<PAGE> 1
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UNITED STATES
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>
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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:
Form, Schedule or
Registration Statement No.:
Filing Party:
Date Filed:
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<PAGE> 2
[BURLINGTON RESOURCES LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 19, 2000
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Burlington Resources Inc. will be
held on Wednesday, April 19, 2000, at 9:00 a.m. in the Ambassador Room, The St.
Regis Hotel, 1919 Briar Oaks Lane, Houston, Texas, for the following purposes:
1. To elect nine directors, each to hold office for a term of one year.
2. To consider and act on the proposed Burlington Resources Inc. 2000
Stock Option Plan for Non-Employee Directors.
3. To transact any other business which may be properly brought before the
meeting.
Only stockholders of record at the close of business on March 3, 2000 are
entitled to notice of, and to vote at, the meeting and any adjournment thereof.
By Order of the Board of Directors
/s/ JEFFERY P. MONTE
---------------------------
JEFFERY P. MONTE
Corporate Secretary
March 10, 2000
<PAGE> 3
BURLINGTON RESOURCES INC.
5051 WESTHEIMER
HOUSTON, TEXAS 77056-2124
Mailing Date:
March 10, 2000
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 April 19,
2000. Shares of common stock, par value $.01 per share, and the Voting Share, as
explained below, of the Company represented by a properly executed proxy will be
voted at the meeting. The proxy may be revoked at any time before its exercise
by sending written notice of revocation to Mr. Jeffery P. Monte, Corporate
Secretary, Burlington Resources Inc., 5051 Westheimer, Suite 1400, Houston,
Texas 77056-2124, or by signing and delivering a proxy which is dated and
received later, either electronically or by mail, or, if the stockholder attends
the meeting in person, by giving notice of revocation to the Inspector of
Election at the meeting.
The Company has two outstanding classes of securities that entitle holders
to vote generally at meetings of the Company's stockholders: common stock, par
value $.01 per share; and Special Voting Stock, par value $.01 per share. A
single share (the "Voting Share") of Special Voting Stock was issued to CIBC
Mellon Trust Company of Canada (the "Trustee") as trustee under a Voting and
Exchange Trust Agreement for the benefit of holders of exchangeable shares
issued by the Company's wholly-owned subsidiary, Burlington Resources Canada
Inc., in connection with the Company's November 1999 acquisition of Poco
Petroleums Ltd.
The common stock and the Voting Share vote together as a single class on
all matters except when Delaware law requires otherwise. Each share of common
stock outstanding on the record date is entitled to one vote. The Voting Share
is entitled to one vote for each exchangeable share outstanding on the record
date. The Trustee is required to vote the Voting Share in the manner that
holders of exchangeable shares instruct, and to abstain from voting in
proportion to the exchangeable shares for which the Trustee does not receive
instructions. Accordingly, references to "stockholders" in this Proxy Statement
include holders of common stock, the Trustee, and holders of exchangeable
shares. The common stock and the exchangeable shares are referred to
collectively as "voting stock". The procedures for holders of exchangeable
shares to instruct the Trustee about voting at the Annual Meeting are explained
in the "Voting Direction for Holders of Exchangeable Shares of Burlington
Resources Canada Inc." that is enclosed with this Proxy Statement only for
holders of exchangeable shares.
The record date for the stockholders entitled to notice of and to vote at
the Annual Meeting was the close of business on March 3, 2000. At the record
date, 205,489,807 shares of common stock and one Voting Share were outstanding
and entitled to be voted at the Annual Meeting. At the record date, 9,739,027
exchangeable shares were outstanding and entitled to give voting instructions to
the Trustee. Accordingly, 215,228,834 votes are eligible to be cast at the
Annual Meeting.
A plurality of the votes present and entitled to be voted at the Annual
Meeting is required for the election of Directors. An affirmative vote of a
majority of the shares present and entitled to be voted at the Annual 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.
<PAGE> 4
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Board of Directors of the Company held six meetings during 1999. The
standing committees of the Board of Directors include an Audit Committee and a
Compensation and Nominating Committee. The Audit Committee held four meetings
during 1999. 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 compliance with the Company's code of business
conduct. The Compensation and Nominating Committee met four times during 1999.
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 1999, 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 Mr.
Jeffery P. Monte, Corporate Secretary, Burlington Resources Inc., 5051
Westheimer, Suite 1400, Houston, Texas 77056-2124.
STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN OTHER HOLDERS
The following table sets forth the number of shares of voting stock
beneficially owned as of March 3, 2000 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
voting 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.................................... 12,103 2,062 14,165
S. P. Gilbert.................................. 18,053 2,062 20,115
L. I. Grant.................................... 11,762 5,380 17,142
J. T. LaMacchia................................ 9,000 2,060 11,060
J. F. McDonald................................. 13,653 2,062 15,715
K. W. Orce..................................... 32,877(3) 3,114 35,991
D. M. Roberts.................................. 34,000 8,623 42,623
J. F. Schwarz.................................. 15,088(4) 3,298 18,386
W. Scott, Jr................................... 12,296 7,093 19,389
B. S. Shackouls................................ 434,895 104,465 539,360
H. L. Steward.................................. 415,755 -- 415,755
W. E. Wall..................................... 11,185 2,062 13,247
NAMED EXECUTIVE OFFICERS
J. E. Hagale................................... 212,294 24,500 236,794
R. L. Limbacher................................ 103,573 3,196 106,769
J. A. Williams................................. 116,825 -- 116,825
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (16 PERSONS)...................... 1,579,351 179,377 1,758,728
</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
2
<PAGE> 5
60 days of March 3, 2000; as a result, the number of shares shown in
this column includes 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. Limbacher and Mr.
