SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Section 240.14a-12
Devon Energy Corporation
________________________________________________
(Name of Registrant as Specified In Its Charter)
Marian J. Moon, Corporate Secretary
_________________________________________
(Name of Person(s) Filing Proxy Statement)
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<PAGE>
DEVON ENERGY CORPORATION
20 North Broadway, Suite 1500
Oklahoma City, OK 73102-8260
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of Devon Energy
Corporation, a Delaware Corporation ("Devon" or the "Company")
will be held in the Community Room (Mezzanine Floor), Bank of
Oklahoma, Robinson Avenue at Robert S. Kerr, Oklahoma City,
Oklahoma on June 11, 1996 at 1:00 p.m., local time, for the
following purposes:
1. To elect two directors for terms expiring in 1999;
2. To ratify the appointment of KPMG Peat Marwick LLP, the U.S.
member firm of KPMG (Klynveld Peat Marwick Goerdeler),
as independent certified public accountants of Devon
for 1996;
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on April 15,
1996, are entitled to notice of and to vote at the meeting. The
accompanying proxy statement contains information regarding the
matters to be considered at the meeting. For reasons outlined in
the attached proxy statement, the Board of Directors recommends a
vote "FOR" the matters being voted upon.
IMPORTANT
YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE MEETING.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE BE SURE
THAT THE ENCLOSED PROXY IS PROPERLY COMPLETED, DATED, SIGNED AND
RETURNED WITHOUT DELAY. PLEASE USE THE ENCLOSED RETURN ENVELOPE.
IT REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
Marian J. Moon
Corporate Secretary
Oklahoma City, Oklahoma
April 25, 1996
<PAGE>
DEVON ENERGY CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 11, 1996
THE COMPANY
Devon is an independent energy company engaged primarily in
oil and gas exploration, development and production, and in the
acquisition of producing properties. The Company owns interests
in 900 oil and gas properties in 10 states, with the majority
being in New Mexico, Wyoming, Texas, Oklahoma, and Louisiana. At
December 31, 1995, Devon's estimated proved reserves were 363.8
billion cubic feet of natural gas, 44.5 million barrels of oil
and 9.5 million barrels of natural gas liquids, or 114.6 million
barrels of oil equivalent of total proved reserves.
During 1988 Devon expanded its capital base with its first
issuance of common stock to the public and began a substantial
expansion program. Management has utilized a two-pronged growth
strategy of acquiring producing properties and engaging in
controlled exploratory and development drilling activities.
During the eight years ended December 31, 1995, Devon has drilled
605 wells, 581 of which were producers, and consummated 15
significant acquisitions. During this same period, capital costs
incurred totalled $535 million and reserve additions, including
revisions, were 159.1 million barrels of oil equivalent. These
additions, minus production and property sales, resulted in a
fourteen-fold increase in reserves during the eight-year period.
Since September 29, 1988, Devon's common stock has been
traded on the American Stock Exchange under the symbol "DVN".
The Company's mailing address is 20 North Broadway, Suite 1500,
Oklahoma City, OK 73102-8260. Its telephone number is 405/235-
3611.
All references in this proxy statement to Devon or the
Company include its predecessors and subsidiary corporations.
GENERAL INFORMATION
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Devon to be
used at the annual meeting of stockholders (the "Meeting"). The
Meeting will be held on the 11th day of June, 1996, and any
adjournment thereof. At the Meeting the shareholders will (i)
elect two directors for terms expiring in 1999 and (ii) ratify
the appointment of KPMG Peat Marwick LLP as the Company's
independent certified public accountants. The shareholders will
also consider and vote upon such other business as may properly
come before the Meeting or any adjournment thereof. This proxy
statement is first being sent to the shareholders on or about
April 25, 1996.
The Board of Directors has established April 15, 1996, as
the record date (the "Record Date") to determine stockholders
entitled to notice of and to vote at the Meeting. At the close
of business on the Record Date, 22,113,896 shares of $.10 par
value common stock of the Company ("Common Stock") were
outstanding. Each share is entitled to one vote. Devon's
officers and directors own a total of 1,435,156 shares, or 6.5%,
of Devon Common Stock, and intend to vote all of such shares in
favor of the matters to be voted upon at the Meeting.
Each proxy which is properly signed, dated and returned to
the Company in time for the Meeting, and not revoked, will be
voted in accordance with instructions contained therein. If no
contrary instructions are given, proxies will be voted "FOR" the
two director nominees and "FOR" the ratification of KPMG Peat
Marwick LLP as independent certified public accountants. Proxies
may be revoked at any time prior to their being exercised by
delivering a written notice of revocation or a later dated proxy
to the Secretary of the Company. In addition, a stockholder
present at the Meeting may revoke his Proxy and vote in person.
The office of the Company's Secretary appoints an inspector
of election to tabulate all votes and to certify the results of
all matters voted upon at the Meeting. Election of each director
at the Meeting and approval of the appointment of the Company's
independent certified public accountants for 1996 will be by
plurality vote.
Neither the corporate law of the state of Oklahoma, the
state in which Devon is incorporated, nor the Company's
Certificate of Incorporation or Bylaws have any provisions
regarding the treatment of abstentions and broker non-votes. It
is the Company's policy (i) to count abstentions or broker non-
votes for purposes of determining the presence of a quorum at the
Meeting; (ii) to treat abstentions as votes not cast but to treat
them as shares represented at the Meeting for determining results
on actions requiring a majority vote; and (iii) to consider
neither abstentions nor broker non-votes in determining results
of plurality votes.
