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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
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 Rule 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)
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[NEWFIELD EXPLORATION COMPANY LOGO]
NEWFIELD EXPLORATION COMPANY
Houston, Texas
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 3, 2001
To the Stockholders:
The 2001 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 3, 2001, in the Grand Ballroom of the Hotel Sofitel, 425
N. Sam Houston Parkway E., Houston, Texas, for the following purposes:
(1) to elect 11 directors to serve until the 2002 Annual Meeting of
Stockholders;
(2) to ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for the fiscal year ending
December 31, 2001; 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 6, 2001, 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. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, WE ASK THAT YOU SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
By order of the Board of Directors,
/s/ TERRY W. RATHERT
Terry W. Rathert
Secretary
March 21, 2001
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[NEWFIELD EXPLORATION COMPANY LOGO]
NEWFIELD EXPLORATION COMPANY
363 N. SAM HOUSTON PKWY E.
SUITE 2020
HOUSTON, TEXAS 77060
(281) 847-6000
WWW.NEWFLD.COM
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PROXY STATEMENT
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SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company (the "Board of Directors") for use at the Annual Meeting to be
held at 11:00 a.m., Central Daylight Time on Thursday, May 3, 2001, in the Grand
Ballroom of the Hotel Sofitel, 425 N. Sam Houston Parkway E., Houston, Texas or
at any adjournment(s) thereof. The solicitation of proxies by the Board of
Directors will be conducted primarily by mail. In addition, officers, directors
and employees of the Company may solicit proxies personally or by telephone,
telegram or other forms of wire or facsimile communication. The Company will
reimburse brokers, custodians, nominees and fiduciaries for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of common
stock of the Company ("Common Stock"). The costs of the solicitation will be
borne by the Company. This proxy statement and the form of proxy were first
mailed to stockholders of the Company on or about March 26, 2001.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy (a) by execution and submission of a
revised proxy, (b) by written notice to the Secretary of the Company or (c) by
voting in person at the Annual Meeting. In the absence of such revocation,
shares represented by the proxies will be voted at the Annual Meeting.
At the close of business on March 6, 2001, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were 44,680,331 outstanding shares of Common Stock, each share of
which is entitled to one vote. Common Stock is the only class of outstanding
securities of the Company entitled to notice of and to vote at the Annual
Meeting.
The Company's annual report to stockholders for the year ended December 31,
2000, including financial statements, is being mailed with the enclosed proxy to
all stockholders entitled to vote at the Annual Meeting. The annual report does
not constitute a part of the proxy soliciting material.
ITEM 1
ELECTION OF DIRECTORS
Eleven directors are to be elected at the Annual Meeting. The nominees for
election as directors are Joe B. Foster, David A. Trice, Randy A. Foutch,
Charles W. Duncan, Jr., Howard H. Newman, Thomas G. Ricks, C. E. (Chuck) Shultz,
Terry Huffington, Dennis R. Hendrix, Philip J. Burguieres and Claire S. Farley.
If elected, each director will serve until the Company's 2002 Annual Meeting of
Stockholders and until his or her successor shall have been elected and
qualified. Each of the nominees for director (other than Mr. Foutch and Ms.
Farley) currently serves as a director of the Company. A plurality of the votes
cast in person or by proxy by the holders of Common Stock is required to elect a
director. Accordingly, abstentions and "broker non-votes" will have no effect on
the outcome of the election assuming a quorum is present or represented by proxy
at the Annual Meeting. A broker non-vote occurs if a broker or other nominee
does not have discretionary authority and has not received instructions with
respect to a particular item. Stockholders may not cumulate their votes in the
election of directors.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual Meeting,
the persons named in the enclosed proxy will vote for the election of such other
person(s) as may be nominated by the Board of Directors.
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The following table sets forth information regarding the names, ages as of
February 28, 2001, principal occupations of the nominees, other directorships in
certain companies held by them, and the length of continuous service as a
director of the Company.
DIRECTOR
NOMINEES PRINCIPAL OCCUPATION AND DIRECTORSHIPS SINCE AGE
-------- -------------------------------------- -------- ---
Joe B. Foster........................ Employee and Chairman of the Board of the 1988 66
Company; Director, McDermott International,
Inc.
David A. Trice....................... President and Chief Executive Officer of the 2000 52
Company
Randy A. Foutch...................... Vice President - Mid-Continent of the Company * 49
and President and Chief Executive Officer of
Newfield Exploration Mid-Continent Inc.
Charles W. Duncan, Jr. .............. Chairman, Duncan Interests 1990 74
Howard H. Newman..................... Vice Chairman and Managing Director of E.M. 1990 53
Warburg, Pincus & Co., LLC; Director, ADVO,
Inc., Cox Insurance Holdings Plc., Dime
Bancorp, Inc., Eagle Family Foods Holdings,
Inc., EEX Corporation, Encore Acquisition
Company and Spinnaker Exploration Company
Thomas G. Ricks...................... President and Chief Executive Officer, The 1992 47
University of Texas Investment Management
Company; Director, DTM Corporation
C. E. (Chuck) Shultz................. Chairman and Chief Executive Officer, 1994 61
Dauntless Energy Inc. and Chairman, Canadian
Oil Sands Trust; Director, Syncrude Canada
Ltd.
