o | Preliminary Proxy Statement | |
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A-1 |
Note: | Throughout this proxy statement, references to the stock split relate to the two-for-one stock split of Apache common stock distributed in shares of common stock on January 14, 2004, to stockholders of record on December 31, 2003, and references to the stock dividends relate to the five-percent stock dividend on Apache common stock distributed in shares of common stock on April 2, 2003, to stockholders of record on March 12, 2003, and to the ten-percent stock dividend on Apache common stock distributed in shares of common stock on January 21, 2002, to stockholders of record on December 31, 2001. |
| using the internet voting site or the toll-free telephone number listed on the enclosed proxy card. Specific directions for using the internet and telephone voting systems are shown on the proxy card. |
| marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. |
2
3
Director |
||||
Since | ||||
G. STEVEN FARRIS, 59, was appointed president, chief
executive officer and chief operating officer in May 2002,
having been president and chief operating officer of the Company
since May 1994. He was senior vice president of the Company from
1991 to 1994, and vice president exploration and
production from 1988 to 1991. Prior to joining Apache,
Mr. Farris was vice president of finance and business
development for Terra Resources, Inc., a Tulsa, Oklahoma oil and
gas company, from 1983 to 1988. He is U.S. Chairman of the
U.S.-Egypt
Business Council and is a member of the Board of Visitors of
M.D. Anderson Cancer Center, Houston, Texas. At Apache,
Mr. Farris is a member of the Executive Committee.
|
1994 | |||
RANDOLPH M. FERLIC, 71, is a private investor. He retired
in December 1993 from his practice as a thoracic and
cardiovascular surgeon. Dr. Ferlic is the founder of
Surgical Services of the Great Plains, P.C., and served as
its president from 1974 to 1993. He has been a Regent of the
University of Nebraska since November 2000 and was chairman of
its audit committee until March 2008, at which time he became
vice chairman. Dr. Ferlic serves as a director of the
Nebraska Medical Center and chairman of its audit committee, as
well as commissioner for the Midwestern Higher Education
Compact. At Apache, he is chairman of the Audit Committee and a
member of the Executive Committee.
|
1986 | |||
A. D. FRAZIER, JR., 63, became chairman and chief
executive officer of Danka Business Systems PLC, St. Petersburg,
Florida, effective March 15, 2006. He also owns and is
chairman of WolfCreek Broadcasting, Inc. and was of Counsel with
the law firm of Balch & Bingham LLP, Atlanta, Georgia,
from January 2005 to March 2006. Mr. Frazier retired as a
director, president and chief operating officer of Caremark Rx,
Inc., a publicly-traded pharmacy benefit management company, in
March 2004 having served in that role since August 2002. From
March 2001 until August 2002, he was chairman and chief
executive officer of the Chicago Stock Exchange. From October
2004 until its sale in January 2007, he was a director and
chairman of the board of Gold Kist, Inc., Atlanta, Georgia, an
integrated chicken production, processing and marketing company.
At Apache, Mr. Frazier is a member of the Management
Development and Compensation Committee and the Stock Option Plan
Committee.
|
1997 | |||
JOHN A. KOCUR, 80, is retired from the private practice
of law. He served as vice chairman of the Companys board
of directors from 1988 to 1991. Mr. Kocur was employed by
the Company from 1969 until his retirement in 1991, and served
as the Companys president from 1979 to 1988. At Apache, he
is chairman of the Executive Committee, a member of the
Corporate Governance and Nominating Committee, and a member of
the Management Development and Compensation Committee.
|
1977 |
4
Director |
Term |
|||||||
Since | Expires | |||||||
FREDERICK M. BOHEN, 70, is senior advisor to the
president of The Rockefeller University, following his
retirement as executive vice president and chief operating
officer of The Rockefeller University in November 2005, having
served in those capacities from February 2002, and from 1990
through September 1999. He was senior vice president of Brown
University from 1983 to 1990, and served as vice president of
finance and operations at the University of Minnesota from 1981
to 1983. Mr. Bohen was with the U.S. Department of Health
and Human Services as assistant secretary for management and
budget from 1977 to 1981. He is a director of American Council
of Learned Societies and a member of its executive committee.
Mr. Bohen is also a director of the Polish American Freedom
Foundation and chairman of its investment committee, a director
and treasurer of the TEAK Fellowship, a not-for-profit
organization that mentors and assists gifted adolescent children
from disadvantaged circumstances, and non-executive chairman of
the board of The Fund for Teachers, a Texas non-profit
corporation. At Apache, he is chairman of the Management
Development and Compensation Committee and chairman of the Stock
Option Plan Committee.
|
1981 | 2009 | ||||||
EUGENE C. FIEDOREK, 76, is a private investor. Formerly,
he was managing director of EnCap Investments L.C., a Dallas,
Texas, energy investment banking firm, from 1988 until March
1999, when EnCap was acquired by El Paso Energy.
Mr. Fiedorek was the managing director of the Energy
Banking Group of First RepublicBank Corp. in Dallas, Texas, from
1978 to 1988. At Apache, he is a member of the Audit Committee.
|
1988 | 2010 | ||||||
PATRICIA ALBJERG GRAHAM, 72, joined the Companys
board of directors in September 2002. She is the Charles Warren
Professor of the History of Education Emerita at Harvard
University. Dr. Graham joined the faculty of Harvard
Graduate School of Education in 1974, and was its dean from 1982
to 1991. From 1991 to 2000, she served as president of the
Spencer Foundation, which supports research into educational
improvement. Dr. Graham is a director of Rural School
Community Trust, Central European University, the Higher
Education Support Sub-Board of the Open Society Institute, The
Fund for Teachers, a Texas non-profit corporation, Smolny
College of St. Petersburg State University, Russia, and the
Josiah Macy, Jr. Foundation. At Apache, she is a member of the
Corporate Governance and Nominating Committee.
|
2002 | 2010 | ||||||
GEORGE D. LAWRENCE, 57, is a private investor, and joined
the Companys board of directors in May 1996. Formerly, he
was president, chief executive officer and a director of The
Phoenix Resource Companies, Inc. from 1990 until May 1996, when
Phoenix became a wholly-owned subsidiary of Apache.
Mr. Lawrence is non-executive chairman of Ucross
Foundation, a Wyoming non-profit corporation, and non-executive
chairman of Springboard Educating the Future, a
Texas non-profit corporation, serving in those capacities
without compensation. At Apache, he is a member of the Executive
Committee and the Management Development and Compensation
Committee.
|
1996 | 2009 |
5
Director |
Term |
|||||||
Since | Expires | |||||||
F. H. MERELLI, 71, became chairman of the board, chief
executive officer, president, and a director of Cimarex Energy
Co., a Denver, Colorado independent oil and gas exploration and
production company, on September 30, 2002, upon the
acquisition by Cimarex of Key Production Company, Inc. and the
exploration and production division of Helmerich &
Payne, Inc. He was chairman of the board and chief executive
officer of Key from 1992 until October 2002, and served as
Keys president from 1992 to September 1999 and from March
2002 to October 2002. Formerly, Mr. Merelli served as
Apaches president and chief operating officer from 1988 to
1991. Prior to that, he was president of Terra Resources, Inc.,
a Tulsa, Oklahoma oil and gas company, from 1979 to 1988.
At Apache, Mr. Merelli is a member of the Audit
Committee and the Executive Committee.
|
1997 | 2010 | ||||||
RODMAN D. PATTON, 64, joined the Companys board of
directors in December 1999. Mr. Patton has nearly
30 years experience in oil and gas investment banking and
corporate finance activity, most recently serving as managing
director of the Merrill Lynch Energy Group from 1993 until April
1999. Previously, he was with The First Boston Corporation
(later Credit Suisse First Boston) and Eastman Dillon, Union
Securities (later Blyth Eastman Dillon). Mr. Patton is a
director of NuStar GP, LLC (formerly Valero GP, LLC),
San Antonio, Texas, and is chairman of its audit committee
and a member of its compensation committee. NuStar GP, LLC is
the general partner of NuStar Energy LP (formerly Valero LP),
owner and operator of crude oil and refined products pipeline,
terminalling, and storage assets. At Apache, Mr. Patton is
a member of the Audit Committee.
|
1999 | 2009 | ||||||
CHARLES J. PITMAN, 65, joined the Companys board of
directors in May 2000. He retired from BP Amoco plc in late
1999, having served as regional president Middle
East/Caspian/Egypt/India. Prior to the merger of British
Petroleum and Amoco Corporation in 1998, Mr. Pitman held a
variety of executive positions at Amoco, and he is interim
chairman and a non-executive director of Urals Energy Public
Company Limited, an oil exploration and production company
operating in Russia. Mr. Pitman served as chairman of the
board of First Calgary Petroleums Ltd., an oil and gas
exploration company engaged in exploration development
activities in Algeria, from June 2007 until his resignation
effective March 12, 2008, and was sole member of Shaker
Mountain Energy Associates LLC from September 1999 to November
2007. At Apache, Mr. Pitman is chairman of the Corporate
Governance and Nominating Committee.
|
2000 | 2009 | ||||||
RAYMOND PLANK, 85, has been chairman of the
Companys board of directors since 1979, having served as
the companys chief executive officer from 1966 until May
2002, and president from 1954 to 1979. Mr. Plank is a
trustee of Ucross Foundation, a Wyoming non-profit corporation,
and founder and a director of The Fund for Teachers, a Texas
non-profit corporation. He founded the Company and is a member
of the Executive Committee.
|
1954 | 2010 |
6
7
Name | Board | Audit | MD&C | Stock Option | Executive | CG&N | ||||||||||||||||||||||||