The cost of solicitation of proxies will be borne by the
Company. Proxies may be solicited by mail or personally by
directors, officers or regular employees of the Company, none of
whom will receive additional compensation therefor. The Company
has also retained Morrow & Co., Inc. to assist in the
solicitation of proxies for a fee of $3,500, plus reimbursement
of certain expenses. Those holding shares of the company's
Common Stock of record for the benefit of others ("Nominee
Holders") are being asked to distribute proxy soliciting
materials to, and request voting instructions from, the
beneficial owners of such shares. The Company will reimburse
Nominee Holders for their reasonable out-of-pocket expenses.
PRINCIPAL SECURITY OWNERSHIP
The table below sets forth as of April 15, 1996, the names
and addresses of each person known by management to own
beneficially more than 5% of the Company's outstanding Common
Stock, the number of shares beneficially owned by each such
stockholder and the percentage of outstanding shares owned. The
table also sets forth the number and percentage of outstanding
shares of Common Stock beneficially owned by the Company's Chief
Executive Officer ("CEO"), each of the Company's directors, the
four most highly compensated executive officers other than the
CEO and by all officers and directors of the Company as a group.
Common Stock
Name and Address of Number of Percent of
Beneficial Owner Shares Class
- ---------------------- ----------- ----------
Merrill Lynch & Co., Inc. 2,200,000 (1) 9.95%
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Strong Capital Management, Inc. 1,728,400 (2) 7.82%
100 Heritage Reserve
Menomonee Falls, WI 53051
FMR Corp. 1,480,800 (3) 6.70%
82 Devonshire Street
Boston, Massachusetts 02109
J. Larry Nichols* 653,571 (4) 2.93%
Thomas F. Ferguson* 450,100 (5) 2.04%
Michael E. Gellert* 311,720 (6) 1.41%
H. R. Sanders, Jr.* 130,026 (7) 0.58%
John W. Nichols* 101,204 0.46%
H. Allen Turner 83,485 (8) 0.38%
Darryl G. Smette 78,600 (9) 0.35%
David M. Gavrin* 76,180 (10) 0.34%
J. Michael Lacey 73,665 (11) 0.33%
All directors and officers of Devon
as a group (13 persons) 2,074,456 (12) 9.12%
* Director. The business address of each director is 20 North
Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260.
(1) Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group,
Inc. ("ML Group") and Princeton Services, Inc. ("PSI") are
parent holding companies. Merrill Lynch Asset Management,
L.P. ("MLAM") is an investment adviser to Merrill Lynch
Growth Fund for Investment and Retirement (the "Fund"), the
beneficial owner of such shares. ML&Co., ML Group, PSI, MLAM
and the Fund disclaim beneficial ownership of such shares.
(2) Strong Capital Management, Inc. ("SCM") is an investment
advisor registered under Section 203 of the Investment
Advisers Act of 1940. Mr. Richard Strong is Chairman of the
Board of SCM and beneficially owns substantially all of its
outstanding voting securities. SCM has been granted
discretionary dispositive power over its clients' securities
and in some instances has voting power over such securities.
Any and all discretionary authority which has been delegated
to SCM may be revoked in whole or in part at any time.
(3) FMR Corp. is a holding corporation. A wholly-owned
subsidiary of FMR Corp., Fidelity Management and Research
Company, beneficially owns 1,162,600 shares as a result of
acting as investment adviser to several investment
companies. Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of 318,200
shares.
(4) Includes 42,965 shares owned of record by Mr. Nichols as
Trustee of a family trust, 78,624 shares owned by Mr.
Nichols' wife, 12,570 shares owned by Mr. Nichols as trustee
of his children's trusts as to which he exercises sole
voting and investment power, 6,200 shares owned by Mr.
Nichols' son, 6,000 shares owned by Mr. Nichols' daughter
and 173,600 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Nichols.
(5) Includes 450,100 shares owned by Englewood, N.V. The
ultimate parent of Englewood, N.V., Al-Futtooh Investments
WLL, is owned equally by Sheikh Nasser Al-Sabah, Sheikha
Salwa Al-Sabah and Sheikh Hamad Al-Sabah, who each share
voting and investment power. Thomas F. Ferguson is Managing
Director of Englewood N.V. and disclaims beneficial
ownership of the shares attributable to Englewood N.V.
(6) Includes 309,149 shares owned by Windcrest Partners, a
limited partnership, in which Mr. Gellert shares investment
and voting power.
(7) Includes 126,800 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Sanders.
(8) Includes 82,500 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Turner.
(9) Includes 76,300 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Smette.
(10) Includes 3,757 shares owned of record by Mr. Gavrin as
trustee of a family trust, 2,141 shares owned by Mr. Gavrin
as co-trustee of the Mark Sandler 1987 Trust and 8,835
shares owned by Mr. Gavrin's wife.
(11) Includes 68,500 shares which are deemed beneficially owned
pursuant to stock options held by Mr. Lacey.
(12) Includes 639,300 shares which are deemed beneficially owned
pursuant to stock options held by officers.
ELECTION OF DIRECTORS
Pursuant to provisions of the Company's Certificate of
Incorporation and Bylaws, the Board of Directors has fixed the
number of directors at six. The Company's Certificate of
Incorporation and Bylaws provide for three classes of directors
serving staggered three-year terms, with each class to be as
nearly equal in number as possible. The Board of Directors has
nominated Michael E. Gellert and H. R. Sanders, Jr. for re-
election as directors for terms expiring at the 1999 annual
meeting, and in each case until their successors are elected and
qualified. Proxies cannot be voted for a greater number of
persons than the number of nominees named. Both nominees are
presently directors of the Company whose terms expire at the
Meeting. Other directors who are remaining on the Board will
continue in office in accordance with their previous elections
until the expiration of their terms at the 1997 or 1998 annual
meeting, as the case may be.
The Board of Directors recommends a vote "FOR" each of the
nominees for election to the Board of Directors.
