UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
NEWFIELD EXPLORATION COMPANY
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[ ] No fee required.
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0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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(NEWFIELD LOGO)
NEWFIELD EXPLORATION COMPANY
HOUSTON, TEXAS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 1, 2003
To the Stockholders of Newfield Exploration Company:
The 2003 Annual Meeting of Stockholders (the "Annual Meeting") of Newfield
Exploration Company (the "Company") will be held at 11:00 a.m., Central Daylight
Time, on Thursday, May 1, 2003, in the Hotel Sofitel, 425 N. Sam Houston Parkway
E., Houston, Texas, for the following purposes:
(1) to elect eleven directors to serve until the 2004 Annual Meeting
of Stockholders;
(2) to ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the year ending December 31,
2003; and
(3) to transact such other business as may properly come before such
meeting or any adjournment(s) thereof.
The close of business on March 13, 2003, has been fixed as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the Annual Meeting or any adjournment(s) thereof.
You are cordially invited to attend the Annual Meeting.
By order of the Board of Directors,
/s/ TERRY W. RATHER
TERRY W. RATHERT
Secretary
March 29, 2003
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO VOTE YOUR SHARES VIA THE INTERNET, OUR TOLL-FREE TELEPHONE
NUMBER OR BY SIGNING, DATING AND PROMPTLY RETURNING YOUR PROXY IN THE ENCLOSED
ENVELOPE.
TABLE OF CONTENTS
PAGE
----
ABOUT THE MEETING........................................... 1
What is the purpose of the meeting?....................... 1
Am I entitled to vote at the meeting?..................... 1
What are my voting rights as a stockholder?............... 1
How do I vote?............................................ 1
Can I change my vote?..................................... 2
What constitutes a quorum?................................ 2
What are the Board's recommendations?..................... 2
What vote is required to approve each item?............... 2
Other Information......................................... 2
ITEM 1 -- ELECTION OF DIRECTORS............................. 3
Security Ownership of Certain Beneficial Owners and
Management............................................. 5
Board Meetings and Committees............................. 6
Compensation of Directors................................. 6
EXECUTIVE COMPENSATION.................................... 7
Summary Compensation Table................................ 7
Stock Options Granted in 2002............................. 8
Stock Option Exercises and Year-End Values................ 9
Equity Compensation Plan.................................. 9
Employment Agreement...................................... 9
Compensation Committee Interlocks and Insider
Participation.......................................... 10
Interests of Management and Others in Certain
Transactions........................................... 10
Section 16(a) Beneficial Ownership Reporting Compliance... 11
Compensation Committee Report on Executive Compensation... 11
Stockholder Return Performance Presentation............... 14
Audit Committee Report.................................... 15
Principal Accountant Fees and Services.................... 16
ITEM 2 -- RATIFICATION OF APPOINTMENT OF AUDITORS........... 16
OTHER BUSINESS.............................................. 17
STOCKHOLDER PROPOSALS....................................... 17
(NEWFIELD LOGO)
NEWFIELD EXPLORATION COMPANY
363 N. SAM HOUSTON PKWY E.
SUITE 2020
HOUSTON, TEXAS 77060
(281) 847-6000
WWW.NEWFLD.COM
PROXY STATEMENT
FOR THE 2003 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Newfield Exploration
Company to be voted at Newfield's Annual Meeting of Stockholders to be held at
11:00 a.m., Central Daylight Time, on Thursday, May 1, 2003, in the Hotel
Sofitel, 425 N. Sam Houston Parkway E., Houston, Texas or at any adjournment(s)
thereof. This proxy statement and the form of proxy/voting instruction card were
first mailed or given to stockholders on approximately April 1, 2003.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE MEETING?
At the meeting, holders of our common stock will act upon the matters
described in the foregoing notice of the meeting -- the election of eleven
directors and the ratification of the selection of PricewaterhouseCoopers LLP as
our independent accountants for the year ending December 31, 2003.
AM I ENTITLED TO VOTE AT THE MEETING?
Only stockholders of record on March 13, 2003, the record date for the
meeting, are entitled to receive notice of and to vote at the meeting.
WHAT ARE MY VOTING RIGHTS AS A STOCKHOLDER?
Stockholders are entitled to one vote for each share of our common stock
that they owned as of the record date. Stockholders may not cumulate their votes
in the election of directors.
HOW DO I VOTE?
Stockholders may vote at the meeting in person or by proxy. Proxies validly
delivered by stockholders (by Internet, telephone or mail as described below)
and received by us prior to the meeting will be voted in accordance with the
instructions contained therein. If a stockholder's proxy/voting instruction card
gives no instructions, it will be voted in accordance with the recommendation of
our Board of Directors.
There are three ways to vote by proxy:
- BY INTERNET: Visit the web site http://www.voteproxy.com and follow the
on-screen instructions. To vote your shares, you must use the control
number printed on your proxy/voting instruction card. The web site is
available 24 hours a day, seven days a week, and will be accessible UNTIL
11:59 p.m., Eastern Daylight Time, on April 30, 2003;
- BY TELEPHONE: Call toll-free 1-800-PROXIES (1-800-776-9437). To vote
your shares, you must use the control number printed on your proxy/voting
instruction card. Telephone voting is accessible 24 hours a day, seven
days a week, UNTIL 11:59 p.m., Eastern Daylight Time, on April 30, 2003;
or
- BY MAIL: Mark you proxy/voting instruction card, date and sign it, and
return it in the postage-paid envelope provided. If the envelope is
missing, please address your completed proxy/voting instruction card to
Newfield Exploration Company, c/o American Stock Transfer & Trust
Company, 59 Maiden Lane, New York, New York 10273-0923.
IF YOU VOTE BY INTERNET OR TELEPHONE, YOU NEED
NOT RETURN YOUR PROXY/VOTING INSTRUCTION CARD.
CAN I CHANGE MY VOTE?
Yes. A stockholder may revoke or change a proxy before the proxy is
exercised by filing with our Secretary a notice of revocation, delivering to us
a new proxy or by attending the meeting and voting in person. Stockholders who
vote by telephone or the Internet may change their votes by re-voting by
telephone or the Internet within the time periods listed above. A stockholder's
last timely vote, including via the Internet or telephone, is the one that is
counted.
WHAT CONSTITUTES A QUORUM?
Stockholders entitled to cast at least a majority of the votes that all
stockholders are entitled to cast must be present at the meeting in person or by
proxy to constitute a quorum for the transaction of business. At the close of
business on March 13, 2003, the record date, there were 51,787,375 shares of our
common stock outstanding.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Our Board of Directors recommends a vote "FOR" the election of the eleven
nominees proposed for election as directors and "FOR" the ratification of the
selection of PricewaterhouseCoopers LLP as our independent accountants for 2003.