Frederick M. Bohen
|
ü | ü | * | ü | * | |||||||||||||||||||||||||
G. Steven Farris
|
ü | ü | ||||||||||||||||||||||||||||
Randolph M. Ferlic
|
ü | ü | * | ü | ||||||||||||||||||||||||||
Eugene C. Fiedorek
|
ü | ü | ||||||||||||||||||||||||||||
A. D. Frazier, Jr.
|
ü | ü | ü | |||||||||||||||||||||||||||
Patricia Albjerg Graham
|
ü | ü | ||||||||||||||||||||||||||||
John A. Kocur
|
ü | ü | ü | * | ü | ** | ||||||||||||||||||||||||
George D. Lawrence
|
ü | ü | ü | |||||||||||||||||||||||||||
F. H. Merelli
|
ü | ü | ü | |||||||||||||||||||||||||||
Rodman D. Patton
|
ü | ü | ||||||||||||||||||||||||||||
Charles J. Pitman
|
ü | ü | * | |||||||||||||||||||||||||||
Raymond Plank
|
ü | * | ü | |||||||||||||||||||||||||||
Jay A. Precourt***
|
ü | ü | ||||||||||||||||||||||||||||
No. of Meetings in 2006
|
6 | 9 | 6 | 6 | 0 | 4 | ||||||||||||||||||||||||
* | Chairman | |
** | Mr. Kocur was appointed as a member of the CG&N Committee, effective August 7, 2007. | |
*** | Mr. Precourt retired as a member of the Companys board of directors, effective July 2, 2007. |
8
9
| Expertise and perspective needed to govern the business and strengthen and support senior management for example: strong financial expertise, knowledge of international operations, or knowledge of the petroleum industry and/or related industries. |
| Sound business judgment and a sufficiently broad perspective to make meaningful contributions. |
| Interest and enthusiasm in the Company and a commitment to become involved in its future. |
| The time and energy to meet board of directors commitments. |
| Constructive participation in discussions, with the capacity to quickly understand and evaluate complex and diverse issues. |
| Dedication to the highest ethical standards. |
| Supportive of management, but independent, objective, and willing to question and challenge both openly and in private exchanges. |
| An awareness of the dynamics of change and a willingness to anticipate and explore opportunities. |
10
11
February 22, 2008
|
Members of the Audit Committee
Randolph M. Ferlic, Chairman Eugene C. Fiedorek F. H. Merelli Rodman D. Patton |
12
13
14
Change in |
|||||||||||||||||||||||||||||||||||
Pension Value |
|||||||||||||||||||||||||||||||||||
and Nonqualified |
|||||||||||||||||||||||||||||||||||
Fees Earned |
Stock |
Non-Equity |
Deferred |
||||||||||||||||||||||||||||||||
or Paid in |
Awards |
Option |
Incentive Plan |
Compensation |
All Other |
||||||||||||||||||||||||||||||
Cash |
(2) |
Awards |
Compensation |
Earnings |
Compensation |
Total |
|||||||||||||||||||||||||||||
Name(1)(a) | ($)(b) | ($)(c) | ($)(d) | ($)(e) | ($)(f) | ($)(g) | ($)(h) | ||||||||||||||||||||||||||||
Frederick M. Bohen
|
165,000 | 16,902 | | | 3,830 | | 185,732 | ||||||||||||||||||||||||||||
Randolph M. Ferlic
|
165,000 | 16,902 | | | | | 181,902 | ||||||||||||||||||||||||||||
Eugene C. Fiedorek
|
150,000 | 16,902 | | | | | 166,902 | ||||||||||||||||||||||||||||
A.D. Frazier
|
150,000 | 16,902 | | | | | 166,902 | ||||||||||||||||||||||||||||
Patricia A. Graham
|
150,000 | 52,553 | | | 7,556 | | 210,109 | ||||||||||||||||||||||||||||
John A. Kocur
|
165,000 | 16,902 | | | | 20,589 | (3) | 202,491 | |||||||||||||||||||||||||||
George D. Lawrence
|
150,000 | 16,902 | | | 9,214 | 176,116 | |||||||||||||||||||||||||||||
F. H. Merelli
|
150,000 | 16,902 | | | 697 | | 167,599 | ||||||||||||||||||||||||||||
Rodman D. Patton
|
150,000 | 16,902 | | | 6,793 | | 173,695 | ||||||||||||||||||||||||||||
Charles J. Pitman
|
165,000 | 16,902 | | | 97 | | 181,999 | ||||||||||||||||||||||||||||
Jay A. Precourt(4)
|
75,000 | 26,276 | | | | | 101,276 | ||||||||||||||||||||||||||||
(1) | Employee directors do not receive additional compensation for serving on the board of directors or any committee of the board. Raymond Plank, the Companys chairman and founder, and G. Steven Farris, the Companys president, chief executive officer and chief operating officer, are not included in this table as they are employees of the Company. The compensation they received as employees of the Company is shown in the Summary Compensation Table. | |
(2) | Amount recognized for financial statement reporting purposes during 2007 for restricted stock granted prior to 2007. | |
At year-end 2007, the aggregate number of shares of unvested, restricted Apache common stock was 1,540 shares for Dr. Graham. With the exception of Dr. Graham, none of the directors had unvested, restricted Apache Common stock at year-end 2007. | ||
(3) | Includes life insurance, medical and dental premiums of $11,830 and $8,759 reimbursed for the taxes payable on income attributable to this benefit. | |
(4) | Mr. Precourt retired as a member of the Companys board of directors, effective July 2, 2007. |
15
Amount and |
Percent of |
||||||||||
Nature of Beneficial |
Class |
||||||||||
Title of Class | Name of Beneficial Owner | Ownership(1) | Outstanding | ||||||||
Common Stock, par value $0.625
|
Frederick M. Bohen
|
17,453 | (2)(3) | * | |||||||
G. Steven Farris
|
878,191 | (5)(6)(7) | * | ||||||||
Randolph M. Ferlic
|
429,289 | (2)(8) | * | ||||||||
Eugene C. Fiedorek
|
39,293 | (2) | * | ||||||||
A. D. Frazier, Jr.
|
17,584 | (2) | * | ||||||||
Patricia A. Graham
|
11,750 | (2)(3) | * | ||||||||
John A. Kocur
|
38,736 | (2) | * | ||||||||
George D. Lawrence
|
37,985 | (2)(3) | * | ||||||||
F. H. Merelli
|
26,549 | (2)(3) | * | ||||||||
Rodman D. Patton
|
25,130 | (2)(3) | * | ||||||||
Charles J. Pitman
|
22,317 | (2)(3) | * | ||||||||
Raymond Plank
|
615,708 | (4)(5)(6)(7) | * | ||||||||
Roger B. Plank
|
410,431 | (4)(5)(6)(7) | * | ||||||||
John A. Crum
|
141,732 | (5)(6)(7) | * | ||||||||
Rodney J. Eichler
|
140,182 | (4)(5)(6)(7) | * | ||||||||
All directors, nominees, and executive officers as a group
(including the above name persons)
|
3,667,023 | (4)(5)(6)(7) | 1.10 | ||||||||
* | Represents less than one percent of outstanding shares of common stock. | |
(1) | All ownership is sole and direct unless otherwise noted. Inclusion of any common shares not owned directly shall not be construed as an admission of beneficial ownership. Fractional shares have been rounded to the nearest whole share. | |
(2) | Includes restricted common shares awarded under the Companys Equity Compensation Plan for Non-Employee Directors. | |
(3) | Includes the following common share equivalents related to retainer fees deferred under the Companys Non-Employee Directors Compensation Plan: Mr. Bohen 4,983; Dr. Graham 6,355; Mr. Lawrence 9,054; Mr. Merelli 1,011; Mr. Patton 5,116: and Mr. Pitman 153. | |
(4) | Includes the following common stock equivalents held through the Companys Deferred Delivery Plan: Mr. Raymond Plank 86,361; Mr. Roger Plank 30,702; Mr. Eichler 22,368; and all directors and executive officers as a group 213,796. |
16
(5) | Includes the following common shares issuable upon the exercise of outstanding employee stock options which are exercisable within 60 days: Mr. Farris 249,752; Mr. Raymond Plank 252,364; Mr. Roger Plank 129,265; Mr. Crum 50,917; Mr. Eichler 69,813; and all directors and executive officers as a group 1,058,054. | |
(6) | Includes shares held by the trustee of the Companys 401(k) Savings Plan and related Non-Qualified Retirement/Savings Plan: Mr. Farris 72,327; Mr. Raymond Plank 9,050; Mr. Roger Plank 53,315; Mr. Crum 33,038; Mr. Eichler 12,616; and all directors and executive officers as a group 244,345. | |
(7) | Includes the following restricted stock units (each equivalent to one share of common stock) granted under the Companys Executive Restricted Stock Plan and under the 2005 Share Appreciation Plan: Mr. Farris 75,973; Mr. Raymond Plank 75,973; Mr. Roger Plank 28,145; Mr. Crum 21,000; Mr. Eichler 19,686; and all directors and executive officers as a group 434,069. | |
(8) | Includes 13,860 common shares owned directly by Ferlic Investments, Ltd. in which Dr. Ferlic owns a 36-percent interest. Also includes a total of 21,090 common shares held by Dr. Ferlics daughters, son and grandchildren, as to which he has some power of disposition, but disclaims beneficial ownership. |
17
(a) |
(b) |
(c) |
|||||||||||||
Number of Securities |
|||||||||||||||
Number of Securities |
Remaining Available for |
||||||||||||||
to be Issued |
Weighted-Average |
Future Issuance Under |
|||||||||||||
Upon Exercise of |
Exercise Price of |
Equity Compensation Plans |
|||||||||||||
Outstanding Options, |
Outstanding Options, |
(Excluding Securities |
|||||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Reflected in Column (a)) | ||||||||||||
Equity compensation plans approved by security holders(1)(4)
|
8,218,469 | $ | 63.795 | (3) | 12,563,300 | ||||||||||
Equity compensation plans not approved by security holders(2)(4)
|
1,855,672 | $ | 32.242 | (3) | 612,639 | ||||||||||
Total
|
10,074,141 | $ | 58.306 | (3) | 13,175,939 | ||||||||||
(1) | Includes the Companys 1995 Stock Option Plan, 1998 Stock Option Plan, 2005 Stock Option Plan, 2005 Share Appreciation Plan, and 2007 Omnibus Equity Compensation Plan. | |
(2) | Includes the Companys 1996 Performance Stock Option Plan, 2000 Stock Option Plan, Executive Restricted Stock Plan, Non-Employee Directors Compensation Plan, Equity Compensation Plan for Non-Employee Directors, and Deferred Delivery Plan. | |
The Companys Deferred Delivery Plan allows officers and certain key employees to defer income from restricted stock units granted under the Executive Restricted Stock Plan and the 2007 Omnibus Equity Compensation Plan in the form of deferred units. Each deferred unit is equivalent to one share of Apache common stock. Distributions from the plan are made, at the election of the participant, beginning five years from deferral or upon termination of employment. | ||
(3) | Weighted average exercise price of outstanding stock options; excludes restricted stock units, performance-based stock units, and deferred stock units. | |
(4) | See Note 7 of the Notes to Consolidated Financial Statements included in the Companys Form 10-K for the year ended December 31, 2007, for the material features of the 1995 Stock Option Plan, 1996 Performance Stock Option Plan, 1998 Stock Option Plan, 2000 Stock Option Plan, 2005 Stock Option Plan, 2005 Share Appreciation Plan, Executive Restricted Stock Plan, and 2007 Omnibus Equity Compensation Plan. |
18
19
20
21
Overview
|
A strong corporate culture comprised of the collective values of the members of the Company is an indivisible component of Apaches fifty-four year record of success. Against this background, Apache achieved its best record in 2007. This achievement included record reserve growth and record financial results as measured by earnings and cash flow per share. The following paragraphs, and subsequent data, unite the Management Development and Compensation Committee of our board of directors (the MD&C Committee) with the interests of our stockholders and enduring employees. Together, they have spelled success, financial reward, and self-respect. | ||
Founded 54 years ago with $250,000, Apache embarked on a mission to build a profitable oil and gas company for the long-term benefit of its stockholders, based on a value structure of integrity, respect for human dignity, work ethic, and sense of urgency. This is the same mission Apache has today and its original values permeate the culture of our organization. | |||
By virtually any measurement, 2007 was Apaches best year ever. Records were reached in all key categories of earnings, cash-flow, revenues, production, and reserve growth. Apache increased its production by 12 percent. Apaches stock price increased by 62 percent, which was second in our peer group. In overall market value, Apache added $14 billion of shareholder value in 2007, as the Companys strategic initiatives and commitment to long-term investment enabled the Company to grow both production and reserves going into a period of historically high commodity prices. Notably, Apaches conservative approach to growth and pricing has also enabled the Company to perform well on a comparative basis during periods of low commodity prices. Given the Companys past and current corporate performance, the MD&C Committee made its executive compensation decisions for 2007. | |||
The following provides an overview of the more detailed disclosure set forth in this section. | |||
The primary objectives of our executive compensation programs are to attract, retain, motivate, and reward the best talent available to the Company in the energy market; to align the interests of our executive officers with those of our stockholders; and to pay for performance, whereby a majority of an executive officers total compensation is a function of performance incentives. | |||
We compensate our executive officers with base salary, annual incentives, long-term incentives, and benefits. | |||
Annual operational and strategic goals identified by our management and approved by the MD&C Committee are the foundation for the performance measures used to determine annual incentive payouts to our executive officers. | |||
We grant our executive officers restricted stock units and stock options as a means to align the interests of our executive officers with those of our stockholders. | |||
22
For our executives as a group, we generally target total compensation at or higher than the market 50th percentile depending upon numerous factors such as: job responsibility, job complexity, experience level, corporate performance, and/or individual performance. | |||
The continued historical success of the Company and the Companys ability to create stockholder value have been and are dependent on our ability to attract, retain, motivate, and reward the best talent available to the Company in the energy market, including the employees named in this proxy statement. | |||
We believe that the growth and return to stockholders achieved since our founding in 1954 confirm the high quality of our employees, the visionary leadership of both our founder and chairman and our chief executive officer, the successful guiding governance and diligence of our board of directors, and the effectiveness and efficiency of our compensation and benefit programs. | |||
The following compensation discussion and analysis outlines the processes, elements and decisions regarding 2007 compensation for our executive officers named in the Summary Compensation Table (the Named Executive Officers). | |||
MD&C Committee Composition |
The MD&C Committee is composed of four independent directors as defined by the NYSE listing standards and described under Standing Committees and Meetings of the Board of Directors. | ||
MD&C Committee Duties |
The MD&C Committee is responsible for determining the compensation of our chairman, chief executive officer, chief financial officer, and other top executive officers. The MD&C Committee is governed by a written charter adopted by the board of directors. The full charter is available on Apaches corporate website at www.apachecorp.com. The following is a summary of the MD&C Committees key responsibilities relating to executive compensation: | ||
1. To review and approve
compensation programs for the executive officers of the Company.
