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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:
 
     
     
 
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  (3)   Filing Party:
 
     
     
 
  (4)   Date Filed:
 
     
     
 


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(APACHE LOGO)
 
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 Company’s annual meeting in 2014;
 
  2.  Ratification of Ernst & Young LLP as the Company’s independent auditors for fiscal year 2011;
 
  3.  An advisory vote on the compensation of the Company’s named executive officers;
 
  4.  An advisory vote on the frequency of the advisory vote on the compensation of the Company’s named executive officers;
 
  5.  Approval of an amendment to the Company’s Restated Certificate of Incorporation to authorize additional common stock;
 
  6.  Approval of an amendment to the Company’s Restated Certificate of Incorporation to authorize additional preferred stock;
 
  7.  Approval of the Company’s 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 Company’s 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
 
-s- C.L. Peper
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 Company’s 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 Company’s website at http://www.apachecorp.com


 

 
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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.


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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 Company’s board of directors starting on or about April 14, 2011.
 
Purpose of the Annual Meeting
 
At the Company’s annual meeting, shareholders will vote on the following matters:
 
•  Items 1-4: election of directors,
 
•  Item 5: ratification of Ernst & Young LLP as the Company’s independent auditors,
 
•  Item 6: an advisory vote on the compensation of the Company’s named executive officers,
 
•  Item 7: an advisory vote on the frequency of the advisory vote on the compensation of the Company’s named executive officers,
 
•  Item 8: approval of a proposed amendment to the Company’s Restated Certificate of Incorporation to authorize additional common stock,
 
•  Item 9: approval of a proposed amendment to the Company’s Restated Certificate of Incorporation to authorize additional preferred stock,
 
•  Item 10: approval the Company’s 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 Company’s 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.


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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 Company’s 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 Company’s independent auditors,
 
•  FOR the advisory vote on compensation of the Company’s named executive officers,
 
•  FOR an annual advisory vote on the compensation of the Company’s named executive officers,
 
•  FOR the approval of the proposed amendment to the Company’s Restated Certificate of Incorporation to authorize additional common stock,


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•  FOR the approval of the proposed amendment to the Company’s 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 Apache’s 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 Company’s 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 Company’s independent auditors. You may vote FOR or AGAINST the ratification of Ernst & Young LLP as the Company’s 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.


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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.


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ELECTION OF DIRECTORS
(ITEM NOS. 1-4 ON PROXY CARD)
 
The Company’s 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 Company’s 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 nominee’s 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 Company’s 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 America’s Natural Gas Alliance (“ANGA”). At Apache, Mr. Farris is a member of the Executive Committee.
 
RANDOLPH M. FERLIC, 73, a private investor, joined the Company’s 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.


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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 state’s 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 Company’s board of directors in 1977. Mr. Kocur, who is retired from the private practice of law, served as vice chairman of the Company’s 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 director’s 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 Company’s 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  


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    Term
 
    Expires  
 
         
EUGENE C. FIEDOREK, 79, a private investor, joined the Company’s 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 Company’s 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 nation’s 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 Company’s 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 Company’s 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  

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    Term
 
    Expires  
 
         
GEORGE D. LAWRENCE, 60, a private investor, joined the Company’s 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 Company’s 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 Cimarex’s 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 Key’s president from 1992 to September 1999 and again from March 2002 to October 2002. Prior to joining Key, Mr. Merelli served as Apache’s 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 Company’s 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 Company’s 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  

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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 director’s service on the Company’s 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 Company’s 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 corporation’s president, was responsible for and managed its finances, and was trustee and manager of the corporation’s employee benefit plans. Dr. Ferlic has twice been publicly elected to the University of Nebraska Board of Regents and has served on the board’s 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 Company’s 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 Bank’s 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


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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 Company’s 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 Company’s president in 1979. Mr. Kocur, as president and later as vice chairman, was instrumental in overseeing Apache’s growth from a small drilling program company into a leading independent, international oil and gas company. Mr. Kocur’s unparalleled experience with and understanding of the Company’s history and objectives provide invaluable insight into the Company’s 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 1980’s, 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 Board’s 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 Apache’s audit committee.
 