It is the intention of the persons named in the Proxy to
vote Proxies "FOR" the election of the two nominees. In the
event that either of the nominees should fail to stand for
election, the persons named in the Proxy intend to vote for
substitute nominees designated by the Board of Directors, unless
the Board of Directors reduces the number of directors to be
elected.
INFORMATION ABOUT NOMINEES AND DIRECTORS
Nominees for Re-election as Directors For Terms Expiring in 1999
Michael E. Gellert, age 64, has been a director of Devon
since 1969 and is a member of the Compensation and Stock Option
Committee. In addition to managing his personal investments and
serving as a director of Devon, Mr. Gellert serves on the board
of several other companies. These include Humana Inc., owners of
managed health care facilities; Premier Parks, Inc., amusement
parks operator; Seacor Holdings, Inc., owners and operators of
marine equipment; and Regal Cinemas, Inc., owners and operators
of multiplex motion picture theatres. Mr. Gellert is also a
member of the Putnam Trust Company Advisory Board to The Bank of
New York. He was associated with the Drexel Burnham Lambert Group
and its predecessors for 31 years, including 13 years as a
director, and served in various executive capacities for its
wholly-owned subsidiary, Drexel Burnham Lambert Incorporated.
H. R. Sanders, Jr., age 63, has been a Director and
Executive Vice President of Devon since 1981. Prior to joining
Devon, Mr. Sanders was associated with RepublicBank Dallas, N.A.,
serving from 1970 to 1981 as its Senior Vice President with
direct responsibility for independent oil and gas producer and
mining loans. Mr. Sanders is a member of the Independent
Petroleum Association of America, Texas Independent Producers and
Royalty Owners Association, Oklahoma Independent Petroleum
Association and a past director of Triton Energy Corporation.
Directors Whose Terms Expire in 1998
David M. Gavrin, age 61, a director of Devon since 1979,
serves as the chair of the Compensation and Stock Option
Committee. In addition to managing his personal investments, he
serves as a director of several other companies as well as Devon.
The companies for which Mr. Gavrin serves as a director include
Heidemij, N.V., a worldwide environmental services company; New
York Federal Savings Bank; United American Energy Corp., an
independent power producer; and, Lectorum Publishing, Inc., a
publisher and distributor of Spanish language books. In addition,
Mr. Gavrin was associated with Drexel Burnham Lambert
Incorporated for 14 years as First Vice President and was a
General Partner of Windcrest Partners, an investment partnership,
for 10 years.
John W. Nichols, age 81, is the co-founder of Devon and has
been Chair of the Board of Directors since the Company's
inception in 1969. He is a Founding Partner and Oversight
General Partner of Blackwood & Nichols Co. Blackwood & Nichols
Co. continues to operate approximately 250 wells in the prolific
Northeast Blanco Unit of the San Juan Basin in New Mexico. John
Nichols is a non-practicing Certified Public Accountant.
Directors Whose Terms Expire in 1997
Thomas F. Ferguson, age 59, has been a director of Devon
since 1982, and is the chair of the Audit Committee. He is
Managing Director of Englewood, N.V., a wholly-owned subsidiary
of Kuwaiti-based Al-Futtooh Investments WLL. His 20 year
association with the principals of Al-Futtooh has allowed him to
represent them on the board of directors of Devon and other
companies in which they invest. Those interests include
investments in hotels, pharmaceuticals, an investment banking
company and a venture capital fund. Mr. Ferguson is a Canadian
qualified Certified General Accountant and was formerly employed
by the Economist Intelligence Unit of London as a financial
consultant.
J. Larry Nichols, age 53, co-founded Devon with his father
in 1969. He has been a Director since 1971, President since 1976
and Chief Executive Officer since 1980. He is also an Oversight
General Partner of Blackwood & Nichols Co. He serves as a
director of the Independent Petroleum Association of America and
chairs its Public Lands Committee. He is president of the
Domestic Petroleum Council and is also a director of the
Independent Petroleum Association of New Mexico, the Oklahoma
Independent Petroleum Association and the National Petroleum
Council. He also serves as a director of the National Association
of Manufacturers and of the Oklahoma Nature Conservancy. Mr.
Nichols holds a geology degree from Princeton University and a
law degree from the University of Michigan. He served as a law
clerk to Mr. Chief Justice Earl Warren and Mr. Justice Tom Clark
of the U.S. Supreme Court. Mr. Nichols is a member of the
Oklahoma Bar Association.
INFORMATION ABOUT EXECUTIVE OFFICERS
The positions held by the executive officers of the Company
are as follows.
J. Michael Lacey, age 50, joined Devon as Vice President -
Operations and Exploration in 1989. Prior to his employment with
Devon, Mr. Lacey served as General Manager in Tenneco Oil
Company's Mid-Continent and Rocky Mountain Divisions. He holds
both undergraduate and graduate degrees in Petroleum Engineering
from the Colorado School of Mines, is a Registered Professional
Engineer and a member of the Society of Petroleum Engineers and
the American Association of Petroleum Geologists.
Darryl G. Smette, age 48, Vice President of Marketing and
Administrative Planning since 1989, joined Devon in 1986 as
Manager of Gas Marketing. Mr. Smette's educational background
includes an undergraduate degree from Minot State College and a
masters degree from Wichita State University. His marketing
background includes 15 years with Energy Reserves Group, Inc./BHP
Petroleum (Americas), Inc., the last position being Director of
Marketing. He is also an oil and gas industry instructor approved
by the University of Texas' Department of Continuing Education.
Mr. Smette is a member of the Oklahoma Independent Producers
Association, Natural Gas Association of Oklahoma and the American
Gas Association.