Terry Huffington..................... Chairman and President of Huffco Group, Inc. 1997 46
Dennis R. Hendrix.................... Retired Chairman, PanEnergy Corp; Director, 1997 61
Duke Energy Corporation, Allied Waste
Industries, Inc. and International Power PLC
Philip J. Burguieres................. Chief Executive Officer, EMC Holdings, LLC; 1998 57
Vice Chairman, The McNair Group; Director,
Chase Bank of Texas N.A. and McDermott
International, Inc.; and Director and Chairman
Emeritus Weatherford International, Inc.
Claire S. Farley..................... Chief Executive Officer, Trade-Ranger Inc. * 42
---------------
* Not currently a director; nominated for election at the Annual Meeting
Directors of the Company are elected annually and hold office until the
next annual meeting of stockholders and until their successors are duly elected
and qualified. The Company's executive officers serve at the discretion of the
Board of Directors.
Each of the directors has been engaged in the principal occupation set
forth opposite his name for the past five years except as follows:
Mr. Foster founded the 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. He was named interim
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President, Chief Executive Officer and Chairman of the Board of Baker Hughes
Incorporated on that same day. Mr. Foster resigned from his position at Baker
Hughes in August 2000. Mr. Foster remains an employee (but not an officer) of
the Company.
Mr. Trice, one of the Company's founders, served as President, Chief
Executive Officer and a Director of the Huffco Group from 1991 to July 1997,
when he rejoined the 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. Foutch founded Lariat Petroleum, Inc. in April 1996 and served as its
Chairman of the Board, President and Chief Executive Officer. Following the
Company's acquisition of Lariat in January 2001, Mr. Foutch continued as
President and Chief Executive Officer of Lariat's successor, Newfield
Exploration Mid-Continent Inc. Mr. Foutch was elected to his position with the
Company at the time of the acquisition of Lariat.
Mr. Hendrix served PanEnergy Corp from 1990 to 1997, first as Chief
Executive Officer and later as Chairman of the Board.
Mr. Burguieres served Weatherford International Incorporated as President
and Chief Executive Officer from 1991 to 1996. From 1996 to 1998 Mr. Burguieres
served Weatherford Enterra, Inc. as Chairman of the Board. Mr. Burguieres was
named to his present position in March 1999.
Ms. Farley joined Texaco Exploration and Production Inc. as an exploration
geologist in 1981. She served Texaco in a variety of capacities, most recently,
as President of Texaco's Worldwide Exploration and New Ventures Division. Ms.
Farley left Texaco in October 1999 to serve as Chief Executive Officer of
Intelligent Diagnostics Corporation, a position she held until being named to
her present position in January 2001.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership information, unless
otherwise indicated, as of March 6, 2001, with respect to (i) each person known
by the Company to own beneficially 5% or more of its outstanding 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(2)
------------------------
NAME OF BENEFICIAL OWNER(1) SHARES PERCENT
--------------------------- ---------- --------
American Express Financial Corporation(3)................... 2,798,993 6.3%
Massachusetts Financial Services Company(4)................. 5,616,474 12.6
Joe B. Foster(5)............................................ 711,710 1.6
David A. Trice.............................................. 159,831 *
Randy A. Foutch............................................. 51,158 *
Robert W. Waldrup........................................... 155,675 *
Terry W. Rathert............................................ 181,208 *
David F. Schaible........................................... 181,803 *
Elliott Pew................................................. 85,207 *
Charles W. Duncan, Jr. ..................................... 614,295 1.4
Howard H. Newman(6)......................................... 1,929,040 4.3
Thomas G. Ricks(7).......................................... 1,302,400 2.9
C. E. Shultz................................................ 10,705 *
Terry Huffington............................................ 273,089 *
Dennis R. Hendrix........................................... 19,416 *
Philip J. Burguieres........................................ 4,147 *
Claire S. Farley............................................ -- *
Executive officers, directors and director nominees as a
group (consisting of 19 persons)(8)....................... 5,800,790 12.8
---------------
* Less than 1%
(1) The address of American Express Financial Corporation ("AEFC") is 200 AXP
Financial Center, Minneapolis, MN 55474. The address of Massachusetts
Financial Services Company ("MFS") is 500 Boylston Street, Boston, MA 02116.
(2) Under the regulations of the Securities and Exchange Commission (the "SEC"),
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 such
shares, whether or not he or she has any pecuniary interest in such shares,
or if he or she has the right to acquire the power to vote or dispose of
such 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, Waldrup, Rathert, Schaible and
Pew include 307,700; 71,000; 31,000; 131,000; 106,000; and 43,000 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 758,600 shares that may
be acquired by such persons within 60 days through the exercise of stock
options.
