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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
------------------------
BURLINGTON RESOURCES INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
CALCULATION OF FILING FEE
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PER UNIT PRICE OR
OTHER
UNDERLYING VALUE OF
TRANSACTION
COMPUTED
TITLE OF EACH CLASS OF AGGREGATE NUMBER OF PURSUANT TO PROPOSED MAXIMUM
SECURITIES TO WHICH SECURITIES TO WHICH EXCHANGE AGGREGATE VALUE OF TOTAL FEE
TRANSACTION APPLIES: TRANSACTION APPLIES: ACT RULE 0-11: TRANSACTION: PAID
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<S> <C> <C> <C> <C>
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</TABLE>
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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 27, 1997
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Burlington Resources Inc. will be
held on Thursday, March 27, 1997, at 9:00 a.m. in the San Felipe Room,
Doubletree Hotel, 2001 Post Oak Boulevard, Houston, Texas, for the following
purposes:
1. To elect 10 directors, each to hold office for a term of one year.
2. To consider and vote on a stockholder proposal.
3. To transact any other business which may be properly brought before the
meeting.
Only stockholders of record at the close of business on January 31, 1997
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 20, 1997
<PAGE> 3
BURLINGTON RESOURCES INC.
5051 WESTHEIMER
HOUSTON, TEXAS 77056-2124
Mailing Date:
February 20, 1997
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 27,
1997. 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 31, 1997 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 124,937,654 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 seven meetings during 1996.
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 1996. 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 five times during 1996. 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 1996,
no Directors attended fewer than 75% of the meetings of the Board of Directors
and the committees thereof.
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.
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NAME AND ADDRESS OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OF CLASS
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FMR Corp., Edward C. Johnson 3d and Abigail P.
Johnson............................................. 18,698,433(1) 14.97%
82 Devonshire Street
Boston, Massachusetts 02109
Wellington Management Company......................... 12,615,300(2) 10.10%
75 State Street
Boston, Massachusetts 02109
Vanguard/Windsor Fund................................. 11,429,100(3) 9.15%
P.O. Box 2600
Valley Forge, Pennsylvania 19482
</TABLE>
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NOTES
(1) In its Schedule 13G, FMR Corp. states that it has sole voting power as to
645,384 shares and sole dispositive power with respect to 18,697,833 shares
and that Fidelity International Limited has sole voting and dispositive
power as to 600 shares. Mr. Johnson and Ms. Johnson state that they have
voting power with respect to no shares and dispositive power with respect
to 18,697,833 shares.
(2) Wellington Management Company ("WMC"), in its capacity as investment
adviser, may be deemed to have beneficial ownership of these shares, which
are owned by numerous investment advisory clients, only one of which,
Vanguard/Windsor Fund, is known to have more than 5% of the class. WMC
reports that it had sole voting power as to no shares, shared voting power
as to 834,000 shares and shared dispositive power as to 12,615,300 shares.
(3) Vanguard/Windsor Fund reports that it had sole voting power and shared
dispositive power with respect to the reported shares. These shares are
also included in the shares beneficially owned by Wellington Management
Company, an investment adviser for Vanguard/Windsor Fund, as explained in
note 2.
2
<PAGE> 5
The following table sets forth the number of shares of Common Stock
beneficially owned as of January 31, 1997 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. No individual Director (including nominees for Director) or named
executive officer beneficially owns 1% or more of the Company's outstanding
Common Stock, nor do the Directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
-----------------------------------------
BENEFICIALLY DEFERRAL
NAME OWNED (1) PLANS (2) TOTAL
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DIRECTORS
J. V. Byrne.................................... 8,903 504 9,407
S. P. Gilbert.................................. 15,053 504 15,557
L. I. Grant.................................... 5,000 943 5,943
J. T. LaMacchia................................ 4,000 502 4,502
J. F. McDonald................................. 10,653 504 11,157
T. H. O'Leary.................................. 687,174 160,123 847,297
D. M. Roberts.................................. 11,000 2,883 13,883
W. Scott, Jr................................... 9,296(3) 1,413 10,709
B. S. Shackouls................................ 69,000 100,354 169,354
W. E. Wall..................................... 8,185 504 8,689
NAMED EXECUTIVE OFFICERS
J. E. Hagale................................... 93,735 23,536 117,271
C. R. Owen..................................... 75,156 28,795 103,951
G. J. Schissler................................ 15,000 28,265 43,265
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (14 PERSONS)...................... 1,073,241 363,849 1,437,090
</TABLE>
NOTES
(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 31, 1997; as a result,
the number of shares shown in this column include for Dr. Byrne, Mr.
