<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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
Newfield Exploration Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[NEWFIELD LOGO]
NEWFIELD EXPLORATION COMPANY
Houston, Texas
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 7, 1998
To the Stockholders:
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of Newfield
Exploration Company (the "Company") will be held on Thursday, May 7, 1998, at
11:00 a.m., local time, in the Ballroom of the Wyndham Greenspoint Hotel, 12400
Greenspoint Drive, Houston, Texas, for the following purposes:
(1) To elect ten directors to serve until the 1999 Annual Meeting of
Stockholders;
(2) To approve the Newfield Exploration Company 1998 Omnibus Stock Plan;
(3) To ratify the selection of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending December 31,
1998; and
(4) To transact such other business as may properly come before such
meeting or any adjournment(s) thereof.
The close of business on March 31, 1998, has been fixed as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the Annual Meeting or any adjournment(s) thereof.
You are cordially invited to attend the Annual Meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, WE ASK THAT YOU SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors
/s/ TERRY W. RATHERT
Terry W. Rathert
Secretary
April 3, 1998
<PAGE> 3
[NEWFIELD LOGO]
NEWFIELD EXPLORATION COMPANY
363 N. SAM HOUSTON PKWY E.
SUITE 2020
HOUSTON, TEXAS 77060
(281) 847-6000
www.newfld.com
-------------------------------
PROXY STATEMENT
-------------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company for use at the Annual Meeting to be held on Thursday, May 7,
1998, at 11:00 a.m., local time, in the Ballroom of the Wyndham Greenspoint
Hotel, 12400 Greenspoint Drive, Houston, Texas, or at any adjournment(s)
thereof. The solicitation of proxies by the Board of Directors of the Company
(the "Board of Directors") will be conducted primarily by mail. In addition,
officers, directors and employees of the Company may solicit proxies personally
or by telephone, telegram or other forms of wire or facsimile communication. The
Company will reimburse brokers, custodians, nominees and fiduciaries for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of common stock of the Company ("Common Stock"). The costs of the
solicitation will be borne by the Company. The Company has engaged ChaseMellon
Shareholder Services, L.L.C., the Company's transfer agent, to solicit proxies
in favor of all items set forth in the notice attached hereto. The Company
anticipates that the costs it will incur for this service will be approximately
$5,500 plus expenses. This proxy statement and the form of proxy were first
mailed to stockholders of the Company on or about April 9, 1998.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy (a) by execution and submission of a
revised proxy, (b) by written notice to the Secretary of the Company or (c) by
voting in person at the Annual Meeting. In the absence of such revocation,
shares represented by the proxies will be voted at the Annual Meeting.
At the close of business on March 31, 1998, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were 36,050,775 outstanding shares of Common Stock, each share of
which is entitled to one vote. Common Stock is the only class of outstanding
securities of the Company entitled to notice of and to vote at the Annual
Meeting.
The Company's annual report to stockholders for the year ended December 31,
1997, including financial statements, is being mailed with the enclosed proxy to
all stockholders entitled to vote at the Annual Meeting. The annual report does
not constitute a part of the proxy soliciting material.
ITEM 1.
ELECTION OF DIRECTORS
Ten directors are to be elected at the Annual Meeting. The nominees for
election as directors are Joe B. Foster, Robert W. Waldrup, Charles W. Duncan,
Jr., Howard H. Newman, Thomas G. Ricks, C. E. (Chuck) Shultz, Terry Huffington,
Dennis R. Hendrix, Philip J. Burguieres and John C. Sawhill. If elected, each
director will serve until the Company's 1999 Annual Meeting of Stockholders and
until his or her successor shall have been elected and qualified. All of the
current director nominees are required to stand for election at the Annual
Meeting because directors hold annual terms. A plurality of the votes cast in
person or by proxy by the holders of Common Stock is required to elect a
director. Accordingly, abstentions and "broker non-votes"
<PAGE> 4
will have no effect on the outcome of the election assuming a quorum is present
or represented by proxy at the Annual Meeting. A broker non-vote occurs if a
broker or other nominee does not have discretionary authority and has not
received instructions with respect to a particular item. Stockholders may not
cumulate their votes in the election of directors.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual Meeting,
the persons named in the enclosed proxy will vote for the election of such other
person(s) as may be nominated by the Board of Directors.
The following table sets forth information regarding the names, ages as of
February 28, 1998, principal occupations of the nominees, other directorships in
certain companies held by them, and the length of continuous service as a
director of the Company.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEES PRINCIPAL OCCUPATION AND DIRECTORSHIPS SINCE AGE
-------- -------------------------------------- -------- ---
<S> <C> <C> <C>
Joe B. Foster....................... Chairman of the Board, President and Chief Executive 1988 63
Officer of the Company; Director, Baker Hughes
Incorporated and New Jersey Resources Corporation
Robert W. Waldrup................... Vice President -- Operations of the Company 1992 53
Charles W. Duncan, Jr............... Private investments; Director, American Express 1990 71
Company, The Coca-Cola Company, and United
Technologies Corporation
Howard H. Newman.................... Managing Director of E.M. Warburg, Pincus & Co., LLC; 1990 50
Director, ADVO, Inc., RenaissanceRE Holdings
Limited., Comcast UK Cable Partners Limited, Cox
Insurance Holdings Plc. and Eagle Family Foods
Holdings, Inc.
Thomas G. Ricks..................... President and Chief Executive Officer, The University 1992 44
of Texas Investment Management Company; Director, DTM
Corporation
C. E. (Chuck) Shultz................ Chairman and Chief Executive Officer, Dauntless 1994 58
Energy Inc. and Chairman, Canadian Oil Sands Trust;
Director, Archer Resources Ltd., Jannock Limited and
Syncrude Canada Ltd.
Terry Huffington.................... Chairman and President of Huffco Group, Inc. 1997 43
Dennis R. Hendrix................... Retired Chairman, PanEnergy Corp.; Director, Duke 1997 57
Energy Corporation, Allied Waste Industries, Inc. and
National Power PLC;
Philip J. Burguieres................ Chairman of the Board, Weatherford Enterra, Inc.; * 54
Director, Chase Bank of Texas N.A., Cogen
Technologies Energy Group, Denali Incorporated,
Hydril Company and McDermott International, Inc.
John C. Sawhill..................... President and Chief Executive Officer of the Nature * 61
Conservancy; Director, The Procter and Gamble
Company, Pacific Gas and Electric Company, NACCO
Industries and the Vanguard Group of Mutual Funds;
Member Advisory Board of British Petroleum
</TABLE>
- ---------
* Not currently a director.
2
<PAGE> 5
Directors of the Company are elected annually and hold office until the
next annual meeting of stockholders and until their successors are duly elected
and qualified. The Company's executive officers serve at the discretion of the
Board of Directors.
Each of the nominees has been engaged in the principal occupation set forth
opposite his name for the past five years except as follows:
Thomas G. Ricks served as Vice Chancellor for Asset Management of the
University of Texas System from 1992 to March 1996. Mr. Ricks was named to his
present position on March 1, 1996.
C. E. Shultz served as President, Chief Executive Officer and a Director of
Gulf Canada Resources Limited from 1990 to January 1995. Mr. Shultz was named to
his present position in January 1995.
From 1990 to 1997, Mr. Hendrix served PanEnergy Corp., first as Chief
Executive Officer and later as Chairman of the Board of Directors of PanEnergy
Corp.
From 1991 to 1996, Mr. Burguieres served Weatherford International
Incorporated as President and Chief Executive Officer.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, unless otherwise
indicated, as of February 28, 1998 regarding beneficial ownership of Common
Stock of the Company by (i) each person known by the Company to own beneficially
five percent or more of its outstanding Common Stock, (ii) the Company's Chief
Executive Officer and each of the Company's other four most highly compensated
executive officers during 1997, (iii) each director and director nominee and
(iv) all executive officers, directors and director nominees as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(2)
-----------------------
NAME OF BENEFICIAL OWNER(1) SHARES(3)(4) PERCENT
--------------------------- ------------ -------
<S> <C> <C>
Warburg, Pincus Investors, L.P.(5).......................... 6,431,028 17.8%
FMR Corp.(6)................................................ 2,230,200 6.2
Merrill Lynch & Co., Inc.(7)................................ 4,004,100 11.1
American Express Financial Corporation(8)................... 2,012,250 5.6
Joe B. Foster(9)............................................ 1,300,528 3.5
Robert W. Waldrup........................................... 322,566 *
Terry W. Rathert............................................ 285,217 *
William D. Schneider........................................ 133,294 *
David F. Schaible........................................... 247,506 *
Charles W. Duncan, Jr....................................... 603,668 1.7
Jeffrey A. Harris(10)....................................... 6,440,586 17.8
Howard H. Newman(10)........................................ 6,448,186 17.9
Thomas G. Ricks(11)......................................... 1,502,400 4.2
C. E. Shultz................................................ 7,558 *
Dale E. Zand................................................ 79,508 *
Terry Huffington............................................ 269,942 *
Dennis R. Hendrix........................................... 11,250 *
Philip J. Burguieres........................................ 1,000 *
John C. Sawhill............................................. 64,000 *
Executive officers and directors as a group (consisting of
20 persons)(12)........................................... 11,474,969 30.6
</TABLE>
- ---------------
* Less than 1%
(1) The address of Warburg, Pincus Investors, L.P. ("Warburg") and Messrs.
Harris and Newman is 466 Lexington Ave., 10th Floor, New York, NY 10017.
The address of FMR Corp. is 82 Devonshire Street, Boston, MA 02109-3614.
The address of Merrill Lynch & Co., Inc. ("ML&Co") is World Financial
Center, North Tower, 250 Vesey Street, New York, NY 10281. The address of
American
3
<PAGE> 6
Express Financial Corporation ("American Express Financial") is IDS Tower
10, Minneapolis, MN 55440.
