Petroleum Corporation, a Delaware corporation (the "Company"), will be held in
The Wyndham Hotel, Greenspoint, 12400 Greenspoint Drive, Houston, Texas, on
Thursday, April 27, 1995, at 9:30 A.M., for the purpose of:
(1) Electing two Class III directors for terms of three years, each to
hold office until the expiration of his term and until his successor shall
have been elected and shall have qualified;
(2) Approving the amendment to the Annual Incentive Bonus Plan; and,
(3) Transacting such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
A record date of March 3, 1995, has been fixed for determining stockholders
entitled to notice of, and to vote at, the Annual Meeting of Stockholders, and
only holders of Common Stock of record at the close of business on the record
date will be entitled to receive notice of, and to vote at, such meeting or any
adjournment or adjournments thereof.
Whether or not you expect to be present at the meeting, please sign, date
and return the enclosed proxy in the enclosed addressed envelope, which requires
no postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SUZANNE SUTER
----------------------------------
SUZANNE SUTER
Corporate Secretary
Dated: March 20, 1995
Houston, Texas
<PAGE> 4
[ANADARKO LOGO]
P. O. BOX 1330
HOUSTON, TEXAS 77251-1330
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1995
---------------------
GENERAL INFORMATION
This statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Anadarko Petroleum Corporation, a Delaware
corporation (the "Company" or "Anadarko"), of proxies for use at its Annual
Meeting of Stockholders to be held in The Wyndham Hotel, Greenspoint, 12400
Greenspoint Drive, Houston, Texas, on Thursday, April 27, 1995, at 9:30 A.M.,
for the purposes set forth in the accompanying notice of the meeting. Proxy
material is being mailed to holders of the Company's common stock, par value
$0.10 per share ("Common Stock"), on or about March 20, 1995.
A stockholder may, at any time prior to the meeting, revoke a proxy by
giving written notice of such revocation addressed to the Corporate Secretary of
the Company at P. O. Box 1330, Houston, Texas 77251-1330. Unless revoked prior
to its exercise, any proxy given pursuant to this solicitation will be voted at
the meeting. Also, a stockholder may attend the meeting and vote in person
whether or not the stockholder has previously given a proxy.
RECORD DATE AND VOTING AT THE MEETING
On March 3, 1995, the record date for the determination of stockholders
entitled to vote at the meeting, the Company had 58,886,244 shares of Common
Stock outstanding, each of which will be entitled to one vote at the meeting.
Votes cast by proxy or in person at the meeting will be tabulated by the
election inspectors appointed for the meeting. The holders of a majority of the
shares entitled to vote at the meeting, whether present in person or represented
by proxy, will constitute a quorum for the transaction of business at the
meeting. Proxy cards that are not signed or that are not returned are treated as
not voted for any purpose.
All elections for directors shall be decided by a plurality of the votes
cast in respect thereof. If no voting direction is indicated on the proxy card,
the shares will be considered votes for the nominee. In accordance with Delaware
law, a stockholder 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 director.
Abstentions from voting with respect to proposals are treated as votes
against the particular proposal. If a broker indicates on a proxy that it does
not have discretionary authority as to certain shares to vote on a particular
proposal, those shares will not be considered as present and entitled to vote
with respect to that proposal.
<PAGE> 5
ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
The Board is divided into three classes of directors serving staggered
three-year terms. Class I and Class III each have two directors and Class II has
three directors.
At the meeting, the two Class III directors are to be elected for terms of
three years, each to hold office until the expiration of his term in 1998 and
until his successor shall have been elected and shall have qualified. It is the
intention of the persons named in the accompanying form of proxy to vote such
proxy, unless otherwise instructed, for the election of Messrs. Larry Barcus and
James L. Bryan for terms of three years. If either of these nominees should be
unable to serve, the proxies will be voted for the election of such other
persons as shall be determined by the persons named in the proxy, in accordance
with their judgment.
Messrs. Ronald Brown and John R. Gordon, Class I directors, were elected by
the stockholders in 1993 for terms of three years. Messrs. Conrad P. Albert,
Robert J. Allison, Jr. and Charles M. Simmons, Class II directors, were elected
by the stockholders in 1994 to each serve a three-year term.
INFORMATION ABOUT DIRECTORS
Certain information concerning the nominees for election as directors, and
those persons whose terms of office as directors will continue after the
meeting, is set forth below.
NOMINEES FOR ELECTION
LARRY BARCUS -- Mr. Barcus is Chairman of L. G. Barcus and Sons, Inc.,
Kansas City, Kansas, a general contractor with operations nationwide.
<TABLE>
<CAPTION>
AGE AT END BECAME A PROPOSED
OF 1995 DIRECTOR TERM EXPIRES
---------- -------- ------------
<S> <C> <C>
58 1986 1998
</TABLE>
JAMES L. BRYAN -- Mr. Bryan has been Senior Vice President Operations of
Dresser Industries, Inc. ("Dresser"), an oil field services company with
executive offices in Dallas, Texas, since February 1994. In May 1990, Mr. Bryan
was elected Vice President-Operations of Dresser. Mr. Bryan was President and
Chief Executive Officer of M-I Drilling Fluids Co., a Dresser/Halliburton
company from 1986 until May 1990.
<TABLE>
<CAPTION>
AGE AT END BECAME A PROPOSED
OF 1995 DIRECTOR TERM EXPIRES
---------- -------- ------------
<S> <C> <C>
59 1986 1998
</TABLE>
DIRECTORS CONTINUING IN OFFICE
CONRAD P. ALBERT -- Mr. Albert resides in New York and is engaged in
personal investments. He was Executive Vice President of Manufacturers Hanover
Trust Company, a banking corporation, New York, New York, from September 1983
through 1991. Mr. Albert is a director of Deep Tech International.
<TABLE>
<CAPTION>
AGE AT END BECAME A PRESENT
OF 1995 DIRECTOR TERM EXPIRES
---------- -------- ------------
<S> <C> <C>
49 1986 1997
</TABLE>
ROBERT J. ALLISON, JR. -- Mr. Allison has been Chairman of the Board and
Chief Executive Officer of the Company since October 1, 1986. Mr. Allison was
elected President of the Company in January 1993.
<TABLE>
<CAPTION>
AGE AT END BECAME A PRESENT
OF 1995 DIRECTOR TERM EXPIRES
---------- -------- ------------
<S> <C> <C>
56 1985 1997
</TABLE>
2
<PAGE> 6
RONALD BROWN -- Mr. Brown resides in Rancho Santa Fe, California, and is
engaged in personal investments. He retired as Executive Vice President of
Compass Bank, Houston, Texas in 1992. He had served in that position from 1991
when River Oaks Bank was acquired by Compass Bank. Prior to 1991 he was Vice
Chairman and President of River Oaks Bank, a banking association.
