<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 EXPLORATION COMPANY LOGO]
NEWFIELD EXPLORATION COMPANY
Houston, Texas
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 4, 2000
To the Stockholders:
The 2000 Annual Meeting of Stockholders (the "Annual Meeting") of Newfield
Exploration Company (the "Company") will be held at 11:00 a.m., Central Daylight
Time, on Thursday, May 4, 2000, in the Ballroom of the Hotel Sofitel, 425 N. Sam
Houston Parkway E., Houston, Texas, for the following purposes:
(1) To elect 11 directors to serve until the 2001 Annual Meeting of
Stockholders;
(2) To approve the Newfield Exploration Company 2000 Omnibus Stock Plan;
(3) To approve the Newfield Exploration Company 2000 Non-Employee
Director Restricted Stock Plan;
(4) To approve an amendment to the Newfield Exploration Company 1993
Employee Stock Purchase Plan;
(5) To approve the Newfield Exploration Company 2001 Employee Stock
Purchase Plan;
(6) To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for the fiscal year ending
December 31, 2000; and
(7) To transact such other business as may properly come before such
meeting or any adjournment(s) thereof.
The close of business on March 10, 2000, 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
March 20, 2000
<PAGE> 3
[NEWFIELD EXPLORATION COMPANY 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 at 11:00 a.m., Central
Daylight Time, on Thursday, May 4, 2000, in the Ballroom of the Hotel Sofitel,
425 N. Sam Houston Parkway E., 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 Company has engaged
Georgeson Shareholder Communication Inc. to distribute proxy solicitation
material to bankers, banks and other nominees and to assist in the solicitation
of proxies for a fee of $7,000, plus out-of-pocket expenses. The costs of the
solicitation will be borne by the Company. This proxy statement and the form of
proxy were first mailed to stockholders of the Company on or about March 23,
2000.
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 10, 2000, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were 41,765,124 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,
1999, 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
Eleven directors are to be elected at the Annual Meeting. The nominees for
election as directors are Joe B. Foster, David A. Trice, 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 2001 Annual Meeting of
Stockholders and until his or her successor has been elected and qualified. Each
of the nominees for director currently serves as a director of the Company. All
of the directors 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" 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.
<PAGE> 4
The following table sets forth information regarding the names, ages as of
February 29, 2000, 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 of the Company; interim 1988 65
President, Chief Executive Officer and Chairman
of the Board, Baker Hughes Incorporated and
Director, New Jersey Resources Corporation
David A. Trice....................... President and Chief Executive Officer of the 2000 51
Company
Robert W. Waldrup.................... Vice President - Operations of the Company 1992 55
Charles W. Duncan, Jr. .............. Chairman, Duncan Interests 1990 73
Howard H. Newman..................... Managing Director of E.M. Warburg, Pincus & 1990 52
Co., LLC; Director, ADVO, Inc., RenaissanceRe
Holdings Ltd., Cox Insurance Holdings Plc.,
Spinnaker Exploration, Inc., Eagle Family Foods
Holdings, Inc. and EEX Corporation
Thomas G. Ricks...................... President and Chief Executive Officer, The 1992 46
University of Texas Investment Management
Company; Director, DTM Corporation
C. E. (Chuck) Shultz................. Chairman and Chief Executive Officer, Dauntless 1994 60
Energy Inc. and Chairman, Canadian Oil Sands
Trust; Director, Jannock Limited and Syncrude
Canada Ltd.
Terry Huffington..................... Chairman and President of Huffco Group, Inc. 1997 45
Dennis R. Hendrix.................... Retired Chairman, PanEnergy Corp; Director, 1997 60
Duke Energy Corporation, Allied Waste
Industries, Inc. and National Power PLC
Philip J. Burguieres................. Chief Executive Officer, EMC Holdings, LLC; 1998 56
Vice Chairman, The McNair Group; Director,
Chase Bank of Texas N.A., Denali Incorporated
and McDermott International, Inc.; and Director
and Chairman Emeritus Weatherford
International, Inc.
John C. Sawhill...................... President and Chief Executive Officer of The 1998 63
Nature Conservancy; Director, The Procter and
Gamble Company, PG&E Corporation, NACCO
Industries and the Vanguard Group of Mutual
Funds
</TABLE>
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 directors has been engaged in the principal occupation set
forth opposite his name for the past five years except as follows:
Mr. Foster founded the Company in 1989 and, until May 1999, served as
President, Chief Executive Officer and Chairman of the Board. In May 1999, Mr.
Foster resigned from the position of President. On January 31, 2000, Mr. Foster
retired from the position of Chief Executive Officer. He was named to his
2
<PAGE> 5
present position at Baker Hughes Incorporated on that same day. Mr. Foster
remains an employee (but not an officer) of the Company.
Mr. Trice served as President, Chief Executive Officer and a Director of
the Huffco Group from 1991 to July 1997. From July 1997 to May 1999, Mr. Trice
served the Company as Vice President - Finance and International. In May 1999 he
was appointed President and Chief Operating Officer. Mr. Trice was named Chief
Executive Officer on February 1, 2000.
Mr. 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.
Mr. Hendrix served PanEnergy Corp from 1990 to 1997, first as Chief
Executive Officer and later as Chairman of the Board.
Mr. Burguieres served Weatherford International Incorporated as President
and Chief Executive Officer from 1991 to 1996. From 1996 to 1998 Mr. Burguieres
served Weatherford Enterra, Inc. as Chairman of the Board. Mr. Burguieres was
named to his present position in March 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, unless otherwise
indicated, as of March 10, 2000, regarding beneficial ownership of Common Stock
of the Company by (i) each person known by the Company to own beneficially 5% or
more of its outstanding Common Stock, (ii) the Company's Chief Executive Officer
at December 31, 1999 and each of the Company's other four most highly
compensated executive officers for the year ended December 31, 1999, (iii) each
director and (iv) all executive officers and directors as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(2)
------------------------
NAME OF BENEFICIAL OWNER(1) SHARES PERCENT
--------------------------- ---------- --------
<S> <C> <C>
FMR Corp.(3)................................................ 4,774,700 11.4%
Massachusetts Financial Services Company(4)................. 4,444,300 10.6
Franklin Resources, Inc.(5)................................. 2,519,000 6.0
David A. Trice.............................................. 121,101 *
Robert W. Waldrup........................................... 206,543 *
Terry W. Rathert............................................ 244,051 *
David F. Schaible........................................... 215,414 *
Joe B. Foster(6)............................................ 1,160,016 2.7
Charles W. Duncan, Jr. ..................................... 604,892 1.4
Howard H. Newman............................................ 33,382 *
Thomas G. Ricks(7).......................................... 1,302,400 3.1
C. E. Shultz................................................ 8,782 *
Terry Huffington............................................ 271,166 *
Dennis R. Hendrix........................................... 12,474 *
Philip J. Burguieres........................................ 2,224 *
John C. Sawhill............................................. 65,224 *
Executive officers and directors as a group (consisting of
18 persons)(8)............................................ 4,469,259 10.4
</TABLE>
- ---------------
* Less than 1%
(1) The address of FMR Corp. is 82 Devonshire Street, Boston, MA 02109-3614. The
address of Massachusetts Financial Services Company ("MFS") is 500 Boylston
Street, Boston, MA 02116-3719. The address of Franklin Resources, Inc.
("FRI") is 777 Mariners Island Boulevard, San Mateo, CA 94404.
(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
3
<PAGE> 6
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, Trice, Waldrup,
Rathert and Schaible include 583,300; 40,000; 60,000; 185,000 and 145,000
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 1,129,900 shares that may be
acquired by such persons within 60 days through the exercise of stock
options.