PATRICIA ALBJERG GRAHAM Prior to her appointment as dean of Harvard University’s 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 government’s 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


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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 company’s 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 Phoenix’s operations in Egypt, an area that remains at the core of Apache’s 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.


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RODMAN D. PATTON For over 25 years prior to joining Apache’s 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 GP’s audit committee, Mr. Patton has extensive financial reporting expertise, which serves him well in his role as a member of Apache’s 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 Company’s 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 Company’s 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 director’s 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 director’s 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 director’s immediate family is employed as a partner of Ernst & Young LLP, the Company’s 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 Company’s 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 Company’s audit within that time; (e) the director or a member of the director’s 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 director’s 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.


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Lead Director
 
The Company’s 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 management’s 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 board’s individual, group, and committee self-assessments are done annually, leads periodic discussions with other board members and management concerning the board’s 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 Company’s Governance Principles, which are available on the Company’s 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 Company’s 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 Apache’s 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 Plank’s retirement as chief executive officer of the Company in 2002, Mr. Farris was appointed as the Company’s chief executive officer and Mr. Raymond Plank remained as the Company’s chairman of the board. Upon Mr. Plank’s retirement as chairman of the board in January 2009, Mr. Farris was appointed the Company’s chairman of the board, once again unifying the roles of chairman and chief executive officer. As Apache’s 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 Chairman’s ability to call board meetings with the CEO’s 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.


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Risk Oversight
 
The Company’s 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 Company’s risk management processes on behalf of the board. The Audit Committee charter provides that the Audit Committee should assess and manage the Company’s exposure to risk, and discuss the Company’s 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 Company’s risk profile. The Audit Committee and the board of directors focus on the most significant risks facing the Company, and the Company’s risk management strategy and ensure that the risks undertaken are consistent with the board’s tolerance for risk. While the board is responsible for setting, monitoring and maintaining the Company’s risk management policies and practices, the Company’s 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 Company’s 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 Company’s stock performance. This allows executives to focus on the Company’s business without an excessive focus on the Company’s 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.


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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 Company’s 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 Company’s 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 Company’s independent public accountants and evaluates their costs and related fees. Additionally, the Audit Committee reviews the Company’s financial statements and the adequacy of the Company’s 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 Company’s exposure to risk. The Audit Committee has the sole authority to appoint, compensate, retain, oversee, and terminate our


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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 Company’s 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 NYSE’s 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 Company’s 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 Company’s management resources and structure and administers the Company’s 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 Company’s 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 Company’s 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 Company’s 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


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appropriate nominee candidates. Shareholder recommendations for director nominees received by Apache’s 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 Company’s website (www.apachecorp.com). Also available on the Company’s 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 Apache’s corporate secretary at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400.


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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 Company’s 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 candidate’s or director’s inclusion in any protected class or group identified in the Company’s anti-discrimination policy.
 
The above criteria and guidelines, together with the section of the Company’s 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 Company’s board of directors or its committees. The Company’s Governance Principles are available on the Company’s 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 Company’s 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.


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REPORT OF THE AUDIT COMMITTEE
 
The Audit Committee oversees the Company’s financial reporting process on behalf of the board of directors. The Company’s 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 Company’s 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 firm’s 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 firm’s independence.
 
The Audit Committee also reviewed management’s report on its assessment of the effectiveness of the Company’s internal controls over financial reporting as well as the independent registered public accounting firm’s report on the effectiveness of the Company’s internal controls over financial reporting.
 
The Audit Committee discussed with the Company’s 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 Company’s internal controls, including internal controls over financial reporting, and the overall quality of the Company’s 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 management’s assessment of the effectiveness of the Company’s 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 Company’s 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


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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 Company’s 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 Company’s 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 director’s 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 Company’s 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 Company’s 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.