<TABLE>
<CAPTION>
AGE AT END BECAME A PRESENT
OF 1995 DIRECTOR TERM EXPIRES
---------- -------- ------------
<S> <C> <C>
62 1986 1996
</TABLE>
JOHN R. GORDON -- Mr. Gordon has been President of Deltec Asset Management
Corporation, a New York investment management company, since January 1988. He is
a director of Deltec Asset Management Corp., a registered investment company.
<TABLE>
<CAPTION>
AGE AT END BECAME A PRESENT
OF 1995 DIRECTOR TERM EXPIRES
---------- -------- ------------
<S> <C> <C>
47 1988 1996
</TABLE>
CHARLES M. SIMMONS -- Mr. Simmons is retired and resides in Fort Worth,
Texas where he is engaged in personal investments. Mr. Simmons is a director of
Photoprotective Technologies, Inc., a registered investment company.
<TABLE>
<CAPTION>
AGE AT END BECAME A PRESENT
OF 1995 DIRECTOR TERM EXPIRES
---------- -------- ------------
<S> <C> <C>
69 1986 1997
</TABLE>
COMMITTEES OF THE BOARD
The Board has a standing Executive Committee, Audit Committee and
Compensation and Benefits Committee (the "Compensation Committee"). Mr. Allison
is Chairman and Messrs. Brown and Bryan are members of the Executive Committee.
Mr. Bryan is Chairman and Messrs. Albert and Barcus are members of the Audit
Committee. Mr. Gordon is Chairman and Messrs. Brown and Simmons are members of
the Compensation Committee. During 1994, the Audit Committee met three times and
the Compensation Committee met four times. The Executive Committee did not meet
in 1994.
The Executive Committee reviews and, where appropriate, approves corporate
action with respect to the conduct of the business of the Company between Board
meetings. Actions taken by the Executive Committee are regularly submitted to
the Board at its next meeting for review by the full Board.
The Audit Committee recommends to the Board each year the appointment of
independent auditors for the following year. The Audit Committee considers the
independence of such auditors; reviews the fees for audit and nonaudit services;
reviews the plan, scope and results of the independent audit; reviews the
recommendations resulting from such audit and the responses of management to
such recommendations; reviews the plan, scope and results of the Company's
internal audit group's activities; reviews the recommendations resulting from
internal audits; and reviews the accounting controls of the Company that the
Audit Committee or the Board may deem necessary or desirable. This Committee
also reviews the annual financial statements issued by the Company to its
security holders and makes recommendations as to accounting and auditing
policies which, in its judgment, should receive the attention of the Board.
The Compensation Committee considers and approves certain remuneration
arrangements between the Company and its officers, including executive officers'
salaries; adopts or makes recommendations to the Board regarding the adoption of
compensation and employee benefit plans in which officers and certain key
employees of the Company and certain subsidiaries are eligible to participate;
and grants bonuses, stock options, restricted stock and other benefits pursuant
to Company plans. This Committee also reviews and makes recommendations with
respect to the election of officers of the Company, and when appropriate,
recommends the election to the Board of a Chief Executive Officer.
3
<PAGE> 7
MEETINGS
During 1994, the Board met five times. Each incumbent director of the
Company, during his term as a director in 1994, attended at least 75% of the
aggregate number of meetings of the Company's Board and Committees of which he
was a member.
VOTING SECURITIES AND PRINCIPAL HOLDERS
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock beneficially
owned, or as to which there is a right to acquire beneficial ownership within 60
days of February 28, 1995, by each continuing director, each nominee for
director, and all directors and executive officers of the Company as a group as
of February 28, 1995. No director, nominee for director or officer of the
Company owns and has the right to acquire more than 1% of the outstanding Common
Stock. All directors and officers of the Company as a group own beneficially, or
have the right to acquire, within 60 days of February 28, 1995, approximately
1.9% of the outstanding Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP
-------------------------------------
NUMBER
OF OPTIONS
SHARES EXERCISABLE TOTAL PERCENT
TITLE NAME OF BENEFICIALLY WITHIN BENEFICIAL OF
OF CLASS BENEFICIAL OWNER OWNED(1) 60 DAYS OWNERSHIP CLASS
-------- ---------------- ------------ ----------- ---------- -------
<S> <C> <C> <C> <C> <C>
Common Stock......... Robert J. Allison, Jr. 200,982 330,000 530,982 *
Common Stock......... Charles G. Manley 35,555 63,000 98,555 *
Common Stock......... Michael E. Rose 16,967 63,000 79,967 *
Common Stock......... Charles K. Abernathy 32,750 81,000 113,750 *
Common Stock......... John N. Seitz 19,662 71,600 91,262 *
Common Stock......... Conrad P. Albert 11,000 15,000 26,000 *
Common Stock......... Larry Barcus 1,000 35,000 36,000 *
Common Stock......... Ronald Brown 2,222 35,000 37,222 *
Common Stock......... James L. Bryan 1,000 35,000 36,000 *
Common Stock......... John R. Gordon 10,330 35,000 45,330 *
Common Stock......... Charles M. Simmons 10,000 35,000 45,000 *
Common Stock......... All directors and executive 346,468 798,600 1,140,068 1.9%
officer as a group, including
the above- named (16 persons)
</TABLE>
---------------
* Less than one percent.
(1) The directors and officers have sole voting and dispositive power of all
shares beneficially owned. Included are beneficially owned and undistributed
shares of Common Stock held in the Anadarko Employee Savings Plan. The
number does not include shares of Common Stock which the directors or
officers of the Company have the right to acquire within 60 days of February
28, 1995.
4
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to persons known to be the
beneficial owner of more than 5% of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF PERCENT
BENEFICIAL OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
-------------- ------------------------------------ --------- ----
<S> <C> <C> <C>
Common Stock............ Sonatrach Petroleum 6,000,000(1) 10.2%
Investment Corporation (Ireland) Limited
10, rue du Sahara
Hydra, Algiers, Algeria
</TABLE>
---------------
(1) According to information contained in a Schedule 13D filed with the
Securities and Exchange Commission (the "Commission"), dated May 11, 1993.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company purchases oil field services of companies including Dresser and
its affiliates and subsidiaries. In 1994, the aggregate amount paid to Dresser
and its affiliates and subsidiaries was approximately $671,000. Mr. Bryan, a
director of the Company, is Senior Vice President Operations of Dresser.
