<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
------------------------
BURLINGTON RESOURCES INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BURLINGTON RESOURCES INC.
(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(i)(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
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
PER UNIT PRICE OR
OTHER
UNDERLYING VALUE OF
TITLE OF EACH CLASS OF AGGREGATE NUMBER OF TRANSACTION COMPUTED PROPOSED MAXIMUM
SECURITIES TO WHICH SECURITIES TO WHICH PURSUANT TO EXCHANGE AGGREGATE VALUE OF
TRANSACTION APPLIES: TRANSACTION APPLIES: ACT RULE 0-11: TRANSACTION:
- ---------------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
</TABLE>
[ ] 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.
Amount previously paid: Filing party:
Form, schedule or
registration statement no.: Date filed:
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<PAGE> 2
[Burlington Resources Logo]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 16, 1995
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Burlington Resources Inc. will be
held on Thursday, March 16, 1995, at 9:00 a.m. in the Consulate Room, Westin
Oaks Hotel, 5011 Westheimer, Houston, Texas, for the following purposes:
1. To elect seven directors, each to hold office for a term of one year.
2. To transact any other business which may be properly brought before the
meeting.
Only stockholders of record at the close of business on January 23, 1995
are entitled to notice of, and to vote at, the meeting and any adjournment
thereof.
By Order of the Board of Directors
WENDI S. ZERWAS
Corporate Secretary
February 16, 1995
<PAGE> 3
BURLINGTON RESOURCES INC.
5051 WESTHEIMER
HOUSTON, TEXAS 77056-2124
Mailing Date:
February 16, 1995
PROXY STATEMENT
The enclosed proxy is solicited by the management of Burlington Resources
Inc. (the "Company") for use at the Annual Meeting of Stockholders on March 16,
1995. Shares of Common Stock, par value $.01 per share ("Common Stock"), of the
Company represented by a properly executed proxy in the accompanying form will
be voted at the meeting. The proxy may be revoked at any time before its
exercise by sending written notice of revocation to Ms. Wendi S. Zerwas,
Corporate Secretary, Burlington Resources Inc., 5051 Westheimer, Suite 1400,
Houston, Texas 77056-2124, or by signing and delivering a proxy which is dated
later, or, if the stockholder attends the meeting in person, by giving notice of
revocation to the Inspectors of Election at the meeting.
January 23, 1995 was the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting. On that date there were
outstanding and entitled to vote 126,510,960 shares of Common Stock, which is
the Company's only class of voting securities. Each stockholder is entitled to
one vote for each share of Common Stock held of record. A plurality of the
shares of Common Stock present in person or represented by proxy at the meeting
is required for the election of Directors. An affirmative vote of a majority of
the shares of Common Stock present in person or represented by proxy and
entitled to vote at the meeting is required for approval of all other items
being submitted to the stockholders for their consideration. Abstentions are
counted in the number of shares present in person or represented by proxy and
entitled to vote for purposes of determining whether a proposal has been
approved, whereas broker nonvotes are not counted for those purposes.
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Board of Directors of the Company held eight meetings during 1994.
There are two standing committees of the Board of Directors: an Audit Committee
and a Compensation and Nominating Committee. The Audit Committee held two
meetings during 1994. This Committee recommends the employment of the Company's
independent auditors and reviews with management and the independent auditors
the Company's financial statements, basic accounting and financial policies and
practices, audit scope and competency of control personnel. The Compensation and
Nominating Committee met four times during 1994. This Committee reviews and
recommends to the Board of Directors the compensation and promotion of senior
officers, the size and composition of the Board of Directors and nominees for
Directors, and any proposed employee benefit plans. This Committee also grants
stock options and other forms of long-term incentive compensation. During 1994,
no Directors attended fewer than 75% of the meetings of the Board of Directors.
The Compensation and Nominating Committee will consider proposals for
nominees for Directors from stockholders which are made in writing to Ms. Wendi
S. Zerwas, Corporate Secretary, Burlington Resources Inc., 5051 Westheimer,
Suite 1400, Houston, Texas 77056-2124.
<PAGE> 4
STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN OTHER HOLDERS
The following table sets forth information about the only known beneficial
owners of more than 5% of the Company's Common Stock. This information is based
solely on Schedules 13G filed by such beneficial owners with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OF CLASS
----------------------------------------------------- ---------- --------
<S> <C> <C>
Wellington Management Company........................ 12,692,550(1) 10.03%
75 State Street
Boston, Massachusetts 02109
FMR Corp. and Edward C. Johnson 3d................... 8,236,525(2) 6.51%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
NOTES
(1) Wellington Management Company has advised the Company that its Schedule 13G
includes 6,268,500 shares of Common Stock owned by The Windsor Fund, for
which Wellington is the investment advisor.
(2) In its Schedule 13G, FMR Corp. states that it has voting power as to 226,288
shares and dispositive power with respect to 8,236,525 shares. Mr. Johnson
states that he has voting power with respect to no shares and dispositive
power with respect to 8,236,525 shares.
