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 |
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o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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1. | To elect the members of the Board of Directors of the Company to serve until the next annual meeting of the Companys stockholders; | |
2. | To ratify the appointment of the independent auditor by the Companys Audit Committee; and | |
3. | To transact such other business as may properly come before the meeting and any adjournment or postponement thereof. |
2
| Jeffrey L. Berenson is a director and member of the compensation committee of Epoch Holdings Corporation, a holding company that provides investment management and advisory services. Mr. Berenson is a former director of Patina Oil & Gas Corporation, which we acquired by merger in May 2005. | |
| Michael A. Cawley is President, Chief Executive Officer and Trustee of The Samuel Roberts Noble Foundation, Inc. (Foundation), which we paid $42,268 for the use of its aircraft during 2007. During that same period, the Foundation paid $49,209 to us for the use of our aircraft. Mr. Cawley received payments totaling approximately $51,763 in 2007 attributable to his interests in certain oil and gas royalties that he purchased from the Company in the 1990s. Mr. Cawley is also a director and member of the Compensation Committee of Noble Corporation, a publicly traded drilling company. | |
| Edward F. Cox received payments in 2007 totaling $222,747 attributable to his interests in certain oil and gas royalties and interests in two general partnerships that hold royalties and are managed by the Company. Mr. Cox purchased these interests from the Company in the 1980s and 1990s. | |
| Kirby L. Hedrick is a director and member of the Audit and Reserves, Operations and Environmental, Health and Safety committees of Pengrowth Energy Trust, a closed-end investment trust that engages in the acquisition, ownership and management of working interests and royalty interests in oil and natural gas properties and processing facilities in Canada. Mr. Hedrick is also a member of the Wyoming Environmental Quality Council. | |
| Scott D. Urban retired as Group Vice President, Upstream for several profit centers at BP in 2005, and is a partner in Edgewater Energy Partners, an organizational consulting firm for energy-related industries. | |
| William T. Van Kleef is a director and chair of the Audit Committee of Oil States International, Inc., a publicly traded company that provides specialty products and services to oil and gas drilling and production companies worldwide. Mr. Van Kleef retired as Chief Operating Officer of Tesoro Corporation in 2005. |
3
| We have an empowered Lead Independent Director, currently Michael A. Cawley, who is elected annually by our independent directors. The Lead Independent Directors responsibilities and authority generally include: |
| approving the scheduling of regular and, where feasible, special meetings of the Board to assure that there is sufficient time for discussion of all agenda items; | |
| consulting with the Chairman to establish the agenda for each Board meeting; | |
| discussing with the Chairman and approving the scope of materials to be delivered to the directors in advance of Board meetings; | |
| presiding at all executive sessions of the independent or non-management directors and all other Board meetings at which the Chairman is not present: | |
| serving as a liaison between the Chairman and the independent or non-management directors; | |
| coordinating the activities of such directors; | |
| coordinating the agenda for and moderating sessions of the Boards independent directors and other non-management directors; | |
| facilitating communications among the other members of the Board; and | |
| consulting with the chairs of the Board committees and soliciting their participation to avoid diluting their authority or responsibilities. |
| Our non-management directors hold executive sessions without management at regularly scheduled meetings of our Board and at other meetings as appropriate. These sessions take place outside the presence of our Chief Executive Officer or any of our other employees. The Lead Independent Director presides at these executive sessions, which allow the non-management directors the opportunity to separately consider management performance and broader matters of strategic significance to us. During 2007, our non-management directors met six times in executive sessions of the Board. |
| All members of our Audit Committee have been determined to meet the standards of independence required of audit committee members by the NYSE and applicable SEC rules. See Director Independence above. | |
| Our Board has determined that all members of our Audit Committee are financially literate. Further, our Board has determined that William T. Van Kleef possesses accounting or related financial management expertise within the meaning of the listing standards of the NYSE, and is an audit committee financial expert within the meaning of applicable SEC rules. | |
| Our Audit Committee operates under a charter adopted by our Board that governs its duties and conduct. A copy of the charter can be obtained free of charge from our website, www.nobleenergyinc.com, or by written request to us at the address appearing on the first page of this proxy statement to the attention of our Corporate Secretary or by calling (281) 872-3100. | |
| KPMG LLP, our independent auditor, reports directly to our Audit Committee. | |
| Our Audit Committee, consistent with the Sarbanes-Oxley Act of 2002 and the rules adopted thereunder, meets with management and our independent auditor prior to the filing of officers certifications with the SEC to receive information concerning, among other things, the integrity of our financial controls and reporting. |
4
| Our Audit Committee has adopted a Policy on Reporting Concerns and Complaints Regarding Accounting, Internal Accounting Controls and Auditing Matters to enable confidential and anonymous reporting to the Audit Committee of concerns regarding questionable accounting matters. |
| All members of our Compensation, Benefits and Stock Option Committee (Compensation Committee) have been determined to meet the NYSE standards for independence. See Director Independence above. Further, each member of our Compensation Committee is a Non-Employee Director as defined in Rule 16b-3 under the Securities Exchange Act of 1934 and an outside director as defined for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended. | |
| Our Compensation Committee operates under a charter adopted by our Board that governs its duties and conduct. A copy of the charter can be obtained free of charge from our website, www.nobleenergyinc.com, or by written request to us at the address appearing on the first page of this proxy statement to the attention of our Corporate Secretary or by calling (281) 872-3100. |
| All members of our Corporate Governance and Nominating Committee (Governance Committee) have been determined to meet the NYSE standards for independence. See Director Independence above. | |
| Our Governance Committee operates under a charter adopted by our Board that governs its duties and conduct. A copy of the charter can be obtained free of charge from our website, www.nobleenergyinc.com, or by written request to us at the address appearing on the first page of this proxy statement to the attention of our Corporate Secretary or by calling (281) 872-3100. | |
| Our Governance Committee considers candidates for Board membership suggested by its members and other Board members, as well as by our management and stockholders. A stockholder who wishes to recommend a prospective nominee for the Board should follow the procedures described in this proxy statement under the caption Evaluation of Director Nominees. |
| We have adopted a set of Corporate Governance Guidelines, including standards for director qualification and director responsibilities. The guidelines can be obtained free of charge from our website, www.nobleenergyinc.com, or by written request to us at the address appearing on the first page of this proxy statement to the attention of our Corporate Secretary or by calling (281) 872-3100. |
| We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees and sets out our policy regarding laws and business conduct, contains other policies relevant to business conduct and sets out a process for reporting violations thereof. A copy of this code can be obtained free of charge from our website, www.nobleenergyinc.com, or by written request to us at the address appearing on the first page of this proxy statement to the attention of our Corporate Secretary or by calling (281) 872-3100. Amendments to this code will be promptly posted on our website. | |
| We have also adopted a Code of Ethics for Chief Executive and Senior Financial Officers, violations of which are to be reported to our Audit Committee. A copy of this code can be obtained free of charge from our website, www.nobleenergyinc.com, or by written request to us at the address appearing on the first page of this proxy statement to the attention of our Corporate Secretary or by calling (281) 872-3100. Amendments to this code will also be promptly posted on our website. |
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Number of Shares |
||||||||
of Common Stock |
Percent |
|||||||
Name and Address of Beneficial Owner
|
Beneficially Owned | of Class | ||||||
NWQ Investment Management Company, LLC
|
16,678,183 | (1) | 9.7 | % | ||||
2049 Century Park East, 16th Floor
Los Angeles, CA 90067 |
||||||||
AXA Financial, Inc.
|
14,690,658 | (2) | 8.5 | % | ||||
1290 Avenue of the Americas
New York, NY 10104 |
||||||||
Barclays Global Investors, NA
|
14,541,599 | (3) | 8.4 | % | ||||
82 Devonshire Street
Boston, MA 02109 |
6
Number of Shares |
||||||||
of Common Stock |
Percent |
|||||||
Name and Address of Beneficial Owner
|
Beneficially Owned | of Class | ||||||
FMR LLC
|
10,911,557 | (4) | 6.3 | % | ||||
82 Devonshire Street
Boston, MA 02109 |
||||||||
Wellington Management Company, LLP
|
9,240,579 | (5) | 5.4 | % | ||||
75 State Street
Boston, MA 02109 |
||||||||
Capital World Investors
|
9,229,000 | (6) | 5.4 | % | ||||
333 South Hope Street
Los Angeles, CA 90071 |
(1) | Includes shares of common stock beneficially owned by clients of NWQ Investment Management Company, LLC, which clients may include investment companies registered under the Investment Company Act of 1940, as amended, and/or employee benefit plans, pension funds, charitable funds, and other institutional and high net worth clients. NWQ has sole voting power with respect to 14,557,121 shares of common stock and sole dispositive power with respect to 16,678,183 shares of common stock. | |
(2) | Included in the shares of common stock that are beneficially owned by AXA Financial, Inc. are (a) 14,668,597 shares beneficially owned by AllianceBernstein L.P. and acquired solely for investment purposes on behalf of client discretionary investment advisory accounts, (b) 8,100 shares acquired solely for investment purposes by AXA Rosenberg Investment Management LLC, (c) 6,466 shares acquired solely for investment purposes by AXA Investment Managers Paris (France), (d) 400 shares acquired solely for investment purposes by AXA Konzern AG (Germany), and (e) 7,095 shares acquired solely for investment purposes by AXA Equitable Life Insurance Company. AllianceBernstein L.P. has sole voting power with respect to 10,810,450 shares of common stock, shared voting power with respect to 10,605 shares of common stock and sole dispositive power with respect to 14,668,597 shares of common stock. | |
(3) | Included in the shares of common stock that are beneficially owned by Barclays Global Investors, NA. are (a) 10,104,153 shares beneficially owned by Barclays Global Investors, NA, a bank as defined under Section 3(a)(6) of the Securities and Exchange Act of 1934, as amended (and referred to in this proxy statement as the Exchange Act), which has sole voting power with respect to 8,613,460 shares of common stock and sole dispositive power with respect to 10,104,153 shares of common stock, (b) 1,851,017 shares beneficially owned by Barclays Global Fund Advisors, an investment adviser registered under the Investment Advisers Act of 1940, (c) 1,808,065 shares beneficially owned by Barclays Global Investors, Ltd, a bank as defined under Section 3(a)(6) of the Exchange Act, which has sole voting power with respect to 1,508,112 shares of common stock and sole dispositive power with respect to 1,808,065 shares of common stock, (d) 606,623 shares beneficially owned by Barclays Global Investors Japan Limited, an investment adviser registered under the Investment Advisers Act of 1940, and (e) 171,741 shares beneficially owned by Barclays Global Investors Canada Limited, an investment adviser registered under the Investment Advisers Act of 1940, which has sole dispositive power with respect to 171,741 shares of common stock, but no voting power with respect to those shares. | |
(4) | Included in the shares of common stock that are beneficially owned by FMR LLC are (a) 10,388,306 shares beneficially owned by Fidelity Management & Research Company, a wholly-owned subsidiary of FMR Corp. and an investment adviser registered under the Investment Advisers Act of 1940, (b) 2,578 shares beneficially owned by Strategic Advisors, Inc., a wholly-owned subsidiary of FMR LLC and an investment adviser registered under the Investment Advisers Act of 1940, (c) 2,800 shares beneficially owned by Pyramis Global Advisors, LLC, an indirect wholly-owned subsidiary of FMR LLC and an investment adviser registered under the Investment Advisers Act of 1940, (d) 191,673 shares beneficially owned by Pyramis Global Advisors Trust Company, an indirect wholly-owned subsidiary of FMR LLC and a bank as defined under Section 3(a)(6) of the Exchange Act, and (e) 326,200 shares beneficially owned by Fidelity International Limited, a qualified institution. |
7
(5) | Wellington Management Company LLP, in its capacity as investment adviser, may be deemed to beneficially own 9,240,579 shares of common stock, which are held of record by clients of Wellington Management Company LLP. Wellington has shared voting power with respect to 5,438,862 shares of common stock and shared dispositive power with respect to 9,226,179 shares of common stock. | |
(6) | Capital World Investors is deemed to be the beneficial owner of 9,299,000 shares of common stock as a result of CRMC acting as investment adviser to various investment companies registered under the Investment Company Act of 1940. |
8
9
| the name and address of the stockholder and evidence of the persons ownership of our stock, including the number of shares owned and the length of time of ownership; | |
| whether the stockholder intends to appear in person or by proxy at our annual stockholders meeting to make the nomination; | |
| a description of all arrangements or understandings between the stockholder and the nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is made; and | |
| the name of the candidate, the candidates résumé or a listing of his or her qualifications to be a member of our Board and the persons consent to be named as a director if selected by our Governance Committee and nominated by our Board. |
10
11
Common Stock Beneficially Owned(1) | ||||||||
Number of |
Percent of |
|||||||
Name
|
Shares(2)(3) | Class | ||||||
Director
|
||||||||
Jeffrey L. Berenson
|
45,299 | 0.03 | % | |||||
Michael A. Cawley
|
63,886 | (4) | 0.04 | |||||
Edward F. Cox
|
29,975 | (7) | 0.02 | |||||
Charles D. Davidson
|
1,306,074 | (5) | 0.76 | |||||
Thomas J. Edelman
|
2,726,456 | (6) | 1.58 | |||||
Kirby L. Hedrick
|
68,475 | 0.04 | ||||||
Scott D. Urban
|
20,233 | 0.01 | ||||||
William T. Van Kleef
|
42,475 | 0.02 | ||||||
Named Executive Officer (excluding any director named above) | ||||||||
Alan R. Bullington
|
151,100 | (5) | 0.09 | |||||
Susan M. Cunningham
|
301,372 | 0.18 | ||||||
David L. Stover
|
267,837 | 0.16 | ||||||
Chris Tong
|
192,013 | 0.11 | ||||||
All directors and named executive officers as a group
(12 persons)
|
5,215,195 | (4)(5) | 3.03 | % |
(1) | Unless otherwise indicated, all shares are directly held with sole voting and investment power. | |
(2) | Includes shares not outstanding but subject to options that are currently exercisable (or that will become exercisable on or before April 30, 2008), as follows: Mr. Berenson 22,851 shares; Mr. Cawley 57,464 shares; Mr. Cox 11,651 shares; Mr. Davidson 1,130,257 shares; Mr. Edelman 600,191 shares; Mr. Hedrick 61,651 shares; Mr. Urban 14,168 shares; Mr. Van Kleef 22,851 shares; Mr. Bullington 110,097 shares; Ms. Cunningham 264,731 shares; Mr. Stover 215,791 shares; and Mr. Tong 150,186 shares. | |
(3) | Includes restricted stock awards not currently vested, as follows: Mr. Berenson 1,265 shares; Mr. Cawley 1,265 shares; Mr. Cox 1,265 shares; Mr. Davidson 132,602 shares; Mr. Edelman 1,265 shares; Mr. Hedrick 1,265 shares; Mr. Urban 6,065 shares; Mr. Van Kleef 1,265 shares; Mr. Bullington 26,098 shares; Ms. Cunningham 27,218 shares; Mr. Stover 43,905 shares; and Mr. Tong 25,931 shares. | |
(4) | Mr. Cawley is one of 12 trustees of The Samuel Roberts Noble Foundation, Inc. (the Foundation). The Foundation holds of record 1,802,166 shares of our common stock. As with other corporate action, the voting of the shares held by the Foundation requires a majority vote of its trustees at a meeting at which a quorum of trustees is present. Where there are multiple trustees of a company and a majority vote is required for corporate action, no individual trustee is deemed to have beneficial ownership of securities held by such company. Accordingly, the 1,802,166 shares held of record by the Foundation are not reflected in Mr. Cawleys beneficial ownership of common stock. | |
(5) | Includes shares indirectly held in a qualified 401(k) Plan, as follows: Mr. Davidson 3,085 shares and Mr. Bullington 8,297 shares. | |
(6) | Includes 1,100,000 shares held under deferred compensation plans. | |
(7) | Includes 12,000 shares held by spouse. |
12
| review and approve our goals and objectives in the areas of: (1) salary and bonus compensation, (2) benefits, and (3) equity-based compensation, as they relate to our CEO, evaluating our CEOs performance based on those goals and objectives and, either as a committee or together with the other independent directors (as directed by our Board), determine and approve our CEOs compensation level based on that evaluation; | |
| make recommendations to our Board with respect to non-CEO executive officer compensation, incentive compensation plans and equity-based plans that are subject to Board approval; and | |
| produce an annual report on executive compensation as required by the SEC to be included, or incorporated by reference, in our proxy statement or other applicable SEC filings. |
13
14
Anadarko Petroleum Corp.