(3) Based solely on the Schedule 13G/A filed with the Commission on February 11,
2000 by FMR Corp., Fidelity Management & Research Company ("Fidelity"), a
wholly owned subsidiary of FMR
Corp., is the beneficial owner of 4,394,700 shares as a result of acting as
investment advisor to various investment companies (the "Funds"). Edward C.
Johnson 3d, Chairman of FMR Corp. and members of the Johnson family, through
their ownership of FMR Corp. voting common stock and the execution of a
shareholders' voting agreement, 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
4,394,700 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 Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is the beneficial owner of 380,000 shares as a result of
its serving as an investment manager of institutional accounts. Each of
Edward C. Johnson 3d and FMR Corp., through its control of Fidelity
Management Trust Company, has sole dispositive power over, and sole power to
vote or to direct voting of, such shares.
(4) Based solely on the Schedule 13G filed with the Commission on February 10,
2000 by MFS. The shares are also beneficially owned by certain other
non-reporting entities.
(5) Based solely on the Schedule 13G/A filed jointly with the Commission on
January 28, 2000 by FRI, Franklin Advisers, Inc., a wholly owned subsidiary
of FRI ("FAI"), and Charles B. Johnson and Rupert H. Johnson, Jr. (the
"Principal Shareholders"). The shares are beneficially owned by one or more
open or closed-end investment companies or other managed accounts that are
advised by FAI. The advisory contracts grant to FAI all investment and
voting power over the shares. The Principal Shareholders each own in excess
of 10% of the outstanding common stock of FRI. Thus, FRI and the Principal
Shareholders may be deemed to be beneficial owners of the shares. FRI, the
Principal Shareholders and FAI disclaim any economic interest in, or
beneficial ownership of, the shares. FRI, the Principal Shareholders and FAI
are of the view that they are not acting as a "group" for purposes of
Section 13(d) of the Exchange Act and that they are not required to
attribute to each other the beneficial ownership of securities held by any
of them or by any persons advised by FAI.
(6) Includes 64,800 shares held by Mr. Foster as trustee for the benefit of a
charitable trust and 95,000 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.
(7) 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.
(8) See Notes 2, 6 and 7 above.
4
<PAGE> 7
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during 1999. During 1999, each of
the directors attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
each committee of the Board of Directors on which such director served.
The Board of Directors has the following standing committees:
AUDIT COMMITTEE. The Audit Committee, which currently consists of
Messrs. Ricks, Shultz, Burguieres and Sawhill and Ms. Huffington, met twice
during 1999. 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, Hendrix and Sawhill and Ms.
Huffington, met four times during 1999. 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
DIRECTOR FEES. Non-employee directors are paid a $20,000 annual fee. In
addition, a fee of $1,000 is paid to each non-employee director for attendance
at each meeting of the Board of Directors and for attendance as a committee
member at any committee meeting not held in conjunction with a meeting of the
Board of Directors. 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 $210,650 in the
aggregate in 1999 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.
RESTRICTED STOCK. Pursuant to the Newfield Exploration Company 1995
Non-Employee Director Restricted Stock Plan (the "Existing 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 of Directors (and not in connection with an annual
meeting of stockholders) is granted, effective on the date of appointment, 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. An aggregate of 50,000 restricted
shares were initially available for issuance pursuant to the Existing
Non-Employee Director Plan. As of March 15, 2000, 8,135 restricted shares
remained available. Each of Messrs. Duncan, Newman, Shultz, Hendrix, Burguieres,
Sawhill and Ms. Huffington were granted 1,173 restricted shares on May 5, 1999
pursuant to the Existing Non-Employee Director Plan. In accordance with the
terms of such plan, Mr. Ricks made an irrevocable written election not to
receive grants under the plan.
On February 10, 2000, the Board of Directors adopted, subject to
stockholder approval, the Newfield Exploration Company 2000 Non-Employee
Director Restricted Stock Plan (the "New Non-Employee Director Plan"). The terms
of the New Non-Employee Director Plan are substantially identical to the
existing plan. See "Item 3 -- Approval of Newfield Exploration Company 2000
Non-Employee Director Restricted Stock Plan" for a summary of the new plan. If
the New Non-Employee Director Plan is approved by stockholders at the Annual
Meeting, the Existing Non-Employee Director Plan will be terminated, no further
5
<PAGE> 8
grants will be made under such plan and each non-employee director who is in
office immediately after the Annual Meeting will receive a restricted share
grant pursuant to the New Non-Employee Director Plan.
EMPLOYMENT AGREEMENT. Contemporaneously with Joe B. Foster's retirement as
Chief Executive Officer of the Company on January 31, 2000, Mr. Foster and the
Company entered into an employment agreement providing for Mr. Foster to be a
non-officer employee of the Company. The employment agreement initially
terminates on February 15, 2002, but automatically extends for one additional
year on each of the first, second and third anniversaries of the initial
termination date unless either party gives at least 30 days prior notice of its
election not to so extend. Pursuant to the agreement, Mr. Foster is entitled to
an annual base salary of $225,000 and is eligible to participate in all benefit
plans of the Company available to similarly situated employees. Upon termination
of the employment agreement for any reason other than for cause, Mr. Foster will
be entitled to severance through January 30, 2005 at a rate of $200,000 per
year.
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, 1999, 1998 and 1997.
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(4) DEFERRED(5) AWARDS(6) OPTIONS COMPENSATION(7)
------------------ ---- ------ ---------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joe B. Foster(1)..................... 1999 $240,000 $220,000 $ 60,000 $ -- -- $19,200
Chief Executive Officer and 1998 238,750 95,000 -- 238,750 42,000 19,100
Chairman of the Board 1997 225,000 210,000 221,631 -- 50,000 18,000
David A. Trice(2).................... 1999 222,500 180,000 25,000 251,250 25,000 17,800
President and 1998 204,167 75,000 24,000 -- 50,000 16,333
Chief Operating Officer 1997 125,000 80,000 22,025 752,500 100,000 6,436
Robert W. Waldrup.................... 1999 190,000 150,000 40,000 -- -- 15,200
Vice President - Operations 1998 187,872 75,000 -- 155,188 70,000 15,147
1997 181,833 150,000 152,801 -- -- --
Terry W. Rathert(3).................. 1999 172,000 150,000 40,000 -- -- 13,760
Vice President - Planning and 1998 171,583 75,000 -- 155,188 70,000 13,727
Administration and Secretary 1997 166,783 135,000 143,165 -- -- 13,343
David F. Schaible.................... 1999 160,833 150,000 42,500 -- -- 12,867
Vice President - Acquisitions 1998 154,167 80,000 -- 155,188 70,000 12,333
and Development 1997 139,585 150,000 146,469 -- -- 11,567
</TABLE>
- ---------------
(1) Mr. Foster also served as President until May 1999. On January 31, 2000, Mr.
Foster resigned from the position of Chief Executive Officer. He remains
Chairman of the Board and an employee of the Company, but not an officer.
(2) Mr. Trice was Vice President - Finance and International of the Company
until his election as President and Chief Operating Officer in May 1999. He
was appointed Chief Executive Officer on February 1, 2000. Mr. Trice joined
the Company in July 1997.
(3) Mr. Rathert was appointed Vice President and Chief Financial Officer on
February 10, 2000. He continues as the Secretary of the Company.
(4) Reflects current cash incentive compensation awards pursuant to the Newfield
Employee 1993 Incentive Compensation Plan (the "Incentive Compensation
Plan") paid in February 2000, 1999 and 1998 based upon performance in 1999,
1998 and 1997, respectively. See "-- Compensation Committee Report on
Executive Compensation -- Executive Compensation -- Incentive Compensation
Plan."
6
<PAGE> 9
(5) Reflects deferred incentive compensation awards granted in February 2000,
1999 and 1998, pursuant to the Incentive Compensation Plan based upon
performance in 1999, 1998 and 1997, 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."