(3) Based solely on the Schedule 13G filed with the SEC on February 2, 2001 by
AEFC. AEFC, a registered investment advisor, is the beneficial owner of the
indicated shares as a result of it being a parent holding company and acting
as an investment advisor to investment companies and others. AEFC has shared
dispositive power with respect to all of such shares and shared voting power
with respect to 1,461,097 of such shares.
(4) Based solely on the Schedule 13G/A filed with the SEC on February 12, 2001
by MFS. MFS has sole dispositive power with respect to all of the indicated
shares and sole voting power with respect to 5,287,244 of such shares.
(5) Includes 39,800 shares held by Mr. Foster as trustee for the benefit of
charitable trusts and 15,000 shares held by a charitable organization that
Mr. Foster serves as president and a director. Mr. Foster disclaims any
pecuniary interest with respect to such shares.
(6) Warburg, Pincus Ventures, L.P., a Delaware limited partnership ("WPV"), is
the owner of 1,864,735 of the shares indicated as beneficially owned by Mr.
Newman and are included because of his affiliation with WPV. The sole
general partner of WPV is Warburg, Pincus & Co., a New York general
partnership ("WP & Co."). E.M. Warburg, Pincus & Co., LLC, a New York
limited liability company ("EMW LLC"), manages WPV. Mr. Newman is a managing
director and a member of EMW LLC and a general partner of WP & Co. Mr.
Newman disclaims beneficial ownership of the WPV shares within the meaning
of Rule 13d-3 under the Exchange Act.
(7) All of the shares indicated as beneficially owned by Mr. Ricks are owned
directly by The Permanent University Fund of the State of Texas or the Board
of Regents of the University of Texas System and are included because Mr.
Ricks, as President and Chief Executive Officer of the University of Texas
Investment Management Company, may be deemed to share the power to vote or
dispose of such shares. Mr. Ricks disclaims beneficial ownership of these
shares within the meaning of Rule 13d-3 under the Exchange Act.
(8) See Notes 2, 5, 6 and 7 above.
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DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held nine meetings during 2000. During 2000, each of
the directors attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
each committee of the Board of Directors on which such director served.
Standing committees of the Board of Directors include the following:
AUDIT COMMITTEE. The Audit Committee, which currently consists of Messrs.
Ricks, Shultz and Burguieres and Ms. Huffington, met four times during 2000. The
Board of Directors has adopted a written charter for the Audit Committee. A copy
of the charter is attached as Appendix A to this proxy statement. See the Audit
Committee Report included elsewhere in this proxy statement and the charter of
the Audit Committee 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 Ms. Huffington, met
four times during 2000. Its principal functions are to review and approve the
compensation of employees of the Company, including bonuses, benefit plans and
stock options, and administer the employee benefit plans of the Company. Members
of the Compensation Committee are not eligible to participate in any of the
plans or programs they administer.
COMPENSATION OF DIRECTORS
DIRECTOR FEES. Non-employee directors are paid a $20,000 annual fee. In
addition, a fee of $1,000 is paid to each non-employee director for attendance
at each meeting of the Board and for attendance at any committee meeting, as a
committee member, not held in conjunction with a meeting of the Board. A fee of
$500 is also paid to each non-employee director for participation in each
telephonic board meeting and for participation as a committee member in each
committee meeting not held in conjunction with a board meeting. The Company's
non-employee directors were paid $226,500 in the aggregate in 2000 as
compensation for serving as directors. Only non-employee directors are
compensated for serving as directors. Non-employee directors are also reimbursed
for out-of-pocket expenses incurred to attend board and committee meetings.
RESTRICTED STOCK. Pursuant to the Newfield Exploration Company 2000
Non-Employee Director Restricted Stock Plan (the "Non-Employee Director Plan")
each non-employee director who is in office immediately after an annual meeting
of stockholders receives a number of restricted shares of Common Stock
determined by dividing $30,000 by the closing sales price of the Common Stock on
the New York Stock Exchange (the "NYSE") on the date of the annual meeting
(rounded down to nearest whole share). In addition, each non-employee director
who is appointed to the Board (and not in connection with an annual meeting of
stockholders) is granted, effective on the date of appointment, a number of
restricted shares of Common Stock determined by dividing $30,000 by the closing
sales price of the Common Stock on the NYSE on the date of such 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 the Non-Employee Director Plan.
Each of Messrs. Duncan, Newman, Shultz, Hendrix and Burguieres, John C. Sawhill
(deceased) and Ms. Huffington were granted 750 restricted shares on May 4, 2000
pursuant to the Non-Employee Director Plan. In accordance with the terms of such
plan, Mr. Ricks made an irrevocable written election not to receive grants under
the plan.