H. Allen Turner, age 43, has been responsible for Devon's
investment banking activities and investor communications as Vice
President of Corporate Development since 1982. In 1981 he served
as Executive Vice President of Palo Pinto/Harken Drilling
Programs. For the six prior years he was associated with Merrill
Lynch with various responsibilities including Regional Tax
Investments Manager. He is a member of the Petroleum Investor
Relations Association, and serves on the Independent Petroleum
Association of America Capital Markets Committee. He received his
bachelor's degree from Duke University.
William T. Vaughn, age 49, is Devon's Vice President of
Finance in charge of commercial banking functions, accounting,
tax and information services. Mr. Vaughn was elected in 1987 to
his present position. Prior to that he was Controller of Devon
from 1983 to 1987. Mr. Vaughn's prior experience includes serving
as Controller with Marion Corporation for two years and
employment with Arthur Young & Co. for seven years with various
duties including audit manager. He is a Certified Public
Accountant and a member of the American Institute of Certified
Public Accountants and the Oklahoma Society of Certified Public
Accountants. He is a graduate of the University of Arkansas with
a Bachelor of Science degree.
Danny J. Heatly, age 40, has been Devon's Controller since
1989. Prior to joining Devon, Mr. Heatly was associated with Peat
Marwick Main & Co. in Oklahoma City for ten years with various
duties including senior audit manager. He is a Certified Public
Accountant and a member of the American Institute of Certified
Public Accountants and the Oklahoma Society of Certified Public
Accountants. He graduated with a Bachelor of Accountancy degree
from the University of Oklahoma.
Gary L. McGee, age 46, was elected Treasurer in 1983, having
first served as Devon's Controller. Mr. McGee is a member of the
Petroleum Accounting Society of Oklahoma City and has been active
in varied accounting functions with several companies in the
industry. He served as Vice President of Finance with KSA
Industries, Inc., a private holding company with various
interests including oil and gas exploration. Mr. McGee also held
various accounting positions with Adams Resources and Energy Co.
and Mesa Petroleum Company. He received his accounting degree
from the University of Oklahoma.
Marian J. Moon, age 45, was elected Corporate Secretary in
1994. Ms. Moon has served Devon in various capacities since 1984,
most recently as Manager of Corporate Communications and
Analysis. She has also served as Assistant Secretary with
responsibilities including compliance with SEC and stock exchange
regulations. Prior to joining Devon, Ms. Moon was employed for
eleven years by Amarex, Inc., an Oklahoma City based oil and
natural gas production and exploration firm, where she served
most recently as Treasurer. Ms. Moon is a member of the Petroleum
Investor Relations Association and the American Society of
Corporate Secretaries. She is a graduate of Valparaiso
University.
MEETINGS AND COMMITTEES OF THE BOARD
During 1995, the Board of Directors of the Company held four
regular meetings. All directors attended (1) all of the meetings
of the board of directors and (2) all of the meetings held by
committees of the board on which they served. The Board of
Directors has standing audit and compensation and stock option
committees. It does not have a standing nominating committee.
Mr. Ferguson is the sole member of the Company's Audit
Committee. The Audit Committee meets with the Company's
independent certified public accountants and reviews the
consolidated financial statements of the Company on a regular
basis. The functions of the Audit Committee consist of
recommending independent accountants to the Board of Directors;
approving the nature and scope of services performed by the inde
pendent accountants and reviewing the range of fees for such
services; conferring with the independent accountants and
reviewing the results of their audit; reviewing the Company's
accounting and financial controls; and providing assistance to
the Board of Directors with respect to the corporate and
reporting practices of the Company. The Board of Directors, as
recommended by the Audit Committee, has selected KPMG Peat
Marwick LLP to serve as the Company's independent certified
public accountants for the fiscal year ending December 31, 1996,
subject to ratification by the stockholders. The Audit Committee
met two times during 1995.
The compensation and stock option committee, which consists
of Messrs. Gavrin (Chair) and Gellert, determines the nature and
amount of compensation of all executive officers of the Company
who are also directors and the amount and terms of stock options
granted to all employees. In addition, this committee provides
guidance to and makes recommendations to management on employee
benefit programs. The compensation and stock option committee
held one meeting in 1995.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding annual
and long-term compensation during 1993, 1994 and 1995 for the CEO
and the four most highly compensated executive officers, other
than the CEO, who were serving as executive officers of the
Company on December 31, 1995.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation<F2>
_____________________________________________________________________________________
Awards of
Options/SAR's<F3>
__________________
Name Principal Position Year Salary Bonus Other<F1> All Other
# Shares Compensation<F4>
_________________________________________________________________________________________________________________
<S> <S> <C> <C> <C> <C> <C> <C>
J. L. Nichols President & CEO 1995 $300,000 $200,600 -- 36,000 $3,000
1994 $275,000 $200,600 -- 72,000 $3,000
1993 $250,000 $175,600 -- 40,000 $4,497
__________________________________________________________________________________________________________________
H.R. Sanders, Jr. Executive Vice President 1995 $240,710 <F5> $175,600 -- 27,000 $3,000
1994 $230,710 <F5> $118,988 -- 54,000 $3,000
1993 $220,710 <F5> $100,600 -- 30,000 $4,497
__________________________________________________________________________________________________________________
J. M. Lacey Vice President 1995 $200,000 $65,600 -- 18,000 $3,000
1994 $190,000 $67,618 -- 36,000 $3,000
1993 $178,000 $55,600 -- 20,000 $4,345
__________________________________________________________________________________________________________________
H. A. Turner Vice President 1995 $160,000 $65,600 -- 18,000 $3,000
1994 $155,000 $67,019 -- 36,000 $3,000
1993 $145,000 $50,600 -- 20,000 $4,045
__________________________________________________________________________________________________________________
D. G. Smette Vice President 1995 $160,000 $65,600 -- 18,000 $3,000
1994 $155,000 $67,019 -- 36,000 $3,000
1993 $145,000 $50,600 -- 20,000 $4,045
__________________________________________________________________________________________________________________
<FN>
<F1> Excludes other compensation which, in aggregate, does not
exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported for the named executive officer.