|
|||
2. To review and approve
corporate goals and objectives relevant to the compensation of
the chairman of the board and the chief executive officer,
evaluate the performance of these two positions, and make
recommendations to the board of directors for approval of total
compensation for these two positions.
|
|||
3. To review the
Companys executive compensation programs to determine
whether such programs are properly achieving their intended
purposes.
|
|||
4. To make recommendations to
the board of directors regarding incentive and equity
compensation for executive officers other than both the chairman
and the chief executive officer.
|
|||
23
The MD&C Committee has been charged with fair administration of base and incentive compensation of our top executive officers. The board of directors believes that the MD&C Committee has historically used and will continue to use its business judgment in carrying out its objectives. | |||
In this report, we disclose which of our Named Executive Officers have participated in various incentive plans and any standards they are expected to meet in order to receive such benefits. We also disclose how much such executive officers have received under those plans during the past fiscal year and, in some cases, for prior years. | |||
We apply the factors that we consider in determining salaries and other compensation of the executive officers on an individual basis, taking into account each officers position, duties, extent of authority, and responsibilities. | |||
Compensation Philosophy |
The principle objective of the MD&C Committee is to develop an executive compensation program that will attract, retain, motivate and reward executive officers capable of leading the Company in a complex, competitive, and changing industry. A capable, highly motivated senior management team is an integral part of the Companys continued success. | ||
Role of the Consultant |
The MD&C Committee has the authority to engage the services of independent compensation consultants for assistance and to provide periodic reviews of the effectiveness and competitiveness of Apaches executive compensation structure. During 2007, the MD&C Committee engaged the services of an independent, executive compensation consulting firm, Longnecker and Associates (the Consultant), to assist the MD&C Committee in its review of the compensation structure for all executive officers. The Consultant worked with our management in providing the MD&C Committee with a market competitive executive compensation analysis. Reports are provided both to the MD&C Committee for review of the compensation for the top executive officers and to each of the chief executive officer and chairman for review of the compensation for their direct reports. The Consultant only provides executive compensation consulting services under the direction of the MD&C Committee and does not provide any additional services to the Company. | ||
24
Role of Senior Management |
The Companys vice president of human resources (VPHR) prepares information and materials for the MD&C Committee meetings. The Consultant and, as deemed appropriate by the VPHR, other employees and executives of the Company, work with the VPHR to obtain the information necessary for compensation analysis by the MD&C Committee. Reports are provided back both to the MD&C Committee for review of the compensation for the top officers and to each of the chief executive officer and chairman for review of their direct reports. Each of the chairman and the chief executive officer provides his recommendations to the MD&C Committee on compensation actions for executive officers, other than those for themselves. The chairman and the chief executive officer provide to the MD&C Committee their evaluations of the performance of the other executive officers for the MD&C Committee to consider for compensation purposes. | ||
Executive Compensation Decision Factors |
The MD&C Committee considers multiple factors when determining compensation levels for executive officers, including, but not limited to, level of responsibility, individual performance, Company performance, market competitive data, and prior experience. | ||
Following a discussion with the Consultant in September 2007, the MD&C Committee, along with senior management, re-evaluated the list of peer companies that the Company uses for comparative purposes. | |||
Peer Companies and Survey Data |
Our peer companies all have significant oil and gas exploration and production businesses and have been identified based on relevant financial factors such as revenue, market capital, net income, and total assets. While the largest vertically integrated energy companies such as Exxon Mobil Corporation, Royal Dutch Shell plc, and Chevron Corporation all have oil and gas exploration and production businesses, we have not included them in our list of peer companies because they are significantly larger. Likewise, we have also not included companies that are similar to us in size if they are in unrelated industries, because we typically do not hire executives from such companies, nor would we be likely to lose executives to such companies. The peer list for 2007 was as follows: Anadarko Petroleum Corporation, Chesapeake Energy Corporation, Devon Energy Corporation, EOG Resources, Inc., Hess Corporation, Murphy Oil Corporation, Noble Energy, Inc., and XTO Energy Inc. | ||
While these peer companies served as a foundation for compensation benchmarking purposes for our Named Executive Officers, the Consultant also used published survey sources specific to the energy industry for additional benchmarking. The executive compensation data from these two sources were weighted at 50 percent each to calculate market reference points (Market Reference Points) for each element of executive compensation that represented the 50th percentile of this compensation data. The MD&C Committee views these Market Reference Points as particularly useful for benchmarking purposes. | |||
25
Prior to September 2007, the previous peer group included Newfield Exploration Company and Pioneer Natural Resources Company but excluded Murphy Oil Corporation, Hess Corporation and XTO Energy Inc. In consultation with the Consultant, the MD&C Committee altered the makeup of the peer group to satisfy the need for additional data points and to ensure that all of the peer companies are of comparable size to Apache and that their primary revenues are from exploration and production operations. | |||
Base Salary
|
We believe that one of the most effective ways to compete in the energy industrys executive labor market is to offer our executive officers a competitive base salary. The MD&C Committee analyzes each executive officers compensation using the following process: | ||
1. Define the key executive
positions within the Company in terms of scope and
responsibility, job complexity, knowledge, experience required,
and other relevant factors.
|
|||
2. Rank the executive
positions on the basis of these factors to establish a logical
relationship among them.
|
|||
3. For the Named Executive
Officers, develop a salary band using the Market Reference Point
as the 50th percentile.
|
|||
4. For other executive
positions, establish salary ranges by utilizing applicable
energy industry surveys.
|
|||
We generally set our executives base salaries, including those of both our chairman and our chief executive officer, to fall between the 50th and 75th percentile Market Reference Points for executive base salaries. As a general policy, we set the base salaries of our Named Executive Officers so that the highest salaries are paid to both our chairman and our chief executive officer, with lower base salaries for our chief financial officer, executive vice president Canada, and executive vice president Egypt. We employ this policy in recognition of the fact that the responsibilities relating to such positions are of the greatest scope for both our chairman and our chief executive officer, with more focused scopes for the others. | |||
26
We generally review the base salaries of all executive officers, including the Named Executive Officers, every 12 to 18 months. Each of the chairman and the chief executive officer provides his recommendations to the MD&C Committee on compensation actions for all executive officers, other than themselves. The MD&C Committee, in conjunction with the chief executive officer, determines whether to adjust the base salaries of our executive officers, including our Named Executive Officers, in connection with these reviews. The MD&C Committee considers each executives benchmarking against the Market Reference Point, position and scope of responsibilities. In addition to such external market considerations, the MD&C Committee also considers internal pay equity among our executives, including the Named Executive Officers, for base salary planning. The foregoing discussion of how the MD&C Committee determines base salaries is not intended to be exhaustive, but does summarize the material factors considered by the MD&C Committee. The MD&C Committee did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the MD&C Committee may have given different weight to different factors. The MD&C Committee conducted an overall analysis of the factors described above and viewed the totality of the information presented to it, including discussions with the Consultant and our senior management. | |||
The most recent increases in base salary for each of our Named Executive Officers was on February 16, 2008 for each of the chairman and the chief executive officer, on May 16, 2007 for the chief financial officer, and on November 1, 2007 for each of the executive vice president Canada and the executive vice president Egypt. | |||
Annual Incentive |
General | ||
The Companys executive officers are eligible to receive an annual cash incentive bonus tied to achievement by the Company of a variety of financial, operational, and strategic objectives and to the executive officers personal performance. We have created separate plans with unique objectives for our executive officers to take into account the different levels and types of responsibility that the executive officers have within the Company. For example, our executive officers, other than our Named Executive Officers, with only regional responsibilities participate in regional incentive plans that are designed to recognize the success of a particular region with respect to production, revenue, and cost results, while corporate-level plans consider the Companys overall results. While these plans are built upon a mix of objective and subjective factors, each plan covering our Named Executive Officers is, on the whole, a qualitative analysis and requires the MD&C Committee to exercise significant discretion in making compensation decisions. | |||
27
The following discussion of the factors considered by the MD&C Committee with respect to each of the Companys plans is not intended to be exhaustive, but does summarize the material factors considered by the MD&C Committee in making its decisions. The MD&C Committee conducted an overall analysis of the factors and viewed the totality of the information presented to it. | |||
Chairman and Chief Executive Officer | |||
Each of the Companys chairman and the chief executive officer are eligible to receive an annual cash incentive bonus determined after consideration of the Companys achievement of financial, operational, and strategic objectives. This plan, which is more comprehensive and less formulaic than those available to the other Named Executive Officers, applies only to each of our chairman and our chief executive officer because the scope of responsibilities to the Company for those positions is broader than those of the other executive positions. The MD&C Committee policy provides for bonuses awarded under this plan targeted at 100 percent of base salary. | |||
