def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
|
o |
|
Preliminary Proxy Statement |
|
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
þ |
|
Definitive Proxy Statement |
|
o |
|
Definitive Additional Materials |
o |
|
Soliciting Material Pursuant to §240.14a-12 |
Apache Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
(3) |
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
APACHE
CORPORATION
One Post Oak Central
2000 Post Oak Boulevard, Suite 100
Houston, Texas
77056-4400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 2011 annual meeting of shareholders of Apache Corporation, a
Delaware corporation, will be held on Thursday, May 5,
2011, at 10:00 a.m. (Houston time), at the Hilton Houston
Post Oak, 2001 Post Oak Boulevard, Houston, Texas, for the
following purposes:
|
|
|
|
1.
|
Election of four directors named in the attached proxy statement
to serve until the Companys annual meeting in 2014;
|
|
|
2.
|
Ratification of Ernst & Young LLP as the
Companys independent auditors for fiscal year 2011;
|
|
|
3.
|
An advisory vote on the compensation of the Companys named
executive officers;
|
|
|
4.
|
An advisory vote on the frequency of the advisory vote on the
compensation of the Companys named executive officers;
|
|
|
5.
|
Approval of an amendment to the Companys Restated
Certificate of Incorporation to authorize additional common
stock;
|
|
|
6.
|
Approval of an amendment to the Companys Restated
Certificate of Incorporation to authorize additional preferred
stock;
|
|
|
7.
|
Approval of the Companys 2011 Omnibus Equity Compensation
Plan; and
|
|
|
8.
|
Transaction of any other business that may properly come before
the meeting or any adjournment thereof.
|
Holders of record of the Companys common stock as of the
close of business on March 7, 2011, are entitled to notice
of, and to vote at, the annual meeting.
It is important that your shares are represented at the meeting.
We encourage you to designate the proxies named on the enclosed
proxy card to vote your shares on your behalf and per your
instructions. This action does not limit your right to vote in
person or to attend the meeting.
By order of the Board of Directors
APACHE CORPORATION
C. L. Peper
Corporate Secretary
Houston, Texas
April 7, 2011
Important
Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to be held on May 5,
2011:
This
proxy statement, along with the Companys Annual Report on
Form 10-K/A
for the fiscal year ended December 31, 2010 and the 2010
Summary Annual Report, are available free of charge on the
Companys website at
http://www.apachecorp.com
Proxy
Statement Table of Contents
|
|
|
|
|
|
|
Page
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
9
|
|
|
|
|
12
|
|
|
|
|
15
|
|
|
|
|
18
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
23
|
|
|
|
|
24
|
|
|
|
|
25
|
|
|
|
|
26
|
|
|
|
|
30
|
|
|
|
|
47
|
|
|
|
|
48
|
|
|
|
|
54
|
|
|
|
|
57
|
|
|
|
|
58
|
|
|
|
|
59
|
|
|
|
|
60
|
|
|
|
|
62
|
|
|
|
|
63
|
|
|
|
|
65
|
|
|
|
|
67
|
|
|
|
|
68
|
|
|
|
|
69
|
|
|
|
|
71
|
|
|
|
|
73
|
|
|
|
|
84
|
|
|
|
|
84
|
|
|
|
|
85
|
|
|
|
|
A-1
|
|
|
|
|
B-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 shareholders 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 shareholders 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 shareholders of record on December 31, 2001.
|
APACHE
CORPORATION
One Post Oak Central
2000 Post Oak Boulevard, Suite 100
Houston, Texas
77056-4400
April 7, 2011
PROXY
STATEMENT
General
This proxy statement contains information about the 2011 annual
meeting of shareholders of Apache Corporation. In this proxy
statement both Apache and the Company
refer to Apache Corporation. This proxy statement and the
enclosed proxy card are being mailed to you by the
Companys board of directors starting on or about
April 14, 2011.
Purpose
of the Annual Meeting
At the Companys annual meeting, shareholders will vote on
the following matters:
|
|
|
Items 1-4:
election of directors,
|
|
|
Item 5: ratification of Ernst & Young LLP as the
Companys independent auditors,
|
|
|
Item 6: an advisory vote on the compensation of the
Companys named executive officers,
|
|
|
Item 7: an advisory vote on the frequency of the advisory
vote on the compensation of the Companys named executive
officers,
|
|
|
Item 8: approval of a proposed amendment to the
Companys Restated Certificate of Incorporation to
authorize additional common stock,
|
|
|
Item 9: approval of a proposed amendment to the
Companys Restated Certificate of Incorporation to
authorize additional preferred stock,
|
|
|
Item 10: approval the Companys 2011 Omnibus Equity
Compensation Plan (the 2011 Omnibus Plan), and
|
|
|
On any other business that properly comes before the meeting. As
of the date of this proxy statement, the Company is not aware of
any other business to come before the meeting.
|
There are no rights of appraisal or similar rights of dissenters
arising from matters to be acted on at the meeting.
Who Can
Vote
Only shareholders of record holding shares of Apache common
stock at the close of business on the record date, March 7,
2011, are entitled to receive notice of the annual meeting and
to vote the shares of Apache common stock they held on that
date. The Companys stock transfer books will not be
closed. A complete list of shareholders entitled to vote at the
annual meeting will be available for examination by any Apache
shareholder at 2000 Post Oak Boulevard, Suite 100, Houston,
Texas, for purposes relating to the annual meeting, during
normal business hours for a period of ten days before the
meeting.
As of February 28, 2011, there were 382,851,081 shares
of Apache common stock issued and outstanding. Holders of Apache
common stock are entitled to one vote per share and are not
allowed to cumulate votes in the election of directors. The
enclosed proxy card shows the number of shares that you are
entitled to vote.
1
How to
Vote
If your shares of Apache common stock are held by a broker, bank
or other nominee (in street name), you will receive
instructions from them on how to vote your shares. If your
shares are held by a broker and you do not give the broker
specific instructions on how to vote your shares, your broker
may vote your shares at its discretion on routine
matters. However, your shares will not be voted on any
non-routine matters to be acted upon at the annual
meeting. In such cases, an absence of voting instructions
results in a broker non-vote.
The routine matters to be acted upon at the annual
meeting are Item 5 ratification of
Ernst & Young LLP as our independent auditors and
Item 8 approval of a proposed amendment to our
Restated Certificate of Incorporation to authorize additional
common stock. All other matters to be acted upon at the annual
meeting are non-routine matters, and as such, if you
hold all or any portion of your shares in street name and you do
not give your broker or bank specific instructions on how to
vote your shares, your shares will not be voted on any of the
following non-routine matters:
|
|
|
Items 1-4 the election of directors;
|
|
|
Item 6 the advisory vote on the compensation of
our named executive officers;
|
|
|
Item 7 the advisory vote on the frequency of
the advisory vote on compensation of our named executive
officers;
|
|
|
Item 9 approval of proposed amendment to the
Companys Restated Certificate of Incorporation to
authorize additional preferred stock; and
|
|
|
Item 10 the approval of the 2011 Omnibus Plan.
|
If you hold shares of Apache common stock in your own name (as a
shareholder of record), you may give the Company
instructions on how your shares are to be voted by:
|
|
|
|
(1)
|
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); or
|
|
|
(2)
|
marking, signing, dating, and returning the enclosed proxy card
in the postage-paid envelope provided.
|
When using internet or telephone voting, the voting systems will
verify that you are a shareholder through the use of a company
number for Apache and a unique control number for you. If
you vote by internet or telephone, please do not also mail the
enclosed proxy card.
Whichever method you use to transmit your instructions, your
shares of Apache common stock will be voted as you direct. If
you sign and return the enclosed proxy card or otherwise
designate the proxies named on the proxy card to vote on your
behalf, but do not specify how to vote your shares, they will be
voted:
|
|
|
FOR the election of the nominees for director,
|
|
|
FOR ratification of Ernst & Young LLP as
the Companys independent auditors,
|
|
|
FOR the advisory vote on compensation of the
Companys named executive officers,
|
|
|
FOR an annual advisory vote on the compensation of
the Companys named executive officers,
|
|
|
FOR the approval of the proposed amendment to the
Companys Restated Certificate of Incorporation to
authorize additional common stock,
|
2
|
|
|
FOR the approval of the proposed amendment to the
Companys Restated Certificate of Incorporation to
authorize additional preferred stock,
|
|
|
FOR approval of the 2011 Omnibus Plan, and
|
|
|
In accordance with the judgment of the persons voting the proxy
on any other matter properly brought before the meeting, if any
are properly raised at the meeting.
|
Voting
401(k) Plan Shares
If you are an employee or former employee participating in the
Apache 401(k) Savings Plan and have shares of Apache common
stock credited to your plan account as of the record date, such
shares are shown on the enclosed proxy card and you have the
right to direct the plan trustee regarding how to vote those
shares. The trustee for the 401(k) plan is Fidelity Management
Trust Company.
The trustee will vote the shares in your plan account in
accordance with your instructions. If you do not send
instructions (in the manner described under How to
Vote above) or if your proxy card is not received by
May 3, 2011, the shares credited to your account will be
voted by the trustee in the same proportion as it votes shares
for which it did receive timely instructions.
Revoking
a Proxy
You may revoke a proxy before it is voted by submitting a new
proxy with a later date (by internet, telephone or mail), by
voting at the meeting, or by filing a written revocation with
Apaches corporate secretary. Your attendance at the annual
meeting alone will not automatically revoke your proxy.
Quorum
The presence at the annual meeting, in person or by proxy, of
the holders of a majority of the shares of Apache common stock
outstanding on the record date will constitute a quorum,
permitting the business of the meeting to be conducted.
Votes
Needed
Election of Directors. In
December 2006, the Companys bylaws were amended to provide
for the election of directors by majority vote. Thus, the
affirmative vote of a majority of the votes cast at the annual
meeting is required for the election of directors. You may vote
FOR or AGAINST any or all director nominees or you may ABSTAIN
as to one or more director nominees. As set forth in our bylaws,
only votes FOR or AGAINST the election of a director nominee
will be counted. Abstentions and broker non-votes count for
quorum purposes, but not for purposes of the election of
directors. A vote to ABSTAIN is not treated as a vote FOR or
AGAINST and thus, will have no effect on the outcome of the vote.
Ratification of the Appointment of Independent
Registered Public Accounting Firm. The
affirmative vote of a majority of the votes cast at the annual
meeting is required for ratification of Ernst & Young
LLP as the Companys independent auditors. You may vote FOR
or AGAINST the ratification of Ernst & Young LLP as
the Companys independent auditors or you may ABSTAIN.
Votes cast FOR or AGAINST and ABSTENTIONS with respect to this
matter will be counted as shares entitled to vote on the matter.
Broker non-votes will be counted as shares entitled to vote on
this matter. A vote to ABSTAIN will have the effect of a vote
AGAINST ratification of the appointment of our independent
registered public accounting firm.
3
An Advisory Vote on the Compensation of the Named
Executive Officers. You may vote FOR or
AGAINST the advisory vote on the compensation of our named
executive officers or you may ABSTAIN. A majority of the shares
of Common Stock present in person or represented by proxy at our
Annual Meeting and entitled to vote must be voted FOR approval
of the advisory proposal in order for it to pass. Votes cast FOR
or AGAINST and ABSTENTIONS with respect to the proposal will be
counted as shares entitled to vote on the proposal. Broker
non-votes will not be counted as shares entitled to vote on the
proposal. A vote to ABSTAIN will have the effect of a vote
AGAINST the proposal.
An Advisory Vote on the Frequency of the Advisory Vote
on the Compensation of the Named Executive
Officers. A plurality of the shares of
Common Stock present in person or represented by proxy at our
Annual Meeting and entitled to vote must be voted FOR approval
of holding the advisory vote on the compensation of our named
executive officers either every one, two or three years in order
for the proposal to pass. You may vote to hold the advisory vote
on compensation of named executive officers:
|
|
|
Every year (recommended by our board);
|
|
|
Every two years;
|
|
|
Every three years; or
|
|
|
You may Abstain from voting on this proposal.
|
Broker non-votes will not be counted as shares entitled to vote
on the proposal. A vote to ABSTAIN will have the effect of a
vote AGAINST the proposal.
Approval of an Amendment to our Restated Certificate of
Incorporation to Authorize Additional Common
Stock. A majority of the outstanding
shares of Common Stock must be voted FOR the proposal in order
for it to pass. You may vote FOR or AGAINST the proposal to
approve this amendment to our Restated Certificate of
Incorporation or you may ABSTAIN. Broker non-votes will be
counted as shares entitled to vote on this matter. A vote to
ABSTAIN will have the effect of a vote AGAINST the proposal.
Approval of an Amendment to our Restated Certificate of
Incorporation to Authorize Additional Preferred
Stock. A majority of the outstanding
shares of Common Stock must be voted FOR the proposal in order
for it to pass. You may vote FOR or AGAINST the proposal to
approve this amendment to our Restated Certificate of
Incorporation or you may ABSTAIN. A vote to ABSTAIN or a broker
non-vote will have the effect of a vote AGAINST the proposal.
Approval of the 2011 Omnibus
Plan. A majority of the shares of Common
Stock present in person or represented by proxy at our Annual
Meeting and entitled to vote must be voted FOR approval of the
2011 Omnibus Plan in order for it to pass. Votes cast FOR or
AGAINST and ABSTENTIONS with respect to the proposal will be
counted as shares entitled to vote on the proposal. Broker
non-votes will not be counted as shares entitled to vote on the
proposal. A vote to ABSTAIN will have the effect of a vote
AGAINST the proposal.
Other Business. The affirmative vote of
a majority of the votes cast at the annual meeting is required
for approval of any other business which may properly come
before the meeting or any adjournment thereof. Only votes FOR or
AGAINST these proposals will be counted. Abstentions and broker
non-votes count for quorum purposes, but not for the voting on
these proposals.
Who
Counts the Votes
Representatives of Wells Fargo Bank, N.A. will tabulate the
votes and act as inspectors of the election.
4
ELECTION
OF DIRECTORS
(ITEM NOS. 1-4 ON PROXY CARD)
The Companys certificate of incorporation provides that,
as near as numerically possible, one-third of the directors
shall be elected at each annual meeting of shareholders. Unless
directors earlier resign or are removed, their terms are for
three years, and continue thereafter until their successors are
elected and qualify as directors.
The current terms of directors G. Steven Farris, Randolph M.
Ferlic, A.D. Frazier, Jr., and John A. Kocur will expire at
the 2011 annual meeting. Messrs. Farris, Ferlic, Frazier
and Kocur have been recommended by the Companys Corporate
Governance and Nominating (CG&N) Committee and
nominated by the board of directors for election by the
shareholders to an additional three-year term. If elected,
Messrs. Farris, Ferlic, Frazier, and Kocur will serve
beginning upon election until the annual meeting of shareholders
in 2014.
Unless otherwise instructed, all proxies will be voted in favor
of these nominees. If one or more of the nominees is unwilling
or unable to serve, the proxies will be voted only for the
remaining named nominees. Proxies cannot be voted for more than
four nominees. The board of directors knows of no nominee for
director who is unwilling or unable to serve.
The board of directors recommends that you vote FOR the
election of each of the directors.
NOMINEES
FOR ELECTION AS DIRECTORS
Biographical information, including principal occupation and
business experience during the last five years, of each nominee
for director, is set forth below. Unless otherwise stated, the
principal occupation of each nominee has been the same for the
past five years. In addition, each nominees experience,
qualifications, attributes or skills to serve on our board are
discussed under the heading Qualifications of
Directors below.
G. STEVEN FARRIS, 62, who joined the Companys
board of directors in 1994, was appointed chairman of the board
on January 15, 2009, and has served as chief executive
officer since May 2002. Mr. Farris also served the Company
as president and chief operating officer from May 1994 until
February 12, 2009, as senior vice president from 1991 to
1994, and as 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 a member of the Board of
Visitors of M.D. Anderson Cancer Center, Houston, Texas, and is
a founding member and serves on the executive committee of
Americas Natural Gas Alliance (ANGA). At
Apache, Mr. Farris is a member of the Executive Committee.
RANDOLPH M. FERLIC, 73, a private investor, joined the
Companys board of directors in 1986. Dr. Ferlic
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,
and continues to serve as, 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 lead director,
chairman of the Audit Committee and a member of the Executive
Committee.
5
A. D. FRAZIER, JR., 66, joined the board of
directors of the Company in 1997. He is a partner in Affiance,
Inc., a Georgia based bank consulting group, and senior advisor
to The Dilenschneider Group, Inc., a New York based public
relations consulting company. In July 2010, Mr. Frazier was
appointed chairman of the Special Council for Tax Reform and
Fairness to Georgians, established by Georgia state legislature
to examine the states tax code, and is owner and chairman
of WolfCreek Broadcasting, Inc., Young Harris, Georgia. He has
served as chairman and chief executive officer of Danka Business
Systems PLC, St. Petersburg, Florida, from March 2006 until its
sale in July 2008, and was of Counsel with the law firm of
Balch & Bingham LLP, Atlanta, Georgia, from January
2005 to March 2006. 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.
JOHN A. KOCUR, 83, joined the Companys board of
directors in 1977. Mr. Kocur, who is retired from the
private practice of law, served as vice chairman of the
Companys board of directors from 1988 to 1991. At Apache,
he currently serves as chairman of the Executive Committee, a
member of the Corporate Governance and Nominating Committee, and
a member of the Management Development and Compensation
Committee.
CONTINUING
DIRECTORS
Biographical information, including principal occupation and
business experience during the last five years, for each
continuing member of the board of directors whose term is not
expiring at the 2011 annual meeting, is set forth below. Unless
otherwise stated, the principal occupation of each director has
been the same for the past five years. In addition, each
directors experience, qualifications, attributes or skills
to serve on our board are discussed under the heading
Qualifications of Directors below.
|
|
|
|
|
|
|
Term
|
|
|
|
Expires
|
|
|
|
|
|
|
|
FREDERICK M. BOHEN, 73, joined the Companys board
of directors in 1981. Mr. Bohen has served The Rockefeller
University as senior advisor to the president since his
retirement in November 2005, as executive vice president from
February 2002 to November 2005, and as chief operating officer
from 1990 through September 1999. He was senior vice president
of Brown University from 1983 to 1990, and he 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, a director of the Polish American Freedom
Foundation and chairman of its investment committee, a director
of the Rockefeller Archive Center and serves as its treasurer,
and a director of the TEAK Fellowship, a
not-for-profit
organization that mentors and assists gifted adolescent children
from disadvantaged circumstances. At Apache, he is chairman of
the Management Development and Compensation Committee and
chairman of the Stock Option Plan Committee.
|
|
|
2012
|
|
6
|
|
|
|
|
|
|
Term
|
|
|
|
Expires
|
|
|
|
|
|
|
|
EUGENE C. FIEDOREK, 79, a private investor, joined the
Companys board of directors in 1988. Formerly,
Mr. Fiedorek was co-founder, president and 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. Prior to founding EnCap,
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.
|
|
|
2013
|
|
|
|
|
|
|
PATRICIA ALBJERG GRAHAM, 75, joined the Companys
board of directors in September 2002. Dr. Graham is the
Charles Warren Professor of the History of Education, Emerita at
Harvard University. She joined the faculty of Harvard Graduate
School of Education in 1974 and served as its dean from 1982 to
1991. From 1991 to 2000, she served as president of the Spencer
Foundation, the nations leading funder of research into
educational improvement. Dr. Graham is a director of
Central European University, and Smolny College of St.