<F2> No awards of restricted stock or payments under long-term
incentive plans were made by the Company to any of the named
executives in any period covered by the table.
<F3> Two option grants were made in 1994 as a result of a change
in the timing of the grant dates from mid-year to year-end.
One grant was made in 1995 and one was made in 1993. It is
anticipated that future consideration of option grants will
be made only once per year, at year-end. See "Compensation
and Stock Option Committee Report on Executive Compensation -
- Stock Options."
<F4> These amounts represent Company matching contributions to the
Devon Energy Incentive Savings Plan.
<F5> Includes $10,710 of interest imputed at the fair market rate
of 9% on a non-interest bearing note payable to Devon in the
amount of $119,000 executed by Mr. Sanders and secured by a
first mortgage on his home.
</FN>
</TABLE>
Option Grants in 1995
The following table sets forth information concerning
options to purchase Common Stock granted in 1995 to the five
individuals named in the Summary Compensation Table. The material
terms of such options appear in the following table and the
footnotes thereto.
<TABLE>
<CAPTION>
Individual Grants
______________________________________________________________________________
Percent of Total Exercise Grant Date
Options Options Granted to Price Expiration Present
Name Granted<F1> Employees in 1995 Per Share <F2> Date Value <F3>
________________ ___________ _________________ ______________ __________ __________
<S> <C> <C> <C> <C> <C>
J. Larry Nichols 36,000 16.4% $23.875 12/19/2005 $ 355,932
H. R. Sanders, Jr. 27,000 12.3% $23.875 12/19/2005 $ 266,949
J. Michael Lacey 18,000 <F4> 8.2% $23.875 12/19/2005 $ 177,966
H. Allen Turner 18,000 <F4> 8.2% $23.875 12/19/2005 $ 177,966
Darryl G. Smette 18,000 <F4> 8.2% $23.875 12/19/2005 $ 177,966
___________________________________________________________________________________________
<FN>
<F1> The options, which were granted December 20, 1995, were
immediately vested and exercisable.
<F2> Exercise price is the fair market value on the date of grant,
determined by calculating the average of the high and low
prices of Common Stock, as reported by the American Stock
Exchange for the date of grant.
<F3> The grant date present value is an estimation of the possible
future value of the option grant based upon one of the
methods prescribed by the Securities and Exchange Commission,
the Binomial Option Pricing Model. This model uses the past
performance of a stock to predict the future value of a stock
option. The following assumptions were used in the model:
volatility (a measure of the historic variability of a stock
price) - 38.1%; risk-free interest rate (the interest paid by
short-term, risk-free investments such as U.S. Treasury
bills) - 5.5% per annum; annual dividend yield - 0.5%; and,
time of exercise - five years from grant date. Because the
options are non-transferable, the life of the option was
reduced to five years for the purposes of the model. No
adjustment was made to the value for risk of forfeiture. The
option value estimated using this model does not necessarily
represent the value to be realized by the named officers.
<F4> 80% of the unexercised portion of such options are subject to
forfeiture upon the officer's voluntary termination or
termination for cause prior to December 20, 1996. This
percentage decreases 20% each subsequent year. After December
20, 1999, no options are subject to forfeiture.
</FN>
</TABLE>
Aggregated Option Exercises in 1995 and Year-End Option Values
The following table sets forth information for the five
individuals named in the Summary Compensation Table concerning
their exercise in 1995 of options to purchase Common Stock and
the unexercised options to purchase Common Stock held by the
named individuals at December 31, 1995.
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised
at 12/31/95 In-The-Money Options at 12/31/95<F2>
____________________________ ____________________________________
Number of Shares
Acquired Upon Value
Name Exercise Realized<F1> Exercisable Unexercisable Exercisable Unexercisable
- -------------- -------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Larry Nichols 35,000 $241,563 169,400 12,600 $1,021,038 $ 30,713
H. R. Sanders, Jr. -- $ -- 122,600 8,400 $ 565,275 $ 20,475
J. Michael Lacey -- $ -- 60,900 31,600 $ 373,338 $157,100
H. Allen Turner -- $ -- 74,900 31,600 $ 584,338 $157,100
Darryl G. Smette -- $ -- 68,700 31,600 $ 487,363 $157,100
_________________________________________________________________________________________________________________
<FN>
<F1> The value realized equals the aggregate amount of the
excess of the fair market value (the average of the high
and low prices of the Common Stock as reported by the
American Stock Exchange on the exercise date) over the
relevant exercise price.
<F2> The value is based on the aggregate amount of the excess of
$25.50 (the closing price as reported by the American Stock
Exchange for December 29, 1995) over the relevant exercise
price for outstanding options that were exercisable and in-
the-money at year-end.
</FN>
</TABLE>
Compensation Pursuant to Plans
Long-term Incentive Plans. Prior to 1993, Devon had
outstanding stock options issued to certain of its executive
officers and employees under two stock option plans adopted in
1987 and 1988 (the "1987 Plan" and the "1988 Plan"). During
1993, all remaining options outstanding under the 1987 Plan were
exercised. Also during 1993 the 1988 Plan was canceled. Options
granted under the 1988 Plan remain exercisable by the employees
owning such options, but no new options will be granted under the
1988 Plan. At December 31, 1995, 14 participants held options
granted under the 1988 Plan.
Effective June 7, 1993, Devon adopted the Devon Energy
Corporation 1993 Stock Option Plan (the "1993 Plan") and reserved
one million shares of Common Stock for issuance thereunder to key
management and professional employees.