(2) Under the regulations of the Securities and Exchange Commission (the
"Commission"), shares are deemed to be "beneficially owned" by a person if
he or she directly or indirectly has or shares the power to vote or dispose
of such shares, whether or not he or she has any pecuniary interest in such
shares, or if he or she has the right to acquire the power to vote or
dispose of such shares within 60 days, including any right to acquire such
power through the exercise of any option, warrant or right. The shares
beneficially owned by Messrs. Foster, Waldrup, Rathert, Schneider and
Schaible include 594,500; 189,000; 239,000; 74,000 and 178,750 shares,
respectively, that may be acquired by such persons within 60 days through
the exercise of stock options. The shares owned by the executive officers
and directors as a group include 1,361,830 shares that may be acquired by
such persons within 60 days through the exercise of stock options.
(3) Pursuant to the Company's 1995 Omnibus Stock Plan (the "Omnibus Plan"), the
Company has awarded restricted shares of Common Stock that are subject to
forfeiture provisions. See "Executive Compensation-Compensation Committee
Report on Executive Compensation-Executive Compensation-Restricted Stock
Awards." The shares beneficially owned by Messrs. Foster, Waldrup, Rathert,
Schneider and Schaible include the following shares awarded pursuant to the
Omnibus Plan that are subject to forfeiture provisions: (a) 45,000; 21,000;
21,000; 18,000 and 21,000 shares, respectively, awarded in February 1996
and (b) 10,000; 6,500; 6,500; 6,500 and 6,500 shares, respectively, awarded
in February 1998. The shares beneficially owned by the executive officers
and directors as a group include an additional 60,000 restricted shares
awarded to other executive officers, pursuant to the Omnibus Plan, that are
subject to forfeiture provisions.
(4) Pursuant to the Company's Non-Employee Director Plan (as hereinafter
defined), the Company grants restricted shares of Common Stock that are
subject to forfeiture provisions to its non-employee directors at certain
times. See "-- Compensation of Directors." The shares beneficially owned by
each of Messrs. Duncan, Shultz and Zand include 668 shares granted
immediately following the 1995 Annual Meeting of Stockholders that are
subject to forfeiture provisions. The shares beneficially owned by each of
Messrs. Duncan, Harris, Newman, Shultz and Zand include 1,334 shares and
1,558 shares granted immediately following the 1996 Annual Meeting of
Stockholders and the 1997 Annual Meeting of Stockholders, respectively,
that are subject to forfeiture provisions. The shares beneficially owned by
Ms. Huffington and Mr. Hendrix include 1,363 shares and 1,269 shares,
respectively, granted at the time of appointment as a director.
(5) The sole general partner of Warburg is Warburg, Pincus & Co., a New York
general partnership ("WP"). E.M. Warburg, Pincus & Co., LLC, a New York
limited liability company ("EMW LLC"), manages Warburg. The members of EMW
LLC are substantially the same as the partners of WP. Lionel I. Pincus is
the managing partner of WP and the managing member of EMW LLC and may be
deemed to control both WP and EMW LLC. WP, as sole general partner of
Warburg, has a 20% interest in the profits of Warburg. Mr. Jeffrey A.
Harris and Mr. Howard H. Newman are Managing Directors and members of EMW
LLC and general partners of WP. As such, Messrs. Harris and Newman may be
deemed to have an indirect pecuniary interest (within the meaning of Rule
16a-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) in an indeterminate portion of the shares beneficially owned by
Warburg. See Note 10 below.
(6) Based solely on the Schedule 13G dated February 14, 1998 filed by FMR Corp.
with the Commission, Fidelity Management & Research Company ("Fidelity"), a
wholly owned subsidiary of FMR Corp. and an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940 (the "Advisors
Act"), is the beneficial owner of 1,815,900 shares as a result of acting as
investment advisor to various investment companies (the "Funds") registered
under Section 8 of the Investment Company Act of 1940 (the "Investment
Company Act"). Edward C. Johnson 3d, Chairman of FMR Corp., various Johnson
family members and trusts for the benefit of Johnson family members,
through their ownership of FMR Corp. voting common stock and the execution
of a shareholders' voting agreement,
4
<PAGE> 7
may be deemed to form a controlling group with respect to FMR Corp. Edward
C. Johnson 3d, FMR Corp., through its control of Fidelity, and the Funds
each has sole power to dispose of 414,300 shares owned by the Funds.
Neither FMR Corp. nor Edward C. Johnson 3d has the sole power to vote or
direct the voting of the shares owned directly by the Funds, which power
resides with the Funds' Boards of Trustees. Fidelity carries out the voting
of the shares under written guidelines established by the Funds' Boards of
Trustees. Fidelity Management Trust Company, a wholly owned subsidiary of
FMR Corp. and a bank as defined in Section 3(a)(6) of the Exchange Act, is
the beneficial owner of 414,300 shares as a result of its serving as an
investment manager of institutional account(s). Edward C. Johnson 3d and
FMR Corp., through its control of Fidelity Management Trust Company, have
sole dispositive power over 414,300 shares and sole power to vote or to
direct voting of the 414,300 shares.
(7) Based solely on the Schedule 13G dated January 29, 1998 filed with the
Commission jointly by ML&Co., Princeton Services, Inc. ("PSI"), Merrill
Lynch Asset Management, L.P. ("MLAM") and Merrill Lynch Growth Fund (the
"Merrill Fund"), the Merrill Fund is the beneficial owner of 4,000,000
shares. Each of PSI and MLAM may be deemed to share voting and dispositive
power with respect to such shares with each other and, with the Merrill
Fund, an additional 4,100 shares. PSI is the general partner of MLAM. MLAM,
an investment advisor registered under Section 203 of the Advisors Act,
serves as investment advisor to the Merrill Fund, an investment company
registered under Section 8 of the Investment Company Act. PSI is a wholly
owned direct subsidiary of Merrill Lynch Group, Inc. ("ML Group"), and ML
Group is a wholly owned direct subsidiary of ML&Co.
(8) Based solely on the Schedule 13G dated December 31, 1997 filed with the
Commission, jointly, by American Express Company ("American Express") and
American Express Financial, an investment advisor registered under Section
203 of the Advisors Act, are the beneficial owners of 2,012,250 shares.
Each of American Express and American Express Financial may be deemed to
share voting power with respect to 1,076,450 shares and dispositive power
with respect to the entirety of such 2,012,250 shares. American Express
Financial is a wholly owned subsidiary of American Express. The latter
disclaims "beneficial ownership" of such shares.
(9) Includes 25,000 restricted shares granted to Mr. Foster in 1993 that are
subject to forfeiture provisions that will lapse upon the achievement of
certain performance targets for 1998. Also includes 123,600 shares held by
Mr. Foster as trustee for the benefit of two charitable trusts and 100,000
shares held by a charitable organization that Mr. Foster serves as
president and a director. Mr. Foster disclaims any pecuniary interest with
respect to such shares.
(10) Warburg is the owner of 6,431,028 of the shares indicated as beneficially
owned by each of Messrs. Harris and Newman and are included because of
their affiliation with Warburg. Each of Messrs. Harris and Newman disclaims
"beneficial ownership" of the Warburg shares within the meaning of Rule
13d-3 under the Exchange Act. See Note 5 above.
(11) All of the shares indicated as beneficially owned by Mr. Ricks are owned
directly by The Permanent University Fund of the State of Texas or the
Board of Regents of the University of Texas System and are included because
Mr. Ricks, as President and Chief Executive Officer of the University of
Texas Investment Management Company, may be deemed to share the power to
vote or dispose of such shares. Mr. Ricks disclaims "beneficial ownership"
of these shares within the meaning of Rule 13d-3 under the Exchange Act.
(12) See Notes 2 through 4 and 9 through 11 above.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during 1997. During 1997, each
director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors held during the period that such director
served as a director and (ii) the total number of meetings held by each
committee of the Board of Directors on which such director served during the
period that such director so served.
5
<PAGE> 8
The Board of Directors has the following standing committees:
AUDIT COMMITTEE. The Audit Committee, which currently consists of
Messrs. Duncan, Ricks, Shultz, Zand and Hendrix and Ms. Huffington, met
three times during 1997. Its principal functions are to recommend to the
Board of Directors each year the engagement of a firm of independent
auditors, to review the Company's accounting and internal control systems
and principal accounting policies and to oversee the entire audit function,
both independent and internal.
COMPENSATION COMMITTEE. The Compensation Committee, which currently
consists of Messrs. Duncan, Newman, Ricks, Shultz, Harris, Zand and Hendrix
and Ms. Huffington, met twice during 1997. Its principal functions are to
review and approve the compensation of employees of the Company, including
bonuses, benefit plans and stock options, and administer the employee
benefit plans of the Company. Members of the Compensation Committee are not
eligible to participate in any of the plans or programs they administer.
The Board of Directors nominates persons to stand for election as directors
of the Company.
COMPENSATION OF DIRECTORS
Non-employee directors are paid $20,000 annually. In addition, a fee of
$1,000 is paid to each non-employee director for attendance at each meeting of
the Board and for attendance at any committee meeting, as a committee member,
not held in conjunction with a meeting of the Board. A fee of $500 is also paid
to each non-employee director for participation in each telephonic board meeting
and for participation as a committee member in each committee meeting not held
in conjunction with a board meeting. The Company's non-employee directors were
paid $153,125, in the aggregate, in 1997 as compensation for serving as
directors. Only non-employee directors are compensated for serving as directors.
Non-employee directors are also reimbursed for out-of-pocket expenses incurred
to attend board and committee meetings.