Petersburg State University, Russia. Dr. Graham also serves
as Chair of the Board of Trustees of The Carnegie Foundation for
the Advancement of Teaching and is a member of its compensation
committee, having previously served on the Carnegie Board from
1984 through 1992. At Apache, she is a member of the Corporate
Governance and Nominating Committee.
|
|
|
2013
|
|
|
|
|
|
|
SCOTT D. JOSEY, 53, joined the Companys board of
directors in February 2011. Mr. Josey served as the
chairman of the board of Mariner Energy, Inc. from August 2001
until November 2010, when Mariner merged with Apache. He was
appointed chief executive officer of Mariner in October 2002 and
president in February 2005. From 2000 to 2002, he served as vice
president of Enron North America Corp. and co-managed its Energy
Capital Resources group. From 1995 to 2000, Mr. Josey
provided investment banking services to the oil and gas industry
and portfolio management services to institutional investors as
a co-founder of Sagestone Capital Partners. From 1993 to 1995,
he was a director with Enron Capital & Trade Resources
Corp. in its energy investment group. From 1982 to 1993, he
worked in all phases of drilling, production, pipeline,
corporate planning and commercial activities at Texas Oil and
Gas Corp. Mr. Josey is a member of the Society of Petroleum
Engineers and the Independent Petroleum Association of America.
|
|
|
2012
|
|
|
|
|
|
|
CHANSOO JOUNG, 50, joined the Companys board of
directors in February 2011. Mr. Joung serves as a senior
advisor at Warburg Pincus LLC, a firm he was a partner of from
2005 to 2010. Prior to joining Warburg Pincus, Mr. Joung
was co-head, then head of the Americas Natural Resources Group
in the investment banking division of Goldman Sachs from 1999 to
2004, and he served as a corporate finance banker in the Natural
Resources Group from 1994 to 1999. While in the Natural
Resources Group, he was promoted to managing director in 1996
and a partner in 1998. Mr. Joung founded and led Goldman
Sachs London-based European Energy Group in investment
banking from 1992 to 1994. He began his career with Goldman
Sachs in 1987 in the corporate finance department and also
worked in the mergers and acquisitions department until 1990.
Mr. Joung also served as a director of Targa Resources
Corp. and Targa Resources Partners, LP from 2007 to February
2011.
|
|
|
2013
|
|
7
|
|
|
|
|
|
|
Term
|
|
|
|
Expires
|
|
|
|
|
|
|
|
GEORGE D. LAWRENCE, 60, a private investor, joined the
Companys board of directors in May 1996. Mr. Lawrence
was president, chief executive officer and a director of The
Phoenix Resource Companies, Inc., a public oil and gas company,
from 1990 until May 1996, when Phoenix merged with Apache. At
Apache, he is a member of the Executive Committee and the
Management Development and Compensation Committee.
|
|
|
2012
|
|
|
|
|
|
|
F. H. MERELLI, 73, joined the Companys board of
directors in 1997. Mr. Merelli has served as 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, since September 30,
2002, the date of Cimarexs acquisitions of Key Production
Company, Inc. and the exploration and production division of
Helmerich & Payne, Inc. He served as chairman of the
board and chief executive officer of Key from 1992 until October
2002, and as Keys president from 1992 to September 1999
and again from March 2002 to October 2002. Prior to joining Key,
Mr. Merelli served as Apaches president and chief
operating officer from 1988 to 1991. Prior to joining Apache, 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.
|
|
|
2013
|
|
|
|
|
|
|
RODMAN D. PATTON, 67, joined the Companys board of
directors in December 1999. Mr. Patton has over
30 years experience in oil and gas investment banking and
corporate finance activity, including 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.
|
|
|
2012
|
|
|
|
|
|
|
CHARLES J. PITMAN, 68, joined the Companys board of
directors in May 2000. Mr. Pitman served as a non-executive
director and chairman of Urals Energy Public Company Limited, an
oil exploration and production company operating in Russia, from
September 2005 until January 2009, chairman of the board of
First Calgary Petroleums Ltd., an oil and gas exploration
company engaged in exploration and development activities in
Algeria, from June 2007 to March 2008, and was sole member of
Shaker Mountain Energy Associates LLC from September 1999 to
November 2007. 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. At Apache,
Mr. Pitman is chairman of the Corporate Governance and
Nominating Committee.
|
|
|
2012
|
|
8
QUALIFICATIONS
OF DIRECTORS
In selecting our directors and director nominees, the CG&N
Committee has sought to create a board with a broad and balanced
set of skills, complimented by diversity of experience and
expertise. As is evidenced by the biographical information set
forth above, each director contributes his or her own unique
background which has led the CG&N Committee to conclude
that the Company and our shareholders will benefit from the
directors service on the Companys board. It is
equally important that the particular skill sets of each
director complement the experience, qualifications, attributes
and skills of our board of directors as a whole. In addition to
the qualifications described in the preceding biographical
information, the following is a discussion of the particular
experience, qualifications, attributes or skills of each
director that led our board to conclude that he or she will
contribute to the diversity of experience and expertise required
for the effective functioning of our board.
G. STEVEN FARRIS Mr. Farris 28 years
experience in the oil and gas industry coupled with his
16 years of direct leadership at Apache provide him with
valuable insight not only into the oil and gas industry, but
also the unique
day-to-day
operations of Apache. Throughout his career, Mr. Farris has
held positions of increasing responsibility in the oil and gas
industry, culminating in his appointment as chief executive
officer of Apache in May 2002 and chairman of the board in
January 2009. Since being named as chief operating officer in
1994, Mr. Farris has been instrumental in growing the
Companys reserves by almost nine times to
2,359 million barrels of oil equivalent (MMboe)
and production to 658,000 barrels per day (b/d).
RANDOLPH M. FERLIC Dr. Ferlic has been involved in
research activities throughout his professional life, including
in-depth analysis of data, probabilities, and risks. For his
work as a cardiovascular and thoracic surgeon, Dr. Ferlic
was awarded Legend status by the Nebraska Medical
Center and, in February 2011, the Spirit of the
Heart award by the American Heart Association. In addition
to founding Surgical Services of the Great Plains, from 1974
until 1994, Dr. Ferlic served as the corporations
president, was responsible for and managed its finances, and was
trustee and manager of the corporations employee benefit
plans. Dr. Ferlic has twice been publicly elected to the
University of Nebraska Board of Regents and has served on the
boards audit committee since 2000. He served as a director
and executive committee member on the Nebraska Medical Center
Board, a large hospital system, and was chair of the audit
committee from January 2004 until retirement in December 2010.
Dr. Ferlic was appointed by both Democrat and Republican
governors to serve the past 20 years as a commissioner for
the Midwestern Higher Education Compact, a 12-state policy and
business compact for all educational activities in those states.
He served as treasurer of the Compact from
1997-2000
and again starting in 2010. His service to both the Compact and
the Nebraska Board of Regents has involved shaping policies that
help craft strategic and global views. Over the years,
Dr. Ferlic has acquired over 400,000 shares of the
Companys common stock for himself and his family, which
further aligns him with shareholder interests.
A. D. FRAZIER, JR. In addition to the many executive
positions noted in his biographical information above,
Mr. Frazier spent a large part of his career as an
executive in the investment banking industry. He served as the
chief executive officer of INVESCO, Inc., an affiliate of an
independent global investment management firm, from 1997 to
2000. Mr. Frazier also served as executive vice president,
North American Banking Group, of First Chicago Corporation and
First National Bank of Chicago from 1982 to 1991, where, among
other numerous industry specialties, he oversaw the Banks
oil and gas specialty, which provided him with an intimate
knowledge of the oil and gas industry. He also served as the
chief operating officer of the Atlanta Olympic Games Committee
from 1991 to October 1996. During his career, Mr. Frazier
has gathered extensive experience as an executive responsible
for the development, management, and operation of a diverse
group of businesses and organizations. Through these executive
and director positions, Mr. Frazier
9
gathered extensive experience in identifying, analyzing, and
managing risk across a wide range of industries.
JOHN A. KOCUR Mr. Kocur was employed by Apache in
various roles from the time that the Companys stock was
first listed on the New York Stock Exchange in 1969 until his
retirement in 1991. During his tenure, Mr. Kocur served
Apache in various roles of increasing responsibility, including
serving as its general counsel, culminating in his appointment
as the Companys president in 1979. Mr. Kocur, as
president and later as vice chairman, was instrumental in
overseeing Apaches growth from a small drilling program
company into a leading independent, international oil and gas
company. Mr. Kocurs unparalleled experience with and
understanding of the Companys history and objectives
provide invaluable insight into the Companys past,
current, and future operations and management.
FREDERICK M. BOHEN Throughout his career, Mr. Bohen
has held executive-level leadership roles and been responsible
for the finance and operations of large, complex organizations.
As senior vice-president of Brown University in the 1980s,
an Ivy League school and a premier university college, he was
responsible for all aspects of business operations, including
finance, budget, human resources, and facilities. As executive
vice-president and chief operating officer of the Rockefeller
University during the period
1990-2005,
Mr. Bohen was responsible for all aspects of the operations
of this world-renowned center for research and graduate training
in the biomedical sciences, including human resources, finance,
capital projects, facilities, and the management of an annual
operating budget exceeding $250 million. In these roles
over more than two decades, he was steadily involved in the
recruitment and retention of officer-level talent and the
development of related compensation policies and programs. With
broad leadership responsibility in these institutions for
finance over the same period, Mr. Bohen acquired the
experience and judgment useful in identifying, assessing and
minimizing financial and other risks and uncertainties in the
leadership and direction of complex organizations. He has also
served as a Director of Oppenheimer and Company; of the Student
Loan Marketing Association (Sallie Mae), where he
chaired the Boards compensation committee; of the College
Construction Loan Insurance Association (Connie
Lee); and of the Mexico Equity Income Fund, Inc.
EUGENE C. FIEDOREK After working as a petroleum reservoir
engineer at Shell Oil Company and British American Oil Producing
Company for eight years, Mr. Fiedorek spent 37 years
in the oil and gas investment banking and commercial banking
industries. As co-founder, president, and managing director of
EnCap Investments and managing director of the Energy Banking
Group of First RepublicBank, he gained extensive experience in
advising oil and gas companies on their capital structure and
strategic direction. Through these positions, Mr. Fiedorek
gained valuable experience in identifying, assessing, and
minimizing risk that can affect large oil and gas companies.
These positions also provided him with the financial reporting
expertise necessary for his role on Apaches audit
committee.
PATRICIA ALBJERG GRAHAM Prior to her appointment as dean
of Harvard Universitys Graduate School of Education in
1982, Dr. Graham served as dean of the Radcliffe Institute,
vice president for Institutional Planning for Radcliffe College,
and vice president of Radcliffe College. In 1977,
Dr. Graham, a leading historian of American education, left
her positions at Radcliffe College upon her appointment by
then-President Jimmy Carter to serve as the director of the
National Institute of Education, then the federal
governments education research agency, a position in which
she served until 1979. Throughout her career, Dr. Graham
has held a variety of leadership and policy-making roles in the
area of education. In her service as dean of Harvard Graduate
School of Education and vice president of Radcliffe College,
Dr. Graham was responsible for, among other things, the
management, structure, and
day-to-day
operations of these premiere educational institutions.
Dr. Graham also served on the board of Northwestern Mutual
Life Insurance Company from 1980 2005 and, for most
of that period, served on the management compensation and public
10
policy committee of the board. She was a member of the board of
Science Research Associates from 1984 1989.
SCOTT D. JOSEY Mr. Josey has spent his entire
career, spanning 30 years, in the oil and gas industry. As
the former chief executive officer, president and chairman of
the board of Mariner, he gained extensive management, financial
and technical expertise in the oil and gas field. Because of his
service in the operations of an oil and gas company, as an
investment banker advising the oil and gas industry, and as the
chief executive officer of an exploration and production
company, Mr. Josey gained extensive knowledge of an oil and
gas companys prospects and operations and their impact on
its financial condition. As an active participant in various
energy-related professional organizations, he has an excellent
understanding of the various issues that impact exploration and
production companies. Mr. Josey has invaluable experience
in identifying, assessing, and managing risks faced by
exploration and production companies like Apache.
CHANSOO JOUNG Mr. Joung has spent almost his entire
career working in the finance industry with energy companies. He
currently serves as a senior advisor at Warbus Pincus LLC where
he provides advice on new and existing investments in the energy
sector for the firm. Previously, as a partner at Warbus Pincus,
his duties included sourcing, executing and monitoring energy
investments. Prior to joining Warbus Pincus, Mr. Joung
spent almost 18 years at Goldman Sachs where he worked in
the Natural Resources Group and also founded and led the
London-based European Energy Group in investment banking. In
addition to our board, he also serves on the boards of a number
of private companies in a variety of sectors in the energy
industry, and served on the boards of Targa Resources Corp. and
Targa Resources Partners, LP. Through his experiences as an
investment banker, Mr. Joung gained significant experience
with energy companies, the energy industry, and energy-related
capital markets activity, which will enhance his contributions
to the board. Those experiences have also given Mr. Joung
the ability to identify, assess, and manage risk that can affect
a large energy company like Apache.
GEORGE D. LAWRENCE Mr. Lawrence began his oil and
gas career with the predecessor to The Phoenix Resource
Companies, Inc. in 1985, holding management positions with
increasing responsibility, culminating in his appointment as
president, chief executive officer, and a director of Phoenix in
1990 until 1996, when the company merged with Apache. During his
tenure as chief executive officer of Phoenix, Mr. Lawrence
gained valuable experience in corporate leadership in all
aspects of business including finance, securities, operations,
strategy and risk. At Phoenix and its predecessor,
Mr. Lawrence was extensively involved in international
operations that were spread over several continents and he was
especially instrumental in leading Phoenixs operations in
Egypt, an area that remains at the core of Apaches
operations today. Prior to entering the oil and gas business,
Mr. Lawrence engaged in a diversified private practice of
law and also served five years at the United States
Department of Justice, his last position there being the
Assistant Chief of the Environmental Enforcement Section.
F. H. MERELLI Mr. Merelli has spent more than
30 years in key executive and director positions in the oil
and gas industry. His extensive experience leading oil and gas
companies in the capacities of president, chief executive
officer, and chairman of the board has provided a wealth of
knowledge and understanding of the intricacies of the oil and
gas industry. Through these positions, Mr. Merelli has
gained valuable experience in identifying, assessing, and
managing risk that can affect large oil and gas companies,
including Apache. Although Mr. Merelli served as president
and chief operating officer of Apache for just three years, his
impact on the Company was considerable. Many of the management
and incentive systems that he and Mr. Farris put into place
upon his arrival at Apache 20 years ago remain in place
today, as do many of the management personnel they brought to
the Company.
11
RODMAN D. PATTON For over 25 years prior to joining
Apaches board of directors, Mr. Patton held various
executive positions in the oil and gas investment banking
industry. As a managing director at Merrill Lynch, First Boston
(later Credit Suisse) and other investment banks,
Mr. Patton has extensive experience advising oil and gas
companies on capital structure, strategy and direction. He also
gained valuable experience in the assessment and management of
risk faced by oil and gas companies. As a former investment
banker and as chairman of NuStar GPs audit committee,
Mr. Patton has extensive financial reporting expertise,
which serves him well in his role as a member of Apaches
audit committee.
CHARLES J. PITMAN Having served in executive and director
capacities at numerous oil and gas companies, Mr. Pitman
has gained invaluable experience in and knowledge of the oil and
gas industry. During his
24-year
career at Amoco Corporation and BP Amoco plc, Mr. Pitman
served in a variety of leadership positions in the United States
and multiple international locations, principally in the Middle
East. Notably, Mr. Pitman served as president of Amoco
Egypt Oil Company from 1992 to 1996, president of Amoco Eurasia
Petroleum Company from 1997 to 1998, regional president BP Amoco
plc Middle East/Caspian/Egypt/India and head of new
business development Middle East/Caspian from
December 1998 until his retirement in 1999. Most recently,
Mr. Pitman has utilized his considerable experience in
international oil and gas by participating in oil and gas
ventures in Russia and Algeria. Prior to joining Amoco,
Mr. Pitman served in the United States Department of State
as a Foreign Service Officer and Attorney-Adviser.
DIRECTOR
INDEPENDENCE
During 2010 and the first two months of 2011, the board of
directors evaluated all business and charitable relationships
between the Company and the Companys non-employee
directors (all directors other than Mr. Farris) and all
other relevant facts and circumstances. As a result of the
evaluation, the board of directors determined, as required by
the Companys Governance Principles, that each non-employee
director is an independent director as defined by the standards
for director independence established by applicable laws, rules,
and listing standards including, without limitation, the
standards for independent directors established by The New York
Stock Exchange, Inc. (NYSE), The NASDAQ National
Market (NASDAQ), and the Securities and Exchange
Commission (SEC).
Subject to some exceptions, these standards generally provide
that a non-employee director will not be independent if
(a) the director is, or in the past three years has been,
an employee of the Company; (b) the director or a member of
the directors immediate family is, or in the past three
years has been, an executive officer of the Company;
(c) the director or a member of the directors
immediate family has received more than $120,000 per year in
direct compensation from the Company other than for service as a
director (or for a family member, as a non-executive employee);
(d) the director or a member of the directors
immediate family is employed as a partner of Ernst &
Young LLP, the Companys independent registered public
accountants, or the director has an immediate family member who
is a current employee of such firm and works in any capacity on
the Companys audit, or the director or an immediate family
member was within the last three years a partner or employee of
such firm and personally worked on the Companys audit
within that time; (e) the director or a member of the
directors immediate family is, or in the past three years
has been, employed as an executive officer of a company where an
Apache executive officer serves on the compensation committee;
or (f) the director or a member of the directors
immediate family is an executive officer of a company that makes
payments to, or receives payments from, Apache in an amount
which, in any twelve-month period during the past three years,
exceeds the greater of $200,000 or two percent of the
consolidated gross revenues of the company receiving the payment.
12
Lead
Director
The Companys Governance Principles require that the
independent (non-employee) directors meet in executive session
at least twice each year and, in 2010, they met five times in
executive session. These executive sessions are chaired by a
lead director. In February 2011, the Company amended its
Governance Principles to specify that the lead director is an
independent director who is elected from time to time, but not
less than annually, by the affirmative vote of a majority of the
non-management directors. In addition to chairing the executive
sessions, the lead director discusses managements proposed
meeting agenda with the other independent directors and reviews
the approved meeting agenda with our chairman and chief
executive officer, leads the discussion with our chief executive
officer following the independent directors executive
sessions, ensures that the boards individual, group, and
committee self-assessments are done annually, leads periodic
discussions with other board members and management concerning
the boards information needs, and is available for
discussions with major shareholders. In February 2011, Randolph
M. Ferlic was elected lead director. The role and
responsibilities of the lead director and the method established
for communication of concerns to the independent directors are
included in the Companys Governance Principles, which are
available on the Companys website (www.apachecorp.com).