In its determination of the 2007 cash incentive bonus for each of the chairman and the chief executive officer, the MD&C Committee considered the general health of the Company as compared to its peers, the effectiveness of its long-term strategy over the last several years, the performance of the Companys stock price compared to its peers during 2007 and over the last several years, as well as the following six corporate goals (the Corporate Goals): production growth of 13 percent, reserve growth of between five and ten percent, annual earnings above $2.0 billion, record annual cash flow, controlling lifting costs per BOE within two percent of the prior year, and controlling general and administrative expenses within three percent of the prior year. | |||
These Corporate Goals were proposed by senior management and then reviewed, modified and approved by the MD&C Committee for 2007. The foregoing discussion of the factors considered by the MD&C Committee is not intended to be exhaustive, but it does summarize the material factors considered by the MD&C Committee in making its decisions with respect to the cash incentive bonuses for each of the chairman and the chief executive officer. In contrast to the analysis it performs for the other executive officers, the MD&C Committee did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. The MD&C Committee conducted an overall analysis of the factors described above and viewed the totality of the information available to it. In contrast to the analysis it performs for the other executive officers, the MD&C Committee also focuses more on the long-term realization of the Companys strategic goals, the comprehensive performance of the Company over several years, and the relative performance of the Company compared to its peer group. | |||
28
Chief Financial Officer, Executive Vice President Canada, and Executive Vice President Egypt | |||
Each of our other corporate executives, including our chief financial officer, executive vice president Canada and executive vice president Egypt, are eligible to receive an annual cash incentive bonus determined after consideration of the Companys achievement of financial, operational, and strategic objectives and the executives personal performance. We believe that the financial, operational, and strategic objectives discussed below are key indicators as to how the Company is measured in the marketplace. The MD&C Committee targets bonuses awarded under this plan at 75 percent of base salary for the chief financial officer, executive vice president Canada and executive vice president Egypt. This annual bonus potential is less than for the chairman and the chief executive officer because the vice presidents only have responsibility for designated operations or regions within the Company and do not have responsibility for the Company as a whole. | |||
Seventy-five percent of the 2007 cash incentive bonus for our executives under this plan was based 50 percent upon the Corporate Goals and 50 percent upon achievement by the Company of both basic and extraordinary strategic objectives tied to the Companys business plan. The MD&C Committee used a point system that weighted each Corporate Goal between ten and 30 percent of the total. If the Company overachieved one or more of the Corporate Goals, the executive officers were awarded credit above the percentage weight for that goal due to the extraordinary nature of these achievements, which was the case for 2007. The MD&C Committee also used a point system that weighted each basic strategic objective between approximately three and 17 percent. If the Company overachieved one or more of the basic objectives, or if it achieved one or more of the extraordinary objectives, the executive officers were awarded additional credit due to the extraordinary nature of these achievements, which was the case in 2007. The MD&C Committee has subjective discretion in determining the relative success of strategic objectives. | |||
In the case of the executive vice presidents of Canada and Egypt, both the chairman and the chief executive officer qualitatively assessed the performance of the region under the control of such executive officer, considering 2007 results for exploration, production, and drilling. Both the chairman and the chief executive officer made recommendations to the MD&C Committee as to whether additional credit should be given for regional achievements. | |||
29
The remaining 25 percent of each executives eligible bonus was based on personal achievement of the executive, as determined by the chief executive officer and recommended to the MD&C Committee. In general, the leadership and management skills of the executive were evaluated. A variety of qualitative and quantitative goals and performance results were taken into account, such as job responsibility, job complexity and successful performance of an executive officers business unit. However, there was no attempt to quantify, rank or otherwise assign relative weights to the factors considered. The chief executive officer conducted an overall analysis of such factors and considered the totality of the information available to him. | |||
Long-Term Incentive |
Long-term incentives relating to the Companys common stock serve to align the interests of executive officers with those of the Companys stockholders by tying a portion of each executive officers long-term compensation to the continued growth of the Company and the appreciation of our common stock. The Company grants a combination of restricted stock units, stock options and periodic conditional grants of performance shares to fall at the 50th percentile Market Reference Point for long-term incentive amounts. Grants of stock options and restricted stock units were made to the Named Executive Officers during 2007. No grants of performance shares were made in 2007. | ||
Restricted Stock Units | |||
In 2007, we granted an aggregate of 124,000 restricted stock units under the Companys Executive Restricted Stock Plan and 2007 Omnibus Equity Compensation Plan to the Companys executive officers as a group. As reflected in the Grants of Plan Based Awards Table, we granted an aggregate of 59,100 restricted stock units to the Named Executive Officers listed in the Summary Compensation Table. Grants of restricted stock units to executive officers, including each Named Executive Officer, are proportionate to each officers base salary. In 2007, individual grants of restricted stock units were based on 100 percent of base salary and vest ratably over four years. | |||
In recognition of his past contributions and expected future contributions to the Company, Mr. Farris, our chief executive officer, was granted a conditional stock award in December 1998, for a total of 100,000 shares of the Companys common stock (230,992 shares after adjustment for the stock dividends and stock split). The award was composed of five periodic installments, the last of which comprised 76,998 shares that vested on January 1, 2008. Under the terms of the grant agreement, each vested installment was paid 60 percent in stock and 40 percent in cash, from which was deducted required tax withholding on the full amount of the vested installment. | |||
Stock Options | |||
In 2007, the Companys executive officers received stock option grants under the Companys 2007 Omnibus Equity Compensation Plan. The grants of stock options made in 2007 to the Named Executive Officers are reflected in the Grants of Plan Based Awards Table. | |||
30
Stock options granted to executive officers are proportionate to each officers base salary, including each of the Named Executive Officers, and benefit them only if stockholders also benefit from appreciating stock prices. In 2007, executive officers received stock option grants based on 100 percent of their base salary, and the Companys chief executive officer received a grant based on 300 percent of base salary in keeping with the equity compensation awards of the Market Reference Point. In May 2007, due to his personal circumstances, the chairman of the board requested that he not be awarded stock options because of the significant degree to which the expense of the award to the Company would exceed the benefit of the award to the chairman and his heirs after income and estate taxes. | |||
Performance Shares | |||
In February 2005, the Company established the 2005 Share Appreciation Plan, which was approved by the Companys stockholders in May 2005. Conditional grants were made broadly across the Company in May 2005 to essentially all regular, full time employees in the United States, Canada, the United Kingdom, Australia, and Argentina, including the Named Executive Officers. The majority of these conditional grants under the 2005 Share Appreciation Plan were made to non-executive officers and are intended to provide specific individual incentives toward achieving significant price appreciation for the Companys common stock based on attainment of per share price goals of $81 prior to January 1, 2008, and $108 prior to January 1, 2009. Benefits are payable under these conditional grants, and the right to receive shares will exist, only if one or both of the above-referenced share price goals are achieved for any ten trading days during any period of 30 consecutive trading days, but prior to the expiration date of the grant. As of June 14, 2007, Apaches share price exceeded the $81 threshold for the required ten days. The first installment of 25 percent was issued in July 2007. Subsequent installments of 25 percent each will be issued in 2008, 2009, and 2010 to participants then employed by the Company. As of February 29, 2008, Apaches share price exceeded the $108 threshold for the required ten days. The first installment of 25 percent will be issued on or before March 28, 2008. Subsequent installments of 25 percent each will be issued in 2009, 2010, and 2011 to participants then employed by the Company. Since the inception of the 2005 Share Appreciation Plan, Apaches long-term shareholders have seen the value of the Company more than double, increasing market capitalization by more than $19 billion. For this achievement, approximately 2,800 Apache employees will potentially receive shares with total value equal to about one percent of the growth in market capitalization. | |||
The MD&C Committee believes that the periodic grant of performance shares, otherwise known as conditional grants, provides an effective retentive element of compensation in the event significant stock price appreciation is achieved. The periodic grant of performance shares complements and reinforces the overall compensation program. | |||
31
Equity Award Timing | |||
The MD&C Committee meets each May to determine annual grants of equity awards for the executive officers of the Company. Actual grants of options are made by the Stock Option Plan Committee of the Companys board of directors. The exercise price for stock option grants is set at the per share closing price for Apache common stock on the day on which the grant is made. The Company does not back date stock option grants. The Company has not and does not time the grant of awards in coordination with the release of material, non-public information. In the case of a newly-hired executive officer, the grant would be submitted for approval at the next regularly scheduled meeting of the Stock Option Plan Committee and the exercise price would be set on the day of such approval. | |||
Benefits
|
General Executive Policies | ||