If any other matters are brought before the meeting, the proxy holders will vote
as recommended by our Board. If no recommendation is given, the proxy holders
will vote in their discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
The eleven nominees for election as directors who receive the greatest
number of votes will be elected directors. Approval of the ratification of the
selection of PricewaterhouseCoopers LLP as our independent accounts for 2003
requires the affirmative vote of a majority of the votes cast at the meeting.
Withheld votes, abstentions and broker non-votes will not be taken into account
in determining the outcome of the election of directors or ratification of the
selection of PricewaterhouseCoopers LLP.
OTHER INFORMATION
A copy of our Annual Report for the fiscal year ended December 31, 2002
accompanies this proxy statement. No material contained in our Annual Report is
to be considered a part of the proxy solicitation material.
We will reimburse brokers, custodians, nominees and fiduciaries for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of our common stock. The costs of the solicitation will be borne by us.
2
ITEM 1
ELECTION OF DIRECTORS
Our Board of Directors has nominated the eleven persons named below to
serve as directors until our 2004 annual meeting of stockholders. Unless
instructions to the contrary are given, all properly executed and delivered
proxies will be voted for the election of these eleven nominees as directors. If
any nominee is unable to serve, the proxy holders will vote for such other
person as may be nominated by our Board.
NOMINEES PRINCIPAL OCCUPATION AND DIRECTORSHIPS DIRECTOR SINCE AGE(1)
-------- -------------------------------------- -------------- ------
Joe B. Foster...................... Chairman of the Board of Newfield; 1988 68
Director, McDermott International,
Inc. and New Jersey Resources
Corporation
David A. Trice..................... President and Chief Executive Officer 2000 54
of Newfield; Director, Hornbeck
Offshore Services, Inc.
David F. Schaible.................. Vice President -- Acquisitions and 2002 42
Development of Newfield
Charles W. Duncan, Jr. ............ Chairman, Duncan Interests 1990 76
Howard H. Newman................... Vice Chairman, Warburg Pincus LLC; 1990 55
Director, ADVO, Inc., Cox Insurance
Holdings Plc., Spinnaker Exploration,
Inc. and Encore Acquisition Company
Thomas G. Ricks.................... Chief Investment Officer, H&S Ventures 1992 49
L.L.C.
C. E. (Chuck) Shultz............... Chairman and Chief Executive Officer, 1994 63
Dauntless Energy Inc.; Chairman,
Canadian Oil Sands Ltd.; and Chairman,
Calpine Power Income Fund
Dennis R. Hendrix.................. Retired Chairman, PanEnergy Corp; 1997 63
Director, Allied Waste Industries,
Inc.
Philip J. Burguieres............... Chief Executive Officer, EMC Holdings, 1998 59
LLC; Vice Chairman, Houston Texans;
Director, JPMorgan Chase Houston and
McDermott International, Inc.; and
Director and Chairman Emeritus,
Weatherford International, Inc.
Claire S. Farley................... Chief Executive Officer, Randall & 2001 44
Dewey Inc.; Director, Boise Cascade
Corporation
John Randolph Kemp III............. Retired President, Exploration (2) 58
Production, Americas, Conoco Inc.;
Director, Osyka Corporation
---------------
(1) As of February 28, 2003.
(2) Not currently a director; nominated for election at the Annual Meeting.
Each of the director nominees has been engaged in the principal occupation
set forth opposite his or her name for the past five years except as follows:
Mr. Foster founded our company in 1989 and, until May 1999, served as
President, Chief Executive Officer and Chairman of the Board. In May 1999, Mr.
Foster resigned from the position of President. On January 31, 2000, Mr. Foster
retired from the position of Chief Executive Officer but remained an employee
(but not an officer) of our company until February 2003. As a non-officer
employee, Mr. Foster
3
was involved primarily in special projects and the review of potential
acquisitions. Mr. Foster was named interim President, Chief Executive Officer
and Chairman of the Board of Baker Hughes Incorporated on January 31, 2000. Mr.
Foster resigned from those positions in August 2000.
Mr. Trice, one of our company's founders, served as President, Chief
Executive Officer and a Director of the Huffco Group from 1991 to July 1997,
when he rejoined our company as Vice President -- Finance and International. In
May 1999, he was appointed President and Chief Operating Officer. Mr. Trice was
named Chief Executive Officer on February 1, 2000.
Mr. Ricks served as President and Chief Executive Officer of the University
of Texas Investment Management Company from March 1996 until he was named to his
present position in May 2001.
Mr. Burguieres served as Chairman of the Board of Weatherford Enterra, Inc.
(a predecessor of Weatherford International) from December 1992 to May 1998. He
was named Chairman Emeritus of Weatherford International in May 1998. EMC
Holdings is a private energy investment firm started by Mr. Burguieres in March
1999.
Ms. Farley joined Texaco Exploration and Production Inc. in 1981 and served
in a variety of capacities. She was President of the Worldwide Exploration and
New Ventures Division when she left Texaco in October 1999 to serve as Chief
Executive Officer of Intelligent Diagnostics Corporation. Ms. Farley left
Intelligent Diagnostics in January 2001 to become Chief Executive Officer of
Trade Ranger Inc. Ms. Farley also served on the Board of Directors of Trade
Ranger. In May 2002, Ms. Farley resigned her position as CEO of Trade Ranger but
continued to serve as a director until being named Chief Executive Officer of
Randall & Dewey Inc. in September 2002.
Mr. Kemp joined Conoco Inc. in 1966 and served in a variety of engineering
and management positions. From 1993 to 1998, Mr. Kemp served Conoco as Vice
President, Exploration and Production for South America, Africa, Asia and the
Middle East. At the time of his retirement from Conoco in November 1999, Mr.
Kemp was President, Exploration Production, Americas.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership information, unless
otherwise indicated, as of February 28, 2003, with respect to (i) each person
known by us to own beneficially 5% or more of our outstanding shares of common
stock, (ii) each of the named executive officers (see "-- Executive
Compensation"), (iii) each of the directors and nominees for director and (iv)
all executive officers, directors and director nominees as a group.
BENEFICIAL OWNERSHIP(1)
-----------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT
------------------------ ----------- ---------
Warburg, Pincus & Co.(2).................................... 4,814,735 9.3%
American Express Financial Corporation(3)................... 2,785,685 5.4
Joe B. Foster(4)............................................ 570,104 1.1
David A. Trice.............................................. 319,112 *
David F. Schaible........................................... 233,611 *
Terry W. Rathert............................................ 201,324 *
Elliott Pew................................................. 182,929 *
William D. Schneider........................................ 115,892 *
Charles W. Duncan, Jr. ..................................... 616,003 1.2
Howard H. Newman(2)......................................... 4,883,998 9.4
Thomas G. Ricks............................................. 1,708 *
C. E. Shultz................................................ 12,413 *
Terry Huffington............................................ 274,797 *
Dennis R. Hendrix........................................... 21,124 *
Philip J. Burguieres........................................ 5,855 *
Claire S. Farley............................................ 1,708 *
John Randolph Kemp.......................................... 850 *
Executive officers, directors and director nominees as a
group (consisting of 18 persons)(1)(2)(4)................. 7,481,124 14.2
---------------
* Less than 1%
(1) Shares are deemed to be "beneficially owned" by a person if he or she
directly or indirectly has or shares the power to vote or dispose of the
shares, whether or not he or she has any pecuniary interest in the shares,
or if he or she has the right to acquire the power to vote or dispose of the
shares within 60 days, including any right to acquire such power through the
exercise of any option, warrant or right. The shares beneficially owned by
Messrs. Foster, Trice, Schaible, Rathert, Pew and Schneider include 122,000;
178,330; 118,580; 122,330; 115,300 and 66,150 shares, respectively, that may
be acquired by such persons within 60 days through the exercise of stock
options. The shares owned by the executive officers, directors and director
nominees as a group include 753,290 shares that may be acquired by those
persons within 60 days through the exercise of stock options.