During 1989, Anadarko Algeria Corporation ("Anadarko Algeria"), a
wholly-owned subsidiary of the Company, entered into an agreement with
Sonatrach, an Algerian entreprise nationale ("Sonatrach") which gives Anadarko
Algeria the right to explore for and produce liquid hydrocarbons in Algeria.
Sonatrach is wholly-owned by the People's Democratic Republic of Algeria and
owns 99.9% of the capital stock of Sonatrach Petroleum Investment Corporation
(Ireland) Limited. As of December 31, 1994, a total of approximately $105.6
million in exploration costs had been incurred by Anadarko Algeria of which
approximately $33.2 million was incurred in 1994.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer
of $30,000 for serving on the Board of Directors, plus $1,250 for attendance at
each meeting of the Board. In addition, non-employee directors receive an annual
retainer of $3,000 for serving on the Audit or the Compensation Committee, plus
$1,250 for each committee meeting attended. Non-employee directors who serve as
a Chairman of a committee receive an additional annual retainer of $3,000. All
directors are reimbursed for expenses incurred in attending Board and committee
meetings. Employees of the Company who are also directors do not receive a
retainer or fees for Board and committee meetings attended.
The Company has a stock option plan for directors who are not employees of
the Company. Under the Anadarko Petroleum Corporation 1988 Stock Option Plan for
Non-Employee Directors (the "1988 Plan"), each non-employee director receives an
initial grant of 10,000 options which vest equally over a two-year period. In
addition, on October 27th of each year, each non-employee director is granted an
option to purchase 5,000 shares of Common Stock at the fair market value on such
date. All outstanding options granted under the 1988 Plan are options which do
not constitute incentive stock options ("IS0s") within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code") ("NQOs"). All outstanding
options under the 1988 Plan are exercisable no earlier than one year from the
date of grant and expire ten years from the date of grant. Options may not be
awarded or granted after October 26, 1998, or the earlier termination of the
1988 Plan. The 1988 Plan was amended in 1994 to permit non-employee directors to
receive a portion of their retainer and/or meeting fees in Common Stock.
The Company has a Director Retirement Income Plan for its non-employee
directors. Directors having ten or more years of service on the Board and having
attained age 65 will be eligible to receive retirement income equal to 60% of
the director's annual retainer fee in effect as of the director's retirement
date from the Board. Directors having less than ten years of service will accrue
a benefit of 6% per year of service of the director's annual retainer fee in
effect as of such director's retirement. Such retirement income will become
5
<PAGE> 9
payable on the later of the director's retirement date or age 65 and will be
payable in equal installments on a monthly basis during the life of the director
with 120 months of payments guaranteed.
The Company has a Director Deferred Compensation Plan (the "Director
Deferred Plan") which allows non-employee directors to defer all or part of
their director annual retainer fee and provides unfunded benefit payments in
amounts related to the amount of compensation deferred, age of the director at
the time the compensation is deferred and accrued interest. Amounts previously
deferred accrue interest at 20% per annum. The Director Deferred Plan may
provide in-service payments during the time the director is a member of the
Board. Upon retirement, death, disability or the attainment of age 65, the
participant will receive annual payments, over a ten-year period, or in certain
cases on an accelerated or lump sum basis. The Company has obtained life
insurance policies to help fund its contractual obligations. There have been no
deferrals under the Director Deferred Plan since 1990.
COMPENSATION AND BENEFITS COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing and
administering executive compensation programs which promote the Company's
strategic objectives, thereby enhancing stockholder value. This report on
executive compensation describes the compensation decisions made by the
Compensation Committee during 1994 with respect to the executive officers of the
Company. The Compensation Committee is comprised entirely of directors who are
not employees of the Company.
COMPENSATION PHILOSOPHY OF THE COMPANY
The key elements of Anadarko's total executive compensation program include
base salary, annual bonus and long-term stock incentive plans. These plans have
been developed to attract, reward and retain key personnel critical to the
long-term success of the Company through incentive programs that are competitive
within the oil and gas industry. Anadarko's compensation programs are designed
to provide executive officers total compensation levels above the average of the
Company's competitive market with the opportunity to be within the top quartile
of a select peer group of comparable public oil and gas companies, to the extent
that Company and executive performance on an individual and collective basis so
warrants. In 1994, Mr. Allison's total compensation was within the top quartile
of the select peer group.
In structuring the Company's compensation programs and in determining the
appropriateness of awards, the Compensation Committee's primary consideration is
the achievement of the Company's strategic business goals, taking into
consideration competitive practice, market economics and other factors. To the
extent fulfilling these goals is consistent with favorable tax treatment under
section 162(m) of the Code, the Compensation Committee is committed to making
awards that qualify for the performance-based deduction. In 1994, stockholders
approved the Company's Annual Incentive Bonus Plan (the "Incentive Plan") and
1993 Stock Incentive Plan (the "1993 Plan"). These plans were designed to
satisfy the requirements for exempting compensation attributable to certain
awards made under the plans from the $1 million limit under section 162(m). At
the time of stockholder approval, the Company considered the plans to be in
compliance with the proposed regulations under section 162(m). In December 1994,
the Internal Revenue Service (the "IRS") published amendments to the proposed
section 162(m) regulations. Upon review of these amendments, the Company
believes the language contained in the 1993 Plan continues to satisfy the
proposed and amended IRS requirements for exempting compensation arising upon
the exercise of stock options from the $1 million limit. However, the Company
has determined that the proposed amendments require the Company to amend the
Incentive Plan, as proposed for stockholder approval in this proxy statement, in
order to preserve the compensation exemption under section 162(m).
The Performance Graph, contained in this proxy statement, compares
Anadarko's stock price performance over a five-year period against a published
index for the oil and gas industry. The published index provides a meaningful
comparison of Anadarko's total stockholder return against a consistent
representation of oil and gas companies with whom Anadarko competes for
investment dollars. The majority of these companies are also included in the
select peer group referred to above against which the Compensation Committee
6
<PAGE> 10
annually reviews the total compensation and stock ownership of its executive
officers. The analysis of this select peer group focuses more specifically on
those companies which are similar in asset size and key business segments (oil
and gas exploration and production) and are considered the potential competitors
for the Company's executive talent.
BASE SALARY
Anadarko strives to be the best managed company within the oil and gas
industry, and structures its compensation programs to match pay with
performance. In this context, Anadarko's base salaries are targeted to be above
the industry average, taking into account scope of responsibilities and internal
relationships. Individual base salaries are determined by the Compensation
Committee based on their subjective evaluation of the executive's performance
and the length of time the executive has been in the position. Base compensation
is reviewed annually by the Compensation Committee and adjusted accordingly to
reflect each executive officer's contribution to the performance of the Company.