Williams 10,553, 10,553, 6,000, 6,000, 10,553, 20,252, 9,000, 12,626,
10,553, 384,000, 305,342, 8,185, 167,741, 85,275 and 80,001 shares,
respectively, and 1,237,036 shares for all Directors and executive
officers as a group, which such person (or group) has the right to
acquire within 60 days of March 3, 2000. For Messrs. Shackouls,
Steward, Hagale, Limbacher and Williams, includes 45,000, 6,000,
13,500, 11,000 and 14,500 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 several deferred compensation plans
of the Company. These share equivalents are subject to common stock
market price fluctuations.
(3) Includes 3,000 shares of common stock owned by trusts of which Mr.
Orce's wife is trustee and their children are beneficiaries. Mr. Orce
disclaims beneficial ownership of these shares.
(4) Includes 1,200 shares of common stock owned by Entech Enterprises,
Inc., of which Mr. Schwarz is President and Chief Executive Officer.
Mr. Schwarz disclaims beneficial ownership of these shares.
There are no known beneficial owners of more than 5% of the Company's
voting stock. This information is based solely on the Company's review of
Schedules 13G filed with the Securities and Exchange Commission.
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 nine as of
the date of the Annual Meeting. It is proposed to elect nine 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 voting stock may not cumulate their
votes in the election of Directors. Dr. John V. Byrne, a Director of the Company
since 1988, and Mr. William E. Wall, a Director of the Company since 1992, have
reached retirement age and will not stand for re-election. Mr. H. Leighton
Steward, a Director of the Company since 1997, also has elected to retire and
will not stand for re-election.
Each of the following nominees is a Director of the Company at the present
time:
S. PARKER GILBERT--Retired. Age--66. 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 Taubman
Centers, Inc.
LAIRD I. GRANT--Age--54. Member--Audit Committee. From January 1995 to
December 1998, Ms. Grant was President, Chief Executive Officer, Chief
Investment Officer, and Director, Rockefeller & Co., Inc. Ms. Grant has been a
Director of the Company since 1996.
JOHN T. LAMACCHIA--President and Chief Executive Officer, CellNet Data
Systems, Inc., San Carlos, California -- Wireless Data Communications. Age--58.
Member--Compensation and Nominating Committee. Since May 1999, Mr. LaMacchia's
principal occupation has been as shown above. From October 1993 through February
1999, Mr. LaMacchia was President and Chief Executive Officer, Cincinnati Bell
Inc. Mr. LaMacchia has been a Director of the Company since 1996. Mr. LaMacchia
is also a director of CellNet Data Systems, Inc., Cincinnati Bell Inc. and the
Kroger Company. Cellnet Data Systems Inc. has filed a voluntary petition for
bankruptcy under Chapter 11 of the United States Bankruptcy Code in connection
with a proposed acquisition of the company's assets and assumption of certain
debt by Schlumberger Limited.
JAMES F. MCDONALD--President and Chief Executive Officer,
Scientific-Atlanta, Inc., Norcross, Georgia--Telecommunications. Age--60.
Member--Audit Committee. Since July 1993, Mr. McDonald's principal occupation
has been as shown above. Mr. McDonald has been a Director of the Company since
1988. Mr. McDonald is also a director of American Business Products, Inc.,
Global Crossing Ltd., and Scientific-Atlanta, Inc.
KENNETH W. ORCE--Senior Partner, Cahill Gordon & Reindel, New York, New
York--Law. Age--56. 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 1997. Cahill Gordon & Reindel provides legal
services to the Company and its subsidiaries.
DONALD M. ROBERTS--Retired. Age--64. 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--63.
Member--Compensation and Nominating Committee. For more than five years, Mr.
Schwarz' principal occupation has been as shown above. Mr. Schwarz has been a
Director of the Company since 1997.
WALTER SCOTT, JR.--Chairman, Level 3 Communications, Inc., Omaha,
Nebraska -- Telecommunications and Internet Services. Age--68.
Chairman--Compensation and Nominating Committee. Since April 1998, Mr. Scott's
principal occupation has been as shown above. From 1979 through March 1998, Mr.
Scott was Chairman and President of Peter Kiewit Sons', Inc. Mr. Scott has been
a Director of the Company since
4
<PAGE> 7
1988. Mr. Scott is also a director of Berkshire Hathaway Inc., Commonwealth
Telephone Enterprises, Inc., ConAgra, Inc., Level 3 Communications, Inc.,
Mid-American Energy Holdings, Inc., RCN Corporation, and Valmont Industries,
Inc.
BOBBY S. SHACKOULS--Chairman of the Board, President and Chief Executive
Officer, Burlington Resources Inc., Houston, Texas. Age--49. 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. Mr. Shackouls has
been a Director of the Company since 1995. Mr. Shackouls is also a director of
the Kroger Company.
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 1999, an annual option for 1,000 shares of common
stock was granted to Dr. Byrne, to Ms. Grant and to Messrs. Gilbert, LaMacchia,
McDonald, Orce, Roberts, Schwarz, Scott and Wall pursuant to this plan. The
Company's stockholders are being asked to consider and act on a new 2000 Stock
Option Plan for Non-Employee Directors to replace the 1992 Plan. The new plan
provides for an increase to 5,000 options granted upon a Director's initial
election and an annual grant of 2,000 options. If the Directors Stock Option
Plan had been in effect during the last fiscal year of the Company, then each of
the Directors named above, who is not an employee of the Company, would have
been granted an option for 2,000 shares. The price per share with respect to
each option would have been the fair market value of the common stock on the
date the option was granted.
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 1,000 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.