Apache executive officers are eligible for a limited number of benefits as part of the total compensation provided to maintain a basic level of market competitiveness. This includes a complete diagnostic annual physical, club dues, whole life insurance, enhanced long term disability coverage, and continued contributions to a deferred compensation plan once limits are reached in qualified retirement plans. | |||
Use of Company Property | |||
In addition, to facilitate efficient business travel and for security reasons, the board requires both the chairman and the chief executive officer to use the Companys aircraft for both business and personal travel. The Company also provides the chairman with an apartment, car and driver. | |||
More details on the above benefits are presented under All Other Compensation following the Summary Compensation Table. | |||
No Stock Ownership Requirements |
Because our Named Executive Officers own a significant number of shares of common stock and have been long-term investors in Apache, the Company has not seen the necessity to require that the Named Executive Officers acquire or hold any amount of Company stock. The Company believes that any such requirement would have little effect because the thresholds would likely fall significantly below the number of shares currently owned. As reflected in the Securities Ownership and Principal Holders Table, the Named Executive Officers have substantial holdings of the Companys stock despite the absence of such a requirement. | ||
2007 Executive Compensation Market Analysis Results |
The Named Executive Officers, as a group, received base salaries and annual incentive awards that fell in between the 50th and 75th percentile Market Reference Points. The long-term incentive awards fell slightly below the 50th percentile Market Reference Point. | ||
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2007 MD&C Compensation Decisions Roles and Responsibilities of the Chairman and the Chief Executive Officer |
Raymond Plank, our chairman of the board of directors, was chief executive officer from 1966 until May 2002. From the Companys founding in 1954, his vision, entrepreneurial spirit, and determination have contributed to shaping Apache as it evolved from a small company that organized drilling partnerships to today, when it is one of the larger independent exploration and production companies. After 54 years in the oil and gas industry, Mr. Plank provides experience, contacts, and the ability to gauge appropriate risks that help guide the Company on its successful path. During 54 years under Mr. Planks leadership, the Company successfully navigated and survived multiple economic downturns, recessions, sustained periods of low commodity prices, periods of limited capital availability, and depletion of U.S. reserves to become a successful and growing international independent oil and gas company, positioned to take advantage of recent high commodity prices, without taking undue risks. The board of directors believes the Company and its employees are fortunate to have the ability to draw on the experience and perspective of our founder. | ||
Mr. Plank complements and advises the chief executive officer and the CEOs direct reports and focuses on the long-range direction, capital allocation, cost controls, and strategies of the Company. Mr. Planks responsibilities do not overlap with those of the chief executive officer. Mr. Planks activities include direction of Apaches intensive, on-going programs to monitor, analyze, and respond creatively to the changes and new requirements in the oil and gas industry, and leadership in maintenance of sound business relationships with the management of many of the worlds largest oil and gas companies. These relationships are important to Apaches strategic alliances and to its acquisition approach, which emphasizes privately negotiated transactions that develop and achieve mutual business benefits. Mr. Plank participates in developing the Companys strategies, capital allocation, cost controls, and setting corporate direction. The board of directors believes that Mr. Planks continued service to the Company affords us a competitive advantage over our competitors. | |||
G. Steven Farris, our president, chief executive officer and chief operating officer, assumed the responsibilities of chief executive officer in May 2002. His activities include leadership in developing the Companys strategies, recommending and implementing the Companys capital expenditure programs, and maintenance of sound business relationships with the management of many of the worlds largest oil and gas companies and with the investment community. Mr. Farris has been responsible for the Companys developing interest and successful exploration efforts going forward in international areas such as Egypt, Australia, the North Sea, Argentina, and Canada. As chief executive officer, he oversees all of the Companys major business and staff units, while guiding and developing Apaches senior management. Reporting directly to Mr. Farris is each of the executive vice presidents and corporate and regional vice presidents, including the chief financial officer and the general counsel. | |||
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2007 Corporate Performance |
As described above, 2007 was the Companys best year ever. Records were reached in all key categories of earnings, cash-flow, revenues, production and reserve growth. The Company increased its production by 12 percent, its stock price increased by 62 percent, which was second in our peer group, and it added $14 billion of stockholder value in 2007. | ||
Chairman
|
The Company has had 22 years of consecutive reserve growth and has increased production in 28 out of the last 29 years. Over the last 15 years, the Company has grown reserves by an average of 19 percent per annum and production by an average of 14 percent per annum. The board and the MD&C Committee recognize that this outstanding record of growth is the result of senior managements perseverance with its long-term capital investment program, in the face of significant countervailing pressures from outsiders for stock buybacks and other uses of Company cash that would not have positioned the Company to continue growing reserves and production into the increasing price environment of the past several years. This focus on long-term investments for the future, rather than short-term profits and results, is a direct result of the leadership of both the chairman and the chief executive officer. | ||
In 2007, the Company exceeded four of six of the Corporate Goals for the year. | |||
Based on the foregoing, including the 2007 corporate performance, and in light of the compensation decision making policies described above, the MD&C Committee, on February 16, 2008, increased Mr. Planks base salary slightly from $1,450,000 to $1,500,000, which is approximately the 75th percentile Market Reference Point; and awarded Mr. Plank a cash incentive bonus for 2007 of $1,900,000, which was 132 percent of his 2007 salary. In May 2007, Mr. Plank was awarded long-term incentives in the manner described above under Long-Term Incentive. | |||
Mr. Planks awards are reflected in the Summary Compensation Table and Grants of Plan Based Awards Table. Mr. Planks employment agreement is discussed under Employment Contracts and Termination of Employment and Change-in-Control Arrangements. | |||
Chief Executive Officer |
Based on the foregoing, including the 2007 corporate performance, and in light of the compensation decision making processes and policies described above, the MD&C Committee, on February 16, 2008, increased Mr. Farris base salary slightly from $1,450,000 to $1,500,000, which is approximately the 75th percentile Market Reference Point; and awarded Mr. Farris a cash incentive bonus for 2007 of $1,900,000, which was 132 percent of his 2007 salary. In May 2007, Mr. Farris was awarded long-term incentives in the manner described above under Long-Term Incentive. | ||
Mr. Farris awards are reflected in the Summary Compensation Table and Grants of Plan Based Awards Table. Mr. Farris employment agreement is discussed under Employment Contracts and Termination of Employment and Change-in-Control Arrangements. | |||
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Other Named Executive Officers |
Messrs. Roger Plank, Crum and Eichler have served Apache for a combined 54 years. During this period, each of them has made significant contributions to the Company. After assuming the position of chief financial officer on August 1, 1997, Mr. Roger Plank has been instrumental in managing the financial health of the Company. He has managed the complex financial matters related to the expansion of the Company into the global market place. The scope of his responsibilities is large and has continued to grow in recent years because of securities laws changes such as the Sarbanes-Oxley Act of 2002. Mr. Crum has overseen numerous international operations including increasing the performance of our North Sea properties, spearheading our Australia region and, most recently, leading our Canadian operations. Our Canada region comprises 23 percent of the Companys estimated proved reserves, which makes it the second largest region in the Company. Mr. Eichler has spearheaded our Egypt region for more than ten years. He has been integral to the growth and development of that region. Due to growth during those ten years, Egypt has become the country with the Companys largest single acreage position and immense resource potential. In 2007, Egypt contributed approximately 18 percent of the Companys total production. | ||
In 2007, the Company exceeded four of six of the Corporate Goals for the year. Once the additional credits are taken into account, the strategic objectives were also exceeded for the year. | |||
Based on the foregoing, including the 2007 corporate performance, and in light of the compensation decision making processes and policies described above, including awards and recommendations by both our chairman and our chief executive officer and consideration of the performance of a Company region, as applicable, the Company awarded each of Messrs. Roger Plank, Crum and Eichler cash incentive bonus payments for 2007 of approximately 87 percent of base salary, based on exceeding the targeted performance on both the Corporate Goals and the strategic objectives; awarded Mr. Crum an additional one-time payment of $50,000 in connection with his transition to Canada; and awarded each of them long term incentives in the manner described above under Long-Term Incentive. | |||
In recognition of the Companys outstanding financial and operational results that led to a record setting 2007, the board of directors authorized a special award of 12.65 percent of the approved bonus that was given to all of the Companys employees except for the chairman and the chief executive officer. These additional awards were paid separately to Messrs. Roger Plank, Crum and Eichler but simultaneously with their regular incentive plan bonuses. The total of both cash incentive bonus payments for each of Messrs. Roger Plank, Crum and Eichler for 2007 was 97.5 percent of base salary. | |||
On May 16, 2007, the Company increased Mr. Roger Planks base salary from $500,000 to $535,000, and on November 1, 2007, increased Mr. Crums base salary from $385,000 to $420,000 and Mr. Eichlers base salary from $355,000 to $390,000. | |||
35
Our Named Executive Officers awards are reflected in the Summary Compensation Table and Grants of Plan Based Awards Table. | |||
Other Executives |