In addition, the Compensation Committee monitors the aggregate number of
executive officers in an effort to insure that the organization continues to be
managed on an efficient, cost-effective basis.
Mr. Allison's annual base salary for 1994, shown in the Summary
Compensation Table, was increased by the Compensation Committee, effective
January 1, as a result of his contribution to the Company's outstanding
financial and operational performance for 1993. The Company reported record
revenues and cash flow for 1993. In addition, the Company's 1993 exploration
program was very successful, highlighted by the significant discovery in the
sub-salt play in the Gulf of Mexico. In determining Mr. Allison's base
compensation against his comparable peers, the Compensation Committee considered
Mr. Allison's leadership and specific individual contributions to the Company's
continued growth during his 16 years as Anadarko's Chief Executive Officer.
ANNUAL INCENTIVE BONUS
For 1994, executive officers were eligible to receive annual bonus
incentives under the Company's Incentive Plan. The Incentive Plan puts a
significant portion of the executive's compensation at risk by linking their
potential annual compensation to the Company's achievement of specific
performance goals. These goals are established by the Compensation Committee in
writing with respect to each calendar year.
Under the Incentive Plan, a total bonus target is established for each
individual executive officer and other key employees, which in 1994 ranged from
15% of base salary up to 60% of base salary. This target is based upon the
individual's position, level of responsibility and ability to impact the
Company's success. The individual target is adjusted by a Corporate Performance
Rating, approved by the Compensation Committee, based on the Company's
achievement of the established performance goals. Individuals may receive up to
150% of their bonus target if the Company exceeds the specified goals and,
conversely, individuals may receive a reduced bonus or no bonus payment if the
Company does not attain the specified goals.
For 1994, the performance goals established by the Compensation Committee
included financial, operational and relative stock price performance criteria.
The financial criteria included (1) net income; and (2) cash flow, both of which
were measured against internal objectives. The operational criteria included the
comparison of (1) Anadarko's average five-year reserve replacement measured
against an internal objective; and (2) Anadarko's average five-year worldwide
cost of finding measured against the most recent available industry average
five-year worldwide cost of finding. The stock price performance criteria
included the comparison of Anadarko's relative stock price performance for 1994
as measured against the relative average stock price performance of a select
group of peer companies for the same period. Each performance goal, including
the specific criteria for such goal, was assigned a weight by the Compensation
Committee based upon its relative importance in increasing stockholder value.
While financial results for 1994 were less than originally budgeted due to
low gas prices and unseasonably mild weather in the summer and early winter
months, the Company's operational performance was exceptional. Anadarko had
several exploration successes in Algeria and the Gulf of Mexico and increased
its reserves through the development drilling program within the United States.
For the 13th consecutive year,
7
<PAGE> 11
Anadarko more than replaced annual production volumes with proved reserves of
natural gas, crude oil, condensate and natural gas liquids. During 1994,
Anadarko added 126.4 million energy equivalent barrels (EEBs) of proved reserves
(stated after property sales). This reserve replacement is equal to 308% of 1994
production, which was 41.0 million EEBs, and is the best operating performance
in the Company's history. Anadarko recorded total reserves of 476 million EEBs
at the end of 1994, which represents an increase of 22% over year-end 1993. This
was accomplished at a time when the Company was selling more oil and gas than
ever before. In addition, Anadarko's worldwide five-year cost of finding for
1990 through 1994 was $3.78 per EEB and continues to be better than the most
recently published industry worldwide five-year average for the period 1989
through 1993. Anadarko's relative stock performance for the year was slightly
better than the relative average stock performance of the peer companies despite
the depressed energy market. The Company's overall performance, as measured
against the financial, operational and relative stock price performance goals
established by the Compensation Committee, produced the maximum Corporate
Performance Rating under the Incentive Plan. As a result, the Compensation
Committee approved the bonus amount for Mr. Allison reflected in the Summary
Compensation Table which represents 150% of his 60% bonus target.
STOCK PLANS
The Company believes equity-based programs encourage long-term strategic
management and enhancement of stockholder value. To align the interests of
executive officers with those of stockholders, the Company may grant certain
stock-based awards under the 1993 Plan. Anadarko has established stock ownership
guidelines for executive officers of two and one-half times base salary for Vice
Presidents, three times base salary for Senior Vice Presidents and five times
base salary for the Chief Executive Officer. The Compensation Committee believes
stock ownership is important to place executive officers in the same position as
stockholders with a commitment to the long-term success of Anadarko.
The Compensation Committee periodically reviews competitive market data to
determine appropriate stock awards based on the executive's position and the
market value of the stock. In addition, the Compensation Committee considers
previous stock grants when determining grant size for executive officers. The
1993 Plan provides for various stock-based awards, however the Compensation
Committee continues to award stock options to ensure that the interests of
executives and stockholders are aligned. Stock options only produce value for
the executive if there is an increase in stock price which results in a
corresponding increase in value to the stockholder. Stock options are granted on
an annual basis at the fair market value of the Common Stock on the date of
grant. For 1994, the Compensation Committee granted Mr. Allison 60,000 stock
options.
SUMMARY
Anadarko's compensation strategy is to provide total compensation
commensurate with the Company's achievement of specific operational, financial
and strategic objectives and the long-term appreciation of Anadarko's stock
price. The Company believes a significant portion of executive compensation
should be directly and materially linked to the creation of value for our
stockholders. The Compensation Committee believes the design of the Company's
total executive compensation program provides executives the incentive to
maximize long-term operational performance consistent with sound financial
controls and high standards of integrity. It is the Compensation Committee's
belief that this focus will ultimately be reflected in Anadarko's stock price
and stockholder return.