(2) Warburg, Pincus & Co. (WP&Co.) is the sole general partner and Warburg,
Pincus LLC (WP LLC) is the manager of several private equity funds that
together own an aggregate of 4,814,735 shares of our common stock. Mr.
Newman, a director of our company, is a general partner of WP&Co. and a Vice
Chairman, Managing Director and member of WP LLC. The 4,814,735 shares are
included in the number of shares beneficially owned by Mr. Newman in the
table because of Mr. Newman's affiliation with WP&Co. and WP LLC. Mr. Newman
disclaims beneficial ownership of these shares.
(3) All information in the table and in this note with respect to American
Express Financial Corporation (AEFC) is based solely on the Schedule 13G it
filed with the SEC on February 13, 2003. AEFC has shared voting power with
respect to 1,900,400 of the indicated shares and shared dispositive power
5
with respect to the remainder of the shares. The address of AEFC is 145 AXP
Financial Center, Minneapolis, MN 55474.
(4) Includes 7,400 shares held by Mr. Foster as trustee for the benefit of
charitable trusts and 7,500 shares held by a charitable organization of
which Mr. Foster serves as president and a director.
BOARD MEETINGS AND COMMITTEES
Our Board of Directors held nine meetings during 2002. During 2002, each of
our directors attended at least 75% of the aggregate of (i) the total number of
meetings of our Board of Directors and (ii) the total number of meetings held by
each committee of our Board of Directors on which the director served.
Standing committees of our Board of Directors include the following:
AUDIT COMMITTEE. The Audit Committee, which currently consists of Messrs.
Ricks, Shultz and Burguieres and Mmes. Farley and Huffington, met six times
during 2002. See "-- Audit Committee Report" and the charter of the Audit
Committee, which was attached as Appendix A to our 2001 proxy statement, for a
description of the Audit Committee's purposes and responsibilities.
COMPENSATION COMMITTEE. The Compensation Committee, which currently
consists of Messrs. Duncan, Newman, Ricks and Hendrix and Mmes. Huffington and
Farley, met four times during 2002. The principal functions of the Compensation
Committee are to review and approve the compensation of our employees, including
bonuses, benefit plans and stock options, and administer our employee benefit
plans. Members of the committee are not eligible to participate in any of the
plans or programs they administer.
CORPORATE GOVERNANCE COMMITTEE. The Corporate Governance Committee, which
currently consists of Messrs. Burguieres, Duncan, Hendrix, Newman, Ricks and
Shultz and Mmes. Huffington and Farley, met one time during 2002. The principal
functions of the Corporate Governance Committee are to consider matters related
to corporate governance and recommend to our Board of Directors the size and
composition of the Board. The committee also monitors and makes recommendations
to our Board with respect to the functions of the committees of the Board.
COMPENSATION OF DIRECTORS
DIRECTOR FEES. Our non-employee directors are paid a $20,000 annual fee.
During 2002, a fee of $1,000 was paid to each non-employee director for
attendance at each meeting of our Board and for attendance at any committee
meeting, as a committee member, not held in conjunction with a meeting of our
Board. A fee of $500 was also paid to each non-employee director for
participation in each telephonic board meeting and for participation as a
committee member in each telephonic committee meeting not held in conjunction
with a board meeting. Our non-employee directors were paid $222,000 in the
aggregate in 2002 as compensation for serving as directors. Only non-employee
directors are compensated for serving as directors. Non-employee directors also
are reimbursed for out-of-pocket expenses incurred to attend board and committee
meetings.
On February 12, 2003, our Board increased the meeting fees payable to our
non-employee directors effective for meetings after that date. Non-employee
directors now receive a fee of $1,500 per board meeting and committee meeting
held on a day on which a board meeting is not held and a fee of $750 for each
telephonic board or committee meeting. In addition, non-employee directors will
be paid a fee of $1,000 for each committee meeting held on the same day as a
board meeting if the committee meeting lasts for a substantial period of time.
The annual fee will remain $20,000, but committee chairmen will receive an
additional annual fee of $3,000. For purposes of annual fees, a new annual
period begins on the date of our annual meeting of stockholders and that period
ends on the date of our next annual meeting.
RESTRICTED STOCK. Pursuant to our 2000 Non-Employee Director Restricted
Stock Plan each of our directors who is in office immediately after an annual
meeting of stockholders and who has not been an employee of our company at any
time since the beginning of the calendar year preceding the calendar year
6
in which the annual meeting is held receives a number of restricted shares of
our common stock determined by dividing $30,000 by the closing sales price of
our common stock on the NYSE on the date of the annual meeting (rounded down to
nearest whole share). In addition, each eligible non-employee director who is
appointed to our Board (not in connection with an annual meeting of
stockholders) is granted, effective on the date of appointment, a number of
restricted shares of our common stock determined by dividing $30,000 by the
closing sales price of our common stock on the NYSE on the date of appointment
(rounded down to nearest whole share). With respect to all such grants, the
restrictions lapse on the day before the first annual meeting of stockholders
following the date of grant. An aggregate of 50,000 restricted shares were
initially available for issuance pursuant to our Non-Employee Director Plan.
Each of Messrs. Duncan, Newman, Ricks, Shultz, Hendrix and Burguieres and Mmes.