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EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation of each person who served as the Chief Executive Officer of the
Company during 2000 and each of its four other most highly compensated executive
officers (collectively, the "named executive officers") for the years ended
December 31, 2000, 1999 and 1998.
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(5).................... 2000 $238,333 $468,750 $156,250 $306,250 30,000 $20,759
President and 1999 222,500 180,000 25,000 251,250 25,000 17,800
Chief Executive Officer 1998 204,167 75,000 24,000 -- 50,000 16,333
Joe B. Foster(6)..................... 2000 226,250 -- -- 30,683 -- --
Former Chief Executive 1999 240,000 220,000 60,000 -- -- 19,200
Officer and Employee 1998 238,750 95,000 -- 238,750 42,000 19,100
Robert W. Waldrup.................... 2000 197,183 300,000 100,000 153,125 20,000 16,625
Vice President - Operations 1999 190,000 150,000 40,000 -- -- 15,200
1998 187,872 75,000 -- 155,188 70,000 15,147
Terry W. Rathert..................... 2000 178,667 300,000 100,000 153,125 20,000 14,890
Vice President - Chief Financial 1999 172,000 150,000 40,000 -- -- 13,760
Officer and Secretary 1998 171,583 75,000 -- 155,188 70,000 13,727
David F. Schaible.................... 2000 175,750 356,250 118,750 153,125 20,000 17,734
Vice President - Acquisitions 1999 160,833 150,000 42,500 -- -- 12,867
and Development 1998 154,167 80,000 -- 155,188 70,000 12,333
Elliott Pew(7)....................... 2000 169,500 326,250 108,750 153,125 20,000 15,162
Vice President - Exploration....... 1999 160,833 150,000 20,000 -- -- 12,867
1998 149,138 80,000 24,000 562,500 100,000 56,367
---------------
(1) Reflects current cash incentive compensation awards pursuant to the Newfield
Employee 1993 Incentive Compensation Plan (the "Incentive Compensation
Plan") paid in February 2001, 2000, and 1999 based upon performance in 2000,
1999, and 1998, respectively. See "-- Compensation Committee Report on
Executive Compensation -- Executive Compensation -- Incentive Compensation
Plan."
(2) Reflects deferred incentive compensation awards granted in February 2001,
2000, and 1999, pursuant to the Incentive Compensation Plan based upon
performance in 2000, 1999 and 1998, respectively. Deferred awards are paid
in four equal annual installments. A recipient of a deferred award has the
option for 30 days following the date of grant to elect to have a portion of
such award paid in the form of Common Stock. See "-- Compensation Committee
Report on Executive Compensation -- Executive Compensation -- Incentive
Compensation Plan."
(3) The 1998 and 1999 restricted stock awards were made pursuant to the Newfield
Exploration Company 1995 Omnibus Stock Plan (the "1995 Omnibus Plan") and
the 2000 restricted stock awards were made pursuant to the Newfield
Exploration Company 1998 Omnibus Stock Plan (the "1998 Omnibus Plan"). The
dollar value of the awards was determined by multiplying the closing price
of the Common Stock on the NYSE on the date of grant by the number of
restricted shares granted to such executive officer. At December 31, 2000,
Mr. Foster held 22,006 restricted shares with a value of $1,042,534 (based
on the closing price of the Common Stock on the NYSE on December 31, 2000 of
$47.4375), Mr. Trice held 32,500 restricted shares with a value of
$1,539,688, Messrs. Waldrup, Rathert and Schaible each held 15,900
restricted shares with a value of $753,263 and Mr. Pew held 20,000
restricted shares with a value of $947,500. 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 2000, 1999, and 1998 were met. See
"-- Compensation Committee Report on Executive Compensation -- Executive
Compensation -- Restricted Stock Awards."
(4) Reflects amounts contributed or accrued by the Company under the Company's
401(k) Profit Sharing Plan (the "401(k) Plan") and the Company's Deferred
Compensation Plan. See "-- Compensation Committee Report on Executive
Compensation -- Executive Compensation -- Deferred Compensation Plan." With
respect to Mr. Pew in 1999, also includes a $25,000 employment incentive
payment at the time he joined the Company and a $20,000 equity purchase
incentive payment.
(5) Mr. Trice was appointed Chief Executive Officer on February 1, 2000.
(6) On January 31, 2000, Mr. Foster retired from the position of Chief Executive
Officer. He remains Chairman of the Board (a non-officer position) and an
employee of the Company, but not an officer. He does not receive any
additional compensation for serving as Chairman of the Board.
(7) Mr. Pew joined the Company on January 29, 1998.