Pursuant to the Company's 1995 Non-Employee Director Restricted Stock Plan,
as amended in 1997 (the "Non-Employee Director Plan"), each non-employee
director who is in office immediately after an annual meeting of stockholders
receives a number of restricted shares of Common Stock determined by dividing
$30,000 by the closing sales price of the Common Stock on the New York Stock
Exchange (the "NYSE") on the date of the annual meeting (rounded down to nearest
whole share). In addition, each non-employee director who is appointed to the
Board for the first time after the 1997 Annual Meeting of Stockholders (and not
in connection with an annual meeting of stockholders) is granted, effective on
the date of appointment of such director to the Board, a number of restricted
shares of Common Stock determined by dividing $30,000 by the closing sales price
of the Common Stock on the NYSE on the date of such appointment (rounded down to
nearest whole share). With respect to all such grants, the restrictions lapse on
the day before the first annual meeting of stockholders following the date of
grant. The restrictions on shares granted pursuant to the Non-Employee Director
Plan before the 1997 Annual Meeting of Stockholders generally lapse over a three
year period, with lapsing occurring as to one-third of such shares on the day
before each annual meeting of stockholders during such period. An aggregate of
50,000 restricted shares may be issued pursuant to the Non-Employee Director
Plan. Each of Messrs. Duncan, Shultz, Zand, Harris and Newman were granted 1,558
restricted shares on May 1, 1997 pursuant to the Non-Employee Director Plan. In
accordance with the terms of such plan, Mr. Ricks made an irrevocable written
election not to receive grants pursuant to the Non-Employee Director Plan. On
May 15, 1997, Ms. Huffington was appointed a director of the Company and,
accordingly, was granted 1,363 restricted shares pursuant to the plan. Mr.
Hendrix was granted 1,269 restricted shares pursuant to the plan when he was
appointed director of the Company on August 1, 1997.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation of the Chief Executive Officer of the Company and each of its four
other most highly compensated executive officers (collectively, the "named
executive officers") for the years ended December 31, 1997, 1996 and 1995. All
information presented in this section is restated to reflect the two-for-one
split of the Company's outstanding Common Stock effected in December 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------------------
----------------------------------- NUMBER OF
BONUS RESTRICTED SECURITIES
NAME AND PRINCIPAL ------------------------ STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY CURRENT(1) DEFERRED(2) AWARDS(3) OPTIONS COMPENSATION(4)
------------------ ---- -------- ---------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joe B. Foster.................... 1997 $225,000 $210,000 $221,631 -- 50,000 $18,000
Chairman of the Board, 1996 224,416 200,000 239,251 75,000 30,000 9,500
President and Chief 1995 217,350 150,000 81,075 -- -- 9,240
Executive Officer
Robert W. Waldrup................ 1997 181,833 150,000 152,801 -- -- 14,547
Vice President - Operations 1996 179,416 140,000 165,810 35,000 15,000 9,500
1995 172,333 100,000 57,759 -- -- 9,240
Terry W. Rathert................. 1997 166,783 135,000 143,165 -- -- 13,343
Vice President - Planning 1996 163,867 120,000 157,860 35,000 15,000 9,500
and Administration 1995 157,333 100,000 55,468 -- -- 9,240
and Secretary
David F. Schaible................ 1997 144,583 150,000 146,469 -- -- 11,567
Vice President - 1996 138,500 140,000 155,967 35,000 15,000 9,500
Acquisitions and Development 1995 121,000 100,000 51,378 -- -- 9,240
William D. Schneider............. 1997 139,583 125,000 116,322 -- -- 11,167
Vice President - 1996 134,375 120,000 120,950 30,000 12,500 9,500
International Exploration 1995 127,291 80,000 39,024 -- -- 9,240
</TABLE>
- ---------------
(1) Reflects current cash incentive compensation awards pursuant to the Newfield
Employee 1993 Incentive Compensation Plan (the "Incentive Compensation
Plan") paid in February 1998, 1997 and 1996, respectively, based upon
performance in 1997, 1996 and 1995, respectively. See "-- Compensation
Committee Report on Executive Compensation -- Executive
Compensation -- Incentive Compensation Plan."
(2) Reflects deferred incentive compensation awards granted in February 1998,
1997 and 1996, pursuant to the Incentive Compensation Plan based upon
performance in 1997, 1996 and 1995, respectively. Deferred awards are paid
in four equal annual installments. A recipient of a deferred award has the
option for 30 days following the date of grant to elect to have a portion of
such award paid in the form of Common Stock. See "-- Compensation Committee
Report on Executive Compensation -- Executive Compensation -- Incentive
Compensation Plan."
(3) The indicated awards of restricted shares of Common Stock were made on
February 13, 1996. Such shares are subject to forfeiture provisions that,
upon the achievement of certain annual performance targets, lapse with
respect to 20% of the shares granted to a particular executive officer on
each of the first five anniversaries of the date of grant. The performance
targets for 1997 and 1996 were met. If the performance targets for a
particular year are not met, the forfeiture provisions may still lapse at a
later date. See "-- Compensation Committee Report on Executive
Compensation -- Executive Compensation -- Restricted Stock Awards."
(4) Reflects amounts contributed or accrued by the Company under the Company's
401(k) Profit Sharing Plan and the Company's Deferred Compensation Plan. See
"-- Compensation Committee Report on Executive Compensation -- Executive
Compensation -- Deferred Compensation Plan."
7
<PAGE> 10
STOCK OPTIONS GRANTED IN 1997
The following table contains certain information concerning stock options
granted to the named executive officers in 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL EXERCISE OR PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED BASE PRICE FOR OPTION TERMS(3)
OPTIONS TO EMPLOYEES PER EXPIRATION ---------------------
GRANTED(1) IN 1997 SHARE(2) DATE 5% 10%
---------- ---------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joe B. Foster................ 50,000 17.5% $26.00 02/13/07 $380,205 $1,375,445
</TABLE>
- ---------------
(1) The options expire 10 years from the date of grant. Twenty percent of the
options will vest on the first and each succeeding anniversary of the date
of grant. The options were granted pursuant to the Omnibus Plan.
(2) The exercise price of the options was established by the Compensation
Committee. The average of the high and low sales price of Common Stock on
the NYSE on the date of grant was $20.63.
(3) Calculated based upon the indicated rates of appreciation, compounded
annually, from the date of grant to the end of each option term. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent upon the future performance of the Common Stock and overall market
conditions. There can be no assurance that the amounts reflected in this
table will be achieved. The calculation does not take into account the
effects, if any, of provisions of the option plans governing termination of
options upon employment termination, transferability or vesting.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table contains certain information concerning stock options
exercised during 1997 and the value of unexercised options at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1997 AT DECEMBER 31, 1997(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joe B. Foster............. -- $ -- 548,500 104,000 $10,589,516 $804,314
Robert W. Waldrup......... -- -- 162,000 43,000 3,116,304 711,157
Terry W. Rathert.......... 32,500 679,256 212,000 43,000 4,066,929 711,157
David F. Schaible......... 1,000 23,250 161,750 32,250 3,108,390 503,547
William D. Schneider...... -- -- 67,500 28,000 1,280,743 441,349
</TABLE>
- ---------------
(1) The value realized upon the exercise of a stock option is equal to the
difference between the closing price of the Common Stock on the NYSE on the
date of exercise and the exercise price of the stock option multiplied by
the number of shares acquired.
(2) The value of each unexercised in-the-money stock option is equal to the
difference between the closing price of the Common Stock on the NYSE on
December 31, 1997 of $23.31 per share and the exercise price of the stock
option.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Charles W.
Duncan, Jr., Howard H. Newman, Thomas G. Ricks, C. E. Shultz, Jeffery A. Harris,
Dale E. Zand, Terry Huffington and Dennis R. Hendrix.
The Company's 401(k) Profit Sharing Plan (the "401(k) Plan") invests in
several mutual funds affiliated with Warburg (the "Warburg Funds"). The amount
invested in the Warburg Funds at any time depends upon the elections made by the
participants in the 401(k) Plan. The Company believes that the
8
<PAGE> 11
401(k) Plan invests on the same basis in terms of rates and fees as are offered
generally to similar employee investment vehicles. As of December 31, 1997, an
aggregate of $1.6 million of the 401(k) Plan's assets were invested in the
Warburg Funds. Messrs. Newman and Harris are affiliated with Warburg.
Ms. Huffington is a principal owner of Huffco International L.L.C.
("Huffco") and David A. Trice, Vice President - Finance and International of the
Company, is a minority owner of Huffco. On May 15, 1997, prior to Ms. Huffington
and Mr. Trice becoming affiliated with the Company, the Company acquired
substantially all of the assets and assumed substantially all of the operating
liabilities of Huffco (the "Huffco Transaction"), including all the issued and
outstanding common stock of Huffco China LDC ("Huffco China"), the owner of an
undivided 35% interest in a 415,000 acre production sharing contract area known
as Block 05/36, Bohai Bay, offshore the People's Republic of China. The Company
paid Huffco a cash payment of $5,850,000 at closing. Huffco has the right to
further payments upon the occurrence of certain events. If the Company acquires
an interest in two blocks offshore Cote de Ivoire on or before May 15, 2002, the
Company will pay Huffco $2,620,000, subject to certain adjustments if the
Company sells such interest to a third party under certain circumstances. Based
on current facts, the Company does not anticipate acquisition of an interest in
the two blocks. In addition, in the event the Company commits to a development
program in the Federal Republic of Nigeria on or before May 15, 2002, the
Company will pay Huffco $1,000,000. Although the Company continues to evaluate
opportunities in Nigeria, the Company has not committed to a development program
or any other project in Nigeria.
Huffco retained preferred shares of Huffco China that provide for an
aggregate dividend equal to 10% of the excess of proceeds received by Huffco
China from the sale of oil, gas and other minerals over all costs incurred with
respect to exploration and production in Block 05/36, Bohai Bay, plus an
allocated portion of the cash purchase price paid by the Company to Huffco at
the closing of the Huffco Transaction. During 1997 the Company completed the
drilling of its initial exploratory well in Bohai Bay at a cost of $4.3 million.
The well did not encounter commercial quantities of oil and gas and the
participants agreed to plug and abandon the well. At December 31, 1997, Huffco
China had approximately $10 million in unrecovered costs and, as a result, no
dividends have been paid to date on the preferred shares.