|
Newfield Exploration Company | |
Apache Corp.
|
Noble Energy, Inc. | |
Cabot Oil & Gas Corporation
|
Pioneer Natural Resources Company | |
Chesapeake Energy Corp.
|
Plains Exploration and Production Company | |
Devon Energy Corp.
|
Range Resources Corporation | |
EOG Resources, Inc.
|
Southwestern Energy Company | |
Forest Oil Corp.
|
XTO Energy Inc. | |
Murphy Oil Corp.
|
||
| compensate employees for the value of their contributions; | |
| provide total compensation that is flexible enough to respond to changing market conditions and that also aligns compensation levels with absolute performance as well as performance compared to industry benchmarks; and |
15
| provide total compensation that will attract, motivate and retain individuals of high quality and support a long-standing internal culture of loyalty and dedication to our interests. |
| a sufficient portion of total compensation should be at risk in order to align the interests of our executives with those of our stockholders; | |
| the variable portion of total compensation should reflect both Company and individual performance; | |
| as an individuals level of responsibility increases, a greater portion of total compensation should be at risk and the mix of total compensation should be weighted more heavily in favor of incentive-based compensation; and | |
| stock options and restricted stock are compensation elements that most effectively align the interests of our stockholders and our executives. |
16
| provide a comprehensive long-term incentive program that is performance-driven and rewards long-term business success; | |
| offer competitive long-term incentive compensation opportunities; | |
| provide motivation to maximize long-term stockholder value creation; | |
| reward outstanding achievement of those who can most directly affect our performance and instill a sense of business ownership; and | |
| assist us in attracting and retaining high quality talent. |
17
18
Formula 1
|
Formula 2
|
||
1.25% × final average monthly compensation × years of credited service (up to 30) + 0.50% × final average monthly compensation that exceeds Social Security covered compensation × years of credited service (up to 30) | 2% × final average monthly compensation × years of credited service (up to 20) | ||
19
Contribution Percentage |
Contribution Percentage |
|||||||||
for Portion of Basic |
for Portion of Basic |
|||||||||
Compensation Below |
Compensation Above |
|||||||||
Age of Participant | the FICA Taxable Wage Base | the FICA Taxable Wage Base | ||||||||
Under 35
|
4 | % | 8 | % | ||||||
At least 35 but under 48
|
7 | % | 10 | % | ||||||
At least 48
|
9 | % | 12 | % | ||||||
20
| individuals who constituted our Board on January 1, 2008 (or such other date as may be specified in individual change of control agreements) (Incumbent Board) cease to constitute at least 51% of the Board, provided that any individual whose election was approved by a vote of at least a majority of the directors of the Incumbent Board will be considered a member of the Incumbent Board; | |
| our stockholders approve a reorganization, merger or consolidation whereby the persons who were stockholders immediately prior to the reorganization, merger or consolidation do not immediately thereafter own at least 51% of the voting shares of the new entity; | |
| our stockholders approve a liquidation or dissolution of the Company or a sale of all or substantially all of our assets to a non-related party; or | |
| a new person or entity becomes the owner of at least 25% of our outstanding common stock or voting power in the Company. |
| all unpaid salary and expenses; | |
| a lump sum equal to a multiple of his or her annual cash compensation (made up of annual salary and bonus) ranging from 2.5 times to 2.99 times; |
21
| an amount equal to his or her pro-rata target bonus for the then-current year; | |
| life, disability, medical and dental insurance benefits, upon his or her written request, ranging among named executive officers from 30 to 36 months or such shorter period until the executive obtains substantially equivalent coverage from a subsequent employer; | |
| the vesting of his or her stock options and restricted stock; and | |
| reimbursement for reasonable fees up to $15,000 for out-placement employment services. |
| a cash payment of two weeks of pay for every year of completed service, with a minimum of 12 weeks of pay and a maximum of 52 weeks of pay; | |
| a pro-rated STIP payment based on the number of months of employment during the calendar year of termination; | |
| six months of reduced-rate contributions under our medical and dental plans; and | |
| twelve weeks of coverage under our employee assistance plan. |
22
23
24
Change in |
|||||||||||||||||||||||||||||||||||||||||||||
Pension Value |
|||||||||||||||||||||||||||||||||||||||||||||
and Non- |
|||||||||||||||||||||||||||||||||||||||||||||
Non-Equity |
Qualified |
||||||||||||||||||||||||||||||||||||||||||||
Stock |
Option |
Incentive Plan |
Deferred |
All Other |
|||||||||||||||||||||||||||||||||||||||||
Name and |
Salary |
Awards |
Awards |
Compensation |
Compensation |
Compensation |
Total |
||||||||||||||||||||||||||||||||||||||
Principal Position | Year | ($)(1) | Bonus($) | ($)(2) | ($)(3) | ($)(4) | Earnings($)(5) | ($)(6) | ($) | ||||||||||||||||||||||||||||||||||||
Charles D. Davidson
|
2007 | $ | 1,025,000 | | $ | 1,464,932 | $ | 1,762,478 | $ | 3,793,400 | $ | 804,352 | $ | 67,901 | $ | 8,918,063 | |||||||||||||||||||||||||||||
President and Chief Executive Officer
|
2006 | 966,676 | | 666,574 | 1,080,668 | 3,378,625 | 561,828 | 64,380 | 6,718,751 | ||||||||||||||||||||||||||||||||||||
Chris Tong
|
2007 | 410,419 | | 483,330 | 574,967 | 972,188 | 103,617 | 26,585 | 2,571,106 | ||||||||||||||||||||||||||||||||||||
Senior Vice President and Chief Financial Officer
|
2006 | 385,420 | | 292,657 | 380,552 | 775,559 | 81,510 | 24,971 | 1,940,669 | ||||||||||||||||||||||||||||||||||||
David L. Stover
|
2007 | 495,836 | | 414,624 | 468,358 | 1,326,575 | 133,883 | 36,681 | 2,875,957 | ||||||||||||||||||||||||||||||||||||
Executive Vice President and Chief Operating Officer
|
2006 | 416,671 | | 160,392 | 233,659 | 1,098,591 | 85,170 | 33,262 | 2,027,745 | ||||||||||||||||||||||||||||||||||||
Alan R. Bullington
|
2007 | 408,335 | | 306,774 | 373,173 | 930,367 | 332,744 | 33,374 | 2,384,767 | ||||||||||||||||||||||||||||||||||||
Senior Vice President International Division
|
2006 | 365,004 | | 123,321 | 209,899 | 740,705 | 221,465 | 30,700 | 1,691,094 | ||||||||||||||||||||||||||||||||||||
Susan M. Cunningham
|
2007 | 408,335 | | 337,659 | 390,682 | 982,944 | 111,311 | 15,460 | 2,246,391 | ||||||||||||||||||||||||||||||||||||
Senior Vice President Exploration
|
2006 | 385,420 | | 167,964 | 249,118 | 760,857 | 104,529 | 17,246 | 1,685,134 | ||||||||||||||||||||||||||||||||||||
(1) | Reflects salary earned in the year indicated. Certain of our named executive officers deferred a portion of their base salaries under our Deferred Compensation Plan: |
Percentage of |
Amount |
||||||||||||||
Name | Year | Salary Deferred | Deferred | ||||||||||||
Charles D. Davidson
|
2007 | 45 | % | $ | 461,252 | ||||||||||
2006 | 45 | % | 435,004 | ||||||||||||
Chris Tong
|
2007 | 20 | % | 82,084 | |||||||||||
2006 | 20 | % | 77,084 | ||||||||||||
David L. Stover
|
2007 | 5 | % | 24,792 | |||||||||||
2006 | 5 | % | 20,834 | ||||||||||||
Alan R. Bullington
|
2007 | 25 | % | 102,084 | |||||||||||
2006 | 50 | % | 182,502 | ||||||||||||
(2) | Reflects the compensation expense recognized in our financial statements for the fiscal year indicated for restricted stock granted under our 1992 Plan to our named executive officers. Compensation expense was computed in accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123(R)). A discussion of the assumptions used in calculating these values may be found in Note 9 to our financial statements in the Form 10-K for the year ended December 31, 2007, as filed with the SEC. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Dividends payable on the restricted stock were accounted for under SFAS 123(R). A portion of the shares of restricted stock granted in 2005 and the shares granted in 2006 will vest on the third anniversary of the grant date if specified performance goals are satisfied. Performance goals are satisfied if total stockholder return is at or above the 25th percentile of the total stockholder return for our compensation peer group as defined at the time of grant. The remaining shares of restricted stock granted in 2005 and the shares granted in 2007 to our named executive officers will vest on the third anniversary of the grant date. The vesting of these shares is not contingent upon the satisfaction of any |
25
performance goals. See the Grants of Plan Based Awards table for information on restricted stock granted in 2007. |
(3) | Reflects the compensation expense recognized in our financial statements for the fiscal year indicated for nonqualified stock options granted under our 1992 Plan to our named executive officers. Compensation expense was computed in accordance with SFAS 123(R). A discussion of the assumptions used in calculating these values may be found in Note 9 to our financial statements in the Form 10-K for the year ended December 31, 2007, as filed with the SEC. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Options represent the right to purchase shares of common stock at a price per share equal to fair market value on the date of grant. Options will vest ratably over three years in equal installments (33.33%) on the first, second and third anniversaries of the date of grant. Vesting of these options is not contingent upon the satisfaction of any performance goals, although none of the options may be exercised before the first anniversary (absent a change of control of the Company) or after the tenth anniversary of the date of grant. See the Grants of Plan Based Awards table for information on stock options granted in 2007. | |
(4) | Reflects payments under our STIP based on the achievement of certain performance goals during the year indicated and payout of performance units previously awarded under our LTIP. STIP awards earned during the year indicated were paid or deferred in February of the following year, and performance unit awards under the LTIP cover the three-year performance period ending on December 31st of the year indicated, as follows: |
Performance |
|||||||||||||||
Name | Year | STIP Payout | Units Payout(a) | ||||||||||||
Charles D. Davidson
|
2007 | $ | 2,600,000 | $ | 1,193,400 | ||||||||||
2006 | 2,562,500 | 816,125 | |||||||||||||
Chris Tong
|
2007 | 656,268 | 315,920 | ||||||||||||
2006 | 649,965 | 125,594 | |||||||||||||
David L. Stover
|
2007 | 1,010,655 | 315,920 | ||||||||||||
2006 | 977,262 | 121,329 | |||||||||||||
Alan R. Bullington
|
2007 | 614,447 | 315,920 | ||||||||||||
2006 | 619,376 | 121,329 | |||||||||||||
Susan M. Cunningham
|
2007 | 667,024 | 315,920 | ||||||||||||
2006 | 599,717 | 161,140 | |||||||||||||
(a) | The payout amount indicated for the three-year period ending December 31, 2007 is an estimate only; actual payout will be determined at a meeting of our Compensation Committee in April 2008. |
(5) | Reflects during the year indicated: (a) the aggregate increase in actuarial present value of the named executive officers benefits under our Retirement Plan and our Restoration Plan; and (b) the above-market Deferred Compensation Plan earnings, as follows: |
Increase in |
Deferred |
||||||||||||||
Retirement and |
Compensation |
||||||||||||||
Name | Year | Restoration Plans(a) | Earnings(b) | ||||||||||||
Charles D. Davidson
|
2007 | $ | 749,258 | $ | 55,094 | ||||||||||
2006 | 467,766 | 94,062 | |||||||||||||
Chris Tong
|
2007 | 100,860 | 2,757 | ||||||||||||
2006 | 78,688 | 2,822 | |||||||||||||
David L. Stover
|
2007 | 129,041 | 4,842 | ||||||||||||
2006 | 77,117 | 8,053 | |||||||||||||
Alan R. Bullington
|
2007 | 321,967 | 10,777 | ||||||||||||
2006 | 205,662 | 15,803 | |||||||||||||
Susan M. Cunningham
|
2007 | 111,311 | | ||||||||||||
2006 | 104,529 | | |||||||||||||
26
(a) | Beginning of year values for calculating the aggregate increase in actuarial present value reflect a 5.75% discount rate; end of year values reflect a 6.50% discount rate. Present values are based on the same actuarial assumptions and measurement dates disclosed in Note 11 to our financial statements in the Form 10-K for the year ended December 31, 2007, as filed with the SEC, except that for purposes of the present value calculations participants are assumed to work until age 65 and commence their benefits at that time. |
(b) | Earnings in 2007 based on the difference between the plan crediting rate of 6.82% and 120% of the annual long-term Applicable Federal Rate as of September 2006 (6.27%); earnings in 2006 based on the difference between the plan crediting rate of 6.90% and 120% of the annual long-term Applicable Federal Rate as of September 2005 (5.43%). |
(6) | All other compensation includes: |
Deferred |
|||||||||||||||||||||||||||||||||||
Compensation |
|||||||||||||||||||||||||||||||||||
Thrift Plan |
Plan |
||||||||||||||||||||||||||||||||||
Matching |
Matching |
Club |
Insurance |
Holiday |
Physical |
||||||||||||||||||||||||||||||
Name | Year | Contributions | Contributions | Memberships | Premiums | Bonus | Examinations | ||||||||||||||||||||||||||||
Charles D. Davidson
|
2007 | $ | 13,500 | $ | 48,000 | $ | 3,964 | $ | 2,280 | $ | 157 | $ | | ||||||||||||||||||||||
2006 | 13,200 | 44,800 | 3,964 | 2,280 | 136 | | |||||||||||||||||||||||||||||