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STOCK OPTIONS GRANTED IN 2000
The following table contains information concerning stock options granted
to the named executive officers in 2000.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL EXERCISE OR PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED BASE PRICE FOR OPTION TERMS(3)
OPTIONS TO EMPLOYEES PER EXPIRATION ----------------------
GRANTED(1) IN 2000 SHARE(2) DATE 5% 10%
---------- --------------- ----------- ---------- -------- ----------
Joe B. Foster........... -- -- -- -- -- --
David A. Trice.......... 30,000 3.63% $29.81 2/10/2010 $562,420 $1,425,284
Robert W. Waldrup....... 20,000 2.42% 29.81 2/10/2010 374,947 950,189
Terry W. Rathert........ 20,000 2.42% 29.81 2/10/2010 374,947 950,189
David F. Schaible....... 20,000 2.42% 29.81 2/10/2010 374,947 950,189
Elliott Pew............. 20,000 2.42% 29.81 2/10/2010 374,947 950,189
---------------
(1) The options expire 10 years from the date of grant. Twenty percent of such
options will vest on the first and each succeeding anniversary of the date
of grant. The options were granted pursuant to the Newfield Exploration
Company 2000 Omnibus Stock Plan (the "2000 Omnibus Plan").
(2) The exercise price of the options is equal to the average of the high and
low sales price of the 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 the 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 provisions of the option plans governing termination of
options upon employment termination, transferability or vesting.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table contains certain information with respect to the named
executive officers concerning stock options exercised during 2000 and the value
of unexercised options at December 31, 2000.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 2000 DECEMBER 31, 2000(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
Joe B. Foster............... 250,000 $7,577,194 333,300 51,200 $13,304,617 $1,228,172
David A. Trice.............. -- -- 65,000 140,000 1,655,138 3,574,750
Robert W. Waldrup........... 40,000 1,194,564 20,000 85,000 591,950 2,312,888
Terry W. Rathert............ 65,000 2,206,218 120,000 85,000 4,935,700 2,312,888
David F. Schaible........... 50,000 2,014,382 95,000 85,000 3,849,763 2,312,888
Elliott Pew................. 2,000 38,570 19,000 115,000 481,603 3,003,313
---------------
(1) The value realized upon the exercise of a stock option is equal to the
difference between the closing price of the 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 the Common Stock on the NYSE on
December 31, 2000 of $47.4375 per share and the exercise price of the stock
option.
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EMPLOYMENT AGREEMENTS
Contemporaneously with Joe B. Foster's retirement as Chief Executive
Officer of the Company on January 31, 2000, Mr. Foster and the Company entered
into an employment agreement providing for Mr. Foster to be a non-officer
employee of the Company. The employment agreement initially terminates on
February 15, 2002, but automatically extends for one additional year on each of
the first, second and third anniversaries of the initial termination date unless
either party gives at least 30 days prior notice of its election not to so
extend. Pursuant to the agreement, Mr. Foster is entitled to an annual base
salary of $225,000 and is eligible to participate in all benefit plans of the
Company available to similarly situated employees. Upon termination of the
employment agreement for any reason other than for cause, Mr. Foster will be
entitled to severance through January 30, 2005 at a rate of $200,000 per year.
In January 2001, the Company acquired Lariat Petroleum, Inc. (see
"-- Compensation Committee Interlocks and Insider Participation"). Randy A.
Foutch was Chairman of the Board, President and Chief Executive Officer of
Lariat prior to its merger into a wholly owned subsidiary of the Company.
Effective as of the date of the merger, Mr. Foutch's existing employment
agreement with Lariat was modified to provide that he would continue as
President and Chief Executive of Lariat's successor, Newfield Exploration Mid-
Continent Inc., and Mr. Foutch was appointed Vice President - Mid-Continent of
the Company. The agreement, as so modified, provides for an initial base salary
of $225,000 and the grant effective as of the date of the merger of 25,000
restricted shares and options to purchase 100,000 shares of Common Stock of the
Company pursuant to the 2000 Omnibus Plan. The term of the agreement
automatically extends each day so that the remaining term is always one year
unless either party provides notice to the other of the termination of such
automatic extension. Following such a notice, the agreement will terminate on
the one year anniversary of the date of such notice. Notwithstanding the
foregoing, either party may terminate the agreement at any time for any reason
by providing notice to the other party. If such termination is by the Company
and is for a reason other than cause, disability or material breach of the
agreement or is by Mr. Foutch and is the result of the Company's material breach
of the agreement, Mr. Foutch's office being relocated outside of Tulsa County,
Oklahoma without his consent or a change in control of the Company (as defined
in the 2000 Omnibus Plan), then the Company shall continue to pay Mr. Foutch his
then current base salary until the first anniversary of the date of such
termination or for a period of 90 days following such termination if such
termination resulted from Mr. Foutch's death.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Duncan, Newman, Ricks and Hendrix, Ms. Huffington and John C.
Sawhill (deceased) served during all or part of 2000 on the Compensation
Committee of the Board of Directors. There were no "interlocks" among any of the
members of the Compensation Committee and any of the executive officers of the
Company.