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 H. Leighton Steward, who
inadvertently failed to include on his timely filed Form 4 of May 4, 1999 the
disposition of 1,513 shares of common stock held by the Steward Family Limited
Partnership.
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 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. In 1999, executive
base salaries were below the median when compared to a group of oil and gas
companies. This 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. For 2000, executive
base salaries will be positioned approximately at the median of the comparator
group.
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. 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 1993
Stock Incentive Plan (the "Stock Incentive Plan") and the 1997 Performance Share
Unit Plan (the "PSU Plan"). The Committee's objective is to target 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. Long-term incentive value is
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 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 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
are also 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
6
<PAGE> 9
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 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.
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 1999 were
excellent. Natural gas production was 2,004 million cubic feet per day, and oil
production was approximately 90 thousand barrels per day and, even excluding the
effects of the Poco Petroleums Ltd. acquisition, the Company exceeded the
objectives for the year. Through internal development, the Company replaced 146%
of production for the year at finding costs that were substantially below
objectives.
Excluding special charges, basic earnings per share, operating income and
operating cash flow all exceeded objectives for the year. Notwithstanding the
excellent strategic, operating and financial results, the Company's Total
Shareholder Return was below the return for the Dow Jones Secondary Oil Index.
In view of these results, the Committee awarded Mr. Shackouls an annual
incentive award of $618,750, which represents 75 percent of the maximum award
available under the Incentive Compensation Plan. Similarly, the Committee
awarded the other executive officers 75% of the maximum awards available under
that plan.
In general, the Committee reviews the base salaries for the executive group
every year and in connection with promotions or significant changes in
responsibilities. There were no executive officer salary increases in 1999.
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's performance was acceptable in view
of prevailing conditions when reviewing its strategic, operating and financial
objectives during the performance period of January 1, 1999 to December 31,
1999. 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 1999, or 9,375 units for Mr. Shackouls and
16,213 units for the other executive officers. The Committee also approved the
vesting of 50 percent of the performance shares granted under a predecessor LL&E
incentive plan for the 1997-1999 performance period, or 3,050 shares for Mr.
Steward and 1,373 shares for Mr. Williams.
Long-Term Incentive Plan 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 comparator group of oil and gas companies, the Committee in
January 2000 granted Mr. Shackouls 50,000 stock options and 25,000 shares of
restricted stock. The Committee also granted the other executive officers an
aggregate of 48,000 stock options and an aggregate of 20,000 shares of
restricted stock. 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
7
<PAGE> 10
Committee considered the current outstanding long-term incentive awards. The
grant of restricted stock vests in three years. These stock option and
restricted stock awards were granted in January 2000.
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 were to be achieved by the end of 1998 or,
for new incumbents, within five years of their appointment to the position. As
of March 3, 2000, the record date for the Annual Meeting, each of the Company's
executive officers had attained the stock ownership targets currently required
by the guidelines.
COMPENSATION AND NOMINATING COMMITTEE
Walter Scott, Jr., Chairman
S. Parker Gilbert
John T. LaMacchia
John F. Schwarz
William E. Wall
8
<PAGE> 11
Comparison of 5-Year Cumulative Total Shareholder Return(1)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Burlington Resources(2).......... $100 $114 $148 $133 $108 $101
S & P 500........................ 100 137 169 225 289 350
Secondary Oil.................... 100 116 143 152 111 125
</TABLE>
YEAR ENDED DECEMBER 31
Comparison of Cumulative Total Shareholder Return
Since the Company's Initial Public Offering(1)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
7/8/88 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Burlington
Resources(2) $100 $129 $194 $155 $146 $197 $211 $177 $201 $262
S & P 500............ 100 105 138 133 174 187 206 209 287 353
Secondary. Oil 100 101 137 114 112 113 125 121 140 173
<CAPTION>
12/31/97 12/31/98 12/31/99
-------- -------- --------
<S> <C> <C> <C>
Burlington
Resources(2) $236 $191 $179
S & P 500............ 470 604 731
Secondary. Oil 184 134 152
</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, 1994 and July 8, 1988, 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.
9
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31,
1999, 1998 and 1997 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 1999 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 1999 $825,000 $618,750 $109,309(4) $352,500 40,000 --
Chairman of the Board, 1998 $825,000 $412,500 $119,440 -- -- --
President and Chief 1997 $697,748 $697,748 $142,312 $438,130 50,000 --
Executive Officer
H. Leighton Steward(5) 1999 $450,000 $337,500 $187,187(4) --262,878 -- $104,558
Vice Chairman of the 1998 $450,000 $535,000 $165,352 -- 25,000 $ 140,757
Board 1997 $ 86,538 $600,000 $ 9,888 $ 40,000 --
John E. Hagale 1999 $400,020 $300,015 $ 4,414 $176,250 20,000 --
Executive Vice President 1998 $370,020 $185,010 $ 5,944 -- -- --
and Chief Financial 1997 $310,020 $310,020 $ 2,958 $153,346 10,000 --
Officer
John A. Williams(5) 1999 $350,040 $262,530 $ 25,491 $176,250 20,000 $ 47,068
President and 1998 $325,020 $262,510 $ 2,654 -- 25,000 $ 56,317
Chief Executive Officer, 1997 $ 51,000 $260,000 $ 2,661 $197,156 60,000 --
BR International
Randy L. Limbacher 1999 $300,000 $225,000 $ 2,065 $176,250 20,000 --
President and 1998 $250,020 $125,010 $ 1,284 -- 36,600 --
Chief Executive Officer,
BR North America
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION(3)
- --------------------------- ---------------
<S> <C>
Bobby S. Shackouls $ 79,595
Chairman of the Board, $ 93,108
President and Chief $ 87,284
Executive Officer
H. Leighton Steward(5) $551,046
Vice Chairman of the $413,685
Board $367,964
John E. Hagale $ 54,285
Executive Vice President $ 56,346
and Chief Financial $ 46,162
Officer
John A. Williams(5) $160,420
President and $128,092
Chief Executive Officer, $106,607
BR International
Randy L. Limbacher $ 34,239
President and $ 31,022
Chief Executive Officer,
BR North America
</TABLE>
- ---------------
NOTES
(1) Unless otherwise noted, 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 on the date
of grant. On December 31, 1999, Messrs. Shackouls, Steward, Hagale, Williams
and Limbacher held 20,000, 6,000, 8,500, 9,500 and 6,000 shares,
respectively, of restricted common stock, having a market value, based on
the closing price of the common stock on such date, of $661,250, $198,375,
$281,031, $314,094, and $198,375, 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 1999 in the
Company's Retirement Savings Plan and Supplemental Benefits Plan for Messrs.