(6) The restricted stock awards were made pursuant to the Newfield Exploration
Company 1995 Omnibus Stock Plan (the "1995 Omnibus Plan"). The dollar value
of the awards was determined by multiplying the closing price of the Common
Stock on the NYSE on the date of grant by the number of restricted shares
granted to such executive officer. At December 31, 1999, Mr. Foster held
38,000 restricted shares with a value of $1,016,500 (based on the closing
price of the Common Stock on the NYSE on December 31, 1999), Mr. Trice held
31,000 restricted shares with a value of $829,250 and Messrs. Waldrup,
Rathert and Schaible each held 19,200 restricted shares with a value of
$513,600. To the extent declared and paid, dividends will be paid on
restricted shares. Restricted stock awards vest on the ninth anniversary of
the date of grant. The awards may, however, vest earlier, at a rate of 20%
per year, if certain annual performance targets are achieved. The
performance targets for 1999, 1998 and 1997 were met. See "-- Compensation
Committee Report on Executive Compensation -- Executive
Compensation -- Restricted Stock Awards."
(7) Reflects amounts contributed or accrued by the Company under the Company's
401(k) Profit Sharing Plan (the "401(k) Plan") and the Newfield Exploration
Company Deferred Compensation Plan (the "Deferred Compensation Plan"). See
"-- Compensation Committee Report on Executive Compensation -- Executive
Compensation -- Deferred Compensation Plan."
STOCK OPTIONS GRANTED IN 1999
The following table contains information concerning stock options granted
to the named executive officers in 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL EXERCISE OR PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED BASE PRICE FOR OPTION TERMS(3)
OPTIONS TO EMPLOYEES PER EXPIRATION ------------------------
GRANTED(1) IN 1999 SHARE(2) DATE 5% 10%
---------- --------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David A. Trice......... 25,000 8.12% $25.38 5/16/09 $399,034 $1,011,230
</TABLE>
- ---------------
(1) The options expire 10 years from the date of grant. Twenty percent of such
options will vest on the first and each succeeding anniversary of the date
of grant. The options were granted pursuant to the Newfield Exploration
Company 1998 Omnibus Stock Plan (the "1998 Omnibus Plan").
(2) The exercise price of the options is equal to the average of the high and
low sales price of the Common Stock on the NYSE on the date of grant.
(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.
7
<PAGE> 10
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table contains certain information with respect to the named
executive officers concerning stock options exercised during 1999 and the value
of unexercised options at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1999 DECEMBER 31, 1999(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joe B. Foster.............. 60,000 $1,256,975 558,900 75,600 $11,986,909 $279,036
David A. Trice............. -- -- 40,000 135,000 202,400 878,350
Robert W. Waldrup.......... 100,000 2,255,825 53,000 72,000 1,037,530 666,320
Terry W. Rathert........... 40,000 891,841 178,000 72,000 3,881,280 666,320
David F. Schaible.......... 54,000 1,236,551 138,000 72,000 2,985,655 666,320
</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, 1999 of $26.75 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 Messrs.
Duncan, Newman, Ricks, Hendrix and Sawhill and Ms. Huffington.
Assets held in the 401(k) Plan are invested in several mutual funds
affiliated with E.M. Warburg, Pincus & Co., LLC. The amount invested in the
funds at any time depends upon the elections made by the participants in the
401(k) Plan. The Company believes that such investments are on the same basis in
terms of rates and fees as are offered generally to similar employee investment
vehicles. As of December 31, 1999, an aggregate of $3.1 million of the 401(k)
Plan's assets were invested in the funds. Mr. Newman is a managing director of
E.M. Warburg, Pincus & Co., LLC.
Ms. Huffington is a principal owner of Huffco International L.L.C.
("Huffco") and David A. Trice, a director and President and Chief Executive
Officer of the Company, is a minority owner of Huffco. In May 1997, prior to Ms.
Huffington and Mr. Trice becoming affiliated with the Company, the Company
acquired substantially all of the assets of Huffco. The acquired assets included
all of the outstanding common stock of Huffco China, LDC, now known as Newfield
China, LDC ("Newfield China"), the owner of an undivided 35% interest in a
production sharing contract area in Bohai Bay, offshore China. Huffco retained
preferred shares of Newfield China that provide for an aggregate dividend equal
to 10% of the excess of proceeds received by Newfield China from the sale of
oil, gas and other minerals over all costs incurred with respect to exploration
and production in the covered area, plus an allocated portion of the cash
purchase price paid by the Company to Huffco at the closing of the Huffco
Transaction. At December 31, 1999, Newfield China had approximately $13 million
in unrecovered costs, no reserves and no revenue and, as a result, no dividends
have been paid to date on the preferred shares. Huffco also has the right to
further payments upon the occurrence of certain events. If the Company acquires
an interest in two particular 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 Nigeria on or before May 15, 2002, the Company will pay
Huffco $1,000,000. The Company has not committed to a development program nor
any other project in Nigeria.
8
<PAGE> 11
Mr. Hendrix is a director of Duke Energy Corporation. The Company sells gas
to, and purchases transportation services from, Duke, or its subsidiaries and
affiliates, in the ordinary course of business. The Company believes that the
payments that it receives for sales of such gas and the charges and fees that it
pays for such transportation services are competitive with those of other
companies.
Mr. Hendrix and Philip J. Burguieres are directors of Chase Bank of Texas
N.A., an affiliate of the Chase Manhattan Bank. The Company maintains a $225
million revolving credit facility with the Chase Bank of Texas N.A., as Agent.
Mr. Burguieres is a director of both Weatherford International, Inc. and
McDermott International, Inc. The Company purchases oil field goods, equipment
and services from Weatherford and McDermott, or their respective subsidiaries
and affiliates, in the ordinary course of business. The Company believes that
the charges and fees that it pays for such goods, equipment and services are
competitive with the charges and fees of other companies providing such items.
Joe B. Foster is interim President, Chief Executive Officer and Chairman of
the Board of Baker Hughes Incorporated. The Company purchases oil field goods,
equipment and services from Baker Hughes, or its subsidiaries and affiliates, in
the ordinary course of business. The Company believes that the charges and fees
that it pays for such goods, equipment and services are competitive with the
charges and fees of other companies providing such items.
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 that attract and retain
committed, highly qualified personnel. To achieve those goals, 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 similar
oil and gas exploration and production enterprises.
- 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 a 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 and grants of restricted shares under the 1995 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
the shares vest. As a result, if the market price of the Common Stock increases
9
<PAGE> 12
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 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 Plan and the Newfield Exploration
Company 2000 Omnibus Stock Plan (the "2000 Omnibus Plan") (see "Item
2 -- Approval of the Newfield Exploration Company 2000 Omnibus Stock Plan") are
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.
COMPANY PERFORMANCE. The Company's net production for 1999 was 113.5
billion cubic feet of natural gas equivalent ("Bcfe"), an increase of 28% over
1998 production. During 1999, the Company replaced 172% of 1999 production and
added 195 Bcfe of new reserves. The Company's proved reserves at year-end 1999
were 595 Bcfe, up 16% over 1998. Operating cash flow before changes in assets
and liabilities for 1999 was $205 million, a significant increase over 1998.
This increase reflects both increased production and higher commodity prices.
Net income in 1999 was $33.2 million. This compares to a net loss of $57.7
million in 1998. The loss in 1998 reflects a $68 million after-tax ceiling test
writedown required under full cost accounting methods. Net income, without the
effect of the writedown, would have been $10.4 million in 1998.
The Company balances its drilling program with the acquisition of proved
properties. The Company drilled 20 wells in 1999, 13 of which were successful.
During 1999, about $80 million was invested in proved property acquisitions,
primarily in the Gulf of Mexico and offshore Australia.
