<PAGE> 1
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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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<TABLE>
<CAPTION>
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
- -------------------------- -------------------- -------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
</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:
================================================================================
<PAGE> 2
[BURLINGTON RESOURCES LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 26, 1998
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Burlington Resources Inc. will be
held on Thursday, March 26, 1998, at 9:00 a.m. in the Ambassador Room, The
Sheraton Hotel, 1919 Briar Oaks Lane, Houston, Texas, for the following
purposes:
1. To elect 12 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 30, 1998
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 19, 1998
<PAGE> 3
BURLINGTON RESOURCES INC.
5051 WESTHEIMER
HOUSTON, TEXAS 77056-2124
Mailing Date:
February 19, 1998
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 26,
1998. 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 30, 1998 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 176,839,857 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 1997. The
standing committees of the Board of Directors include an Audit Committee and a
Compensation and Nominating Committee. The Audit Committee held two meetings
during 1997. 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 1997. 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 1997,
all Directors attended at least 75 percent 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.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OF CLASS
------------------- ---------- --------
<S> <C> <C>
FMR Corp., Edward C. Johnson 3d and Abigail P.
Johnson............................................. 24,772,894(1) 14.01%
82 Devonshire Street
Boston, Massachusetts 02109
Wellington Management Company, LLP.................... 10,622,700(2) 6.01%
75 State Street
Boston, Massachusetts 02109
Vanguard/Windsor Fund, Inc............................ 10,338,800(3) 5.85%
P.O. Box 2600
Valley Forge, Pennsylvania 19482
</TABLE>
- ---------------
NOTES
(1) In its Schedule 13G, FMR Corp. states that it has sole voting power as to
878,674 shares and sole dispositive power with respect to 24,757,294 shares
and that Fidelity International Limited has sole voting and dispositive
power as to 15,600 shares. Mr. Johnson and Ms. Johnson state that they have
voting power with respect to no shares and dispositive power with respect
to 24,772,894 shares.
(2) In its Schedule 13G, Wellington Management Company, LLP ("WMC"), in its
capacity as investment adviser, states that it 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 108,400 shares and
shared dispositive power as to 10,622,700 shares.
(3) Vanguard/Windsor Fund, Inc. reports that it has 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 30, 1998 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
- ----------------------------------------------- ------------ --------- ---------
<S> <C> <C> <C>
DIRECTORS
J. V. Byrne.................................... 9,903 1,015 10,918
S. P. Gilbert.................................. 16,053 1,015 17,068
L. I. Grant.................................... 6,762 2,570 9,332
J. T. LaMacchia................................ 5,000 1,013 6,013
J. F. McDonald................................. 11,653 1,015 12,668
K. W. Orce..................................... 25,877 656 26,533
D. M. Roberts.................................. 14,500 4,629 19,129
J. F. Schwarz.................................. 11,588 748 12,336
W. Scott, Jr................................... 10,296(3) 3,142 13,438
B. S. Shackouls................................ 154,000 101,574 255,574
H. L. Steward.................................. 473,689 0 473,689
W. E. Wall..................................... 9,185 1,015 10,200
NAMED EXECUTIVE OFFICERS
J. E. Hagale................................... 120,985 23,822 144,807
C. R. Owen..................................... 102,234 31,659 133,893
G. J. Schissler................................ 40,000 28,609 68,609
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (18 PERSONS)...................... 1,289,196 220,827 1,510,023
</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 30, 1998; as a result,
the number of shares shown in this column include for Dr. Byrne, Mr.
Gilbert, Ms. Grant, Mr. LaMacchia, Mr. McDonald, Mr. Orce, Mr. Roberts,
Mr. Schwarz, Mr. Scott, Mr. Shackouls, Mr. Steward, Mr. Wall, Mr.
Hagale, Mr. Owen and Mr. Schissler 8,553, 8,553, 4,000, 4,000, 8,553,
18,252, 7,000, 10,626, 8,553, 144,000, 334,797, 6,185, 116,485, 89,562,
37,500 shares, respectively, and 1,012,439 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 30, 1998. For Messrs.
Shackouls, Steward, Hagale, Owen and Schissler, includes 10,000, 6,000,
3,500, 2,500 and 2,500 shares of Common Stock, respectively, subject to
restrictions.
(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 12 as of
the date of the Annual Meeting. It is proposed to elect 12 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 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--69. 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--64. 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 and Taubman Centers, Inc.