The exercise price of incentive stock options granted under
the 1993 Plan may not be less than the estimated fair market
value of the stock on the date of grant, plus 10% if the grantee
owns or controls more than 10% of the total voting stock of Devon
prior to the grant. The exercise price of nonqualified options
granted under the 1993 Plan may not be less than 75% of the fair
market value of the stock on the date of grant. Options granted
are exercisable during a period established for each grant, which
period may not exceed 10 years from the date of grant. Under the
1993 Plan, the grantee must pay the exercise price in cash or in
Common Stock, or a combination thereof, at the time the option is
exercised. The 1993 Plan expires on April 25, 2003. As of
December 31, 1995, 18 participants held options granted under the
1993 Plan.
The Company has no other plans that provide compensation
intended to serve as incentive for performance to occur over a
period longer than one fiscal year.
Retirement Plan. Devon maintains a defined benefit
retirement plan (the "Plan") which provides benefits based upon
past and future employment service with Devon. Each eligible
employee who retires is entitled to receive annual retirement
income, computed as a percentage of final average compensation,
(which consists of salaries, wages, and bonuses), and credited
years of service up to 25 years. Contributions by employees are
neither required nor permitted under the Plan and no benefit
accrues after an employee reaches age 70. Benefits are computed
based on straight-life annuity amounts and are reduced by Social
Security payments. All of the executive officers except John W.
Nichols participate in the Plan.
The following table illustrates estimated annual benefits
payable upon retirement under the Plan to employees in specified
compensation and years of service classifications assuming a
normal retirement in 1995 at age 65.
Years of Service
___________________________________________
Final Average Compensation 15 20 25
- -------------------------- ----------- --------- ---------
$50,000 $10,000 $16,400 $22,900
$100,000 $25,800 $38,800 $51,800
$150,000 $45,300 $64,800 $84,300
_______________________________________________________________________
The maximum annual compensation that can be considered is
$150,000, subject to adjustments in accordance with regulations
of the Internal Revenue Service. Accordingly, only $150,000 of
compensation for each of J. Larry Nichols, H. R. Sanders, Jr., J.
Michael Lacey, H. Allen Turner and Darryl G. Smette is considered
by the Plan.
The following table sets forth the credited years of service
under Devon's Plan for each of the five individuals named in the
Summary Compensation Table.
Credited
Years of Service
Name of Individual (Through December 31, 1995)
J. Larry Nichols 25 years
H. R. Sanders, Jr. 14 years
J. Michael Lacey 6 years
H. Allen Turner 14 years
Darryl G. Smette 9 years
Supplemental Retirement Plan. Effective July 1, 1995, Devon
established a nonqualified deferred compensation plan (the
"Supplemental Plan"), the purpose of which is to provide
supplemental retirement income to certain selected key management
and highly compensated employees. An employee must be selected by
the Compensation and Stock Option Committee in order to be
eligible for participation in the Supplemental Plan. All of the
executive officers except John W. Nichols have been selected to
participate in the Supplemental Plan. Each eligible participant's
supplemental retirement income will equal the difference, if any,
between 65% of his final average compensation, (the average of
the highest three consecutive year's compensation out of the last
ten), multiplied by a fraction, the numerator of which is his
credited years of service (not to exceed 20) and the denominator
of which is 20 (the denominator is 16 for H. R. Sanders, Jr.),
less any offset amounts. Offset amounts are (i) retirement
benefits payable to the participant under the Plan, (ii) benefits
due to the participant under Social Security, and (iii) any
benefits which are paid to the participant under the Company's
long-term disability plan. The Supplemental Plan is currently
unfunded.
Employment Agreements
Pursuant to severance agreements, each of the five
individuals named in the Summary Compensation Table is entitled
to certain compensation ("Severance Payment") in the event that
his employment with the Company is terminated (a) within one year
of the acquisition by the Company of reserves or assets which
result in the reserves or assets of the Company increasing by at
least 20% or (b) within two years of a change in control of the
Company. "Change of control" is defined in the agreements as
being an event which results in an entity or group acquiring
either (i) 30% or more of the Company's outstanding voting
securities, or (ii) less than 30% of the outstanding voting
securities, but which a majority of the Board of Directors
determines has caused a change in control. In either case the
Severance Payment would be approximately equal to two times the
individual's annual compensation.
The Company also has a severance agreement with Mr. William
T. Vaughn, Vice President of Finance, with terms identical to the
above-referenced severance agreements. The Company has no other
employment agreements with any of its executive officers.
Director Compensation
Non-management directors of Devon receive an annual retainer
of $16,000, payable quarterly, plus $750 for each Board meeting
attended. Also, directors serving as chairmen of the standing
committees of the Board of Directors receive an additional $1,000
per year. Non-management directors serving as members of these
two committees receive $300 per meeting attended. John W.
Nichols, Chair of the Board, received $180,600 in 1995 as payment
for his services as director and as Chair of the Board.
Compensation and Stock Option Committee Report on Executive
Compensation
The compensation and stock option committee of the Board of
Directors (the "Committee") establishes the general compensation
policies of the Company. The Committee meets in November or
December of each year to establish specific compensation levels
for the Chief Executive Officer ("CEO"), the Executive Vice
President ("EVP"), the Chair of the Board and to review the
executive officers' compensation generally. (The compensation
for executive officers other than the CEO, EVP and Chair of the
Board is determined by the CEO and EVP.)
The Committee's goal in setting executive compensation is to
motivate, reward and retain management talent who support the
Company's goals of increasing absolute and per share growth for
shareholders. This goal is carried out through awards of base
salary, annual cash bonuses and stock options.