Based on the achievement record described above, the MD&C Committee recommended, and the full board of directors unanimously approved, a cash incentive bonus payment of approximately 115 percent of the targets set for executive officers participating in the Annual Incentive plan described above that was applicable to our Named Executive Officers, other than our chairman and our chief executive officer. The special 12.65 percent award mentioned above was in addition to the regular incentive plan bonus payment. | ||
Tax Legislation |
The Omnibus Budget Reconciliation Act of 1993 (OBRA), as interpreted by the Internal Revenue Service on June 4, 2007, imposes a limit, with certain exceptions, on the amount that a publicly held corporation may deduct in any tax year commencing on or after January 1, 1994, for the compensation paid or accrued with respect to its chief executive officer and its three highest compensated officers for the year (other than the principal executive officer or the principal financial officer). The MD&C Committee continues to review the Companys compensation plans based upon these regulations and, from time to time, determines what further actions or changes to the Companys compensation plans, if any, are appropriate. It is the intention of the MD&C Committee to receive stockholder approval for all future stock-based compensation plans so that they may qualify for the performance-based compensation exemption. | ||
The Companys 1995 Stock Option Plan, 1998 Stock Option Plan, 2005 Stock Option Plan, 2005 Share Appreciation Plan, and 2007 Omnibus Equity Compensation Plan were approved by the Companys stockholders and grants made under such plans qualify as performance-based under the regulations. The Companys existing incentive compensation plans, special achievement bonuses, Executive Restricted Stock Plan, and 2000 Stock Option Plan do not meet the requirements of the regulations, as the stockholder approvals necessary for exemption were not sought. However, these plans operate similarly to prior or other existing plans and are designed to reward the contribution and performance of employees and to provide a meaningful incentive for achieving the Companys goals, which in turn enhances stockholder value. No further grants can be made under the 2000 Stock Option Plan as it has since terminated. | |||
Upon stockholder approval of the 2007 Omnibus Equity Compensation Plan on May 2, 2007, the Companys Executive Restricted Stock Plan and 2005 Stock Option Plan were amended to allow no additional grants on or after that date. While the MD&C Committee cannot predict with certainty how the Companys compensation policies may be further impacted by OBRA, it is anticipated that executive compensation paid or accrued pursuant to the Companys compensation plans that have not met the requirements of the regulations will not result in any material loss of tax deductions in the foreseeable future. | |||
36
Internal Revenue Code section 409A requires nonqualified deferred compensation plans to meet requirements in order to avoid acceleration of the recipients federal income taxation of the deferred compensation. The Internal Revenue Service issued final regulations in April 2007 regarding the application of Section 409A, which are generally effective January 1, 2009. In the meantime, companies are expected to comply in good faith with the statute, taking note of the interim guidance issued by the Internal Revenue Service. The Company has amended several of its benefit plans in order for them to be exempt from Section 409A, while the Company continues to provide benefits through several plans that remain subject to Section 409A. The terms of most of these plans have been amended to bring them into a best efforts compliance with the interim guidance on Section 409A, and the terms of all the plans will be amended in 2008, as necessary, to meet the requirements of the final regulations. | |||
37
Change in |
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All Other |
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Awards(2) |
Awards(2) |
Compensation(3) |
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Name and Principal Position(a) | Year(b) | ($)(c) | ($)(d) | ($)(e) | ($)(f) | ($)(g) | ($)(h) | ($)(i) | ($)(j) | ||||||||||||||||||||||||||||||||||||
Raymond Plank
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2007 | 1,437,500 | | 1,127,689 | 669,037 | 1,900,000 | 68,714 | 283,212 | 5,486,152 | ||||||||||||||||||||||||||||||||||||
Chairman of the Board
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2006 | 1,331,250 | | 909,331 | 553,764 | 1,100,000 | 59,997 | 258,846 | 4,213,188 | ||||||||||||||||||||||||||||||||||||
G. Steven Farris
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2007 | 1,437,500 | | 2,043,382 | 896,116 | 1,900,000 | 976,446 | 472,511 | 7,725,955 | ||||||||||||||||||||||||||||||||||||
President, Chief Executive Officer and
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2006 | 1,331,250 | | 1,345,441 | 553,764 | 1,100,000 | 335,106 | 620,100 | 5,285,661 | ||||||||||||||||||||||||||||||||||||
Chief Operating Officer
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|||||||||||||||||||||||||||||||||||||||||||||
Roger B. Plank
|
2007 | 521,875 | | 416,857 | 132,024 | 508,840 | 683,385 | 169,741 | 2,432,722 | ||||||||||||||||||||||||||||||||||||
Executive Vice President and
|
2006 | 490,625 | | 370,454 | 66,220 | 349,600 | 159,992 | 187,260 | 1,624,151 | ||||||||||||||||||||||||||||||||||||
Chief Financial Officer
|
|||||||||||||||||||||||||||||||||||||||||||||
John A. Crum
|
2007 | 390,833 | 50,000 | 289,721 | 98,825 | 381,095 | 1,053,804 | 1,475,265 | 3,739,543 | ||||||||||||||||||||||||||||||||||||
Executive Vice President Canada
|
2006 | 366,042 | | 274,562 | 48,570 | 260,800 | 91,239 | 386,583 | 1,427,796 | ||||||||||||||||||||||||||||||||||||
Rodney J. Eichler
|
2007 | 360,833 | | 288,174 | 92,165 | 351,806 | 173,785 | 703,819 | 1,970,582 | ||||||||||||||||||||||||||||||||||||
Executive Vice President Egypt
|
2006 | 341,459 | | 249,725 | 45,814 | 243,300 | 310,336 | 343,517 | 1,534,151 | ||||||||||||||||||||||||||||||||||||
(1) | For 2007, the Named Executive Officers, with the exception of Mr. Crum, were not entitled to receive payments that would be characterized as bonus payments. Mr. Crum received a one-time payment in connection with his transition to Canada. | |
(2) | Dollar amount of compensation recognized in 2007 for stock awards and option awards, as defined under FAS 123R, including costs related to awards granted in previous years as well as 2007. Dollar amount does not include compensation costs for awards with performance-based vesting requirements that have not been attained and for which attainment has not yet been deemed probable. The discussion of the assumptions used in calculating these values can be found in the footnotes to the Grants of Plan Based Awards Table below and in Note 7 of the Notes to Consolidated Financial Statements included in the Companys Form 10-K for the year ended December 31, 2007. | |
(3) | Amounts reflected under column (g) are paid pursuant to the Companys incentive compensation plan as described under Annual Incentive in the Compensation Discussion and Analysis. The amounts awarded to Messrs. Roger Plank, Crum and Eichler represent the total incentive bonus comprised of the recommended award of $451,700, $338,300, and $312,300, respectively, along with the special award, authorized by the board of directors to recognize a stellar year and described in the Compensation Discussion and Analysis, of an additional 12.65 percent of the original award resulting in the additional payment of $57,140, $42,795 and $39,506, respectively. | |
(4) | See Non-Qualified Deferred Compensation Table below. | |
(5) | For additional information on All Other Compensation, see discussion and table below. |
38
39
Raymond |
G. Steven |
Roger B. |
John A. |
Rodney J. |
||||||||||||||||||||||||||
Benefits | Year | Plank | Farris | Plank | Crum | Eichler | ||||||||||||||||||||||||
Company Contributions Retirement Plans
|
2007 | $ | 27,000 | $ | 27,000 | $ | 27,000 | $ | 27,000 | $ | 27,000 | |||||||||||||||||||
2006 | $ | 26,400 | $ | 26,400 | $ | 26,400 | $ | 26,400 | $ | 26,400 | ||||||||||||||||||||
Company Contributions Non-Qualified Plan
|
2007 | $ | 145,750 | $ | 277,500 | $ | 77,577 | $ | 51,196 | $ | 45,496 | |||||||||||||||||||
2006 | $ | 139,475 | $ | 265,350 | $ | 57,328 | $ | 37,326 | $ | 34,976 | ||||||||||||||||||||
Life Insurance Premiums or Annuity Fees
|
2007 | $ | 1,200 | $ | 76,256 | $ | 12,169 | $ | 13,247 | $ | 18,800 | |||||||||||||||||||
2006 | $ | 1,200 | (a) | $ | 100,475 | $ | 14,979 | $ | 14,707 | $ | 18,800 | |||||||||||||||||||
Reimbursement for Payment of Taxes on
|
2007 | $ | 688 | $ | 43,738 | $ | 6,980 | $ | 7,598 | $ | 13,309 | |||||||||||||||||||
Life Insurance Premiums or Annuity Fees
|
2006 | $ | 688 | $ | 57,629 | $ | 8,591 | $ | 8,435 | $ | 13,309 | |||||||||||||||||||
Use of Company Property
|
2007 | $ | 76,449 | (b) | $ | 24,936 | (c) | $ | 25,830 | (c) | $ | | $ | 6,600 | ||||||||||||||||
2006 | $ | 84,665 | (d) | $ | 153,915 | (d) | $ | 55,401 | (d) | $ | 7,200 | $ | 6,000 | |||||||||||||||||
Reimbursement for Payment of Taxes on
|
2007 | $ | 32,125 | $ | 11,371 | $ | 12,722 | $ | | $ | 88 | |||||||||||||||||||
Use of Company Property
|
2006 | $ | 6,418 | $ | 8,547 | $ | 16,685 | $ | 106 | $ | 88 | |||||||||||||||||||
Enhanced Long Term Disability Coverage,
|
2007 | $ | | $ | 10,276 | $ | 6,029 | $ | 5,841 | $ | 3,382 | |||||||||||||||||||
Annual Physicals, and Club Memberships
|
2006 | $ | | $ | 7,393 | $ | 6,200 | $ | 3,427 | $ | 2,768 | |||||||||||||||||||
Reimbursement for Payment of Taxes on
|
2007 | $ | | $ | 1,434 | $ | 1,434 | $ | 1,434 | $ | | |||||||||||||||||||
Annual Physicals and Club Memberships
|
2006 | $ | | $ | 391 | $ | 1,676 | $ | 516 | $ | 283 | |||||||||||||||||||
Subtotal Benefits 2007
|
$ | 283,212 | $ | 472,511 | $ | 169,741 | $ | 106,316 | $ | 114,675 | ||||||||||||||||||||
Subtotal Benefits 2006
|
$ | 258,846 | $ | 620,100 | $ | 187,260 | $ | 98,117 | $ | 102,624 | ||||||||||||||||||||
40
Raymond |
G. Steven |
Roger B. |
John A. |
Rodney J. |
||||||||||||||||||||||||||
Foreign Assignment Allowances | Year | Plank | Farris | Plank | Crum | Eichler | ||||||||||||||||||||||||
Foreign Service Premium
|
2007 | $ | | $ | | $ | | $ | 29,750 | $ | 54,125 | |||||||||||||||||||
2006 | $ | | $ | | $ | | $ | 26,250 | $ | 51,219 | ||||||||||||||||||||
Foreign Assignment Tax Equalization
|
2007 | $ | | $ | | $ | | $ | 1,219,854 | (e) | $ | 355,055 | ||||||||||||||||||
2006 | $ | | $ | | $ | | $ | 187,808 | $ | | ||||||||||||||||||||
Location Pay
|
2007 | $ | | $ | | $ | | $ | | $ | 72,166 | |||||||||||||||||||
2006 | $ | | $ | | $ | | $ | | $ | 68,292 | ||||||||||||||||||||
Housing and Utilities
|
2007 | $ | | $ | | $ | | $ | 63,683 | $ | 47,093 | |||||||||||||||||||
2006 | $ | | $ | | $ | | $ | 11,137 | $ | 47,954 | ||||||||||||||||||||
Home Leave and Travel
|
2007 | $ | | $ | | $ | | $ | | $ | 55,540 | |||||||||||||||||||
2006 | $ | | $ | | $ | | $ | | $ | 72,678 | ||||||||||||||||||||
Goods and Services Allowance
|
2007 | $ | | $ | | $ | | $ | 22,383 | $ | 4,415 | |||||||||||||||||||
2006 | $ | | $ | | $ | | $ | 33,354 | $ | | ||||||||||||||||||||
Relocation Allowance
|
2007 | $ | | $ | | $ | | $ | 32,529 | $ | | |||||||||||||||||||
2006 | $ | | $ | | $ | | $ | 29,167 | $ | | ||||||||||||||||||||
Tax Return Preparation
|
2007 | $ | | $ | | $ | | $ | 750 | $ | 750 | |||||||||||||||||||
2006 | $ | | $ | | $ | | $ | 750 | $ | 750 | ||||||||||||||||||||
Subtotal Foreign Assignment Allowances 2007
|
$ | | $ | | $ | | $ | 1,368,949 | $ | 589,144 | ||||||||||||||||||||
Subtotal Foreign Assignment Allowances 2006
|
$ | | $ | | $ | | $ | 288,466 | $ | 240,893 | ||||||||||||||||||||
Total All Other Compensation 2007
|
$ | 283,212 | $ | 472,511 | $ | 169,741 | $ | 1,475,265 | $ | 703,819 | ||||||||||||||||||||