Chris Tong
|
2007 | 13,500 | 11,125 | | 1,824 | 136 | | ||||||||||||||||||||||||||||
2006 | 13,200 | 9,925 | | 1,710 | 136 | | |||||||||||||||||||||||||||||
David L. Stover
|
2007 | 13,500 | 16,250 | 4,608 | 2,166 | 157 | | ||||||||||||||||||||||||||||
2006 | 13,200 | 11,800 | 4,516 | 1,710 | 136 | 1,900 | |||||||||||||||||||||||||||||
Alan R. Bullington
|
2007 | 13,500 | 11,000 | 5,214 | 1,824 | 136 | 1,700 | ||||||||||||||||||||||||||||
2006 | 13,200 | 8,700 | 5,213 | 1,550 | 136 | 1,900 | |||||||||||||||||||||||||||||
Susan M. Cunningham
|
2007 | 13,500 | | | 1,824 | 136 | | ||||||||||||||||||||||||||||
2006 | 13,200 | | | 1,710 | 136 | 2,200 | |||||||||||||||||||||||||||||
Percentage |
||||||||||
of Total |
||||||||||
Name | Year | Compensation | ||||||||
Charles D. Davidson
|
2007 | 11.5 | % | |||||||
2006 | 14.4 | % | ||||||||
Chris Tong
|
2007 | 16.0 | % | |||||||
2006 | 19.9 | % | ||||||||
David L. Stover
|
2007 | 17.2 | % | |||||||
2006 | 20.6 | % | ||||||||
Alan R. Bullington
|
2007 | 17.1 | % | |||||||
2006 | 21.6 | % | ||||||||
Susan M. Cunningham
|
2007 | 18.2 | % | |||||||
2006 | 22.9 | % | ||||||||
27
All Other |
All Other |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock |
Option |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts |
Estimated Future Payouts |
Awards: |
Awards: |
Exercise |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Under Non-Equity Incentive |
Under Equity Incentive |
Number of |
Number of |
or Base |
Grant Date |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plan Awards | Plan Awards |
Shares of |
Securities |
Price of |
Fair Value |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock or |
Underlying |
Option |
of Stock and |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Approval |
Grant |
Units |
Threshold |
Target |
Max |
Threshold |
Target |
Max |
Units (#) |
Options (#) |
Awards |
Option |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Date(1) | Date(1) | Granted | ($) | ($) | ($) | (#) | (#) | (#) | (2) | (3) | ($/Sh)(4) | Awards(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Charles D. Davidson
|
1/30/2007 | 2/1/2007 | | | | | | | | 58,262 | 164,118 | $ | 53.415 | $ | 6,183,004 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Chris Tong
|
1/30/2007 | 2/1/2007 | | | | | | | | 11,700 | 32,957 | 53.415 | 1,241,639 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
David L. Stover
|
1/30/2007 | 2/1/2007 | | | | | | | | 17,257 | 48,610 | 53.415 | 1,831,362 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Alan R. Bullington
|
1/30/2007 | 2/1/2007 | | | | | | | | 12,763 | 35,953 | 53.415 | 1,354,480 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan M. Cunningham
|
1/30/2007 | 2/1/2007 | | | | | | | | 12,231 | 34,455 | 53.415 | 1,298,033 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Awards were approved at our January 2007 Compensation Committee meeting; grants were effective and priced February 1, 2007. | |
(2) | Represents the shares of restricted stock granted under our 1992 Plan in 2007. The shares will vest on February 1, 2010. Dividends declared on shares of restricted stock are accrued during the three-year restricted period. Accrued dividends will be paid upon vesting of restricted shares. Dividends accrued during 2007 as follows: Mr. Davidson $25,344; Mr. Tong $5,090; Mr. Stover $7,507; Mr. Bullington $5,552; and Ms. Cunningham $5,320. | |
(3) | Represents grant of nonqualified stock options under our 1992 Plan. Options represent the right to purchase shares of common stock at the price per share (equal to fair market value on the date of grant) indicated in the table. Options will vest ratably over three years in equal installments (33.33%) on the first, second and third anniversaries of the date of grant. | |
(4) | Exercise price at fair market value is defined in our 1992 Plan as the average of the reported high and low trading price of our common stock on the NYSE on the date of grant. The closing price of our common stock on February 1, 2007 was $53.50. | |
(5) | Reflects grant date fair value of restricted stock and nonqualified stock options granted to our named executive officers on February 1, 2007 determined pursuant to SFAS 123(R). Dividends payable on restricted stock awards are accounted for under SFAS 123(R). A discussion of the assumptions used in calculating these values may be found in Note 9 to our financial statements in the Form 10-K for the year ended December 31, 2007, as filed with the SEC. Grant date fair value of stock options reported above is as follows: Mr. Davidson $3,070,648; Mr. Tong $616,625; Mr. Stover $909,493; Mr. Bullington $672,681; and Ms. Cunningham $644,653. Grant date fair value of restricted stock reported above is as follows: Mr. Davidson $3,112,356; Mr. Tong $625,014; Mr. Stover $921,869; Mr. Bullington $681,799; and Ms. Cunningham $653,380. |
| stockholder return of 63%, ranking third among our compensation peer group for the 2007 fiscal year; | |
| record net income of approximately $944 million, or $5.45 per diluted share; | |
| record net cash provided by operating activities; | |
| a 13% total sales volume increase over 2006, adjusted for our Gulf of Mexico asset sale; | |
| total reserve additions of approximately 120 million barrels of oil equivalent, representing 166% of production in 2007; |
28
| significant exploration success in West Africa, with the Company drilling six successful exploration and appraisal wells with only one dry hole; and | |
| achievement of various other project and performance milestones. |
29
Equity |
Equity |
||||||||||||||||||||||||||||||||||||||||||||
Incentive |
Incentive |
||||||||||||||||||||||||||||||||||||||||||||
Plan Awards |
Market |
Plan |
Equity Incentive |
||||||||||||||||||||||||||||||||||||||||||
Number of |
Number of |
Value |
Awards: |
Plan Awards: |
|||||||||||||||||||||||||||||||||||||||||
Number of |
Number of |
Securities |
Shares or |
of Shares |
Number of |
Market or Payout |
|||||||||||||||||||||||||||||||||||||||
Securities |
Securities |
Underlying |
Units of |
or Units of |
Unearned |
Value of Unearned |
|||||||||||||||||||||||||||||||||||||||
Underlying |
Underlying |
Unexercised |
Stock |
Stock |
Shares, Units or |
Shares, Units or |
|||||||||||||||||||||||||||||||||||||||
Unexercised |
Unexercised |
Unearned |
Option |
Option |
Held That |
Held That |
Other Rights |
Other Rights That |
|||||||||||||||||||||||||||||||||||||
Options (# |
Options (# |
Options |
Exercise |
Expiration |
Have Not |
Have Not |
That Have Not |
Have Not Vested |
|||||||||||||||||||||||||||||||||||||
Name | Exercisable) | Unexercisable) | (#) | Price ($) | Date | Vested (#) | Vested ($)(9) | Vested (#) | ($)(9) | ||||||||||||||||||||||||||||||||||||
Charles D. Davidson
|
160,000 | | $ | 18.9375 | 10/2/2010 | 8,700 | (7) | $ | 691,824 | 12,000 | (6) | $ | 954,240 | ||||||||||||||||||||||||||||||||
120,000 | 21.6050 | 1/29/2011 | 6,000 | (12) | 477,120 | 17,181 | (8) | 1,366,233 | |||||||||||||||||||||||||||||||||||||
154,000 | 16.2700 | 2/1/2012 | 58,262 | (13) | 4,632,994 | ||||||||||||||||||||||||||||||||||||||||
150,000 | 17.6825 | 2/1/2013 | |||||||||||||||||||||||||||||||||||||||||||
86,580 | 22.2325 | 2/1/2014 | |||||||||||||||||||||||||||||||||||||||||||
39,234 | 19,618 | (1) | 29.8700 | 2/1/2015 | |||||||||||||||||||||||||||||||||||||||||
14,367 | 7,183 | (2) | 32.7925 | 5/16/2015 | |||||||||||||||||||||||||||||||||||||||||
8,000 | 4,000 | (3) | 41.4650 | 8/1/2015 | |||||||||||||||||||||||||||||||||||||||||
25,986 | 51,971 | (4) | 45.9400 | 2/1/2016 | |||||||||||||||||||||||||||||||||||||||||
164,118 | (5) | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||||||||||||||||
Chris Tong
|
33,333 | 16,667 | (10) | | 29.8800 | 1/3/2015 | 16,000 | (11) | 1,272,320 | 3,176 | (6) | 252,556 | |||||||||||||||||||||||||||||||||
10,386 | 5,194 | (1) | 29.8700 | 2/1/2015 | 4,000 | (12) | 198,080 | 3,522 | (8) | 280,069 | |||||||||||||||||||||||||||||||||||
5,333 | 2,667 | (3) | 41.4650 | 8/1/2015 | 11,700 | (13) | 930,384 | ||||||||||||||||||||||||||||||||||||||
5,327 | 10,653 | (4) | 45.9400 | 2/1/2016 | |||||||||||||||||||||||||||||||||||||||||
32,957 | (5) | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||||||||||||||||
David L. Stover
|
15,000 | | 20.0350 | 12/16/2012 | 4,000 | (12) | 318,080 | 3,176 | (6) | 252,556 | |||||||||||||||||||||||||||||||||||
40,000 | 17.6825 | 2/1/2013 | 17,257 | (13) | 1,372,277 | 3,522 | (8) | 280,069 | |||||||||||||||||||||||||||||||||||||
12,872 | 22.2325 | 2/1/2014 | |||||||||||||||||||||||||||||||||||||||||||
10,386 | 5,194 | (1) | 29.8700 | 2/1/2015 | |||||||||||||||||||||||||||||||||||||||||
5,333 | 2,667 | (3) | 41.4650 | 8/1/2015 | |||||||||||||||||||||||||||||||||||||||||
5,327 | 10,653 | (4) | 45.9400 | 2/1/2016 | |||||||||||||||||||||||||||||||||||||||||
48,610 | (5) | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||||||||||||||||
Alan R. Bullington
|
40,000 | 17.6800 | 2/1/2013 | ||||||||||||||||||||||||||||||||||||||||||
12,872 | | 22.2325 | 2/1/2014 | 2,000 | (12) | 159,040 | 3,176 | (6) | 252,556 | ||||||||||||||||||||||||||||||||||||
10,386 | 5,194 | (1) | 29.8700 | 2/1/2015 | 12,763 | (13) | 1,014,913 | 3,193 | (8) | 253,907 | |||||||||||||||||||||||||||||||||||
3,333 | 1,667 | (3) | 41.4650 | 8/1/2015 | |||||||||||||||||||||||||||||||||||||||||
4,829 | 9,659 | (4) | 45.9400 | 2/1/2016 | |||||||||||||||||||||||||||||||||||||||||
35,953 | (5) | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||||||||||||||||
Susan M. Cunningham
|
40,000 | | 20.9250 | 4/23/2011 | 4,000 | (12) | 318,080 | 3,176 | (6) | 252,556 | |||||||||||||||||||||||||||||||||||
54,000 | 16.2700 | 2/1/2012 | 12,231 | (13) | 972,609 | 3,522 | (8) | 280,069 | |||||||||||||||||||||||||||||||||||||
50,000 | 17.6825 | 2/1/2013 | |||||||||||||||||||||||||||||||||||||||||||
17,094 | 22.2325 | 2/1/2014 | |||||||||||||||||||||||||||||||||||||||||||
10,386 | 5,194 | (1) | 29.8700 | 2/1/2015 | |||||||||||||||||||||||||||||||||||||||||
5,333 | 2,667 | (3) | 41.4650 | 8/1/2015 | |||||||||||||||||||||||||||||||||||||||||
5,327 | 10,653 | (4) | 45.9400 | 2/1/2016 | |||||||||||||||||||||||||||||||||||||||||
34,455 | (5) | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||||||||||||||||
(1) | Remaining stock options vested February 1, 2008. | |
(2) | Remaining stock options vest May 16, 2008. | |
(3) | Remaining stock options vest August 1, 2008. | |
(4) | 50% of stock options vested February 1, 2008; and 50% of stock options vest February 1, 2009. | |
(5) | 331/3% of stock options vested February 1, 2008; 331/3% of stock options vest February 1, 2009; and 331/3 of stock options vest February 1, 2010. | |
(6) | Restricted stock vested February 1, 2008, as performance goals were satisfied. The performance goals for determining vesting are described in this proxy statement under the heading Long-Term Incentive Plan. |
30
(7) | Restricted stock vests May 16, 2008. | |
(8) | Restricted stock vests February 1, 2009 if performance goals are satisfied. The performance goals for determining vesting are described in this proxy statement under the heading Long-Term Incentive Plan. | |
(9) | Market value based on December 31, 2007 closing price of $79.52. | |
(10) | Remaining stock options vested January 3, 2008. | |
(11) | Restricted stock vested on January 3, 2008. | |
(12) | Restricted stock vested February 1, 2008. | |
(13) | Restricted stock vests February 1, 2010. |
Option Awards |
||||||||||||||||||||
Stock Awards |
||||||||||||||||||||
Number of Shares |
||||||||||||||||||||
Acquired on |
Value Realized on |
Number of Shares |
Value Realized on |
|||||||||||||||||
Name | Exercise (#) | Exercise ($) | Acquired on Vesting (#) | Vesting ($)(2) | ||||||||||||||||
Charles D. Davidson
|
| | 22,320 | $ | 1,192,223 | |||||||||||||||
Chris Tong
|
| | | | ||||||||||||||||
David L. Stover
|
| | 3,318 | 177,231 | ||||||||||||||||
Alan R. Bullington(1)
|
46,000 | $ | 2,081,840 | 3,318 | 177,231 | |||||||||||||||
Susan M. Cunningham
|
| | 4,406 | 235,346 | ||||||||||||||||
(1) | Mr. Bullington exercised stock options under 10b5-1 trading plans in 2007 as follows: 6,000 shares on February 14, 2007 with an exercise price of $21.605; 3,500 shares on March 23, 2007 with an exercise price of $16.27; 4,500 shares on March 29, 2007 with an exercise price of $16.27; 8,000 shares on April 11, 2007 with an exercise price of $16.27; 8,000 shares on May 21, 2007 with an exercise price of $16.27; 8,000 shares on May 31, 2007 with an exercise price of $16.27 and 8,000 shares on June 4, 2007 with an exercise price of $16.27. Fair market value at the time of exercise ranged from $53.415 to $65.24. | |
(2) | Shares of restricted stock granted on February 1, 2004 vested on February 1, 2007 as performance goals were satisfied. The performance goals for determining vesting are described in this proxy statement under the heading Long-Term Incentive Plan. Income recognized on vesting is based on the average of the high and low trading price of our common stock on February 1, 2007 ($53.415). Dividends that accrued on the shares of restricted stock during the restricted period were paid on March 16, 2007 as follows: Mr. Davidson $11,718; Mr. Stover $1,742; Mr. Bullington $1,742; and Ms. Cunningham $2,313. |
31
Number of |
||||||||||||||||||
Years of |
Present Value of |
Payments During |
||||||||||||||||
Credited |
Accumulated |
Last Fiscal Year |
||||||||||||||||
Name | Plan Name | Service(1) | Benefit ($)(2) | ($) | ||||||||||||||
Charles D. Davidson
|
Retirement Plan | 7 | $ | 222,395 | $ | 0 | ||||||||||||