Huffington and Farley were granted 787 restricted shares on May 3, 2002 pursuant
to this plan.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation of our Chief Executive Officer and each of our four other most
highly compensated executive officers (referred to as the "named executive
officers") for the years ended December 31, 2002, 2001 and 2000.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------------------
----------------------------------- NUMBER OF
BONUS RESTRICTED SECURITIES
NAME AND PRINCIPAL ------------------------ STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY CURRENT(1) DEFERRED(2) AWARDS(3) OPTIONS COMPENSATION(4)
------------------ ---- -------- ---------- ----------- ---------- ---------- ---------------
David A. Trice.............. 2002 $272,500 $385,000 $165,000 $253,350 40,000 $22,070
President and Chief 2001 256,667 285,000 190,000 288,900 20,000 20,803
Executive Officer 2000 238,333 468,750 156,250 306,250 30,000 21,029
David F. Schaible........... 2002 208,333 297,500 127,500 337,800 25,000 16,937
Vice
President -- Acquisitions.. 2001 197,500 225,000 150,000 288,900 10,000 16,070
and Development 2000 175,750 356,250 118,750 153,125 20,000 18,004
Terry W. Rathert............ 2002 198,333 297,500 127,500 337,800 25,000 13,270
Vice President, Chief 2001 188,333 195,000 130,000 192,600 10,000 15,337
Financial Officer 2000 178,667 300,000 100,000 153,125 20,000 15,160
and Secretary
Elliott Pew................. 2002 189,167 280,000 120,000 -- 20,000 15,403
Vice
President -- Exploration 2001 182,667 144,000 96,000 288,900 10,000 14,883
2000 169,500 326,250 108,750 153,125 20,000 15,432
William D. Schneider........ 2002 175,167 157,500 67,500 -- 15,000 14,283
Vice President -- 2001 170,000 144,000 96,000 192,600 7,500 13,870
International 2000 162,500 285,000 95,000 153,125 20,000 13,270
---------------
(1) Reflects current cash incentive compensation awards pursuant to our 1993
Incentive Compensation Plan paid in February 2003, 2002 and 2001 based upon
performance in 2002, 2001 and 2000, respectively. See "-- Compensation
Committee Report on Executive Compensation -- Incentive Compensation Plan."
(2) Reflects deferred incentive compensation awards granted in February 2003,
2002 and 2001 pursuant to our 1993 Incentive Compensation Plan based upon
performance in 2002, 2001 and 2000, respectively. Deferred awards are paid
in four equal annual installments. Pursuant to our 1993 Incentive
Compensation Plan, a recipient of a deferred award has the option for 30
days following the date of grant to elect to have all or a portion of such
award paid in shares of our common stock. See "-- Compensation Committee
Report on Executive Compensation -- Incentive Compensation Plan."
(3) The 2000 restricted stock awards were made pursuant to our 1998 Omnibus
Stock Plan and the 2001 restricted stock awards and the 2002 restricted
stock awards were made pursuant to our 2000 Omnibus Stock Plan. The dollar
value of the awards was determined by multiplying the closing price
7
of our common stock on the NYSE on the date of grant by the number of
restricted shares granted to the executive officer. At December 31, 2002,
Mr. Trice held 23,500 restricted shares with a value of $847,175 (based on
the closing price of our common stock on the NYSE on December 31, 2002 of
$36.05), Mr. Schaible held 20,300 restricted shares with a value of
$731,815, Mr. Rathert held 18,300 restricted shares with a value of
$659,715, Mr. Pew held 14,000 restricted shares with a value of $504,700 and
Mr. Schneider held 8,300 restricted shares with a value of $299,215. To the
extent declared and paid, dividends will be paid on restricted shares.
Restricted stock awards vest on the ninth anniversary of the date of grant.
The awards may, however, vest earlier, at a rate of 20% per year, if certain
annual performance targets are achieved. The performance targets for 2002,
2001 and 2000 were met. See "-- Compensation Committee Report on Executive
Compensation -- Executive Compensation -- Restricted Stock Awards."
(4) Reflects amounts contributed or accrued by us under our 401(k) Plan and our
Deferred Compensation Plan (see "-- Compensation Committee Report on
Executive Compensation -- Deferred Compensation Plan" ) and premiums paid by
us of $270 per year with respect to term life insurance for the benefit of
each named executive officer.
STOCK OPTIONS GRANTED IN 2002
The following table contains information concerning stock options granted
to the named executive officers in 2002.
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS EXERCISE OR OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO BASE PRICE FOR OPTION TERMS(3)
OPTIONS EMPLOYEES IN PER EXPIRATION ---------------------------
NAME GRANTED(1) 2002 SHARE(2) DATE 5% 10%
---- ---------- ------------- ----------- ---------- ----------- -------------
David A. Trice.......... 20,000 1.87% $35.68 11/26/2012 $448,779 $1,137,295
20,000 1.87 33.73 02/07/2012 424,252 1,075,139
David F. Schaible....... 10,000 0.94 35.68 11/26/2012 224,390 568,647
15,000 1.41 33.73 02/07/2012 318,189 806,354
Terry W. Rathert........ 10,000 0.94 35.68 11/26/2012 224,390 568,647
15,000 1.41 33.73 02/07/2012 318,189 806,354
Elliott Pew............. 10,000 0.94 35.68 11/26/2012 224,390 568,647
10,000 0.94 33.73 02/07/2012 212,126 537,569
William D. Schneider.... 5,000 0.47 35.68 11/26/2012 112,195 284,324
10,000 0.94 33.73 02/07/2012 212,126 537,569
---------------
(1) The options expire 10 years from the date of grant. Twenty percent of the
options will vest on the first and each succeeding anniversary of the date
of grant. The options were granted pursuant to our 2000 Omnibus Stock Plan.
(2) The exercise price of the options is equal to the average of the high and
low sales price of our common stock on the NYSE on the date of grant.
(3) Calculated based upon the indicated rates of appreciation, compounded
annually, from the date of grant to the end of each option term. Actual
gains, if any, on stock option exercises and common stock holdings are
dependent upon the future performance of our common stock and overall market
conditions. There can be no assurance that the amounts reflected in this
table will be achieved. The calculation does not take into account the
effects, if any, of the terms and conditions of the options, including
termination of options upon employment termination, restrictions on transfer
and forfeiture prior to vesting.
8
STOCK OPTION EXERCISES AND YEAR-END VALUES
The following table contains certain information with respect to the named
executive officers concerning stock options exercised during 2002 and the value
of unexercised options at December 31, 2002.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 2002 DECEMBER 31, 2002(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
David A. Trice.......... -- $ -- 164,330 100,670 $2,341,196 $608,054
David F. Schaible....... 13,750 441,321 105,580 65,670 2,251,159 498,054
Terry W. Rathert........ 20,000 629,730 109,330 65,670 2,371,346 498,054
Elliott Pew............. -- -- 92,300 71,700 1,360,500 625,391
William D. Schneider.... 28,000 881,980 54,650 45,350 858,887 317,289
---------------
(1) The value realized upon the exercise of a stock option is equal to the
difference between the closing price of our common stock on the NYSE on the
date of exercise and the exercise price of the stock option multiplied by
the number of shares acquired.
(2) The value of each unexercised in-the-money stock option is equal to the
difference between the closing price of our common stock on the NYSE on
December 31, 2002 of $36.05 per share and the exercise price of the stock
option.
EQUITY COMPENSATION PLANS
The table below provides information relating to our equity compensation
plans as of December 31, 2002.