Total All Other Compensation 2006
|
$ | 258,846 | $ | 620,100 | $ | 187,260 | $ | 386,583 | $ | 343,517 | ||||||||||||||||||||
(a) | For Raymond Plank, annuity fee related to the 20-year annuity purchased in exchange for surrendering life insurance coverage. | |
(b) | For Raymond Plank, this amount for 2007 includes $40,447 for use of Company-owned apartment, $5,158 for Company-provided car and driver, and $30,844 for use of corporate aircraft of which $10,220 was related to Company-supported charitable interests. | |
(c) | These amounts for 2007 are for use of corporate aircraft. For Roger B. Plank, the amount includes $3,650 related to Company-supported charitable interests. | |
(d) | For Raymond Plank, G. Steven Farris, and Roger B. Plank, these amounts for 2006 are for use of corporate aircraft, of which $3,204, $23,078, and $10,883, respectively, was related to Company-supported charitable interests. | |
(e) | This amount includes an overpayment of tax paid by the Company on Mr. Crums behalf to the Canada Revenue Agency in connection with the gain on his 2007 stock option exercise. It has been determined that this income was not subject to withholding in Canada and, therefore, the overpayment will be remitted back to the Company in a future tax year. |
41
Estimated Future |
All Other |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future |
Payouts Under |
Stock |
All Other Option |
Grant Date |
|||||||||||||||||||||||||||||||||||||||||||||||||||
Payouts Under |
Equity Incentive Plan |
Awards: Number |
Awards: Number |
Exercise or Base |
Fair |
||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan Awards | Awards |
of Shares of |
of Securities |
Price of |
Value of Stock |
||||||||||||||||||||||||||||||||||||||||||||||||||
Stock or |
Underlying |
Option |
and Option |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Units(#) |
Options(#) |
Awards ($/Sh) |
Awards ($) |
|||||||||||||||||||||||||||||||||||||||||||||
Name(a) | Date(b) | ($)(c) | ($)(d) | ($)(e) | (#)(f) | (#)(g) | (#)(h) | (1)(i) | (2)(j) | (4)(k) | (1)(5)(l) | ||||||||||||||||||||||||||||||||||||||||||||
Raymond Plank
|
05/01/2007 | | | | | | | 20,700 | | | 1,517,103 | ||||||||||||||||||||||||||||||||||||||||||||
05/02/2007 | | | | | | | | (3 | ) | (3 | ) | (3 | ) | ||||||||||||||||||||||||||||||||||||||||||
G. Steven Farris
|
05/01/2007 | | | | | | | 20,700 | | | 1,517,103 | ||||||||||||||||||||||||||||||||||||||||||||
05/02/2007 | | | | | | | | 62,100 | 74.10 | 1,362,474 | |||||||||||||||||||||||||||||||||||||||||||||
Roger B. Plank
|
05/01/2007 | | | | | | | 7,100 | | | 520,359 | ||||||||||||||||||||||||||||||||||||||||||||
05/02/2007 | | | | | | | | 14,300 | 74.10 | 313,742 | |||||||||||||||||||||||||||||||||||||||||||||
John A. Crum
|
05/01/2007 | | | | | | | 5,500 | | | 403,095 | ||||||||||||||||||||||||||||||||||||||||||||
05/02/2007 | | | | | | | | 11,000 | 74.10 | 241,340 | |||||||||||||||||||||||||||||||||||||||||||||
Rodney J. Eichler
|
05/01/2007 | | | | | | | 5,100 | | | 373,779 | ||||||||||||||||||||||||||||||||||||||||||||
05/02/2007 | | | | | | | | 10,100 | 74.10 | 221,594 | |||||||||||||||||||||||||||||||||||||||||||||
(1) | This column reflects the number of restricted stock units granted under the terms of the Executive Restricted Stock Plan. Such restricted stock units vest ratably over four years and no dividends are paid on such units until vested. The grant date fair value of these awards is based on a closing price of the Companys common stock on the date of grant. | |
(2) | This column sets forth the number of shares of the Companys common stock subject to options granted under the terms of the 2007 Omnibus Equity Compensation Plan. The options granted under the terms of the 2007 Omnibus Equity Compensation Plan are generally nontransferable and become exercisable ratably over four years. The options were granted for a term of ten years, subject to earlier termination in specific circumstances related to termination of employment, and are not intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code. The exercise price and any withholding tax requirements may be paid by cash and/or delivery or attestation of already-owned shares of the Companys common stock. | |
The Companys stock option plans, including the 2007 Omnibus Equity Compensation Plan, are administered by the Stock Option Plan Committee of Apaches board of directors. | ||
Options granted under the 2007 Omnibus Equity Compensation Plan are subject to appropriate adjustment in the event of reorganization, stock split, stock dividend, combination of shares, merger, consolidation or other recapitalization of the Company. If there is a change in control of the Company, all outstanding options become automatically vested so as to make all such options fully vested and exercisable as of the date of such change of control. A change in control occurs when a person, partnership or corporation acting in concert, or any or all of them, acquires more than 20 percent of the Companys outstanding voting securities. A change in control shall not occur if, prior to the acquisition of more than 20 percent of the Companys voting securities, such persons, partnerships or corporations are solicited to do so by the Companys board of directors. | ||
(3) | Raymond Plank requested that he not be granted stock options in May 2007 see discussion under the heading Long-Term Incentive in the Compensation Discussion and Analysis. |
42
(4) | The exercise price is the closing price per share of the Companys common stock on the date of grant, as reported on The New York Exchange, Inc. Composite Transactions Reporting System. | |
(5) | The grant date present value is based on the Black-Scholes option pricing model adapted for use in calculating the fair value of executive stock options, using the following assumptions for the grants made May 2, 2007: volatility 24.35 percent; risk free rate of return 4.55 percent; dividend yield 0.81 percent; and expected option life 5.5 years. There were no adjustments made to the model for non-transferability or risk of forfeiture. The actual value, if any, an executive may realize will depend on the excess of the market price over the exercise price on the date the option is exercised. There is no assurance the value realized by an executive will be at or near the value estimated by the Black-Scholes model. |
43
Option Awards |
Stock Awards |
||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive |
|||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive |
Equity Incentive |
Plan Awards: |
|||||||||||||||||||||||||||||||||||||||||||
Number of |
Number of |
Plan Awards: |
Number of |
Plan Awards: |
Market or |
||||||||||||||||||||||||||||||||||||||||
Securities |
Securities |
Number of |
Shares or |
Market Value |
Number of |
Payout Value of |
|||||||||||||||||||||||||||||||||||||||
Underlying |
Underlying |
Securities |
Units of |
of Shares |
Unearned Shares, |
Unearned Shares, |
|||||||||||||||||||||||||||||||||||||||
Unexercised |
Unexercised |
Underlying |
Option |
Option |
Stock that |
or Units of |
Units or Other |
Units or Other |
|||||||||||||||||||||||||||||||||||||
Options |
Options |
Unexercised |
Exercise |
Expiration |
Have Not |
Stock that Have |
Rights That Have |
Rights That Have |
|||||||||||||||||||||||||||||||||||||
Exercisable |
Unexercisable |
Unearned Options |
Price |
Date |
Vested |
Not Vested(1) |
Not Vested |
Not Vested |
|||||||||||||||||||||||||||||||||||||
Name(a) | (#)(b) | (#)(c) | (#)(d) | ($)(e) | (f) | (#)(g) | ($)(h) | (#)(i) | ($)(j) | ||||||||||||||||||||||||||||||||||||
Raymond Plank
|
37,750 | | | 14.4210 | 05/05/2009 | 2,650 | (2) | 284,981 | 22,220 | (7) | | (7) | |||||||||||||||||||||||||||||||||
57,750 | | | 17.9654 | 09/22/2009 | 10,750 | (3) | 1,156,055 | 11,108 | (4) | 1,194,554 | (1) | ||||||||||||||||||||||||||||||||||
31,865 | | | 49.7100 | 05/03/2010 | 14,100 | (5) | 1,516,314 | | | ||||||||||||||||||||||||||||||||||||
79,174 | | | 49.7100 | 05/02/2011 | 20,700 | (6) | 2,226,078 | | | ||||||||||||||||||||||||||||||||||||
31,750 | 31,750 | (9) | | 56.7300 | 05/05/2015 | ||||||||||||||||||||||||||||||||||||||||
14,075 | 42,225 | (5) | | 71.8800 | 05/03/2016 | ||||||||||||||||||||||||||||||||||||||||
G. Steven Farris
|
57,750 | | | 14.4210 | 05/05/2009 | 76,998 | (8) | 8,280,365 | 22,220 | (7) | | (7) | |||||||||||||||||||||||||||||||||
57,750 | | | 17.9654 | 09/22/2009 | 2,650 | (2) | 284,981 | 11,108 | (4) | 1,194,554 | (1) | ||||||||||||||||||||||||||||||||||
29,253 | | | 49.7100 | 05/03/2010 | 10,750 | (3) | 1,156,055 | | | ||||||||||||||||||||||||||||||||||||
79,174 | | | 49.7100 | 05/02/2011 | 14,100 | (5) | 1,516,314 | | | ||||||||||||||||||||||||||||||||||||
31,750 | 31,750 | (9) | | 56.7300 | 05/05/2015 | 20,700 | (6) | ||||||||||||||||||||||||||||||||||||||
14,075 | 42,225 | (5) | | 71.8800 | 05/03/2016 | ||||||||||||||||||||||||||||||||||||||||
| 62,100 | (10) | | 74.1000 | 05/02/2017 | ||||||||||||||||||||||||||||||||||||||||
Roger B. Plank
|
18,364 | | | 14.4210 | 05/05/2009 | 1,200 | (2) | 129,048 | 8,800 | (7) | | (7) | |||||||||||||||||||||||||||||||||
18,480 | | | 17.9654 | 09/22/2009 | 3,900 | (3) | 419,406 | 4,395 | (4) | 472,638 | (1) | ||||||||||||||||||||||||||||||||||
48,972 | | | 21.2663 | 05/03/2010 | 4,950 | (5) | 532,323 | | | ||||||||||||||||||||||||||||||||||||
26,267 | | | 51.1400 | 05/02/2011 | 7,100 | (6) | 763,534 | | | ||||||||||||||||||||||||||||||||||||
11,682 | | | 51.1400 | 05/03/2010 | |||||||||||||||||||||||||||||||||||||||||
3,850 | 3,850 | (3) | | 56.7300 | 05/05/2015 | ||||||||||||||||||||||||||||||||||||||||
1,650 | 4,950 | (5) | | 71.8800 | 05/03/2016 | ||||||||||||||||||||||||||||||||||||||||
| 14,300 | (10) | | 74.1000 | 05/02/2017 | ||||||||||||||||||||||||||||||||||||||||
John A. Crum
|
14,090 | | | 21.2663 | 05/03/2010 | 875 | (2) | 94,098 | 6,480 | (7) | | (7) | |||||||||||||||||||||||||||||||||
32,802 | | | 25.1083 | 05/02/2011 | 2,850 | (3) | 306,489 | 3,240 | (4) | 348,430 | (1) | ||||||||||||||||||||||||||||||||||
2,800 | 2,800 | (9) | | 56.7300 | 05/05/2015 | 3,675 | (5) | 395,210 | | | |||||||||||||||||||||||||||||||||||
1,225 | 3,675 | (5) | | 71.8800 | 05/03/2016 | 5,500 | (6) | 591,470 | | | |||||||||||||||||||||||||||||||||||
| 11,000 | (10) | | 74.1000 | 05/02/2017 | ||||||||||||||||||||||||||||||||||||||||
Rodney J. Eichler
|
9,124 | | | 11.6884 | 09/17/2008 | 800 | (2) | 86,032 | 6,110 | (7) | | (7) | |||||||||||||||||||||||||||||||||
10,164 | | | 14.4210 | 05/05/2009 | 2,700 | (3) | 290,358 | 3,053 | (4) | 328,320 | (1) | ||||||||||||||||||||||||||||||||||
10,164 | | | 17.9654 | 09/22/2009 | 3,450 | (5) | 371,013 | | | ||||||||||||||||||||||||||||||||||||
22,406 | | | 25.1083 | 05/02/2011 | 5,100 | (6) | 548,454 | | | ||||||||||||||||||||||||||||||||||||
1,328 | | | 55.6200 | 05/03/2010 | |||||||||||||||||||||||||||||||||||||||||
2,650 | 2,650 | (9) | | 56.7300 | 05/05/2015 | ||||||||||||||||||||||||||||||||||||||||
1,150 | 3,450 | (5) | | 71.8800 | 05/03/2016 | ||||||||||||||||||||||||||||||||||||||||
| 10,100 | (10) | | 74.1000 | 05/02/2017 | ||||||||||||||||||||||||||||||||||||||||
(1) | Based on the per share closing price of the Companys common stock of $107.54 for December 31, 2007. | |
(2) | Vests on 05/06/2008. | |
(3) | Vests ratably on 05/04/2008 and 05/04/2009. | |
(4) | Vests ratably on 06/14/2008, 06/14/2009 and 06/14/2010. | |
(5) | Vests ratably on 05/03/2008, 05/03/2009 and 05/03/2010. | |
(6) | Vests ratably on 06/01/2008, 05/01/2009, 05/01/2010 and 05/01/2011. | |
(7) | Vests only if $108.00 price threshold attained prior to 01/01/2009; no payout value unless vesting occurs. | |
(8) | Vests on 01/01/2008 under terms of conditional grant agreement see footnotes to Option Exercises and Stock Vested Table. | |