Gilbert, Ms. Grant, Mr. LaMacchia, Mr. McDonald, Mr. O'Leary, Mr.
Roberts, Mr. Scott, Mr. Shackouls, Mr. Wall, Mr. Hagale, Mr. Owen and
Mr. Schissler 7,553, 7,553, 3,000, 3,000, 7,553, 622,976, 6,000, 7,553,
69,000, 5,185, 92,735, 65,812, 15,000 shares, respectively, and 972,406
shares for all Directors and executive officers as a group, which such
person (or group) has the right to acquire within 60 days of January
31, 1997.
(2) These shares represent the economic equivalent of shares of Common
Stock, and were received as a result of grants under the Phantom Stock
Plan for Non-Employee Directors and elections 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 and/or to convert
restricted shares of Common Stock into phantom stock pursuant to the
Company's 1994 Restricted Stock Exchange Plan.
(3) 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.
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 10 as of
the date of the Annual Meeting. It is proposed to elect 10 Directors, each to
hold office for a term of one year and until his or her 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 10 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--Retired. Age--68. Chairman--Audit Committee. Dr. Byrne has
been retired since January 1996. From November 1984 to December 1995, Dr. Byrne
was President of Oregon State University. Dr. Byrne has been a Director of the
Company since 1988.
S. PARKER GILBERT--Retired. Age--63. Member--Compensation and Nominating
Committee. Mr. Gilbert has been retired since January 1991. Mr. Gilbert has been
a Director of the Company since 1990. Mr. Gilbert is also a director of ITT
Industries, Inc., 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.
LAIRD I. GRANT--President, Chief Executive Officer, Chief Investment
Officer, and Director, Rockefeller & Co., Inc., New York, New York--Asset
management. Age--51. Member--Audit Committee. Since January 1995, Ms. Grant's
principal occupation has been as shown above. From June 1991 to December 1994,
Ms. Grant was Executive Vice President of U.S. Trust Company. Ms. Grant has been
a Director of the Company since 1996.
JOHN T. LAMACCHIA--President and Chief Executive Officer, Cincinnati Bell
Inc., Cincinnati, Ohio--Telecommunications. Age--55. Member--Compensation and
Nominating Committee. Since October 1993, Mr. LaMacchia's principal occupation
has been as shown above. From 1988 to October 1993, Mr. LaMacchia was President
and Chief Operating Officer of Cincinnati Bell Inc. Mr. LaMacchia has been a
Director of the Company since 1996. Mr. LaMacchia is also a director of
Cincinnati Bell Inc. and the Kroger Company.
JAMES F. MCDONALD--President and Chief Executive Officer,
Scientific-Atlanta, Inc., Norcross, Georgia--Telecommunications. Age--56.
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. 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, Burlington Resources Inc.,
Houston, Texas. Age--62. Since December 1995, Mr. O'Leary's principal occupation
has been as shown above. From February 1993 to December 1995, Mr. O'Leary was
Chairman of the Board, President and Chief Executive Officer of Burlington
Resources Inc. 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. 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--Retired. Age--61. Member--Audit Committee. Mr. Roberts
has been retired since September 1995. From February 1990 until September 1995,
Mr. Roberts was Vice Chairman and Treasurer, United States Trust Company of New
York and its parent, U.S. Trust Corporation. Mr. Roberts
4
<PAGE> 7
has been a Director of the Company since 1993. Mr. Roberts is also a director of
York International Corporation.
WALTER SCOTT, JR.--Chairman and President, Peter Kiewit Sons', Inc., Omaha,
Nebraska -- Construction, Mining and Telecommunications. Age--65.
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., CalEnergy Company, Inc., C-TEC Corporation, ConAgra, Inc., First
Bank System, Inc., Valmont Industries, Inc. and WorldCom, Inc.
BOBBY S. SHACKOULS--President and Chief Executive Officer, Burlington
Resources Inc., Houston, Texas. Age--46. Since December 1995, Mr. Shackouls'
principal occupation has been as shown above. Since October 1994, Mr. Shackouls
has been President and Chief Executive Officer of Burlington Resources Oil & Gas
Company (formerly known as Meridian Oil Inc.), a wholly owned subsidiary of the
Company. From June 1993 to October 1994, Mr. Shackouls was Executive Vice
President and Chief Operating Officer of Meridian Oil Inc. From July 1991 to May
1993, Mr. Shackouls was President and Chief Operating Officer of Torch Energy
Advisors, Inc. Mr. Shackouls has been a Director of the Company since 1995.