NUMBER OF NUMBER OF SECURITIES
SECURITIES TO BE REMAINING AVAILABLE
ISSUED UPON FOR FUTURE ISSUANCE
EXERCISE OF WEIGHTED AVERAGE UNDER COMPENSATION
OUTSTANDING EXERCISE PRICE OF PLANS (EXCLUDING)
OPTIONS, WARRANTS OUTSTANDING OPTIONS, SECURITIES REFLECTED
PLAN CATEGORY AND RIGHTS WARRANTS AND RIGHTS IN FIRST COLUMN
------------- ----------------- -------------------- --------------------
Equity compensation plans approved
by our stockholders............. 3,873,090 $28.48 1,931,184
Equity compensation plans not
approved by our stockholders.... N/A N/A N/A
--------- ------ ---------
Total............................. 3,873,090 $28.48 1,931,184
========= ====== =========
All of our equity compensation plans have been approved by our
stockholders.
EMPLOYMENT AGREEMENT
Contemporaneously with Joe B. Foster's retirement as our Chief Executive
Officer on January 31, 2000, Mr. Foster entered into an employment agreement
with us providing for Mr. Foster to be a non-officer employee of our company.
The employment term under the agreement expired on February 15, 2003. Pursuant
to the agreement, Mr. Foster was entitled to an annual base salary of $225,000
and was eligible to participate in all benefit plans of the Company available to
similarly situated employees. Mr. Foster is entitled to severance through
January 30, 2005 at a rate of $200,000 per year pursuant to the agreement.
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Duncan, Newman, Ricks and Hendrix and Mmes. Huffington and Farley
served during all or part of 2002 on the Compensation Committee of our Board of
Directors. There were no "interlocks" among any of the members of the
Compensation Committee and any of our executive officers.
Prior to our acquisition of Lariat Petroleum in January 2001, Warburg,
Pincus Ventures, L.P. (WPV) owned approximately 88% of the outstanding capital
stock of Lariat on a fully diluted basis. In the acquisition, WPV received cash
and 1,864,735 shares of our common stock for its Lariat stock. In connection
with the acquisition, we entered into a registration rights agreement with the
former stockholders of Lariat that received our common stock in the acquisition,
including WPV. Pursuant to this agreement, we filed a shelf registration
statement under the Securities Act to register the reoffer and resale of these
shares of common stock. We are required to maintain the effectiveness of the
registration statement for the shorter of two years and the date upon which all
of the shares covered by the registration statement have been sold. In addition,
we agreed to provide customary indemnification and contribution for the benefit
of the other parties to the registration rights agreement, including WPV.
The sole general partner of WPV is Warburg, Pincus & Co. (WP & Co.).
Warburg Pincus LLC (WP LLC) manages WPV. Mr. Newman is a general partner of WP &
Co and a Vice Chairman, Managing Director and member of WP LLC.
Three private equity funds (the WP funds) managed by WP LLC held all of the
outstanding preferred stock of EEX Corporation prior to our acquisition of EEX
and received an aggregate of 4,700,000 shares of our common stock in exchange
for their EEX preferred stock in the acquisition. Concurrently with the
execution of the merger agreement to acquire EEX, we entered into a registration
rights agreement and a voting agreement with the WP funds. Pursuant to the
registration rights agreement, we filed a shelf registration statement under the
Securities Act to register the reoffer and resale of the shares of our common
stock received by the WP funds in the acquisition. We are required to maintain
the effectiveness of the registration statement until all of the shares of our
common stock received by the WP funds in the acquisition have been sold or until
such time as such shares are eligible for resale under Rule 144(k) under the
Securities Act. In addition, if we propose to file a registration statement or a
prospectus supplement to an already effective shelf registration statement with
respect to an underwritten public offering of our common stock, the WP funds
have the right to include their shares of our common stock in the registration,
subject to certain limitations. We also agreed to provide customary
indemnification and contribution for the benefit of the WP funds. Pursuant to
the voting agreement, we paid the WP funds $62,500, representing 50% of the
filing fee paid by the WP funds in connection with antitrust filings they made
in connection with the acquisition.
WP & Co is the sole general partner of the WP funds and Mr. Newman was a
director of EEX prior to its acquisition. Individually, Mr. Newman received
3,250 shares of our common stock in exchange for 56,992 shares of EEX common
stock he held prior to the acquisition.
Ms. Huffington is a principal owner of Huffco International L.L.C. and
David A. Trice, our President and Chief Executive Officer, is a minority owner
of Huffco. In May 1997, prior to Ms. Huffington and Mr. Trice becoming
affiliated with us, we acquired from Huffco an entity now known as Newfield
China, LDC, the owner of a 35% interest (subject to a 51% reversionary interest
held by the Chinese government) in a production sharing contract area, referred
to as "Block 05/36," in the Bohai Bay, offshore China. Huffco retained preferred
shares of Newfield China that provide for an aggregate dividend equal to 10% of
the excess of proceeds received by Newfield China from the sale of oil, gas and
other minerals over all costs incurred with respect to exploration and
production in Block 05/36, plus the cash purchase price we paid Huffco for
Newfield China ($6.2 million). At December 31, 2002, Newfield China had
approximately $36 million in unrecovered costs, no reserves and no revenue and,
as a result, no dividends have been paid to date on its preferred shares.
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
David A. Trice, President and Chief Executive Officer of the Company, is a
minority owner of Huffco. See "-- Compensation Committee Interlocks and Insider
Participation."
10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors and
persons who own more than 10% of our common stock to file reports of ownership
and changes in ownership with the SEC. These persons are required by SEC
regulations to furnish us with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such reports received by us and
representations from certain reporting persons that they have complied with the
relevant filing requirements, we believe that all such filing requirements were
complied with during the year ended December 31, 2002 except as follows: On
November 26, 2002, David A. Trice, our Chief Executive Officer, was granted an
option to purchase 20,000 shares of our common stock; David F. Schaible, our
Vice President -- Acquisitions and Development, Terry W. Rathert, our Vice
President and Chief Financial Officer, and Elliott Pew, our Vice
President -- Exploration, were each granted an option to purchase 10,000 shares
of our common stock; and William D. Schneider, our Vice
President -- International, was granted an option to purchase 5,000 shares of
our common stock. Each of these grants should have been reported on a "Form 4"
filing with the SEC no later than November 28, 2002 but were filed late on
January 17, 2003.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee oversees the administration of compensation
programs applicable to all employees of Newfield, including its executive
officers. Executive compensation is reviewed at least annually by the Committee.
The Compensation Committee seeks to encourage growth in Newfield's oil and
gas reserves, earnings and cash flow and to enhance stockholder value through
the creation and maintenance of compensation opportunities that attract and
retain committed, highly qualified personnel. To achieve those goals, the
Committee believes that the compensation of all employees, including executive
officers, should include the following components:
- a base salary that is competitive with compensation offered by other
similar oil and gas exploration and production enterprises;
- annual incentive compensation, based on company performance and
profitability, to reward achievement of company objectives, individual
responsibility and productivity, high quality work and impact on company
results;
- the opportunity to purchase common stock at a discount of at least 15%
through the Employee Stock Purchase Plan and the provision of other
equity incentives as motivators for all employees and to better align the
interests of employees and stockholders; and
- case specific compensation plans to accommodate individual circumstances
or nonrecurring situations as required.