Restoration Plan | 7 | 1,896,275 | 0 | |||||||||||||||
Chris Tong
|
Retirement Plan | 3 | 64,136 | 0 | ||||||||||||||
Restoration Plan | 3 | 149,962 | 0 | |||||||||||||||
David L. Stover
|
Retirement Plan | 5 | 93,967 | 0 | ||||||||||||||
Restoration Plan | 5 | 222,440 | 0 | |||||||||||||||
Alan R. Bullington
|
Retirement Plan | 17 | 381,012 | 0 | ||||||||||||||
Restoration Plan | 17 | 771,831 | 0 | |||||||||||||||
Susan M. Cunningham
|
Retirement Plan | 7 | 146,807 | 0 | ||||||||||||||
Restoration Plan | 7 | 307,939 | 0 | |||||||||||||||
(1) | Messrs. Davidson, Stover, Bullington and Ms. Cunningham are fully vested in their retirement benefits. Due to plan changes made effective January 1, 2008, all vested employees are eligible for immediate commencement and can elect an unlimited lump sum option for their Retirement Plan benefits. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Messrs. Tong and Bullington elected to receive an annuity from the Restoration Plan and Messrs. Davidson and Stover and Ms. Cunningham elected to receive a lump sum from the Restoration Plan. Messrs. Davidson and Bullington and Ms. Cunningham elected to receive their Restoration Plan benefits upon separation of service and Messrs. Tong and Stover elected to receive their Restoration Plan benefits at the later of age 55 or separation of service. The following annuity and lump sum amounts would be payable to our named executive officers from our Retirement Plan and Restoration Plan effective January 1, 2008: |
Retirement |
Restoration |
Retirement |
Restoration |
||||||||||||||||||||||
Age at |
Plan Monthly |
Plan Monthly |
Plan |
Plan |
|||||||||||||||||||||
Name | 12/31/2007 | Annuity | Annuity | Lump Sum | Lump Sum | ||||||||||||||||||||
Charles D. Davidson
|
57.83 | $ | 1,992 | | $ | 346,573 | $ | 2,996,596 | |||||||||||||||||
Chris Tong
|
51.33 | | | | | ||||||||||||||||||||
David L. Stover
|
50.17 | 405 | | 120,577 | 285,134(a) | ||||||||||||||||||||
Alan R. Bullington
|
56.75 | 3,296 | 6,617 | 583,892 | | ||||||||||||||||||||
Susan M. Cunningham
|
52.00 | 661 | | 183,291 | 384,190 | ||||||||||||||||||||
(a) | Not payable until the later of separation of service or attainment of age 55. An actuarially equivalent amount will be payable at that time. |
(2) | Represents the actuarial present value of the accumulated pension benefits for our named executive officers as of December 31, 2007 under our Retirement Plan and Restoration Plan. Present values are based on the same actuarial assumptions and measurement dates utilized in our Form 10-K filing for the year ended December 31, 2007 except that, for purposes of the present value calculations, participants are assumed to work until age 65 and commence their benefits at that time. |
32
Aggregate |
|||||||||||||||||||||||||
Executive |
Registrant |
Aggregate |
Withdrawals/ |
||||||||||||||||||||||
Contributions in |
Contributions in |
Earnings |
Distributions in |
Aggregate Balance at |
|||||||||||||||||||||
Name | Last FY ($)(1) | Last FY ($)(2) | in Last FY ($)(3) | Last FY | Last FYE ($)(4) | ||||||||||||||||||||
Charles D. Davidson
|
$ | 3,023,752 | $ | 48,000 | $ | 664,614 | $ | 0 | $ | 10,605,958 | |||||||||||||||
Chris Tong
|
277,073 | 11,125 | 33,294 | 0 | 573,415 | ||||||||||||||||||||
David L. Stover
|
269,107 | 16,250 | 58,417 | 0 | 932,670 | ||||||||||||||||||||
Alan R. Bullington
|
721,460 | 11,000 | 130,026 | 0 | 2,093,401 | ||||||||||||||||||||
Susan M. Cunningham
|
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
(1) | Mr. Davidson deferred 100% of the STIP payment he earned in 2006 (paid in 2007) ($2,562,500) and 45% ($461,252) of base salary in 2007. Mr. Tong deferred 30% of the STIP payment he earned in 2006 (paid in 2007) ($194,989) and 20% ($82,084) of base salary in 2007. Mr. Stover deferred 25% of the STIP payment he earned in 2006 (paid in 2007) ($244,315) and 5% ($24,792) of base salary in 2007. Mr. Bullington deferred 100% of the STIP payment he earned in 2006 (paid in 2007) ($619,376) and 25% ($102,084) of base salary in 2007. | |
(2) | Represents matching contributions of 100% of the first 6% of base salary deferred, to the extent not matched in our Thrift Plan. | |
(3) | Interest is paid at the greater of 125% of the 120-month rolling average of the 10-year Treasury Note, or the 120-month rolling average of the Prime Rate. Interest paid in 2007 based on Prime Rate average of 6.82%, compounded monthly. | |
(4) | All named executive officers are 100% vested in these balances. |
| amounts credited under our Deferred Compensation Plan; | |
| unused vacation pay; and | |
| amounts accrued and vested under our Retirement Plan and Restoration Plan. |
33
| will have until the earlier of (1) the fifth anniversary of his or her retirement date or (2) the expiration of the remainder of the outstanding ten-year option term, to exercise all stock options that are vested as of his or her retirement date; | |
| may be entitled to receive a prorated share of outstanding unvested restricted stock and performance unit awards at such time as any performance criteria associated with the awards is satisfied; | |
| may elect to continue to participate in our medical and dental plans at subsidized retiree rates until he or she reaches age 65 (continued coverage for medical and dental benefits for the named executive officers dependents may also be elected at subsidized retiree rates); and | |
| may continue to receive life insurance coverage until the attainment of age 65 at subsidized premium rates. |
Involuntary Termination or |
|||||||||||||||||||||||||
Termination Without Cause |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
in Connection With a |
|||||||||||||||||||||||
Executive Benefits and |
Termination on |
Termination on |
Change of Control on |
Disability on |
|||||||||||||||||||||
Payments Upon Separation | 12/31/07(1) | 12/31/2007(1) | 12/31/2007 | 12/31/2007(1) | Death on 12/31/2007 | ||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Severance
|
| | (9) | $ | 8,132,800 | (10) | | | |||||||||||||||||
STIP Payments
|
| (2) | | (2) | 1,025,000 | (10) | | (2) | | (2) | |||||||||||||||
Stock Options
|
| | 7,491,384 | (11) | | | |||||||||||||||||||
Restricted Stock
|
$ | 1,865,062 | (3) | $ | 1,865,062 | (3) | 8,122,411 | (12) | $ | 7,667,000 | (3) | $ | 7,667,000 | (3) | |||||||||||
Performance Units
|
1,814,131 | (4) | 1,814,131 | (4) | 2,361,196 | (13) | 1,814,131 | (4) | 1,814,131 | (4) | |||||||||||||||
Benefits and Perquisites:
|
|||||||||||||||||||||||||
Retirement Plans
|
2,118,670 | (5) | 2,118,670 | (5) | 2,118,670 | (5) | 3,279,977 | (17) | 1,744,851 | (19) | |||||||||||||||
Deferred Compensation Plan
|
| (6) | | (6) | | (6) | | (6) | | (6) | |||||||||||||||
Health & Welfare Benefits
|
121,234 | (7) | 121,234 | (7) | 125,732 | (14) | 121,234 | (7) | | ||||||||||||||||
Disability Income
|
| | | | (18) | | |||||||||||||||||||
Life Insurance Benefits
|
| | | | 1,000,000 | (20) | |||||||||||||||||||
Excise Tax &
Gross-Up
|
| | 6,800,000 | (15) | | | |||||||||||||||||||
Accrued Vacation Pay
|
| (8) | | (8) | | (8) | | (8) | | (8) | |||||||||||||||
Employment Services
|
| | 15,000 | (16) | | | |||||||||||||||||||
TOTAL
|
$ | 5,919,097 | $ | 5,919,097 | $ | 36,192,193 | $ | 12,882,342 | $ | 12,225,982 | |||||||||||||||
(1) | Mr. Davidson was eligible for early retirement as of December 31, 2007. Upon his termination of employment, he will be entitled to retiree benefits under all of our benefit plans. |
34
(2) | Mr. Davidson would not be entitled to a STIP payment for 2007 in the event of his termination of employment on December 31, 2007, other than in the event of a change of control. Employees must be employed on the STIP payment date (February 2008) in order to receive payment. | |
(3) | As a retiree, or due to termination as a result of disability or death, Mr. Davidson or his named beneficiary may be entitled to a prorated portion of all unvested performance-based restricted stock awards. The prorated portion of these awards will only vest at the end of each restricted period if the performance goals for that period have been satisfied. The prorated portion is based on the number of months of service completed by Mr. Davidson during the restricted period. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of shares awarded will vest in 2008 (12,000 shares); 2006 award two-thirds of shares awarded (11,454 shares) will vest in 2009. All unvested shares of restricted stock with time-based vesting provisions (14,700 shares in 2005 and 58,262 shares in 2007) will be forfeited upon retirement, unless the Board, in its discretion, takes action to accelerate the vesting of these shares. In the event of termination of employment as a result of death or disability, all unvested shares of restricted stock with time-based vesting provisions will vest as follows: 2005 award 14,700 shares will vest; 2007 award 58,262 shares will vest. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(4) | As a retiree, or due to termination as a result of disability or death, Mr. Davidson or his named beneficiary may be entitled to a prorated portion of all unvested performance unit awards. The prorated portion of these awards may vest at the end of each performance period based on the level of achievement of the applicable performance objectives for that period. The prorated portion is based on the number of months of service completed by Mr. Davidson during the performance period. Value is based on the assumption that performance units will pay out at target level. We have assumed that the performance objectives will be satisfied and the following prorated awards will vest: 2005 award 100% of units awarded will vest in 2008 (720,000 units); 2006 award two-thirds of units awarded will vest in 2009 (1,094,131 units). | |
(5) | Reflects the present value of Mr. Davidsons accrued benefits under our Retirement Plan and Restoration Plan. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement upon separation from service and can elect a lump sum option for their Retirement Plan benefits. Based on a December 31, 2007 termination date, Mr. Davidsons monthly age 65 retirement benefits from our Retirement Plan would be $2,532. If Mr. Davidson commences his retirement benefits immediately following retirement on December 31, 2007, his monthly benefits from our Retirement Plan, reduced for early retirement, would be $1,992. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Mr. Davidson elected to receive a lump sum from the Restoration Plan upon separation of service. The lump sum payable to Mr. Davidson from our Restoration Plan based on a December 31, 2007 termination date is $2,996,596. | |
(6) | Mr. Davidson would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 20. | |
(7) | Reflects the present value of expected future medical and dental benefits that will be paid by the Company in connection with Mr. Davidsons participation in the medical and dental plans as a retiree. Assumptions used for this calculation are the same assumptions disclosed in Note 11 to our financial statements in the Form 10-K for the year ended December 31, 2007, as filed with the SEC, for post-retirement calculations. | |
(8) | Mr. Davidson is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Davidson used all of his vacation during 2007 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2007. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Davidsons salary. | |
(9) | Mr. Davidson is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Davidson is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, plus a prorated STIP payment based on his STIP target percentage (100%) for a total payment of $1,300,962. |
35
(10) | We entered into a Change of Control Agreement with Mr. Davidson that provides for severance benefits in the event that Mr. Davidsons employment terminates within two years after a change of control of the Company. Under Mr. Davidsons Change of Control Agreement, if Mr. Davidson is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.99 times his annual cash compensation (consisting of annual salary and STIP). Mr. Davidson is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. | |
(11) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all unvested stock options held by Mr. Davidson as of December 31, 2007. | |
(12) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Davidson on December 31, 2007 based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(13) | Vesting of performance units accelerates in the event of a change of control. Represents the value of all unvested performance units held by Mr. Davidson on December 31, 2007 based on a target value of $1.00 per unit. | |
(14) | Mr. Davidsons Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 36 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. Mr. Davidson is also entitled to continue his medical and dental coverage following this 36-month period as a participant in our retiree medical plan at subsidized premium rates as discussed above. The value reflected also includes the present value of the expected future medical and dental benefits that will be paid by us in connection with Mr. Davidsons participation in the retiree medical plan following the 36-month period. | |
(15) | Mr. Davidson is entitled to a gross-up payment for any excise tax due in connection with a change of control pursuant to Internal Revenue Code Sections 280G and 4099. The estimated gross-up payment for Mr. Davidson based on a December 31, 2007 change of control and the closing price of our common stock on December 31, 2007 of $79.52 is $6,800,000. | |