WILLIAM E. WALL--Of Counsel, Siderius Lonergan, Seattle, Washington--Law.
Age--68. Member--Compensation and Nominating Committee. For more than five
years, 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 1996, an initial option for 3,000 shares of Common
Stock was granted to Ms. Grant and to Mr. LaMacchia and 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's Phantom Stock Plan for Non-Employee Directors provides that
immediately following each Annual Meeting of Stockholders, a memorandum account
established for each of the Directors who is not a salaried officer of the
Company will be credited with 500 shares of phantom stock. Dividends paid on
Common Stock are deemed to be reinvested in additional phantom stock pursuant to
the plan. Amounts credited to the memorandum accounts pursuant to this plan are
unfunded obligations of the Company. Upon termination of service as a Director,
phantom shares credited in the memorandum account will be valued at the fair
market value of the Company's Common Stock at that time and paid in cash.
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 the Company's executives with those of the shareholders. Key
elements of this philosophy are:
- Establishing compensation plans which strengthen the Company's ability to
attract and retain executives and key employees and to deliver pay
commensurate with the Company's performance, as measured by 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
this 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 based on individual and
Company performance relative to certain annual objectives. 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 percent of base salary. 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 objectives, 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 of building
shareholder value.
The Company's long-term incentive program consists of the Stock Incentive
Plan (the "Stock Incentive Plan") and the Performance Share Unit Plan (the "PSU
Plan"). With the completion of the four and one-half year performance cycle
under the Company's 1992 PSU Plan in December 1996, the Board approved the 1997
PSU Plan, which is based on a four year performance cycle ending in December
2000. The Committee's objective 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 and to emphasize stock options as the cornerstone of the Company's
long-term incentive compensation program. Long-term incentive benefits are
dependent on the Company's achievement of its strategic, operating and financial
goals, the Company's total shareholder return as compared to the Dow Jones
Secondary Oil Index, and continued increases in the price of the Company's
Common Stock.
Under the Stock Incentive Plan, stock options are granted to executives,
managers and key employees. The options generally vest no earlier than one year
after the grant date, have a term of ten years and have an
6
<PAGE> 9
exercise price equal to 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 or PSU Plan
pay-out, the Company's Common Stock at a discount of up to 25 percent of fair
market value. Stock purchased under the Plan cannot be sold for at least three
years or until termination of employment.
Vesting of PSUs under the 1997 PSU Plan occurs over a four year performance
period and 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.
The deferred compensation provisions of the Company's compensation plans,
including the 1992 PSU Plan, permit participants to allocate all or a portion of
their deferred compensation in a variety of investment funds, including phantom
shares of the Company's Common Stock. As an inducement for executives to
increase their exposure to the Company's Common Stock, and to provide a benefit
similar to the stock purchase rights program available under the Stock Incentive
Plan, the Committee granted executives the opportunity to invest their deferred
PSU pay-out in phantom shares at 75 percent of the fair market value of the
Company's Common Stock, provided that such funds may not be transferred to
another investment fund for three years or until termination of employment.
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. 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 consistent with
this compensation philosophy, the Committee will also attempt to structure
compensation programs that are tax-deductible by the Company.
COMPANY PERFORMANCE AND COMPENSATION
Annual Incentive Award
The Company's operating, financial and strategic results in 1996 were
excellent. In July, the Company announced the acceleration of its on-going
divestiture program. The Company sold over 9,500 working interest wells from
January 1, 1994 to December 31, 1996, including its working interest in
approximately 4,000 wells sold during 1996. By July 31, 1997, the Company
expects to sell its working interest in approximately 9,200 additional wells,
thus reducing its pre-1994 working interest well count over 50 percent. This
accelerated divestiture program allowed the Company to reorganize and reduce the
number of its operating divisions from five to three. The accelerated
divestiture program and reorganization is expected to result in more than a 20
percent reduction in the Company's 1995 level of production expenses per
thousand cubic feet equivalent. It will also result in a reduction of over 10
percent in the Company's 1995 level of corporate administrative expenses per
thousand cubic feet equivalent.
Notwithstanding this divestiture program, natural gas production, at 1,225
million cubic feet per day, increased by 5% over last year. Oil production
increased by 6% to 51 thousand barrels per day. Through acquisitions and
internal development, the Company replaced 122% of production for the year at
very attractive finding costs. After adjustment for the sale of non-strategic
properties, reserves stood at 6.4 trillion cubic feet of gas equivalent as of
December 31, 1996.