The Committee generally believes that the total cash
compensation of its CEO, EVP and other executive officers should
be similar to the total cash compensation of similarly situated
executives of peer group public companies within the oil and gas
industry. Further, a significant portion of the complete
compensation package should be tied to the Company's success in
achieving long-term growth in earnings, cash flow, reserves and
stock price per share.
Base Salary. A competitive base salary is considered vital
to support the continuity of management and is consistent with
the long-term nature of the oil and gas business. The Committee
believes that the base salaries of the executive officers should
be similar to the base salaries of executive officers of similar
companies within the oil and gas industry. Therefore, no
performance criteria are applied to the base salary portion of
the total compensation. Performance of the Company versus its
peers is, however, given significant weight in the cash bonus and
stock option portions of total compensation.
The CEO's base salary for 1995 was based upon information
available to the Committee at its December, 1994 meeting. At
that meeting the Committee established a peer group of 17
companies to which Devon should be compared. This peer group
included companies which are similar to Devon in total revenues,
balance sheet ratios, oil and gas reserves and overall oil and
gas operations. (The industry group index in the Performance
Graph included in this Proxy Statement includes, but is not
limited to, the companies used for this compensation analysis.
In its analysis, the Committee specifically focused on those
companies that are most similar to Devon in size, financial
structure and operations, believing that the most direct
comparisons would not necessarily include all of the more than
200 companies included in the industry group index used for the
Performance Graph.)
A review of the base salaries for the highest-paid executive
at each of these peer companies revealed that the 1994 base
salary of Devon's CEO was at the low end of the range of all base
salaries in the group, and only 74% of the average base salary
for the group. As a result of this finding, the Committee
increased Devon's CEO's base salary for 1995 by 9% to improve his
base salary in relationship to the peer group.
The Committee used similar criteria to evaluate the base
salary for Devon's EVP. However, the EVP's base salary was a
somewhat higher percentage than that of the CEO in relationship
to the peer group. While the EVP's base salary was at the low
end of the range of all base salaries for the second-highest paid
executives in the peer group, it was 85% of the average base
salary. As a result of this finding the Committee increased the
EVP's base salary by 4% to keep his base salary competitive with
the group.
The Committee advised the CEO and EVP that similar criteria
should be used to evaluate the base salaries of the other
executive officers of the Company.
Cash Bonuses. The Committee believes that the officers'
cash bonuses should be tied to Devon's success in achieving
growth in comparison to those of the Company's industry peers and
to the individual officers' contribution to such success. Cash
bonuses for calendar year 1995 were set at the December, 1995
Committee meeting. In setting the cash bonus for the CEO for the
calendar year 1995, the Committee established a peer group of 16
oil and gas companies to which Devon should be compared. (This
peer group was the same as the 17 companies used for the prior
year comparison, except that one company on the prior year's list
was merged into another company.)
The Committee reviewed Devon's growth of the last three
years compared with the peer group average on a number of
different measures, notably change in earnings per share, cash
flow per share, reserves per share and stock price. In all of
these categories, Devon's performance was materially superior to
the peer group's performance. As a result of this analysis, the
Committee awarded the CEO a cash bonus of $200,000. This award
resulted in his total compensation for 1995 being 93% of the
average total 1994 compensation for the highest-paid executives
at each of the companies in the peer group.
The Committee used the same criteria to evaluate the cash
bonus for the EVP. In addition, the Committee recognized the
EVP's individual contribution to certain transactions completed
in 1995. As a result of this analysis the Committee awarded him a
cash bonus of $175,000. This award resulted in his total
compensation for 1995 being 114% of the average total 1994
compensation for the second highest-paid executives of companies
in the peer group.
The Committee advised the CEO and EVP that similar criteria
should be used in establishing cash bonuses for the other
executive officers.
Stock Options. The Committee desires to reward key
management and professional employees for long-term strategic
management practices and enhancement of shareholder value through
the award of stock options. Stock options are granted at an
option price equal to the fair market value of the Common Stock
on the grant date. The grant of these options and the optionees'
holdings of unexercised options and/or ownership of exercised
option shares is designed to closely align the interests of the
executive officers with those of the shareholders. The ultimate
value of the stock options will depend on the continued success
of the Company, thereby creating a continuing incentive for
executive officers to perform long after the initial grant.
Stock options were awarded to the CEO, EVP and other
executive officers in December, 1995.
The award of options is based generally upon the same
criteria as that used for the award of cash bonuses; that is,
more options are awarded if the Company performs well in
relationship to its peers, and less or none are awarded if the
Company does not perform well. In addition, the Committee wants
to encourage executives to maintain ownership of Company stock
and/or unexercised options. Although there are no specific
ownership criteria used in awarding options, long-term ownership
is viewed favorably. The Committee noted that Devon's officers as
a group still retain over 75% of all options granted to them. The
sole option exercised by an officer in 1995 was held for nearly
five years and was about to expire.
The Committee generally seeks to award no more than 1% of
the outstanding shares in any one year, and further desires to
keep the total number of shares under option and available for
option to less than 10% of the total shares outstanding. As of
December 31, 1995, there were 1,028,900 shares under option and
337,200 shares available for option, which were 4.7% and 1.5%,
respectively, of the total shares outstanding.
Policy on Deductibility of Compensation. Section 162(m) of
the Internal Revenue Code limits the tax deduction to $1 million
for compensation paid to any one executive officer, unless
certain requirements are met. The Committee presently intends
that all compensation paid to executive officers will meet the
requirements for deductibility under Section 162(m). However, the
Committee may award compensation which is not deductible under
Section 162(m) if it believes that such awards would be in the
best interest of the Company or its shareholders.