In connection with the Huffco Transaction, Ms. Huffington and Mr. Trice,
who was the Chief Executive Officer of Huffco prior to the Huffco Transaction,
each entered into a subscription agreement with the Company pursuant to which
Ms. Huffington acquired 268,579 shares for $5,396,782 and Mr. Trice acquired
4,021 shares for $80,814. Pursuant to the subscription agreements, the Company
filed a registration statement with the Commission to register the resale of the
shares acquired by Ms. Huffington and Mr. Trice under the Securities Act of
1933, as amended (the "Securities Act"). Pursuant to the subscription
agreements, the Company is required to maintain the effectiveness of the
registration statement for one year. In addition, the Company agreed to
indemnify Ms. Huffington and Mr. Trice against certain liabilities that they may
incur in connection with the resale of their shares, including liabilities
arising under the Securities Act, and to contribute to payments that they may be
required to make with respect thereto. Ms. Huffington was appointed a director
of the Company effective as of May 15, 1997 and Mr. Trice was appointed a vice
president of the Company in charge of international and financial affairs.
Mr. Hendrix and Mr. Burguieres are directors of Chase Bank of Texas N.A.,
an affiliate of the Chase Manhattan Bank. The Company maintains a $125 million
revolving credit facility with the Chase Manhattan Bank. At December 31, 1997,
the Company had approximately $5 million of borrowings outstanding under the
credit facility.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee oversees the administration of compensation
programs applicable to all employees of the Company, including its executive
officers. Executive compensation is reviewed and approved annually by the
Committee.
The Compensation Committee seeks to encourage growth in the Company's oil
and gas reserves and cash flow and to enhance stockholder value through the
creation and maintenance of compensation opportunities
9
<PAGE> 12
that attract and retain committed, highly qualified personnel. To such purpose,
the Committee believes that the compensation of all employees, including
executive officers, should include the following components:
- A base salary that is competitive with compensation offered by other oil
and gas exploration and production enterprises similar to the Company.
- Annual incentive compensation, based on Company performance and
profitability, to reward achievement of Company objectives, individual
responsibility and productivity, high quality work and impact on Company
results. See "-- Executive Compensation -- Incentive Compensation Plan"
below.
- The opportunity to purchase Common Stock at a discount of at least 15%
through the Newfield Employee Stock Purchase Plan and other equity
incentives as motivators for all employees and to better align the
interests of employees and stockholders.
- Case specific compensation plans to accommodate individual circumstances
or nonrecurring situations as required.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to a public company for
compensation paid to its chief executive officer and four other most highly
compensated executive officers if the compensation of any such officers exceeds
$1 million in a particular year. Qualifying performance-based compensation is
not subject to the deduction limit if certain requirements are met.
As noted above, a significant portion of the Company's compensation is
performance-based. The Company has structured portions of its performance-based
compensation (such as stock option grants) in a manner that excludes such
compensation from the deduction limit. Awards under the Company's Incentive
Compensation Plan after 1996 and grants of restricted shares under the Omnibus
Plan do not, however, qualify for exclusion from the deduction limit. For
Section 162(m) purposes, the market value of restricted shares are included in
the year that forfeiture restrictions lapse. As a result, if the market price of
the Common Stock increases significantly, the amount of compensation for
purposes of Section 162(m) will also increase significantly. For Section 162(m)
purposes, deferred awards under the Incentive Compensation Plan after 1996 are
included in the year paid, and are paid, at the election of the recipient, in
either cash or Common Stock. During the deferral period, the awards to be paid
in cash accrue interest and the value of awards to be paid in Common Stock vary
depending on the Common Stock's market price.
The Compensation Committee has not intended and does not currently intend
to award compensation to any executive officer that would exceed the deduction
limit of Section 162(m), but no assurance can be given that such limit will not
be exceeded if the market price of the Common Stock increases significantly
after the date of an award. The 1998 Omnibus Stock Plan being submitted to
stockholders at the Annual Meeting is structured to permit the Compensation
Committee to award restricted shares that will be excluded from the deduction
limit. The Compensation Committee may, however, determine that it is in the best
interest of the Company to award restricted shares pursuant to such plan that do
not meet the requirements for exclusion from the deduction limit or to otherwise
award compensation that would exceed such limit.
10
<PAGE> 13
COMPANY PERFORMANCE. During 1997, and as it did in 1996, the Company
realized its best year of performance since its founding in 1989, both in terms
of financial and operating results. Results for 1997 on a per share basis are
summarized below:
<TABLE>
<CAPTION>
PERCENT
AT YEAR END: 1997 1996 CHANGE
------------ ------ ------ -------
<S> <C> <C> <C>
Market price.............................................. $23.31 $26.00 -10%
Book value................................................ $ 7.00 $ 6.45 +9%
Present value of estimated proved reserves
less long-term debt(1).................................. $13.81 $11.84 +17%
</TABLE>
<TABLE>
<CAPTION>
PERCENT
FOR THE YEAR: 1997 1996 CHANGE
------------- ------ ------ -------
<S> <C> <C> <C>
Net income................................................ $ 1.07 $ 1.03 + 4%
Operating cash flow(2).................................... $ 4.26 $ 3.37 +26%
</TABLE>
- ---------------
(1) Based upon estimates prepared by the Company. The present value of estimated
proved reserves is pre-tax and was determined for both years by using
constant prices as of December 31, 1997, with estimated future net cash
flows from such reserves discounted at 10% per annum. See "Item 2.
Properties -- Oil and Gas Reserves" in Part I of the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 (the "Form 10-K") for
information regarding the present value of estimated proved reserves at
December 31, 1997 using prices as of such date and for certain cautionary
statements with respect to such estimates. Also see "Item 1.
Business -- Forward Looking Statements" in Part I of the Form 10-K for
certain cautionary statements with respect to such estimates and the
production of hydrocarbons.
(2) Represents operating cash flow before changes in assets and liabilities. See
"Selected Five-Year Financial and Reserve Data" on page 14 of the Company's
annual report to stockholders for the year ended December 31, 1997.
The Company's production for 1997 was 74.0 billion cubic feet of natural
gas equivalent ("Bcfe"), up 31% from 1996. This generated $162 million of
operating cash flow before changes in assets and liabilities, up 29% from 1996.
Net income increased to $41 million, up 5% over 1996. Estimated proved reserve
additions equaled 251% of production.
The Company drilled 18 domestic exploratory wells in 1997, nine of which
were successful. These exploratory successes, together with development
drilling, resulted in estimated proved reserve additions by the drill bit of
approximately 109 Bcfe. In addition, the Company acquired interests in 10
producing fields during 1997, resulting in proved reserve additions of
approximately 81 Bcfe.
The Company initiated international activities with the acquisition of
Huffco China, LDC. The Company drilled one unsuccessful exploration well in the
Bohai Bay, offshore Peoples Republic of China in 1997.
EXECUTIVE COMPENSATION. Before taking the actions described in this report,
the Compensation Committee thoroughly reviewed and discussed the Company's
financial and operating results for 1997. A summary of the indicators deemed
particularly relevant by the Compensation Committee are presented above. The
Compensation Committee also compared the Company's performance to that of its
peers. This performance is reflected under the caption "Stockholder Return
Performance Presentation" below. Specific actions taken by the Compensation
Committee regarding executive compensation are summarized below.
Base Salary. The Compensation Committee evaluated peer group information in
setting base salary levels. Annual salary adjustments for the Company's
executive group are based on general levels of market salary increases,
individual performance and the Company's overall financial and operating
results, without any specific relative weight assigned to any of these factors.
Incentive Compensation Plan. The Incentive Compensation Plan is funded by
amounts equal to the revenues that would be attributable to a 1% overriding
royalty interest on acquired producing properties and a 2% overriding royalty
interest from exploration properties, bearing upon both the interest of the
Company and
11
<PAGE> 14
certain investors that participated in the Company's activities in such
properties and proportionately reduced to the interest of the Company and such
investors. Amounts available for distribution under the Incentive Compensation
Plan attributable to the overriding royalty interests bearing against the
Company are limited to 5% of the Company's Adjusted Net Income (as defined in
the Incentive Compensation Plan). Awards may consist of both a current and
deferred amount. Eligible employees may elect for a portion of deferred amounts
to be paid in Common Stock instead of cash. If an eligible employee elects for a
deferred amount to be paid in Common Stock, the number of shares of Common Stock
to be awarded is determined by using the fair market value of the Common Stock
on the date of the award. Deferred Awards are paid in four annual installments,
each installment consisting of 25% of the deferred award, plus interest on
awards paid in cash.
Awards granted to the named executive officers in February 1998 for the
1997 performance period pursuant to the Incentive Plan are presented under
"Bonus" in the Summary Compensation Table. Such awards were based approximately
50% on level of responsibility and the Company's performance and approximately
50% on individual productivity, quality of work and impact on the Company's
results. The Compensation Committee established awards for each executive after
hearing the recommendations of the Chief Executive Officer.
Deferred Compensation Plan. During 1997, the Company implemented a highly
compensated employee Deferred Compensation Plan (the "Deferred Plan"). This
non-qualified plan allows an eligible employee to defer a portion of the
employee's salary or bonus on an annual basis. The Company matches $1.00 for
each $1.00 of employee deferral, with the Company's contribution not to exceed
8% of an employee's salary, subject to limitations imposed by the Deferred Plan.
The Company's contribution is reduced by the amount of contribution made by the
Company to the 401(k) Plan for each participant.