A substantial portion of the compensation of Newfield's executive officers
and its employees in general is provided through Newfield's incentive
compensation plan and grants of stock options and restricted stock. Newfield
also encourages executive officers and other highly compensated employees to
save for retirement through its Deferred Compensation Plan.
INCENTIVE COMPENSATION PLAN. The 1993 Incentive Compensation Plan provided
for the creation each calendar year of an award pool that, in general, was equal
to the revenues that would be attributable to a 1% overriding royalty interest
on acquired producing properties and a 2% overriding royalty interest on
exploration properties, bearing on both the interest of Newfield and certain
investors that participated in Newfield's activities in such properties and
proportionately reduced to the interest of Newfield and such investors. If, for
a particular year, the portion of the pool that related to Newfield's interests
was in excess of 5% of Newfield's adjusted net income (as defined in the plan)
for that year, such excess could not be awarded to employees. Awards could
consist of both a current and deferred amount. The deferred portion of awards
varied from year to year depending on the size of award pool, overall
performance and other factors. Eligible employees could elect for all or a
portion of deferred awards to be paid in common stock instead of cash. In such
case, the number of shares of common stock to be awarded was determined by
11
using the fair market value of the common stock on the date of the award.
Deferred Awards are paid in four annual installments, each installment
consisting of 25% of the deferred award, plus interest on awards paid in cash.
Payment of deferred awards generally is conditioned on continued employment -- a
significant retention tool.
Effective January 1, 2003, Newfield's Board of Directors terminated the
1993 Incentive Compensation Plan and adopted the 2003 Incentive Compensation
Plan. The 2003 plan is very similar to the old plan. Under the new plan, the
incentive pool is generally equal to 5% of Newfield's adjusted net income (as
defined in the plan) plus the revenues attributable to an overriding royalty
interest bearing on the interest of investors as described above. For the past
six years, the portion of the pool generated by the phantom overriding royalty
interest bearing on Newfield's interest had been limited by the cap of 5% of
Newfield's adjusted net income. The new plan also eliminates the option to elect
to have all or a portion of a deferred award to be paid in common stock instead
of cash. This option was infrequently used by employees. The primary reason for
terminating the old plan and adopting the new plan is to eliminate the
administrative burden of accounting for the phantom overriding royalty interest
bearing on Newfield's interests and the administrative burden associated with
the election to receive stock in lieu of cash with respect to deferred awards.
DEFERRED COMPENSATION PLAN. Newfield's highly compensated employee
Deferred Compensation Plan allows an eligible employee to defer a portion of his
or her salary or bonus on an annual basis. Newfield matches 100% of an
employee's deferral up to 8% of the employee's salary, subject to limitations
imposed by the plan. Newfield's contribution with respect to any particular
employee is reduced to the extent that Newfield made contributions to the 401(k)
Plan on behalf of that employee.
TAX DEDUCTIBILITY CONSIDERATIONS. Section 162(m) of the Internal Revenue
Code generally disallows a tax deduction to a public company for compensation
paid to its chief executive officer and four other most highly compensated
executive officers if the compensation of any these officers exceeds $1 million
in a particular year. Qualifying performance-based compensation is not subject
to the deduction limit if certain requirements are met.
The Committee considers its primary goal to be the design of compensation
strategies that further the best interests of Newfield and its stockholders. To
the extent that they are not inconsistent with that goal, the Committee will
attempt where practical to use compensation policies and programs that preserve
the deductibility of compensation expense. Stock options granted under
Newfield's stock option plans are designed to qualify as performance-based
compensation. However, restricted stock awards and grants under Newfield's 1993
and 2003 Incentive Compensation Plans do not qualify as performance-based
compensation for purposes of Section 162(m).
EXECUTIVE COMPENSATION. Specific actions taken by the Compensation
Committee regarding executive compensation are summarized below.
Base Salary. The Compensation Committee evaluated peer group information
in setting base salary levels. Annual salary adjustments for Newfield's
executive group are based on general levels of market salary increases, cost of
living adjustments, individual performance and Newfield's overall financial and
operating results, without any specific relative weight assigned to any of these
factors.
Incentive Compensation Awards. Awards granted under the 1993 Incentive
Compensation Plan to the named executive officers in February 2003 for the 2002
performance period are presented under "Bonus" in the Summary Compensation
Table. The allocation of the available pool among employees was based upon an
employee's position and level of responsibility at Newfield and an employee's
impact on 2002 results (weighted approximately 40%), overall value to Newfield
(e.g., leadership, consistency over a number of years) (weighted approximately
35%) and quality of performance (weighted approximately 25%). The Compensation
Committee established awards for each of the executive officers after hearing
the recommendations of Newfield's Chief Executive Officer. Based on the
recommendation of Newfield's Chief Executive Officer, 30% of the grants were in
the form of deferred awards.
Stock Option Awards. In February 2002, Each of Messrs. Schaible and
Rathert was granted an option to purchase 15,000 shares of common stock and each
of Messrs. Pew and Schneider was granted an option to purchase 10,000 shares of
common stock. These awards are intended to provide these executive
12
officers with further incentive with respect to Newfield's future performance,
to further align their interests with those of Newfield's stockholders and to
reward them for their contribution to Newfield's performance in 2001.
In November 2002, each of Messrs. Schaible, Rathert and Pew was granted an
option to purchase 10,000 shares of common stock and Mr. Schneider was granted
an option to purchase 5,000 shares of common stock. These awards were made upon
completion of Newfield's acquisition of EEX Corporation -- the most significant
event of 2002. The awards are intended to help ensure that Newfield will retain
the services of its highly valued employees, to provide further incentive and to
reward the recipients for their past performance.
Restricted Stock Awards. In February 2002, the Compensation Committee
awarded 10,000 restricted shares to each of Messrs. Schaible and Rathert
pursuant to the 2000 Omnibus Plan. The value of these shares and the restricted
shares awarded to Mr. Trice described below, on the date of their award, is
reflected under "Long Term Compensation Awards" in the Summary Compensation
Table. The restricted shares vest on the ninth anniversary of the date of grant.
However, the restricted shares will vest earlier, at a rate of 20% per year,
upon the achievement of certain annual performance targets (either (i) 10% or
greater rate of return on average stockholders' equity or (ii) the addition of
proved reserves during the performance year at least equal to production for the
year). The awards were granted to these executive officers to provide them with
further incentive with respect to Newfield's future performance, to further
align their interests with those of Newfield's stockholders and to reward them
for their contribution to Newfield's performance in 2002.