In addition, the Company's financial results were far above the objectives
for the year. Operating income increased from $23 million in 1995 to $448
million in 1996, operating cash flow increased from $452 million in 1995 to $652
million in 1996 and earnings per share increased from $.19 in 1995 to $2.17 in
1996 (excluding special items in each year). Well operating and general and
administrative expenses were reduced on a unit of production basis. The
exploration program continued its successful expansion with capital expenditures
of $105 million in 1996.
Considering the strategic, operating and financial results of the Company,
which were not specifically weighted, the Committee awarded Mr. Shackouls an
annual incentive award of $600,000, which represents the maximum award available
under the Incentive Compensation Plan. Similarly, the Committee awarded the
other executive officers the maximum awards available under that plan.
7
<PAGE> 10
Long-Term Incentive Plan Pay-Out
The Company's operating results for the four and one-half year performance
period of the 1992 PSU Plan were also excellent. Natural gas production grew at
an average annual rate of 11%, from an average of 793 million cubic feet per day
in the second quarter of 1992 to an average of 1,273 million cubic feet per day
in the fourth quarter of 1996. Oil production grew at an average annual rate of
6%, from an average of 40 thousand barrels per day in the second quarter of 1992
to an average of 53 thousand barrels per day in the fourth quarter of 1996.
During the period, the Company replaced 171% of its production at very
attractive finding costs.
The Company's financial results, although subject to the volatile pricing
environment for oil and gas, particularly in the San Juan Basin, were very good.
Earnings per share from continuing operations (excluding special items)
increased from $1.20 in 1992 to $2.17 in 1996. Operating income (excluding
special items) increased from $240 million in 1992 to $448 million in 1996.
Operating cash flow increased from $433 million in 1992 to $652 million in 1996.
The Company achieved a number of strategic objectives during the
performance period. First, the Company expanded into the offshore Gulf of
Mexico, beginning with the 1994 purchase of offshore properties from Maxus
Energy Corporation. The Company's natural gas production from this strategic
producing area has increased from approximately 100 million cubic feet per day
to approximately 240 million cubic feet per day in December 1996. Second, the
Company, working with its natural gas transmission suppliers, has expanded its
ability to move San Juan Basin gas to premium markets in the Gulf Coast and
eastern United States, in addition to its traditional markets in California and
the southwestern United States. Third, as discussed above, the Company has
undertaken dramatic efforts to improve its operating efficiencies through a
property divestiture program begun in 1994 and accelerated in July 1996.
Finally, the Company has substantially increased its exposure to high potential
exploration projects, which is an essential component of the Company's growth
strategy. The Company's Total Shareholder Return during this period exceeded
that of the Dow Jones Secondary Oil Index.
The Company's performance, for purposes of the PSU Plan, was evaluated over
a four and one-half year interval. The Committee determined that the Company
substantially exceeded its strategic, financial and operating objectives during
the performance period of June 30, 1992 to December 31, 1996. The Committee also
reviewed the Company's Total Shareholder Return relative to the return of the
other companies in the Dow Jones Secondary Oil Index. Previously, the Committee
approved the vesting of 11.25, 7.5, and 7.5 percent of the units granted under
the PSU Plan for the period from June 30, 1992 through December 31, 1993, 1994,
and 1995, respectively. Units granted during the performance cycle vested on a
modified schedule. The Committee approved the vesting of 15 percent of the units
based on the Company's performance for 1996, or 20,700 units for Mr. Shackouls
and 42,300 units for the other executive officers. In addition, in connection
with the completion of the PSU Plan cycle, based on the Company's operating,
financial and strategic results, and Total Shareholder Return relative to the
Dow Jones Secondary Oil Index, for the four and one-half year performance period
from June 30, 1992 to December 31, 1996, the Committee approved the vesting of
an additional 40,463 units for Mr. Shackouls and 123,005 units for the other
executive officers. For the entire four and one-half year program, the Committee
vested in aggregate 87.5 percent of the units granted.
Pay-out under the PSU Plan, which occurred in January 1997, was based on
the number of vested units multiplied by the average closing price of the
Company's Common Stock for the 20 trading days prior to December 31, 1996.
Aggregate payments under the PSU Plan consisted of $4,172,283 to Mr. Shackouls
and $12,110,945 to the other executive officers, of which Mr. Shackouls and the
other executive officers deferred $3,922,283 and $6,555,789, or 94 percent and
54 percent of the total pay-out, respectively, into phantom shares of the
Company's Common Stock. The PSU pay-out to these executives represents
approximately .92% of the $1.8 billion increase in the Company's market
capitalization during the performance cycle. The Company's long-term incentive
compensation payments during this period were below the targeted seventy-fifth
percentile of long-term incentive compensation provided by the competitor group
of energy companies.