Reporting
of Concerns to Independent Directors
Anyone who has concerns about the Company may communicate those
concerns to the independent directors. Such communication should
be mailed to the Companys corporate secretary at 2000 Post
Oak Boulevard, Suite 100, Houston, Texas
77056-4400,
who will forward such communications to the independent
directors.
Board
Leadership Structure and Risk Oversight
Board
Leadership Structure
Throughout much of Apaches history, the Company has
ascribed to the traditional U.S. board leadership
structure, under which our chief executive officer has also
served as the chairman of our board of directors. From 1969
until 2002, both of these positions were held by our founder,
Mr. Raymond Plank. However, upon Mr. Raymond
Planks retirement as chief executive officer of the
Company in 2002, Mr. Farris was appointed as the
Companys chief executive officer and Mr. Raymond
Plank remained as the Companys chairman of the board. Upon
Mr. Planks retirement as chairman of the board in
January 2009, Mr. Farris was appointed the Companys
chairman of the board, once again unifying the roles of chairman
and chief executive officer. As Apaches history
demonstrates, we believe it is important to maintain the
flexibility to have either a combined or a separated chair and
CEO structure as circumstances dictate. Each structure has
served us well in the past. Currently, we believe that the
efficiencies created by a combined position work best,
especially when viewed in conjunction with our lead director
elected annually by our independent directors, assuring strong
board leadership. In particular, this structure helps to ensure
clarity regarding leadership of the Company, allows the Company
to speak with one voice and provides for efficient coordination
of board action, particularly in times of crisis. The
combination of the Chairmans ability to call board
meetings with the CEOs intimate knowledge of our business,
including our risk management framework, provides a strong
structure for the efficient operation of our board process and
effective leadership of our board overall. This structure avoids
potential confusion as to leadership roles and duplication of
efforts that can result from the roles being separated. It also
assists our CEO in managing our Company and dealing with third
parties more effectively on a
day-to-day
basis. Our board regularly reviews all the aspects of our
governance profile, including this one, and will make changes as
circumstances warrant. This is the model that the Company has
utilized for much of its history and we believe that it is the
most effective way to lead the Company going forward.
13
Risk
Oversight
The Companys Governance Principles state that in addition
to its general oversight of management, the board of directors
is responsible for a number of specific functions, including
assessing major risks facing the Company and reviewing options
for their mitigation. Our board of directors has four standing
independent committees with separate chairs: Audit, Management
Development and Compensation, Executive, and Corporate
Governance and Nominating. Our Audit Committee is primarily
responsible for overseeing the Companys risk management
processes on behalf of the board. The Audit Committee charter
provides that the Audit Committee should assess and manage the
Companys exposure to risk, and discuss the Companys
major financial risk exposure and the steps management has taken
to monitor, control, and report such exposures. In addition, the
Audit Committee reports to the board of directors, which also
considers the Companys risk profile. The Audit Committee
and the board of directors focus on the most significant risks
facing the Company, and the Companys risk management
strategy and ensure that the risks undertaken are consistent
with the boards tolerance for risk. While the board is
responsible for setting, monitoring and maintaining the
Companys risk management policies and practices, the
Companys executive officers and members of our management
team are responsible for implementing and overseeing our
day-to-day
risk management processes. Additionally, the board has created a
Risk Management Committee composed of members of our management
team. The Risk Management Committee monitors and manages risks
related to, among other things, our commodity hedging activities
and foreign currency exchange exposure. The Company believes
that this division of responsibility is the most effective way
to monitor and control risk.
In addition to the oversight provided by our full board of
directors, Audit Committee, executive officers and the members
of our management team, including our Risk Management Committee,
our independent (non-employee) directors hold regularly
scheduled executive sessions as often as they deem appropriate,
but in any event at least twice each year. These executive
sessions are chaired by a lead director, and provide an
additional avenue through which we monitor the Companys
risk exposure and policies regarding risk management.
Risk
Considerations in Our Compensation Programs
Our Management Discussion and Compensation Committee (the
MD&C Committee) has discussed the concept of
risk as it relates to our compensation programs, and the
MD&C Committee does not believe our compensation programs
encourage excessive or inappropriate risk taking. The MD&C
Committee, with assistance of its independent compensation
consultant, arrived at this conclusion for the following reasons:
|
|
|
Our employees receive both fixed and variable compensation. The
fixed (salary) portion provides a steady income regardless of
the Companys stock performance. This allows executives to
focus on the Companys business without an excessive focus
on the Companys stock price performance.
|
|
|
The goals for the annual cash incentive bonus are set to avoid
overweighting any single goal that, if not achieved, would
result in the loss of a large percentage of compensation.
|
|
|
Our stock options and restricted stock units generally vest over
four years, which discourages short-term risk taking.
|
|
|
Our equity ownership requirements encourage a long-term
perspective by our executives.
|
|
|
A substantial portion of our executives long-term equity
compensation is forfeited upon voluntary termination, which
encourages our executives to maintain a long-term focus.
|
|
|
Our incentive programs have been in place for many years and we
have seen no evidence that they encourage excessive risk taking.
|
|
|
Essentially all of our employees participate in our compensation
programs regardless of business unit which encourages consistent
behavior across the Company.
|
14
STANDING
COMMITTEES AND MEETINGS
OF THE BOARD OF DIRECTORS
The board of directors has an Audit Committee, a Corporate
Governance and Nominating (CG&N) Committee, a
Management Development and Compensation (MD&C)
Committee and its subcommittee, the Stock Option Plan Committee,
and an Executive Committee. Actions taken by these committees
are reported to the board of directors at the next board
meeting. During 2010, each of the Companys directors
attended at least 75 percent of all meetings of the board
of directors and committees of which he or she was a member. Ten
of eleven directors attended the Companys 2010 annual
meeting of shareholders held on May 6, 2010. Scott D. Josey
and Chansoo Joung are not included in this table, as they joined
the board in February 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 MEMBERSHIP ROSTER
|
Name
|
|
|
Board
|
|
|
Audit
|
|
|
CG&N
|
|
|
MD&C
|
|
|
Stock Option
|
|
|
Executive
|
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**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Meetings in 2010
|
|
|
12
|
|
|
9
|
|
|
4
|
|
|
9
|
|
|
6
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Chairman of the Board |
|
** |
|
Committee Chairman |
|
|
|
Lead Director |
Audit
Committee
The Audit Committee reviews, with the independent public
accountants and internal auditors of the Company, their
respective audit and review programs and procedures and the
scope and results of their audits. It also examines professional
services provided by the Companys independent public
accountants and evaluates their costs and related fees.
Additionally, the Audit Committee reviews the Companys
financial statements and the adequacy of the Companys
system of internal controls over financial reporting. As
described more fully in Board Leadership Structure and
Risk Oversight, the Audit Committee is also tasked with
assessing and managing the Companys exposure to risk. The
Audit Committee has the sole authority to appoint, compensate,
retain, oversee, and terminate our
15
independent auditors. It also has the sole authority to
pre-approve and all terms of and set fees for audit services,
audit related services, tax services, and other services to be
performed for the Company by the Companys independent
registered public accountants.
During 2010 and the first two months of 2011, the board of
directors reviewed the composition of the Audit Committee
pursuant to the rules of the NYSE and NASDAQ governing audit
committees. Based on this review, the board of directors
confirmed that all members of the Audit Committee are
independent under the NYSE and NASDAQ rules. During
2000, the Audit Committee adopted a charter, which was approved
by the board of directors on May 4, 2000, and which
reflects the NYSEs rules and the regulations of the SEC.
On February 4, 2004, the Audit Committee adopted an amended
and restated charter, which was approved by the board of
directors on February 5, 2004. The Audit Committee charter
is available on the Companys website (www.apachecorp.com).
The board of directors has determined that all members of the
Audit Committee qualify as financial experts, as defined in
Item 407 of
Regulation S-K
under the Securities Act of 1933.
MD&C
Committee
The MD&C Committee reviews the Companys management
resources and structure and administers the Companys
compensation programs and retirement, stock purchase and similar
plans. Under the provisions of its charter, the MD&C
Committee may, at its discretion and if allowed by applicable
laws or regulations, delegate all or a portion of its duties and
responsibilities to a subcommittee of the MD&C Committee
composed of at least two members. During 2010 and the first two
months of 2011, the board of directors reviewed the composition
of the MD&C Committee pursuant to the rules of the NYSE and
NASDAQ governing compensation committees. Based on this review,
the board of directors confirmed that all members of the
MD&C Committee are independent under the NYSE
and NASDAQ rules. The MD&C Committee charter is available
on the Companys website (www.apachecorp.com).
Stock
Option Plan Committee
The MD&C Committee has one standing subcommittee, the Stock
Option Plan Committee, the two members of which are
outside directors as defined by applicable federal
tax law or regulations of the Internal Revenue Service. The
duties of the Stock Option Plan Committee include the award and
administration of grants under the Companys stock-based
compensation plans.
CG&N
Committee
The duties of the CG&N Committee include recommending to
the board of directors the slate of director nominees submitted
to the shareholders for election at the annual meeting and
proposing qualified candidates to fill vacancies on the board of
directors. The CG&N Committee is also responsible for
developing corporate governance principles for the Company,
reviewing related party transactions, and overseeing the
evaluation of the board of directors. During 2010 and the first
two months of 2011, the board of directors reviewed the
composition of the CG&N Committee pursuant to the rules of
the NYSE and NASDAQ governing governance committees. Based on
this review, the board of directors confirmed that all members
of the CG&N Committee are independent under the
NYSE and NASDAQ rules. The CG&N Committee charter is
available on the Companys website (www.apachecorp.com).
The CG&N Committee considers director nominee
recommendations from executive officers of the Company,
independent members of the board and shareholders of the
Company, and from other interested parties. The CG&N
Committee may also retain an outside search firm to assist it in
finding
16
appropriate nominee candidates. Shareholder recommendations for
director nominees received by Apaches corporate secretary
(at the address for submitting shareholder proposals and
nominations set forth under the heading Future Shareholder
Proposals and Director Nominations) are forwarded to the
CG&N Committee for consideration.
Executive
Committee
The Executive Committee is vested with the authority to exercise
the full power of the board of directors, within established
policies, in the intervals between meetings of the board of
directors. In addition to the general authority vested in it,
the Executive Committee may be vested with specific powers and
authority by resolution of the board of directors.
Committee
Charters
As noted above, you can access electronic copies of the charters
of the committees of the board of directors on the
Companys website (www.apachecorp.com). Also available on
the Companys website are our Governance Principles and our
Code of Business Conduct which meets the requirements of a code
of ethics under applicable SEC regulations and NYSE and NASDAQ
standards. In 2010, Apache revised its Code of Business Conduct
to add (i) an introduction to clarify that the Code applies
to all directors, officers and employees of Apache; and
(ii) a new section titled Receiving or providing
gifts and entertainment in furtherance of legitimate company
interests, pursuant to which, Apache employees are
prohibited from accepting or providing gifts or entertainment
that, under the circumstances, are excessive in value or
frequency. The Code of Business Conduct, as amended, also
contains some administrative changes. You may request printed
copies of any of these documents by writing to Apaches
corporate secretary at 2000 Post Oak Boulevard, Suite 100,
Houston, Texas
77056-4400.
17
CRITERIA
FOR NEW BOARD MEMBERS
AND RE-ELECTION OF BOARD MEMBERS
The CG&N Committee considers the following criteria in
recommending new nominees or the re-election of directors to the
Companys board of directors and its committees:
|
|
|
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.
|
|
|
Ability to constructively participate 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.
|
All decisions to recommend the nomination of a new nominee for
election to the board of directors or for the re-election of a
director are within the sole discretion of the CG&N
Committee.
All director candidates are evaluated, and the decision of
whether or not to nominate a particular candidate is made, based
solely on Company- and work-related factors and not with regard
to a candidates or directors inclusion in any
protected class or group identified in the Companys
anti-discrimination policy.
The above criteria and guidelines, together with the section of
the Companys Governance Principles entitled
Qualifications of Board Members constitute the
policy of the CG&N Committee regarding the recommendation
of new nominees or the re-election of directors to the
Companys board of directors or its committees. The
Companys Governance Principles are available on the
Companys website (www.apachecorp.com).
Company policy precludes directors and employees from
discriminating against any protected group. Company policy also
precludes directors and employees from basing work-related
decisions on anything other than work-relevant criteria. The
Companys approach to diversity complements these policies
without conflicting with them; our status as a global company
makes the need for board diversity in all its aspects essential
to our business. Our criteria for board selection, summarized in
this section, operates as our diversity policy.
18
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees the Companys financial
reporting process on behalf of the board of directors. The
Companys management has the primary responsibility for the
financial statements, for maintaining effective internal
controls over financial reporting, and for assessing the
effectiveness of internal controls over financial reporting. In
fulfilling its oversight responsibilities, the Audit Committee
reviewed and discussed the audited consolidated financial
statements in the Annual Report on
Form 10-K
for the year ended December 31, 2010 with Company
management, including a discussion of the quality, not just the
acceptability, of the accounting principles; the reasonableness
of significant judgments; and the clarity of disclosures in the
financial statements.
The Audit Committee reviewed with the independent registered
public accounting firm, which is responsible for expressing an
opinion on the conformity of those audited consolidated
financial statements with U.S. generally accepted
accounting principles, its judgments as to the quality, not just
the acceptability, of the Companys accounting principles
and such other matters as are required to be discussed with the
Audit Committee by Statement on Auditing Standards No. 61,
Communication with Audit Committees (as amended), other
standards of the Public Company Accounting Oversight Board
(United States), rules of the Securities and Exchange
Commission, and other applicable regulations. In addition, the
Audit Committee has discussed with the independent registered
public accounting firm the firms independence from Company
management and the Company, including the matters in the letter
from the firm required by PCAOB Rule 3526, Communication
with Audit Committees Covering Independence, and considered
the compatibility of non-audit services with the independent
registered public accounting firms independence.
The Audit Committee also reviewed managements report on
its assessment of the effectiveness of the Companys
internal controls over financial reporting as well as the
independent registered public accounting firms report on
the effectiveness of the Companys internal controls over
financial reporting.
The Audit Committee discussed with the Companys internal
auditors and independent registered public accounting firm the
overall scope and plans for their respective audits. At each of
the four Audit Committee meetings held in person during 2010,
the Audit Committee met with the internal auditors and the
independent registered public accounting firm, with and without
management present, to discuss the results of their
examinations, their evaluations of the Companys internal
controls, including internal controls over financial reporting,
and the overall quality of the Companys financial
reporting.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the board of directors, and
the board has approved, that the audited consolidated financial
statements and managements assessment of the effectiveness
of the Companys internal controls over financial reporting
be included in the Annual Report on
Form 10-K
for the year ended December 31, 2010, filed by the Company
with the Securities and Exchange Commission.
The Audit Committee is governed by a charter, which is available
on the Companys website (www.apachecorp.com). The Audit
Committee held nine meetings during fiscal year 2010, including
the four in-person meetings referenced above. The Audit
Committee is comprised solely of independent directors as
defined by the New York Stock Exchange and the NASDAQ National
Market listing standards and
Rule 10A-3
of the Securities Exchange Act of 1934, as amended.
|
|
|
February 22, 2011
|
|
Members of the Audit Committee
Randolph M. Ferlic, Chairman Eugene C. Fiedorek F. H. Merelli Rodman D. Patton
|
19
DIRECTOR
COMPENSATION
Non-Employee
Directors Cash Compensation
During 2010, under the terms of the non-employee directors
compensation plan, non-employee directors received an annual
cash retainer of $150,000 (with no separate meeting attendance
fees or retainer payable in shares), and the chairman of each
committee received an additional annual cash retainer of $15,000
for chairing that committee.
During 2010, under the terms of the Companys non-employee
directors compensation plan, non-employee directors could
defer receipt of all or any portion of their cash retainers.
Deferred cash amounts accrue interest equal to the
Companys rate of return on its short-term marketable
securities. Once each year, participating directors may elect to
transfer all or a portion of their deferred cash amounts into
the form of shares of Apache common stock. After such election,
amounts deferred in the form of Apache common stock accrue
dividends as if the stock were issued and outstanding when such
dividends were payable. All deferred amounts, as well as accrued
interest and dividends, are maintained in a separate memorandum
account for each participating non-employee director. Amounts
are paid out in cash
and/or
shares of Apache common stock, as applicable, upon the
non-employee directors retirement or other termination of
his or her directorship, or on a specific date, in a lump sum or
in annual installments over a ten-year (or shorter) period. One
non-employee director deferred all of his cash retainer fees
during 2010.
Non-Employee
Directors Restricted Stock Units Program
In August 2008, the Company established the Non-Employee
Directors Restricted Stock Units Program (the RSU
Program), pursuant to the Companys 2007 Omnibus
Equity Compensation Plan. Each year, all non-employee directors
are eligible to receive grants of restricted stock units
comparable in value to the initial 1,500 restricted stock units
awarded under the RSU Program in 2008.
Each non-employee director was awarded 1,818 restricted stock
units on August 14, 2010 under the RSU Program, with a
grant date fair value of $165,911. Half of the restricted stock
units vest thirty days after the grant and the other half vest
on the one-year anniversary date of the grant. Each restricted
stock unit is equivalent to one share of common stock. Except as
noted below, any unvested restricted stock units are forfeited
at the time the non-employee director ceases to be a member of
the board. The unvested portion of any award automatically vests
upon death or termination without cause (including retirement).
Non-employee directors are required to choose, at the time of
each award, whether such award will vest as 100 percent
common stock or a combination of 40 percent cash and
60 percent common stock. Additionally, non-employee
directors are entitled to receive dividend equivalents, equal to
dividends on the Companys common stock, in cash on the
unvested portions of the restricted stock unit awards.
Equity
Compensation Plan for Non-Employee Directors
The Company established an equity compensation plan for
non-employee directors in February 1994, which is administered
by the MD&C Committee. The original expiration date for
this plan was July 1, 2009, with a maximum of
50,000 shares of common stock (115,500 shares after
adjustment for the stock dividends and stock split) for awards
granted during the term of the plan. However, in February 2007,
the plan was amended to provide that no new awards would be
granted subsequent to January 1, 2007, and no awards have
been made since that date. The plan continues in existence
solely for the purpose of governing still-outstanding awards
made prior to January 1, 2007.
20
Each non-employee director was awarded 1,000 restricted shares
of the Companys common stock every five years from
July 1, 1994 through July 1, 2000, with the shares
vesting at a rate of 200 shares annually. On May 3,
2001, the plan was amended to provide that on July 1, 2001
and on July 1 of each third year thereafter, each non-employee
director was awarded 1,000 restricted shares of common stock,
with one-third of the shares vesting annually. On
February 5, 2004, the plan was amended to adjust the awards
to 2,310 restricted shares of common stock (1,000 shares
adjusted for the stock dividends and stock split) for any awards
made on July 1, 2004 and thereafter.