The following table sets forth the number of shares of Common Stock
beneficially owned as of January 23, 1995 by each Director (including all
nominees for Director), the executive officers of the Company named in the
Summary Compensation Table below, and by all Directors and executive officers as
a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES RIGHT TO ACQUIRE
BENEFICIALLY OWNED WITHIN 60 DAYS
AS OF JANUARY 23, OF JANUARY 23, PERCENT
NAME 1995(1)(2) 1995(3) OF CLASS
----------------------------------- ------------------ ----------------- --------
<S> <C> <C> <C>
DIRECTORS
J. V. Byrne........................ 6,903 5,553 *
S. P. Gilbert...................... 13,053 5,553 *
J. F. McDonald..................... 8,653 5,553 *
T. H. O'Leary...................... 627,873 563,476 *
D. M. Roberts...................... 6,500 4,000 *
W. Scott, Jr. ..................... 7,296(4) 5,553 *
W. E. Wall......................... 6,185 3,185 *
NAMED EXECUTIVE OFFICERS
J. E. Hagale....................... 92,443 84,735 *
C. R. Owen......................... 55,173 47,812 *
L. E. Parker....................... 130,163(5) 119,419 *
B. S. Shackouls.................... 13,073 12,000 *
ALL DIRECTORS AND EXECUTIVE
OFFICERS
AS A GROUP (13 PERSONS).......... 1,043,730 923,408 *
</TABLE>
- ---------------
NOTES
* Indicates that the percentage of shares beneficially owned does not exceed
1% of the class.
(Footnotes continued on following page)
2
<PAGE> 5
(1) For purposes of this table, shares are considered to be "beneficially" owned
if the person directly or indirectly has sole or shared voting and
investment power with respect to such shares. In addition, a person is
deemed to beneficially own shares if that person has the right to acquire
such shares within 60 days of January 23, 1995; as a result, the number of
shares shown in this column also includes the number of shares shown in the
column "Right to Acquire Within 60 Days of January 23, 1995." The numbers
shown also include shares owned through the Company's Retirement Savings
Plan as of December 31, 1994.
(2) In addition to the foregoing beneficial ownership amounts, Messrs. O'Leary,
Hagale, Owen and Shackouls own the economic equivalent of 73,810, 4,231,
2,418 and 11,329 shares of Common Stock, respectively, as a result of their
elections to convert restricted shares of Common Stock into phantom stock
pursuant to the Company's 1994 Restricted Stock Exchange Plan and to have
certain deferred compensation valued as if it were invested in Common Stock
and subject to fluctuations in the market price of Common Stock.
(3) Shares subject to options which are exercisable within 60 days of January
23, 1995.
(4) Excludes 1,213,100 shares of Common Stock owned by a subsidiary of Peter
Kiewit Sons', Inc., of which Mr. Scott is Chairman and President. Mr. Scott
disclaims beneficial ownership of these shares.
(5) Includes 2,500 shares of Common Stock subject to restrictions.
3
<PAGE> 6
ELECTION OF DIRECTORS
In accordance with the By-Laws of the Company, the Board of Directors has
fixed the number of Directors constituting the Board of Directors at seven as of
the date of the Annual Meeting. It is proposed to elect seven Directors, each to
hold office for a term of one year and until his successor shall have been
elected and qualified. Unless otherwise instructed by the stockholder, the
persons named in the enclosed form of proxy will vote the shares represented by
such proxy for the election of the seven nominees named in this Proxy Statement,
subject to the condition that if any of the named nominees should be unable to
serve, discretionary authority is reserved to vote for a substitute. No
circumstances are presently known which would render any nominee named herein
unable or unwilling to serve. Holders of the Common Stock may not cumulate their
votes in the election of Directors.
Each of the following nominees is a Director of the Company at the present
time:
JOHN V. BYRNE--President, Oregon State University, Corvallis, Oregon.
Age--66. Chairman--Audit Committee. Since November 1984, Dr. Byrne's principal
occupation has been as shown above. Dr. Byrne has been a Director of the Company
since 1988.
S. PARKER GILBERT--Retired. Age--61. Member--Compensation and Nominating
Committee. Mr. Gilbert has been retired since January 1991. From January 1984
until December 1990, Mr. Gilbert was Chairman and Managing Director of Morgan
Stanley Group Inc. Mr. Gilbert has been a Director of the Company since 1990.
Mr. Gilbert is also a director of ITT Corporation, Morgan Stanley Group Inc.,
and Taubman Centers, Inc. Morgan Stanley & Co. Incorporated, a subsidiary of
Morgan Stanley Group Inc., acts as a commercial paper dealer for, and provides
investment banking and financial advisory services to, the Company and its
subsidiaries.
JAMES F. MCDONALD--President and Chief Executive Officer,
Scientific-Atlanta, Inc., Norcross, Georgia--Telecommunications. Age--54.
Member--Audit Committee. Since July 1993, Mr. McDonald's principal occupation
has been as shown above. From July 1991 until July 1993, Mr. McDonald was a
partner with J.H. Whitney & Co. From January 1991 until July 1991, Mr. McDonald
was Vice Chairman of the Board of Prime Computer, Inc. From January 1990 until
January 1991, Mr. McDonald was Vice Chairman of the Board and Chief Executive
Officer of Prime Computer, Inc. Mr. McDonald has been a Director of the Company
since 1988. Mr. McDonald is also a director of Scientific-Atlanta, Inc.
THOMAS H. O'LEARY--Chairman of the Board, President and Chief Executive
Officer, Burlington Resources Inc., Houston, Texas. Age--60. Since February
1993, Mr. O'Leary's principal occupation has been as shown above. From July 1992
to February 1993, Mr. O'Leary was Chairman of the Board and Chief Executive
Officer of Burlington Resources Inc. From October 1990 until July 1992, Mr.
O'Leary was Chairman of the Board, President and Chief Executive Officer of
Burlington Resources Inc. From January 1989 until October 1990, Mr. O'Leary was
President and Chief Executive Officer of Burlington Resources Inc. Mr. O'Leary
has been a Director of the Company since 1988. Mr. O'Leary is also a director of
B.F. Goodrich and The Kroger Company.
DONALD M. ROBERTS--Vice Chairman and Treasurer, United States Trust Company
of New York and its parent, U.S. Trust Corporation, New York, New York. Age--59.