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Each non-employee director was awarded 1,000 restricted shares of the Company’s 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 Company’s 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 Company’s 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 Company’s 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 director’s death prior to receipt of all benefits payable under the plan, the remaining benefits are payable to the director’s 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 Company’s board of directors in 2001.


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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 Company’s 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 Company’s 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.


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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 Company’s Equity Compensation Plan for Non-Employee Directors.
 
(footnotes continued on following page)


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(3) Includes the following common share equivalents related to retainer fees deferred under the Company’s 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 Company’s 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 Company’s 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 Apache’s non-employee directors, except Messrs. Josey and Joung, and includes the following restricted stock units granted under the Company’s 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 Company’s 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 Company’s directors and officers, as well as beneficial owners of ten percent or more of the Company’s common stock, to report their holdings and transactions in the Company’s 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 Company’s directors and officers timely filed all reports required by Section 16(a).


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EQUITY COMPENSATION PLAN INFORMATION
 
The following table summarizes information as of December 31, 2010, relating to the Company’s 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 Company’s 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 Company’s 2000 Stock Option Plan, Executive Restricted Stock Plan, Non-Employee Directors’ Compensation Plan, and Deferred Delivery Plan.
 
The Company’s 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 Company’s 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.


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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 Company’s 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 Company’s 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 Company’s regional vice president - Gulf Coast drilling and production engineering since July 2006. He previously served as the region’s 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 Company’s 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 Company’s 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.


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MATTHEW W. DUNDREA, 56, was appointed senior vice president - treasury and administration in November 2010, having previously served as the Company’s 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 Company’s 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 Company’s 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 Company’s 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.


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REBECCA A. HOYT, 46, was appointed vice president, chief accounting officer, and controller in November 2010. She previously served as the Company’s 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 Company’s 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 Company’s 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. O’BRIEN, 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. O’Brien 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.


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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 Company’s principal financial officer until November 2010. He previously served as the Company’s 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.


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COMPENSATION DISCUSSION AND ANALYSIS
 
OVERVIEW
 
Year 2010
 
The year 2010 was one of the most successful in Apache’s 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 Apache’s strong financial position.
 
Compensation Philosophy and Practices
 
Apache’s board of directors designs the Company’s 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.
 
Apache’s board of directors also designs the Company’s 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.
 
Apache’s board of directors also designs the Company’s 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, Apache’s board of directors strengthened the Company’s 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 Company’s Code of Business Conduct, instituted a new shareholder outreach program that


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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 Company’s website.
 
EXECUTIVE COMPENSATION DECISION MAKING PROCESSES
 
Board of Directors
 
Apache’s 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 (Apache’s 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 Company’s 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 Company’s base, annual cash incentive, and long-term compensation, and benefit programs for executive officers. The MD&C Committee’s 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 Company’s executive compensation programs to determine whether such programs are achieving their intended purposes.
 
•  To avoid incentivizing excessive risk taking in the Company’s 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


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Consultant has provided limited work for management in connection with the Consultant’s 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 officer’s 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 Committee’s 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 Company’s 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 Company’s 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 officer’s recommendations on these matters, reaches final determination, and reports these outcomes to the Board of Directors.
 
EXECUTIVE COMPENSATION
 
Compensation Philosophy
 
The Company’s 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 officer’s 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 officer’s 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.


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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 Company’s total shareholder return program (“TSR Program”) for the comparison of the Company’s total shareholder return to that of its peers. For additional information on the Company’s 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 Consultant’s 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 Company’s 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 individual’s 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.


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Four Key Compensation Elements
 
The Company’s 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          
 
(LOGO)   (LOGO)
 
The charts above illustrate that 90 percent of our chief executive officer’s 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.


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•  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 executive’s 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 Company’s executive officers are eligible to earn an annual cash incentive bonus tied to a combination of each officer’s achievement of job-specific goals and the Company’s 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.
 
Apache’s 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. Apache’s 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.