During 1999, the Company continued to expand its leasehold positions in the
Gulf of Mexico. The Company added 35 new leases in the Gulf of Mexico during
1999, increasing the number of blocks held by the Company to 168. Twenty-three
of these blocks came through an acquisition from Phillips Petroleum.
The Company ended 1999 with no bank debt and $125 million of long-term
debt. The Company successfully issued $144 million of quarterly income
convertible trust preferred securities in mid-1999 despite a very limited market
for securities of oil and gas companies. The proceeds were used to retire bank
debt associated with acquisitions earlier in the year.
EXECUTIVE COMPENSATION. Before taking the actions described in this report,
the Compensation Committee considered the Company's financial and operating
results. A summary of the indicators deemed particularly relevant by the
Compensation Committee are presented above. 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.
Stock Option Awards. In May 1999, Mr. Trice was granted options to purchase
25,000 shares of Common Stock in recognition of his promotion to President and
Chief Operating Officer in May 1999 and to provide incentive with respect to the
Company's future performance. Twenty percent of this award will vest on the
first and each succeeding anniversary of the date of grant.
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
10
<PAGE> 13
2% overriding royalty interest from exploration properties, bearing upon both
the interest of the Company and 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 2000 for the
1999 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. The Deferred Compensation Plan allows eligible
highly compensated employees to defer a portion of their salary or bonus on an
annual basis. The Company matches 100% of an employee's deferral up to 8% of
such employee's salary, subject to limitations imposed by the plan. The
Company's contribution is reduced by contributions made by the Company to the
401(k) Plan on behalf of such employee.
Restricted Stock Awards. The Compensation Committee awarded 10,000
restricted shares to Mr. Trice in May 1999 pursuant to the 1995 Omnibus Plan.
The restricted shares vest on the ninth anniversary of the date of grant.
However, the shares will vest earlier, at a rate of 20% per year, upon the
achievement of certain annual performance targets (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). The award was granted in recognition of Mr. Trice's promotion to
President and Chief Operating Officer of the Company, to provide further
incentive with respect to the Company's future performance and to further align
the interests of Mr. Trice with those of the Company's stockholders.
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. In accordance with previously announced plans,
Mr. Foster retired from the position of Chief Executive Officer on January 31,
2000. Contemporaneously with such retirement, Mr. Foster and the Company entered
into an employment agreement providing for Mr. Foster to be a non-officer
employee of the Company. See "-- Compensation of Directors -Employment
Agreement" for a summary of such employment agreement. Specific actions taken by
the Compensation Committee regarding Mr. Foster's compensation for the 1999
performance year are summarized below.
Base Salary. Mr. Foster's base salary remained unchanged from 1998 to 1999.
Incentive Compensation Plan. In February 2000, Mr. Foster received a
$220,000 current award and a $60,000 deferred award for the 1999 performance
period pursuant to the Incentive Compensation Plan which compares to a $95,000
current award and no deferred award for the 1998 performance period. 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.
COMPENSATION COMMITTEE
Charles W. Duncan, Jr.
Howard H. Newman
Thomas G. Ricks
Terry Huffington
Dennis R. Hendrix
John C. Sawhill
11
<PAGE> 14
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
As required by applicable rules of the 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 December 31, 1994 at the closing price
on such date.
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, Noble Affiliates, Inc., Pogo Producing Company and Vintage
Petroleum, Inc. The Louisiana Land and Exploration Company ("LL&E") and Seagull
Energy Corporation ("Seagull") were included in the Company's Peer Group and the
Stockholder Return Performance Presentation shown below until October 1997 and
March 1999, respectively. As neither Burlington Resources, which acquired LL&E
in October 1997, nor Ocean Energy Inc., which merged with Seagull in March 1999,
are members of the Company's Peer Group, LL&E and Seagull are not included in
the Peer Group after such transactions. For purposes of the Stockholder Return
Performance Presentation, the LL&E investment and the Seagull investment were
allocated pro rata based on investment value among the remainder of the Peer
Group companies at the times of their respective acquisitions.
CUMULATIVE RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 12/30/94)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Newfield Exploration $100.00 $135.46 $260.92 $233.78 $209.34 $268.25
Peer Group $100.00 $128.09 $167.42 $170.06 $122.40 $151.35
S&P 500 $100.00 $137.12 $168.23 $223.91 $287.36 $347.82
</TABLE>
12
<PAGE> 15
ITEM 2
APPROVAL OF THE NEWFIELD EXPLORATION COMPANY
2000 OMNIBUS STOCK PLAN
On February 10, 2000, the Board of Directors adopted, subject to
stockholder approval, the 2000 Omnibus Plan. As of March 15, 2000, an aggregate
of 70,509 shares of Common Stock were available for grant pursuant to all of the
Company's employee stock plans (other than pursuant to the 2000 Omnibus Plan,
the Newfield Exploration Company 1993 Employee Stock Purchase Plan (the
"Existing Stock Purchase Plan"), the Newfield Exploration Company 2001 Employee
Stock Purchase Plan (the "New Stock Purchase Plan") and the Incentive
Compensation Plan). As of such date, the Company and its subsidiaries had 227
full time employees, including 93 Australian offshore workers.
SUMMARY OF THE PLAN
The full text of the 2000 Omnibus Plan was filed with the Commission as
Exhibit 10.20 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 (the "Company's 1999 Form 10-K"). The following summary is
qualified in its entirety by reference to the full text of the plan.
PURPOSE. The purpose of the 2000 Omnibus Plan is to provide a means through
which the Company and its subsidiaries may attract able persons to enter the
employ of the Company or its subsidiaries and to provide a means whereby those
individuals upon whom the successful administration and management of the
Company and its subsidiaries rest, and whose present and potential contributions
to the welfare of the Company and its subsidiaries are of importance, may
acquire and maintain stock ownership, thereby strengthening their concern for
the Company and its subsidiaries. A further purpose of the plan is to provide
such individuals with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company and its subsidiaries.
ELIGIBILITY; TYPES OF AWARDS. Under the 2000 Omnibus Plan, the Compensation
Committee may award nonqualified stock options, incentive stock options and
restricted stock to employees of the Company and its subsidiaries.
OPTIONS. Options granted under the 2000 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 of a share of
Common Stock on the date the stock option is granted. For this purpose, the fair
market value of a share for a particular day is equal to the average of the high
and low sales price of the Common Stock on the NYSE on that day. 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 Compensation Committee
may determine.
RESTRICTED STOCK. The 2000 Omnibus Plan also provides for shares of the
Company's Common Stock to be issued in the form of restricted stock awards.
Participants will have the right to vote restricted shares and the right to
receive any cash dividends. The Compensation Committee will determine the
participants to whom restricted shares will be awarded, the number of shares to
be awarded, the duration of the restricted period, the conditions under which
the shares 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 award expire. The
Compensation Committee may also establish performance targets 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) of the Code. Restrictions may lapse upon the attainment of one or
more performance targets based on, among others, the market price of the Common
Stock, earning per share, net income, cash flow, reserve additions or revisions,
economic value added from reserves, total capitalization, total stockholder
return, assets, exploration successes, production volumes, finding and
development costs or cost reductions and savings. The Compensation Committee
may, in its
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<PAGE> 16
discretion, terminate any restrictions applicable to a restricted stock award
unless such award was designed to qualify as performance based compensation.