Restricted Stock Awards. In February 1996 the Compensation Committee
awarded shares of restricted Common Stock to the named executive officers
pursuant to the Omnibus Plan. These awards are reflected under "Long-Term
Compensation Awards" in the Summary Compensation Table. While not required by
the terms of the Omnibus Plan, at the time of grant such awards contained
forfeiture provisions that required the achievement of a performance target each
year (either (i) 10% or greater rate of return on average stockholders' equity
or (ii) the addition of proved reserves during the performance year at least
equal to production for such year). Upon the achievement of a performance target
for a particular year, the forfeiture provisions with respect to 20% of the
restricted shares awarded to a particular executive officer lapsed. In order to
limit the potentially adverse effect on earnings of accounting for variable plan
awards, the Compensation Committee determined in July 1997 to amend such awards
to provide that, to the extent performance for a particular year was not met,
the restricted shares would not be forfeited at that time and the forfeiture
provisions would nevertheless lapse, subject to continued employment, on the
ninth anniversary of the award. In making its determination, the Compensation
Committee noted that the performance targets for 1996 had been achieved and that
the performance targets for 1997 would almost certainly be achieved.
CHIEF EXECUTIVE OFFICER COMPENSATION. As described above, the Company's
executive compensation philosophy, including the compensation of the Chief
Executive Officer, is a competitive base salary and incentive compensation based
upon the Company's performance. Specific actions taken by the Compensation
Committee regarding Mr. Foster's compensation are summarized below.
Base Salary. Mr. Foster's base salary was increased from $224,416 for 1996
to $225,000 for 1997. The increase was based on the factors described above
under "Executive Compensation -- Base Salary." Mr. Foster's monthly base salary
did not increase during 1997. The amount of base salary received by Mr. Foster
during 1997 was $225,000 compared to $224,416, because a lower monthly salary
was received during one month of 1996.
Incentive Compensation Plan. In February 1998, Mr. Foster received a
$210,000 current award and a $221,631 deferred award for the 1997 performance
period pursuant to the Incentive Compensation Plan. These awards were based
approximately 50% on the Company's performance and Mr. Foster's level of
responsibility and approximately 50% on productivity, perceived quality of work
and impact on the Company's results.
12
<PAGE> 15
Omnibus Plan. In February 1997, Mr. Foster was granted options to purchase
50,000 shares of Common Stock pursuant to the Omnibus Plan. This award was
granted to provide Mr. Foster incentive with respect to the Company's future
performance and to award him for his contribution to the Company's performance
in 1996. The Compensation Committee set the exercise price at $26.00 per share
(the closing price of the Common Stock at year end 1996). The closing price of
the Common Stock on the date of grant was $20.63.
Restricted Stock Awards. During 1997, Mr. Foster's 1996 restricted stock
award was amended as described above under "Executive Compensation-Restricted
Stock Awards."
Compensation Committee
Charles W. Duncan, Jr.
Howard H. Newman
Thomas G. Ricks
C. E. Shultz
Jeffrey A. Harris
Dale E. Zand
Terry Huffington
Dennis R. Hendrix
13
<PAGE> 16
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
As required by applicable rules of the Securities and Exchange Commission,
the performance graph shown below was prepared based upon the following
assumptions:
1. $100 was invested in the Company's Common Stock, the S&P 500 and
the Peer Group (as defined below) on November 12, 1993 at the closing price
on such date. The Company's Common Stock began trading on the New York
Stock Exchange on that date and the last reported sale was at $9.06 per
share. The initial public offering price of the Common Stock was $8.75 per
share. (The November 12, 1993 per share initial public offering price and
last reported sale price, indicated in this paragraph reflect the
two-for-one split of the Company's outstanding Common Stock effected
December 1996.)
2. Peer Group investment is weighted based on the stock market
capitalization of each individual company within the Peer Group at the
beginning of the period.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Company's Peer Group are as follows: Apache
Corporation, Cross Timbers Oil Company, Devon Energy Corporation, Enron Oil &
Gas Company, The Louisiana Land & Exploration Company*, Noble Affiliates, Inc.,
Pogo Producing Company, Seagull Energy Corporation and Vintage Petroleum, Inc.
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 11/12/93)
<TABLE>
<CAPTION>
NEWFIELD
MEASUREMENT PERIOD EXPLORATION
(FISCAL YEAR COVERED) CO. PEER GROUP S&P 500
<S> <C> <C> <C>
11/12/93 100 100 100
12/31/93 97 93 101
12/30/94 110 89 102
12/29/95 149 114 140
12/31/96 287 149 172
12/31/97 257 151 229
</TABLE>
- ---------------
* The Louisiana Land & Exploration Company ("LL&E") was acquired by Burlington
Resources in October 1997. LL&E was included in the Company's peer group up
until the acquisition by Burlington. The value of the LL&E investment was
held constant from the date of acquisition through the end of 1997. As
Burlington is not a member of the Company's Peer Group, information relative
to LL&E was not included in this presentation after October 1997 and, in the
future, will not be considered in calculation of the Company's Return
Performance Presentation.
14
<PAGE> 17
ITEM 2
APPROVAL OF THE NEWFIELD EXPLORATION COMPANY
1998 OMNIBUS STOCK PLAN
On February 12, 1998, the Board of Directors adopted, subject to
stockholder approval, the Newfield Exploration Company 1998 Omnibus Stock Plan
(the "1998 Omnibus Plan" or the "Plan"). The purpose of the 1998 Omnibus Plan is
to provide a means through which the Company may attract able persons to enter
the employ of the Company and to provide a means whereby employees can acquire
and maintain stock ownership, thereby strengthening their concern for the
welfare of the Company and their desire to remain in its employ.
At March 31, 1998, an aggregate of 79,840 shares of Common Stock were
available for grant pursuant to all of the Company's stock plans.
The full text of the 1998 Omnibus Plan is set forth in Annex A hereto. The
following brief summary of the Plan is qualified in its entirety by reference to
the full text.
TYPES OF AWARDS. Under the 1998 Omnibus Plan, the Compensation Committee
(the "Committee") may award nonqualified stock options, incentive stock options
and restricted stock awards to employees of the Company and its subsidiaries.
The Company and its subsidiaries currently have approximately 86 full time
employees.
SHARES AVAILABLE. The Plan provides for the issuance of up to 1,000,000
shares of Common Stock pursuant to options and restricted stock awards granted
under the Plan, but not more than 250,000 of such shares may be issued as
restricted stock. Under the terms of the Plan, any one employee may not receive
stock options in any calendar year that would permit such employee to acquire
more than 100,000 shares of Common Stock and with no more than 50,000 shares of
Common Stock in the form of restricted stock awards. If any options granted
under the Plan expire or terminate prior to exercise, the shares subject to the
portion of the option not exercised will be available for subsequent grants. If
any restricted stock awards are forfeited to the Company, the forfeited shares
will be available for subsequent grants. The number of shares and the exercise
price per share of Common Stock that may be issued pursuant to outstanding stock
options or restricted stock awards will be subject to adjustment by the
Committee upon the occurrence of certain events described in the Plan.
ADMINISTRATION. The 1998 Omnibus Plan will be administered by the
Committee, which must approve options and restricted stock awards granted under
the Plan. The Committee has broad powers to administer and interpret the Plan,
including the authority (i) to establish rules for the administration of the
Plan, (ii) to select the participants in the Plan, (iii) to determine the types
of awards to be granted and the number of shares covered by such awards, and
(iv) to set the terms and conditions of such awards. All determinations and
interpretations of the Committee will be binding on all interested parties.
OPTIONS. Options granted under the 1998 Omnibus Plan may be either
"incentive stock options" within the meaning of Section 422 of the Code or
"nonqualified" stock options that do not qualify for special tax treatment under
Section 422 or similar provisions of the Code. No stock option may be granted
with a per share exercise price less than the Fair Market Value (as defined in
the Plan) of a share of the underlying Common Stock on the date the stock option
is granted. The Fair Market Value of a share of Common Stock for a particular
day is generally equal to the average of the high and low sales price of the
Common Stock on the NYSE on such day. The Fair Market Value of the Company's
Common Stock was $25.59 per share on March 31, 1998. The exercise price may be
paid in cash or shares of Common Stock. Further, the optionee may be authorized
to exercise an option and direct an immediate sale of any Common Stock thereby
acquired pursuant to an extension of credit by the Company for the aggregate
purchase price of such stock, upon terms the Committee may determine.
RESTRICTED STOCK AWARDS. The 1998 Omnibus Plan also provides for shares of
the Company's Common Stock to be issued in the form of restricted stock awards.
The participant will have the right to vote the shares of restricted stock and
the right to receive any cash dividends. The Committee will determine the
participants
15
<PAGE> 18
to whom restricted stock awards will be granted, the number of shares of
restricted stock to be granted, the duration of the restricted period, the
conditions under which the restricted stock may be forfeited to the Company and
other terms and conditions of restricted stock awards. Restricted stock may not
be disposed of by a participant until the restrictions specified in the
restricted stock award expire. The Committee may also establish performance
goals applicable to restricted stock awards in such a manner as will permit
lapse of restrictions with respect thereto to qualify as "performance-based
compensation" pursuant to Section 162(m)(4)(C) of the Code. Such performance
goals will, until changed by the Committee with the approval of stockholders if
required by the Code, be based on the attainment of target levels of one or more
of net income, cash flows, reserve additions or revisions, economic value added
from reserves, total capitalization, total stockholder return, assets,
exploration successes, production volumes, finding and development costs, cost
reductions and savings, return on sales, profit margins or earnings per share as
may be specified by the Committee.
CHANGE OF CONTROL PROVISIONS. Upon the occurrence of a Change of Control
(as defined in the Plan) all restrictions on restricted stock awards, if any,
under the 1998 Omnibus Plan will immediately lapse, and the Committee may take
one or more of the following actions in connection with any options granted
under the 1998 Omnibus Plan: (i) accelerate the time at which options then
outstanding may be exercised so that such options may be exercised in full, (ii)
require the mandatory surrender to the Company by selected participants of some
or all of the outstanding options held by such participants and provide for the
purchase, in cash, of such options at a price determined pursuant to the terms
of the Plan, (iii) make such adjustments to options then outstanding as the
Committee deems appropriate to reflect such Change of Control or (iv) provide
that thereafter upon any exercise of an option theretofore granted the
participant shall be entitled to purchase under such option, in lieu of the
number of shares of Common Stock then covered by such option the number and
class of shares of stock or other securities or property (including, without
limitation, cash) to which the participant would have been entitled if,
immediately prior to such Change of Control, the participant had been the holder
of record of the number of shares of Common Stock then covered by such option.