In January 2001, the Company acquired Lariat Petroleum, Inc. by merging
Lariat into Newfield Exploration Mid-Continent Inc., a wholly owned subsidiary
of the Company, pursuant to an Amended and Restated Agreement and Plan of Merger
dated as of January 19, 2001 (the "Merger Agreement"). The aggregate merger
consideration, inclusive of Lariat debt and certain other obligations, was
approximately $333 million. Part of that consideration included the issuance of
approximately 1.9 million shares of the Company's Common Stock.
WPV owned approximately 88% and Randy A. Foutch owned approximately 6% of
the outstanding capital stock of Lariat on a fully diluted basis. WPV received
cash proceeds of approximately $78.6 million and 1,864,735 shares of Common
Stock of the Company and Mr. Foutch received cash proceeds of approximately $9.6
million and 26,158 shares of Common Stock of the Company in the merger. In
addition, contemporaneously with the merger, WPV received approximately $39.1
million as repayment in full of notes payable by Lariat to WPV. Pursuant to the
Merger Agreement, the Company is entitled, subject to certain limitations, to
indemnification for certain customary matters from the former stockholders of
Lariat, including WPV and Mr. Foutch.
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In connection with the merger, the Company entered into a Registration
Rights Agreement with the former stockholders of Lariat that received Common
Stock of the Company in the merger, including WPV and Mr. Foutch. Pursuant to
such agreement, the Company filed a registration statement with the SEC to
register the reoffer and resale of such Common Stock under the Securities Act of
1933 (the "Securities Act"). The Company is 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 such registration statement have
been sold. In addition, the Company agreed to indemnify the other parties to the
Registration Rights Agreement against certain liabilities that they may incur in
connection with the reoffer and resale of their shares of Common Stock,
including liabilities arising under the Securities Act, and to contribute to
payments that they may be required to make with respect thereto.
The sole general partner of WPV is WP & Co. EMW LLC manages WPV. Mr. Newman
is a managing director and a member of EMW LLC and a general partner of WP & Co.
Mr. Hendrix is a director of Duke Energy Corporation and of Chase Bank of
Texas N.A., an affiliate of The Chase Manhattan Bank. The Company sells gas to,
and purchases transportation services from, Duke Energy Corporation, or its
subsidiaries and affiliates, in the ordinary course of business. The Company
believes that the payments that it receives for sales of such gas and the
charges and fees that it pays for such transportation services are competitive
with those of other companies. The Company maintains its revolving credit
facility with The Chase Manhattan Bank, as Agent.
Ms. Huffington is a principal owner of Huffco International L.L.C.
("Huffco") and David A. Trice, President and Chief Executive Officer of the
Company, is a minority owner of Huffco. In May 1997, prior to Ms. Huffington and
Mr. Trice becoming affiliated with the Company, the Company acquired
substantially all of the assets of Huffco. The acquired assets included all of
the outstanding common stock of Huffco China, LDC, now known as Newfield China,
LDC ("Newfield China"), the owner of an undivided 35% interest in a production
sharing contract area in Bohai Bay, offshore the People's Republic of 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, Bohai Bay, plus an allocated portion
of the cash purchase price paid by the Company to Huffco at the closing of the
Huffco Transaction. At December 31, 2000, Newfield China had approximately $19.6
million in unrecovered costs, no reserves and no revenue and, as a result, no
dividends have been paid to date on the preferred shares. Huffco also has the
right to further payments upon the occurrence of certain events. If the Company
acquires an interest in two particular blocks offshore Cote de Ivoire on or
before May 15, 2002, the Company will pay Huffco $2.6 million, subject to
certain adjustments if the Company sells such interest to a third party under
certain circumstances. Based on current facts, the Company does not anticipate
acquisition of an interest in the two blocks. In addition, if the Company
commits to a development program in the Federal Republic of Nigeria on or before
May 15, 2002, the Company will pay Huffco $1 million. The Company has not
committed to a development program nor any other project in Nigeria.
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."
In January 2001, the Company acquired Lariat Petroleum, Inc. by merging
Lariat into a wholly owned subsidiary of the Company. Randy A. Foutch was
Chairman of the Board, President and Chief Executive Officer of Lariat prior to
the merger. Effective as of the date of the merger, Mr. Foutch's existing
employment agreement with Lariat was modified (see "-- Employment Agreements")
to provide that he would continue as President and Chief Executive of Lariat's
successor, Newfield Exploration Mid-Continent Inc., and Mr. Foutch was appointed
Vice President - Mid-Continent of the Company. Mr. Foutch was a stockholder of
Lariat prior to the merger and is a party to the Merger Agreement and
Registration Rights Agreement. See "-- Compensation Committee Interlocks and
Insider Participation."