Shackouls, Steward, Hagale, Williams and Limbacher of $74,250, $54,000,
$46,802, $41,004 and $34,001, respectively. Includes matching contributions
made by the Company during 1998 in the Company's Retirement Savings Plan and
Supplemental Benefits Plan for Messrs. Shackouls, Steward, Hagale, Williams
and Limbacher of $91,365, $39,397, $54,403, $29,757 and $29,624,
respectively. Includes matching contributions made by the Company during
1997 in the Company's Retirement Savings Plan and Supplemental Benefits Plan
for Messrs. Shackouls and Hagale of $77,757 and $46,162, respectively.
Includes for Messrs. Steward and Williams contributions and allocations made
by the Company for 1997 in the LL&E Savings Plan and Compensatory Benefits
and Supplemental Excess Plan in the amounts of $61,054 and $25,866,
respectively. Includes for Messrs. Steward and Williams interest accrued
during 1998 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 amounts of $374,288 and $98,335,
respectively. Includes for Messrs. Steward and Williams 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 amounts of $306,910 and $80,741,
respectively. During 1997, Mr. Shackouls received additional compensation of
$9,527 in connection with the relocation of his home.
(4) For Mr. Shackouls, includes $41,177, $46,587 and $59,710 attributed for
personal use of Company airplanes in 1999, 1998 and 1997, respectively, and
for tax gross-up payments, primarily in connection with his use of Company
airplanes. For Mr. Steward, includes a $50,000 housing allowance in 1999 and
1998 pursuant to his Employment Agreement, and $41,311 in 1999 for tax
gross-up payments, primarily in connection with relocation assistance and
his use of Company airplanes.
(5) Messrs. Steward and Williams commenced employment with the Company in
October 1997. Their bonuses include amounts payable pursuant to the LL&E
annual incentive program. Their 1998 bonuses include a 1997 special
incentive bonus paid in March 1998 to Messrs. Steward and Williams in the
amounts of $310,000 and $100,000, respectively.
10
<PAGE> 13
OPTIONS GRANTED IN 1999
The following information is furnished for the year ended December 31, 1999
with respect to the named executive officers for stock options which were
granted in January 1999 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 1999(1) IN 1999 PER SHARE DATE(1) VALUE(2)
---- ---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
B. S. Shackouls.................... 40,000 11.1% $35.3750 1/13/09 $466,000
H. L. Steward...................... -- -- -- -- --
J. E. Hagale....................... 20,000 5.5% $35.3750 1/13/09 $233,000
J. A. Williams..................... 20,000 5.5% $35.3750 1/13/09 $233,000
R. L. Limbacher.................... 20,000 5.5% $35.3750 1/13/09 $233,000
</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
1/13/99, with an option price of $35.3750, it assumed a stock price
volatility of 27.54%, a risk-free rate of return of 4.72% and a dividend of
$0.55 per year. The value has been reduced by approximately 13% 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.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END VALUES
The following information is furnished for the year ended December 31, 1999
with respect to the named executive officers for stock option exercises which
occurred during 1999.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SECURITIES AT DECEMBER 31, 1999 AT DECEMBER 31, 1999(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
B. S. Shackouls....... -- -- 344,000 115,000 -- --
H. L. Steward......... -- -- 305,342 -- $1,658,957 --
J. E. Hagale.......... 10,570 $ 35,008 154,135 43,750 $ 74,243 --
J. A. Williams........ 37,973 $476,301 60,001 44,999 -- --
R. L. Limbacher....... -- -- 65,275 41,825 -- --
</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 exercise price for that option and
$33.0625, the closing price of the common stock on the New York Stock
Exchange on December 31, 1999.
11
<PAGE> 14
LONG-TERM INCENTIVE PLAN AWARDS IN 1999
No awards under the Performance Share Unit Plan were granted during 1999.
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 35
- --------------------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$ 400,000........... $ 94,185 $125,580 $156,975 $188,370 $ 219,765
$ 600,000........... $142,185 $189,580 $236,975 $284,370 $ 331,765
$ 800,000........... $190,185 $253,580 $316,975 $380,370 $ 443,765
$1,000,000........... $238,185 $317,580 $396,975 $476,370 $ 555,765
$1,200,000........... $286,185 $381,580 $476,975 $572,370 $ 667,765
$1,400,000........... $334,185 $445,580 $556,975 $668,370 $ 779,765
$1,600,000........... $382,185 $509,580 $636,975 $764,370 $ 891,765
$1,800,000........... $430,185 $573,580 $716,975 $860,370 $1,003,765
$2,000,000........... $478,185 $637,580 $796,975 $956,370 $1,115,765
</TABLE>
- ---------------
NOTE
(1) Average pension earnings for a given year include salary and bonus payments.