The Compensation and Benefits Committee of the Board of Directors:
Mr. John R. Gordon
Mr. Ronald Brown
Mr. Charles M. Simmons
8
<PAGE> 12
The following table sets forth information with respect to the Chief
Executive Officer and the four most highly compensated executive officers of the
Company as to whom the total annual salary and bonus for the fiscal year ended
December 31, 1994, exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------
OTHER
ANNUAL
PRINCIPAL COMPENSA-
NAME POSITION YEAR SALARY($) BONUS($) TION($)(1)
----- ----------- ---- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Robert J. Allison, Jr. Chairman, President 1994 825,000 743,000 0
and Chief Executive
Officer
Chairman, President 1993 750,000 675,000 0
and Chief Executive
Officer
Chairman and Chief 1992 675,000 338,000 0
Executive Officer
Charles G. Manley Senior Vice President, 1994 280,000 148,000 0
Administration
Senior Vice President, 1993 245,000 130,000 0
Administration
Vice President 1992 204,000 61,000 0
Administration &
Employee Relations
Michael E. Rose Senior Vice President, 1994 280,000 148,000 0
Finance
Senior Vice President 1993 245,000 130,000 0
Finance
Vice President Finance/ 1992 208,000 62,000 0
Chief Financial Officer
Charles K. Abernathy Vice President 1994 228,000 90,000 0
Operations International/
Offshore
Vice President 1993 218,000 82,000 0
Operations-International/
Gulf of Mexico
Vice President 1992 205,000 60,000 0
Operations-International/
Gulf of Mexico
John N. Seitz Vice President 1994 250,000 130,000 0
Exploration
Vice President 1993 220,000 100,000 0
Exploration
Vice President 1992 190,000 57,000 0
Exploration
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
AWARDS PAYOUTS
------------------------- ----------
SECURITIES ALL
RESTRICTED UNDERLYING OTHER
STOCK OPTIONS/ LTIP COMPENSA-
NAME AWARDS($)(2) SARS(#)(3) PAYOUTS($) TION($)(4)
----- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
Robert J. Allison, Jr. 0 60,000 0 192,180
0 60,000 0 219,371
0 40,000 0 182,475
Charles G. Manley 0 24,000 0 77,626
593,438 24,000 0 80,726
0 15,000 0 72,901
Michael E. Rose 0 24,000 0 74,078
593,438 24,000 0 78,911
0 15,000 0 72,325
Charles K. Abernathy 0 18,000 0 67,485
395,625 18,000 0 63,170
0 15,000 0 58,306
John N. Seitz 113,000 18,000 0 43,485
395,625 18,000 0 42,894
0 15,000 0 35,696
</TABLE>
---------------
(1) No executive officer had perquisites in excess of $50,000 or 10% of salary
plus bonus.
(2) As of December 31, 1994, the number of restricted shares held by each
executive officer and corresponding value on December 31, 1994 was for Mr.
Manley, 9,000 shares valued at $346,500; Mr. Rose, 9,000 shares valued at
$346,500; Mr. Abernathy, 6,000 shares valued at $231,000; and Mr. Seitz,
8,000 shares valued at $308,000. Dividends will be paid on unvested shares.
The restricted stock awarded in 1993 vested 20% on May 10, 1993 and will
vest 20% per year each May 10th thereafter. The restricted stock awarded to
Mr. Seitz in 1994 will vest 33% per year each April 28th beginning in 1995.
(3) No SAR's are outstanding.
(4) This column includes (a) Company contributions to the Anadarko Employee
Savings Plan and Executive Benefit Equalization Plan; (b) interest earned
above 120% of the applicable federal rate on deferred compensation under the
Executive Deferred Compensation Plan; and (c) payments under the Annual
Override Bonus Plan ("ORRI"). The 1994 amounts for items (a), (b) and (c)
for each of the individuals named in the table are for Mr. Allison, $49,500,
$74,623 and $68,057; Mr. Manley, $16,800, $46,453 and $14,373; Mr. Rose,
$16,800, $43,452 and $13,826; Mr. Abernathy, $13,680, $31,575 and $22,230;
and Mr. Seitz, $15,000, $11,396 and $17,089, respectively. No deferrals have
been made under the Executive Deferred Compensation Plan since 1990. Grants
under the ORRI were discontinued after 1986; however, awards that were
previously made will continue to produce payments to the recipients over the
lifetime of the wells in the pool.
9
<PAGE> 13
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------- AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES
SECURITIES OPTIONS/SARS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN PRICE(2) EXPIRATION -------------------------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ------------- ------------ -------- ---------- ----- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Allison, Jr.... 60,000 16.2% $48.00 10/27/04 $ 0 $ 1,811,217 $ 4,589,978
Charles G. Manley........ 24,000 6.5% $48.00 10/27/04 $ 0 $ 724,487 $ 1,835,991
Michael E. Rose.......... 24,000 6.5% $48.00 10/27/04 $ 0 $ 724,487 $ 1,835,991
Charles K. Abernathy..... 18,000 4.9% $48.00 10/27/04 $ 0 $ 543,365 $ 1,376,993
John N. Seitz............ 18,000 4.9% $48.00 10/27/04 $ 0 $ 543,365 $ 1,376,993
Above Optionees Gain as %
of all Stockholders Gain. 0.2% 0.2%
All Stockholders(4)...... 58,857,290 $ 0 $1,427,404,422 $3,617,195,782
</TABLE>
---------------
(1) No SARs were granted in 1994. Stock options granted on October 27, 1994 were
granted under the Company's 1993 Plan. Fifty percent of the options become
fully exercisable on October 27, 1995 and 50 percent become fully
exercisable on October 27, 1996. In the event of a "Change of Control" (as
defined by the 1993 Plan) the Compensation Committee can take any one or
more of the following actions: (i) provide for the acceleration of vesting;
(ii) provide for the purchase of the option by the Company; (iii) make such
adjustment as deemed appropriate; or (iv) cause such option to be assumed,
or new rights substituted therefor, by the acquiring or surviving
corporation.
(2) The exercise price equals the fair market value of the Common Stock on the
date of grant.
(3) The dollar amounts under these columns are the results of calculation at 0%
and at the 5% and 10% rates set by the Commission and are not intended to
forecast possible future appreciation, if any, of the Company's stock price.
The Company did not use an alternative formula for a grant date valuation,
as the Company is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors.
(4) Shares owned by All Stockholders on December 31, 1994. No gain to optionee
is possible without an increase in stock appreciation which will benefit all
stockholders commensurately. A zero percent gain in stock price appreciation
will result in no appreciation for the optionee.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
YEAR-END YEAR-END
SHARES (#) ($)
ACQUIRED VALUE -------------- --------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE*
---- ----------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Robert J. Allison, Jr.................. 0 $0 330,000/90,000 $ 3,123,750/$0
Charles G. Manley...................... 0 $0 63,000/36,000 $ 324,000/$0
Michael E. Rose........................ 0 $0 63,000/36,000 $ 324,000/$0
Charles K. Abernathy................... 0 $0 81,000/27,000 $ 550,909/$0
John N. Seitz.......................... 0 $0 71,600/27,000 $ 431,962/$0
</TABLE>
---------------
* Computed based upon the difference between aggregate fair market value on
December 30, 1994 ($38.5625) and aggregate exercise price.