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•  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 region’s 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 Company’s 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 Company’s officers. These stock ownership requirements more closely align the interests of officers with the Company’s 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 officer’s base salary, measured against the value of the officer’s discretionary holdings, based on the average per share closing price of the Company’s 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


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stock; shares beneficially owned in a trust or partnership, by a spouse and/or minor child; and shares held in the Company’s 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 officer’s 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 Company’s 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 Company’s common stock on the date of grant and expire 10 years after grant; and
 
•  allow for accelerated vesting only upon a recipient’s 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,


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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 grantee’s 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 year’s 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 Company’s 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 company’s dividends for the performance period (assuming same-day reinvestment into the company’s common stock on the ex-dividend date) and the average per share closing price of each company’s stock for the 60 trading days at the end of the performance period minus the average per share closing price of the company’s stock for the 60 trading days preceding the beginning of the performance period; by (ii) the average per share closing price of each company’s stock for the 60 trading days preceding the beginning of the performance period.


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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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 grantee’s


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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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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


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$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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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.


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On November 17, 2010, Apache’s 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 Company’s 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 Company’s capital-expenditure programs, developing and maintaining sound business relationships with many of the world’s major energy companies, developing and maintaining good relationships with the shareholder, investment, and policy-making communities, guiding and developing senior management, and overseeing the Company’s 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 Company’s estimated proved reserves, and 48 percent of the Company’s 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 Company’s estimated proved reserves, and 52 percent of the Company’s total production.


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•  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 Company’s 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 Committee’s 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  
                     


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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. Farris’s responsibilities, his leadership in the Company’s record acquisitions of approximately $11 billion in assets in 2010, the long-term realization of the Company’s corporate management objectives, the Company’s 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 Company’s achievement of financial, operational, and corporate management objectives and each executive’s 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 officer’s 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 officer’s 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 Company’s total


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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 Company’s $11 billion in acquisition transactions in 2010 and the Company’s 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 officer’s 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 Company’s 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.


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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 Company’s chairman and chief executive officer) under the Company’s 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 Company’s compensation plans based upon these regulations and, from time to time, determines what further actions or changes to the Company’s 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 Company’s 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 Company’s shareholders and grants made under such plans qualify as “performance-based” under the regulations. The Company’s 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 Company’s goals, which in turn enhances shareholder value. No further grants can be made under the Company’s 1998, 2000 and 2005 Stock Option Plans,


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Executive Restricted Stock Plan, and the 2008 Share Appreciation Program. While the MD&C Committee cannot predict with certainty how the Company’s compensation policies may be further affected by this limitation, it is anticipated that executive compensation paid or accrued pursuant to the Company’s 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 recipient’s 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


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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 Company’s 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 Company’s 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 Company’s chairman and chief executive officer, resigned from his positions as the Company’s president and chief operating officer, effective February 12, 2009. Mr. Farris continues as the Company’s principal executive officer. Mr. Roger Plank continued as the Company’s 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. Crum’s 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 Company’s 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 Company’s 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)


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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 Company’s common stock upon attainment of significant increases in shareholder value, or doubling the per share price of the Company’s 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 Company’s 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 Company’s 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.


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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 Company’s 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 Company’s 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 Officer’s 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.


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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)


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            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 Company’s 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)


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in the U.S. Pursuant to the foreign assignment policy, the Company withheld from Mr. Crum’s 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. Crum’s 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. Crum’s 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. Crum’s 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. Crum’s 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 Company’s 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. Crum’s behalf in 2008 net of the refund, or U.S. $1.75 million. Also pursuant to the Company’s 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 Company’s 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. Eichler’s 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. Eichler’s withholding that were incurred as a result of his foreign assignment.


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GRANTS OF PLAN BASED AWARDS TABLE
 
The table below provides supplemental information relating to the Company’s 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  
                                                                                                               
Thomas P. Chambers
                        170,434                                                                  
        01/15/2010                                 0         2,100         5,250                                 297,906  
        01/15/2010