No Present Intention to Submit a Compensation Plan to the
Shareholders. The Committee has no present intention of
submitting a compensation plan to the shareholders for approval
which would result in the issuance of more than 5% of the
Company's outstanding Common Stock.
We believe that the Company has an appropriate compensation
structure which properly rewards and motivates its executive
officers to build shareholder value.
As to Compensation to As to Compensation to Executive Officers
the CEO and EVP other than the CEO and EVP
David M. Gavrin, Chair J. Larry Nichols
Michael E. Gellert H. R. Sanders, Jr.
Compensation Committee Interlocks
The Compensation Committee is composed of two independent,
non-employee directors, Mr. Gavrin and Mr. Gellert. These
directors have no interlocking relationships as defined by the
Securities and Exchange Commission.
Performance Graph
The following performance graph compares the Company's
cumulative total stockholder return on its Common Stock for the
five-year period from December 31, 1990 to December 31, 1995,
with the cumulative total return of the Standard & Poor's 500
stock index and the Stock Index by Standard Industrial
Classification Code ("SIC Code") for Crude Petroleum and Natural
Gas. The SIC Code for Crude Petroleum and Natural Gas is 1311.
The identities of the 200+ companies included in the index will
be provided upon request.
CUMULATIVE TOTAL RETURN*
THE COMPANY, S&P 500, AND SIC CODE INDEX
FOR CRUDE PETROLEUM AND NATURAL GAS
FISCAL YEAR ENDING
___________________________________________________
COMPANY 1990 1991 1992 1993 1994 1995
DEVON ENERGY CP 100 77.17 130.43 180.09 160.31 225.21
INDUSTRY INDEX 100 104.41 99.14 118.12 123.79 136.14
BROAD MARKET 100 130.48 140.46 154.62 156.66 215.54
Assumes $100 invested on December 31, 1990 in Devon Energy
Corporation Common Stock, S&P 500 Index and SIC Code Index for
Crude Petroleum and Natural Gas.
*Total return assumes reinvestment of dividends.
CERTAIN TRANSACTIONS
In 1986, H. R. Sanders, Jr., Executive Vice President and a
director of Devon, executed a non-interest bearing note in favor
of Devon in the principal amount of $125,000, to evidence his
borrowings from Devon. This note, which was executed as part of
Mr. Sanders' employment agreement with Devon, was made on terms
favorable to him to induce him to move to Oklahoma City. The
employment agreement was entered into on February 8, 1981 and
expired December 31, 1987. The note, which is due on demand, is
secured by a first mortgage on Mr. Sanders' personal residence.
As of December 31, 1995, the outstanding balance of the note was
$119,000.
INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the stockholders, the Board of
Directors of the Company has selected KPMG Peat Marwick LLP as
the Company's independent certified public accountants for fiscal
year 1996. That firm has served as the Company's auditors since
1981.
The Board of Directors recommends a vote "FOR" the
ratification of the appointment of KPMG Peat Marwick LLP.
Representatives of KPMG Peat Marwick LLP are expected to be
present at the Meeting. They will have the opportunity to make a
statement if they so desire and are expected to be available to
respond to appropriate questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for action at
the 1997 Annual Meeting of Stockholders of the Company must
present the proposal to the Secretary of the Company not later
than December 19, 1996. Only those proposals that comply with
the requirements of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934 will be included in the Company's proxy
statement for the 1997 Annual Meeting. No stockholder proposals
were received by the Company for inclusion in this proxy
statement.
OTHER MATTERS
The Board of Directors of the Company knows of no other
matter to come before the Meeting other than that set forth
herein and in the accompanying Notice of Annual Meeting of
Stockholders. However, if any other matters should properly come
before the Meeting, it is the intention of the persons named in
the accompanying Proxy to vote such Proxies as they deem
advisable in accordance with their best judgment.
Your cooperation in giving this matter your immediate
attention and in returning your Proxy promptly will be
appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
Marian J. Moon
Corporate Secretary
April 25, 1996
<PAGE>
DEVON ENERGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Devon Energy Corporation, an
Oklahoma corporation, hereby nominates and appoints John W.
Nichols and J. Larry Nichols, or either of them, with full power
of substitution, as true and lawful agents and proxies to
represent the undersigned and vote all shares of stock of Devon
Energy Corporation owned by the undersigned in all matters coming
before the Annual Meeting of Stockholders (or any adjournment
thereof) of Devon Energy Corporation to be held in the Community
Room (Mezzanine Floor), Bank of Oklahoma on Tuesday, June 11,
1996, at 1:00 p.m., local time. The Board of Directors recommends
a vote "FOR" the matters set forth on the reverse side.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
/X/ Please mark votes as in this example.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
SPECIFIED BELOW BY THE STOCKHOLDER. TO THE EXTENT CONTRARY
SPECIFICATIONS ARE NOT GIVEN, THIS PROXY WILL BE VOTED "FOR" THE
NOMINEES LISTED IN ITEM 1 AND "FOR" ITEM 2.
1. ELECTION OF DIRECTORS
Nominees: Michael E. Gellert and H. R. Sanders, Jr.
FOR WITHHELD
[ ] [ ]
[ ]______________________________________________________
You may withhold your vote for a particular nominee by marking
this box and naming the nominee for which your vote is being
withheld.
2. RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF DEVON ENERGY CORPORATION FOR
1996.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. OTHER MATTERS:
In their discretion, to vote with respect to any other
matters that may come before the meting or any adjournment
thereof, including matters incident to its conduct.
I RESERVE THE RIGHT TO REVOKE THE PROXY AT ANY TIME BEFORE THE
EXERCISE THEREOF.
Please sign exactly as your name appears at left, indicating your
official position or representative capacity, if applicable. If
shares are held jointly, each owner should sign.
Signature: ________________________________ Date _______
Signature: ________________________________ Date_______