10
<PAGE> 14
PENSION PLAN TABLE
The Company has a defined benefit Retirement Income Plan, (the "Retirement
Plan"), covering all United States employees of the Company. The following table
shows the estimated single life annuity payable upon retirement at various
levels of compensation based on the Retirement Plan benefit formula in effect on
December 31, 1994.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------
REMUNERATION 15 20 25 30 35
--------------------------------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 250,000........................ $ 66,000 $ 88,000 $ 110,000 $ 132,000 $ 154,000
300,000....................... 80,000 106,000 133,000 159,000 186,000
400,000....................... 107,000 142,000 178,000 213,000 249,000
500,000....................... 134,000 178,000 223,000 267,000 312,000
600,000....................... 161,000 214,000 268,000 321,000 375,000
700,000....................... 188,000 250,000 313,000 375,000 438,000
800,000....................... 215,000 286,000 358,000 429,000 501,000
900,000....................... 242,000 322,000 403,000 483,000 564,000
1,000,000....................... 269,000 358,000 448,000 537,000 627,000
1,100,000....................... 296,000 394,000 493,000 591,000 690,000
1,200,000....................... 323,000 430,000 538,000 645,000 753,000
1,300,000....................... 350,000 466,000 583,000 699,000 816,000
1,400,000....................... 377,000 502,000 628,000 753,000 879,000
1,500,000....................... 404,000 538,000 673,000 807,000 942,000
1,600,000....................... 431,000 574,000 718,000 861,000 1,005,000
1,700,000....................... 458,000 610,000 763,000 915,000 1,068,000
1,800,000....................... 485,000 646,000 808,000 969,000 1,131,000
1,900,000....................... 512,000 682,000 853,000 1,023,000 1,194,000
2,000,000....................... 539,000 718,000 898,000 1,077,000 1,257,000
</TABLE>
The Retirement Plan provides benefits based on a length of service and a
final average pay formula including salaries and bonuses set forth in columns
(c) and (d) of the Summary Compensation Table. Messrs. Allison, Manley, Rose,
Abernathy and Seitz, respectively, have 21, 21, 17, 20 and 17 years of accrued
service under the Plan. An employee becomes vested in his benefit under the
Retirement Plan at completion of five years of vesting service, as defined in
the Retirement Plan.
The benefits payable under the Retirement Plan are subject to certain
limitations under the Code, but are not subject to any deduction for Social
Security or other offset amounts. For certain employees who may be affected by
such limits, the Company has an Executive Benefit Equalization Plan (the
"Equalization Plan") to maintain total benefits upon retirement at approximately
the levels shown in the table above. The supplemental benefits provided under
the Equalization Plan will not be accorded certain of the favorable tax
treatments that apply to benefits paid under the existing Retirement Plan.
Benefits under the Equalization Plan are unfunded and payable solely from the
general assets of the Company.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Company has Key Employee Contracts of Employment (the "Severance
Contracts") with all current executive officers. The Severance Contracts provide
that in the event of a change in control, as defined in the Severance Contracts,
such individuals will receive certain benefits in the event of the termination
of their employment within five years of the effective date of such change in
control. Such benefits are provided unless such termination of employment is (i)
because of the death or retirement, except in certain circumstances, of the
executive, (ii) by the Company for cause or disability, or (iii) by the
executive other
11
<PAGE> 15
than for good reason (as defined in the Severance Contracts). Generally,
benefits payable under the terms of the Severance Contracts include a lump-sum
cash payment equal to (i) 2.9 times the highest total annualized compensation
paid during the three years ending with the year of such participant's
termination from the Company (including base salary and the amount or value of
any bonuses); (ii) the amount of Company matching contributions which would have
been made on the participant's behalf had he continued to participate in the
Anadarko Employee Savings Plan and the Equalization Plan for up to an additional
three years; (iii) the present value of the additional normal retirement benefit
which would have been received by the employee based on continued service
through normal retirement date and assuming an annual 6% increase in base
salary; (iv) the present value of the amounts of deferred compensation which
would have been received by the employee based on continued service through age
65 under each deferred compensation agreement to which the participant was a
party; and (v) the value of any investments credited to the employee under the
Equalization Plan. In addition, the Severance Contracts provide for a
continuation of various health care, disability and life insurance plans and
certain other benefits for a period of up to three years; and the payment of all
legal fees and expenses incurred by the employee in obtaining or enforcing any
right or benefit provided by the Severance Contracts. The Severance Contracts
also obligate the Company to pay an employee such cash amount as may be
necessary to restore any benefit diminution resulting directly or indirectly
from the assessment of any special excise taxes under section 280G of the Code
in respect to benefits provided under the Severance Contracts. In consideration
of these benefits the employee agrees, in the event a person seeks to effect a
change in control, not to leave the employ of the Company and to render services
commensurate with his position until such person has abandoned or terminated his
efforts or the change in control has occurred. The employee also agrees to
retain, in confidence, any and all confidential information known to him
concerning the Company and its business so long as such information is not
otherwise publicly disclosed. No amounts have been paid under the Severance
Contracts.
The Employee Severance Pay Plan (the "Severance Plan") covers all of the
Company employees who are not covered by the Employment Contracts. The Severance
Plan provides that, in the event of a change in control, as defined in the
Severance Plan, employees will have certain benefits provided to them in the
event of the termination of their employment within three years after the
effective date of such change in control. Benefits are provided unless
termination of employment is (i) because of the death or retirement, except in
certain circumstances, of the employee; (ii) by the Company for cause or
disability; or (iii) by the employee other than for good reason, as defined in
the Severance Plan. The Severance Plan provides benefits that include a lump sum
cash payment based on salary and service ranging from a minimum of three months
to a maximum of two years salary; and a continuation of employee's medical and
dental insurance for six months. No amounts have been paid under the Severance
Plan.
In the event of a "Change of Control", under the terms of Company's
existing stock option plans except for the 1993 Plan, all outstanding options
which were granted at least six months prior to the date of the "Change of
Control" shall be surrendered to the Company and the optionee shall receive a
cash payment in an amount equal to the number of shares of Common Stock subject
to the options multiplied by the difference between the fair market value of a
share of Common Stock on the date determined to be the date of cancellation and
surrender of such options and the option price. Under the 1993 Plan in the event
of a "Change of Control" the Compensation Committee can take one or more of the
following actions: (i) provide for the acceleration of vesting; (ii) provide for
the purchase of the option by the Company; (iii) make such adjustment as deemed
appropriate; or (iv) cause such option to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation.
12
<PAGE> 16
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the S&P 500 Index and to the Dow Jones Oil -- Secondary Index
for the last five years. The graph assumes that the value of the investment in
the Company's Common Stock and each index was $100 at December 31, 1989 and that
all dividends were reinvested.