8
<PAGE> 11
Long-Term Incentive Awards
As an incentive for future performance and consistent with the objective of
targeting long-term incentive compensation at the seventy-fifth percentile when
compared to the competitor group of energy companies, the Committee granted Mr.
Shackouls 300,000 stock options and the other executive officers 470,000 stock
options. In connection with the implementation of the 1997 PSU Plan, the
Committee granted Mr. Shackouls the opportunity to earn up to 75,000 units and
the other executive officers the opportunity to earn up to 132,500 units. The
stock options vest in equal increments over the next four years. Vesting of
performance share units is dependent on the Company's ability to achieve its
strategic, operating and financial objectives, and the Company's Total
Shareholder Return as compared to the Dow Jones Secondary Oil Index. Units may
vest in equal increments over the next four years, and any unvested units may
vest at the end of the four year performance cycle. Payment under this plan will
be made at the end of the four year performance cycle based on the price of the
Company's Common Stock at that time. These awards provide incentive for the
Company's executive officers to continue to build shareholder value over the
long term. In making these grants, the Committee did not consider currently
outstanding long-term incentive awards.
STOCK OWNERSHIP
The Committee established stock ownership guidelines in 1993 to more
closely align executive management's personal financial interests with the
interests of all shareholders. The guidelines require executives, depending upon
their position, to hold the equivalent of one to four times their base pay in
the Company's stock. These targets are to be achieved by the end of 1998 or, for
new incumbents, within five years of their appointment to the position. As of
January 31, 1997, the record date for the Annual Meeting, each of the Company's
executive officers had attained the stock ownership targets required by the
guidelines.
COMPENSATION AND NOMINATING COMMITTEE
Walter Scott, Jr., Chairman
S. Parker Gilbert
John T. LaMacchia
William E. Wall
9
<PAGE> 12
Comparison of 5-Year Cumulative Total Shareholder Return(1)
<TABLE>
<CAPTION>
Measurement Period BURLINGTON S&P 500 DOW JONES
(Fiscal Year Covered) RESOURCES(2) SECONDARY
OIL INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 135 108 101
1993 144 118 112
1994 121 120 108
1995 138 165 125
1996 179 203 154
</TABLE>
YEAR ENDED DECEMBER 31
Comparison of Cumulative Total Shareholder Return
Since the Company's Initial Public Offering(1)
<TABLE>
<CAPTION>
Measurement Period BURLINGTON S&P 500 DOW JONES
(Fiscal Year Covered) RESOURCES (2) SECONDARY
OIL INDEX
<S> <C> <C> <C>
7/8/88 100 100 100
1988 129 105 101
1989 194 138 137
1990 155 133 114
1991 146 174 112
1992 197 187 113
1993 211 206 125
1994 177 209 121
1995 201 287 140
1996 262 353 173
</TABLE>
YEAR ENDED DECEMBER 31
- ------------------
NOTES
(1) Assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on December 31, 1991 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.
10
<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31,
1996, 1995 and 1994 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 1996 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
ANNUAL COMPENSATION ----------------------------
----------------------------------- SECURITIES PAYOUTS
OTHER ANNUAL RESTRICTED UNDERLYING ---------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION STOCK AWARDS(2) OPTIONS LTIP PAYOUTS(3)
- ------------------------------- ---- -------- -------- ------------ --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas H. O'Leary 1996 $500,000 $500,000 $293,191(5) -- 100,000 $6,292,584
Chairman of the Board 1995 $800,000 $400,000 $225,464(5) -- 25,000 --
Burlington Resources Inc. 1994 $800,000 $600,000 $192,179(5) $400,000 34,500 --
Bobby S. Shackouls 1996 $600,000 $600,000 $ 19,178 -- 300,000 $4,172,283
President and Chief 1995 $530,398 $262,500 $ 76,474 -- 34,500 --
Executive Officer 1994 $399,799 $299,900 $ 14,258 -- 22,500 --
Burlington Resources Inc.
C. Ray Owen 1996 $285,000 $290,399 -- -- 95,000 $1,504,748
Executive Vice President and 1995 $285,000 $152,664 $ 10,762 -- 9,000 --
Chief Operating Officer 1994 $224,626 $185,266 $ 8,705 $ 16,000 9,000 --
Burlington Resources
Oil & Gas Company
John E. Hagale 1996 $270,000 $270,000 $ 2,754 -- 95,000 $1,504,748
Executive Vice President and 1995 $270,000 $135,000 $ 8,719 -- 9,000 --
Chief Financial Officer 1994 $242,053 $181,600 $ 33,590 $ 28,000 9,000 --
Burlington Resources Inc.