AMENDMENT. The Board of Directors may terminate or amend the Plan at any
time except that the terms of any option or award agreements then outstanding
may not be adversely affected without the consent of the individual (unless such
amendment is required in order to cause the benefits under the Plan to qualify
as performance-based compensation within the meaning of Section 162(m) of the
Code). The Board of Directors may not amend the Plan without the approval of the
Company's stockholders if the amendment would increase the total number of
shares of Common Stock available for issuance under the Plan, extend the term of
the Plan, decrease the authority granted to the Committee in contravention of
Rule 16b-3 of the Exchange Act, materially increase the benefits accruing to
employees under the Plan or change the class of employees eligible to
participate in the Plan.
FEDERAL INCOME TAX MATTERS. "Nonqualified" stock options granted under the
Plan are not intended to and do not qualify for the favorable tax treatment
available to "incentive" stock options under Section 422 of the Code. Generally,
no income is taxable to the optionee (and the Company is not entitled to any
deduction) upon the grant of a nonqualified stock option. When a nonqualified
stock option is exercised, the optionee generally must recognize compensation
taxable as ordinary income equal to the difference between the option price and
the fair market value of the shares on the date of exercise. The Company
normally will receive a deduction equal to the amount of compensation the
optionee is required to recognize as ordinary income if the Company complies
with applicable federal withholding requirements.
"Incentive" stock options granted under the Plan are intended to qualify
for favorable tax treatment under Section 422 of the Code. Under Section 422, an
optionee realizes no taxable income when an incentive stock option is granted.
Further, the optionee generally will not realize any taxable income when the
incentive stock option is exercised if he or she has at all times from the date
of the option's grant until three months before the date of exercise been an
employee of the Company. The Company ordinarily is not entitled to any deduction
upon the grant or exercise of an incentive stock option. Certain other favorable
tax consequences may be available to the optionee if he or she does not dispose
of the shares acquired upon the exercise of an
16
<PAGE> 19
incentive stock option for a period of two years from the granting of the option
and one year from the receipt of the shares.
A participant who receives a grant of restricted stock and who does not
elect to be taxed at the time of grant will not recognize taxable income upon
such grant and the Company will not be entitled to a deduction until the
termination of the restricted period. Upon such termination, the participant
will recognize taxable ordinary income in an amount equal to the fair market
value of the Common Stock at that time, and the Company will be entitled to a
deduction in the same amount. However, a participant may elect to recognize
taxable ordinary income in the year the shares are granted in an amount equal to
their fair market value at that time, determined without regard to the
restrictions. In that event, the Company will be entitled to a deduction in such
year in the same amount, and any gain or loss recognized by the participant upon
loss recognized by the participant upon subsequent disposition of the Common
Stock will be capital gain or loss. Any dividends with respect to the restricted
stock that are paid or made available to a participant (who has not elected to
be taxed on the date of grant) while the shares remain forfeitable are treated
as additional compensation taxable as ordinary income to the participant and
deductible to the Company. If such election has been made with respect to the
shares, the dividends represent ordinary dividend income to the participant that
are not deductible to the Company. If the participant elects to be taxed on the
restricted stock on the date of grant and the participant subsequently forfeits
the shares, the participant is not entitled to a deduction as a consequence of
such forfeiture and the Company must include as ordinary income the amount it
previously deducted in the year of grant with respect to such shares.
VOTE REQUIRED
The proposal to adopt the 1998 Omnibus Plan requires the affirmative vote
of the holders of a majority of the Common Stock present or represented by proxy
and entitled to vote at the Annual Meeting. Under Delaware law, an abstention
would have the same effect as a vote against this proposal, but a broker
non-vote would not be counted for purposes of determining whether a majority had
been achieved.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE 1998 OMNIBUS STOCK PLAN.
ITEM 3.
APPOINTMENT OF AUDITORS
Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed Coopers & Lybrand L.L.P., independent public accountants, to
audit the consolidated financial statements of the Company for the year ending
December 31, 1998. The Company is advised that no member of Coopers & Lybrand
L.L.P. has any direct or material indirect financial interest in the Company or,
during the past three years, has had any connection with the Company in the
capacity of promoter, underwriter, voting trustee, director, officer or
employee.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Delaware
law, an abstention would have the same effect as a vote against this proposal,
but a broker non-vote would not be counted for purposes of determining whether a
majority had been achieved.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THIS APPOINTMENT.
In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. A representative of
Coopers & Lybrand L.L.P. is expected to be present at the Annual Meeting, will
be offered the opportunity to make a statement if such representative desires to
do so and will be available to respond to appropriate questions.
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ITEM 4.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material and for presentation at the Company's 1999 Annual Meeting of
Stockholders must forward such proposal to the Secretary of the Company at the
address indicated on the cover page of this proxy statement, so that the
Secretary receives it no later than December 4, 1998.
By Order of the Board of Directors
/s/ TERRY W. RATHERT
Terry W. Rathert
Secretary
April 3, 1998
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ANNEX A
NEWFIELD EXPLORATION COMPANY
1998 OMNIBUS STOCK PLAN
I. PURPOSE
The purpose of the NEWFIELD EXPLORATION COMPANY 1998 OMNIBUS STOCK PLAN
(the "Plan") is to provide a means through which NEWFIELD EXPLORATION COMPANY, a
Delaware corporation (the "Company"), and its subsidiaries may attract able
persons to enter the employ of the Company and to provide a means whereby
employees can acquire and maintain stock ownership, thereby strengthening their
concern for the welfare of the Company and their desire to remain in its employ.
A further purpose of the Plan is to provide employees with additional incentive
and reward opportunities designed to enhance the profitable growth of the
Company. Accordingly, the Plan provides for granting Incentive Stock Options,
options that do not constitute Incentive Stock Options, Restricted Stock Awards
or any combination of the foregoing, as is best suited to the circumstances of
the particular employee as provided herein.
II. DEFINITIONS
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
(a) "AWARD" means, individually or collectively, any Option or Restricted
Stock Award.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CHANGE OF CONTROL" means the occurrence of any of the following
events: (i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than a previously wholly-owned subsidiary of the Company), (ii) the
Company sells, leases or exchanges all or substantially all of its assets to any
other person or entity (other than a wholly-owned subsidiary of the Company),
(iii) the Company is to be dissolved and liquidated, (iv) any person or entity,
including a "group" as contemplated by Section 13(d)(3) of the Exchange Act,
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the outstanding shares of the Company's voting stock
(based upon voting power), or (v) as a result of or in connection with a
contested election of directors, the persons who were Directors of the Company
before such election shall cease to constitute a majority of the Board.
(d) "CHANGE OF CONTROL VALUE" shall mean (i) the per share price offered to
stockholders of the Company in any such merger, consolidation, reorganization,
sale of assets or dissolution transaction, (ii) the price per share offered to
stockholders of the Company in any tender offer or exchange offer whereby a
Change of Control takes place, or (iii) if such Change of Control occurs other
than pursuant to a tender or exchange offer, the Fair Market Value per share of
the shares into which Awards are exercisable, as determined by the Committee. In
the event that the consideration offered to stockholders of the Company consists
of anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered that is other than cash.
(e) "CODE" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to any section and any regulations under such section.
(f) "COMMITTEE" means the Compensation Committee of the Board which shall
be (i) constituted so as to permit the Plan to comply with Rule 16b-3 and (ii)
constituted solely of "outside directors," within the meaning of section 162(m)
of the Code and applicable interpretive authority thereunder.
(g) "COMPANY" means Newfield Exploration Company.
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(h) "DIRECTOR" means an individual elected to the Board by the stockholders
of the Company or by the Board under applicable corporate law who is serving on
the Board on the date the Plan is adopted by the Board or is elected to the
Board after such date.
(i) An "EMPLOYEE" means any person (including an officer or a Director) in
an employment relationship with the Company or any parent or subsidiary
corporation (as defined in section 424 of the Code).
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(k) "FAIR MARKET VALUE" means, as of any specified date, the mean of the
reported high and low sales prices of the Stock on that date on the principal
stock exchange, if any, on which the Stock is then traded, or if no prices are
reported on that date, on the last preceding date on which such prices of the
Stock are so reported. If the Stock is traded over the counter at the time a
determination of its fair market value is required to be made hereunder, its
fair market value shall be deemed to be equal to the average between the
reported high and low or closing bid and asked prices of Stock on the most
recent date on which Stock was publicly traded. In the event Stock is not
publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.
(l) "HOLDER" means an employee who has been granted an Award.
(m) "INCENTIVE STOCK OPTION" means an incentive stock option within the
meaning of section 422 of the Code.
(n) "OPTION" means an Award granted under Paragraph VII of the Plan and
includes both Incentive Stock Options to purchase Stock and Options to purchase
Stock that do not constitute Incentive Stock Options.
(o) "OPTION AGREEMENT" means a written agreement between the Company and a
Holder with respect to an Option.
(p) "PLAN" means the Newfield Exploration Company 1998 Omnibus Stock Plan,
as amended from time to time.
(q) "RESTRICTED STOCK AGREEMENT" means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.
(r) "RESTRICTED STOCK AWARD" means an Award granted under Paragraph VIII of
the Plan.
(s) "RULE 16B-3" means SEC Rule 16b-3 promulgated under the Exchange Act,
as such may be amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.
(t) "SEC" means the Securities and Exchange Commission.
(u) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(v) "STOCK" means Common Stock, par value $.01, of the Company.
(w) "TREASURY REGULATIONS" means regulations issued by the Department of
the Treasury applicable to the Code.
III. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective upon the date of its adoption by the Board,
provided the Plan is approved by the stockholders of the Company within twelve
months thereafter and on or prior to the date of the first annual meeting of
stockholders of the Company held subsequent to the acquisition of an equity
security by a Holder hereunder for which exemption is claimed under Rule 16b-3.
No further Awards may be granted under the Plan after the expiration of ten
years from the date of its adoption by the Board. The Plan shall remain in
effect until all Awards granted under the Plan have been satisfied or expired.
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IV. ADMINISTRATION
(a) COMMITTEE. The Plan shall be administered by the Committee.
(b) POWERS. Subject to the provisions of the Plan, the Committee shall have
sole authority, in its discretion, to determine which employees shall receive an
Award, the time or times when such Award shall be made, whether an Incentive
Stock Option, nonqualified Option or Restricted Stock Award shall be granted,
and the number of shares of Stock which may be issued under each Option or
Restricted Stock Award. In making such determinations, the Committee may take
into account the nature of the services rendered by the respective employees,
their present and potential contribution to the Company's success and such other
factors as the Committee in its discretion shall deem relevant.
(c) ADDITIONAL POWERS. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and the
respective agreements executed thereunder, to prescribe such rules and
regulations relating to the Plan as it may deem advisable to carry out the Plan,
and to determine the terms, restrictions and provisions of each Award, including
such terms, restrictions and provisions as shall be requisite in the judgment of
the Committee to cause designated Options to qualify as Incentive Stock Options,
and to make all other determinations necessary or advisable for administering
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in any agreement relating to an Award in the manner
and to the extent it shall deem expedient to carry it into effect. The
determinations of the Committee on the matters referred to in this Article IV
shall be conclusive.
V. GRANT OF OPTIONS AND RESTRICTED STOCK AWARDS;
SHARES SUBJECT TO THE PLAN
(a) STOCK GRANT AND AWARD LIMITS. The Committee may from time to time grant
Awards to one or more employees determined by it to be eligible for
participation in the Plan in accordance with the provisions of Paragraph VI.
Subject to Paragraph IX, the aggregate number of shares of Stock that may be
issued under the Plan shall not exceed 1,000,000 shares of Stock. Shares of
Stock shall be deemed to have been issued under the Plan only to the extent
actually issued and delivered pursuant to an Award. To the extent that an Award
lapses or the rights of its Holder terminate, any shares of Stock subject to
such Award shall again be available for the grant of an Award to the extent
permissible pursuant to Rule 16b-3. Separate stock certificates shall be issued
by the Company for those shares acquired pursuant to the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise of
any Option that does not constitute an Incentive Stock Option. Notwithstanding
any provision in the Plan to the contrary, the maximum number of shares of Stock
that may be subject to Awards granted to any one employee during any calendar
year is 100,000 shares of Stock and with no more than 50,000 shares of Stock
that may be subject to Restricted Stock Awards (subject to adjustment in the
same manner as provided in Paragraph IX with respect to shares of Stock subject
to Awards then outstanding). The limitation set forth in the preceding sentence
shall be applied in a manner that will permit compensation generated in
connection with Restricted Stock Awards (to the extent that such Awards are
intended by the Committee to constitute "performance-based" compensation) or the
exercise of Options to constitute "performance-based" compensation for purposes
of section 162(m) of the Code, including, without limitation, counting against
such maximum number of shares, to the extent required under section 162(m) of
the Code and applicable interpretive authority thereunder, any shares subject to
Options that are cancelled or repriced or shares subject to Restricted Stock
Awards that are forfeited. Further, notwithstanding any provision of the Plan to
the contrary, the maximum number of shares of Stock that may be granted as
Restricted Stock Awards under Paragraph VIII during the term of the Plan is
250,000 shares of Stock (subject to adjustment in the same manner as provided in
Paragraph IX with respect to shares of Stock subject to Awards then
outstanding).
(b) STOCK OFFERED. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Stock or Stock previously issued and
outstanding and reacquired by the Company.
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VI. ELIGIBILITY
Awards may be granted only to persons who, at the time of grant, are
employees of the Company or one of its subsidiaries. Awards may not be granted
to any Director who is not an employee of the Company or one of its
subsidiaries. An Award may be granted on more than one occasion to the same
person, and, subject to the limitations set forth in the Plan, such Award may
include an Incentive Stock Option, an Option that is not an Incentive Stock
Option, a Restricted Stock Award or any combination thereof.
VII. STOCK OPTIONS
(a) OPTION PERIOD. The term of each Option shall be as specified by the
Committee at the date of grant.
(b) LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.
(c) SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by an individual during
any calendar year under all incentive stock option plans of the Company and its
parent and subsidiary corporations exceeds $100,000, such Incentive Stock
Options shall be treated as options that do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with applicable provisions
of the Code, Treasury Regulations and other administrative pronouncements, which
of an optionee's Incentive Stock Options will not constitute Incentive Stock
Options because of such limitation and shall notify the optionee of such
determination as soon as practicable after such determination. No Incentive
Stock Option shall be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of its parent or
subsidiary corporation, within the meaning of section 422(b)(6) of the Code,
unless (i) at the time such Option is granted the option price is at least 110%
of the Fair Market Value of the Stock subject to the Option and (ii) such Option
by its terms is not exercisable after the expiration of five years from the date
of grant.
(d) OPTION AGREEMENT. Each Option shall be evidenced by an Option Agreement
in such form and containing such provisions not inconsistent with the provisions
of the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under section 422 of
the Code. Such Option Agreement may also include, without limitation, provisions
relating to (i) subject to the provisions hereof accelerating such vesting on a
Change of Control, vesting of Options, (ii) tax matters (including provisions
(y) permitting the delivery of additional shares of Stock or the withholding of
shares of Stock from those acquired upon exercise to satisfy federal or state
income tax withholding requirements and (z) dealing with any other applicable
employee wage withholding requirements), and (iii) any other matters not
inconsistent with the terms and provisions of the Plan that the Committee shall
in its sole discretion determine. Further, an Option Agreement may authorize and
provide for an Optionee to exercise the Option and direct immediate market sale
of any Stock thereby acquired pursuant to an extension of credit by the Company
to such Optionee for the aggregate exercise price and upon such other terms and
conditions as the Committee may determine. Moreover, an Option Agreement may
provide for the payment of the purchase price of shares of Stock to be purchased
upon the exercise of an Option or portion thereof, in whole or in part, by
delivery of a number of shares of Stock (plus cash if necessary) having a Fair
Market Value equal to such purchase price. The terms and conditions of the
respective Option Agreements need not be identical.
(e) OPTION PRICE AND PAYMENT. The price at which a share of Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but
such purchase price (i) shall not be less than the Fair Market Value of a share
of Stock on the date such Option is granted, and (ii) shall be subject to
adjustment as provided in Paragraph IX. An Option or portion thereof may be
exercised by delivery of an irrevocable notice of exercise to the Company. The
purchase price of shares of Stock to be purchased upon the exercise of an Option
or portion thereof shall be paid in full in the manner prescribed by the
Committee.
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(f) STOCKHOLDER RIGHTS AND PRIVILEGES. The Holder shall be entitled to all
the privileges and rights of a stockholder only with respect to such shares of
Stock as have been purchased under an Option and for which stock certificates
have been registered in the Holder's name.
VIII. RESTRICTED STOCK AWARDS
(a) RESTRICTION PERIOD TO BE ESTABLISHED BY THE COMMITTEE. At the time a
Restricted Stock Award is made, the Committee shall establish a period of time
(the "Restriction Period") applicable to such Award. Each Restricted Stock Award
may have a different Restriction Period, in the discretion of the Committee. The
Restriction Period applicable to a particular Restricted Stock Award shall not
be changed except as permitted by Paragraph VIII(b) or Paragraph IX.
(b) OTHER TERMS AND CONDITIONS. Stock awarded pursuant to a Restricted
Stock Award shall be represented by a stock certificate registered in the name
of the Holder of such Restricted Stock Award. The Holder shall have the right to
receive dividends during the Restriction Period, to vote Stock subject thereto
and to enjoy all other stockholder rights, except that (i) the Holder shall not
be entitled to delivery of the stock certificate until the Restriction Period
shall have expired, (ii) the Company shall retain custody of the Stock during
the Restriction Period, (iii) the Holder may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of the Stock during the Restriction
Period, and (iv) a breach of the terms or a failure to satisfy the conditions
established by the Committee pursuant to the Restricted Stock Agreement shall
cause a forfeiture of the Restricted Stock Award. At the time of such Award, the
Committee may, in its sole discretion, prescribe additional terms, conditions or
restrictions relating to Restricted Stock Awards, including, but not limited to,
rules pertaining to the termination of employment (by retirement, disability,
death or otherwise) of a Holder prior to expiration of the Restriction Period.
Such additional terms, conditions or restrictions shall be set forth in a
Restricted Stock Agreement made in conjunction with the Award. Such Restricted
Stock Agreement may also include, without limitation, provisions relating to (i)
subject to the provisions hereof accelerating vesting on a Change of Control,
vesting of Awards, (ii) tax matters (including provisions (y) covering any
applicable employee wage withholding requirements and (z) prohibiting an
election by the Holder under section 83(b) of the Code), and (iii) any other
matters not inconsistent with the terms and provisions of the Plan that the
Committee shall in its sole discretion determine. Without limiting the
generality of the foregoing, it is intended that the Committee may establish
performance goals applicable to Restricted Stock Awards granted to employees
who, in the judgment of the Committee, may be Covered Employees (as such term is
defined in Section 162(m)(3) of the Code) in such a manner as shall permit lapse
of restrictions with respect thereto to qualify as "performance-based
compensation" as described in Section 162(m)(4)(C) of the Code. It is
specifically provided that the material terms of such performance goals for
employees who, in the judgment of the Committee, may be Covered Employees,
shall, until changed by the Committee with the approval of the stockholders, if
such stockholder approval is required by the Code, be as follows: the business
criteria on which the performance goals shall be based shall be the attainment
of target levels of one or more of net income, cash flows, reserve additions or
revisions, economic value added from reserves, total capitalization, total
stockholder return, assets, exploration successes, production volumes, finding
and development cost, costs reductions and savings, return on sales, profit
margin or earnings per share as may be specified by the Committee.