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Joe B. Foster is a director of McDermott International, Inc. and was
interim President, Chief Executive Officer and Chairman of the Board of Baker
Hughes Incorporated until August 2000. Philip J. Burguieres is a director of
McDermott, Weatherford International, Inc. and Chase Bank of Texas N.A., an
affiliate of The Chase Manhattan Bank. The Company purchases oil field goods,
equipment and services from Weatherford, McDermott and Baker Hughes, or their
respective subsidiaries and affiliates, in the ordinary course of business. The
Company believes that the charges and fees that it pays for such goods,
equipment and services are competitive with the charges and fees of other
companies providing such items. The Company maintains its revolving credit
facility with The Chase Manhattan Bank, as Agent.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers (as
defined in Rule 16a-1(f)), directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the SEC. Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file. Based solely on its review of the copies of such reports received by it
and representations from certain reporting persons that they have complied with
the relevant filing requirements, the Company believes that all filing
requirements applicable to its officers, directors and 10% stockholders were
complied with during the year ended December 31, 2000, except that Charles W.
Duncan Jr. filed an Annual Statement of Changes in Beneficial Ownership on Form
5 in February 2001 that delinquently reported a sale of 6,000 shares of the
Company's Common Stock in November 2000 by a Trust of which Mr. Duncan serves as
trustee. Pursuant to the requirements of Section 16(a) of the Exchange Act, such
transaction should have been reported by Mr. Duncan on a Report of Change of
Beneficial Ownership on Form 4 in December 2000, but such report was not filed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee oversees the administration of compensation
programs applicable to all employees of the Company, including its executive
officers. Executive compensation is reviewed and approved annually by the
Committee.
The Compensation Committee seeks to encourage growth in the Company'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. See "-- Executive Compensation -- Incentive Compensation Plan"
below.
-- The opportunity to purchase Common Stock at a discount of at least 15%
through the Newfield 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.
-- Case specific compensation plans to accommodate individual circumstances
or nonrecurring situations as required.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"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 such officers exceeds
$1 million in a particular year. Qualifying performance-based compensation is
not subject to the deduction limit if certain requirements are met.
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As noted above, a significant portion of the Company's compensation is
performance-based. The Company has structured portions of its performance-based
compensation (such as stock option grants) in a manner that excludes such
compensation from the deduction limit. Awards under the Company's Incentive
Compensation Plan after 1996 and grants of restricted shares under the 1995
Omnibus Plan do not, however, qualify for exclusion from the deduction limit.
For Section 162(m) purposes, the market value of restricted shares are included
in the year that the shares vest. As a result, if the market price of the Common
Stock increases significantly, the amount of compensation for purposes of
Section 162(m) will also increase significantly. For Section 162(m) purposes,
deferred awards under the Incentive Compensation Plan after 1996 are included in
the year paid, and are paid, at the election of the recipient, in either cash or
Common Stock. During the deferral period, the awards to be paid in cash accrue
interest and the value of awards to be paid in Common Stock vary depending on
the Common Stock's market price.
The Compensation Committee has not intended and does not currently intend
to award compensation to any executive officer that would exceed the deduction
limit of Section 162(m), but no assurance can be given that such limit will not
be exceeded if the market price of the Common Stock increases significantly
after the date of an award. The 1998 Omnibus Plan and the 2000 Omnibus Plan are
structured to permit the Compensation Committee to award restricted shares that
will be excluded from the deduction limit. The Compensation Committee may,
however, determine that it is in the best interest of the Company to award
restricted shares pursuant to such plan that do not meet the requirements for
exclusion from the deduction limit or to otherwise award compensation that would
exceed such limit.
COMPANY PERFORMANCE. The Company's net production for 2000 was 140 billion
cubic feet of natural gas equivalent ("Bcfe"), an increase of 23% over 1999
production. During 2000, the Company replaced 166% of 1999 production and added
232 Bcfe of new reserves. The Company's proved reserves at year-end 2000 were
687 Bcfe, up 16% over 1999. Net income in 2000 was $132.3 million, or $2.93 per
diluted share. This compares to $33.2 million in 1999, or $0.79 per diluted
share. Operating cash flow before changes in assets and liabilities for 2000 was
$384 million, an 85% increase over 1999. This increase reflects both increased
production and higher commodity prices.
During 2000, the Company balanced its drilling program with the acquisition
of proved properties. The Company completed its largest-ever acquisition with
the purchase of three producing fields in South Texas for $139 million in the
first quarter of 2000. On December 28, 2000, the Company announced a definitive
agreement with respect to its $333 million acquisition of Lariat Petroleum.
Lariat's operations are concentrated in the Anadarko Basin of Oklahoma. It had
proved reserves at year-end 2000 of 256 Bcfe. The acquisition closed in January
2001, establishing a new focus area with a large inventory of prospects and
leads. During 2000, the Company drilled 57 wells, of which 45 were successful,
including its first international discovery in Bohai Bay, offshore China.
Substantially all of the Company's investment activities during 2000 were funded
by cash flow from operations.
EXECUTIVE COMPENSATION. Before taking the actions described in this
report, the Compensation Committee considered the Company's financial and
operating results. A summary of the indicators deemed particularly relevant by
the Compensation Committee are presented above. 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 the Company's
executive group are based on general levels of market salary increases,
individual performance and the Company's overall financial and operating
results, without any specific relative weight assigned to any of these factors.