Member--Audit Committee. Since February 1990, Mr. Roberts' principal occupation
has been as shown above. From January 1989 until February 1990, Mr. Roberts was
Executive Vice President and Treasurer of United States Trust Company of New
York and its parent, U.S. Trust Corporation. Mr. Roberts has been a Director of
the Company since 1993. Mr. Roberts is also a trustee of United States Trust
Company of New York and a director of U.S. Trust Corporation and York
International Corporation.
WALTER SCOTT, JR.--Chairman and President, Peter Kiewit Sons', Inc., Omaha,
Nebraska -- Construction, Mining and Telecommunications. Age--63.
Chairman--Compensation and Nominating Committee. For more than five years Mr.
Scott's principal occupation has been as shown above. Mr. Scott has been a
Director of the Company since 1988. Mr. Scott is also a director of Berkshire
Hathaway Inc., California Energy Company, Inc., C-TEC Corporation, ConAgra,
Inc., FirsTier Financial, Inc., MFS Communications Company, Inc. and Valmont
Industries, Inc.
4
<PAGE> 7
WILLIAM E. WALL--Of Counsel, Siderius Lonergan, Seattle, Washington--Law.
Age--66. Member--Compensation and Nominating Committee. Since March 1988, Mr.
Wall's principal occupation has been as shown above. Mr. Wall has been a
Director of the Company since 1992.
DIRECTORS' COMPENSATION
Directors who are not officers or employees of the Company receive an
annual retainer of $55,000. Directors who are also officers or employees of the
Company do not receive any compensation for duties performed as Directors.
Directors who are not officers or employees of the Company may defer all or part
of their compensation.
The Company's 1992 Stock Option Plan for Non-Employee Directors provides
for the annual grant of a nonqualified option for 1,000 shares of Common Stock
immediately following the Annual Meeting of Stockholders to Directors who are
not salaried officers of the Company. In addition, an option for 3,000 shares is
granted upon a Director's initial election or appointment to the Board of
Directors. The exercise price per share with respect to each option is 100% of
the fair market value (as defined in the plan) of the Common Stock on the date
the option is granted. During 1994, an annual option for 1,000 shares of Common
Stock was granted to Dr. Byrne and to Messrs. Gilbert, McDonald, Roberts, Scott
and Wall pursuant to this plan.
The Company has established a Charitable Award Program for Directors who
have served on the Board of Directors for at least two years. Upon the death of
a Director, the Company will donate $1 million to one or more educational
institutions or private foundations nominated by the Director.
5
<PAGE> 8
REPORT ON EXECUTIVE COMPENSATION
BY THE COMPENSATION AND NOMINATING COMMITTEE
The Compensation and Nominating Committee of the Board of Directors (the
"Committee") is composed entirely of Directors who are not employees of the
Company. The Committee is responsible for establishing and administering the
Company's executive compensation program.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The philosophy underlying the development and administration of the
Company's annual and long-term compensation plans is the alignment of the
interests of executive management with those of the shareholders. Key elements
of this philosophy are:
- Establishing compensation plans which strengthen the Company's ability to
attract and retain officers and key employees and to deliver pay
commensurate with the Company's performance, as measured by the
achievement of strategic, operating and financial objectives.
- Providing significant equity-based incentives for executives to ensure
that they are motivated over the long term to respond to the Company's
business challenges and opportunities as owners rather than just as
employees.
- Rewarding executives for superior performance and when shareholders
receive an above-average return on their investment over the long term.
One of the Committee's objectives is to position executive base salaries at
the median when compared to other companies in the energy sector. A group of
approximately 40 oil and gas companies is used to determine base salaries in the
energy sector. This competitor group includes all of the companies currently in
the Dow Jones Secondary Oil Index, which is used in the Comparison of Cumulative
Total Shareholder Return, together with certain other independent and integrated
oil and gas companies. The performance of the companies in the competitor group
is not considered in establishing executive base salaries.
The Incentive Compensation Plan, or annual bonus plan, is the program by
which executives can earn additional compensation. At maximum award levels,
total annual cash compensation for the Company's executives is in the top
quartile of the competitor group's total annual cash compensation. The Plan
allows for maximum awards of up to 100% of base salary, depending on individual
and Company performance relative to certain annual objectives. In determining
the size of the annual bonus, no single performance factor or formula is used.
The Committee believes that the rigid application of quantitative performance
measures would eliminate the consideration of important qualitative factors
critical to long-term strategic performance. In evaluating the Company's
performance, the Committee considers a combination of strategic, operating and
financial measures, including oil and gas production levels, reserve additions
and reserve finding costs, earnings per share, operating income and operating
cash flow. These performance measures, which are not specifically weighted, are
considered to be critical to the Company's fundamental goal -- building
shareholder value.
The Company's long-term incentive compensation program consists of the 1993
Stock Incentive Plan (the "Stock Incentive Plan") and the 1992 Performance Share
Unit Plan (the "PSU Plan"). The Committee's objective for these plans is to
structure the executives' long-term incentive compensation opportunity at
approximately the seventy-fifth percentile of long- term incentive compensation
provided by the competitor group of energy companies. Benefits under these Plans
accrue when strategic, operating and financial goals are achieved and the
Company's Common Stock appreciates.
Under the Stock Incentive Plan, stock options are granted to executives,
managers and key employees. The options have a term of ten years and have an
exercise price at the fair market value on the day of grant. Stock purchase
rights granted under the Stock Incentive Plan are made available to the same
group of employees. They give the employee a one-time opportunity to purchase
with all or a portion of his or her after-tax annual bonus the Company's Common
Stock at a discount of up to 25% of fair market value. Stock purchased under the
Plan cannot be sold for at least three years or until termination of employment.