OUTSTANDING PLAN BENEFITS. As of March 15, 2000, stock options had been
granted pursuant to the 2000 Omnibus Plan, subject to stockholder approval of
the plan, as set forth in the table below. If the 2000 Omnibus Plan is not
approved by stockholders, such grants will be forfeited.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES EXERCISE
UNDERLYING OPTIONS PRICE PER EXPIRATION
GRANTED(1) SHARE(2) DATE
------------------ --------- ----------
<S> <C> <C> <C>
David A. Trice........................................... 30,000 $29.81 2/10/10
Robert W. Waldrup........................................ 20,000 29.81 2/10/10
Terry W. Rathert......................................... 20,000 29.81 2/10/10
David F. Schaible........................................ 20,000 29.81 2/10/10
Executive officers as a group............................ 135,250 29.81 2/10/10
Non-executive officer employees as a group............... 131,125 29.81 2/10/10
</TABLE>
- ---------------
(1) The options expire 10 years from the date of grant. Twenty percent of the
options vest on the first and each succeeding anniversary of the date of
grant.
(2) The exercise price of the options is equal to the average of the high and
low sales price of the Common Stock on the NYSE on the date of grant.
SHARES AVAILABLE. The 2000 Omnibus Plan provides for the issuance of up to
2,000,000 shares of Common Stock pursuant to options and restricted stock awards
granted under the plan, but not more than 200,000 of such shares may be issued
as restricted stock. Under the terms of the plan, the maximum number of shares
of Common Stock that may be subject to awards granted to any one employee during
any calendar year is 100,000, of which no more than 50,000 may be in the form of
restricted stock awards. If an option granted under the 2000 Omnibus Plan
expires or terminates prior to exercise, the shares subject to the portion of
the option not exercised will be available for subsequent awards. In addition,
to the extent that a restricted stock award is forfeited, the shares so
forfeited will be available for subsequent awards. The number of shares
available under the plan and the number of shares subject to, and the exercise
price of, outstanding stock options will be subject to adjustment upon a change
in the Common Stock as a result of a stock dividend or split, recapitalization,
reorganization, reclassification or other similar change.
ADMINISTRATION. The 2000 Omnibus Plan is administered by the Compensation
Committee, which must approve option and restricted stock awards granted under
the Plan. The Compensation Committee has broad powers to administer and
interpret the 2000 Omnibus 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.
CHANGE OF CONTROL PROVISIONS. Upon the occurrence of a change of control,
all restrictions on restricted shares granted under the 2000 Omnibus Plan will
immediately lapse and the Compensation Committee may take one or more of the
following actions in connection with any options granted under the plan: (i)
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, after which
such options will terminate, (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 Compensation Committee deems appropriate to
reflect such change of control or (iv) provide that the number and class of
shares covered by an option be adjusted so that such option will thereafter
cover the number and class of shares of stock or other securities or property
(including 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. A
"change of control" generally means: (i) the Company is not the surviving entity
in any merger, consolidation or other reorganization (or survives only as a
subsidiary of an entity),
14
<PAGE> 17
(ii) the Company sells, leases or exchanges all or substantially all of its
assets to any other person or entity, (iii) the Company is dissolved or
liquidated, (iv) any person, entity or group acquires or gains control of more
than 50% of the Company's outstanding voting stock or (v) as the result of a
contested election, the persons who were directors of the Company before such
election cease to constitute a majority of the Board of Directors.
AMENDMENT. The Board of Directors may terminate or amend the 2000 Omnibus
Plan at any time except that the terms of any award then outstanding may not be
adversely affected without the consent of the holder of such award. The Board of
Directors may not amend the 2000 Omnibus Plan without the approval of
stockholders if the amendment would increase the total number of shares of
Common Stock available for issuance under the plan or change the class of
persons eligible to participate in the plan.
TERM. Unless sooner terminated, no awards may be granted pursuant to the
plan after February 10, 2010.
FEDERAL INCOME TAX CONSEQUENCES. "Nonqualified" stock options granted under
the 2000 Omnibus 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.
Subject to certain limitations on compensation in excess of $1 million set forth
in Section 162(m) of the Code, the Company 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 2000 Omnibus 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 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 restricted stock award 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 restrictions with respect to such shares. 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 subject to certain
limitations on compensation in excess of $1 million set forth in Section 162(m)
of the Code, the Company will be entitled to a deduction in the same amount. A
participant may, however, 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 subsequent disposition of the Common
Stock will be capital gain or loss. Any dividends with respect to shares that
are paid or made available to a participant (who has not elected to be taxed on
the date of grant) while such shares remain forfeitable are treated as
additional compensation taxable as ordinary income to the participant and
deductible by the Company. If such election has been made with respect to the
shares, dividends represent ordinary dividend income to the participant and are
not deductible by the Company. If the participant elects to be taxed on the
restricted shares on the date of grant and the participant subsequently forfeits
such 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.
Certain provisions in the 2000 Omnibus Plan provide for the acceleration of
the time at which options then outstanding may be exercised and the lapse of
restrictions on restricted shares. Such acceleration or lapse
15
<PAGE> 18
may constitute "parachute payments" which, when aggregated with certain other
payments received by an individual, could result in the individual receiving
"excess parachute payments" (a portion of which would be allocated to those
payments derived from an award of stock). The Company would not be allowed a
deduction for any excess parachute payments and the recipient of the payments
would be subject to a nondeductible 20% excise tax on such payments in addition
to income tax otherwise owed with respect to such payment.
VOTE REQUIRED
The proposal to adopt the 2000 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 NEWFIELD EXPLORATION COMPANY 2000 OMNIBUS STOCK PLAN.
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<PAGE> 19
ITEM 3
APPROVAL OF NEWFIELD EXPLORATION COMPANY
2000 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN
On February 10, 2000, the Board of Directors adopted, subject to
stockholder approval, the New Non-Employee Director Plan. As of March 15, 2000,
8,135 restricted shares remained available for grant pursuant to the Existing
Non-Employee Director Plan. The terms of the New Non-Employee Director Plan are
substantially identical to those of the existing plan. If the New Non-Employee
Director Plan is approved by stockholders at the Annual Meeting, the existing
plan will be terminated and no further grants will be made under such plan.
SUMMARY OF THE PLAN
The full text of the New Non-Employee Director Plan was filed with the
Commission as Exhibit 10.18 to the Company's 1999 Form 10-K. The following
summary is qualified in its entirety by reference to the full text of the plan.
PURPOSE. The purpose of the plan is to enhance the ability of the Company
to attract and retain qualified persons who are not employees of the Company for
service as members of the Board of Directors and to encourage ownership in the
Company by such non-employee directors by granting shares of Common Stock
subject to the restrictions described below.
ELIGIBILITY. Only non-employee directors of the Company are eligible to
receive grants under the New Non-Employee Director Plan. A non-employee director
is a director who is not an employee of the Company and was not an employee of
the Company during the preceding calendar year.
AWARDS. Under the New Non-Employee Director Plan, in each year that the
plan is in effect, each non-employee director who is in office immediately after
an annual meeting of stockholders of the Company will be granted a number of
restricted shares determined by dividing $30,000 by the closing sales price of
the Common Stock on the NYSE on the date of such meeting, rounded down to the
nearest whole number. In addition, each non-employee director who is appointed
by the Board of Directors for the first time after the Annual Meeting (and not
in connection with an annual meeting of stockholders) will be granted, effective
as of the date of such appointment, a number of restricted shares determined by
dividing $30,000 by the closing sales price of the Common Stock on the NYSE on
the date of grant, rounded down to the nearest whole number. Restrictions on
shares granted pursuant to the plan generally lapse on the day immediately
preceding the date of the next annual meeting of stockholders following the date
of grant.
PLAN BENEFITS. Eight of the 11 director nominees standing for election at
the Annual Meeting qualify as non-employee directors. Assuming the New
Non-Employee Director Plan is approved by stockholders at the Annual Meeting and
each non-employee director nominee is elected, the following table sets forth
the name of each non-employee director that would be eligible to receive a grant
on the date of the Annual Meeting and the value (based on the closing price of
the Common Stock on the NYSE on the date of the Annual Meeting) of the
restricted shares to be granted to such non-employee director and the
non-employee directors as a group.