(16) | Mr. Davidsons Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. | |
(17) | In the event of Mr. Davidsons termination of employment due to permanent and total disability, his age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if he had continued to work until age 65. The value reflected represents the actuarial present value of Mr. Davidsons age 65 benefits based on a disability date of December 31, 2007. The calculation is based on Mr. Davidsons final average compensation as of his date of disability. Upon commencement of his benefits at age 65, Mr. Davidsons monthly benefit from our Retirement Plan and Restoration Plan will be $48,483. In the event that Mr. Davidson elects to immediately commence his retirement benefits, the amounts payable will be as described in Note 5 above. | |
(18) | Our LTD benefits are fully insured through CIGNA. Eligibility for benefits is determined by CIGNA only after the employees termination of employment because of a medical condition. Benefits pay at 60% of monthly income, capped at $15,000 per month. | |
(19) | In the event of Mr. Davidsons death while an active employee, his named beneficiary is entitled to a death benefit under our Retirement Plan and Restoration Plan. The death benefit payable in the event of his death on December 31, 2007 is $1,744,851. This lump sum payment was calculated based on the same actuarial assumptions utilized in our Form 10-K filing for the year ended December 31, 2007 and the GAR 1994 mortality tables as required by our Retirement Plan and Restoration Plan. The accrued death benefit was reduced for early commencement. | |
(20) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
36
Involuntary Termination or |
|||||||||||||||||||||||||
Termination Without Cause |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
in Connection With a |
|||||||||||||||||||||||
Termination on |
Termination on |
Change of Control on |
Disability on |
Death on |
|||||||||||||||||||||
12/31/07 | 12/31/2007 | 12/31/2007 | 12/31/2007 | 12/31/2007 | |||||||||||||||||||||
Vested Benefits as of December 31, 2007:
|
|||||||||||||||||||||||||
Stock Options(1)
|
$ | 44,414,769 | $ | 44,414,769 | $ | 44,414,769 | $ | 44,414,769 | $ | 44,414,769 | |||||||||||||||
Deferred Compensation Plan
|
10,605,958 | 10,605,958 | 10,605,958 | 10,605,958 | 10,605,958 | ||||||||||||||||||||
Total Vested Benefits
|
$ | 55,020,727 | $ | 55,020,727 | $ | 55,020,727 | $ | 55,020,727 | $ | 55,020,727 | |||||||||||||||
Benefits and Payments Upon Separation:
|
$ | 5,919,097 | $ | 5,919,097 | $ | 36,192,193 | $ | 12,882,342 | $ | 12,225,982 | |||||||||||||||
Total Walk-Away Value
|
$ | 60,939,824 | $ | 60,939,824 | $ | 91,212,920 | $ | 67,903,069 | $ | 67,246,709 | |||||||||||||||
(1) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all stock options vested and exercisable as of December 31, 2007. |
Involuntary Termination or |
|||||||||||||||||||||||||
Termination Without Cause |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
in Connection With a |
|||||||||||||||||||||||
Executive Benefits and |
Termination on |
Termination on |
Change of Control on |
Disability on |
Death on |
||||||||||||||||||||
Payments Upon Separation | 12/31/07(1) | 12/31/2007(1) | 12/31/2007 | 12/31/2007(1) | 12/31/2007 | ||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Severance
|
| | (8) | $ | 2,374,912 | (9) | | | |||||||||||||||||
STIP Payments
|
| (1) | | (1) | 318,750 | (9) | | (1) | | (1) | |||||||||||||||
Stock Options
|
| | 2,404,795 | (10) | | | |||||||||||||||||||
Restricted Stock
|
| (2) | $ | 1,272,320 | (22) | 3,053,409 | (11) | $ | 2,960,052 | (16) | $ | 2,960,052 | (16) | ||||||||||||
Performance Units
|
| (3) | | (3) | 527,013 | (12) | 414,875 | (17) | 414,875 | (17) | |||||||||||||||
Benefits and Perquisites:
|
|||||||||||||||||||||||||
Retirement Plans
|
| (4) | | (4) | | (4) | 908,932 | (18) | 86,318 | (20) | |||||||||||||||
Deferred Compensation Plan
|
| (5) | | (5) | | (5) | | (5) | | (5) | |||||||||||||||
Health & Welfare Benefits
|
| (6) | | (6) | 44,421 | (13) | | (6) | | ||||||||||||||||
Disability Income
|
| | | | (19) | | |||||||||||||||||||
Life Insurance Benefits
|
| | | | 850,000 | (21) | |||||||||||||||||||
Excise Tax &
Gross-Up
|
| | 1,600,000 | (14) | | | |||||||||||||||||||
Accrued Vacation Pay
|
| (7) | | (7) | | (7) | | (7) | | (7) | |||||||||||||||
Employment Services
|
| | 15,000 | (15) | | | |||||||||||||||||||
TOTAL
|
| $ | 1,272,320 | $ | 10,338,300 | $ | 4,283,859 | $ | 4,311,245 | ||||||||||||||||
(1) | Mr. Tong would not be entitled to a STIP payment for 2007 in the event of his termination of employment on December 31, 2007, other than in the event of a change of control. Employees must be employed on the STIP payment date (February 2008) in order to receive payment. | |
(2) | All unvested shares of restricted stock will be forfeited upon Mr. Tongs voluntary termination of employment on December 31, 2007, including his 2005 awards 23,176 shares; the 2006 award 3,522 shares; and the 2007 award 11,700 shares; provided, however, that 16,000 shares of Mr. Tongs 2005 restricted stock award will vest in the event of his termination by the Company without cause. |
37
(3) | All unvested performance units will be forfeited upon Mr. Tongs voluntary or involuntary termination of employment on December 31, 2007. The following performance units will be forfeited: 2005 award 190,600 units and 2006 award 336,413 units. | |
(4) | Mr. Tong is not vested in either our Retirement Plan or our Restoration Plan. | |
(5) | Mr. Tong would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 22. | |
(6) | Mr. Tong would not be eligible to participate in our retiree medical and dental plans in the event of his termination of employment on December 31, 2007. | |
(7) | Mr. Tong is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Tong used all of his vacation during 2007 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2007. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Tongs salary. | |
(8) | Mr. Tong is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Tong is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, plus a prorated STIP payment based on his STIP target percentage (75%) for a total payment of $416,827. | |
(9) | We entered into a Change of Control Agreement with Mr. Tong that provides for severance benefits in the event that Mr. Tongs employment terminates within two years after a change of control of the Company. Under Mr. Tongs Change of Control Agreement, if Mr. Tong is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.5 times his annual cash compensation (consisting of annual salary and STIP). Mr. Tong is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. | |
(10) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all unvested stock options held by Mr. Tong as of December 31, 2007. | |
(11) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Tong on December 31, 2007 based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(12) | Vesting of performance units accelerates in the event of a change of control. Represents the value of all unvested performance units held by Mr. Tong on December 31, 2007 based on a target value of $1.00 per unit. | |
(13) | Mr. Tongs Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 30 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. | |
(14) | Mr. Tong is entitled to a gross-up payment for any excise tax due in connection with a change of control pursuant to Internal Revenue Code Sections 280G and 4099. The estimated gross-up payment for Mr. Tong based on a December 31, 2007 change of control and the closing price of our common stock on December 31, 2007 of $79.52 is $1,600,000. | |
(15) | Mr. Tongs Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. | |
(16) | In the event of termination of employment as a result of disability or death, Mr. Tong or his named beneficiary may be entitled to a prorated portion of all unvested performance-based restricted stock awards. The prorated portion of these awards will only vest at the end of each restricted period if the performance goals for that period have been satisfied. The prorated portion is based on the number of months of service completed by Mr. Tong during the restricted period. Value is based on the closing price of our common stock as of December 31, 2007 ($79.52). We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of the shares awarded will vest in 2008 (3,176 shares); and 2006 award two-thirds of the shares awarded (2,348 shares) will vest in 2009. All unvested shares of |
38
restricted stock with time-based vesting provisions will also vest in the event of Mr. Tongs termination of employment as a result of death or disability as follows: 2005 award 20,000 shares will vest; 2007 award 11,700 shares will vest. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). | ||
(17) | In the event of termination of employment as a result of disability or death, Mr. Tong or his named beneficiary may be entitled to a prorated portion of all unvested performance unit awards. The prorated portion of these awards may vest at the end of each performance period based on the level of achievement of the applicable performance goals for that period. The prorated portion is based on the number of months of service completed by Mr. Tong during the performance period. Value is based on the assumption that performance units will payout at target level. We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of units awarded will vest in 2008 (190,600 units); 2006 award two thirds of the units awarded will vest in 2009 (224,275 units). | |
(18) | In the event of Mr. Tongs termination of employment due to permanent and total disability, his age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if he had continued to work until age 65. The value reflected represents the actuarial present value of Mr. Tongs age 65 benefits based on a disability date of December 31, 2007. The calculation is based on Mr. Tongs final average compensation as of his date of disability. Upon commencement of his benefits at age 65, Mr. Tongs monthly benefit from our Retirement Plan and Restoration Plan would be $20,031. Mr. Tong is not eligible to commence his benefits prior to age 65. | |
(19) | Our LTD benefits are fully insured through CIGNA. Eligibility for benefits is determined by CIGNA only after the employees termination of employment because of a medical condition. Benefits pay at 60% of monthly income, capped at $15,000 per month. | |
(20) | In the event of Mr. Tongs death while an active employee, his named beneficiary is entitled to a death benefit under the Retirement Plan and Restoration Plan. The death benefit payable in the event of Mr. Tongs death on December 31, 2007 is $86,318. This lump sum payment was calculated based on the same actuarial assumptions utilized in our Form 10-K filing for the year ended December 31, 2007 and the GAR 1994 mortality tables as required by our Retirement Plan and Restoration Plans. The accrued death benefit was reduced for early commencement. | |
(21) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. | |
(22) | Represents the value of 16,000 shares of unvested restricted stock granted in January 2005 that will immediately vest in the event of Mr. Tongs involuntary termination without cause on December 31, 2007. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). All other unvested shares of restricted stock will be forfeited upon Mr. Tongs involuntary termination of employment on December 31, 2007, including the 2005 awards of 7,176 shares, the 2006 award of 3,522 shares and the 2007 award of 11,700 shares. |
Involuntary Termination or |
|||||||||||||||||||||||||
Termination Without Cause |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
in Connection With a |
|||||||||||||||||||||||
Termination on |
Termination on |
Change of Control on |
Disability on |
Death on |
|||||||||||||||||||||
12/31/07 | 12/31/2007 | 12/31/2007 | 12/31/2007 | 12/31/2007 | |||||||||||||||||||||
Vested Benefits as of December 31, 2007:
|
|||||||||||||||||||||||||
Stock Options(1)
|
$ | 2,552,143 | $ | 2,552,143 | $ | 2,552,143 | $ | 2,552,143 | $ | 2,552,143 | |||||||||||||||
Deferred Compensation Plan
|
573,415 | 573,415 | 573,415 | 573,415 | 573,415 | ||||||||||||||||||||
Total Vested Benefits
|
$ | 3,125,558 | $ | 3,125,558 | $ | 3,125,558 | $ | 3,125,558 | $ | 3,125,558 | |||||||||||||||
Benefits and Payments Upon Separation:
|
$ | | $ | 1,272,320 | $ | 10,338,300 | $ | 4,283,859 | $ | 4,311,245 | |||||||||||||||
Total Walk-Away Value
|
$ | 3,125,558 | $ | 4,397,878 | $ | 13,463,858 | $ | 7,409,417 | $ | 7,436,803 | |||||||||||||||
39
(1) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all stock options vested and exercisable as of December 31, 2007. |
Involuntary Termination or |
|||||||||||||||||||||||||
Termination Without Cause |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
in Connection With a |
|||||||||||||||||||||||
Executive Benefits and |
Termination on |
Termination on |
Change of Control on |
Disability on |
Death on |
||||||||||||||||||||
Payments Upon Separation | 12/31/07(1) | 12/31/2007(1) | 12/31/2007 | 12/31/2007(1) | 12/31/2007 | ||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Severance
|
| | (8) | $ | 2,704,147 | (9) | | | |||||||||||||||||
STIP Payments
|
| (1) | | (1) | 472,500 | (9) | | (1) | | (1) | |||||||||||||||
Stock Options
|
| | 1,986,067 | (10) | | | |||||||||||||||||||
Restricted Stock
|
| (2) | | (2) | 2,222,982 | (11) | $ | 2,129,625 | (16) | $ | 2,129,625 | (16) | |||||||||||||