LAIRD I. GRANT--President, Chief Executive Officer, Chief Investment
Officer, and Director, Rockefeller & Co., Inc., New York, New York--Asset
management. Age--52. 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 United States Trust Company of New
York. 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--56. Member--Compensation and
Nominating Committee and Executive 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--57.
Member--Audit Committee and Executive 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 American
Business Products, Inc. and Scientific-Atlanta, Inc.
KENNETH W. ORCE--Senior Partner, Cahill Gordon & Reindel, New York, New
York--Law. Age--54. Member--Audit Committee. For more than five years, Mr.
Orce's principal occupation has been as shown above. Mr. Orce has been a
Director of the Company since October 1997. Cahill Gordon & Reindel provides
legal services to the Company and its subsidiaries.
DONALD M. ROBERTS--Retired. Age--62. 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 has been a Director of
the Company since 1993. Mr. Roberts is also a director of York International
Corporation.
JOHN F. SCHWARZ--Chairman, President and Chief Executive Officer, Entech
Enterprises, Inc., Houston, Texas--Energy Investments. Age--61.
Member--Compensation and Nominating Committee. For more than five years, Mr.
Schwarz' principal occupation has been as shown above. From 1989 to 1994, Mr.
Schwarz was President, Chief Executive Officer and Director of Energy
Development Corporation. Mr. Schwarz has been a Director of the Company since
October 1997.
4
<PAGE> 7
WALTER SCOTT, JR.--Chairman and President, Peter Kiewit Sons', Inc., Omaha,
Nebraska -- Construction, Mining, Telecommunications and Energy. Age--66.
Chairman--Compensation and Nominating Committee. Member -- Executive 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.,
Commonwealth Telephone Enterprises, Inc., ConAgra, Inc., RCN Corporation, U.S.
Bancorp and Valmont Industries, Inc.
BOBBY S. SHACKOULS--Chairman of the Board, President and Chief Executive
Officer, Burlington Resources Inc., Houston, Texas. Age--47. Member -- Executive
Committee. Since July 1997, Mr. Shackouls' principal occupation has been as
shown above. From December 1995 to July 1997, Mr. Shackouls was President and
Chief Executive Officer of the Company. 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.
H. LEIGHTON STEWARD--Vice Chairman of the Board, Burlington Resources Inc.,
Houston, Texas. Age--63. Chairman--Executive Committee. Since October 1997, Mr.
Steward's principal occupation has been as shown above. From 1989 to October
1997, Mr. Steward was Chairman of the Board and Chief Executive Officer of The
Louisiana Land and Exploration Company ("LL&E"), which is now a wholly owned
subsidiary of the Company, and was President of LL&E from 1985 to 1995 and from
January to October 1997. Mr. Steward has been a Director of the Company since
October 1997. Mr. Steward is also a director of First Commerce Corporation and
the First National Bank of Commerce.
WILLIAM E. WALL--Of Counsel, Siderius Lonergan, Seattle, Washington--Law.
Age--69. 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 1997, an initial option for 3,000 shares of Common
Stock was granted to Messrs. Orce and Schwarz and an annual option for 1,000
shares of Common Stock was granted to Dr. Byrne, to Ms. Grant and to Messrs.
Gilbert, LaMacchia, 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.
5
<PAGE> 8
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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and Directors and persons who own more than 10% of a
registered class of the Company's equity securities to file initial reports of
ownership and changes in ownership with the SEC and the New York Stock Exchange.
Such officers, Directors and stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Company and
written representations from the Company's executive officers and Directors, all
persons subject to the reporting requirements of Section 16(a) filed the
required reports on a timely basis, except Laird I. Grant, who failed to timely
report the acquisition by a trust of which she is a beneficiary of 762 shares of
the Company's Common Stock as a result of the Company's acquisition of LL&E in
October 1997.
6
<PAGE> 9
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 to
be competitive with other companies in the energy sector. For 1997, executive
base salaries were positioned at the median when compared to a group of
approximately 40 oil and gas companies. This comparator group included all of
the companies currently in the Dow Jones Secondary Oil Index, together with
certain other independent and integrated oil and gas companies. For 1998,
executive base salaries will be positioned within the third quartile when
compared to a group of 16 oil and gas companies. This new comparator group
includes many 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 comparator 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 comparator 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. Beginning in 1998, the Committee will consider growth in appraised
net worth in addition to the strategic, operating and financial objectives
described above. These 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 compensation program consists of the
Stock Incentive Plan (the "Stock Incentive Plan") and the Performance Share Unit
Plan (the "PSU Plan"). 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 comparator group
of oil and gas 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.