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<PAGE> 20
NEW PLAN BENEFITS
2000 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN
<TABLE>
<CAPTION>
NAME OF NON-EMPLOYEE DIRECTOR(1) DOLLAR VALUE
-------------------------------- ------------
<S> <C>
Charles W. Duncan, Jr. ..................................... $ 30,000
Howard H. Newman............................................ 30,000
Thomas G. Ricks............................................. 30,000
C.E. Shultz................................................. 30,000
Terry Huffington............................................ 30,000
Dennis R. Hendrix........................................... 30,000
Philip J. Burguieres........................................ 30,000
John C. Sawhill............................................. 30,000
Non-employee directors as a group........................... 240,000
</TABLE>
- ---------------
(1) Certain of the non-employee directors may elect not to receive grants of
restricted shares because of restrictions imposed by their employers or
otherwise.
SHARES AVAILABLE. A total of 50,000 shares of Common Stock are available
for grants under the New Non-Employee Director Plan. Any restricted shares that
are forfeited to the Company will be available for future grants. Grants of
restricted shares under the plan will be in addition to, and will not replace,
any cash or other compensation arrangement available to non-employee directors.
Any individual who has been nominated to be elected or appointed as a director
may make an irrevocable written election not to be granted restricted shares.
The New Non-Employee Director Plan provides for adjustment in the number of
restricted shares that may be granted upon a change in the Common Stock as a
result of a stock dividend or split, recapitalization, reorganization,
reclassification or other similar change.
RESTRICTIONS. A certificate for restricted shares granted pursuant to the
New Non-Employee Director Plan will be issued in the name of each non-employee
director, but the certificate will be held by the Company for the director's
account. The director will not be entitled to delivery of the certificate and
the shares will be subject to transfer restrictions until the day before the
next annual meeting of stockholders unless a non-employee director's
directorship terminates due to death or disability, in which case all transfer
restrictions on all restricted shares held by such director will lapse. A
director will forfeit all rights in restricted shares unless such director
remains a non-employee director until the day before the next annual meeting of
stockholders. Subject to the foregoing, the director will, commencing on the
date of grant, have the rights and privileges of a stockholder as to restricted
shares, including the right to receive dividends and to vote such restricted
shares.
Notwithstanding the foregoing, the transfer restrictions on all restricted
shares will lapse as of the effective date of any of the following events: (i)
the Company is not the surviving entity in any merger or consolidation, (ii) the
Company sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity or (iii) the
Company is to be dissolved or liquidated.
ADMINISTRATION. The New Non-Employee Director Plan will be administered in
accordance with its terms by a committee of the Board of Directors consisting of
two or more directors, each of whom must meet the requirements for
"disinterested persons" within the meaning of Rule 16b-3 under the Exchange Act.
AMENDMENT. The New Non-Employee Director Plan may be terminated by the
Board of Directors at any time. The Board of Directors also has the right to
amend the plan, but no amendment may be made without the approval of the
stockholders that would (i) materially increase the benefits accruing to
participants under the plan, (ii) increase the aggregate number of shares of
Common Stock that may be granted under the plan, (iii) change the category of
directors eligible to receive grants under the plan or (iv) extend the maximum
period during which grants may be made under the plan. In addition, the plan may
not be amended more than once every six months, other than to comply with
changes in the Code, the Employee Retirement Income Security Act of 1974 or the
rules thereunder.
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<PAGE> 21
TERM. Unless sooner terminated, no restricted shares may be issued pursuant
to the plan after February 10, 2010.
FEDERAL INCOME TAX CONSEQUENCES. A non-employee director who receives a
grant of restricted shares and 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 restrictions with respect to
such shares. Upon such termination, the director 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. A
director may, however, 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 non-employee director upon subsequent disposition of the
Common Stock will be capital gain or loss. Any dividends with respect to shares
that are paid or made available to a non-employee director (who has not elected
to be taxed on the date of grant) while such shares remain forfeitable are
treated as additional compensation taxable as ordinary income to the director
and are deductible by the Company. If such election has been made with respect
to the shares, dividends represent ordinary dividend income to the director and
are not deductible by the Company. If the director elects to be taxed on the
restricted shares on the date of grant and the director subsequently forfeits
such shares, the director 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 approve the New Non-Employee Director 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 NEWFIELD EXPLORATION COMPANY 2000 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK
PLAN.
ITEM 4
APPROVAL OF AMENDMENT TO THE NEWFIELD EXPLORATION COMPANY
1993 EMPLOYEE STOCK PURCHASE PLAN
In July 1999, the Company acquired all of the outstanding capital stock of
Gulf Australia Resources Limited, which, together with its subsidiaries, has
over 100 employees located in Australia. At that time, the terms of the Existing
Stock Purchase Plan provided that all employees of the Company and those of any
present or future subsidiary of the Company (subject to certain hours per week
requirements) were eligible to participate in the plan. The Existing Stock
Purchase Plan is designed to provide employees with the opportunity to purchase
Common Stock at a discount that does not result in taxable income at the time of
purchase for United States federal income tax purposes. Such favorable tax
treatment is not available under Australian tax law without undesirable
modifications to the plan. In addition, no clear exemption for the Existing
Stock Purchase Plan is available under Australian securities law.
SUMMARY OF THE AMENDMENT
On December 31, 1999, the Board of Directors amended the Existing Stock
Purchase Plan, subject to stockholder approval, to provide that employees of a
subsidiary of the Company will not be eligible to participate in the plan unless
such subsidiary is designated by the committee administering the plan as a
participating company. By not designating any of its Australian subsidiaries as
a participating company, the Company will be able to avoid the above mentioned
unfavorable tax and securities law treatments.
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<PAGE> 22
The amendment was effective as of January 1, 2000, provided that it is
approved by stockholders at the Annual Meeting. If the amendment is not so
approved, then the Existing Stock Purchase Plan will immediately terminate and
the options granted under the plan on January 1, 2000 will be rescinded. At
January 1, 2000, 109 employees were eligible to participate in the Existing
Stock Purchase Plan and 82 employees participated. As of March 15, 2000, there
were 49,982 shares of Common Stock (exclusive of shares subject to options
granted on January 1, 2000) available for issuance pursuant to the Existing
Stock Purchase Plan. The terms of the Existing Stock Purchase Plan, as so
amended, are substantially similar to the terms of the New Stock Purchase Plan.
The principal difference between the two plans is that the existing plan fixes
the number of shares that may be purchased pursuant to an option on the first
day of the option period based on the amount of payroll deduction elected and
the closing price of the Common Stock on that date while under the new plan the
number of shares that may be purchased is not fixed at the beginning of the
option period and is based on actual payroll deductions and the applicable
option price (which is the lower of the closing price of the Common Stock on the
first day or the last day of an option period). See "Item 5 -- Approval of the
Newfield Exploration Company 2001 Employee Stock Purchase Plan" for a summary of
the New Stock Purchase Plan.
TEXT OF THE AMENDMENT
The amendment deleted Section 3 of the Existing Stock Purchase Plan and in
its place substituted the following:
"3. PARTICIPATING COMPANIES AND ELIGIBILITY.
(a) PARTICIPATING COMPANIES. The Committee may designate any
present or future parent or subsidiary corporation of the Company
(within the meaning of Section 424(e) and (f) of the Code) that is
eligible by law to participate in the Plan as a "PARTICIPATING COMPANY"
by written instrument delivered to the designated Participating Company.
Such written instrument shall specify the effective date of such
designation and shall become, as to such designated Participating
Company and persons in its employment, a part of the Plan. The terms of
the Plan may be modified as applied to the Participating Company only to
the extent permitted under Section 423 of the Code. Transfer of
employment among the Company and Participating Companies (and among any
other parent or subsidiary corporation of the Company) shall not be
considered a termination of employment hereunder. Any Participating
Company may, by appropriate action of its Board of Directors, terminate
its participation in the Plan. Moreover, the Committee may, in its
discretion, terminate a Participating Company's Plan participation at
any time.