Performance Units
|
| (3) | | (3) | 527,013 | (12) | 414,875 | (17) | 414,875 | (17) | |||||||||||||||
Benefits and Perquisites:
|
|||||||||||||||||||||||||
Retirement Plans
|
$ | 316,407 | (4) | $ | 316,407 | (4) | 316,407 | (4) | 957,913 | (18) | 128,656 | (20) | |||||||||||||
Deferred Compensation Plan
|
| (5) | | (5) | | (5) | | (5) | | (5) | |||||||||||||||
Health & Welfare Benefits
|
| (6) | | (6) | 44,600 | (13) | | (6) | | ||||||||||||||||
Disability Income
|
| | | | (19) | | |||||||||||||||||||
Life Insurance Benefits
|
| | | | 1,000,000 | (21) | |||||||||||||||||||
Excise Tax &
Gross-Up
|
| | 2,000,000 | (14) | | | |||||||||||||||||||
Accrued Vacation Pay
|
| (7) | | (7) | | (7) | | (7) | | (7) | |||||||||||||||
Employment Services
|
| | 15,000 | (15) | | | |||||||||||||||||||
TOTAL
|
$ | 316,407 | $ | 316,407 | $ | 10,288,716 | $ | 3,502,413 | $ | 3,673,156 | |||||||||||||||
(1) | Mr. Stover would not be entitled to a STIP payment for 2007 in the event of his termination of employment on December 31, 2007, other than in the event of a change of control. Employees must be employed on the STIP payment date (February 2008) in order to receive payment. | |
(2) | All unvested shares of restricted stock will be forfeited upon Mr. Stovers voluntary or involuntary termination of employment on December 31, 2007, including the 2005 award 7,176 shares; the 2006 award 3,522 shares; and the 2007 award 17,257 shares. | |
(3) | All unvested performance units will be forfeited upon Mr. Stovers voluntary or involuntary termination of employment on December 31, 2007. The following performance units will be forfeited: 2005 award 190,600 units; and 2006 award 336,413 units. | |
(4) | Reflects the present value of Mr. Stovers accrued benefits under our Retirement Plan and Restoration Plan. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement upon separation from service and can elect a lump sum option for their Retirement Plan benefits. Based on a December 31, 2007 termination date, Mr. Stovers monthly age 65 retirement benefits from our Retirement Plan would be $1,719. If Mr. Stover commences his retirement benefits immediately following termination of employment on December 31, 2007, his monthly benefits from our Retirement Plan, reduced for early commencement, would be $405. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Mr. Stover elected to receive a lump sum from the Restoration Plan at the later of attainment of age 55 or separation of service. Mr. Stovers Restoration Plan lump sum amount as of December 31, 2007 is $285,134. An actuarially equivalent amount will be payable to Mr. Stover at the time he attains age 55 (in 2012) based on the interest rates in effect at that time. | |
(5) | Mr. Stover would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 21. |
40
(6) | Mr. Stover would not be eligible to participate in our retiree medical and dental plans in the event of his termination of employment on December 31, 2007. | |
(7) | Mr. Stover is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Stover used all of his vacation during 2007 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2007. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Stovers salary. | |
(8) | Mr. Stover is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Stover is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, plus a prorated STIP payment based on his STIP target percentage (90%) for a total payment of $593,654. | |
(9) | We entered into a Change of Control Agreement with Mr. Stover that provides for severance benefits in the event that Mr. Stovers employment terminates within two years after a change of control of the Company. Under Mr. Stovers Change of Control Agreement, if Mr. Stover is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.5 times his annual cash compensation (consisting of annual salary and STIP). Mr. Stover is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. | |
(10) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each option and the closing price of our common stock on December 31, 2007 ($79.52) on all unvested stock options held by Mr. Stover as of December 31, 2007. | |
(11) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Stover on December 31, 2007 based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(12) | Vesting of performance units accelerates in the event of a change of control. Represents the value of all unvested performance units held by Mr. Stover on December 31, 2007 based on a target value of $1.00 per unit. | |
(13) | Mr. Stovers Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 30 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. | |
(14) | Mr. Stover is entitled to a gross-up payment for any excise tax due in connection with a change of control pursuant to Internal Revenue Code Sections 280G and 4099. The estimated gross-up payment for Mr. Stover based on a December 31, 2007 change of control and the closing price of our common stock on December 31, 2007 of $79.52 is $2,000,000. | |
(15) | Mr. Stovers Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. | |
(16) | In the event of termination of employment as a result of disability or death, Mr. Stover or his named beneficiary may be entitled to a prorated portion of all unvested performance based restricted stock awards. The prorated portion of these awards will only vest at the end of each restricted period if the performance goals for that period have been satisfied. The prorated portion is based on the number of months of service completed by Mr. Stover during the restricted period. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of the shares awarded will vest in 2008 (3,176 shares); and 2006 award two-thirds of the shares awarded (2,348 shares) will vest in 2009. All unvested shares of restricted stock with time-based vesting provisions will also vest in the event of Mr. Stovers termination of employment as a result of death or disability as follows: 2005 award 4,000 shares will vest; 2007 award 17,257 shares will vest. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(17) | In the event of termination of employment as a result of disability or death, Mr. Stover or his named beneficiary may be entitled to a prorated portion of all unvested performance unit awards. The prorated |
41
portion of these awards may vest at the end of each performance period based on the level of achievement of the applicable performance goals for that period. The prorated portion is based on the number of months of service completed by Mr. Stover during the performance period. Value is based on the assumption that performance units will pay out at target level. We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of the units awarded will vest in 2008 (190,600 units); and 2006 award two-thirds of units awarded will vest in 2009 (224,275 units). |
(18) | In the event of Mr. Stovers termination of employment due to permanent and total disability, his age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if he had continued to work until age 65. The value reflected represents the actuarial present value of Mr. Stovers age 65 benefits based on a disability date of December 31, 2007. The calculation is based on Mr. Stovers final average compensation as of his date of disability. Upon commencement of his benefits at age 65, Mr. Stovers monthly benefit from our Retirement Plan and Restoration Plan will be $22,946. Mr. Stover is not eligible to commence his benefits prior to age 65. | |
(19) | Our LTD benefits are fully insured through CIGNA. Eligibility for benefits is determined by CIGNA only after the employees termination of employment because of a medical condition. Benefits pay at 60% of monthly income, capped at $15,000 per month. | |
(20) | In the event of Mr. Stovers death while an active employee, his named beneficiary is entitled to a death benefit under the Retirement Plan and Restoration Plan. The death benefit payable in the event of Mr. Stovers death on December 31, 2007 is $128,656. This lump sum payment was calculated based on the same actuarial assumptions utilized in our Form 10-K filing for the year ended December 31, 2007 and the GAR 1994 mortality tables as required by our Retirement Plan and Restoration Plans. The accrued death benefit was reduced for early commencement. | |
(21) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
Involuntary |
|||||||||||||||||||||||||
Termination or |
|||||||||||||||||||||||||
Termination |
|||||||||||||||||||||||||
Without |
|||||||||||||||||||||||||
Cause in |
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Connection With |
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Voluntary |
Involuntary |
a Change of |
|||||||||||||||||||||||
Termination on |
Termination on |
Control on |
Disability on |
Death on |
|||||||||||||||||||||
12/31/07 | 12/31/2007 | 12/31/2007 | 12/31/2007 | 12/31/2007 | |||||||||||||||||||||
Vested Benefits as of December 31, 2007:
|
|||||||||||||||||||||||||
Stock Options(1)
|
$ | 5,000,673 | $ | 5,000,673 | $ | 5,000,673 | $ | 5,000,673 | $ | 5,000,673 | |||||||||||||||
Deferred Compensation Plan
|
932,670 | 932,670 | 932,670 | 932,670 | 932,670 | ||||||||||||||||||||
Total Vested Benefits
|
$ | 5,933,343 | $ | 5,933,343 | $ | 5,933,343 | $ | 5,933,343 | $ | 5,933,343 | |||||||||||||||
Benefits and Payments Upon Separation:
|
$ | 316,407 | $ | 316,407 | $ | 10,288,716 | $ | 3,502,413 | $ | 3,673,156 | |||||||||||||||
Total Walk-Away Value
|
$ | 6,249,750 | $ | 6,249,750 | $ | 16,222,059 | $ | 9,435,756 | $ | 9,606,499 | |||||||||||||||
(1) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all stock options vested and exercisable as of December 31, 2007. |
42
Involuntary Termination or |
|||||||||||||||||||||||||
Termination Without Cause |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
in Connection With a |
|||||||||||||||||||||||
Executive Benefits and |
Termination on |
Termination on |
Change of Control on |
Disability on |
Death on |
||||||||||||||||||||
Payments Upon Separation | 12/31/07(1) | 12/31/2007(1) | 12/31/2007 | 12/31/2007(1) | 12/31/2007 | ||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Severance
|
| | (9) | $ | 2,058,586 | (10) | | | |||||||||||||||||
STIP Payments
|
| (2) | | (2) | 315,000 | (10) | | (2) | | (2) | |||||||||||||||
Stock Options
|
| | 1,584,222 | (11) | | | |||||||||||||||||||
Restricted Stock
|
$ | 421,827 | (3) | $ | 421,827 | (3) | 1,680,417 | (12) | $ | 1,595,781 | (3) | $ | 1,595,781 | (3) | |||||||||||
Performance Units
|
393,943 | (4) | 393,943 | (4) | 495,614 | (13) | 393,943 | (4) | 393,943 | (4) | |||||||||||||||
Benefits and Perquisites:
|
|||||||||||||||||||||||||
Retirement Plans
|
1,152,843 | (5) | 1,152,843 | (5) | 1,152,843 | (5) | 1,308,222 | (17) | 851,864 | (19) | |||||||||||||||
Deferred Compensation Plan
|
| (6) | | (6) | | (6) | | (6) | | (6) | |||||||||||||||
Health & Welfare Benefits
|
133,162 | (7) | 133,162 | (7) | 136,855 | (14) | 133,162 | (7) | | ||||||||||||||||
Disability Income
|
| | | | (18) | | |||||||||||||||||||
Life Insurance Benefits
|
| | | | 840,000 | (20) | |||||||||||||||||||
Excise Tax &
Gross-Up
|
| | 1,400,000 | (15) | | | |||||||||||||||||||
Accrued Vacation Pay
|
| (8) | | (8) | | (8) | | (8) | | (8) | |||||||||||||||
Employment Services
|
| | 15,000 | (16) | | | |||||||||||||||||||
TOTAL
|
$ | 2,101,775 | $ | 2,101,775 | $ | 8,838,537 | $ | 3,431,108 | $ | 3,681,588 | |||||||||||||||
(1) | Mr. Bullington was eligible for early retirement as of December 31, 2007. Upon his termination of employment he will be entitled to retiree benefits under all of our benefit plans. | |
(2) | Mr. Bullington would not be entitled to a STIP payment for 2007 in the event of his termination of employment on December 31, 2007, other than in the event of a change of control. Employees must be employed on the STIP payment date (February 2008) in order to receive payment. | |
(3) | As a retiree, or due to termination as a result of disability or death, Mr. Bullington or his named beneficiary may be entitled to a prorated portion of all unvested performance-based restricted stock awards. The prorated portion of these awards will only vest at the end of each restricted period if the performance goals for that period have been satisfied. The prorated portion is based on the number of months of service completed by Mr. Bullington during the restricted period. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of shares awarded will vest in 2008 (3,176 shares); and 2006 award two-thirds of shares awarded (2,129 shares) will vest in 2009. All unvested shares of restricted stock with time-based vesting provisions (12,763 shares in 2007) will be forfeited upon retirement, unless the Board, in its discretion, takes action to accelerate the vesting of these shares. All unvested shares of restricted stock with time-based vesting provisions will vest in the event of Mr. Bullingtons termination of employment as a result of death or disability as follows: 2005 award 2,000 shares will vest; 2007 award 17,257 shares will vest. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(4) | As a retiree, or due to termination as a result of disability or death, Mr. Bullington or his named beneficiary may be entitled to a prorated portion of all unvested performance unit awards. The prorated portion of these awards may vest at the end of each performance period based on the level of achievement of the applicable performance objectives for that period. The prorated portion is based on the number of months of service completed by Mr. Bullington during the performance period. Value is based on the assumption that performance units will payout at target level. We have assumed that the performance objectives will be satisfied and the following prorated awards will vest: 2005 award 100% of units awarded will vest in 2008 (190,600 units); and 2006 award two-thirds of units awarded will vest in 2009 (203,343 units). |