6
<PAGE> 9
Vesting of PSU's over a four year performance period is dependent on the
Company's achievement of its strategic, operating and financial objectives and
the Company's total shareholder return as compared to the Dow Jones Secondary
Oil Index. In 1994, the Committee began evaluating the Company's total
shareholder return against the Dow Jones Secondary Oil Index, which is more
representative of the entire independent oil and gas exploration and production
industry than the smaller peer group used previously.
The Omnibus Budget Reconciliation Act of 1993 places a limit on the amount
of certain types of compensation for each of the executive officers which may be
tax deductible by the Company. However, the Internal Revenue Service has yet to
issue final regulations on the deductibility limit. The Company will continue to
monitor the presently proposed regulations and will consider modifications to
its compensation programs once final regulations are adopted. The Company's
policy is, primarily, to design and administer compensation plans which support
the achievement of long-term strategic objectives and enhance shareholder value.
Where it is material and supports the Company's compensation philosophy, the
Committee will also attempt to maximize the amount of compensation expense that
is tax-deductible by the Company.
COMPANY PERFORMANCE AND COMPENSATION
During 1994, the Company substantially exceeded its objectives for oil and
gas production. Gas production was 14% greater than in 1993 and oil production
increased by 9% from last year. Reserves added during the year were 212% of
production, substantially exceeding the goal. The Company was able to replace
production from internally developed reserves. Internal reserve finding costs
were better than the objective. The Company accomplished a significant strategic
objective with its move into the offshore Gulf of Mexico through the purchase of
substantially all of the offshore properties of Maxus Energy Corporation.
Because of substantial declines in oil and gas prices, the Company did not
meet its objectives for earnings per share or operating income. However,
shortfalls in income were mitigated by increased production levels and lower
operating and general and administrative expenses. Operating cash flow met the
target for the year.
Because of the strategic, operating and financial accomplishments of the
Company, which were not specifically weighted, the Committee awarded the
Company's CEO, T. H. O'Leary, an annual incentive award of $600,000, 75 percent
of the maximum award available to him under the Incentive Compensation Plan.
Similarly, the Committee awarded the other executive officers 75 percent of
their base salary for the year under the Incentive Compensation Plan. The
Committee reviewed and decided to maintain Mr. O'Leary's base salary at the
current level. The other executive officers received salary increases which
positioned them at or below the median for similar positions in the competitor
group of energy companies.
In evaluating performance for purposes of the PSU Plan, the Committee
reviewed the Company's performance from June 1992 through December 1994 and
ascertained that the strategic and operating objectives were exceeded. Because
of the impact of oil and gas prices in 1994, earnings per share and operating
income did not meet the objectives but operating cash flow met the objectives.
Furthermore, the Committee determined that the Company's total shareholder
return was below the return for the Dow Jones Secondary Oil Index. Accordingly,
the Committee approved the vesting of 50 percent of the PSU's eligible for
vesting, or 10,350 and 20,250 PSU's for Mr. O'Leary and for all other executive
officers, respectively. In addition, the Committee granted 76,500 additional
PSU's to the executive officers who received promotions or increased
responsibilities in 1994. The Committee's objective relative to these PSU grants
and all long-term incentives is to target approximately the seventy-fifth
percentile when compared to the competitor group of companies.
As an incentive for future performance and consistent with the objective
stated above, the Committee granted Mr. O'Leary and the other executive officers
34,500 and 67,500 stock options, respectively. These awards provide incentive
for Mr. O'Leary and the executive officers to continue to build shareholder
value over the long term. In making these awards, the Committee did not consider
currently outstanding grants of stock options.
7
<PAGE> 10
STOCK OWNERSHIP
Last year, the Committee approved Stock Ownership Guidelines to more
closely align executive management's personal financial interests with the
interests of all shareholders. The ownership guidelines are to be attained by
the end of 1998. To encourage and facilitate this progress and to enhance the
retention value of prior awards, the Committee approved the Restricted Stock
Exchange Plan. Under the Plan, executives were given an opportunity to
relinquish previously awarded restricted stock in exchange for phantom shares
equal to 120% of the restricted shares surrendered. These phantom shares vest
two years after the original vesting date of the restricted stock. The cash
value of the phantom shares will be distributed upon retirement from the
Company.
COMPENSATION AND NOMINATING COMMITTEE
Walter Scott, Jr., Chairman
S. Parker Gilbert
William E. Wall
8
<PAGE> 11
Comparison of 5-Year Cumulative Total Shareholder Return(1)
<TABLE>
<CAPTION>
DOW JONES
Measurement Period BURLINGTON SECONDARY OIL PEER
(Fiscal Year Covered) RESOURCES(2) S&P 500 INDEX(3) GROUP(4)
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990 80 97 83 84
1991 75 126 82 64
1992 101 136 82 66
1993 109 150 91 87
1994 91 152 88 79
</TABLE>
Comparison of Cumulative Total Shareholder Return
Since the Company's Initial Public Offering(1)
<TABLE>
<CAPTION>
DOW JONES
Measurement Period BURLINGTON SECONDARY PEER
(Fiscal Year Covered) RESOURCES (2) S&P 500 OIL(3) GROUP(4)
<S> <C> <C> <C> <C>
7/8/88 100 100 100 100
1988 129 105 101 105
1989 194 138 137 170
1990 155 133 114 143
1991 146 174 112 109
1992 197 187 113 112
1993 211 206 125 125
1994 177 209 121 134
</TABLE>
- ------------------
NOTES
(1) Assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on December 31, 1989 and July 8, 1988, respectively,
and that all dividends were reinvested.
(2) The Company's Common Stock return assumes that the .24 share of El Paso
Natural Gas Company ("EPNG") common stock distributed to the Company's
stockholders on June 30, 1992 was sold and the proceeds were reinvested in
the Company's Common Stock.