(b) ELIGIBILITY. Subject to the provisions hereof, all employees of
the Company and the Participating Companies, except for employees whose
customary employment is less than 20 hours per week or for not more than
five months in any calendar year, shall be eligible to participate in
the Plan; provided, however, that no option shall be granted to an
employee if such employee, immediately after the option is granted, owns
stock possessing five percent or more of the total combined voting power
or value of all classes of stock of the Company or of its parent or
subsidiary corporations (within the meaning of Sections 423(b)(3) and
424(d) of the Code)."
Prior to the amendment, Section 3 read as follows:
"3. Eligibility. All employees of the Company and those of any present
or future subsidiary corporations of the Company (within the meaning of
Section 424(f) of the Code), except for employees whose customary
employment is less than 20 hours per week or for not more than five months
in any calendar year, shall be eligible to participate in the Plan;
provided, however, no option shall be granted to an employee if such
employee, immediately after the option is granted, owns stock possessing
five percent or more of the total combined voting power or value of all
classes of stock of the Company or of its parent or subsidiary corporations
(within the meaning of Sections 423(b)(3) and 424(d) of the Code)."
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<PAGE> 23
VOTE REQUIRED
The proposal to approve the amendment to the Existing Stock Purchase 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
the 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 AMENDMENT TO THE NEWFIELD EXPLORATION COMPANY 1993 EMPLOYEE STOCK PURCHASE
PLAN.
ITEM 5
APPROVAL OF THE NEWFIELD EXPLORATION COMPANY
2001 EMPLOYEE STOCK PURCHASE PLAN
On February 10, 2000, the Board of Directors adopted, subject to
stockholder approval, the New Stock Purchase Plan. If approved by stockholders,
the New Stock Purchase Plan will be effective as of January 1, 2001, options
under the new plan will be granted on that date and thereafter on the first day
of each successive July and January while the plan is in effect and no options
will be granted pursuant to the Existing Stock Purchase Plan after July 1, 2000.
At January 1, 2000, 82 employees participated in the existing plan and, as of
March 15, 2000, there were 49,982 shares of Common Stock (exclusive of shares
subject to options granted on January 1, 2000) available for issuance pursuant
to the Existing Stock Purchase Plan. As of March 15, 2000, the Company had 112
employees that would be eligible to participate in the New Stock Purchase Plan.
SUMMARY OF THE PLAN
The full text of the New Stock Purchase Plan was filed with the Commission
as Exhibit 10.19 to the Company's 1999 Form 10-K. The following summary is
qualified in its entirety by reference to the full text of the Plan.
PURPOSE. The purpose of the plan is to provide an incentive for employees
of the Company and certain of its subsidiaries to acquire a proprietary interest
in the Company through the purchase of Common Stock.
ELIGIBILITY. Each employee of the Company or any present or future parent
or subsidiary corporation of the Company that has been designated by the
Compensation Committee as a "participating company" as of a date of grant of
options pursuant to the New Stock Purchase Plan is eligible to participate in
the plan as of such date. However, an eligible employee may not participate if
such employee would own (directly or indirectly) 5% or more of the total
combined voting power of all classes of stock of the Company or any of its
subsidiaries, taking into account options to purchase stock.
SHARES AVAILABLE. The number of shares of Common Stock that may be
purchased by participating employees under the New Stock Purchase Plan may not
exceed 200,000 shares, which may be originally issued or reacquired shares,
including shares bought on the market or otherwise for purposes of the plan.
Should any option granted under the plan expire or terminate prior to its
exercise in full, the shares subject to such option may again be subject to an
option granted under the plan. The number of shares that may be purchased
pursuant to the plan is subject to adjustment in the event of a change in the
Common Stock as a result of a stock dividend or split, recapitalization,
reorganization, reclassification or other similar change. Upon any such event,
the maximum number of shares that may be subject to any option, and the number
and purchase price of shares subject to options outstanding under the New Stock
Purchase Plan, will be adjusted accordingly.
PARTICIPATION. An eligible employee may elect to participate in the New
Stock Purchase Plan on January 1, 2001 and on the first day of each successive
July and January thereafter that occurs prior to December 31, 2010, unless the
plan is earlier terminated, by designating a percentage of such employee's
eligible compensation to be deducted for each pay period and paid into the New
Stock Purchase Plan for such employee's account. The designated percentage may
not be less than 2% nor more than 10%. An eligible employee may participate in
the New Stock Purchase Plan only by means of payroll deduction. No employee will
be granted an option under the Purchase Plan that permits such employee's rights
to purchase Common
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<PAGE> 24
Stock to accrue at a rate that exceeds $25,000 of fair market value of such
stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding. Unless an employee's payroll deductions are
withdrawn (as described below), the aggregate payroll deductions credited to the
employee's account will be used to purchase shares of Common Stock at the end of
the six-month period beginning on a date of grant (an "option period");
provided, however, that the maximum number of shares of Common Stock that may be
purchased by a participant under any option may not exceed 3,000 (subject to
adjustment in the event of a change in the Common Stock). The per share purchase
price of the Common Stock will be 85% of the lesser of the fair market value of
the Common Stock on the date of grant or on the last day of the option period
(the "date of exercise"). For all purposes under the New Stock Purchase Plan,
the fair market value of a share of Common Stock on a particular date shall be
equal to the closing price of such stock on the NYSE on that date. Payroll
deductions will be included in the general funds of the Company, free of any
trust or other arrangement and may be used for any corporate purpose. No
interest will be paid or credited to any participant.
CHANGES IN AND WITHDRAWAL OF PAYROLL DEDUCTIONS. A participant may not
increase the rate of deduction during an option period. A participant may,
however, reduce the rate of his or her payroll deduction at any time during an
option period to a specific percentage net less than 2% of eligible
compensation. Such reduction is irrevocable. A participant also may withdraw in
whole from the New Stock Purchase Plan, but not in part, at any time prior to
the date of exercise relating to a particular option period. Upon withdrawal,
the Company promptly will refund to the participant the amount of the
participant's payroll deductions under the plan that have not been otherwise
returned or used upon exercise of options, and thereafter the participant's
payroll deduction authorization and interest in unexercised options under the
New Stock Purchase Plan will terminate.
DELIVERY OF SHARES. As soon as practicable after each date of exercise, the
Company will deliver to each participant a certificate for the number of whole
shares purchased by such participant.
TERMINATION OF EMPLOYMENT; LEAVES OF ABSENCE. Except as described below, if
the employment of a participant terminates for any reason, then the
participant's participation in the New Stock Purchase Plan will cease and the
Company will refund the amount of such participant's payroll deductions under
the plan that have not yet been otherwise returned or used upon exercise of
options. If the employment of a participant terminates after such participant
has attained age 65 or due to death or permanent disability, the participant, or
the participant's personal representative, as applicable, may elect either to
(i) withdraw all of the accumulated unused payroll deductions credited to the
participant's account or (ii) exercise the participant's option for the purchase
of Common Stock as of the participant's retirement date, date of death or date
of termination of employment due to permanent disability, as applicable. The per
share purchase price will be 85% of the lesser of the fair market value of the
Common Stock on such date or the date of grant. If no such election is timely
received by the Company, the participant or personal representative will
automatically be deemed to have elected the first alternative.
During a paid leave of absence approved by the Company and meeting Internal
Revenue Service regulations, a participant's elected payroll deductions will
continue. A participant may not contribute to the New Stock Purchase Plan during
an unpaid leave of absence. If a participant takes an unpaid leave of absence
that is approved by the Company and meets Internal Revenue Service regulations,
then such participant's payroll deductions that were made prior to such leave
may remain in the plan and be used to purchase Common Stock on the next date of
exercise. If a participant takes a leave of absence not described above, then
the participant will be considered to have withdrawn from the plan.