7
<PAGE> 10
Under the Stock Incentive Plan, stock options are granted to executives,
managers and key employees. The options vest no earlier than one year after the
grant date, have a term of ten years and have an exercise price equal to the
fair market value of the Common Stock 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 units under the 1997 PSU Plan occurs over a four year
performance period ending in December 2000 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.
In October 1997, the Company completed the acquisition of The Louisiana
Land and Exploration Company ("LL&E"). Outstanding grants and awards under
LL&E's long term incentive compensation plans were converted to become
exercisable for shares of the Company's Common Stock. No new grants will be made
under these LL&E plans.
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 strategic, operating and financial results in 1997 were
excellent. In October 1997, the Company completed the acquisition of LL&E. This
acquisition has created a new model oil and gas company -- the
"super-independent" -- combining the critical mass, diversity of global
opportunities and financial strength of a major oil company with the exploration
and exploitation skill, entrepreneurial spirit, flexibility and responsiveness
of an independent oil and gas company. The Company believes that the acquisition
combined two oil and gas companies with highly complementary management and
operating expertise, personnel, asset portfolios and financial attributes, which
should provide the combined company with substantial opportunities for growth.
In addition, the Company completed the accelerated divestiture program
announced in July 1996. By June 30, 1997, the Company sold its working interest
in approximately 27,000 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. The accelerated
divestiture program and reorganization resulted in more than a 20 percent
reduction in the Company's 1995 level of production expenses per thousand cubic
feet equivalent. It also resulted in a reduction of over 10 percent in the
Company's 1995 level of corporate administrative expenses per thousand cubic
feet equivalent.
The Company's 1997 operating results exceeded the objectives for the year.
Notwithstanding the divestiture program, natural gas production, at 1,669
million cubic feet per day, increased by 4 percent over last year. Oil
production, which was significantly affected by the divestiture program,
decreased by 4 percent to 87 thousand barrels per day. Through internal
development, the Company replaced 148 percent of production for the year at very
attractive finding costs. After adjustment for the sale of non-strategic
properties, reserves grew 10 percent to 7.9 trillion cubic feet of gas
equivalent as of December 31, 1997.
Similarly, the Company's financial results were above the objectives for
the year. Operating cash flow increased from $995 million in 1996 to $1,122
million in 1997. Although operating income decreased from $610 million in 1996
to $583 million in 1997, earnings per share increased from $2.00 in 1996 to
$2.02 in 1997 (excluding special items in each year). Well operating and general
and administrative expenses were reduced on a unit of production basis.
8
<PAGE> 11
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 $697,748, 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.
Consistent with its objective of targeting base salaries within the third
quartile when compared with other companies in the energy sector, the Committee
reviewed base salaries for the Company's executive officers in December 1997. As
a result of this review, Mr. Shackouls' salary was increased to $825,000, which
is below the third quartile base salary for comparable positions within the
comparator group of oil and gas companies. The Committee also adjusted the base
salaries for the other executive officers at approximately the third quartile
for comparable executives within the comparator group.
Long-Term Incentive Plan Vesting
The Company's performance, for purposes of the PSU Plan, is evaluated over
a four year interval, beginning January 1, 1997 and ending December 31, 2000.
The Committee determined that the Company exceeded its strategic, operating and
financial objectives during the performance period of January 1, 1997 to
December 31, 1997, the first year of the four year performance cycle. The
Committee also determined that the Company's Total Shareholder Return for the
same period was below the return for the Dow Jones Secondary Oil Index. Based
upon such determinations, the Committee approved the vesting of 50 percent of
the units eligible for vesting for 1997, or 9,375 units for Mr. Shackouls and
11,563 for the other executive officers.
Long-Term Incentive Awards
In December 1996, the Committee established a four year long-term incentive
compensation program consisting of stock options, which vest in four equal
annual installments, and the PSU Plan, which has a four year performance cycle
ending in December 2000. As a result of the acquisition of LL&E, several former
LL&E executive officers joined the Company during 1997. In accordance with his
employment agreement, Mr. Steward was granted 25,000 stock options to vest in
one year. In order to include certain other former officers of LL&E in the
Company's existing long-term incentive compensation program on a pro-rated
basis, such executive officers were granted an aggregate of 100,000 stock
options, which vest in three equal annual installments. In addition, these
executive officers (including Mr. Steward) were granted the opportunity to earn
up to an aggregate of 48,000 units under the PSU Plan for the performance cycle
ending in December 2000.