Comparison of Five Year Cumulative Total Return
[CRC VELOX]
<TABLE>
<CAPTION>
ANADARKO PE-
FISCAL YEAR ENDED TROLEUM COR- DOW JONES OIL S&P 500 IN-
DECEMBER 31 PORATION SECONDARY DEX
<S> <C> <C> <C>
1989 100 100 100
1990 80 83 97
1991 66 82 126
1992 82 82 136
1993 127 91 149
1994 109 88 151
</TABLE>
13
<PAGE> 17
APPROVAL OF AN AMENDMENT TO THE ANNUAL INCENTIVE BONUS PLAN
(PROPOSAL NO. 2 ON THE PROXY)
The Board of Directors recommends the approval of the Amendment to the
Annual Incentive Bonus Plan (the "Incentive Plan") which limits the maximum
bonus amount paid to any individual under the Incentive Plan.
In December 1994, the Internal Revenue Service ("IRS") issued proposed
amendments to the December 15, 1993 proposed regulations under section 162(m) as
enacted by the Revenue Reconciliation Act of 1993 ("RRA"). The RRA limits to $1
million per year the tax deduction available to public companies for certain
compensation paid to certain employees ("Covered Employees"), subject to an
exemption for compensation which is "performance-based". In 1994, the
stockholders approved the Incentive Plan and the material terms of the
performance goals based on the information provided by the Company pursuant to
the proposed regulations. As a result of that approval, any bonuses awarded
under the Incentive Plan met the requirements of section 162(m) of the Code as
proposed at that time.
The Company's intent is to insure that payments made under the Incentive
Plan continue to qualify for the exemption under section 162(m) of the Code. The
proposed amendments to the proposed regulations require that the Company
resubmit to stockholders for approval an amendment to the Incentive Plan in
order to continue the exemption. Approval by affirmative votes of holders of a
majority of shares of Common Stock present, or represented, and entitled to vote
is required for the payments made under the Incentive Plan to qualify for the
"performance-based" compensation exemption under section 162(m) of the Code.
The Incentive Plan was approved by stockholders on April 28, 1994. The
Incentive Plan is intended to attract and retain employees, to encourage
employees to devote their best efforts to the Company and to recognize employees
for their contributions to the overall success of the Company. The essential
features of the Incentive Plan, as amended, are summarized below.
PERFORMANCE-BASED COMPENSATION EXEMPTION
For any Covered Employee, the Compensation Committee will establish
performance goals under which a bonus can be paid to the Covered Employee. The
Compensation Committee will establish, in writing, for each calendar year
beginning with 1994, the bonus opportunity for each Covered Employee, the
performance goals, the specific performance criteria and appropriate weight of
each performance criteria and the performance target or range of targets to
measure satisfaction, in whole or in part, of the performance goals. The
Compensation Committee shall select from one or more of the following
performance criteria in establishing performance goals: (i) net income, cash
flow and/or reserve replacement measured against internally established targets;
and (ii) cost of finding per energy equivalent barrel and/or stock price
performance, in either case compared against industry or a select peer group.
At the end of the performance period, the Compensation Committee will
evaluate the Company's performance based upon the achievement of the
pre-established performance goals and certify, in writing, the extent to which
the specific performance criteria were attained. Individual awards will be
determined based on performance against the pre-established goals resulting in
bonuses to covered individuals ranging from 0% to a maximum of 150% of such
individual's January 1 base salary.
AMENDMENT
The Amendment to the Incentive Plan adds one sentence, which is as follows:
In no event shall bonuses paid pursuant to the Plan to any individual for
any calendar year be in excess of $1.5 million.
ADMINISTRATION AND DETERMINATION OF BONUSES
The Incentive Plan will be administered by the Compensation Committee,
composed of disinterested, outside directors appointed by the Board. All
decisions made by the Compensation Committee in designating
14
<PAGE> 18
employees eligible to receive bonuses, determining performance objectives,
determining types of bonuses to be paid, determining bonus amounts, determining
how and when bonuses will be paid and construing the provisions of the Incentive
Plan shall be final. Bonuses paid to individuals, other than Covered Employees,
will be paid at the discretion of the Compensation Committee. All employees,
including Covered Employees, are eligible to participate in the Incentive Plan.
The specific performance goals for 1995 will be established prior to the date
specified by section 162(m).
INDEPENDENT AUDITORS
KPMG Peat Marwick served as the Company's independent auditors during 1994
and was appointed by the Board to serve in that capacity for 1995.
Representatives of KPMG Peat Marwick will be present at the meeting to respond
to appropriate questions from stockholders and to make a statement if they
desire to do so.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 furnished to the Company during
its most recent fiscal year and Forms 5 furnished to the Company with respect to
its most recent fiscal year, the Company believes that all transactions by
reporting persons were reported on a timely basis.
OTHER MATTERS
It is not expected that any other matters will come before the meeting.
However, if any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying form of proxy to vote such
proxy in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder may desire to present to the 1996 Annual
Meeting of Stockholders must be received by the Company on, or prior to,
November 21, 1995.
PROXY SOLICITATION
The cost of preparing, assembling and mailing the material in connection
with the solicitation of proxies will be borne by the Company. It is expected
that the solicitation of proxies will be primarily by mail but solicitations may
also be made personally or by telephone or telegraph by officers and other
employees of the Company. In addition, the Company has engaged Chemical Bank,
450 West 33rd Street, New York, New York 10001 to assist in such solicitation at
an estimated fee of $5,000 plus disbursements.
It is important that the proxies be returned promptly. All stockholders,
whether or not they expect to attend in person, are urged to sign, date and
return the accompanying form of proxy in the enclosed addressed envelope, which
requires no postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SUZANNE SUTER
SUZANNE SUTER
Corporate Secretary
Dated: March 20, 1995
Houston, Texas
15
<PAGE> 19
PROXY
ANADARKO PETROLEUM CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
April 27, 1995
The undersigned stockholder hereby appoints Robert J. Allison, Jr. and
Suzanne Suter, and any one of them, with power of substitution and
revocation, the attorneys of the undersigned to vote all shares registered in
the name of the undersigned for the election of directors, unless such
authority is withheld, and on all other matters which may come before the
1995 Annual Meeting of Stockholders of Anadarko Petroleum Corporation to be
held on Thursday, April 27, 1995 at 9:30 A.M. or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY ITEM.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
THE PROXY MUST BE SIGNED AND RETURNED TO BE COUNTED.