Gerald J. Schissler 1996 $245,004 $270,004 $ 859 -- 90,000 $1,504,748
Executive Vice President, 1995 $245,004 $122,500 $ 419 -- 9,000 --
Law and Corporate Affairs 1994 $215,004 $161,300 $ 89,428(5) -- 9,000 --
Burlington Resources Inc.
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION(4)
- ------------------------------- ---------------
<S> <C>
Thomas H. O'Leary $1,200,603
Chairman of the Board $ 112,000
Burlington Resources Inc. $ 64,000
Bobby S. Shackouls $1,460,714
President and Chief $ 119,616
Executive Officer $ 23,988
Burlington Resources Inc.
C. Ray Owen $ 431,069
Executive Vice President and $ 30,060
Chief Operating Officer $ 13,478
Burlington Resources
Oil & Gas Company
John E. Hagale $ 297,554
Executive Vice President and $ 26,916
Chief Financial Officer $ 14,343
Burlington Resources Inc.
Gerald J. Schissler $ 418,919
Executive Vice President, $ 24,378
Law and Corporate Affairs $ 12,900
Burlington Resources 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
vest two years after the original vesting date of the related restricted
Common Stock. 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 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 payout pursuant to the Company's 1992 Performance
Share Unit Plan ("PSU Plan") for the performance period which began June 30,
1992 and ended on December 31, 1996. Under the terms of the PSU Plan, this
payment is equal to the number of vested units multiplied by the average
closing price of the Company's Common Stock for the 20 business days
immediately preceding the end of the performance period. Units vested under
the 1992 PSU Plan throughout the four and one-half year performance cycle.
In aggregate, 87.5% of the Units granted under the 1992 PSU Plan vested. Of
this amount, Messrs. O'Leary, Shackouls, Owen, Hagale and Schissler deferred
$3,146,292, $3,922,283, $1,104,748, $750,000, and $1,104,748, respectively,
into phantom shares of the Company's Common Stock.
(4) Participants who elected to defer all or a portion of the 1992 PSU Plan
payment were granted the opportunity to defer this payment in a phantom
stock account at a 25 percent discount to the fair market value of the
Common Stock. Includes in 1996 for Messrs. O'Leary, Shackouls, Owen, Hagale
and Schissler $1,130,270, $1,409,036, $396,869, $269,429 and $396,869,
respectively, with respect to the discount credited to PSU deferrals into
the phantom stock fund. Includes matching contributions made by the Company
during 1996 in the Company's Retirement Savings (401(k)) Plan and
Supplemental Benefits Plan for Messrs. O'Leary, Shackouls, Owen, Hagale and
Schissler of $70,333, $51,678, $34,200, $28,125 and $22,050, respectively.
Includes matching contributions made by the Company during 1995 in the
Company's Retirement Savings Plan and Supplemental Benefits Plan for Messrs.
O'Leary, Shackouls, Owen, Hagale and Schissler of $112,000, $49,770,
$30,060, $26,916 and $24,378, respectively. Includes matching contributions
made by the Company during 1994 in the Company's Retirement Savings Plan and
Supplemental Benefits Plan for Messrs. O'Leary, Shackouls, Owen, Hagale and
Schissler of $64,000, $23,988, $13,478, $14,343 and $12,900, respectively.
During 1995, Mr. Shackouls received additional compensation of $69,846 in
connection with the relocation of his home.
(5) For Mr. O'Leary, includes $143,638, $109,218 and $56,404 attributed for
personal use of Company airplanes in 1996, 1995 and 1994, respectively, and
for tax gross-up payments, primarily in connection with his relocation in
1995 and use of Company airplanes. For Mr. Schissler, includes $12,900 and
$12,565 for tax and financial counseling and home security, respectively.
11
<PAGE> 14
OPTIONS GRANTED IN 1996
The following information is furnished for the year ended December 31, 1996
with respect to the named executive officers for stock options which were
granted in December 1996 under the Stock Incentive Plan (the "Stock Incentive
Plan").