(c) PAYMENT FOR RESTRICTED STOCK. The Committee shall determine the amount
and form of any payment for Stock received pursuant to a Restricted Stock Award,
provided that in the absence of such a determination, a Holder shall not be
required to make any payment for Stock received pursuant to a Restricted Stock
Award, except to the extent otherwise required by law.
(d) AGREEMENTS. At the time any Award is made under this Paragraph VIII,
the Company and the Holder shall enter into a Restricted Stock Agreement setting
forth each of the matters contemplated hereby and such other matters as the
Committee may determine to be appropriate. The terms and provisions of the
respective Restricted Stock Agreements need not be identical.
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IX. RECAPITALIZATION OR REORGANIZATION
(a) The shares with respect to which Awards may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised, (i) in the event
of an increase in the number of outstanding shares, shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares, shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
(b) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option theretofore granted the
Holder shall be entitled to (or entitled to purchase, if applicable) under such
Option, in lieu of the number of shares of Stock then covered by such Option,
the number and class of shares of stock and securities to which the Holder would
have been entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, the Holder had been the holder of record of the
number of shares of Stock then covered by such Option.
(c) In the event of a Change of Control, any unsatisfied Restriction
Periods with respect to outstanding Restricted Stock Awards shall immediately
lapse and the Stock previously subject to such restrictions shall be fully
vested. Further, in the event of a Change of Control, the Committee, in its
discretion, may act to effect one or more of the following alternatives with
respect to outstanding Options, which may vary among individual Holders and
which may vary among Options held by any individual Holder: (1) accelerate the
time at which Options then outstanding may be exercised so that such Options may
be exercised in full for a limited period of time on or before a specified date
(before or after such Change of Control) fixed by the Committee, after which
specified date all unexercised Options and all rights of Holders thereunder
shall terminate, (2) require the mandatory surrender to the Company by selected
Holders of some or all of the outstanding Options held by such Holders
(irrespective of whether such Options are then exercisable under the provisions
of the Plan) as of a date, before or after such Change of Control, specified by
the Committee, in which event the Committee shall thereupon cancel such Options
and the Company shall pay to each Holder an amount of cash per share of Stock
equal to the excess, if any, of the Change of Control Value of the shares of
Stock subject to such Option over the exercise price(s) under such Options for
such shares of Stock, (3) make such adjustments to Options then outstanding as
the Committee deems appropriate to reflect such Change of Control (provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Options then outstanding) or (4) provide that
thereafter upon any exercise of an Option theretofore granted the Holder shall
be entitled to purchase under such Option, in lieu of the number of shares of
Stock then covered by such Option, the number and class of shares of stock or
other securities or property (including, without limitation, cash) to which the
Holder would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior to
such merger, consolidation or sale of assets and dissolution the Holder had been
the holder of record of the number of shares of Stock then covered by such
Option. The provisions contained in this Subparagraph (c) shall not terminate
any rights of the Holder to further payments pursuant to any other agreement
with the Company following a Change of Control.
(d) In the event of changes in the outstanding Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Paragraph IX,
any outstanding Awards and any agreements evidencing such Awards shall be
subject to adjustment by the Committee at its discretion as to the number and
price of shares of Stock or other consideration subject to such Awards. In the
event of any such change in the outstanding Stock, the aggregate number of
shares available under the Plan may be appropriately adjusted by the Committee,
whose determination shall be conclusive.
(e) The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation
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of the Company, any issue of debt or equity securities, the dissolution or
liquidation of the Company or any sale, lease, exchange or other disposition of
all or any part of its assets or business or any other corporate act or
proceeding.
(f) Any adjustment provided for in Subparagraphs (a), (b), (c) or (d) above
shall be subject to any required stockholder action.
(g) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Awards theretofore granted or the purchase price per
share, if applicable.
X. AMENDMENT AND TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares of Stock for which Awards have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; provided that no change in any Award theretofore granted may be
made that would impair the rights of the Holder without the consent of the
Holder (unless such change is required in order to cause the benefits under the
Plan to qualify as performance-based compensation within the meaning of section
162(m) of the Code and applicable interpretive authority thereunder), and
provided, further, that the Board may not, without approval of the stockholders,
amend the Plan:
(a) to increase the maximum number of shares of Stock that may be
issued pursuant to the Plan, except as provided in Paragraph IX;
(b) to change the class of employees eligible to receive Awards or
materially increase the benefits accruing to employees under the Plan;
(c) to extend the term of the Plan;
(d) to modify materially the requirements as to eligibility for
participation in the Plan; or
(e) to decrease any authority granted to the Committee under the Plan
in contravention of Rule 16b-3.
XI. MISCELLANEOUS
(a) NO RIGHT TO AN AWARD. Neither the adoption of the Plan by the Company
nor any action of the Board or the Committee shall be deemed to give an employee
any right to be granted an Award hereunder except as may be evidenced by an
Option Agreement or Restricted Stock Agreement duly executed on behalf of the
Company, and then only to the extent and on the terms and conditions expressly
set forth therein. The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
funds or assets to assure the payment of any Award.
(b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan shall (i)
confer upon any employee any right with respect to continuation of employment
with the Company or any subsidiary or (ii) interfere in any way with the right
of the Company or any subsidiary to terminate his or her employment at any time.
(c) OTHER LAWS; WITHHOLDING. The Company shall not be obligated to issue
any Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
and such other state and federal laws, rules or regulations as the Company or
the Committee deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the issuance and sale of such shares. No
fractional shares of Stock shall be delivered, nor shall any cash in lieu of
fractional shares be paid.
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The Company shall have the right to deduct in connection with all Awards any
taxes required by law to be withheld and to require any payments required to
enable it to satisfy its withholding obligations.
(d) NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan shall
be construed to prevent the Company or any subsidiary from taking any corporate
action that is deemed by the Company or such subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
the Plan or any Award made under the Plan. No employee, beneficiary or other
person shall have any claim against the Company or any subsidiary as a result of
any such action.
(e) RESTRICTIONS ON TRANSFER. An Award shall not be transferable otherwise
than by will or the laws of descent and distribution and shall be exercisable
during the Holder's lifetime only by such Holder or the Holder's guardian or
legal representative.
(f) RULE 16B-3. It is intended that the Plan and any grant of an Award made
to a person subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3. If any provision of the Plan or any such Award would
disqualify the Plan or such Award under, or would otherwise not comply with,
Rule 16b-3, such provision or Award shall be construed or deemed amended to
conform to Rule 16b-3.
(g) SECTION 162(M). It is intended that the Plan comply fully with and meet
all the requirements of Section 162(m) of the Code so that Options granted
hereunder with an exercise price not less than Fair Market Value of a share of
Stock on the date of grant shall constitute "performance-based" compensation
within the meaning of such section and the lapse of restrictions with respect to
Restricted Stock Awards that are intended to qualify as "performance-based"
compensation within the meaning of such section shall constitute
"performance-based" compensation. If any provision of the Plan would disqualify
the Plan or would not otherwise permit the Plan to comply with Section 162(m) as
so intended, such provision shall be construed or deemed amended to conform to
the requirements or provisions of Section 162(m); provided that no such
construction or amendment shall have an adverse effect on the economic value to
a Holder of any Award previously granted hereunder.
(h) GOVERNING LAW. This Plan shall be construed in accordance with the laws
of the State of Delaware and applicable federal law.
A-8
<PAGE> 29
NEWFIELD EXPLORATION COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 7, 1998
This Proxy is Solicited on Behalf of the Newfield Exploration
Company Board of Directors
The undersigned hereby appoints Joe B. Foster, Terry W. Rahert and C.
William Austin, and each of them, proxies for the undersigned with full
P power of substitution, to vote all shares of Newfield Exploration Company
Common Stock which the undersigned may be entitled to vote at the Annual
R Meeting of Stockholders of Newfield Exploration Company to be held in
Houston, Texas, on Thursday May 7, 1998 at 11:00 A.M., or at any
O adjournment thereof, upon the matters set forth on the reverse side and
described in the accompanying Proxy Statement and upon such other business
X as may properly come before the meeting or any adjoumment thereof.
Y Please mark this proxy as Indicated on the reverse side to vote on any
Item. If you wish to vote in accordance with the Board of Directors'
recommendations, please sign the reverse side, no boxes need to be checked.
---------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 30
<TABLE>
<CAPTION>
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<S> <C>
Please mark
your vote as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3 FOR AGAINST ABSTAIN
Item 1-ELECTION OF DIRECTORS WITHHELD Item 3-TO RATIFY SELECTION [ ] [ ] [ ]
Joe B. Foster, Robert W. Waldrup, Charles W. Duncan, Jr. FOR FOR ALL OF AUDITORS
Howard H. Newman, Thomas G. Ricks, C.E. (Chuck) Shultz,
Terry Huffington, Dennis R. Hendrix, Phillip J.
Burgulares and John C. Sawhill
[ ] [ ]
WITHHELD FOR: (Write that nominee's name in the space provided I PLAN TO ATTEND MEETING [ ]
below)
COMMENTS/ADDRESS CHANGE
Please mark this box if [ ]
______________________________________________________________ you have written
comments/address change
on the reverse side
FOR AGAINST ABSTAIN
Item 2-APPROVAL OF THE NEWFIELD EXPLORATION COMPANY [ ] [ ] [ ]
1998 OMNIBUS STOCK PLAN
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|
|
|
SIGNATURE(S) ____________________________________________________________________________________ DATE __________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, trainee or guardian, please give full title as such
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