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 comparator group of oil and gas companies, the Committee granted
Mr. Shackouls 50,000 stock options and the other executive officers an aggregate
of 75,000 stock options. 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 considered the outstanding long-term
incentive awards from December 1996.
The Committee also granted restricted stock to retain certain executives
and in recognition of their efforts with respect to the integration of the
Company and LL&E following the acquisition. The Committee granted Mr. Shackouls
10,000 shares and the other executive officers an aggregate of 24,000 shares of
restricted stock. The grant of restricted stock vests in three years.
9
<PAGE> 12
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 30, 1998, 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
John F. Schwarz
William E. Wall
10
<PAGE> 13
Comparison of 5-Year Cumulative Total Shareholder Return(1)
<TABLE>
<CAPTION>
DOW JONES
Measurement Period BURLINGTON SECONDARY
(Fiscal Year Covered) RESOURCES S&P 500 OIL INDEX
<S> <C> <C> <C>
1992 100 100 100
1993 107 110 111
1994 90 112 107
1995 102 153 124
1996 133 188 153
1997 120 251 163
</TABLE>
YEAR ENDED DECEMBER 31
Comparison of Cumulative Total Shareholder Return
Since the Company's Initial Public Offering(1)
<TABLE>
<CAPTION>
DOW JONES
Measurement Period BURLINGTON SECONDARY
(Fiscal Year Covered) RESOURCES (2) S&P 500 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
1997 236 470 184
</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, 1992 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.
11
<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31,
1997, 1996 and 1995 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 1997 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
- ------------------------------ ---- -------- -------- ------------ --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bobby S. Shackouls 1997 $697,748 $697,748 $142,312(4) $438,130 50,000 --
Chairman of the Board, 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
H. Leighton Steward(5) 1997 $ 86,538 $600,000 $ 9,888 $262,878 40,000 --
Vice Chairman of the Board
C. Ray Owen 1997 $315,000 $315,000 $ 46,528 $109,533 10,000 --
Executive Vice President and 1996 $285,000 $290,399 -- -- 95,000 $ 1,504,748
Chief Operating Officer 1995 $285,000 $152,664 $ 10,762 -- 9,000 --
John E. Hagale 1997 $310,020 $310,020 $ 2,958 $153,346 10,000 --
Executive Vice President and 1996 $270,000 $270,000 $ 2,754 -- 95,000 $ 1,504,748
Chief Financial Officer 1995 $270,000 $135,000 $ 8,719 -- 9,000 --
Gerald J. Schissler 1997 $280,020 $280,020 $ 6,655 $109,533 10,000 --
Executive Vice President, 1996 $245,004 $270,004 $ 859 -- 90,000 $ 1,504,748
Law and Administration 1995 $245,004 $122,500 $ 419 -- 9,000 --
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION(3)
- ------------------------------ ---------------
<S> <C>
Bobby S. Shackouls $ 87,284
Chairman of the Board, $1,460,714
President and Chief $ 119,616
Executive Officer
H. Leighton Steward(5) $ 367,964
Vice Chairman of the Board
C. Ray Owen $ 127,698
Executive Vice President and $ 431,069
Chief Operating Officer $ 30,060
John E. Hagale $ 46,162
Executive Vice President and $ 297,554
Chief Financial Officer $ 26,916
Gerald J. Schissler $ 33,001
Executive Vice President, $ 418,919
Law and Administration $ 24,378
</TABLE>
- ---------------
NOTES
(1) Bonus payments are reported for the year in which the related services were
performed.
(2) The value of restricted stock reported in this column is based on the
closing price of the Common Stock on the New York Stock Exchange, Inc. on
the date of grant. On December 31, 1997, Messrs. Shackouls, Steward, Owen,
Hagale and Schissler held 10,000, 6,000, 2,500, 3,500 and 2,500 shares,
respectively, of restricted Common Stock, having a market value, based on
the closing price of the Common Stock on such date, of $448,130, $268,878,
$112,033, $156,846, and $112,033, respectively. Dividends are paid on
restricted Common Stock at the same rate as paid to all stockholders.
(3) Includes matching contributions made by the Company during 1997 in the
Company's Retirement Savings Plan and Supplemental Benefits Plan for Messrs.