(3) The Company began using the Dow Jones Secondary Oil Index for performance
comparison in the PSU Plan in 1994. The Company believes that the Dow Jones
Secondary Oil Index is more representative of the entire independent oil and
gas exploration and production industry than the peer group previously used.
(4) This peer group consists of Anadarko Petroleum Corp., Apache Corp.,
Louisiana Land & Exploration Company, and Oryx Energy Company. This index is
weighted to reflect the relative market capitalization of the peer group
companies on December 31, 1989 and July 8, 1988, respectively, and as of the
beginning of each subsequent year. The Company discontinued using this peer
group for performance comparison in the PSU Plan in 1994.
9
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31,
1994, 1993 and 1992 with respect to the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the Company
and its subsidiaries during 1994 whose salary and bonus exceeded $100,000
("named executive officers"). Annual compensation includes amounts deferred at
the officer's election.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ---------------------------- ---------------
------------------------------------ SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION STOCK AWARDS(2) OPTIONS LTIP PAYOUTS(3) COMPENSATION(4)
- ------------------ ---- --------- -------- ------------ --------------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas H. O'Leary 1994 $800,000 $600,000 $192,179(5) $400,000 34,500 -- $ 64,000
Chairman of the 1993 $750,000 $750,000 $ 80,179(5) -- 34,500 -- $120,315
Board, 1992 $675,000 $675,000 $ 96,482(5) -- 34,500 $ 4,839,000 $183,956
President and
Chief Executive
Officer
Burlington
Resources Inc.
Bobby S. 1994 $399,799 $299,900 $ 14,258 -- 22,500 -- $ 23,988
Shackouls(6) 1993 $204,169 $205,000 -- -- 12,000 -- $374,747
President and
Chief
Executive
Officer
Meridian Oil
Inc.
C. Ray Owen 1994 $224,626 $185,266 $ 8,705 $ 16,000 9,000 -- $ 13,478
Executive Vice 1993 $191,149 $225,251 $ 28,023 -- 6,000 -- $ 23,489
President and 1992 $158,712 $122,471 -- -- 3,800 -- $ 21,209
Chief Operating
Officer
Meridian Oil
Inc.
John E. Hagale 1994 $242,053 $181,600 $ 33,590 $ 28,000 9,000 -- $ 14,343
Senior Vice 1993 $199,723 $215,000 $ 43,600 -- 6,000 -- $ 44,674
President and 1992 $162,500 $130,000 -- -- 4,600 -- $ 31,398
Chief Financial
Officer
Burlington
Resources Inc.;
Executive Vice
President and
Chief Financial
Officer
Meridian Oil
Inc.
L. Edward Parker 1994 $220,008 $165,000 $ 13,451 -- 9,000 -- $ 17,601
Executive Vice 1993 $201,156 $205,000 -- -- 6,000 -- $ 32,877
President, 1992 $169,841 $125,300 -- -- 4,600 -- $ 38,207
Marketing
Meridian Oil
Inc.
</TABLE>
- ---------------
NOTES
(1) Bonus payments are reported for the year in which the related services were
performed.
(2) In July 1994, certain executives elected to convert previously awarded
shares of restricted Common Stock into phantom stock units ("Phantom Units")
pursuant to the Company's 1994 Restricted Stock Exchange Plan. Phantom Units
will vest two years after the original vesting date of the related
restricted Common Stock: as a result, the vesting date for Messrs. O'Leary
and Hagale is December 1996 and for Mr. Owen is January 1998. As an
inducement to extend the vesting date, participants were awarded additional
Phantom Units equal to 20 percent of the number of shares of restricted
Common Stock surrendered. The additional 20% inducement is reported in this
column and is valued at the closing price of the Common Stock on the New
York Stock Exchange, Inc. on the date of grant. A total of 83,300 shares of
restricted Common Stock were exchanged for 99,960 Phantom Units under this
plan. Dividends paid on Common Stock are deemed to be reinvested in
additional Phantom Units pursuant to the plan.
(3) Long-term incentive plan ("LTIP") payouts pursuant to the Company's 1988
Performance Share Unit Plan for the four-year performance period which ended
in 1992.
(4) Includes matching contributions made by the Company during 1994 in the
Company's Retirement Savings (401(k))Plan and Supplemental Benefits Plan for
Messrs. O'Leary, Shackouls, Owen, Hagale and Parker of $64,000, $23,988,
$13,478, $14,343 and $17,601, respectively. Includes matching contributions
made by the Company during 1993 in the Company's Retirement Savings Plan and
Supplemental Benefits Plan for Messrs. O'Leary, Shackouls, Owen, Hagale and
Parker of $120,000, $24,522, $23,469, $24,133 and $32,492, respectively.
Includes matching contributions made by the Company during 1992 in the
Company's Retirement Savings Plan and Supplemental Benefits Plan for Messrs.
O'Leary, Owen, Hagale and Parker of $135,225, $21,205, $24,450 and $33,075,
respectively. Includes interest credited toward deferred compensation at
above market rates for Messrs. O'Leary, Shackouls, Owen, Hagale and Parker
of $315, $225, $20, $41 and $385, respectively, in 1993 and $80, 0, $4, $11
and $138, respectively, in 1992. In addition, includes a payment made by the
Company in 1992 in connection with the modification of stock appreciation
rights outstanding under the Company's 1988 Stock Option Incentive Plan (the
"1988 Option Plan") to Messrs. O'Leary, Hagale and Parker of $48,651, $6,937
and $4,994, respectively. Upon commencement of Mr. Shackouls' employment
with Meridian in 1993, the Company credited his deferred compensation
account under the Supplemental Benefits Plan with $350,000 to compensate Mr.
Shackouls for long term incentive compensation from his former employer
which Mr. Shackouls forfeited by joining Meridian. During 1993, Mr. Hagale
received additional compensation of $20,500 in connection with his
relocation to Houston.