CHIEF EXECUTIVE OFFICER COMPENSATION. As described above, Newfield's
executive compensation philosophy, including the compensation of its Chief
Executive Officer, is a competitive base salary and incentive compensation based
upon Newfield's performance. Specific actions taken by the Compensation
Committee regarding Mr. Trice's compensation for the 2002 performance year are
summarized below.
Base Salary. Mr. Trice's annual base salary increase of $15,833 primarily
represented a cost of living adjustment.
Incentive Compensation Plan. In February 2003, Mr. Trice received a
$385,000 current award and a $165,000 deferred award for the 2002 performance
period pursuant to the 1993 Incentive Compensation Plan. These awards were based
on Mr. Trice's level of responsibility, his relative contribution to Newfield's
performance in 2002, the quality of his performance and his value to Newfield.
Stock Plans. In February 2002, Mr. Trice was granted an option to acquire
20,000 shares of common stock and awarded 7,500 restricted shares pursuant to
the 2000 Omnibus Plan. These actions were taken to provide him with further
incentive with respect to Newfield's future performance, to further align his
interests with those of Newfield's stockholders and to reward him for his
contribution to Newfield's performance in 2001.
In November 2002, Mr. Trice was granted an option to acquire 20,000 shares
of common stock pursuant to the 2000 Omnibus Plan. This award was made upon
completion of Newfield's acquisition of EEX Corporation -- the most significant
event of 2002. The award is intended to serve as a retention device, to provide
further incentive and to reward Mr. Trice for his past performance.
This report is submitted on behalf of the Compensation Committee.
Howard H. Newman, Chairman
Charles W. Duncan, Jr.
Thomas G. Ricks
Terry Huffington
Dennis R. Hendrix
Claire S. Farley
13
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
As required by applicable rules of the SEC, the performance graph shown
below was prepared based upon the following assumptions:
- $100 was invested in our common stock, the S&P 500, our "old peer group"
and our "new peer group" on December 31, 1997 at the closing price on
such date;
- investment in each of our peer groups is weighted based on the stock
market capitalization of each individual company within the peer group at
the beginning of the period; and
- dividends are reinvested on the ex-dividend dates.
OLD PEER GROUP. Our old peer group is composed of Apache Corporation, XTO
Energy Inc., Devon Energy Corporation, EOG Resources Inc., Noble Energy, Inc.,
Pogo Producing Company, Seagull Energy Corporation and Vintage Petroleum, Inc.
Seagull is included in the old peer group only until March 1999, when it was
acquired by Ocean Energy Inc. For purposes of the Stockholder Return Performance
Presentation, the Seagull investment was allocated pro rata based on investment
value among the remainder of the old peer group companies at the time of its
acquisition.
NEW PEER GROUP. Our new peer group is composed of Cabot Oil and Gas
Corporation, Chesapeake Energy Corporation, EOG Resources Inc., Forest Oil
Corporation, Noble Energy, Inc., Pioneer Natural Resources Company, Pogo
Producing Company, Stone Energy Corporation, The Houston Exploration Company and
XTO Energy Inc. With the exception of two peer group companies that fell out of
the group because they were acquired (Seagull Energy and The Louisiana Land &
Exploration Company), we have used the same peer group since 1994. Some of the
members of our old peer group have become major independents. Other members'
strategies and the location of their reserves are now significantly different
than ours. We believe our new peer group more accurately reflects our industry
peers based on market capitalization and business focus.
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------------------
12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
--------------------------------------------------------------------------------------
Newfield
Exploration $100.00 $ 89.53 $114.76 $203.52 $152.34 $154.65
New Peer Group $100.00 $ 70.35 $ 78.98 $207.98 $167.86 $195.24
Old Peer Group $100.00 $ 71.97 $ 88.99 $211.59 $158.63 $184.57
S&P 500 Index $100.00 $128.06 $155.00 $140.89 $124.11 $ 96.22
14
AUDIT COMMITTEE REPORT
The Audit Committee consists of the five directors whose names appear
below. Each member of the Audit Committee is "independent" as defined in
Sections 303.01(B)(2)(a) and 303.01(B)(3) of the NYSE's listing standards. The
primary purpose of the Audit Committee is to assist the Board of Directors in
monitoring:
- the integrity of Newfield's financial reporting process and systems of
internal controls regarding finance, accounting and legal and regulatory
compliance; and
- the independence and performance of Newfield's independent accountants
and internal audit function.
Its specific responsibilities are set forth in its charter, which is attached as
Appendix A to Newfield's 2001 proxy statement.
The Audit Committee has reviewed and discussed with Newfield's management
and PricewaterhouseCoopers LLP, Newfield's independent accountants, the audited
financial statements of Newfield contained in its Annual Report on Form 10-K for
the year ended December 31, 2002.
The Audit Committee has also discussed with Newfield's independent
accountant the matters required to be discussed pursuant to SAS 61, 89 and 90,
"Codification of Statements on Auditing Standards, Communication with Audit
Committees." The Audit Committee has received and reviewed the written
disclosures and the letter from PricewaterhouseCoopers LLP required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," and has discussed with PricewaterhouseCoopers LLP such
independent accountants' independence. The Audit Committee also has considered
whether the provision of non-audit services to Newfield by
PricewaterhouseCoopers LLP is compatible with maintaining their independence.
Based on the review and discussion referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in Newfield's Annual Report on Form 10-K for the year ended December
31, 2002 to be filed with the SEC.
This report is submitted on behalf of the Audit Committee.
Thomas G. Ricks, Chairman
Philip J. Burguieres
Terry Huffington
C. E. Shultz
Claire S. Farley
15
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Aggregate fees for professional services rendered to us by
PricewaterhouseCoopers LLP for the years ended December 31, 2002 and 2001 were:
CATEGORY OF SERVICE 2001 2002
------------------- -------- ----------
Audit....................................................... $332,825 $ 698,646
Audit related............................................... 97,528 263,161
Tax......................................................... 128,772 221,602
All other................................................... -- --
-------- ----------
Total..................................................... $559,125 $1,183,409
======== ==========
The audit fees for the year ended December 31, 2002 were for professional
services rendered in connection with the audit of our 2002 consolidated
financial statements, including audit related procedures performed in connection
with our acquisition of EEX Corporation, and issuance of comfort letters,
consents and assistance with review of various documents filed with the SEC. The
audit fees for the year ended December 31, 2001 were for professional services
rendered in connection with the audit of our 2001 consolidated financial
statements, including audit related procedures performed in connection with our
Mid-Continent acquisition and issuance of comfort letters, consents and
assistance with review of various documents filed with the SEC.
Audit related fees for the year ended December 31, 2002 were for assurance
and related services related to the audit of our 401(k) plan, due diligence
related to our acquisition of EEX Corporation, internal control reviews and
consultations concerning financial accounting and reporting standards. The audit
related fees for the year ended December 31, 2001 were for assurance and related
services related to internal control reviews and consultations concerning
financial accounting and reporting standards.