Under the Pension Plan, the maximum benefit payable in 2000 is $135,000 and
the maximum amount of compensation that may be considered is $170,000.
Pension Plan benefits are not reduced by Social Security benefits.
The Pension Plan formula (as amended as of January 1, 1999) for normal
retirement benefits at age 65 is 1.1% of the highest three-year average
earnings, plus .5% of the highest three-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. An early retirement
supplement equal to 1% of the highest three-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, is payable until age 65. Both the
basic benefit and the early retirement supplement are reduced by 2% for each
year the employee's actual retirement date precedes the date the employee would
have attained age 65. Years of credited service under the Pension Plan at age 65
for Messrs. Shackouls, Hagale, Limbacher and Williams would be 22, 35, 37 and
23, respectively. Mr. Steward is entitled to comparable benefits under the LL&E
Pension Plan and the nonqualified Compensatory Benefits and Supplemental Excess
Plan. Years of credited service at age 65 for Mr. Steward would be 16. 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.
12
<PAGE> 15
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 at a minimum annual salary of $825,000, effective for three years
from the date the Company notifies him that it does not wish to extend the term.
The Agreement shall terminate automatically on the date of the Company's Annual
Meeting of Stockholders following Mr. Shackouls' 60th birthday. The Company also
had an employment agreement with Mr. Steward which provided 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 prior to age 55.
The Severance Protection Plan provides severance benefits following a
Change in Control for officers of the Company and its subsidiaries in an amount
equal to three times annual salary, including maximum bonus amounts. The
Severance Protection Plan also provides for the continuation of life and health
insurance for a period of up to 18 months subsequent to a participant's
termination of employment following a Change in Control as well as a
supplemental pension payable under the Supplemental Benefits Plan calculated by
adding three years of additional credited pension service and certain other
benefits. Benefits are payable under the Severance Protection Plan for any
termination of employment within two years of the date of a Change in Control,
except where termination is by reason of death, disability, for cause, or
instituted by the employee for other than good reason. The Severance Protection
Plan also provides that the Company will pay legal fees and expenses incurred by
a participant to enforce rights or benefits under this plan.
In addition, Mr. Steward, who joined the Company from LL&E, will continue
to be eligible to receive severance benefits under his termination agreement
with LL&E. In general, the LL&E termination agreement provides benefits
comparable to those available under the Company's Severance Protection Plan.
Benefits are payable under the LL&E termination agreement for any termination of
employment within five years of the date of a Change in Control, except where
termination is for cause. Any benefits paid under the LL&E termination agreement
will correspondingly reduce the benefits, if any, payable under the Company's
Severance Protection Plan.
The Company also has an agreement with Mr. Williams under which he waived
his rights under the termination agreement he previously executed while at LL&E.
The agreement provides that if Mr. Williams' employment is terminated under
certain defined circumstances prior to September 30, 2002, he will be paid $3
million, reduced by $83,333 a month for every month he is employed after
September 1999. Any benefits paid under this agreement are not payable in
addition to any other severance or termination benefits, but will be reduced by
the payments under any other termination or severance plan.
The Company has also agreed to provide certain employees formerly employed
in the Company's Seattle, Washington office, including John E. Hagale and one
other executive officer, with additional pension related benefits based on
projected compensation if their employment terminates prior to eligibility for
early retirement.
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 and Medicare tax on the Gross-Up Payment, an amount equal to the
Severance Payments.
13
<PAGE> 16
PROPOSED BURLINGTON RESOURCES INC.
2000 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors recommends the adoption of the Burlington Resources
Inc. 2000 Stock Option Plan For Non-Employee Directors (the "Directors Stock
Option Plan") under which a total of 250,000 shares of common stock would be
made available for the granting of non-qualified stock options. This plan will
replace the 1992 Stock Option Plan for Non-Employee Directors. The Board of
Directors believes that the Directors Stock Option Plan, which is available only
to directors who are not employees of the Company, will promote the interests of
the Company and its stockholders by strengthening the Company's ability to
attract and retain the services of experienced and knowledgeable non-employee
directors and to provide an incentive for such directors to increase their
proprietary interests in the Company's long-term success. Accordingly, the Board
of Directors has approved and adopted the Directors Stock Option Plan, subject
to approval by the stockholders of the Company at this Annual Meeting. No awards
of stock or grants of options have been made, or will be made, under the Plan
prior to approval by the stockholders of the Company. An affirmative vote of a
majority of the shares present and entitled to be voted at the Annual Meeting
will constitute stockholder approval of the Stock Option Plan. A vote in favor
of this Proposal will constitute a vote in favor of the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
The following is a summary of the Directors Stock Option Plan and is
qualified in its entirety by the full text thereof which is attached to this
Proxy Statement as Exhibit A.
ADMINISTRATION
The Directors Stock Option Plan shall be administered by a committee
appointed by the Board of Directors (the "Plan Administrator").
The Plan Administrator shall have full authority to construe the provisions
of the Directors Stock Option Plan, to establish, amend and rescind rules and
regulations relating to the Directors Stock Option Plan, to administer the
Directors Stock Option Plan and to take all such steps and make all such
determinations in connection with the Directors Stock Option Plan and the
options granted thereunder as it may deem necessary or advisable, which
determination shall be final and binding upon all participants. No member of the
Plan Administrator may participate in any vote by the Plan Administrator on any
matter materially affecting the rights of such member under the Directors Stock
Option Plan.
ELIGIBILITY
To be eligible to participate in the Directors Stock Option Plan, an
individual must be a member of the Board of Directors as of the date on which
the options are granted under the Directors Stock Option Plan. Directors of the
Company who are employees shall not be eligible to participate in the Directors
Stock Option Plan. Each member of the Board of Directors to whom an option is
granted is hereinafter referred to as an "optionee."