(5) Includes $56,404, $37,977 and $48,756 attributed for personal use of Company
airplanes in 1994, 1993 and 1992, respectively, and for tax gross-up
payments, primarily in connection with Mr. O'Leary's relocation and use of
Company airplanes.
(6) Mr. Shackouls commenced employment with Meridian in June 1993.
10
<PAGE> 13
OPTIONS GRANTED IN 1994
The following information is furnished for the year ended December 31, 1994
with respect to the named executive officers for stock options which were
granted in December 1994 under the Stock Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS OPTIONS
GRANTED GRANTED EXERCISE GRANT DATE
IN TO EMPLOYEES PRICE EXPIRATION PRESENT
NAME 1994(1) IN 1994 PER SHARE DATE(1) VALUE(2)
- --------------------------------------- --------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
T. H. O'Leary.......................... 2,900(3) .68% $33.875 12/6/2004 $ 35,119
31,600(4) 7.45% $33.875 12/7/2004 $382,676
B. S. Shackouls........................ 2,900(3) .68% $33.875 12/6/2004 $ 35,119
19,600(4) 4.62% $33.875 12/7/2004 $237,356
C. R. Owen............................. 2,900(3) .68% $33.875 12/6/2004 $ 35,119
6,100(4) 1.44% $33.875 12/7/2004 $ 73,871
J. E. Hagale........................... 2,900(3) .68% $33.875 12/6/2004 $ 35,119
6,100(4) 1.44% $33.875 12/7/2004 $ 73,871
L. E. Parker........................... 2,900(3) .68% $33.875 12/6/2004 $ 35,119
6,100(4) 1.44% $33.875 12/7/2004 $ 73,871
</TABLE>
- ---------------
NOTES
(1) Under the terms of the Stock Incentive Plan, options are granted at fair
market value and generally may not be exercised until the employee has
completed one year of continuous employment with the Company or its
subsidiaries from the grant date. Options have a term of ten years and
generally terminate one year following an optionee's death or three years
after termination of employment, disability, retirement, termination in
certain events following a "Change in Control" of the Company, as defined in
the Option Plan (a "Change in Control"), or other termination except that
the Compensation and Nominating Committee may terminate options earlier
following such other termination of employment of the named executive
officers.
(2) The value has been calculated using a variation of the Black-Scholes stock
option valuation methodology. The applied model used the grant date of
December 7, 1994, and option price of $33.875. In addition, it assumed a
stock price volatility of 23.24%, a risk-free rate of return of 7.96% and a
dividend of $.55 per year. Options have an exercise period of ten years, but
the estimated effective option life is approximately six years, taking into
account the one-year waiting period before vesting and the three-year post-
retirement exercise period.
(3) Incentive stock options, which become exercisable on December 7, 1995.
(4) Nonqualified stock options, which become exercisable on December 7, 1995.
11
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND YEAR-END VALUE TABLE
The following information is furnished for the year ended December 31, 1994
with respect to the named executive officers for stock option exercises which
occurred during 1994. The number of, and exercise price for, all outstanding
options granted prior to June 30, 1992 shown on the following table have been
adjusted to reflect the distribution of EPNG common stock to the Company's
stockholders on June 30, 1992.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SECURITIES AT DECEMBER 31, 1994 AT DECEMBER 31, 1994(2)
UNDERLYING VALUE ----------------------------- ----------------------------
NAME OPTIONS EXERCISED REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------------- ----------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. H. O'Leary...... -- -- 563,476 34,500 $3,398,872 $38,813
B. S. Shackouls.... -- -- 12,000 22,500 0 $25,313
C. R. Owen......... -- -- 47,812 9,000 $ 110,562 $10,125
J. E. Hagale....... -- -- 84,735 9,000 $ 425,382 $10,125
L. E. Parker....... 6,766 $ 162,986 119,419 9,000 $ 815,236 $10,125
</TABLE>
- ---------------
NOTES
(1) This amount is the aggregate of the market value of the Common Stock at the
time each stock option was exercised minus the exercise price for that
option.
(2) This amount is the aggregate of the number of options multiplied by the
difference between the closing price of the Common Stock on the New York
Stock Exchange, Inc. on December 30, 1994 minus the exercise price for that
option.
LONG-TERM INCENTIVE PLAN AWARDS IN 1994
The following information is furnished for the year ended December 31, 1994
with respect to the named executive officers with respect to grants under the
PSU Plan during 1994.