RESTRICTION UPON ASSIGNMENT OF OPTION. An option granted under the New
Stock Purchase Plan may not be transferred other than by will or the laws of
descent and distribution. Each option is exercisable, during the employee's
lifetime, only by the employee to whom granted.
ADMINISTRATION, AMENDMENTS AND TERMINATION. The New Stock Purchase Plan is
to be administered and interpreted by a committee appointed from time to time by
the Board. The plan may be amended from time to time by the Board of Directors
provided that no change in any option previously granted may be made that would
impair the rights of a participant without the consent of such participant. The
Board of Directors
22
<PAGE> 25
may in its discretion terminate the plan at any time with respect to any Common
Stock for which options have not been granted.
MERGER, CONSOLIDATION OR LIQUIDATION OF COMPANY. If the Company is not the
surviving corporation in any merger or consolidation (or survives only as a
subsidiary of another entity), or if the Company is to be dissolved or
liquidated, then, unless a surviving corporation assumes or substitutes new
options (within the meaning of Section 424(a) of the Code) for all options then
outstanding, (i) the date of exercise for all options then outstanding will be
accelerated to a date fixed by the committee administering the plan that is
prior to the effective date of such merger or consolidation or such dissolution
or liquidation, (ii) a participant may make a lump-sum deposit prior to the date
of exercise in lieu of the remaining payroll deductions that otherwise would
have been made and (iii) upon such effective date, any unexercised options will
expire and the Company promptly will refund to each participant the amount of
such participant's payroll deductions under the plan that have not yet been
otherwise returned or used upon exercise of options.
TERM. Unless sooner terminated, the plan will terminate on December 31,
2010.
FEDERAL INCOME TAX CONSEQUENCES TO PARTICIPANTS. A participant's payroll
deductions to purchase Common Stock are made on an after-tax basis. There is no
tax liability to the participant when shares of Common Stock are purchased
pursuant to the New Stock Purchase Plan. The participant may, however, incur tax
liability upon disposition (including by way of gift) of the shares acquired
under the plan. The participant's U.S. federal income tax liability will depend
on whether the disposition is a qualifying disposition or a disqualifying
disposition as described below.
If a qualifying disposition of the shares is made by the participant (i.e.,
a disposition that occurs more than two years after the first day of the option
period in which the shares were purchased), or in the event of death (whenever
occurring) while owning the shares, the participant will recognize in the year
of disposition (or, if earlier, the year of the participant's death) ordinary
income in an amount equal to the lesser of (i) the excess of the fair market
value of the shares at the time of disposition (or death) over the amount paid
for the shares under the option or (ii) 15% of the fair market value of the
shares at the date of grant (the beginning of the option period). Upon the sale
of the shares, any amount realized in excess of the ordinary income recognized
by the participant will be taxed to the participant as a long-term capital gain.
If the shares are sold at less than the purchase price under the option, then
there will be no ordinary income. Instead, the participant will have a capital
loss equal to the difference between the sales price and the purchase price paid
under the option.
If a disqualifying disposition of the shares is made (i.e., a disposition
(other than by reason of death) within two years after the first day of the
option period in which the shares were purchased), the participant generally
will recognize ordinary income in the year of disposition in an amount equal to
any excess of the fair market value of the shares at the date of exercise over
the purchase price paid for the shares under the option (even if no gain is
realized on the sale or if a gratuitous transfer is made). Any further gain (or
loss) realized by the participant generally will be taxed as short-term,
mid-term or long-term capital gain (or loss) depending on the holding period.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY OR A PARTICIPATING
COMPANY. The Company, or a participating company for which a participant
performs services, will be entitled to a deduction only if the participant makes
a disqualifying disposition of any shares purchased under the New Stock Purchase
Plan. In such case, the Company or such participating company can deduct as a
compensation expense the amount that is ordinary income to the participant
provided that, among other things, (i) the amount meets the test of
reasonableness, is an ordinary and necessary business expense and is not an
"excess parachute payment" within the meaning of Section 280G of the Code, (ii)
any applicable reporting obligations are satisfied and (iii) the $1 million
limitation of Section 162(m) of the Code is not exceeded.
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<PAGE> 26
VOTE REQUIRED
The proposal to approve the New Stock Purchase 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 NEWFIELD EXPLORATION COMPANY 2001 EMPLOYEE STOCK PURCHASE PLAN.
ITEM 6
RATIFICATION OF APPOINTMENT OF AUDITORS
Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed PricewaterhouseCoopers LLP, independent public accountants,
to audit the consolidated financial statements of the Company for the year
ending December 31, 2000. The Company is advised that no member of
PricewaterhouseCoopers LLP 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
PricewaterhouseCoopers LLP 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.
ITEM 7
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 desires to submit a proposal for inclusion in the proxy
material for presentation at the Company's 2001 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 November 20, 2000. Any notice of a proposal to be
considered at the Company's 2001 Annual Meeting of Stockholders should also be
submitted to the Secretary of the Company. Any such notice will be considered
untimely if not received by the Secretary on or before February 5, 2001.
By order of the Board of Directors,
/s/TERRY W. RATHERT
Terry W. Rathert
Secretary
March 20, 2000
24
<PAGE> 27
NEWFIELD EXPLORATION COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 4, 2000
This Proxy is Solicited on Behalf of the Board of Directors of
Newfield Exploration Company
PROXY
The undersigned hereby appoints David A. Trice, Terry W. Rathert and
P C. William Austin, and each of them, proxies for the undersigned with full
power of substitution, to vote all shares of Newfield Exploration Company
R Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of Newfield Exploration Company to be held in
O Houston, Texas, on Thursday May 4, 2000 at 11:00 A.M., or at any
adjournment thereof, upon the matters set forth on the reverse side and
X described in the accompanying Proxy Statement and upon such other business
as may properly come before the meeting or any adjournment 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*
Please mark [X]
your votes as
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE ITEMS.
Item 1-ELECTION OF DIRECTORS WITHHELD
Joe B. Foster, David A. Trice, Robert W. Waldrup, FOR FOR ALL
Charles W. Duncan, Jr., Howard H. Newman, [ ] [ ]
Thomas G. Ricks, Terry Huffington, Dennis R.
Hendrix, C.E. (Chuck) Shultz, Phillip J. Burguieres
and John C. Sawhill
WITHHELD FOR: (Write that nominees's name in the space
provided below)
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FOR AGAINST ABSTAIN
Item 2-APPROVAL OF THE NEWFIELD EXPLORATION [ ] [ ] [ ]
COMPANY 2000 OMNIBUS STOCK PLAN
Item 3-APPROVAL OF THE NEWFIELD EXPLO- [ ] [ ] [ ]
RATION COMPANY 2000 NON-EMPLOYEE
DIRECTOR RESTRICTED STOCK PLAN
Item 4-APPROVAL OF AMENDMENT TO THE [ ] [ ] [ ]
NEWFIELD EXPLORATION COMPANY 1993
EMPLOYEE STOCK PURCHASE PLAN
Item 5-APPROVAL OF THE NEWFIELD EXPLO- [ ] [ ] [ ]
RATION COMPANY 2001 EMPLOYEE
STOCK PURCHASE PLAN
Item 6-RATIFICATION OF APPOINTMENT OF [ ] [ ] [ ]
AUDITORS
I PLAN TO ATTEND MEETING [ ]
COMMENTS/ADDRESS CHANGE [ ]
Please mark this box if you have
written comments/address change
on the reverse side.
Signature(s) Date
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
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*FOLD AND DETACH HERE*