SHARES AVAILABLE FOR THE PLAN
Subject to adjustment in certain events, the maximum number of shares for
which options may at any time be granted under the Directors Stock Option Plan
is 250,000 shares of common stock. Upon the expiration or termination in whole
or in part of unexercised options, shares of common stock which were subject
thereto will again be available for options under the Directors Stock Option
Plan.
In the event of a recapitalization, stock split, stock dividend, exchange
of shares, merger, reorganization, change in the corporate structure or shares
of the Company or similar event the Board of Directors may make appropriate
adjustments in the number and kind of shares authorized for the Directors Stock
Option Plan and, with respect to outstanding options, may make appropriate
adjustments in the number and kind of shares and the option price.
14
<PAGE> 17
GRANT OF OPTIONS
Options will be granted to members of the Board of Directors who are not
employees of the Company on the basis of 5,000 shares upon a Director's initial
election or appointment to the Company's Board of Directors and 2,000 shares per
year thereafter for each such eligible Director immediately following the Annual
Meeting of Stockholders. Options granted under the Directors Stock Option Plan
will be non-qualified options.
TERMS AND CONDITIONS OF OPTIONS
The price per share with respect to each option will be 100% of the fair
market value (as defined in the Directors Stock Option Plan) of the common stock
on the date the option is granted. Options will not be exercisable later than
the 10th anniversary of the date of its grant. Options granted under the
Directors Stock Option Plan vest, and may be exercised, immediately upon the
grant of such options. The purchase price of shares purchased under options will
be paid in full to the Company upon the exercise of the option either (i) in
cash or by check or (ii) by delivery at fair market value of common stock
already owned for six months by the optionee or (iii) by delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
deliver to the Company the amount of sale or loan proceeds to pay the exercise
price. The fair market value of such common stock as delivered will be valued as
of the day of delivery. An optionee will have none of the rights of a
stockholder until the shares of common stock are issued to him. During an
optionee's lifetime, the option may be exercisable only by him and options will
not be transferable, other than by will or the laws of descent and distribution
except by the designation of a beneficiary to receive and exercise the options
in the event of the optionee's death. Upon the termination of an optionee's
membership on the Board of Directors for any reason, the option will expire,
unless exercised, 36 months after the optionee ceases to be a Director of the
Company (but in no event later than the 10th anniversary date of grant). Upon
the death of an optionee, the option will be exercisable by his legal
representatives, his estate or the beneficiary(s) to whom the deceased's option
rights shall have passed by (a) will or the laws of descent and distribution or
(b) specific designation under the Directors Stock Option Plan.
TERM OF THE DIRECTORS STOCK OPTION PLAN
The Directors Stock Option Plan will be void unless it is approved by the
stockholders of the Company at this Annual Meeting. Subject to the foregoing
condition, options shall be granted pursuant to the Directors Stock Option Plan
on and after this Annual Meeting. The Directors Stock Option Plan will continue
in effect until it is terminated by action of the Board of Directors or the
Company's stockholders. Options theretofore granted may extend beyond that date
and the terms and conditions of the Directors Stock Option Plan will continue to
apply thereto and to shares of common stock acquired upon exercise thereof.
AMENDMENT TO THE DIRECTORS STOCK OPTION PLAN
The Board of Directors may from time to time make such amendments to the
Directors Stock Option Plan as it may deem proper and in the best interest of
the Company without further approval of the stockholders of the Company,
provided that no such amendment may impair the rights of an optionee under any
outstanding option without the optionee's consent.
FEDERAL INCOME TAX CONSEQUENCES OF DIRECTORS STOCK OPTION PLAN
The following discussion summarizes the material federal income tax
consequences of the Directors Stock Option Plan. This discussion is general in
nature and does not address issues related to the tax circumstances of any
particular optionee. The discussion is based on federal income tax laws in
effect on the date hereof and is, therefore, subject to possible future changes
in law. This discussion does not address state, local or foreign consequences.
An optionee will not recognize any income upon the grant of an option. Upon
exercise of any part of an option, the optionee will recognize ordinary income
in an amount equal to the difference between the then fair market value of the
shares acquired and the option exercise price.
15
<PAGE> 18
In general, upon a subsequent disposition of the shares, the optionee's
basis for determining taxable gain or loss would be the amount paid for such
shares plus the amount that was includable in the optionee's income at the time
of exercise. Any gain or loss recognized on such disposition would generally be
treated as long-term or short-term capital gain or loss depending on the length
of time the optionee held these shares and the holding period in effect at that
time.
The Company will generally be entitled to a deduction for federal income
tax purposes upon exercise of an option in an amount equal to the ordinary
income recognized by the optionee.
AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers L.L.P. as
independent public accountants for the year ending December 31, 2000.
Representatives of PricewaterhouseCoopers 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.
ELECTRONIC PROXY VOTING
Registered shareholders can vote their shares via (1) a toll-free telephone
call from the U.S. and Canada; or (2) the Internet; or (3) by mailing their
signed proxy card. The telephone and Internet voting procedures are designed to
authenticate shareholders' identities, to allow shareholders to vote their
shares and to confirm that their instructions have been properly recorded. The
Company has been advised by counsel that the procedures which have been put in
place are consistent with the requirements of applicable law. Specific
instructions to be followed by any registered shareholder interested in voting
via telephone or the Internet are set forth on the enclosed proxy card.
OTHER MATTERS
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 1999 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 Mr.
Jeffery P. Monte, Corporate Secretary, Burlington Resources Inc., 5051
Westheimer, Suite 1400, Houston, Texas 77056-2124, telephone (713) 624-9500.