<TABLE>
<CAPTION>
NUMBER OF UNITS PERFORMANCE PERIOD MAXIMUM
NAME GRANTED IN 1994 UNTIL PAYOUT FUTURE PAYOUT(1)
- -------------------------------------------- --------------- ------------------ ----------------
<S> <C> <C> <C>
T. H. O'Leary............................... 0 12/31/96 0
B. S. Shackouls............................. 31,500 12/31/96 31,500
C. R. Owen.................................. 9,000 12/31/96 9,000
J. E. Hagale................................ 9,000 12/31/96 9,000
L. E. Parker................................ 9,000 12/31/96 9,000
</TABLE>
- ---------------
NOTE
(1) Maximum future payout is stated as the number of vested PSUs at the end of
the performance period. At the end of the performance period, participants
receive a cash payment equal to the number of vested PSUs multiplied by the
average closing price of the Common Stock for the 20 business days
immediately preceding the end of the performance period. Under the terms of
the PSU Plan, a portion of the granted PSUs may vest each year beginning in
1993 and any remaining unvested PSUs may vest at the end of the performance
period on December 31, 1996. In determining whether to vest PSUs, the
Committee evaluates the Company's total shareholder return versus the Dow
Jones Secondary Oil Index and the Company's performance based on a
combination of strategic, operating and financial measures, including oil
and gas production levels, reserve additions and reserve finding costs,
earnings per share, operating income and operating cash flow. PSUs vest to
the extent that the Compensation and Nominating Committee determines that
the Company has achieved its budget targets for these performance measures
since the beginning of the performance period on June 30, 1992. Under the
terms of the PSU Plan, the Compensation and Nominating Committee does not
establish thresholds or targets with respect to the vesting of PSUs at the
time of the initial grant. In the event of a Change in Control of the
Company, 25 percent of the total PSUs originally granted fully vests
together with a proportionate share of PSUs granted after the original grant
date. If a participant is terminated other than for cause, death or
disability, or voluntarily terminates employment for good reason within two
years after a Change in
12
<PAGE> 15
Control but subsequent to the year in which the Change in Control occurs, an
additional 25 percent of the PSUs originally granted will vest together with
a proportionate share of PSUs granted after the original grant date. After a
Change in Control, the value of PSUs is calculated based on the greater of
(i) the highest price at which the Common Stock traded during the 60-day
period ending on the date of the Change in Control or (ii) the highest price
per share paid in connection with such Change in Control. The term "Change
in Control" means in general (i) an accumulation by any person or group of
20% or more of the Company's voting securities, (ii) a purchase pursuant to
a tender or exchange offer for voting securities of the Company, other than
a tender or exchange offer made by the Company, (iii) a merger,
consolidation, liquidation or dissolution of the Company or sale of all or
substantially all of the assets of the Company which is approved by
stockholders, or (iv) an unapproved change in the constitution of the
majority of the Board of Directors within a two-year period.
PENSION PLAN
Benefit accruals under the qualified pension plan of the Company and its
subsidiaries (the "Pension Plan") and the nonqualified Supplemental Benefits
Plan (the "Supplemental Benefits Plan") are based on the gross amount of
earnings, including incentive bonuses, but excluding all commissions and other
extra or added compensation or benefits of any kind or nature. Estimated annual
benefit levels under the Plans, based on earnings and years of credited service
at age 65, are as follows:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE AT AGE 65
PENSION -----------------------------------------------
EARNINGS(1) 15 20 25 30
------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 400,000.................. $ 94,485 $125,980 $157,475 $188,970
$ 600,000.................. $142,485 $189,980 $237,475 $284,970
$ 800,000.................. $190,485 $253,980 $317,475 $380,970
$1,000,000.................. $238,485 $317,980 $397,475 $476,970
$1,200,000.................. $286,485 $381,980 $477,475 $572,970
$1,400,000.................. $334,485 $445,980 $557,475 $668,970
$1,600,000.................. $382,485 $509,980 $637,475 $764,970
$1,800,000.................. $430,485 $573,980 $717,475 $860,970
$2,000,000.................. $478,485 $637,980 $797,475 $956,970
</TABLE>
- ---------------
NOTE
(1) Average pension earnings for a given year include salary and bonus payments
for the year in which the related services were performed (as reported in
the Summary Compensation Table). Under the Pension Plan, the maximum benefit
payable in 1994 is $118,800 and the maximum amount of compensation that may
be considered is $150,000. Pension Plan benefits are not reduced by Social
Security benefits.
The Pension Plan formula for retirement at age 65 is 1.1% of the highest
five-year average earnings, plus .5% of the highest five-year average earnings
in excess of one-third of the FICA taxable wage base in effect during the year
of termination, times the number of years of credited service up to a maximum of
30 years. An early retirement supplement equal to 1% of the highest five-year
average earnings up to one-third of the FICA taxable wage base in effect in the
year of termination, times the number of years of credited service up to a
maximum of 30 years, is payable until age 62. Both the basic benefit and the
supplement are reduced by 2% for each year the employee's actual retirement date
precedes the date the employee would have attained age 65, or the date the
employee could have retired after attaining age 60 with 30 years of credited
service, if earlier. Years of credited service under the Pension Plan at age 65
for Messrs. O'Leary, Shackouls, Owen, Hagale and Parker would be 16, 22, 25, 30
and 30, respectively.
13
<PAGE> 16
EMPLOYMENT AGREEMENTS AND SEVERANCE PLANS
The Company has an agreement with Mr. O'Leary which provides for his
employment as Chief Executive Officer of the Company through December 15, 1996
at a minimum annual salary of $525,000. The Company also has an employment
agreement, which was entered into in 1993 and was modified in 1994, with Mr.
Shackouls which provides for his employment as President and Chief Executive
Officer of Meridian Oil Inc. through April 30, 1998 at a minimum annual salary
of $500,000. These agreements provide that upon termination of employment within
two years after a Change in Control of the Company, Messrs. O'Leary and
Shackouls will be entitled to the greater of the benefits under the employment
agreement or the Key Executive Severance Protection Plan (the "Severance
Protection Plan"). Pursuant to this agreement, Mr. Shackouls is entitled to
additional years of credited service under the Supplemental Benefits Plan if he
remains employed by the Company until age 55.
The Severance Protection Plan provides severance benefits following a
Change in Control for officers of the Company and its subsidiaries in an amount
equal to three times annual salary, including maximum bonus amounts. The
Severance Protection Plan also provides for the continuation of life and health
insurance for a period of up to 18 months subsequent to a participant's
termination of employment following a Change in Control as well as a
supplemental pension payable under the Supplemental Benefits Plan calculated by
adding three years of additional credited pension service and certain other
benefits. Benefits are payable under the Severance Protection Plan for any
termination of employment within two years of the date of a Change in Control,
except where termination is by reason of death, disability, for cause, or
instituted by the employee for other than good reason. The Severance Protection
Plan also provides that the Company will pay legal fees and expenses incurred by
a participant to enforce rights or benefits under this plan.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes an
excise tax on payments to terminated employees following a Change in Control if
the payments meet certain requirements and exceed certain limits set forth in
the Code. If payments under the Severance Protection Plan (the "Severance
Payments") are subject to this excise tax, the Company will pay an additional
amount to the participant (the "Gross-Up Payment") such that the participant
retains, after payment of the excise tax on the Severance Payments and the
Gross-Up Payment and any income tax on the Gross-Up Payment, an amount equal to
the Severance Payments.