Awards were made from shares of common stock held in the
Companys treasury and were automatic and
non-discretionary. All shares awarded under the plan have
vested, have full dividend and voting rights, and are not
eligible for sale while the non-employee director is still
serving as a member of the board.
Share
Ownership Requirement
The Company has a minimum share ownership requirement for
non-employee directors. Within three years of joining the board,
each non-employee director is required to directly own shares
and/or share
equivalents totaling at least 7,000 shares of the
Companys common stock. As of the date of this proxy
statement, each non-employee director directly owned shares
and/or share
equivalents totaling more than 7,000 shares of the
Companys common stock. See beneficial ownership
information under the heading Securities Ownership and
Principal Holders below.
Outside
Directors Retirement Plan
An unfunded retirement plan for non-employee directors was
established in December 1992. The plan is administered by the
MD&C Committee and pays retired non-employee directors
benefits equal to two thirds (2/3) of the annual retainer for a
period based on length of service. Payments are made on a
quarterly basis, for a maximum of ten years, and are paid from
the general assets of the Company. In the event of the
directors death prior to receipt of all benefits payable
under the plan, the remaining benefits are payable to the
directors surviving spouse or designated beneficiary until
the earlier of the termination of the payment period or the
death of the surviving spouse or designated beneficiary. During
2010, benefits were paid under this plan to one former director
who retired from the Companys board of directors in 2001.
21
Director
Compensation Table
The table below summarizes the compensation paid by the Company
to non-employee directors for the fiscal year ended
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
Stock
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
|
Awards
|
|
|
|
Option
|
|
|
|
Incentive Plan
|
|
|
|
Compensation
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
(3)
|
|
|
|
Awards
|
|
|
|
Compensation
|
|
|
|
Earnings
|
|
|
|
Compensation
|
|
|
|
Total
|
|
Name (1)(2)(a)
|
|
|
($)(b)
|
|
|
|
($)(c)
|
|
|
|
($)(d)
|
|
|
|
($)(e)
|
|
|
|
($)(f)
|
|
|
|
($)(g)
|
|
|
|
($)(h)
|
|
Frederick M. Bohen
|
|
|
|
165,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,518
|
|
|
|
|
428
|
|
|
|
|
332,857
|
|
Randolph M. Ferlic
|
|
|
|
165,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
428
|
|
|
|
|
331,339
|
|
Eugene C. Fiedorek
|
|
|
|
150,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
428
|
|
|
|
|
316,339
|
|
A.D. Frazier
|
|
|
|
150,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
428
|
|
|
|
|
316,339
|
|
Patricia A. Graham
|
|
|
|
150,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,027
|
|
|
|
|
428
|
|
|
|
|
321,366
|
|
John A. Kocur
|
|
|
|
165,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,820(4
|
)
|
|
|
|
330,911
|
|
George D. Lawrence
|
|
|
|
150,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,516
|
|
|
|
|
428
|
|
|
|
|
321,855
|
|
F. H. Merelli
|
|
|
|
150,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
627
|
|
|
|
|
428
|
|
|
|
|
316,966
|
|
Rodman D. Patton
|
|
|
|
150,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,229
|
|
|
|
|
428
|
|
|
|
|
321,568
|
|
Charles J. Pitman
|
|
|
|
165,000
|
|
|
|
|
165,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93
|
|
|
|
|
428
|
|
|
|
|
331,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Employee directors do not receive
additional compensation for serving on the board of directors or
any committee of the board. G. Steven Farris, the Companys
chairman and chief executive officer, is not included in this
table as he was an employee of the Company during 2010. The
compensation he received as an employee of the Company is shown
in the Summary Compensation Table.
|
|
(2)
|
|
Scott D. Josey and Chansoo Joung
are not included in this table, as they joined the board of
directors in February 2011.
|
|
(3)
|
|
Grant date fair value, as computed
in accordance with FASB ASC Topic 718, of 1,818 restricted stock
units granted on August 13, 2010, to each non-employee
director based on the per share closing price of the
Companys common stock of $91.26 for August 13, 2010.
|
|
|
|
At year-end 2010, the aggregate
number of unvested, restricted stock units was 909 units
for each director.
|
|
|
|
None of the directors had
unvested, restricted Apache common stock at year-end 2010.
|
|
(4)
|
|
Includes life insurance, medical
and dental premiums of $13,416 and $9,977 reimbursed for the
taxes payable on income attributable to this benefit.
|
22
SECURITIES
OWNERSHIP AND PRINCIPAL HOLDERS
The following tables set forth, as of February 28, 2011,
the beneficial ownership of (i) each director or nominee
for director of the Company, (ii) the principal executive
officer, the principal financial officers, and the three other
most highly compensated executive officers who served as
officers of the Company during 2010, and (iii) all
directors and executive officers of the Company as a group. All
ownership information is based upon filings made by those
persons with the SEC and upon information provided to the
Company. (All share numbers in the table and footnotes have been
adjusted for the stock dividends and stock split.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
|
|
|
Nature of Beneficial
|
|
|
|
Title of Class
|
|
|
Name of Beneficial
Owner
|
|
|
Ownership(1)
|
|
|
Percent of Class
|
Common Stock, par value $0.625
|
|
|
Frederick M. Bohen
|
|
|
|
16,825
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven Farris
|
|
|
|
574,319
|
(5
|
)(6)(7)(8)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randolph M. Ferlic
|
|
|
|
392,953
|
(2
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eugene C. Fiedorek
|
|
|
|
43,905
|
(2
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. D. Frazier, Jr.
|
|
|
|
23,080
|
(2
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia Albjerg Graham
|
|
|
|
14,833
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott D. Josey
|
|
|
|
34,981
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chansoo Joung
|
|
|
|
10,000
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Kocur
|
|
|
|
41,866
|
(2
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George D. Lawrence
|
|
|
|
41,273
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. H. Merelli
|
|
|
|
28,399
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodman D. Patton
|
|
|
|
34,441
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles J. Pitman
|
|
|
|
34,068
|
(2
|
)(3)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank
|
|
|
|
365,584
|
(5
|
)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P. Chambers
|
|
|
|
47,208
|
(5
|
)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum
|
|
|
|
156,925
|
(5
|
)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler
|
|
|
|
163,220
|
(4
|
)(5)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. Anthony Lannie
|
|
|
|
44,614
|
(5
|
)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors, nominees, and executive officers as a group
(including the above name persons)
|
|
|
|
2,788,508
|
(4
|
)(5)(6)(7)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
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.
|
(footnotes continued on
following page)
23
|
|
|
(3)
|
|
Includes the following common
share equivalents related to retainer fees deferred under the
Companys Non-Employee Directors Compensation Plan:
Mr. Bohen 1,270; Dr. Graham
8,414; Mr. Lawrence 9,233;
Mr. Merelli 1,049; Mr. Patton
9,815; and Mr. Pitman 156.
|
|
|
|
(4)
|
|
Includes the following common
stock equivalents held through the Companys Deferred
Delivery Plan: Mr. Eichler 52,770; and all
directors and executive officers as a group 121,270.
|
|
|
|
(5)
|
|
Includes the following common
shares issuable upon the exercise of outstanding employee stock
options which are exercisable within 60 days:
Mr. Farris 85,912; Mr. Plank
31,758; Mr. Chambers 1,104;
Mr. Crum 24,525; Mr. Eichler
33,406; Mr. Lannie 4,608; and all directors and
executive officers as a group 358,011.
|
|
|
|
(6)
|
|
Includes shares held by the
trustee of the Companys 401(k) Savings Plan and related
Non-Qualified Retirement/Savings Plan:
Mr. Farris 11,741; Mr. Plank
54,427; Mr. Chambers 4,882;
Mr. Crum 8,079; Mr. Eichler
12,879; and all directors and executive officers as a
group 143,239.
|
|
|
|
(7)
|
|
Includes 909 restricted stock
units (each equivalent to one share of common stock) for
Apaches non-employee directors, except Messrs. Josey
and Joung, and includes the following restricted stock units
granted under the Companys Executive Restricted Stock
Plan, 2007 Omnibus Equity Compensation Plan, and the
2005 Share Appreciation Plan: Mr. Farris
113,892; Mr. Plank 53,850;
Mr. Chambers 28,136; Mr. Crum
52,370; Mr. Eichler 52,078;
Mr. Lannie 30,429; and all directors and
executive officers as a group 555,620.
|
|
|
|
(8)
|
|
Includes 9,800 shares pledged
as collateral for a loan.
|
The following table sets forth the only person known to the
Company, as of February 28, 2011, to be the owner of more
than five percent of the outstanding shares of the
Companys common stock, according to reports filed with the
SEC:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
|
|
|
Nature of Beneficial
|
|
|
Percent of
|
Title of Class
|
|
|
Name and Address of Beneficial
Owner
|
|
|
Ownership
|
|
|
Class
|
Common Stock par value $0.625
|
|
|
BlackRock, Inc.
40 East 52nd Street
New York, New York 10022
|
|
|
|
23,015,303*
|
|
|
|
6.01*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Per Schedule 13G, dated
January 21, 2011, filed with the SEC by BlackRock, Inc. on
February 2, 2011.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys directors and officers, as
well as beneficial owners of ten percent or more of the
Companys common stock, to report their holdings and
transactions in the Companys securities. Based on
information furnished to the Company and contained in reports
provided pursuant to Section 16(a), as well as written
representations that no other reports were required for 2010,
the Companys directors and officers timely filed all
reports required by Section 16(a).
24
EQUITY
COMPENSATION PLAN INFORMATION
The following table summarizes information as of
December 31, 2010, relating to the Companys equity
compensation plans, under which grants of stock options,
restricted stock units, and other rights to acquire shares of
Apache common stock may be granted from time to time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
8,840,078
|
|
|
|
$
|
81.74(3
|
)
|
|
|
|
4,530,623
|
|
|
Equity compensation plans not approved by security holders(2)(4)
|
|
|
|
388,224
|
|
|
|
$
|
35.28(3
|
)
|
|
|
|
595,733
|
|
|
Total
|
|
|
|
9,228,302
|
|
|
|
$
|
80.18(3
|
)
|
|
|
|
5,126,356
|
|
|
|
|
|
(1)
|
|
Includes the Companys 1998
Stock Option Plan, 2005 Stock Option Plan, 2005 Share
Appreciation Plan, and 2007 Omnibus Equity Compensation Plan
(including the 2008 Share Appreciation Program and Total
Shareholder Return Program).
|
|
(2)
|
|
Includes the Companys 2000
Stock Option Plan, Executive Restricted Stock Plan, Non-Employee
Directors Compensation Plan, 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/A
for the year ended December 31, 2010, for the material
features of the 1998 Stock Option Plan, 2000 Stock Option Plan,
2005 Stock Option Plan, 2005 Share Appreciation Plan,
Executive Restricted Stock Plan, 2007 Omnibus Equity
Compensation Plan (including the 2008 Share Appreciation
Program and Total Shareholder Return Program), and the stock
options converted to Apache stock options in connection with the
acquisition of Mariner Energy, Inc.
|
25
EXECUTIVE
OFFICERS OF THE COMPANY
Biographical information for the executive officers of the
Company is set forth below. Biographical information for G.
Steven Farris is set forth above under the caption
Continuing Directors.
MICHAEL S. BAHORICH, 54, was appointed executive vice
president and chief technology officer in November 2010, having
previously served as the Companys executive vice president
and technology officer since February 2009, executive vice
president - exploration and production technology since May
2000, vice president - exploration and production
technology since January 1999, vice president - exploration
technology since December 1997, and chief geophysicist since
1996. From 1981 until joining the Company in 1996, he held
positions of increasing responsibility at Amoco Corporation in
Denver, Colorado and Tulsa, Oklahoma. Mr. Bahorich is a
member of the board of trustees of the Houston Museum of Natural
Science and serves on advisory boards at Stanford University and
Yale University.
JOHN R. BEDINGFIELD, 55, was appointed vice
president - worldwide exploration and new ventures in
November 2009. He previously served as the Companys
regional vice president and managing director for the Australia
region since May 2009, deputy managing director -
exploration for the Australia region since August 2005, region
exploration manager for the Egypt region from 2003 to 2005,
geophysical manager for Egypt from 1999, and senior staff
geophysicist since 1998. Prior to joining the Company,
Mr. Bedingfield was employed by Exxon Corporation from 1982
to 1998 in a variety of U.S. domestic and international
assignments.
DAVID A. CARMONY, 50, was appointed vice president -
environmental, health and safety in July 2010, having previously
served as the Companys regional vice president - Gulf
Coast drilling and production engineering since July 2006. He
previously served as the regions engineering and
production manager since October 1995, and senior production
engineer since February 1993. Prior to joining the Company, he
was a production, drilling, and reservoir engineer for Pacific
Enterprises Oil Company and Terra Resources, Inc. and a
production engineer for Mitchell Energy.
THOMAS P. CHAMBERS, 55, was appointed executive vice
president and chief financial officer in November 2010, have
previously served as the Companys vice president -
corporate planning and investor relations since March 2009, vice
president - corporate planning since September 2001, and
director of corporate planning since March 1995. Prior to
joining the Company, Mr. Chambers was in the international
business development group at Pennzoil Exploration and
Production, having held a variety of management positions with
the BP plc group of companies from 1981 to 1992.
Mr. Chambers is a member of the Society of Petroleum
Engineers and serves on the advisory board of Houston Foundation
for Life.
JOHN A. CRUM, 58, was appointed co-chief operating
officer and president - North America in February 2009. He
previously served as the Companys executive vice president
and president of Apache Canada Ltd. since June 2007, executive
vice president and managing director - Apache North Sea
since April 2003, executive vice president - Eurasia and
new ventures since May 2000, and regional vice president in
Australia since 1995. Prior to joining the Company,
Mr. Crum served in executive and management roles with
Aquila Energy Resources Corporation, Pacific Enterprises Oil
Company, and Southland Royalty Company. In February 2011,
Mr. Crum tendered his resignation to the Company effective
March 7, 2011.
26
MATTHEW W. DUNDREA, 56, was appointed senior vice
president - treasury and administration in November 2010,
having previously served as the Companys vice president
and treasurer since July 1997, treasurer since March 1996, and
assistant treasurer since 1994. Prior to joining the Company,
Mr. Dundrea held positions of increasing responsibility at
Union Texas Petroleum Holding, Inc. from 1982 to 1994.
ROBERT J. DYE, 55, was appointed senior vice
president - global communications and corporate affairs in
November 2010. He previously served as the Companys vice
president - corporate services since March 2009, vice
president - investor relations since May 1997, director of
investor relations since 1995, and held positions of increasing
responsibility in the corporate planning area since 1992. Prior
to joining the Company, Mr. Dye was planning manager for
the offshore division of BP Exploration, Houston, Texas, from
1988 to 1992.
RODNEY J. EICHLER, 61, was appointed co-chief operating
officer and president - International in February 2009. He
previously served as the Companys executive vice
president - Egypt since February 2003, regional vice
president in Egypt since 1999, and vice president of exploration
and production in Egypt since 1997. Prior to that,
Mr. Eichler served as regional vice president for the
Western region in Houston since 1996, and regional exploration
and development manager for the Rocky Mountain region in Denver
since 1993. Prior to joining the Company, he was vice
president - exploration for Axem Resources, LLC in Denver,
Colorado, from 1989 to 1993. In February 2011, Mr. Eichler was
appointed president and chief operating officer.
DAVID L. FRENCH, 41, was appointed vice president -
business development in January 2010, having previously served
as region production manager - west for Apache Canada in
Calgary since 2007. Mr. French held positions of production
engineering manager and director of purchasing, EH&S and
general services since joining Apache in 2005. Prior to joining
the Company, he served as an associate principle for
McKinsey & Company, a global management consulting
firm, and held engineering and planning management roles in the
Permian Basin for Amoco and Altura Energy Ltd.
RODNEY J. GRYDER, 62, was appointed vice president, audit
in November 2010. He previously served as the Companys
director, internal audit and business analysis since December
2001, and director, internal audit since 1998. Prior to joining
Apache, Mr. Gryder was the director of corporate audit
services at Western Atlas, Inc., manager of internal audit at
TransTexas Gas Corporation, finance manager at Occidental
International Exploration & Production, and held
various audit positions at Tenneco Oil Exploration &
Production.
MARGERY M. HARRIS, 50, was appointed senior vice
president - human resources in February 2011, having been
vice president - human resources since September 2007.
Prior to joining the Company, she was consultant/principal of
MMH Consulting Services, a privately-held human resources
consulting firm, from 2006 to September 2007, executive vice
president and senior vice president - human resources with Texas
Genco LLC, a wholesale power generator, from 2005 to 2006, and
senior vice president - human resources and administration
of Integrated Electrical Services, Inc., from 2000 to 2005.
Ms. Harris worked for Santa Fe Snyder (successor
company to Santa Fe Energy Resources) from 1995 to 2000, in
a variety of human resources capacities including vice
president - human resources.
27
REBECCA A. HOYT, 46, was appointed vice president, chief
accounting officer, and controller in November 2010. She
previously served as the Companys vice president and
controller since November 2006, assistant controller since 2003,
and held positions of increasing responsibility within the
accounting area since joining the Company in 1993. Previously,
Ms. Hoyt was an audit manager with Arthur Andersen LLP, an
independent public accounting firm, from 1992 to 1993.
JON A. JEPPESEN, 63, was appointed executive vice
president in August 2009, having been senior vice president
since February 2003, regional vice president for the Gulf Coast
region since 2002, and regional vice president for the Offshore
region since 1996. He served as the Companys vice
president of exploration and development for North America from
1994 to 1996, and exploration and development manager of the
Offshore region from 1993 to 1994. Prior to joining the Company,
Mr. Jeppesen was vice president of exploration and
development for Pacific Enterprises Oil Company, Dallas, Texas,
from 1989 to 1992.
P. ANTHONY LANNIE, 56, was appointed executive vice
president and general counsel in August 2009, having been senior
vice president and general counsel since May 2004, and vice
president and general counsel since March 2003. Prior to joining
the Company, he was president of Kinder Morgan Power Company,
Houston, Texas, from 2000 through February 2003, and president
of Coral Energy Canada in 1999. Mr. Lannie was senior vice
president and general counsel of Coral Energy, an affiliate of
Shell Oil Company and Tejas Gas Corporation, from 1995 through
1999, and of Tejas Gas Corporation from 1994 until its
combination with Coral Energy in 1998.
ALFONSO LEON, 34, was appointed vice president -
planning, strategy, and investor relations in November 2010,
having served as the Companys director of strategic
planning since March 2009. Prior to joining Apache,
Mr. Leon was a director and head of energy investment
banking at Perella Weinberg Partners from 2006 until 2009. Prior
to that, he served in various corporate strategy, planning, and
business development roles at Royal Dutch Shell.
JANINE J. MCARDLE, 50, was appointed senior vice
president - gas monetization in September 2010, have been
vice president - oil and gas marketing since November 2002.
Prior to joining the Company, she served as managing director
for Aquila Europe Ltd from November 2001 to October 2002, and
held executive and management positions with Aquila Energy
Marketing from 1993 to November 2001, including vice
president - trading and vice president - mergers and
acquisitions. Previously, she was a partner in Hesse Gas from
1991 to 1993, and was a member of the board of directors of
Intercontinental Exchange, the electronic trading platform, from
2000 to October 2002.