Tax fees for the year ended December 31, 2002 were for services related to
tax compliance, including the preparation of tax returns, tax due diligence
related to our acquisition of EEX Corporation and tax planning advice. Tax fees
for the year ended December 31, 2001 were for services related to tax
compliance, including the preparation of tax returns and tax planning advice.
PricewaterhouseCoopers did not provide us any financial information systems
design or implementation services during 2002 or 2001.
ITEM 2
RATIFICATION OF APPOINTMENT OF AUDITORS
Pursuant to the recommendation of the Audit Committee of our Board of
Directors, our Board appointed PricewaterhouseCoopers LLP, independent public
accountants, to audit our consolidated financial statements for the year ending
December 31, 2003. We are advised that no member of PricewaterhouseCoopers has
any direct or material indirect financial interest in our company or, during the
past three years, has had any connection with us in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.
If the appointment is not ratified, our Board will consider the appointment
of other independent accountants. A representative of PricewaterhouseCoopers is
expected to be present at the meeting, will be offered the opportunity to make a
statement if the representative desires to do so and will be available to
respond to appropriate questions.
16
OTHER BUSINESS
Our Board of Directors does not know of any other matters that are to be
presented for action at the meeting. However, if any other matters properly come
before the meeting or any adjournment of the meeting, it is intended that
proxies will be voted in accordance with the judgment of the persons holding the
proxies.
STOCKHOLDER PROPOSALS
Any stockholder who desires to submit a proposal for inclusion in the proxy
material for presentation at our 2004 Annual Meeting of Stockholders must
forward the proposal to our Secretary, at the address indicated on the cover
page of this proxy statement, so that our Secretary receives it no later than
November 30, 2003. Any notice of a proposal to be considered at our 2004 Annual
Meeting of Stockholders should also be submitted to our Secretary. Any such
notice will be considered untimely if not received by our Secretary on or before
February 15, 2004.
By order of the Board of Directors,
/s/ TERRY W. RATHERT
TERRY W. RATHERT
Secretary
March 29, 2003
17
ANNUAL MEETING OF STOCKHOLDERS OF
NEWFIELD EXPLORATION COMPANY
May 1, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible
o Please detach and mail in the envelope provided o
------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE ITEMS:
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 1. ELECTION OF DIRECTORS Item 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT [ ] [ ] [ ]
ACCOUNTANTS
NOMINEES
[ ] FOR ALL NOMINEES [ ] Joe B. Foster TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE HEREOF.
[ ] WITHHOLD AUTHORITY [ ] David A. Trice
FOR ALL NOMINEES
[ ] David F. Schaible
[ ] FOR ALL EXCEPT
(See instructions below) [ ] Charles W. Duncan, Jr.
[ ] Howard H. Newman
[ ] Thomas G. Ricks
[ ] Dennis R. Hendrix
[ ] C. E. (Chuck) Shultz
[ ] Phillip J. Burguieres
[ ] Claire S. Farley
[ ] John Randolph Kemp III
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL EXCEPT"
and fill in the circle next to each nominee
with respect to which you wish to WITHHOLD
YOUR VOTE, as shown here: o
---------------------------------------------------------
---------------------------------------------------------
To change the address on your account, please check the
box at right and indicate your new address in the address
space above. Please note that changes to the registered
name(s) on the account may not be submitted via this [ ] I plan to attend meeting. [ ]
method.
---------------------------------------------------------
Signature of Stockholder Date: Signature of Stockholder Date:
-------------------------- ---------- ----------------------- -----------
NOTE: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
NEWFIELD EXPLORATION COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 1, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NEWFIELD
EXPLORATION COMPANY
PROXY
The undersigned hereby appoints David A. Trice, Terry W. Rathert and C.
William Austin, and each of them, proxies for the undersigned with full power
of substitution, to vote all shares of Newfield Exploration Company Common
Stock which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Newfield Exploration Company to be held in Houston, Texas, on
Thursday, May 1, 2003 at 11:00 A.M., or at any adjournment thereof, upon the
matters set forth on the reverse side and described in the accompanying Proxy
Statement and upon such other business as may properly come before the meeting
or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY ITEM. IF
YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
PLEASE SIGN THE REVERSE SIDE, NO BOXES NEED TO BE CHECKED.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
--------------------------------------------------------------------------------
COMMENTS:
--------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS OF
NEWFIELD EXPLORATION COMPANY
May 1, 2003
---------------------------
PROXY VOTING INSTRUCTIONS
---------------------------
MAIL - Date, sign and mail your proxy card in the envelope
provided as soon as possible. If the envelope is missing,
please address your completed proxy card to Newfield
Exploration Company, c/o American Stock Transfer & Trust ------------------------------- ---------------------
Company, 59 Maiden Lane, New York, NY 10273-0923. COMPANY NUMBER
------------------------------- ---------------------
-OR- ACCOUNT NUMBER
------------------------------- ---------------------
TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776- CONTROL NUMBER
9437) from any touch-tone telephone and follow the instruc- ------------------------------- ---------------------
tions. Have your control number and proxy card available
when you call. Telephone voting is accessible 24 hours a
day, seven days a week, UNTIL 11:59 p.m., Eastern Daylight
Time, on April 30, 2003.
-OR-
INTERNET - Access "www.voteproxy.com" and follow the
on-screen instructions. Have your control number available
when you access the web page. The website is accessible
24 hours a day, seven days a week, UNTIL 11:59 p.m.,
Eastern Daylight Time, on April 30, 2003.
o Please detach and mail in the envelope provided IF you are not voting via telephone or the Internet. o
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE ITEMS:
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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FOR AGAINST ABSTAIN
Item 1. The Board of Directors has nominated the Item 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT [ ] [ ] [ ]
persons listed below to serve as directors ACCOUNTANTS
until 2004.
NOMINEES
[ ] FOR ALL NOMINEES [ ] Joe B. Foster TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE HEREOF.
[ ] WITHHOLD AUTHORITY [ ] David A. Trice
FOR ALL NOMINEES
[ ] David F. Schaible
[ ] FOR ALL EXCEPT
(See instructions below) [ ] Charles W. Duncan, Jr.
[ ] Howard H. Newman
[ ] Thomas G. Ricks
[ ] Dennis R. Hendrix
[ ] C. E. (Chuck) Shultz
[ ] Phillip J. Burguieres
[ ] Claire S. Farley
[ ] John Randolph Kemp III
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL EXCEPT"
and fill in the circle next to each nominee
with respect to which you wish to WITHHOLD
YOUR VOTE, as shown here: o
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To change the address on your account, please check the
box at right and indicate your new address in the address
space above. Please note that changes to the registered
name(s) on the account may not be submitted via this [ ] I plan to attend meeting. [ ]
method.
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Signature of Stockholder Date: Signature of Stockholder Date:
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NOTE: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.