The Company also has a Severance Plan and a Key Executive Retention Plan
which provide benefits for any termination of employment, except where
termination is for cause (generally, a willful failure to substantially perform
an employee's duties or willfully engaging in conduct which is materially
injurious to the Company) or instituted by the employee for other than good
reason. The Severance Plan provides a severance benefit to certain participants
who were employed by the Company in Seattle, Washington, excluding Mr. O'Leary
and employees of the Company's subsidiaries, based on annual compensation and
years of service of up to a maximum of 30 months of compensation, which includes
salary and maximum bonus. The Key Executive Retention Plan provides for a cash
payment upon termination, including among other things the participant's
prorated bonus under the Incentive Compensation Plan, and certain other
severance benefits. The Key Executive Retention Plan also provides that a
participant will receive at termination additional pension benefits based on
projected compensation, and for the continuation of health insurance for a
period of up to 18 months subsequent to a participant's termination of
employment.
AUDITORS
The Board of Directors has appointed Coopers & Lybrand as independent
public accountants for the year ending December 31, 1995.
Representatives of Coopers & Lybrand will be present at the Annual Meeting
of Stockholders with the opportunity to make a statement and to respond to
appropriate questions.
14
<PAGE> 17
EXPENSES OF SOLICITATION
The expenses of preparing and mailing this Proxy Statement and the
accompanying form of proxy and the cost of solicitation of proxies on behalf of
the management will be borne by the Company. In addition, D. F. King & Co. has
been retained to aid in the solicitation at an estimated fee of $10,000. Proxies
may be solicited by personal interview, mail and telephone. Brokerage houses,
other custodians and nominees will be asked whether other persons are beneficial
owners of the shares which they hold of record and, if so, they will be supplied
with additional copies of the proxy materials for distribution to such
beneficial owners. The Company will reimburse parties holding stock in their
names or in the names of their nominees for their reasonable expenses in sending
proxy material to their principals.
OTHER MATTERS
The management knows of no other matters which are likely to be brought
before the meeting. However, if any other matters, not now known or determined,
come before the meeting, the persons named in the enclosed form of proxy or
their substitutes will vote such proxy in accordance with their judgment in such
matters.
ANNUAL REPORT
A copy of the Company's 1994 Annual Report to Stockholders is being mailed
with this Proxy Statement to each stockholder of record. Stockholders not
receiving a copy of such Annual Report may obtain one by writing or calling Ms.
Wendi S. Zerwas, Corporate Secretary, Burlington Resources Inc., 5051
Westheimer, Suite 1400, Houston, Texas 77056-2124, telephone (713) 624-9500.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1996 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 1996 Annual Meeting of Stockholders must be mailed to Ms.
Wendi S. Zerwas, Corporate Secretary, Burlington Resources Inc., 5051
Westheimer, Suite 1400, Houston, Texas 77056-2124, and must be received by the
Corporate Secretary on or before October 19, 1995.
By Order of the Board of Directors
WENDI S. ZERWAS
Corporate Secretary
15
<PAGE> 18
[Burlington Resources Logo]
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT NOTICE OF
YOUR MANAGEMENT WILL APPRECIATE THE ANNUAL MEETING
PROMPT RETURN OF YOUR SIGNED PROXY SO OF STOCKHOLDERS
THE SHARES YOU OWN WILL BE REPRESENTED AND
AT THE ANNUAL MEETING OF STOCKHOLDERS. PROXY STATEMENT
- --------------------------------------------------------------------------------
TO BE HELD IN THE CONSULATE ROOM,
WESTIN OAKS HOTEL,
5011 WESTHEIMER,
HOUSTON, TEXAS
MARCH 16, 1995
9:00 A.M.
<PAGE> 19
PROXY SOLICITED BY THE BOARD OF DIRECTORS
BURLINGTON RESOURCES INC. ANNUAL MEETING OF STOCKHOLDERS
MARCH 16, 1995
The undersigned hereby appoints Thomas H. O'Leary and Gerald J. Schissler,
and each or any of them, with power of substitution, proxies for the undersigned
and authorizes them to represent and vote, as designated, all of the shares of
stock of the Company which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held at the Consulate Room, Westin Oaks Hotel,
5011 Westheimer, Houston, Texas on March 16, 1995 and at any adjournment or
postponement of such meeting for the following purposes and with discretionary
authority as to any other matters that may properly come before the meeting, in
accordance with and as described in the Notice of Annual Meeting of Stockholders
and Proxy Statement. If no direction is given, this proxy will be voted FOR
proposal 1.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
The Board of Directors recommends a vote FOR proposal 1.
1. Election of Directors Nominees: J. V. Byrne, S. P. Gilbert, J. F. McDonald,
T. H. O'Leary, D. M. Roberts, W. Scott, Jr., W. E. Wall
<TABLE>
<S> <C> <C>
/ / FOR / / WITHHELD / / FOR all nominees except as noted above
Mark here for address change and note at left / /
Mark here for comments / /
</TABLE>
<TABLE>
<S> <C> <C>
Please sign exactly as your name -------------------------------- ------------
appears. If acting as attorney, Signature Date
executor, trustee or in other
representative capacity, sign name and
title.
-------------------------------- -------------
Signature Date
</TABLE>