AARON S. G. MERRICK, 48, was appointed vice
president - information technology in August 2009, having
served as director of information technology since March 2006.
Prior to joining the Company, he was president of Merrick
Applied Consulting, Inc. from July 2005 to March 2006, and owner
of Aaron Merrick Computer Consulting from 2002, consulting with
Apache on the development of its data warehouse. After prior
service with the Company from 1991 to 1994 as assistant director
of gas flow management, he was with
T-NETIX,
Inc., a specialized telecommunications company, from 1995 to
2000, where he served as vice president. From 1984 to 1990,
Mr. Merrick was with KPMG Peat Marwick, an independent
public accounting firm.
URBAN F. OBRIEN, 57, was appointed vice
president - governmental affairs in August 2009, having
previously served as director of governmental, regulatory and
community affairs since 1992. Prior to joining the Company,
Mr. OBrien served as governmental affairs manager for
Mitchell Energy, special projects director for
U.S. Representative Lloyd Bentsen, and projects coordinator
for U.S. Representative Michael A. Andrews.
28
W. KREGG OLSON, 57, was appointed executive vice
president - corporate reservoir engineering in August 2009,
having been senior vice president - corporate reservoir
engineering since September 2007, and vice president -
corporate reservoir engineering since January 2004. Prior to
that, Mr. Olson served as director of technical services
from 1995 through 2003, and held positions of increasing
responsibility within corporate reservoir engineering since
joining the Company in 1992. Previously, he was associated with
Grace Petroleum Corporation.
CHERI L. PEPER, 57, was appointed corporate secretary of
the Company in May 1995, having previously served as assistant
secretary since 1992. Prior to joining the Company, she was
assistant secretary for Panhandle Eastern Corporation
(subsequently PanEnergy Corp.) since 1988. Ms. Peper is a
certified public accountant and a director of MemberSource
Credit Union, formerly known as PT&T Federal Credit Union.
ROGER B. PLANK, 54, was appointed president in February
2009, and served as the Companys principal financial
officer until November 2010. He previously served as the
Companys executive vice president and chief financial
officer since May 2000, and vice president and chief financial
officer since July 1997. Since joining the Company in 1981,
Mr. Plank has also served as vice president - planning
and corporate development, vice president - corporate
planning, and vice president - corporate communications. He
is a past president of Texas Independent Producers and Royalty
Owners Association (TIPRO), a large independent trade
association. Mr. Plank is a director of Parker Drilling
Company, Houston, Texas, and chairman of its audit committee. In
February 2011, Mr. Plank was appointed president and chief
corporate officer.
JON W. SAUER, 50, was appointed vice president - tax
in May 2001, having previously served as director of tax since
March 1997, and manager of tax since August 1992. Prior to
joining the Company, Mr. Sauer was tax manager with Swift
Energy Company, Houston, Texas, from 1989 to 1992, and a manager
in the tax practice of Arthur Andersen & Co., an
independent public accounting firm, from 1983 to 1989.
Mr. Sauer is a certified public accountant and past
chairman of the American Exploration & Production
Council (formerly Domestic Petroleum Council) tax committee.
SARAH B. TESLIK, 57, was appointed senior vice
president - policy and governance in October 2006. Prior to
joining the Company, she was chief executive officer of the
Certified Financial Planner Board of Standards, Inc. from
November 2004 to October 2006, and executive director of the
Council of Institutional Investors from July 1988 to October
2004.
29
COMPENSATION
DISCUSSION AND ANALYSIS
OVERVIEW
Year
2010
The year 2010 was one of the most successful in Apaches
57 year history driven in large measure by the acquisition
of over $11 billion of oil and gas assets including a
$6.4 billion acquisition of BP assets in Canada, West Texas
and Western Desert of Egypt and the $4.4 billion merger
with Mariner Energy, Inc., completed in November 2010.
These acquisitions, added to outstanding operating results,
fueled some of the strongest financial and operational
performance in our history including:
|
|
|
Record net income of $3 billion or $8.46 per common diluted
share.
|
|
|
Record annual average production of 658,000 barrels of oil
equivalent a day, increasing 13 percent on an overall basis.
|
|
|
Record year end reserves of approximately 3 billion barrels
of oil equivalent increasing 25 percent over the prior year.
|
|
|
Reserve replacement of 344 percent.
|
|
|
Completion of two equity and two debt offerings generating
approximately $6 billion to finance the acquisitions and
preserve Apaches strong financial position.
|
Compensation
Philosophy and Practices
Apaches board of directors designs the Companys
compensation programs to align the interests of executives and
shareholders. Over 70 percent of our named executive
officers compensation is equity based, and because we
avoid pay practices such as options back dating and repricing,
the alignment of interests is not distorted. Our compensation
programs and practices are truly variable as well: Just as our
compensation suffers when performance does, when performance is
outstanding, as it was in 2010, we reward our executives with
cash bonuses that reflect that performance.
Apaches board of directors also designs the Companys
compensation programs to avoid a short-term focus in an industry
heavily affected by cyclical commodity prices. Our competitive
salaries provide a stable base. Our total shareholder return
program uses rolling three and five-year time frames for
compensation measurement and vesting. Our substantial and
long-term stock ownership requirements for directors and
officers reinforce our focus on long-term performance. And our
enviable track record of retaining executives provides
continuity on which our board believes sustainable performance
depends.
Apaches board of directors also designs the Companys
compensation programs to make clear that it believes that all
employees matter. In 2010, we continued to award equity-based
pay to substantially all employees, a practice we started before
most other companies.
Governance
In 2010, Apaches board of directors strengthened the
Companys already substantial governance and compliance
programs. The board unanimously recommended an annual advisory
vote on the named executive officers compensation,
expanded its governance principles by expanding the
responsibilities of our lead director, began a practice of
external governance education for directors, revised the
Companys Code of Business Conduct, instituted a new
shareholder outreach program that
30
regularly makes senior executives available for direct
discussions with our shareholders, published a Greenhouse Gas
Public Statement, and updated and posted its Sustainability
Report as a living forum on the Companys website.
EXECUTIVE
COMPENSATION DECISION MAKING PROCESSES
Board of
Directors
Apaches board of directors, at the recommendation of the
Management Development and Compensation (MD&C)
Committee, oversees and authorizes the compensation of the
chairman and chief executive officer (our principal executive
officer), the president (our principal financial officer until
November 17, 2010), the co-chief operating officer and
president North America, the co-chief operating
officer and president international, the executive
vice president and chief financial officer (Apaches
principal financial officer from November 17, 2010), and
other executive officers.
Management
Development and Compensation Committee
The specific responsibilities delegated to the MD&C
Committee, by written charter adopted by the board, are posted
on the Companys website (www.apachecorp.com). The
MD&C Committee is responsible for the review, and
recommendation to the board, of matters pertaining to executive
officer compensation. Each of the four members of the MD&C
Committee meet the independence requirements contained in the
New York Stock Exchange and NASDAQ listing standards described
under Standing Committees and Meetings of the Board of
Directors. The MD&C Committee met in person or by
telephone nine times during 2010.
The MD&C Committee is responsible for the oversight and
administration of the Companys base, annual cash
incentive, and long-term compensation, and benefit programs for
executive officers. The MD&C Committees key
compensation responsibilities are:
|
|
|
To review the corporate performance goals and corporate
management objectives, to evaluate the performance of the
chairman and chief executive officer in light of those goals and
objectives, and to recommend to the other independent members of
the board of directors, for approval, the compensation level of
the chairman and chief executive officer.
|
|
|
To make recommendations to the board of directors regarding base
salary, incentive, and equity-based compensation plans for
executive officers other than the chairman and chief executive
officer.
|
|
|
To review and recommend to the board of directors broad-based
long-term compensation programs for both executive and
non-executive employees of the Company.
|
|
|
To review the Companys executive compensation programs to
determine whether such programs are achieving their intended
purposes.
|
|
|
To avoid incentivizing excessive risk taking in the
Companys executive compensation plans.
|
|
|
To meet independently with its advisors at least annually.
|
Use of
Independent Consultant
The MD&C Committee has board authorization to engage an
independent compensation consultant to assist it in its work. In
2010, the MD&C Committee used the services of Pearl
Meyer & Partners (the Consultant). The
Consultant did not provide any services to the Company other
than executive compensation-related services. Except with
respect to limited work described below, all services provided
by the Consultant are at the request and under the direction of
the MD&C Committee. The
31
Consultant has provided limited work for management in
connection with the Consultants database for the industry
and published industry specific compensation surveys, for which
the Consultant receives a de minimis amount of compensation.
Chairman
and Chief Executive Officer Compensation
The MD&C Committee reviews the chairman and chief executive
officers performance for the year and the blended market
data provided by the Consultant. Blended market data is based on
external market data and internal equity. The MD&C
Committees deliberations for salary, bonus, and equity
grant actions are handled in independent session and
recommendations are formalized for approval by the independent
directors.
Senior
Executives Compensation Administration
The chairman and chief executive officer provides compensation
recommendations and evaluations for executives to the MD&C
Committee. The MD&C Committee, along with all of the
Companys independent directors, is authorized by the board
to obtain information from and work directly with any member of
the senior executive team in fulfilling its responsibilities.
The Companys senior vice president of human resources
prepares information and materials for the chairman and chief
executive officer and the MD&C Committee for the exercise
of their distinct, but interrelated, compensation
responsibilities. The MD&C Committee also utilizes the data
provided by the Consultant including recommendations for the
associated values or salary levels derived from their reports.
The committee carefully considers the chairman and the chief
executive officers recommendations on these matters,
reaches final determination, and reports these outcomes to the
Board of Directors.
EXECUTIVE
COMPENSATION
Compensation
Philosophy
The Companys continued success depends on attracting,
directing, motivating, and retaining top talent, including a
top-tier senior management team. The MD&C Committee
believes that executive compensation programs play an important
role in achieving these goals. Its programs are therefore
designed:
|
|
|
to attract, retain, motivate, and reward executive officers who
are capable of leading Apache in a complex, competitive, and
changing industry;
|
|
|
to align the interests of our executive officers with those of
our shareholders;
|
|
|
to pay for performance, whereby a majority of an executive
officers total compensation is a function of performance
results;
|
|
|
to ensure that performance-based compensation does not encourage
excessive risk taking; and
|
|
|
to increase retention by requiring forfeiture of a substantial
portion of an executive officers compensation upon
voluntary termination of employment.
|
Use of
Data
The board of directors believes that both data and judgment play
important roles in the design and implementation of optimal
compensation programs. The MD&C Committee, the Consultant,
and senior executives consider a number of types of internal and
external data in making individual and plan-level compensation
decisions. In each section of this report dealing with an
individual element of compensation, data relevant to that
element is discussed.
32
Peer group data plays an important role in our compensation
decision making. For its 2010 compensation analysis, the
MD&C Committee considered a peer group comprised of the
main companies we compete with for executive talent. The
companies in this group, for the large part, have North American
and/or
natural gas businesses and have been identified based on
relevant comparable financial factors such as revenue, market
capital, net income, and total assets. Our peer list for 2010
(the 2010 Compensation Peer Group) was:
|
|
|
Anadarko Petroleum Corporation;
|
|
|
Chesapeake Energy Corporation;
|
|
|
Devon Energy Corporation;
|
|
|
EOG Resources, Inc.;
|
|
|
Hess Corporation;
|
|
|
Murphy Oil Corporation;
|
|
|
Noble Energy, Inc.; and
|
|
|
XTO Energy Inc. (until it merged with ExxonMobil Corporation on
June 25, 2010)
|
The MD&C Committee uses a broader peer group for the
Companys total shareholder return program (TSR
Program) for the comparison of the Companys total
shareholder return to that of its peers. For additional
information on the Companys TSR Program, please see
Long Term Compensation Performance
Shares Total Shareholder Return Program below.
In addition to the 2010 Compensation Peer Group data, the
MD&C Committee uses the latest available data provided by
the Consultant from published energy-sector surveys and from
published, general industry size-based surveys. The MD&C
Committee reviews the Consultants benchmarking data and
its process for assimilating the data used in this competitive
benchmarking process which is a blend of data from our 2010
Compensation Peer Group and the applicable survey data.
Use of
Judgment
The board of directors and the MD&C Committee believe that
the application of their collective experiences and related
business judgment is as important to the compensation decision
process as is the application of data and formulae. The
Companys compensation policies and practices reflect this
belief.
While blended market data provide an important tool for analysis
and decision-making, the MD&C Committee and the board
realize that over-reliance on data can give a false illusion of
precision. Consequently, the MD&C Committee and the board
also give consideration to an individuals personal
contributions to the organization, as well as his or her skill
sets, qualifications, experience, and demonstrated performance.
We also value and seek to reward performance that develops
talent within the Company, embraces the sense of urgency that
distinguishes the Company, and demonstrates the qualities of
imagination and drive that enable an Apache officer to resolve
longer-term challenges or important new issues. These and
similar qualities and competencies are not easily correlated to
typical compensation data, but also deserve, and are given,
consideration in reaching compensation decisions. The blended
market data provides the MD&C Committee and senior
management with the foundation for application of the above
principles and the ensuing decisions.
33
Four Key
Compensation Elements
The Companys executive compensation program has four parts:
|
|
|
Base salary;
|
|
|
Annual cash incentive bonus;
|
|
|
Long-term compensation; and
|
|
|
Benefits.
|
We generally target base salaries to fall between the
50th and 75th percentile of the blended market data.
Annual and long term incentive plans are initially targeted as a
function of base salaries and are designed to produce total
compensation between the 50th and 75th percentile of
the blended market data.
We do not have a specific formula that dictates the overall
weighting of each element as a part of total compensation. For
2010, our named executive officers were Messrs. G. Steven
Farris, Roger B. Plank, John A. Crum, Rodney J. Eichler, P.
Anthony Lannie, and Thomas P. Chambers. See Compensation
Decisions in 2010 below. The charts below set forth each
element as a proportion of the named executive officers
total direct compensation and reflect the following: base salary
that became effective in 2010, bonus for 2010, and the grant
date fair value for the 2010 annual equity awards:
|
|
|
CEO
|
|
Other Named Executive
Officers
|
|
|
|
|
The charts above illustrate that 90 percent of our chief
executive officers compensation and 86 percent of our
other named executive officers compensation is variable,
and that 72 percent of our named executive officers
total compensation is equity-based long-term compensation that
rewards them when our shareholders are rewarded.
Compensation
Elements
Base
Salary
The board of directors believes that a competitive base salary
is essential to our ability to compete. To establish base salary
ranges, the MD&C Committee analyzes the compensation for
each executive officer position by:
|
|
|
Examining the scope of the job, the nature and complexity of the
responsibilities, the financial impact, the training, knowledge,
and experience required to perform the job, the recruiting
challenges and opportunities associated with each position, the
risks and opportunities associated with hiring at the higher and
lower ranges of the position skill sets, the expected autonomy
of the job, and, for current executives, the company-specific
experience, seniority, performance, and compatibility.
|
34
|
|
|
Utilizing energy-industry and company-size general surveys to
establish salary ranges for comparable executives where the
mid-point of the range reflects the 50th percentile of the
blended market data.
|
|
|
Evaluating the executive positions on the basis of these factors.
|
|
|
Using their judgment to determine where a particular
executives salary falls within the salary ranges.
|
The MD&C Committee reviews base salaries periodically
(typically every 12 to 18 months). Base salary reviews may
occur more or less frequently depending on Company and market
conditions and individual performance.
Annual
Cash Incentive Bonus
The Companys executive officers are eligible to earn an
annual cash incentive bonus tied to a combination of each
officers achievement of job-specific goals and the
Companys achievement of a variety of financial,
operational, and strategic objectives.
Corporate
Performance and Related Bonus Compensation
The MD&C Committee weighs equally the achievement of our
corporate performance goals and our corporate management
objectives in its evaluation of the annual incentive award for
the named executive officers.
Apaches 2010 corporate performance goals were: Production
growth of over five percent, add
and/or
acquire sufficient reserves to replace 2009 production, annual
earnings of at least $2.5 billion, annual cash flow of at
least $6.2 billion, and maintain direct lifting costs per
barrel of oil equivalent (Boe) produced at the 2009
levels of $7.81. The results measured against the 2010 corporate
performance goals were:
|
|
|
Production increased 12.7 percent driven by production from
the Van Gogh and Pyrenees oil projects in Australia which
commenced production in February 2010, and successful drilling
programs in Egypt, the Permian Basin, the Granite Wash play, and
the Horn River shale gas play. Production was augmented by the
three acquisitions: The Gulf of Mexico Shelf assets from Devon
Energy completed in June 2010, the Permian, Canadian and
Egyptian assets from BP completed in the third and fourth
quarters of 2010, and the Mariner merger completed in early
November 2010.
|
|
|
Apache replaced 344 percent of production including
102 percent through drilling, excluding revisions. Reserves
grew by 25 percent over 2009.
|
|
|
Apache reported net income of $3 billion supported by our
diversified portfolio and driven in large part by the growth in
production and higher oil prices as 52 percent of our daily
production was oil and natural gas liquids. Apaches
adjusted earnings for the year, before certain items that impact
the comparability of operating results including merger,
transition and acquisition costs, totaled
$3.2 billion.1
|
|
|
|
Cash flow totaled
$7.37 billion.1
|
1 Adjusted
earnings and cash flow are non-GAAP financial measures, as
defined in Regulation G promulgated by the SEC. Adjusted
earnings is net income (loss) attributable to common stock
adjusted for certain items that management believes affect the
comparability of operating results, such as foreign currency
fluctuation impact on deferred tax expense, merger, acquisitions
and transitions costs, net of tax and additional depletion, net
of tax. A reconciliation of adjusted earnings to net income for
the year ended December 31, 2010 is contained in
item 7 of our Annual Report on
Form 10-K/A
for the year ended December 31, 2010. Cash flow is cash
from operations before changes in operating assets and
liabilities. A reconciliation of cash flow to net cash provided
by operating activities for the year ended December 31,
2010 was previously furnished in our Current Report on
Form 8-K
filed with the SEC on February 17, 2011.
35
|
|
|
Direct lifting costs per Boe of $8.47 were higher than our 2009
level, primarily attributable to the higher lifting costs of the
acquired properties which were under our control for only a part
of the year, limiting our ability to influence them.
|
Other
Performance Measures for Annual Cash Incentive Bonus
The foundation for annual cash incentive bonus determination
process begins with our corporate performance goals and our
corporate management objectives and the achievement of those
targets. In addition, the MD&C Committee believes that
annual cash incentive bonuses are most effective when they are
carefully tailored to job responsibilities of individual
executives. The MD&C Committee receives input from the
chairman and chief executive officer who evaluates officers with
regional responsibilities on their regions production,
revenue, costs, and other results, while corporate-level
officers are evaluated on Company-wide results.
Long-Term
Compensation
The board of directors and the MD&C Committee believe that
long-term, equity-based incentives align the interests of
executive officers and employees with those of the
Companys shareholders. The board and MD&C Committee
also believe that long-term incentives play an important role in
overall Company compensation.