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED EXERCISE GRANT DATE
GRANTED IN TO EMPLOYEES PRICE EXPIRATION PRESENT
NAME 1996(1) IN 1996 PER SHARE DATE(1) VALUE(2)
---- ------------- ------------ --------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
T. H. O'Leary.................... 7,800(3) .32% $ 50.8125 12/10/2006 $ 114,036
92,200(4) 3.81% $ 50.8125 12/11/2006 $1,347,964
B. S. Shackouls.................. 7,800(3) .32% $ 50.8125 12/10/2006 $ 114,036
292,200(4) 12.08% $ 50.8125 12/11/2006 $4,271,964
C. R. Owen....................... 7,800(3) .32% $ 50.8125 12/10/2006 $ 114,036
87,200(4) 3.60% $ 50.8125 12/11/2006 $1,274,864
J. E. Hagale..................... 7,800(3) .32% $ 50.8125 12/10/2006 $ 114,036
87,200(4) 3.60% $ 50.8125 12/11/2006 $1,274,864
G. J. Schissler.................. 7,800(3) .32% $ 50.8125 12/10/2006 $ 114,036
82,200(4) 3.40% $ 50.8125 12/11/2006 $1,201,764
</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 Stock Incentive 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 11, 1996, and option price of $50.8125. In addition, it assumed a
stock price volatility of 20.70%, a risk-free rate of return of 6.20% and a
dividend of $.55 per year. The value has been reduced by approximately 30%
to reflect the probability of forfeiture due to termination of employment
prior to vesting or of a shortened option term due to termination of
employment prior to the expiration date.
(3) Incentive stock options, one-quarter of which become exercisable on December
11, 1997, 1998, 1999 and 2000, respectively.
(4) Nonqualified stock options, one-quarter of which become exercisable on
December 11, 1997, 1998, 1999 and 2000, respectively.
12
<PAGE> 15
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END VALUES
The following information is furnished for the year ended December 31, 1996
with respect to the named executive officers for stock option exercises which
occurred during 1996. 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 IN-THE-MONEY OPTIONS
SECURITIES AT DECEMBER 31, 1996 AT DECEMBER 31, 1996(2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. H. O'Leary......... -- -- 622,976 100,000 $12,478,503 0
B. S. Shackouls....... -- -- 69,000 300,000 $ 807,844 0
C. R. Owen............ -- -- 65,812 95,000 $ 1,022,709 0
J. E. Hagale.......... 10,000 $300,265 92,735 95,000 $ 1,614,430 0
G. J. Schissler....... 9,000 $145,088 15,000 90,000 $ 132,188 0
</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 on December 31, 1996 minus the exercise price for that
option.
LONG-TERM INCENTIVE PLAN AWARDS IN 1996
The following information is furnished for the year ended December 31, 1996
with respect to the named executive officers for grants under the 1997 PSU Plan
which occurred during 1996.
<TABLE>
<CAPTION>
NUMBER OF UNITS PERFORMANCE PERIOD MAXIMUM
NAME GRANTED IN 1996 UNTIL PAYOUT FUTURE PAYOUT(1)
---- --------------- ------------------ ----------------
<S> <C> <C> <C>
T. H. O'Leary............................... 40,000 12/31/2000 40,000
B. S. Shackouls............................. 75,000 12/31/2000 75,000
C. R. Owen.................................. 25,000 12/31/2000 25,000
J. E. Hagale................................ 25,000 12/31/2000 25,000
G. J. Schissler............................. 22,500 12/31/2000 22,500
</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 with respect to each
year during the performance period and any remaining unvested PSUs may vest
at the end of the performance period on December 31, 2000. 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 January 1, 1997. 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
13
<PAGE> 16
a Change in 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.................. $ 94,433 $125,910 $157,388 $188,865
$ 600,000.................. $142,433 $189,910 $237,388 $284,865
$ 800,000.................. $190,433 $253,910 $317,388 $380,865
$1,000,000.................. $238,433 $317,910 $397,388 $476,865
$1,200,000.................. $286,433 $381,910 $477,388 $572,865
$1,400,000.................. $334,433 $445,910 $557,388 $668,865
$1,600,000.................. $382,433 $509,910 $637,388 $764,865
$1,800,000.................. $430,433 $573,910 $717,388 $860,865
$2,000,000.................. $478,433 $637,910 $797,388 $956,865
</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 1996 is $120,000 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 Schissler would be 16, 22, 25,
30 and 19, respectively.
14
<PAGE> 17
EMPLOYMENT AGREEMENTS AND SEVERANCE PLANS
The Company has an agreement with Mr. O'Leary which provides for his
employment as Chairman of the Board of the Company through December 15, 1998 at
a minimum annual salary of $500,000. The Company also has an employment
agreement with Mr. Shackouls which provides for his employment as President and
Chief Executive Officer of the Company through December 15, 2000 at a minimum
annual salary of $600,000. 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 or is terminated by the
Company after age 50.
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.