16
<PAGE> 19
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2001 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 2001 Annual Meeting of Stockholders must be mailed to Mr.
Jeffery P. Monte, Corporate Secretary, Burlington Resources Inc., 5051
Westheimer, Suite 1400, Houston, Texas 77056-2124, and must be received by the
Corporate Secretary on or before November 9, 2000.
Stockholder proposals submitted outside of the procedures set forth above,
including nominations for Directors, must be mailed to Mr. Jeffery P. Monte,
Corporate Secretary, at the address above and must be received by the Corporate
Secretary on or before January 8, 2001. If a proposal is received after that
date, the Company's proxy for the 2001 Annual Meeting may confer discretionary
authority to vote on such matter without any discussion of such matter in the
proxy statement for the 2001 Annual Meeting.
By Order of the Board of Directors
/s/ JEFFERY P. MONTE
------------------------
JEFFERY P. MONTE
Corporate Secretary
17
<PAGE> 20
EXHIBIT A
BURLINGTON RESOURCES INC.
2000 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE I PURPOSES
The purposes of the Burlington Resources Inc. 2000 Stock Option Plan for
Non-Employee Directors (the "Plan") are to attract and retain the services of
experienced and knowledgeable non-employee directors of Burlington Resources
Inc. (the "Company") and to provide an incentive for such directors to increase
their proprietary interests in the Company's long-term success and progress.
ARTICLE II SHARES SUBJECT TO THE PLAN
Subject to adjustment in accordance with Article VI hereof, the total
number of shares of the Company's common stock, $.01 par value per share (the
"Common Stock"), for which options may be granted under the Plan is 250,000 (the
"Shares"). The Shares shall be shares presently authorized but unissued or
subsequently acquired by the Company and shall include shares representing the
unexercised portion of any option granted under the Plan which expires or
terminates without being exercised in full.
ARTICLE III ADMINISTRATION OF THE PLAN
The administrator of the Plan (the "Plan Administrator") shall be a
committee appointed by the Board of Directors of the Company (the "Board").
Subject to the terms of the Plan, the Plan Administrator shall have the power to
construe the provisions of the Plan, to determine all questions arising
thereunder and to adopt, amend and rescind such rules and regulations for the
administration of the Plan as it may deem desirable. All determinations made by
the Plan Administrator in connection with the Plan and any options granted
thereunder shall be final and binding upon all optionees and their successors in
interest. No member of the Plan Administrator shall participate in any vote by
the Plan Administrator on any matter materially affecting the rights of any such
member under the Plan.
ARTICLE IV PARTICIPATION IN THE PLAN
Each member of the Board elected or appointed who is not otherwise an
employee of the Company or any subsidiary (an "Eligible Director") shall receive
the following option grants under the Plan:
1. INITIAL GRANTS
An initial grant (an "Initial Grant") of an option to purchase 5,000 shares
shall automatically be granted to each person who first becomes an Eligible
Director following the date of stockholder approval of the Plan upon the earlier
of the Eligible Director's initial election or appointment as a director of the
Company.
Each Initial Grant shall be fully vested and immediately exercisable upon
grant.
2. ADDITIONAL GRANTS
Commencing with the annual meeting of stockholders of the Company as
specified in the Company's By-Laws (the "Annual Meeting") in 2000, each person
who is an Eligible Director on the date of each Annual Meeting (other than a
person receiving an Initial Grant at that time) shall automatically receive an
additional grant (an "Additional Grant") of an option to purchase 2,000 shares
immediately following that Annual Meeting.
Additional Grants shall be fully vested and immediately exercisable upon
grant.
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ARTICLE V OPTION TERMS
Each option granted to an Eligible Director under the Plan and the issuance
of Shares thereunder shall be subject to the following terms:
1. GRANT LETTER
Each option granted under the Plan shall be evidenced by an option
agreement or grant letter (the "Grant Letter") duly executed on behalf of the
Company. Each Grant Letter shall comply with and be subject to the terms and
conditions of the Plan. Any Grant Letter may contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Plan Administrator.
2. OPTION EXERCISE PRICE
The option exercise price for an option granted under the Plan shall be the
fair market value of the Shares covered by the option at the time the option is
granted. For purposes of the Plan, "fair market value" shall be the mean between
the highest and lowest quoted selling prices at which the Common Stock was sold
on such date as reported in the NYSE-Composite Transactions by The Wall Street
Journal on such date or, if no Common Stock was traded on such date, on the next
preceding date on which Common Stock was so traded.
3. TIME AND MANNER OF EXERCISE OF OPTION
Each option may be exercised in whole or in part at any time and from time
to time, subject to stockholder approval of the Plan; provided, however, that no
fewer than 100 shares (or the remaining Shares then purchasable under the
option, if less than 100 shares) may be purchased upon any exercise of option
rights hereunder and that only whole Shares will be issued pursuant to the
exercise of any option.
Any option may be exercised by giving written notice, signed by the person
exercising the option, to the Company stating the number of Shares with respect
to which the option is being exercised, accompanied by payment in full for such
Shares, which payment may be in whole or in part (i) in cash or by check, (ii)
in shares of Common Stock already owned for at least six (6) months by the
person exercising the option, valued at fair market value at the time of such
exercise, or (iii) by delivery of a properly executed exercise notice, together
with irrevocable instructions to a broker, to properly deliver to the Company
the amount of sale or loan proceeds to pay the exercise price, all in accordance
with the regulations of the Federal Reserve Board.
4. TERM OF OPTIONS
Each option shall expire on the earlier of (i) ten (10) years from the date
of the granting thereof, or (ii) thirty-six (36) months after the date the
optionee ceases to be a director of the Company for any reason.