Company-Wide
Long-Term Compensation
The actions of the Board and MD&C Committee in 2010 reflect
these values. Long-term, equity-based incentives are regularly
made available to substantially all Company employees to ensure
a company-wide ethic of ownership and entrepreneurialism.
Stock
Ownership Requirements
In addition to the stock ownership requirements for our board of
directors adopted in February 2007, in November 2009, the
MD&C Committee adopted a two-part stock ownership policy
for the Companys officers. These stock ownership
requirements more closely align the interests of officers with
the Companys stockholders. Officers are expected to be in
compliance with these requirements within three years of the
later of (i) the date the requirements became effective or
(ii) the date each officer is appointed to his or her
current office.
The first part of the stock ownership policy sets a common stock
ownership amount equal to a multiple of the officers base
salary, measured against the value of the officers
discretionary holdings, based on the average per share closing
price of the Companys stock for the previous year. The
ownership requirements are:
|
|
|
|
Position
|
|
|
Requirement
|
Chief Executive Officer
|
|
|
5x Base Salary
|
Presidents and Co-Chief Operating Officers
|
|
|
3x Base Salary
|
Executive Vice Presidents and Senior Vice Presidents
|
|
|
2.5x Base Salary
|
Vice Presidents and Regional Vice Presidents
|
|
|
2x Base Salary
|
|
|
|
|
In determining stock ownership levels, the Company includes:
shares purchased in the open market; vested shares in qualified
and non-qualified plans; shares obtained through stock option
exercises that the officer continues to hold; the vested portion
of restricted stock units (RSUs) and restricted
36
stock; shares beneficially owned in a trust or partnership, by a
spouse
and/or minor
child; and shares held in the Companys deferred delivery
plan. Unearned performance shares, unvested RSUs, and unvested
shares of restricted stock are not counted toward meeting the
requirements.
Hold
Until Retirement Requirements
The second part of the stock ownership policy provides that each
officer hold at least 15 percent of all restricted and
performance shares he or she receives, net of tax withholding,
until such officer retires or otherwise terminates employment
with the Company.
Components
of Our Equity-Based Long-Term Compensation Programs
The Company grants a combination of RSUs, stock options, and
periodic conditional grants of performance shares targeted to
fall at the 50th percentile of the blended market data for
long-term incentive amounts.
Restricted
Stock Units
The RSUs awarded to our named executive officers typically are
proportionate to each named executive officers base
salary, vest ratably over four years, upon vesting allow each
grantee to receive one share of common stock for each RSU, and
are forfeited by the executive if they are unvested and the
executive voluntarily terminates or is terminated for cause
prior to the vesting date. These RSUs are typically granted each
May to our named executive officers and to substantially our
entire employee population (the May RSUs). The
Company also periodically grants conditional grants of RSUs as
performance shares, see Long Term
Compensation Performance Shares below.
Stock
Options
In 2010, the Companys executive officers also received
stock option grants under the 2007 Omnibus Plan. Generally, our
stock options:
|
|
|
are granted to almost half of our employees, including our named
executive officers;
|
|
|
benefit the named executive officers only if shareholders also
benefit from appreciating stock prices;
|
|
|
are granted to the named executive officers in proportion to
their base salary;
|
|
|
become exercisable ratably over a four-year period;
|
|
|
cannot be repriced or reset;
|
|
|
have an exercise price equal to the closing price of the
Companys common stock on the date of grant and expire
10 years after grant; and
|
|
|
allow for accelerated vesting only upon a recipients
involuntary termination or voluntary termination with cause
following a change of control.
|
The grants of stock options made in 2010 to the named executive
officers are reflected in the Grants of Plan Based Awards
Table.
Performance
Shares
The Company periodically awards conditional performance shares.
Currently, the Company grants performance shares under the TSR
Program, and previous grants were made under the 2008 Share
Appreciation Program. The MD&C Committee believes that the
periodic grant of performance shares,
37
otherwise known as conditional grants, provides an effective
retentive element of performance-based compensation. The
periodic grant of performance shares complements and reinforces
the overall compensation program. Both performance programs are
described below.
Total
Shareholder Return Program
In 2009, the Board concluded that a realignment of our long-term
compensation program was necessary to remain competitive with
our 2010 Compensation Peer Group. Therefore, in November 2009,
under the existing 2007 Omnibus Plan, the board of directors
approved and authorized the Stock Option Plan Committee to
implement the TSR Program. The TSR Program is part of an annual
performance-based incentive compensation program whereby each
year the Stock Option Plan Committee will authorize a
conditional grant of performance shares in the form of RSUs to
substantially all management and senior level professional
employees, including each named executive officer, based on a
target percentage of the grantees annual base salary
determined immediately prior to the beginning of a three-year
performance period. The number of RSUs actually received will
depend on a peer company comparison of total shareholder return
at the end of the performance period. The peer companies will be
determined at the commencement of each performance period.
The peer companies selected for each performance period (the
Performance Peer Group) will be comprised of a
larger group of our peer companies than the companies in our
compensation peer group for a given performance period. We use
an expanded list of peer companies for each years TSR
Program for the following reasons:
|
|
|
Comparison: The broader Performance
Peer Group provides a more appropriate basis for judging our
corporate performance than the more narrowly focused
compensation peer group. The compensation peer group consists,
in large part, of companies whose principle business is
North American
and/or
natural gas, and is our predominant competition for executive
talent. As approximately 50 percent of the Companys
operations are outside the United States and approximately
50 percent of our production is crude oil, we believe it is
more appropriate to have a larger, more diversified peer group
to benchmark our corporate performance. The expanded Performance
Peer Group adds many companies we compete against
internationally. The risks and opportunities faced by this
larger group more closely match ours than those faced by the
less diversified compensation peer group.
|
|
|
Continuation: Because it is not unusual
for one or two companies in our compensation peer group to cease
to exist during a three-year performance period, through merger
or otherwise, the expanded group provides more stability and
longevity to the TSR Program.
|
|
|
Statistical Validity: Our Consultant
advises that the expanded Performance Peer Group gives more
statistical validity to the TSR Program.
|
The TSR for the Company and each member of the Performance Peer
Group is determined by dividing (i) the sum of the
cumulative amount of each companys dividends for the
performance period (assuming
same-day
reinvestment into the companys common stock on the
ex-dividend date) and the average per share closing price of
each companys stock for the 60 trading days at the end of
the performance period minus the average per share closing price
of the companys stock for the 60 trading days preceding
the beginning of the performance period; by (ii) the
average per share closing price of each companys stock for
the 60 trading days preceding the beginning of the performance
period.
38
2010
Performance Program
Pursuant to the 2010 Performance Program, on January 15,
2010, essentially all management and senior level professional
employees, including the named executive officers, were granted
the right to receive RSUs, the number of which will be
determined based on the Companys TSR as compared to the
peer group listed below. The peer companies for the 2010
Performance Program (the 2010 Performance Peer
Group) are:
|
|
|
Anadarko Petroleum Corporation
|
|
BP plc
|
Chesapeake Energy Corporation
|
|
Chevron Corporation
|
ConocoPhillips Company
|
|
Devon Energy Corporation
|
EnCana Corporation
|
|
EniSpA
|
EOG Resources, Inc.
|
|
Exxon Mobil Corporation
|
Hess Corporation
|
|
Marathon Oil Corporation
|
Murphy Oil Corporation
|
|
Newfield Exploration Company
|
Noble Energy Inc.
|
|
Occidental Petroleum Corporation
|
Royal Dutch Shell plc
|
|
XTO Energy Inc.*
|
|
|
|
*
|
|
until it merged with Exxon Mobil
Corporation on June 25, 2010.
|
At the conclusion of the initial three-year performance period,
which began on January 1, 2010 and ends on
December 31, 2012, a calculation of TSR performance will be
made and the Companys performance will be directly ranked
within the 2010 Performance Peer Group, resulting in the
application of a factor to the target RSUs to derive the
adjusted number of RSUs awarded.
The following table reflects the factor that will be applied to
the target RSUs depending on the Companys TSR rank for the
2010 Performance Program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR Rank
|
|
|
|
1-4
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
9
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
14-19
|
|
Payout Multiple
|
|
|
|
2.50
|
|
|
|
|
2.30
|
|
|
|
|
2.00
|
|
|
|
|
1.60
|
|
|
|
|
1.00
|
|
|
|
|
0.90
|
|
|
|
|
0.80
|
|
|
|
|
0.70
|
|
|
|
|
0.60
|
|
|
|
|
0.50
|
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If the Companys TSR ranks from 1 to 13, vesting will begin
on December 31, 2012, with 50 percent of the adjusted
number of RSUs vesting immediately, 25 percent vesting as
of December 31, 2013, and 25 percent vesting as of
December 31, 2014. If the Company ranks from 14 to 19, none
of the target RSUs will vest. Employees must be employed during
the entire performance period and on the date of vesting. Newly
eligible employees will enter at the beginning of the next
available performance period.
2010
Bridge Awards
Because the TSR Program performance awards granted in January
2010 will not begin to vest, if at all, until the end of the
three-year performance period on December 31, 2012, the
Stock Option Plan Committee, based on its review of a report
prepared by the Consultant, granted one-time bridge awards of
RSUs to certain employees on January 15, 2010, including
the named executive officers (except Mr. Farris), that will
vest over 24 months. The MD&C Committee determined and
Mr. Farris agreed that, in light of the RSU grant to
Mr. Farris in May 2008, it was appropriate for him to
forego the bridge award. The bridge award amounts were based on
a number of factors including a comparison of compensation
levels at peer companies and the responsibilities of the
grantees
39
position. The RSUs granted pursuant to the bridge award vest as
follows: one-third immediately, one-third as of January 15,
2011, and one-third as of January 15, 2012.
2011
Performance Program
In November 2010, the Board established the 2011 Performance
Program. Pursuant to the 2011 Performance Program, on
January 7, 2011, essentially all professional and
management employees, including the named executive officers,
were granted the right to receive RSUs, the number of which will
be determined based on the Companys TSR as compared to the
peer group listed below. The peer companies for the 2011
Performance Program (the 2011 Performance Peer
Group) are:
|
|
|
Anadarko Petroleum Corporation
|
|
BP plc
|
Canadian Natural Resources Ltd.
|
|
Chesapeake Energy Corporation
|
Chevron Corporation
|
|
ConocoPhillips Company
|
Devon Energy Corporation
|
|
EnCana Corporation
|
EniSpA
|
|
EOG Resources, Inc.
|
Exxon Mobil Corporation
|
|
Hess Corporation
|
Marathon Oil Corporation
|
|
Murphy Oil Corporation
|
Noble Energy Inc.
|
|
Occidental Petroleum Corporation
|
Royal Dutch Shell plc
|
|
Talisman Energy Inc.
|
At the conclusion of the three-year performance period, which
began on January 1, 2011 and ends on December 31,
2013, a calculation of TSR performance will be made and the
Companys performance will be directly ranked within the
2011 Performance Peer Group, resulting in the application of a
factor to the target RSUs to derive the adjusted number of RSUs
awarded.
The table below reflects the factor that will be applied to the
target RSUs depending on the Companys TSR rank for the
2011 Performance Program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR Rank
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
9
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
14-19
|
|
Payout Multiple
|
|
|
|
2.50
|
|
|
|
|
2.25
|
|
|
|
|
2.00
|
|
|
|
|
1.80
|
|
|
|
|
1.60
|
|
|
|
|
1.40
|
|
|
|
|
1.20
|
|
|
|
|
1.00
|
|
|
|
|
0.90
|
|
|
|
|
0.80
|
|
|
|
|
0.70
|
|
|
|
|
0.60
|
|
|
|
|
0.50
|
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If the Companys TSR ranks from 1 to 13, vesting will begin
on December 31, 2013, with 50 percent of the adjusted
number of RSUs vesting immediately, 25 percent vesting as
of December 31, 2014, and 25 percent vesting as of
December 31, 2015. If the Company ranks from 14 to 19, none
of the conditional RSUs will vest. Employees must be employed
during the entire performance period and on the date of vesting.
Newly eligible employees will enter at the beginning of the next
available performance period.
2008 Share
Appreciation Program
On May 7, 2008, pursuant to the 2007 Omnibus Plan, the
Company established the 2008 Share Appreciation Program. In
2008, estimated one-time conditional grants totaling
approximately 2,773,000 shares of Company common stock were
made to substantially all full-time employees and certain
part-time employees of the Company under the 2008 Share
Appreciation Program.
The primary purpose of the 2008 Share Appreciation Program,
like the Companys prior share appreciation plans, is to
provide incentives to our employees to work toward significant
increases in shareholder value. The conditional grants vest only
upon attainment of an initial price threshold of
40
$162 per share of Company common stock prior to year-end 2010
and a final price threshold of $216 per share prior to year-end
2012. Effective December 31, 2010, the conditional grants
for the $162 per share threshold expired because the price
threshold was not attained, and the shares reserved for those
grants were returned to the 2007 Omnibus Plan. Achievement of
the $216 price threshold would represent approximately
$37 billion of growth in market value for the currently
outstanding shares of the Companys common stock, since
attainment of the prior stock appreciation plan price threshold
in February 2008, under the 2005 Share Appreciation Plan
discussed below. If achieved, the conditional grants to our
employees would have an estimated total value of less than one
percent of such projected growth in market capitalization.
Consistent with prior share appreciation plans, more than
95 percent of the incentives under the 2008 Share
Appreciation Program would be paid to non-executive employees if
the remaining $216 threshold is achieved. In November 2009, the
2008 Share Appreciation Program was amended to provide that
employees hired after December 31, 2009, would not be
eligible for grants under the 2008 Share Appreciation
Program.
2005 Share
Appreciation Plan
Also in 2010, the Company continued to issue vested installments
under the 2005 Share Appreciation Plan. In February 2005,
the Company established the 2005 Share Appreciation Plan,
which was approved by the Companys shareholders in May
2005. The 2005 Share Appreciation Plan served the same
purpose as the 2008 Share Appreciation Program and operated
in a similar manner.
Benefits
General
Executive Policies
As part of their total compensation, the Companys
executive officers are eligible for a limited number of
benefits, which are intended to maintain market competitiveness.
This includes an annual physical examination, 50 percent of
health/fitness club membership dues, cash-value-based variable
universal insurance, enhanced long-term disability coverage, and
continued contributions to a non-qualified deferred compensation
plan once limits are reached in qualified retirement plans. In
2010, Mr. Chambers received taxable reimbursement for 50
percent of his country club membership dues because of his
former role as vice president of investor relations. After his
promotion to executive vice president and chief financial
officer, Mr. Chambers will no longer be reimbursed for his
country club membership. No other named executive officer
receives reimbursement for country club memberships.
Use of
Company Property
The Companys operations are spread around the globe in
locations that include ones with a variety of physical and
geo-political risks. Therefore, for both business efficiency and
security reasons, the board of directors requires the chairman
and chief executive officer to use the Companys aircraft
for all business air travel.
More details on the above benefits are presented under All
Other Compensation following the Summary
Compensation Table.
COMPENSATION
DECISIONS IN 2010
Management
Group in This Report The Named Executive
Officers
The following discussion sets forth decisions regarding 2010
compensation for our named executive officers: Messrs. G.
Steven Farris, Roger B. Plank, John A. Crum, Rodney J. Eichler,
P. Anthony Lannie, and Thomas P. Chambers.
41
On November 17, 2010, Apaches Board promoted Thomas
P. Chambers, formerly vice president-corporate planning and
investor relations, to the position of executive vice president
and chief financial officer. Mr. Chambers succeeded
Mr. Plank, who continues to serve as our president, as the
Companys principal financial officer. In addition, the
board announced various other officer promotions in recognition
of such officers contributions for 2010 and to ensure
continuity going forward.
Chairman
and Chief Executive Officer
Experience
and Responsibilities
Mr. Farris, who began working for the Company in 1988,
became chief executive officer in May 2002 and chairman of the
board in January 2009. His leadership responsibilities include
developing sustainable global strategies, recommending and
implementing the Companys capital-expenditure programs,
developing and maintaining sound business relationships with
many of the worlds major energy companies, developing and
maintaining good relationships with the shareholder, investment,
and policy-making communities, guiding and developing senior
management, and overseeing the Companys major business and
staff units.
Mr. Farris direct reports include each of the other
named executive officers, except for Mr. Chambers who
reports to Mr. Plank. Also reporting directly to
Mr. Farris are our executive vice president and chief
technology officer, executive vice president of corporate
reservoir engineering, senior vice president of human resources,
vice president of worldwide exploration and new ventures, and
vice president of environmental health and safety.
Other
Named Executive Officers
Experience
and Responsibilities
Messrs. Plank, Crum, Eichler, Lannie, and Chambers have
served Apache for a combined 86 years. During this period,
each of them has made significant contributions to the Company.
|
|
|
Mr. Plank, our president, has been instrumental in managing
the financial health of the Company, including management of
complex financial matters related to the expansion of the
Company into a global enterprise. The scope of his
responsibilities has continued to grow as the Company has grown
and as the number of legal and financial jurisdictions in which
the Company operates has multiplied.
|
|
|
Mr. Crum, co-chief operating officer and
president North America, has overseen numerous of
our international operations, including spearheading our
Australia region, increasing the performance of our North Sea
properties, and leading our Canadian operations. Our North
American operations, consisting of our U.S. and Canadian
regions, comprise approximately 70 percent of the
Companys estimated proved reserves, and 48 percent of
the Companys total production.
|
|
|
Mr. Eichler, our co-chief operating officer and
president international, led our Egypt region for
more than 12 years and has overseen its growth and
development into our largest region. Our international regions
consisting of Egypt, Australia, United Kingdom, Argentina, and
Chile comprise approximately 30 percent of the
Companys estimated proved reserves, and 52 percent of
the Companys total production.
|
42
|
|
|
Mr. Lannie, our executive vice president and general
counsel, has led our legal group for the last seven years and
has been instrumental in numerous transactions that have helped
grow the Company during his tenure.
|
|
|
Mr. Chambers, our executive vice president and chief
financial officer, has an exceptional knowledge of the Company
and our industry. Mr. Chambers has been an integral
contributor in the Companys industry trend and acquisition
analysis, commodity price analysis, monthly and long-range
financial budgeting and forecasting, business segment and
corporate performance forecasting and analysis, investor
communications, and hedging strategy.
|
Named
Executive Officer Base Salary Actions
Chairman
and Chief Executive Officer
Mr. Farris base salary for 2010 was $1,750,000.
Mr. Farris 2010 base salary earnings were slightly
above the 75th percentile of blended market data.
Mr. Farris did not receive an increase in his base salary
during 2010.
Other
Named Executive Officers
To make base-salary adjustment recommendations for the named
executive officers other than the chairman and chief executive
officer, the MD&C Committee begins with input from the
chairman and chief executive officer concerning the individual
performance of each executive and his input concerning the
optimal application of the data and policies used (and
summarized above) to establish salary ranges more generally. The
MD&C Committee reviews this information and analyzes how
the base salary and contemplated adjustments for each named
executive officer fit with blended market data, Company
performance, market conditions, and internal pay parity
considerations.