Shackouls, Owen, Hagale and Schissler of $77,757, $48,000, $46,162, and
$33,001, respectively. Includes for Mr. Steward contributions and
allocations made by the Company for 1997 in the LL&E Savings Plan and
Compensatory Benefits and Supplemental Excess Plan in the amount of $61,054
and interest accrued during 1997 in excess of 120% of the applicable federal
interest rate with respect to salary and bonus deferrals pursuant to the
LL&E Deferred Compensation Arrangement in the amount of $306,910. Includes
matching contributions made by the Company during 1996 in the Company's
Retirement Savings Plan and Supplemental Benefits Plan for Messrs.
Shackouls, Owen, Hagale and Schissler of $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. Shackouls, Owen, Hagale and Schissler of $49,770,
$30,060, $26,916 and $24,378, respectively. Includes in 1996 for Messrs.
Shackouls, Owen, Hagale and Schissler $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. During 1995, Mr. Shackouls received
additional compensation of $69,846 in connection with the relocation of his
home. During 1997, Mr. Owen received additional compensation of $79,698 in
connection with the relocation of his home. During 1997, Mr. Shackouls
received additional compensation of $9,527 in connection with the relocation
of his home.
(4) For Mr. Shackouls, includes $59,710 attributed for personal use of Company
airplanes in 1997, and for tax gross-up payments, primarily in connection
with his use of Company airplanes.
(5) Mr. Steward commenced employment with the Company in October 1997. Mr.
Steward's bonus includes amounts payable pursuant to the LL&E annual
incentive program.
12
<PAGE> 15
OPTIONS GRANTED IN 1997
The following information is furnished for the year ended December 31, 1997
with respect to the named executive officers for stock options which were
granted in December 1997 under 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 1997(1) IN 1997 PER SHARE DATE(1) VALUE(2)
---- ------------- ------------ --------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
B. S. Shackouls................... 50,000(3) 2.95% $ 43.5625 12/10/2007 $622,500
H. L. Steward..................... 37,800(3) 2.23% $ 43.5625 12/10/2007 $470,610
2,200(4) .13% $ 43.5625 12/9/2007 $ 27,390
C. R. Owen........................ 10,000(3) .59% $ 43.5625 12/10/2007 $124,500
J. E. Hagale...................... 10,000(3) .59% $ 43.5625 12/10/2007 $124,500
G. J. Schissler................... 10,000(3) .59% $ 43.5625 12/10/2007 $124,500
</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 10, 1997, and option price of $43.5625. In addition, it assumed a
stock price volatility of 23.23%, a risk-free rate of return of 5.88% and a
dividend of $.55 per year. The value has been reduced by approximately 29%
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) Nonqualified stock options which become exercisable on December 10, 1998.
(4) Incentive stock options which become exercisable on December 10, 1998.
13
<PAGE> 16
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END VALUES
The following information is furnished for the year ended December 31, 1997
with respect to the named executive officers for stock option exercises which
occurred during 1997. 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, 1997 AT DECEMBER 31, 1997(2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
B. S. Shackouls........ -- -- 144,000 275,000 $ 424,031 $ 62,500
H. L. Steward.......... -- -- 304,678 102,906 $6,759,126 $845,080
C. R. Owen............. -- -- 89,562 81,250 $ 656,629 $ 12,500
J. E. Hagale........... -- -- 116,485 81,250 $1,098,591 $ 12,500
G. J. Schissler........ -- -- 37,500 77,500 $ 48,750 $ 12,500
</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 in-the-money options
multiplied by the difference between the closing price of the Common Stock
on the New York Stock Exchange on December 31, 1997 and the exercise price
for that option.
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
The following information is furnished for the year ended December 31, 1997
with respect to the named executive officers for grants under the PSU Plan which
occurred during 1997.