(9) | Vests ratably on 05/05/08 and 05/05/09. | |
(10) | Vests ratably on 05/02/08, 05/02/09, 05/02/10, 05/02/11. |
44
Option Awards |
Stock Awards |
|||||||||||||||||||
Number of Shares |
Value Realized |
Number of Shares |
Value Realized |
|||||||||||||||||
Acquired on Exercise |
on Exercise |
Acquired on Vesting |
on Vesting |
|||||||||||||||||
Name(a) | (#)(b) | ($)(c) | (#)(d)(i) | ($)(e)(i) | ||||||||||||||||
Raymond Plank
|
153,636 | 9,970,577 | 20,327 | 1,590,405 | ||||||||||||||||
G. Steven Farris
|
0 | 0 | 81,925 | (ii) | 5,687,288 | (ii) | ||||||||||||||
Roger B. Plank
|
88,122 | 5,989,187 | 8,065 | 629,150 | ||||||||||||||||
John A. Crum
|
65,718 | 3,984,285 | 5,905 | 460,870 | ||||||||||||||||
Rodney J. Eichler
|
18,248 | 1,357,272 | 5,517 | (iii) | 430,737 | (iii) | ||||||||||||||
(i) | Reflects restricted stock units vested under the terms of the Executive Restricted Stock Plan and conditional grants vested under the 2005 Share Appreciation Plan. | |
(ii) | Includes compensation of $4,096,883 related to the vesting of the fourth periodic installment of 61,598 shares under Mr. Farris conditional stock award, of which 36,959 shares (60 percent) were paid to Mr. Farris in the form of stock. The value of the remaining 24,639 shares (40 percent) was paid in cash, based on the per share closing price of the Companys common stock of $66.51 on December 29, 2006. Required tax withholding on the full amount of the fourth vested installment was deducted from the portion paid in cash. |
(iii) | For Mr. Eichler, includes compensation of $343,102 related to the vesting of 4,500 shares that, after required FICA tax withholding of $4,975, was deferred under the terms of Apaches Deferred Delivery Plan. |
45
Aggregate |
||||||||||||||||||||||||||||
Executive |
Registrant |
Aggregate |
Aggregate |
Balance |
||||||||||||||||||||||||
Contributions in |
Contributions in |
Earnings in |
Withdrawals/ |
at Last |
||||||||||||||||||||||||
Last FY |
Last FY |
Last FY |
Distributions |
FYE |
||||||||||||||||||||||||
Name(a) | ($)(b) | ($)(c) | ($)(d) | ($)(e) | ($)(f) | |||||||||||||||||||||||
Raymond Plank
|
(i) | 0 | 145,750 | 384 | 139,725 | 7,014 | ||||||||||||||||||||||
(ii) | 0 | 0 | 68,330 | 3,708,210 | 9,274,635 | |||||||||||||||||||||||
G. Steven Farris
|
(i) | 135,125 | 227,500 | 976,446 | (iii) | 0 | 5,811,399 | |||||||||||||||||||||
(ii) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
Roger B. Plank
|
(i) | 106,816 | 77,577 | 663,582 | (iii) | 0 | 3,283,053 | |||||||||||||||||||||
(ii) | 0 | 0 | 19,803 | 301,381 | 3,297,183 | |||||||||||||||||||||||
John A. Crum
|
(i) | 30,634 | 51,196 | 1,053,804 | (iii) | 0 | 3,768,813 | |||||||||||||||||||||
(ii) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
Rodney J. Eichler
|
(i) | 349,788 | 45,496 | 161,769 | (iii) | 0 | 3,015,913 | |||||||||||||||||||||
(ii) | 338,127 | 0 | 12,016 | 0 | 2,402,168 | |||||||||||||||||||||||
(i) | Non-Qualified Retirement/Savings Plan see discussion under All Other Compensation above. The amounts in column (c) are included in the Summary Compensation Table under All Other Compensation. | |
(ii) | Deferred Delivery Plan see discussion under All Other Compensation above and footnote (2) to the table under Equity Compensation Plan Information above. The amounts in column (d) are not included in the Summary Compensation Table. | |
(iii) | Includes unrealized gain or loss as follows: Mr. Farris $537,882; Mr. Roger Plank $559,433; Mr. Crum $991,105; and Mr. Eichler ($156,205). These amounts are not included in the Summary Compensation Table. |
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Retirement or |
Termination |
Change of |
|||||||||||||||||||||||
Voluntary |
For Cause |
without |
Control |
||||||||||||||||||||||
Name | Termination | Termination | Cause | Termination(4) | Death | ||||||||||||||||||||
Raymond Plank
|
|||||||||||||||||||||||||
Employment Contract(1)
|
$ | 725,000/year | $ | 725,000/year | $ | 725,000/year | $ | 725,000/year | $ | 750,000 | |||||||||||||||
Income Continuance Plan
|
N/A | N/A | N/A | $ | 5,100,000 | N/A | |||||||||||||||||||
Benefits Continuation
|
|||||||||||||||||||||||||
Health
|
$ | 151,000 | $ | 151,000 | $ | 151,000 | $ | 151,000 | $ | 0 | |||||||||||||||
Life
|
$ | 1,200 | $ | 1,200 | $ | 1,200 | $ | 1,200 | $ | 0 | |||||||||||||||
Unvested & Accelerated
|
|||||||||||||||||||||||||
Restricted Stock Units
|
$ | 1,194,554 | $ | 0 | $ | 0 | $ | 6,377,982 | $ | 6,377,982 | |||||||||||||||
Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 3,118,961 | $ | 3,118,961 | |||||||||||||||
TOTAL
|
$ | 2,071,754 | $ | 877,200 | $ | 877,200 | $ | 15,474,143 | $ | 10,246,943 | |||||||||||||||
G. Steven Farris
|
|||||||||||||||||||||||||
Employment Contract(2)
|
$ | 0 | $ | 0 | $ | 6,525,000 | $ | 6,525,000 | $ | 6,525,000 | |||||||||||||||
Income Continuance Plan
|
$ | 0 | $ | 0 | $ | 0 | $ | 5,100,000 | N/A | ||||||||||||||||
Benefits Continuation
|
$ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||
Health
|
$ | 23,892 | $ | 1,952 | |||||||||||||||||||||
Life
|
$ | 152,704 | |||||||||||||||||||||||
Unvested & Accelerated
|
|||||||||||||||||||||||||
Restricted Stock Units(3)
|
$ | 0 | $ | 0 | $ | 0 | $ | 12,432,270 | $ | 12,432,270 | |||||||||||||||
Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 5,195,585 | $ | 5,195,585 | |||||||||||||||
TOTAL
|
$ | 0 | $ | 0 | $ | 6,525,000 | $ | 29,429,451 | $ | 24,154,807 | |||||||||||||||
Roger B. Plank
|
|||||||||||||||||||||||||
Income Continuance Plan
|
$ | 0 | $ | 0 | $ | 0 | $ | 1,769,200 | $ | 0 | |||||||||||||||
Benefits Continuation
|
|||||||||||||||||||||||||
Health
|
$ | 0 | $ | 0 | $ | 0 | $ | 35,248 | $ | 0 | |||||||||||||||
Life
|
$ | 0 | $ | 0 | $ | 0 | $ | 24,542 | $ | 0 | |||||||||||||||
Unvested & Accelerated
|
|||||||||||||||||||||||||
Restricted Stock Units
|
$ | 0 | $ | 0 | $ | 0 | $ | 2,316,951 | $ | 2,316,951 | |||||||||||||||
Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 850,328 | $ | 850,328 | |||||||||||||||
TOTAL
|
$ | 0 | $ | 0 | $ | 0 | (5) | $ | 4,996,269 | $ | 3,167,279 | ||||||||||||||
John A. Crum
|
|||||||||||||||||||||||||
Income Continuance Plan
|
$ | 0 | $ | 0 | $ | 0 | $ | 1,361,600 | $ | 0 | |||||||||||||||
Benefits Continuation
|
|||||||||||||||||||||||||
Health
|
$ | 0 | $ | 0 | $ | 0 | $ | 35,248 | $ | 0 | |||||||||||||||
Life
|
$ | 0 | $ | 0 | $ | 0 | $ | 26,698 | $ | 0 | |||||||||||||||
Unvested & Accelerated
|
|||||||||||||||||||||||||
Restricted Stock Units
|
$ | 0 | $ | 0 | $ | 0 | $ | 1,737,697 | $ | 1,737,697 | |||||||||||||||
Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 641,159 | $ | 641,159 | |||||||||||||||
TOTAL
|
$ | 0 | $ | 0 | $ | 0 | (5) | $ | 3,802,402 | $ | 2,378,856 | ||||||||||||||
Rodney J. Eichler
|
|||||||||||||||||||||||||
Income Continuance Plan
|
$ | 0 | $ | 0 | $ | 0 | $ | 1,266,600 | $ | 0 | |||||||||||||||
Benefits Continuation
|
|||||||||||||||||||||||||
Health
|
$ | 0 | $ | 0 | $ | 0 | $ | 27,296 | $ | 0 | |||||||||||||||
Life
|
$ | 0 | $ | 0 | $ | 0 | $ | 37,804 | $ | 0 | |||||||||||||||
Unvested & Accelerated
|
|||||||||||||||||||||||||
Restricted Stock Units
|
$ | 0 | $ | 0 | $ | 0 | $ | 1,624,177 | $ | 1,624,177 | |||||||||||||||
Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 595,418 | $ | 595,418 | |||||||||||||||
TOTAL
|
$ | 0 | $ | 0 | $ | 0 | (5) | $ | 3,551,295 | $ | 2,219,595 | ||||||||||||||
47
(1) | Mr. Raymond Plank serves the Company under an employment agreement entered into in December 1975, amended and restated in December 1990, and amended in April 1996. The agreement has an undefined term and is terminable at will by the Companys board of directors. Mr. Planks annual compensation under the agreement is determined by the board of directors, but may not be less than $450,000. If his service as a director and an officer is terminated or if he retires, Mr. Plank will serve as an advisor and consultant to the Company for the remainder of his life at annual compensation equal to 50 percent of his then-current annual compensation and will receive health, dental, and vision benefits for himself, his spouse, and his eligible dependents during the remainder of his life. Pursuant to the agreement and in exchange for surrendering life insurance coverage, an annuity was purchased for Mr. Plank that pays $31,500 annually until April 1, 2008. Mr. Plank has agreed not to render service to any of the Companys competitors for the entire period covered by the agreement. Upon Mr. Planks death, a total of $750,000 shall be paid (a) to his designee in equal monthly installments over ten years, or (b) if he has made no designation, in a lump sum to his estate. | |
(2) | Mr. Farris serves the Company pursuant to an employment agreement, dated June 6, 1988, under which his base salary as of year-end 2007 is $1,450,000. The agreement has an undefined term and may be terminated by either the Company or Mr. Farris on 30 days advance written notice. If Mr. Farris employment is terminated without cause (as defined in the employment agreement), or if he terminates his employment within 30 days of a reduction in his salary without a proportionate reduction in the salaries of all other Company executives, Mr. Farris will receive, for 36 months thereafter, (a) an amount equal to his base salary as it existed 60 days prior to termination and (b) 50 percent of the maximum amount for which he qualified under the Companys incentive compensation plan, calculated on his base compensation as it existed 60 days prior to termination. In the event of Mr. Farris death during the 36-month period, the amounts described above shall be paid to his heirs or estate in addition to continuing individual dependent benefits for 60 days. Mr. Farris has agreed not to render service to any of the Companys competitors for the term of his employment or, unless he is terminated without cause, for 36 months thereafter. | |
(3) | On December 17, 1998, Mr. Farris was granted a conditional stock award, the basic provisions of which are discussed above in the footnotes to the Option Exercises and Stock Vested Table and under the heading Long-Term Incentive in the Compensation Discussion and Analysis. Under the terms of the agreement for this award, the vesting of the remaining periodic installment is subject to acceleration under specific circumstances. Those circumstances generally relate to (a) termination of Mr. Farris employment other than for cause, (b) his death or total disability, (c) an individual other than Mr. Raymond Plank or Mr. Farris becoming the Companys chief executive officer, or (d) merger, acquisition or other change-in-control of the Company. The fifth and final vesting occurred on January 1, 2008, and these provisions were not triggered. | |
(4) | In addition to the foregoing, the Company has established an income continuance plan. The plan provides that all officers of the Company, including the Named Executive Officers, and all employees who have either reached the age of 40, served the Company for more than ten years, or have been designated for participation based upon special skills or experience, will receive monthly payments approximating their monthly income and continued health and life benefits from the Company for up to two years, if their employment is terminated as a result of a change in control of the Company (as defined in the plan). | |
(5) | Although there are no written or unwritten contracts, agreements, plans, arrangements, or obligations in place for termination without cause, the Company has, from time to time, paid executive level positions up to two times base salary and benefits continuation for two years. Decisions by the Company to pay termination benefits, and in what amounts, are determined on an individual case basis and not as a matter of policy. |
48
49