On November 17, 2010, in connection with the MD&C
Committees evaluation of their performance during 2010,
the base salary of each of Messrs. Plank, Crum, and Eichler
was increased to $700,000 from $625,000, which is between the
25th and 50th percentile of the blended market data.
Also, Mr. Lannie earned a salary of $500,000 in 2010, which
is between the 50th and 75th percentile of the blended market
data. On May 5, 2010, in connection with his scheduled
salary review and his increased investor relations duties,
Mr. Chambers base salary was increased from $295,000
to $315,000. Then on November 17, 2010, in connection with
his appointment as executive vice president and chief financial
officer, Mr. Chambers salary was increased to
$415,000, which is slightly below the 25th percentile of
the blended market data.
The table below reflects the base salaries that were approved by
the MD&C Committee in 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary as of
|
|
|
Salary as of
|
Name
|
|
|
January 1, 2010
|
|
|
November 17,
2010
|
Mr. Farris
|
|
|
$
|
1,750,000
|
|
|
|
$
|
1,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Plank
|
|
|
$
|
625,000
|
|
|
|
$
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Chambers
|
|
|
$
|
295,000
|
|
|
|
$
|
415,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Crum
|
|
|
$
|
625,000
|
|
|
|
$
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Eichler
|
|
|
$
|
625,000
|
|
|
|
$
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Lannie
|
|
|
$
|
500,000
|
|
|
|
$
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
43
2010
Annual Cash Incentive Bonus Awards
Chairman
and Chief Executive Officer
The MD&C Committee used an analysis specific to the
position of chairman and chief executive to establish the 2010
annual incentive cash bonus for Mr. Farris. Because of the
responsibilities of this office, when setting
Mr. Farris annual cash incentive bonus, the MD&C
Committee placed somewhat greater weight, compared to the
bonus-setting for other named executive officers, on: The scope
of Mr. Farriss responsibilities, his leadership in
the Companys record acquisitions of approximately
$11 billion in assets in 2010, the long-term realization of
the Companys corporate management objectives, the
Companys multi-year comprehensive performance, the
position and strength of the Company relative to peers, and the
level of annual earnings, cash flow and direct lifting costs.
The MD&C Committee did not assign specific weights to these
factors when setting Mr. Farris annual cash incentive
bonus. The annual incentive bonus for our chairman and chief
executive officer was targeted at 125 percent of
Mr. Farris 2010 earnings.
On February 10, 2011, the Board, pursuant to the
recommendation of the MD&C Committee, awarded
Mr. Farris an annual cash incentive bonus for 2010 of
$3,250,000, which was 149 percent of his target.
Mr. Farris 2010 annual cash incentive bonus falls
between the 50th and 75th percentile of the blended
market data.
Other
Named Executive Officers
To establish annual cash incentive bonuses for the named
executive officers other than the chairman and chief executive
officer, the MD&C Committee considered the Companys
achievement of financial, operational, and corporate management
objectives and each executives individual performance. The
2010 annual cash incentive bonus for each named executive
officer was comprised of a corporate performance element and an
individual performance element.
For Messrs. Plank, Crum, and Eichler, the MD&C
Committee targeted eligible bonuses under this plan for 2010 at
100 percent of their earnings. The MD&C Committee
targeted eligible bonus for Mr. Lannie under this plan for
2010 at 75 percent of 2010 earnings. The target eligible
bonus for Mr. Chambers was (i) 50 percent of his
earnings from January 1, 2010, through November 16,
2010 (the period prior to his appointment to executive vice
president and chief financial officer), and
(ii) 75 percent of his earnings from November 17,
2010 through December 31, 2010. The annual cash incentive
program requires that participants must be employed on the date
of payout in order to receive such award.
For the corporate performance element, each corporate goal
represented between approximately zero and 10 percent of an
officers annual incentive bonus. For each corporate goal,
the executive officers could be awarded full credit if the
Company achieved the goal, partial credit if the Company
exceeded results from the prior year but failed to meet the
goal, and extra credit if the Company over-achieved the goal due
to the extraordinary nature of these achievements. Each basic
corporate management objective represented between approximately
zero and 3.9 percent of the officers annual incentive
bonus. If the Company overachieved one or more of the basic
objectives, or if it achieved one or more of the important
objectives, the executive officers could be awarded additional
credit due to the importance of these achievements. The
MD&C Committee has discretion in determining the relative
success of the corporate management objectives.
After its evaluation, the MD&C Committee determined that
the Company achieved 94 percent of our corporate
performance goals in 2010. The MD&C Committee also
determined that the Company achieved 127 percent of our
corporate management objectives. As a result, the Companys
total
44
aggregate achievement of our corporate performance goals and
corporate management objectives was 110.7 percent,
comprised of 47.1 percent for our corporate performance
goals and 63.6 percent for our corporate management
objectives.
For Messrs. Plank, Crum, and Eichler, the chairman and
chief executive officer qualitatively assessed the performance
of their respective groups, considering 2010 results for various
categories, including exploration, production, and drilling. The
chairman and chief executive officer made recommendations to the
MD&C Committee as to the appropriate credit that should be
given for regional achievements. In the case of Mr. Lannie,
the chairman and chief executive officer evaluated his
performance in the Companys $11 billion in
acquisition transactions in 2010 and the Companys two LNG
projects. In the case of Mr. Chambers, Mr. Plank
evaluated his performance during the year and made
recommendations to the chairman and chief executive officer.
The individual performance component was based on the individual
achievement of each executive, as determined by the chairman and
chief executive officer and recommended by him to the MD&C
Committee. 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 units. There was no attempt to
quantify, rank, or otherwise assign relative weights to the
factors considered. The chairman and chief executive officer
conducted an overall analysis of these factors and considered
the totality of the information available to him.
Based on the foregoing, including the Companys 2010
corporate performance and in light of the compensation
decision-making processes and policies described above,
including recommendations by our chairman and chief executive
officer and consideration of the performance of the applicable
Company regions, Messrs. Plank, Crum and Eichler were each
awarded an annual cash incentive bonus for 2010 of approximately
118 percent of their respective 2010 earnings
(118 percent of their targets). Mr. Lannie was awarded
an annual cash incentive bonus for 2010 of approximately
110 percent of his 2010 earnings (147 percent of his
target). Mr. Chambers was awarded an annual cash incentive
bonus for 2010 of approximately 78 percent of his 2010
earnings (147 percent of his target).
The named executive officers annual cash incentive bonus
awards are set forth below and reflected in the Summary
Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
|
|
|
|
|
|
Cash Incentive
|
|
|
|
2010 Annual Cash
|
|
|
Target as Percent
|
|
|
Bonus as
|
Name
|
|
|
Incentive Bonus
|
|
|
of 2010 Earnings
|
|
|
Percent of
Target
|
Mr. Farris
|
|
|
$
|
3,250,000
|
|
|
|
|
125
|
%
|
|
|
|
149
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Plank
|
|
|
$
|
750,000
|
|
|
|
|
100
|
%
|
|
|
|
118
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Chambers
|
|
|
$
|
250,000
|
|
|
|
|
Blend
|
*
|
|
|
|
147
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Crum
|
|
|
$
|
750,000
|
|
|
|
|
100
|
%
|
|
|
|
118
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Eichler
|
|
|
$
|
750,000
|
|
|
|
|
100
|
%
|
|
|
|
118
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Lannie
|
|
|
$
|
550,000
|
|
|
|
|
75
|
%
|
|
|
|
147
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
The target eligible bonus for
Mr. Chambers was (i) 50 percent of his earnings
from January 1, 2010, through November 16, 2010 (the
period prior to his appointment to executive vice president and
chief financial officer), and (ii) 75 percent of his
earnings from November 17, 2010 through December 31,
2010.
|
45
Long-Term
Compensation Awards in 2010
In 2010, the Company granted a total of 191,182 stock options
and 167,825 RSUs to the named executive officers as a group
(including the Companys chairman and chief executive
officer) under the Companys 2007 Omnibus Plan. In 2010,
Mr. Farris did not accept a bridge award (as described
above under 2010 Bridge Awards) or grants of May
RSUs. Additionally, Messrs. Plank, Crum and Eichler did not
receive grants of May RSUs. All of the named executive officers
received conditional grants of RSUs under the 2010 Performance
Program. These conditional grants will vest only upon
achievement of certain total shareholder return thresholds over
a three year performance period. See Long-Term
Compensation Performance Shares-Total Shareholder
Return Program-2010 Performance Program above.
In 2010, the MD&C Committee approved the following
equity-based long-term incentive awards. Additional detail on
these awards is provided in the Grants of Plan Based
Awards Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan. Bridge
|
|
|
Jan. TSR
|
|
|
May
|
|
|
|
|
|
|
Name
|
|
|
RSU
Grants*
|
|
|
RSU
Grants*
|
|
|
RSU
Grants
|
|
|
Total
RSUs
|
|
|
Stock
Options
|
Mr. Farris
|
|
|
|
0
|
|
|
|
|
68,900
|
|
|
|
|
0
|
|
|
|
|
68,900
|
|
|
|
|
102,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Plank
|
|
|
|
9,900
|
|
|
|
|
16,400
|
|
|
|
|
0
|
|
|
|
|
26,300
|
|
|
|
|
24,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Chambers
|
|
|
|
2,300
|
|
|
|
|
2,100
|
|
|
|
|
1,996
|
|
|
|
|
6,396
|
|
|
|
|
4,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Crum
|
|
|
|
9,900
|
|
|
|
|
16,400
|
|
|
|
|
0
|
|
|
|
|
26,300
|
|
|
|
|
24,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Eichler
|
|
|
|
9,900
|
|
|
|
|
16,400
|
|
|
|
|
0
|
|
|
|
|
26,300
|
|
|
|
|
24,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Lannie
|
|
|
|
5,000
|
|
|
|
|
4,400
|
|
|
|
|
4,229
|
|
|
|
|
13,629
|
|
|
|
|
10,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
37,000
|
|
|
|
|
124,600
|
|
|
|
|
6,225
|
|
|
|
|
167,825
|
|
|
|
|
191,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
See discussion above under
2010 Performance Program
|
TAX
LEGISLATION RELATED TO COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as
amended, 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, would be appropriate. It is the intention of the MD&C
Committee for the Company to receive shareholder approval for
all future stock-based compensation plans so that they may
qualify for the performance-based compensation exemption.
The Companys 1998 Stock Option Plan, 2005 Stock Option
Plan, 2005 Share Appreciation Plan, and 2007 Omnibus Equity
Compensation Plan (including the 2008 Share Appreciation
Program and the TSR Program) were approved by the Companys
shareholders 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 shareholder 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 shareholder value. No further
grants can be made under the Companys 1998, 2000 and 2005
Stock Option Plans,
46
Executive Restricted Stock Plan, and the 2008 Share
Appreciation Program. While the MD&C Committee cannot
predict with certainty how the Companys compensation
policies may be further affected by this limitation, 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.
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 were generally effective
January 1, 2009. Prior to effectiveness, companies were
expected to comply in good faith with the statute,
taking note of the interim guidance issued by the Internal
Revenue Service. The Company 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
these plans were amended before January 1, 2009, as
necessary, to meet the requirements of the final regulations.
MANAGEMENT
DEVELOPMENT AND COMPENSATION COMMITTEE REPORT
The Management Development and Compensation Committee of the
board of directors of Apache Corporation reviewed and discussed
with Company management the Compensation Discussion and Analysis
set forth above, and based upon such review and discussion,
recommended to the board of directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
|
|
|
February 28, 2011
|
|
Members of the Management Development and Compensation Committee
|
|
|
|
|
|
Frederick M. Bohen, Chairman
A. D. Frazier, Jr.
John A. Kocur
George D. Lawrence
|
47
SUMMARY
COMPENSATION TABLE
The table below summarizes the compensation for the individuals
listed below for all services rendered to the Company and its
subsidiaries during fiscal years 2010, 2009 and 2008. The
persons included in this table are the Companys principal
executive officer, principal financial officer(s), and the three
other most highly compensated executive officers (the
Named Executive Officers) who served as executive
officers of the Company during 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus(3)
|
|
|
Awards(4)
|
|
|
Awards(4)
|
|
|
Compensation(5)
|
|
|
Earnings(6)
|
|
|
Compensation(7)
|
|
|
Total
|
Name and Principal Position(a)
|
|
|
Year(b)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
($)(f)
|
|
|
($)(g)
|
|
|
($)(h)
|
|
|
($)(i)
|
|
|
($)(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven Farris (1)
|
|
|
|
2010
|
|
|
|
|
1,750,000
|
|
|
|
|
|
|
|
|
|
9,774,154
|
|
|
|
|
3,498,631
|
|
|
|
|
3,250,000
|
|
|
|
|
30,083
|
|
|
|
|
991,561
|
|
|
|
|
19,294,429
|
|
Chairman and
|
|
|
|
2009
|
|
|
|
|
1,387,500
|
|
|
|
|
|
|
|
|
|
1,799,590
|
|
|
|
|
647,242
|
|
|
|
|
2,500,000
|
|
|
|
|
670,077
|
|
|
|
|
685,104
|
|
|
|
|
7,689,513
|
|
Chief Executive Officer
|
|
|
|
2008
|
|
|
|
|
1,493,750
|
|
|
|
|
|
|
|
|
|
36,440,754
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
(593,003
|
)
|
|
|
|
686,519
|
|
|
|
|
38,528,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank (1)(2)
|
|
|
|
2010
|
|
|
|
|
634,375
|
|
|
|
|
|
|
|
|
|
3,392,338
|
|
|
|
|
833,006
|
|
|
|
|
750,000
|
|
|
|
|
581,183
|
|
|
|
|
297,076
|
|
|
|
|
6,487,978
|
|
President
|
|
|
|
2009
|
|
|
|
|
578,598
|
|
|
|
|
|
|
|
|
|
5,320,580
|
|
|
|
|
270,179
|
|
|
|
|
525,000
|
|
|
|
|
927,705
|
|
|
|
|
151,160
|
|
|
|
|
7,773,222
|
|
|
|
|
|
2008
|
|
|
|
|
560,000
|
|
|
|
|
|
|
|
|
|
1,288,498
|
|
|
|
|
283,471
|
|
|
|
|
213,780
|
|
|
|
|
(1,052,656
|
)
|
|
|
|
194,364
|
|
|
|
|
1,487,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P. Chambers (2)(9)
|
|
|
|
2010
|
|
|
|
|
320,661
|
|
|
|
|
|
|
|
|
|
743,727
|
|
|
|
|
168,485
|
|
|
|
|
250,000
|
|
|
|
|
50,516
|
|
|
|
|
90,305
|
|
|
|
|
1,623,694
|
|
Executive Vice President and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Crum (1)(2)
|
|
|
|
2010
|
|
|
|
|
634,375
|
|
|
|
|
|
|
|
|
|
3,392,338
|
|
|
|
|
833,006
|
|
|
|
|
750,000
|
|
|
|
|
204,843
|
|
|
|
|
302,415
|
|
|
|
|
6,116,977
|
|
Co-Chief Operating Officer and
|
|
|
|
2009
|
|
|
|
|
561,145
|
|
|
|
|
50,000
|
|
|
|
|
5,320,580
|
|
|
|
|
270,179
|
|
|
|
|
525,000
|
|
|
|
|
291,309
|
|
|
|
|
207,926
|
|
|
|
|
7,226,139
|
|
President North America
|
|
|
|
2008
|
|
|
|
|
420,000
|
|
|
|
|
|
|
|
|
|
1,006,936
|
|
|
|
|
222,530
|
|
|
|
|
160,335
|
|
|
|
|
(245,388
|
)
|
|
|
|
1,771,878
|
(8)
|
|
|
|
3,336,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Eichler (1)(2)
|
|
|
|
2010
|
|
|
|
|
634,375
|
|
|
|
|
|
|
|
|
|
3,392,338
|
|
|
|
|
833,006
|
|
|
|
|
750,000
|
|
|
|
|
639,024
|
|
|
|
|
623,334
|
|
|
|
|
6,872,077
|
|
Co-Chief Operating Officer and
|
|
|
|
2009
|
|
|
|
|
557,722
|
|
|
|
|
|
|
|
|
|
5,320,580
|
|
|
|
|
270,179
|
|
|
|
|
525,000
|
|
|
|
|
783,529
|
|
|
|
|
256,050
|
|
|
|
|
7,713,060
|
|
President International
|
|
|
|
2008
|
|
|
|
|
390,000
|
|
|
|
|
|
|
|
|
|
942,003
|
|
|
|
|
206,635
|
|
|
|
|
148,882
|
|
|
|
|
(967,864
|
)
|
|
|
|
568,189
|
|
|
|
|
1,287,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. Anthony Lannie (10)
|
|
|
|
2010
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
1,582,424
|
|
|
|
|
356,998
|
|
|
|
|
550,000
|
|
|
|
|
(10,127
|
)
|
|
|
|
166,526
|
|
|
|
|
3,145,821
|
|
Executive Vice President and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
On January 15, 2009, G.
Steven Farris, then the Companys president, chief
executive officer, and chief operating officer, succeeded
Raymond Plank as chairman. Effective February 12, 2009,
Roger B. Plank was appointed president (previously, he served as
executive vice president and chief financial officer), John A.
Crum was appointed co-chief operating officer and
president North America (previously, he served as
executive vice president Canada), and Rodney J.
Eichler was appointed co-chief operating officer and
president International (previously, he served as
executive vice president Egypt). In connection with
these appointments, Mr. Farris, the Companys chairman
and chief executive officer, resigned from his positions as the
Companys president and chief operating officer, effective
February 12, 2009. Mr. Farris continues as the
Companys principal executive officer. Mr. Roger Plank
continued as the Companys principal financial officer
through November 16, 2010. On November 17, 2010,
Thomas P. Chambers was appointed executive vice president and
chief financial officer, succeeding Mr. Roger Plank as
principal financial officer. Previously, Mr. Chambers
served as vice president corporate planning and
investor relations.
|
|
(2)
|
|
In February 2011, Mr. Crum
resigned from the Company, effective March 7, 2011.
Following Mr. Crums resignation, Mr. Eichler was
promoted to president and chief operating officer and
Mr. Plank was promoted to president and chief corporate
officer.
|
|
(3)
|
|
Mr. Crum received a payment
in 2009 in connection with his transition from Canada.
Otherwise, the Named Executive Officers were not entitled to
receive payments that would be characterized as bonus payments.
See footnote (5) for payments under the Companys
incentive compensation plan.
|
|
|
|
(4)
|
|
Value of stock awards and option
awards made during the fiscal year based upon aggregate grant
date fair value, determined in accordance with FASB ASC
Topic 718. 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/A
for the year ended December 31, 2010. The value of these
stock awards and option awards is expensed ratably over the term
of the award.
|
(footnotes continued on
following page)
48
|
|
|
|
|
For 2008, this column also
reflects performance shares granted under the 2008 Share
Appreciation Program (the 2008 Performance Shares).
In May 2008, substantially all current, full time employees and
certain part-time employees, including the Named Executive
Officers, were granted the right to receive shares of the
Companys common stock upon attainment of significant
increases in shareholder value, or doubling the per share price
of the Companys common stock to $216 by the end of 2012.