5. TRANSFERABILITY
During an optionee's lifetime, an option may be exercised only by the
optionee. In the event of the death of an optionee prior to the expiration of an
option as described in Section 4, such option shall be exercisable after the
date of the optionee's death for the balance of the period up to its expiration
as described in Section 4, by the legal representatives or the estate of such
optionee, by any person or persons whom the optionee shall have designated in
writing on forms prescribed by and filed with the Company or, if no such
designation has been made, by the person or persons to whom the optionee's
rights have passed by will or the laws of descent and distribution. Options
granted under the Plan and the rights and privileges conferred thereby shall not
be subject to execution, attachment or similar process and may not be
transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than by will or by the applicable laws of
descent and distribution, except that the Plan Administrator may permit a
recipient of an option to designate in writing during the optionee's lifetime a
beneficiary to receive and exercise options in the event of the optionee's
death. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose
of any option under the Plan or of any right or privilege conferred thereby,
contrary to the provisions of the Plan,
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<PAGE> 22
or the sale or levy or any attachment or similar process upon the rights and
privileges conferred hereby, shall be null and void.
6. PARTICIPANT'S OR SUCCESSOR'S RIGHTS AS STOCKHOLDER
Neither the recipient of an option under the Plan nor the optionee's
successor(s) in interest shall have any rights as a stockholder of the Company
with respect to any Shares subject to an option granted to such person until
such person becomes a holder of record of such Shares.
7. LIMITATION AS TO DIRECTORSHIP
Neither the Plan nor the granting of an option nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an optionee has a right to continue as a
director for any period of time or at any particular rate of compensation.
8. REGULATORY APPROVAL AND COMPLIANCE
The Company shall not be required to issue any certificate or certificates
for Shares upon the exercise of an option granted under the Plan, or record as a
holder of record of Shares the name of the individual exercising an option under
the Plan, without obtaining to the complete satisfaction of the Plan
Administrator the approval of all regulatory bodies deemed necessary by the Plan
Administrator, and without complying, to the Plan Administrator's complete
satisfaction, with all rules and regulations under federal, state or local law
deemed applicable by the Plan Administrator.
ARTICLE VI CAPITAL ADJUSTMENTS
In the event of a recapitalization, stock split, stock dividend, exchange
of shares, merger, reorganization, change in corporate structure or shares of
the Company or similar event, the Board may make such adjustments as it deems
appropriate in the aggregate number and kind of shares for which options may be
granted under the Plan, the number and kind of shares covered by each
outstanding option and the exercise price per share thereof.
In the event of any adjustment in the number of shares covered by any
option, any fractional shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full shares
resulting from such adjustment.
ARTICLE VII EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Company; none of such expenses shall be charged to any optionee.
ARTICLE VIII EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be dated as of April 19, 2000 and shall be effective upon
approval of holders of a majority of the Company's outstanding shares of voting
capital stock at the 2000 Annual Meeting. The Plan shall continue in effect
until it is terminated by action of the Board or the Company's stockholders, but
such termination shall not affect the then outstanding terms of any options.
ARTICLE IX TERMINATION AND AMENDMENT OF THE PLAN
The Board may amend, terminate or suspend the Plan at any time, in its sole
and absolute discretion; provided, however, that no such amendment, termination
or suspension may impair the rights of an optionee under any option theretofore
granted without the optionee's consent.
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[BURLINGTON RESOURCES LOGO]
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<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>
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TO BE HELD IN THE AMBASSADOR ROOM,
THE ST. REGIS HOTEL,
1919 BRIAR OAKS LANE
HOUSTON, TEXAS
APRIL 19, 2000
9:00 A.M.
<PAGE> 24
BURLINGTON RESOURCES
- ------------------------------------
March 10, 2000
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 9:00 a.m. on Wednesday, April 19, 2000, in the Ambassador Room of The
St. Regis 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. The Company has Internet and telephone voting options for your
convenience. We ask that you vote as soon as possible, by using either the
Internet or telephone options or by signing and returning your proxy by mail 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
APRIL 19, 2000
The undersigned hereby appoints Bobby S. Shackouls and L. David Hanower, 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 St. Regis Hotel,
1919 Briar Oaks Lane, Houston, Texas on April 19, 2000 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 proposal 2.
(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: S. P. Gilbert, L. I. Grant, J. T. LaMacchia, J. F. McDonald,
K. W. Orce, D. M. Roberts, J. F. Schwarz, W. Scott, Jr., B. S.
Shackouls
[ ] FOR [ ] WITHHELD [ ]
FOR all nominees except as
noted
above
The Board of Directors recommends a
vote FOR proposal 2.
2. Adoption of 2000 Stock Option Plan for Non-Employee Directors.
[ ] FOR [ ] AGAINST [
] ABSTAIN
Mark here for address change and note at left [ ]
Mark here for comments [ ]
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<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 and
title.
Date
Signature
</TABLE>
<PAGE> 25
VOTE BY TELEPHONE
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE or 1-877-779-8683
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number -- 1-877-PRX-VOTE (1-877-779-8683).
3. Enter your 14-digit Control Number located on your Proxy Card above
your name.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT! -- CALL 1-877-PRX-VOTE ANYTIME.
VOTE BY INTERNET
It's fast, convenient, and your vote is immediately confirmed and posted.
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the website -- http://www.eproxyvote.com/br
3. Enter your 14-digit Control Number located on your Proxy Card above
your name.
4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT!
GO TO HTTP://WWW.EPROXYVOTE.COM/BR ANYTIME.
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING
BY TELEPHONE OR INTERNET