43
(5) | Reflects the present value of Mr. Bullingtons accrued benefits under our Retirement Plan and Restoration Plan. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement upon separation from service and can elect a lump sum option for their Retirement Plan benefits. Based on a December 31, 2007 termination date, Mr. Bullingtons monthly age 65 retirement benefits from our Retirement Plan would be $4,639. If Mr. Bullington commences his retirement benefits immediately following retirement on December 31, 2007, his monthly benefits from our Retirement Plan, reduced for early commencement, would be $3,296. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Mr. Bullington elected to receive an annuity from the Restoration Plan commencing immediately following separation of service. The monthly annuity amount payable to Mr. Bullington from our Restoration Plan immediately following his separation of service on December 31, 2007 is $6,617. | |
(6) | Mr. Bullington would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 20. | |
(7) | Reflects the present value of expected future medical and dental benefits that will be paid by the Company in connection with Mr. Bullingtons participation in the medical and dental plans as a retiree. Assumptions used for this calculation are the same assumptions disclosed in Note 11 to our financial statements in the Form 10-K for the year ended December 31, 2007, as filed with the SEC, for post-retirement calculations. | |
(8) | Mr. Bullington is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Bullington used all of his vacation during 2007 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2007. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Bullingtons salary. | |
(9) | Mr. Bullington is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Bullington is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, plus a prorated STIP payment based on his STIP target percentage (75%) for a total payment of $589,615. | |
(10) | We entered into a Change of Control Agreement with Mr. Bullington that provides for severance benefits in the event that Mr. Bullingtons employment terminates within two years after a change of control of the Company. Under Mr. Bullingtons Change of Control Agreement, if Mr. Bullington is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.5 times his annual cash compensation (consisting of annual salary and STIP). Mr. Bullington is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. | |
(11) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all unvested stock options held by Mr. Bullington as of December 31, 2007. | |
(12) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Bullington on December 31, 2007 based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(13) | Vesting of performance units accelerates in the event of a change of control. Represents the value of all unvested performance units held by Mr. Bullington on December 31, 2007 based on a target value of $1.00 per unit. | |
(14) | Mr. Bullingtons Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 30 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. Mr. Bullington is also entitled to continue his medical and dental coverage following this 30-month period as a participant in our retiree medical plan at subsidized premium rates as discussed above. The value reflected also includes the present value of the expected future medical and dental benefits that will be paid by us in connection with Mr. Bullingtons participation in the retiree medical plan following the 30-month period. |
44
(15) | Mr. Bullington is entitled to a gross-up payment for any excise tax due in connection with a change of control pursuant to Internal Revenue Code Sections 280G and 4099. The estimated gross-up payment for Mr. Bullington based on a December 31, 2007 change of control and the closing price of our common stock on December 31, 2007 of $79.52 is $1,400,000. | |
(16) | Mr. Bullingtons Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. | |
(17) | In the event of Mr. Bullingtons termination of employment due to permanent and total disability, his age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if he had continued to work until age 65. The value reflected represents the actuarial present value of Mr. Bullingtons age 65 benefits based on a disability date of December 31, 2007. The calculation is based on Mr. Bullingtons final average compensation as of his date of disability. Upon commencement of his benefit at age 65, Mr. Bullingtons monthly benefit from our Retirement Plan and Restoration Plan will be $20,702. In the event that Mr. Bullington elects to immediately commence his retirement benefits, the amounts payable will be as described in Note 5 above. | |
(18) | Our LTD benefits are fully insured through CIGNA. Eligibility for benefits is determined by CIGNA only after the employees termination of employment because of a medical condition. Benefits pay at 60% of monthly income, capped at $15,000 per month. | |
(19) | In the event of Mr. Bullingtons death while an active employee, his named beneficiary is entitled to a death benefit under our Retirement Plan and Restoration Plan. The death benefit payable in the event of Mr. Bullingtons death on December 31, 2007 is $851,864. This lump sum payment was calculated based on the same actuarial assumptions utilized in our Form 10-K filing for the year ended December 31, 2007 and the GAR 1994 mortality tables as required by our Retirement Plan and Restoration Plan. The accrued death benefit was reduced for early commencement. | |
(20) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
Involuntary |
|||||||||||||||||||||||||
Termination or |
|||||||||||||||||||||||||
Termination |
|||||||||||||||||||||||||
Without Cause |
|||||||||||||||||||||||||
in Connection |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
With a Change |
|||||||||||||||||||||||
Termination on |
Termination on |
of Control on |
Disability on |
Death on |
|||||||||||||||||||||
12/31/07 | 12/31/2007 | 12/31/2007 | 12/31/2007 | 12/31/2007 | |||||||||||||||||||||
Vested Benefits as of December 31, 2007:
|
|||||||||||||||||||||||||
Stock Options(1)
|
$ | 4,015,565 | $ | 4,015,565 | $ | 4,015,565 | $ | 4,015,565 | $ | 4,015,565 | |||||||||||||||
Deferred Compensation Plan
|
2,093,401 | 2,093,401 | 2,093,401 | 2,093,401 | 2,093,401 | ||||||||||||||||||||
Total Vested Benefits
|
$ | 6,108,966 | $ | 6,108,966 | $ | 6,108,966 | $ | 6,108,966 | $ | 6,108,966 | |||||||||||||||
Benefits and Payments Upon Separation:
|
$ | 2,101,775 | $ | 2,101,775 | $ | 8,838,537 | $ | 3,431,108 | $ | 3,681,588 | |||||||||||||||
Total Walk-Away Value
|
$ | 8,210,741 | $ | 8,210,741 | $ | 14,947,503 | $ | 9,540,074 | $ | 9,790,554 | |||||||||||||||
(1) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all stock options vested and exercisable as of December 31, 2007. |
45
Involuntary Termination or |
|||||||||||||||||||||||||
Termination Without Cause |
|||||||||||||||||||||||||
Voluntary |
Involuntary |
in Connection With a |
|||||||||||||||||||||||
Executive Benefits and |
Termination on |
Termination on |
Change of Control on |
Disability on |
Death on |
||||||||||||||||||||
Payments Upon Separation | 12/31/07(1) | 12/31/2007(1) | 12/31/2007 | 12/31/2007(1) | 12/31/2007 | ||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Severance
|
| | (8) | $ | 2,141,447 | (9) | | | |||||||||||||||||
STIP Payments
|
| (1) | | (1) | 315,000 | (9) | | (1) | | (1) | |||||||||||||||
Stock Options
|
| | 1,616,551 | (10) | | | |||||||||||||||||||
Restricted Stock
|
| (2) | | (2) | 1,823,314 | (11) | $ | 1,729,958 | (16) | $ | 1,729,958 | (16) | |||||||||||||
Performance Units
|
| (3) | | (3) | 527,013 | (12) | 414,875 | (17) | 414,875 | (17) | |||||||||||||||
Benefits and Perquisites:
|
|||||||||||||||||||||||||
Retirement Plans
|
$ | 454,746 | (4) | $ | 454,746 | (4) | 454,746 | (4) | 1,087,201 | (18) | 183,493 | (20) | |||||||||||||
Deferred Compensation Plan
|
| (5) | | (5) | | (5) | | (5) | | (5) | |||||||||||||||
Health & Welfare Benefits
|
| (6) | | (6) | 43,745 | (13) | | (6) | | ||||||||||||||||
Disability Income
|
| | | | (19) | | |||||||||||||||||||
Life Insurance Benefits
|
| | | | 840,000 | (21) | |||||||||||||||||||
Excise Tax &
Gross-Up
|
| | 1,500,000 | (14) | | | |||||||||||||||||||
Accrued Vacation Pay
|
| (7) | | (7) | | (7) | | (7) | | (7) | |||||||||||||||
Employment Services
|
| | 15,000 | (15) | | | |||||||||||||||||||
TOTAL
|
$ | 454,746 | $ | 454,746 | $ | 8,436,816 | $ | 3,232,034 | $ | 3,168,326 | |||||||||||||||
(1) | Ms. Cunningham would not be entitled to a STIP payment for 2007 in the event of her termination of employment on December 31, 2007, other than in the event of a change of control. Employees must be employed on the STIP payment date (February 2008) in order to receive payment. | |
(2) | All unvested shares of restricted stock will be forfeited upon Ms. Cunninghams voluntary or involuntary termination of employment on December 31, 2007, including 2005 award 7,176 shares; 2006 award 3,522 shares; and 2007 award 12,231 shares. | |
(3) | All unvested performance units will be forfeited upon Ms. Cunninghams voluntary or involuntary termination of employment on December 31, 2007. The following performance units will be forfeited: 2005 award 190,600 units; and 2006 award 336,413 units. | |
(4) | Reflects the present value of Ms. Cunninghams accrued benefits under our Retirement Plan and Restoration Plan. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement upon separation from service and can elect an unlimited lump sum option for their Retirement Plan benefits. Based on a December 31, 2007 termination date, Ms. Cunninghams monthly age 65 retirement benefits from our Retirement Plan would be $2,385. If Ms. Cunningham commences her retirement benefits immediately following termination of employment on December 31, 2007, her monthly benefits from our Retirement Plan, reduced for early commencement, would be $661. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Ms. Cunningham elected to receive a lump sum from the Restoration Plan upon separation of service. The lump sum payable to Ms. Cunningham from our Restoration Plan based on a December 31, 2007 termination date is $384,190. | |
(5) | Ms. Cunningham would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of her termination of employment. | |
(6) | Ms. Cunningham would not be eligible to participate in our retiree medical and dental plans in the event of her termination of employment on December 31, 2007. | |
(7) | Ms. Cunningham is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Ms. Cunningham used all of her |
46
vacation during 2007 and would therefore not be entitled to payment for any unused vacation in the event of her termination on December 31, 2007. In the event of termination during the year, all amounts of unused vacation would be paid based on Ms. Cunninghams salary. | ||
(8) | Ms. Cunningham is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Ms. Cunningham is entitled to a severance payment under the plan, she would receive two weeks of pay for every year of completed service, plus a prorated STIP payment based on her STIP target percentage (75%) for a total payment of $411,923. | |
(9) | We entered into a Change of Control Agreement with Ms. Cunningham that provides for severance benefits in the event that Ms. Cunninghams employment terminates within two years after a change of control of the Company. Under Ms. Cunninghams Change of Control Agreement, if Ms. Cunningham is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), she is entitled to receive a lump sum severance payment equal to 2.5 times her annual cash compensation (consisting of annual salary and STIP). Ms. Cunningham is also entitled to a prorated STIP payment based on her termination date in the year of the change of control. | |
(10) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all unvested stock options held by Ms. Cunningham as of December 31, 2007. | |
(11) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Ms. Cunningham on December 31, 2007 based on the closing price of our common stock on December 31, 2007 ($79.52). | |
(12) | Vesting of performance units accelerates in the event of a change of control. Represents the value of all unvested performance units held by Ms. Cunningham on December 31, 2007 based on a target value of $1.00 per unit. | |
(13) | Ms. Cunninghams Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 30 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. | |
(14) | Ms. Cunningham is entitled to a gross-up payment for any excise tax due in connection with a change of control pursuant to Internal Revenue Code Sections 280G and 4099. The estimated gross-up payment for Ms. Cunningham based on a December 31, 2007 change of control and the closing price of our common stock on December 31, 2007 of $79.52 is $1,500,000. | |
(15) | Ms. Cunninghams Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. | |