The aggregate grant date fair value of the 2008 Performance
Shares was computed based upon the probable outcome of the
performance conditions as of the date of grant, or a
Black-Scholes value of $75.41 for shares granted at the
$216 share price target. If the $216 share price
target is achieved, the value of the 2008 Performance Shares
would be as follows: Mr. Farris $1,500,120;
Mr. Plank $1,071,360; Mr. Crum
$840,240; and Mr. Eichler $781,920.
|
|
(5)
|
|
Amounts reflected under column
(g) are paid pursuant to the Companys incentive
compensation plan as described under Annual Cash Incentive
Bonus in the Compensation Discussion and Analysis.
Mr. Farris requested that his 2008 incentive compensation
(after deferrals and required tax withholding) be paid in shares
of the Companys common stock. As a result,
4,722 shares of common stock were issued to Mr. Farris.
|
|
(6)
|
|
See Non-Qualified Deferred
Compensation Table below.
|
|
(7)
|
|
For additional information on All
Other Compensation, see discussion, table, and footnotes below.
|
|
(8)
|
|
See footnote (e) under the
All Other Compensation table below.
|
|
(9)
|
|
Mr. Chambers was not a Named
Executive Officer in 2008 or 2009.
|
|
(10)
|
|
Mr. Lannie was not a Named
Executive Officer in 2008 or 2009.
|
49
All Other
Compensation
Officers participate in two qualified retirement plans. The
401(k) Savings Plan provides a match up to the first six percent
of base pay and incentive bonus. The Money Purchase Retirement
Plan provides an annual six percent company contribution into
the same investment choices as the 401(k) plan with the
exception of Company stock. Additionally, officers can elect to
participate in the Non-Qualified Retirement/Savings Plan to
defer beyond the limits in the 401(k) Savings Plan and continue
Company contributions which exceed the limits in the qualified
plans. The investment choices mirror those in the 401(k) Savings
Plan and the Money Purchase Retirement Plan. The Deferred
Delivery Plan allows officers the ability to defer income in the
form of deferred units from the vesting of restricted stock
units under the Companys Executive Restricted Stock Plan
and 2007 Omnibus Equity Compensation Plan. The contributions
into both non-qualified plans are reported in the Non-Qualified
Deferred Compensation Table. The Company does not have a defined
benefit plan for U.S. employees.
Apache provides U.S. employees with two times their base
salary under group term life insurance. Executives receive the
first $50,000 of coverage under the same group term life
insurance plan, and the remaining amount to bring them up to two
times salary is provided in the form of whole life insurance
policies.
During 2010, the board required G. Steven Farris to use the
Companys aircraft for all air travel for security reasons
and to facilitate efficient business travel. Even though the
Company considers these costs a necessary business expense
rather than a perquisite for Mr. Farris, in line with SEC
guidance, the following table includes the amounts attributable
to each Named Executive Officers personal aircraft usage,
including trips for Company-supported charitable interests.
Beginning in fiscal 2009, executives are no longer reimbursed
for the taxes on the income attributable to the personal use of
corporate aircraft. The methodology for the valuation of
non-integral use of corporate aircraft for disclosure in the
Summary Compensation Table, in compliance with SEC guidance,
calculates the incremental cost to the Company for personal use
of the aircraft based on the cost of fuel and oil per hour of
flight; trip-related inspections, repairs and maintenance; crew
travel expenses; on-board catering; trip-related flight planning
services; landing, parking, and hanger fees; supplies; passenger
ground transportation; and other variable costs. Additionally,
the value of trips attributable to philanthropic interests was
included, even though they are seen as contributing to the
goodwill of the Company. In addition, Standard Industry Fare
Level (SIFL) tables, published by the Internal
Revenue Service, are used to determine the amount of
compensation income that is imputed to the executive for tax
purposes for personal use of corporate aircraft.
In addition to the benefits for which all employees are
eligible, the Company also covers the cost of an annual
physical, 50 percent of health/fitness club membership dues
and the full cost of enhanced long-term disability coverage for
executive officers.
The Company provides various forms of compensation related to
expatriate assignment that differ according to location and term
of assignment, including: foreign service premium, foreign
assignment tax equalization, location pay, housing and
utilities, home leave and travel, goods and services allowance,
relocation expense, and tax return preparation. These items have
been broken out separately in the following table under Foreign
Assignment Allowances to reflect the amounts that pertain to
Mr. Crum and Mr. Eichler. Mr. Crum was executive
vice president Canada from July 2007 to
February 2009. Mr. Eichler, as executive vice
president Egypt, resided in Egypt during 2007, 2008,
and January to June 2009.
50
The following table provides a detailed breakdown of the amounts
for fiscal years 2010, 2009, and 2008 under All Other
Compensation in the Summary Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven
|
|
|
Roger B.
|
|
|
Thomas P.
|
|
|
John A.
|
|
|
Rodney J.
|
|
|
P. Anthony
|
Benefits
|
|
|
Year
|
|
|
Farris
|
|
|
Plank
|
|
|
Chambers
|
|
|
Crum
|
|
|
Eichler
|
|
|
Lannie
|
Company Contributions Retirement Plans
|
|
|
|
2010
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
|
|
2009
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
|
n/a
|
|
|
|
$
|
29,400
|
|
|
|
$
|
29,400
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
27,600
|
|
|
|
$
|
27,600
|
|
|
|
|
n/a
|
|
|
|
$
|
27,600
|
|
|
|
$
|
27,600
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Contributions
|
|
|
|
2010
|
|
|
|
$
|
480,600
|
|
|
|
$
|
109,725
|
|
|
|
$
|
25,939
|
|
|
|
$
|
109,725
|
|
|
|
$
|
109,725
|
|
|
|
$
|
67,800
|
|
Non-Qualified Plan
|
|
|
|
2009
|
|
|
|
$
|
197,100
|
|
|
|
$
|
65,685
|
|
|
|
|
n/a
|
|
|
|
$
|
57,178
|
|
|
|
$
|
55,392
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
379,050
|
|
|
|
$
|
100,661
|
|
|
|
|
n/a
|
|
|
|
$
|
68,531
|
|
|
|
$
|
61,417
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Premiums
|
|
|
|
2010
|
|
|
|
$
|
155,057
|
|
|
|
$
|
27,973
|
|
|
|
$
|
17,702
|
|
|
|
$
|
43,770
|
|
|
|
$
|
72,199
|
|
|
|
$
|
22,766
|
|
|
|
|
|
2009
|
|
|
|
$
|
144,670
|
|
|
|
$
|
22,590
|
|
|
|
|
n/a
|
|
|
|
$
|
33,789
|
|
|
|
$
|
18,800
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
114,733
|
|
|
|
$
|
15,932
|
|
|
|
|
n/a
|
|
|
|
$
|
17,035
|
|
|
|
$
|
18,800
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursement for Taxes on Life
|
|
|
|
2010
|
|
|
|
$
|
88,935
|
|
|
|
$
|
16,044
|
|
|
|
$
|
10,153
|
|
|
|
$
|
25,105
|
|
|
|
$
|
51,113
|
|
|
|
$
|
13,058
|
|
Insurance Premiums
|
|
|
|
2009
|
|
|
|
$
|
82,978
|
|
|
|
$
|
12,957
|
|
|
|
|
n/a
|
|
|
|
$
|
19,380
|
|
|
|
$
|
13,309
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
65,807
|
|
|
|
$
|
9,138
|
|
|
|
|
n/a
|
|
|
|
$
|
9,771
|
|
|
|
$
|
13,309
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Company Property
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
15,955
|
(a)
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
12,985
|
(b)
|
|
|
$
|
12,380
|
(b)
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
2,533
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
70,577
|
(c)
|
|
|
$
|
24,978
|
(c)
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
6,600
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursement for Taxes on Use
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
of Company Property
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
34
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
20,781
|
|
|
|
$
|
12,234
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
88
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Long-Term Disability
|
|
|
|
2010
|
|
|
|
$
|
147,569
|
|
|
|
$
|
36,359
|
|
|
|
$
|
5,726
|
|
|
|
$
|
27,402
|
|
|
|
$
|
28,370
|
|
|
|
$
|
18,502
|
|
Coverage and Annual Physicals
|
|
|
|
2009
|
|
|
|
$
|
7,971
|
|
|
|
$
|
6,571
|
|
|
|
|
n/a
|
|
|
|
$
|
2,856
|
|
|
|
$
|
2,682
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
7,971
|
|
|
|
$
|
3,821
|
|
|
|
|
n/a
|
|
|
|
$
|
2,856
|
|
|
|
$
|
2,682
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursement for Taxes on
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
1,620
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
|
Annual Physicals
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
1,577
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Club Memberships (50%)
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
1,385
|
(d)
|
|
|
$
|
433
|
(d)
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
570
|
(d)
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Equivalents Paid on Unvested
|
|
|
|
2010
|
|
|
|
$
|
90,000
|
|
|
|
$
|
60,000
|
|
|
|
$
|
|
|
|
|
$
|
60,000
|
|
|
|
$
|
60,000
|
|
|
|
$
|
15,000
|
|
Restricted Stock Units
|
|
|
|
2009
|
|
|
|
$
|
210,000
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Benefits 2010
|
|
|
|
|
|
|
|
$
|
991,561
|
|
|
|
$
|
297,076
|
|
|
|
$
|
90,305
|
|
|
|
$
|
295,835
|
|
|
|
$
|
350,807
|
|
|
|
$
|
166,526
|
|
Subtotal Benefits 2009
|
|
|
|
|
|
|
|
$
|
685,104
|
|
|
|
$
|
151,160
|
|
|
|
|
n/a
|
|
|
|
$
|
142,603
|
|
|
|
$
|
122,150
|
|
|
|
|
n/a
|
|
Subtotal Benefits 2008
|
|
|
|
|
|
|
|
$
|
686,519
|
|
|
|
$
|
194,364
|
|
|
|
|
n/a
|
|
|
|
$
|
126,363
|
|
|
|
$
|
130,496
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Table continued on following
page)
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Steven
|
|
|
Roger B.
|
|
|
Thomas P.
|
|
|
John A.
|
|
|
Rodney J.
|
|
|
P. Anthony
|
Foreign Assignment Allowances
|
|
|
Year
|
|
|
Farris
|
|
|
Plank
|
|
|
Chambers
|
|
|
Crum
|
|
|
Eichler
|
|
|
Lannie
|
Foreign Service Premium
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
7,500
|
|
|
|
$
|
14,625
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
63,000
|
|
|
|
$
|
58,500
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes Related to Foreign
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
5,830
|
(e)
|
|
|
$
|
272,277
|
(f)
|
|
|
$
|
|
|
Assignment
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
(8,441
|
)(e)
|
|
|
$
|
24,877
|
(f)
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
1,484,704
|
(e)
|
|
|
$
|
169,990
|
(f)
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location Pay
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
19,500
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
78,000
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Housing, Utilities, and Parking
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
250
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
25,670
|
|
|
|
$
|
31,500
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
46,470
|
|
|
|
$
|
53,030
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Leave and Travel
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
60,686
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goods and Services Allowance
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
4,844
|
|
|
|
$
|
6,182
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
50,591
|
|
|
|
$
|
16,737
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relocation Allowance and Expenses
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
35,000
|
|
|
|
$
|
36,466
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Return Preparation
|
|
|
|
2010
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
750
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
|
2009
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
750
|
|
|
|
$
|
750
|
|
|
|
|
n/a
|
|
|
|
|
|
2008
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
750
|
|
|
|
$
|
750
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Foreign Assignment
Allowances 2010
|
|
|
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
6,580
|
|
|
|
$
|
272,527
|
|
|
|
$
|
|
|
Subtotal Foreign Assignment
Allowances 2009
|
|
|
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
65,323
|
|
|
|
$
|
133,900
|
|
|
|
|
n/a
|
|
Subtotal Foreign Assignment
Allowances 2008
|
|
|
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
|
n/a
|
|
|
|
$
|
1,645,515
|
|
|
|
$
|
437,693
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total All Other
Compensation 2010
|
|
|
|
|
|
|
|
$
|
991,561
|
|
|
|
$
|
297,076
|
|
|
|
$
|
90,305
|
|
|
|
$
|
302,415
|
|
|
|
$
|
623,334
|
|
|
|
$
|
166,526
|
|
Total All Other
Compensation 2009
|
|
|
|
|
|
|
|
$
|
685,104
|
|
|
|
$
|
151,160
|
|
|
|
|
n/a
|
|
|
|
$
|
207,926
|
|
|
|
$
|
256,050
|
|
|
|
|
n/a
|
|
Total All Other
Compensation 2008
|
|
|
|
|
|
|
|
$
|
686,519
|
|
|
|
$
|
194,364
|
|
|
|
|
n/a
|
|
|
|
$
|
1,771,878
|
|
|
|
$
|
568,189
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
This amount for 2010 is for use of
corporate aircraft. For Mr. Plank, the amount includes
$15,955 related to Company-supported charitable interests.
|
|
(b)
|
|
These amounts for 2009 are for use
of corporate aircraft. For Mr. Farris and Mr. Plank,
the amounts include $7,719 and $5,688, respectively, related to
Company-supported charitable interests.
|
|
(c)
|
|
These amounts for 2008 are for use
of corporate aircraft. For Mr. Farris and Mr. Plank,
the amounts include $27,946 and $3,648, respectively, related to
Company-supported charitable interests.
|
|
(d)
|
|
These amounts for Mr. Crum
are reimbursement of 50 percent of health/fitness club
membership dues. In 2010, Mr. Chambers received taxable
reimbursement for 50 percent of his country club membership dues
because of his former role as vice president of investor
relations. After his promotion to executive vice president and
chief financial officer, Mr. Chambers will no longer be
reimbursed for his country club membership.
|
|
(e)
|
|
Executives assigned to foreign
countries typically incur a change in their overall tax
liability because most of the components of assignment
compensation that are provided in addition to base salary are
taxable in the U.S. and in the foreign country. Therefore, the
Companys expatriate assignment policy provides that the
Company will be responsible for any additional foreign or U.S.
taxes due as a direct result of the international assignment,
and the executive remains financially responsible for taxes
which he/she would have incurred if he/she had continued to live
and work
|
(footnotes continued on
following page)
52
|
|
|
|
|
in the U.S. Pursuant to the
foreign assignment policy, the Company withheld
from Mr. Crums compensation an amount equivalent to
the taxes that would have been due had he remained in the U.S.
Those funds were used to help pay taxes due in the U.S. and in
Canada during the period of his foreign assignment. The Company
paid taxes due in excess of Mr. Crums withholding
that were incurred as a result of his foreign assignment.
|
|
|
|
During the fiscal year ended
December 31, 2009, the Company paid U.S. $65,737 in
Canadian foreign taxes on Mr. Crums behalf to the
Canada Revenue Agency (CRA) in connection with his
foreign assignment earnings through February 12, 2009,
after which Mr. Crum returned to the United States. The
Company anticipates that, based on prior experience, the CRA
will refund an amount equal to 60 percent or approximately
U.S. $39,442 of the U.S. $65,737 of Canadian tax paid by the
Company. Therefore, among other items, the 2009 amount includes
40 percent or approximately U.S. $26,295 of the Canadian
tax paid by the Company on Mr. Crums behalf in 2009.
|
|
|
|
During the fiscal year ended
December 31, 2008, the Company paid U.S. $2.58 million
in Canadian foreign taxes on Mr. Crums behalf to the
CRA in connection with his 2008 foreign assignment earnings
including compensation reflected in the Option Exercises and
Stock Vested Table. Pursuant to the Companys expatriate
assignment policy, Mr. Crum is required to remit to the
Company all host country tax refunds he receives related to
taxes paid by the Company on his behalf. The Company has
calculated that the CRA will refund approximately U.S.
$0.83 million of the U.S. $2.58 million of Canadian
tax paid by the Company. Therefore, the 2008 amount includes
payments by the Company of Canadian tax on Mr. Crums
behalf in 2008 net of the refund, or U.S.
$1.75 million. Also pursuant to the Companys policy,
in 2010, Mr. Crum received and remitted to the Company a
$0.34 million refund from the U.S. Internal Revenue Service
(IRS) related to U.S. taxes, which is included in
the 2008 amount.
|
|
(f)
|
|
Executives assigned to foreign
countries typically incur a change in their overall tax
liability because most of the components of assignment
compensation that are provided in addition to base salary are
taxable in the U.S. and in the foreign country. Therefore, the
Companys expatriate assignment policy provides that it
will be responsible for any additional foreign or U.S. taxes due
as a direct result of the international assignment and the
executive remains financially responsible for the tax which
he/she would have incurred if he/she had continued to live and
work in the U.S. Therefore, the Company withheld
from Mr. Eichlers compensation an amount equivalent
to the taxes that would have been due had he remained in the
U.S. Those funds were used to help pay taxes due in the U.S. and
in Egypt during the period of his foreign assignment. The
Company paid taxes due in excess of Mr. Eichlers
withholding that were incurred as a result of his foreign
assignment.
|
53
GRANTS OF
PLAN BASED AWARDS TABLE
The table below provides supplemental information relating to
the Companys grants of stock options and restricted stock
units during fiscal year 2010 to the Named Executive Officers.
There were no stock appreciation rights granted during fiscal
year 2010. Also included, in compliance with SEC rules on
disclosure of executive compensation, is information relating to
the estimated grant date fair value of the grants. For stock
options, the estimated fair value is based upon principles of
the Black-Scholes option pricing model. The Black-Scholes model
utilizes numerous arbitrary assumptions about financial
variables such as interest rates, stock price volatility and
future dividend yield. Neither the values reflected in the table
nor the assumptions utilized in arriving at the values should be
considered indicative of future stock performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
Payouts Under
|
|
|
Stock
|
|
|
All Other Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under
|
|
|
Equity Incentive Plan
|
|
|
Awards: Number
|
|
|
Awards: Number
|
|
|
Exercise or Base
|
|
|
Grant Date
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
Awards
|
|
|
of Shares of
|
|
|
of Securities
|
|
|
Price of
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Value of Stock
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards ($/Sh)
|
|
|
and Option Awards ($)
|
Name (a)
|
|
|
Date (b)
|
|
|
($)(c)
|
|
|
($)(1)(d)
|
|
|
($)(e)
|
|
|
(#)(f)
|
|
|
(#)(2)(g)
|
|
|
(#)(h)
|
|
|
(#)(3)(i)
|
|
|
(#)(4)(j)
|
|
|
(5)(k)
|
|
|
(3)(6)(l)
|
G. Steven Farris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,187,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
68,900
|
|
|
|
|
172,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,774,154
|
|
|
|
|
|
05/05/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,539
|
|
|
|
|
99.30
|
|
|
|
|
3,498,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger B. Plank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
634,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
16,400
|
|
|
|
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,326,504
|
|
|
|
|
|
01/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,065,834
|
|
|
|
|
|
05/05/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,414
|
|
|
|
|
99.30
|
|
|
|
|
833,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
2,100
|
|
|
|
|
5,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
297,906
|
|
|
|
|
|
01/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|