STOCKHOLDER PROPOSAL
Mr. Howard A. Berger and Ms. Dorothy G. Berger, 440 Bristle Cone Lane,
Naples, Florida 34113, have stated that they intend to present the following
resolution at the Annual Meeting. In accordance with applicable proxy
regulations, the proposed resolution and supporting statement, for which the
Board of Directors and the Company accept no responsibility, are set forth
below.
PROPOSED RESOLUTION AND STATEMENT OF SECURITY HOLDER IN SUPPORT OF PROPOSED
RESOLUTION
" 'Be it resolved that effective 1 January 1998, the Charitable Award
Program for Directors, which requires the Company to donate $1,000,000 to one or
more educational institutions or private foundations as may be nominated by each
Director upon their death, be cancelled.'
Rationale: There is no reasonable rationale for such a humongous perk under
any circumstances. Further, adoption of the above proposal will eliminate the
need for me to pray for the health and safety of our Directors."
BOARD OF DIRECTORS STATEMENT RECOMMENDING A VOTE AGAINST THIS RESOLUTION
The Board of Directors believes that the adoption of this proposal would
not be in the best interests of the Company or its stockholders. The Director
Charitable Award Plan is intended to supplement the Company's on-going
charitable support of qualified educational institutions. Since donations must,
directly or indirectly, be made to educational institutions, Directors receive
no direct pecuniary benefit from this Plan. The Company does, however, receive a
benefit from this Plan since these donations will be tax-deductible by the
15
<PAGE> 18
Company. The elimination of the Charitable Award Plan could also put the Company
at a competitive disadvantage in attracting and retaining the most highly
qualified and experienced individuals to serve as Directors since other
companies are able to offer this benefit.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
RESOLUTION.
AUDITORS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as
independent public accountants for the year ending December 31, 1997.
Representatives of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting with the opportunity to make a statement and to respond to appropriate
questions.
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 1996 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 1998 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 1998 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 23, 1997.
By Order of the Board of Directors
WENDI S. ZERWAS
Corporate Secretary
16
<PAGE> 19
[BURLINGTON RESOURCES LOGO]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
YOUR VOTE IS IMPORTANT NOTICE OF
YOUR MANAGEMENT WILL APPRECIATE THE PROMPT ANNUAL MEETING
RETURN OF YOUR SIGNED PROXY SO THE SHARES YOU OF STOCKHOLDERS
OWN WILL BE REPRESENTED AT THE ANNUAL MEETING OF AND
STOCKHOLDERS. PROXY STATEMENT
</TABLE>
- --------------------------------------------------------------------------------
TO BE HELD IN THE SAN FELIPE ROOM,
DOUBLETREE HOTEL,
2001 POST OAK BOULEVARD,
HOUSTON, TEXAS
MARCH 27, 1997
9:00 A.M.
<PAGE> 20
[BURLINGTON RESOURCES LOGO]
- ------------------------------------
February 20, 1997
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 9:00 a.m. on Thursday, March 27, 1997, in the San Felipe Room of the
Doubletree Hotel, 2001 Post Oak Boulevard, Houston, Texas. Detailed information
about the meeting is contained in the accompanying Notice of Annual Meeting and
Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as soon
as possible in the envelope provided.
Sincerely,
/s/ THOMAS O. LEARY
Thomas H. O'Leary
Chairman of the Board
PLEASE DETACH PROXY CARD
PROXY SOLICITED BY THE BOARD OF DIRECTORS
BURLINGTON RESOURCES INC. ANNUAL MEETING OF STOCKHOLDERS
MARCH 27, 1997
The undersigned hereby appoints Thomas H. O'Leary and Gerald J. Schissler,
and each or either 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 in the San Felipe Room, Doubletree
Hotel, 2001 Post Oak Boulevard, Houston, Texas on March 27, 1997 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 and AGAINST proposal 2.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE) SEE REVERSE SIDE
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The Board of Directors recommends a vote FOR proposal 1.
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1. Election of Directors
Nominees: J. V. Byrne, S. P. Gilbert, L. I. Grant, J. T. LaMacchia,
J. F. McDonald, T. H. O'Leary, D. M. Roberts, W. Scott, Jr., B. S.
Shackouls, W. E. Wall
[ ] FOR [ ] WITHHELD [ ] -----------------------------------
FOR all nominees except as noted above
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The Board of Directors recommends a vote AGAINST proposal 2.
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2. Stockholder proposal to eliminate the Charitable Award Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Mark here for address change and note at left [ ]
Mark here for comments [ ]
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Please sign exactly as your name ----------------------- Date -----------
appears. If acting as attorney, Signature
executor, trustee or in other
representative capacity, sign name ----------------------- Date -----------
and title. Signature
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