(16) | In the event of termination of employment as a result of disability or death, Ms. Cunningham or her named beneficiary may be entitled to a prorated portion of all unvested performance based restricted stock awards. The prorated portion of these awards will only vest at the end of each restricted period if the performance goals for that period have been satisfied. The prorated portion is based on the number of months of service completed by Ms. Cunningham during the restricted period. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of the shares awarded will vest in 2008 (3,176 shares); and 2006 award two-thirds of shares awarded (2,348 shares) will vest in 2009. All unvested shares of restricted stock with time-based vesting provisions will also vest in the event of Ms. Cunninghams termination of employment as a result of death or disability as follows: 2005 award 4,000 shares will vest; 2007 award 12,231 shares will vest. Value is based on the closing price of our common stock on December 31, 2007 ($79.52). |
(17) | In the event of termination of employment as a result of disability or death, Ms. Cunningham or her named beneficiary may be entitled to a prorated portion of all unvested performance unit awards. The prorated portion of these awards may vest at the end of each performance period based on the level of achievement of the applicable performance goals for that period. The prorated portion is based on the number of months of service completed by Ms. Cunningham during the performance period. Value is based on the assumption that |
47
performance units will pay out at target level. We have assumed that the performance goals will be satisfied and the following prorated awards will vest: 2005 award 100% of the units awarded will vest in 2008 (190,600 units); and 2006 award two-thirds of units awarded will vest in 2009 (224,275 units). |
(18) | In the event of Ms. Cunninghams termination of employment due to permanent and total disability, her age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if she had continued to work until age 65. The value reflected represents the actuarial present value of Ms. Cunninghams age 65 benefits based on a disability date of December 31, 2007. The calculation is based on Ms. Cunninghams final average compensation as of her date of disability. Upon commencement of her benefits at age 65, Ms. Cunninghams monthly benefit from our Retirement Plan and Restoration Plan would be $21,605. Ms. Cunningham is not eligible to commence her benefits prior to age 65. | |
(19) | Our LTD benefits are fully insured through CIGNA. Eligibility for benefits is determined by CIGNA only after the employees termination of employment because of a medical condition. Benefits pay at 60% of monthly income, capped at $15,000 per month. | |
(20) | In the event of Ms. Cunninghams death while an active employee, her named beneficiary is entitled to a death benefit under our Retirement Plan and Restoration Plan. The death benefit payable in the event of Ms. Cunninghams death on December 31, 2007 is $183,493. This lump sum payment was calculated based on the same actuarial assumptions utilized in our Form 10-K filing for the year ended December 31, 2007 and the GAR 1994 mortality tables as required by our Retirement Plan and Restoration Plans. The accrued death benefit was reduced for early commencement. | |
(21) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
Involuntary Termination or |
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Termination Without Cause |
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Voluntary |
Involuntary |
in Connection With a |
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Termination on |
Termination on |
Change of Control on |
Disability on |
Death on |
|||||||||||||||||||||
12/31/07 | 12/31/2007 | 12/31/2007 | 12/31/2007 | 12/31/2007 | |||||||||||||||||||||
Vested Benefits as of December 31, 2007:
|
|||||||||||||||||||||||||
Stock Options(1)
|
$ | 10,727,941 | $ | 10,727,941 | $ | 10,727,941 | $ | 10,727,941 | $ | 10,727,941 | |||||||||||||||
Deferred Compensation Plan
|
| | | | | ||||||||||||||||||||
Total Vested Benefits
|
$ | 10,727,941 | $ | 10,727,941 | $ | 10,727,941 | $ | 10,727,941 | $ | 10,727,941 | |||||||||||||||
Benefits and Payments Upon Separation:
|
$ | 454,746 | $ | 454,746 | $ | 8,436,816 | $ | 3,232,034 | $ | 3,168,326 | |||||||||||||||
Total Walk-Away Value
|
$ | 11,182,687 | $ | 11,182,687 | $ | 19,164,757 | $ | 13,959,975 | $ | 13,896,267 | |||||||||||||||
(1) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2007 ($79.52) on all stock options vested and exercisable as of December 31, 2007. |
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Change in |
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Pension |
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Value and |
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Nonqualified |
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Non-Equity |
Deferred |
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Fees Earned |
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
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or Paid in |
Awards |
Awards |
Compensation |
Earnings |
Compensation |
Total |
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Name | Cash ($)(1) | ($)(2) | ($)(3) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||
Jeffrey L. Berenson
|
$ | 104,000 | $ | 90,546 | $ | 102,973 | | | | $ | 297,519 | ||||||||||||||||||||||||
Michael A. Cawley
|
124,541 | 90,546 | 102,973 | | | | 318,060 | ||||||||||||||||||||||||||||
Edward F. Cox
|
114,042 | 90,546 | 102,973 | | | | 307,561 | ||||||||||||||||||||||||||||
Thomas J. Edelman
|
76,000 | 90,546 | 102,973 | | | $ | 42,000 | (4) | 311,519 | ||||||||||||||||||||||||||
Kirby L. Hedrick
|
118,042 | 90,546 | 102,973 | | | | 311,561 | ||||||||||||||||||||||||||||
Bruce A. Smith(5)
|
100,000 | 90,546 | 102,973 | | | | 293,519 | ||||||||||||||||||||||||||||
Scott D. Urban
|
18,500 | 46,839 | 65,377 | | | | 130,716 | ||||||||||||||||||||||||||||
William T. Van Kleef
|
115,000 | 90,546 | 102,973 | | | | 308,519 | ||||||||||||||||||||||||||||
(1) | Reflects fees paid or earned by our non-employee directors in 2007. Each non-employee director earned the following: an annual retainer of $50,000 and $2,000 for each Board or committee meeting attended. Mr. Cawley received an additional $20,000 for serving as our Lead Independent Director. Mr. Van Kleef received an additional $15,000 for serving as the Chair of our Audit Committee. Messrs. Hedrick, Cox and Cawley each received an additional $5,000, adjusted to $7,500 beginning August 2007, for serving as Chair of our Compensation Committee; Environmental, Health and Safety Committee; and Governance Committee, respectively. | |
(2) | Reflects the compensation expense recognized in our financial statements for the 2007 fiscal year for restricted stock awards to our non-employee directors in 2006 and 2007 under our 2005 Plan. Compensation expense was computed in accordance with SFAS 123(R). A discussion of the assumptions used in calculating these values may be found in Note 9 to our 2007 audited financial statements included in our annual report on Form 10-K. Pursuant to SEC rules, amounts shown exclude the impact of estimated forfeitures. Restricted stock awarded to our non-employee directors in 2007 will vest on the one-year anniversary of the grant date. The vesting of the restricted shares will accelerate in the event of a change of control of the Company. Each non-employee director except Mr. Urban received an award of 1,982 shares of restricted stock on February 1, 2007 that was unvested as |
49
of December 31, 2007. Mr. Urban received an award of 4,800 shares of restricted stock on October 23, 2007 that was unvested as of December 31, 2007. | ||
(3) | Reflects the compensation expense recognized in our financial statements for the 2007 fiscal year for nonqualified stock options granted to our non-employee directors in 2006 and 2007 under our 2005 Plan. Compensation expense was computed in accordance with SFAS 123(R). A discussion of the assumptions used in calculating these values may be found in Note 9 to our 2007 audited financial statements included in our annual report on Form 10-K. Pursuant to SEC rules, amounts shown exclude the impact of estimated forfeitures. Options represent the right to purchase shares of common stock at a fixed price per share equal to fair market value on the date of grant. Our 2005 Plan defines fair market value as the closing price of our common stock on the NYSE on the date of grant. Options granted to our non-employee directors in 2007 will vest on the one-year anniversary of the grant date. The vesting of the options will accelerate in the event of a change of control of the Company. Vesting of these options is not contingent upon the satisfaction of any performance criteria, although none of the options may be exercised until the first anniversary (absent a change of control of the Company) or after the tenth anniversary of the date of grant. Each non-employee director except Mr. Urban received 5,000 nonqualified stock options on February 1, 2007 that were unvested as of December 31, 2007. Mr. Urban received a grant of 11,200 nonqualified stock options on October 23, 2007 that was unvested as of December 31, 2007. The following directors have option awards outstanding as of December 31, 2007: Mr. Berenson 19,883; Mr. Cawley 54,493; Mr. Cox 8,683; Mr. Edelman 597,223; Mr. Hedrick 58,683; Mr. Smith 58,683; Mr. Urban 11,200; and Mr. Van Kleef 19,883. | |
(4) | Reflects 2007 compensation for office space rent paid for Mr. Edelman pursuant to a consulting agreement effective May 16, 2005 in connection with our acquisition of Patina. | |
(5) | Mr. Smith served on our Board throughout 2007 and until his resignation from the Board on February 1, 2008. |
| the nature of the related persons interest in the transaction; |
50
| the material terms of the transaction, including, without limitation, the amount and type of transaction; | |
| the importance of the transaction to the related person; | |
| the importance of the transaction to the Company; | |
| whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the Company; and | |
| any other matters deemed appropriate. |
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52
2007 | % | 2006 | % | |||||||||||||
Audit Fees(1)
|
$ | 1,860,000 | 89.7 | $ | 1,420,000 | 86.4 | ||||||||||
Audit Related Fees(2)
|
211,000 | 10.2 | 222,360 | 13.5 | ||||||||||||
Tax
|
| | | | ||||||||||||
Other(3)
|
1,500 | 0.1 | 1,500 | 0.1 | ||||||||||||
$ | 2,072,500 | 100.0 | $ | 1,643,860 | 100.0 | |||||||||||
(1) | Services rendered in 2007 and 2006 include auditing our financial statements included in the Companys annual report filed on Form 10-K and our internal controls over financial reporting. Services also include quarterly reviews of our interim financial statements filed on Form 10-Q. | |
(2) | Includes fees paid for foreign statutory and domestic retirement plan audits and other audit-related work. | |
(3) | Includes fees paid for online accounting research subscription. |
53
54
NOBLE ENERGY, INC. ANNUAL MEETING OF STOCKHOLDERS April 22, 2008 9:30 a.m. Central Time The Woodlands Waterway Marriott Hotel & Convention Center 1601 Lake Robbins Drive The Woodlands, Texas 77380 Noble Energy, Inc. 100 Glenborough Drive, Suite 100 Houston, Texas 77067 proxy This proxy is solicited by the Board of Directors for use at the Annual Meeting on April 22, 2008. The shares of stock you hold in your account will be voted as you specify on the reverse side. If no choice is specified, the proxy will be voted FOR Items 1 and 2. By signing the proxy, you revoke all prior proxies and appoint Charles D. Davidson and Chris Tong, and each of them, with full power of substitution to vote your shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and all adjournments or postponements. See reverse for voting instructions. |
There are three ways to vote your Proxy Your telephone or Internet vote authorizes the Named Proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. VOTE BY PHONE TOLL FREE 1-800-560-1965 QUICK ??? EASY ??? IMMEDIATE · Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00 noon (CT) on April 21, 2008 · Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions the voice provides you. VOTE BY INTERNET www.eproxy.com/nbl QUICK EASY IMMEDIATE · Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 noon (CT) on April 21, 2008. · Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions to obtain your records and create an electronic ballot. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope weve provided or return it to Noble Energy, Inc., c/o Shareowner ServicesY, P.O. Box 64873, St. Paul, MN 55164-0873. If you vote by Phone or Internet, please do not mail your Proxy Card The Board of Directors Recommends a Vote FOR Items 1 (all nominees) and 2. 1. Election of directors: 01 Jeffrey L. Berenson 02 Michael A. Cawley 03 Edward F. Cox 04 Charles D. Davidson 05 Thomas J. Edelman 06 Kirby L. Hedrick 07 Scott D. Urban 08 William T. Van Kleef h Vote FOR all nominees (except as marked) h Vote WITHHELD from all nominees (Instructions: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the box provided to the right.) 2. Proposal to ratify the appointment of KPMG LLP as the Companys independent auditor. h For h Against h Abstain 3. In their discretion, the proxies are authorized to vote upon such other business or matters as may properly come before the meeting and any adjournment or postponement thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR PROPOSALS 1 AND 2. Address Change? Mark Box h Indicate changes below: Date Signature(s) in Box Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. COMPANY # Please detach here |