------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
<PAGE> 20
/X/ Please mark your
votes as this
---------------
Common
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
Item 1 -- ELECTION OF CLASS III DIRECTORS
Larry Barcus and James L. Bryan
FOR AGAINST ABSTAIN
/ / / / / /
Item 2 -- Approval of Amendment to the Annual Incentive Bonus Plan
FOR AGAINST ABSTAIN
/ / / / / /
Withheld For: (Write that nominee's name in the space provided below.)
________________________________________________________________________
Signature(s) ____________________________________ Date ________________, 1995
Please mark, date and sign as your name appears above and return in the
enclosed envelope. If shares are held jointly, each stockholder named should
sign.
<PAGE> 21
ANADARKO PETROLEUM CORPORATION
ANNUAL INCENTIVE BONUS PLAN
As Amended January 1, 1995
1. Purpose of the Plan. The ANNUAL INCENTIVE BONUS PLAN (the "Plan") is
intended to provide a method for attracting and retaining employees of
ANADARKO PETROLEUM CORPORATION and participating subsidiaries (the
"Company"), to encourage these individuals to remain with the Company
and to devote their best efforts to its affairs and to recognize
employees for their contributions to the overall success of the
Company.
2. Administration of the Plan. The Plan shall be administered by the
Compensation and Benefits Committee (the "Committee") of the Board of
Directors (the "Board") of the Company and shall operate on the basis
of the calendar year. The Committee is authorized to interpret the
Plan and from time to time may adopt such rules, regulations,
definitions and forms consistent with the provisions of the Plan as it
may deem advisable to carry out the Plan.
3. Determinations of Bonuses. The Committee shall have full power and
authority to (I) designate those employees who may be eligible for
bonuses under the Plan for a calendar year; (ii) determine performance
objectives which must be satisfied as a condition to earning a bonus
under the Plan for a calendar year (which objectives may differ as
among employees or classes of employees); (iii) determine the types of
bonuses to be paid under the Plan for a calendar year; (iv) determine
the extent to which performance objectives applicable to a given bonus
have been achieved; (v) determine the amounts of bonuses (which may
differ among employees or classes of employees) and (vi) determine the
form and time of payment of bonuses. All decisions made by the
Committee shall be final.
4. Section 162(m) Conditions. In the case of any employee whose
compensation is or, in the opinion of the Committee, is potentially
subject to the compensation deduction limits of section 162(m) of the
Internal Revenue Code of 1986, as amended ("162(m)") for a calendar
year, the Committee shall establish, in writing, with respect to each
calendar year beginning with the 1994 calendar year (I) objective
performance goals and the appropriate weighting of such goals from
among the performance criteria described below; (ii) performance
targets or range of targets to measure satisfaction in whole or in
part of such performance goals or combination of goals and (iii) a
bonus opportunity target
<PAGE> 22
percentage of such employee's base salary which will be used to
establish the amount of bonus to be paid to such employee depending
upon the degree of satisfaction of the performance goals. A bonus
amount shall be paid under the Plan for a calendar year to an employee
whose compensation is or, in the opinion of the Committee, is
potentially subject to 162(m) if and only if the performance goal or
combination of performance goals established by the Committee with
respect to such employee have been attained (based upon the degree of
satisfaction of the performance target or range of targets). The
Committee shall certify the attainment of such performance goals in
writing. Bonuses paid pursuant to this section shall not exceed an
amount equal to 150% of such employee's base salary for such calendar
year to be determined as of the beginning of the calendar year. In no
event shall bonuses paid pursuant to the Plan to any individual for
any calendar year be in excess of $1.5 million. The Committee shall
establish performance goals from one or more of the following
performance criteria for those individuals subject to this section:
(I) net income, cash flow and/or reserve replacement measured against
internally established targets; and (ii) cost of finding of energy
equivalent barrels and/or stock price performance, in either case
compared against industry or a select peer group.
5. Payments in Event of Termination. In the event an employee terminates
employment with the Company for any reason including death, disability
and retirement prior to the date of payment of a bonus award, the
Committee may, in its sole discretion, pay to such employee or his
beneficiary, as the case may be, a bonus award. The amount of the
bonus award, if any, will be at the sole discretion of the Committee.
6. Prohibition Against Assignment or Encumbrance. The Plan, and the
rights, interests and benefits hereunder, shall not be assigned,
transferred, pledged, sold, conveyed, or encumbered in any way by an
employee, and shall not be subject to execution, attachment or similar
process. Any attempted sale, conveyance, transfer, assignment, pledge
or encumbrance of the rights, interests or benefits provided pursuant
to the terms of the Plan, contrary to the terms of the foregoing
sentence, or the levy of any attachment or similar process thereupon,
shall be null and void and without effect.
7. Nature of the Plan. The Plan shall constitute an unfunded, unsecured
obligation of the Company to make bonus payments in accordance with
the provisions of the Plan. The establishment of the Plan shall not
be deemed to create a trust. No participant shall have any security
or other interest in any assets of the Company.
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<PAGE> 23
8. Employment Relationship. Employee shall be considered to be in the
employment of the Company as long as he or she remains an employee of
the Company, any subsidiary of the Company or any enterprise which
acquires all or substantially all of the assets and business of the
Company. Nothing in the adoption or implementation of the Plan shall
confer on any employee any right to continued employment by the
Company or affect in any way the right of the Company to terminate his
employment at any time. Any question as to whether and when there has
been a termination of an employee's employment and the cause of such
termination shall be determined by the Committee and its determination
shall be final.
9. Company Not Liable for Interest. If the Company for any reason fails
to make any payment provided for in the Plan at the time same becomes
payable, the Company shall not be liable for interest or other charges
thereon.
10. Termination and Amendment of Plan. The Committee shall have the
right, without the necessity of shareholder or employee approval, to
alter, amend or terminate the Plan at any time.
11. Adjustments to Performance Factors. If any performance goal,
criterion or target for any year shall have been affected by special
factors (including material changes in accounting policies or
practices, material acquisitions or dispositions of property, or other
unusual items) which in the Committee's judgment should or should not
be taken into account, in whole or in part, in the equitable
administration of the Plan, the Committee may, for any purpose of the
Plan, adjust such goal, criterion or target, as the case may be, for
such year (and subsequent years as appropriate), or any combination of
them, and make credits, payments and reductions accordingly under the
Plan; provided, however, that the Committee shall not have the
authority to make any such adjustments with respect to awards paid to
any participant who is at such time a covered employee under Section 4
of the Plan.
12. Rights of Company. Nothing contained in the Plan shall prevent the
Company or any subsidiary from adopting or continuing in effect other
compensation arrangements, which arrangements may be either generally
applicable or applicable only in specific cases.
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