<TABLE>
<CAPTION>
NUMBER OF UNITS PERFORMANCE PERIOD MAXIMUM
NAME GRANTED IN 1997 UNTIL PAYOUT FUTURE PAYOUT(1)
---- --------------- ------------------ ----------------
<S> <C> <C> <C>
B. S. Shackouls............................. -- -- --
H. L. Steward............................... 25,000 12/31/2000 25,000
C. R. Owen.................................. -- -- --
J. E. Hagale................................ -- -- --
G. J. Schissler............................. -- -- --
</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, 1998. 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
14
<PAGE> 17
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.................. $ 94,365 $125,820 $157,275 $188,730
$ 600,000.................. $142,365 $189,820 $237,275 $284,730
$ 800,000.................. $190,365 $253,820 $317,275 $380,730
$1,000,000.................. $238,365 $317,820 $397,275 $476,730
$1,200,000.................. $286,365 $381,820 $477,275 $572,730
$1,400,000.................. $334,365 $445,820 $557,275 $668,730
$1,600,000.................. $382,365 $509,820 $637,275 $764,730
$1,800,000.................. $430,365 $573,820 $717,275 $860,730
$2,000,000.................. $478,365 $637,820 $797,275 $956,730
</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 1997 is $125,000 and the maximum amount of compensation that may
be considered is $160,000. 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. Shackouls, Owen, Hagale and Schissler would be 22, 25, 30 and 19,
respectively. Mr. Steward is entitled to comparable benefits under the
15
<PAGE> 18
LL&E Pension Plan and the nonqualified Compensatory Benefits and Supplemental
Excess Plan. Years of credited service under the LL&E Pension Plan at age 65 for
Mr. Steward would be 17. Mr. Steward is entitled to supplemental pension
payments as if he had been in the employ of the Company since the date he joined
a former employer (1962). These benefits will be reduced by the amount of any
similar benefits paid to Mr. Steward by his former employer.
EMPLOYMENT AGREEMENTS AND SEVERANCE PLANS
The Company has an agreement with Mr. Shackouls which provides for his
employment as Chairman of the Board, President and Chief Executive Officer of
the Company through July 9, 2002 at a minimum annual salary of $750,000. The
Company also has an employment agreement with Mr. Steward which provides for his
employment as Vice Chairman of the Board of the Company through December 1, 1999
at a minimum annual salary of $450,000. These agreements provide that upon
termination of employment within two years after a Change in Control of the
Company, Messrs. Shackouls and Steward 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.
In addition, the three executive officers who joined the Company from LL&E,
including Mr. Steward, will continue to be eligible to receive severance
benefits under their termination agreements with LL&E. In general, the LL&E
termination agreements provide benefits comparable to those available under the
Company's Severance Protection Plan. Benefits are payable under the LL&E
termination agreements for any termination of employment within five years (in
the case of Mr. Steward) or two years (for the other senior executives) of the
date of a Change in Control, except where termination is for cause. The Company
has agreed that its acquisition of LL&E constitutes a Change in Control for
purposes of these agreements. Any benefits paid under the LL&E termination
agreements will correspondingly reduce the benefits, if any, payable under the
Company's Severance Protection Plan.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes an
excise tax on payments to certain 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.
AUDITORS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as
independent public accountants for the year ending December 31, 1998.
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.
16
<PAGE> 19
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 1997 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 1999 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 1999 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 22, 1998.
By Order of the Board of Directors
WENDI S. ZERWAS
Corporate Secretary
17
<PAGE> 20
BURLINGTON RESOURCES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
</TABLE>
- --------------------------------------------------------------------------------
TO BE HELD IN THE AMBASSADOR ROOM,
THE SHERATON HOTEL,
1919 BRIAR OAKS LANE
HOUSTON, TEXAS
MARCH 26, 1998
9:00 A.M.
<PAGE> 21
BURLINGTON RESOURCES
- ------------------------------------
February 19, 1998
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 26, 1998, in the Ambassador Room of the
Sheraton Hotel, 1919 Briar Oaks Lane, 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,
Bobby S. Shackouls
Chairman of the Board,
President and Chief Executive Officer
PLEASE DETACH PROXY CARD
PROXY SOLICITED BY THE BOARD OF DIRECTORS
BURLINGTON RESOURCES INC. ANNUAL MEETING OF STOCKHOLDERS
MARCH 26, 1998
The undersigned hereby appoints Bobby S. Shackouls 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 Ambassador Room, The
Sheraton Hotel, 1919 Briar Oaks Lane, Houston, Texas on March 26, 1998 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) SEE REVERSE SIDE
The Board of Directors recommends a vote FOR proposal 1.
1. Election of Directors
Nominees: J. V. Byrne, S. P. Gilbert, L. I. Grant, J. T. LaMacchia,
J. F. McDonald, K. W. Orce, D. M. Roberts, W. Scott, Jr.,
J. F. Schwarz, B. S. Shackouls, H. L. Steward, W. E. Wall
[ ] FOR [ ] WITHHELD [ ]
---------------------------
FOR all nominees except as
noted above
Mark here for address change and note at left [ ]
Mark here for comments [ ]
<TABLE>
<S> <C> <C>
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
</TABLE>