Contemporaneously with Mr. Foster's retirement as Chief Executive Officer
of the Company on January 31, 2000, Mr. Foster and the Company entered into an
employment agreement providing for Mr. Foster to be a non-officer employee of
the Company. See "-- Employment Agreements." Pursuant to the agreement, Mr.
Foster is entitled to an annual base salary of $225,000.
Stock Option Awards. Each of Messrs. Waldrup, Rathert, Schaible and Pew
were granted options to purchase 20,000 shares of Common Stock in February 2000
pursuant to the 2000 Omnibus Plan to provide
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incentive with respect to the Company's future performance and to reward them
for their contribution to the Company's performance in 1999. Twenty percent of
each of these awards will vest on the first and each succeeding anniversary of
the date of grant.
Incentive Compensation Plan. The Incentive Compensation Plan is funded by
amounts equal to the revenues that would be attributable to a 1% overriding
royalty interest on acquired producing properties and a 2% overriding royalty
interest from exploration properties, bearing upon both the interest of the
Company and certain investors that participated in the Company's activities in
such properties and proportionately reduced to the interest of the Company and
such investors. Amounts available for distribution under the Incentive
Compensation Plan attributable to the overriding royalty interests bearing
against the Company are limited to 5% of the Company's Adjusted Net Income (as
defined in the Incentive Compensation Plan). Awards may consist of both a
current and deferred amount. Eligible employees may elect for a portion of
deferred amounts to be paid in Common Stock instead of cash. If an eligible
employee elects for a deferred amount to be paid in Common Stock, the number of
shares of Common Stock to be awarded is determined by 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.
Awards granted to the named executive officers in February 2001 for the
2000 performance period pursuant to the Incentive Plan are presented under
"Bonus" in the Summary Compensation Table. Such awards were based approximately
50% on level of responsibility and the Company's performance and approximately
50% on individual productivity, quality of work and impact on the Company's
results. The Compensation Committee established awards for each executive after
hearing the recommendations of the Chief Executive Officer.
Deferred Compensation Plan. The Company'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. The Company matches 100% of an
employee's deferral up to 8% of such employee's salary, subject to limitations
imposed by the plan. The Company's contribution is reduced by contributions made
by the Company to the 401(k) Plan on behalf of such employee.
Restricted Stock Awards. In February 2000, the Compensation Committee
awarded 5,000 restricted shares to each of Messrs. Waldrup, Rathert, Schaible
and Pew and 1,006 restricted shares to Mr. Foster pursuant to the 1998 Omnibus
Plan. These awards are 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 such year). The awards were granted to Messrs. Waldrup,
Rathert, Schaible and Pew in order to provide them with further incentive with
respect to the Company's future performance, to further align their interests
with those of the Company's stockholders and to reward them for their
contribution to the Company's performance in 1999. The award was made to Mr.
Foster in connection with his retirement as Chief Executive Officer and as a
reward for past contributions to the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION. As described above, the Company's
executive compensation philosophy, including the compensation of the Chief
Executive Officer, is a competitive base salary and incentive compensation based
upon the Company's performance. Specific actions taken by the Compensation
Committee regarding Mr. Trice's compensation for the 2000 performance year are
summarized below.
Base Salary. Mr. Trice's base salary was increased at the time of his
promotion to Chief Executive Officer in February 2000 to a level consistent with
that of Mr. Foster's when he served as Chief Executive Officer.
Incentive Compensation Plan. In February 2001, Mr. Trice received a
$468,750 current award and a $156,250 deferred award for the 2000 performance
period pursuant to the Incentive Compensation Plan. These awards were based
approximately 50% on the Company's performance and Mr. Trice's level of
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responsibility and approximately 50% on productivity, perceived quality of work
and impact on the Company's results.
Stock Plans. In February 2000, Mr. Trice was granted options to acquire
30,000 shares of Common Stock pursuant to the 2000 Omnibus Plan and awarded
10,000 restricted shares pursuant to the 1998 Omnibus Plan. These actions were
taken in recognition of Mr. Trice's promotion to Chief Executive Officer, in
order to provide him with further incentive with respect to the Company's future
performance, to further align his interests with those of the Company's
stockholders and to reward him for his contribution to the Company's performance
in 1999.
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
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
As required by applicable rules of the SEC, the performance graph shown
below was prepared based upon the following assumptions:
(1) $100 was invested in the Company's Common Stock, the S&P 500 and the
Peer Group (as defined below) on December 29, 1995 at the closing price
on such date.
(2) Peer Group investment is weighted based on the stock market
capitalization of each individual company within the Peer Group at the
beginning of the period.
(3) Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Company's Peer Group are as follows: Apache
Corporation, Cross Timbers Oil Company, Devon Energy Corporation, Enron Oil &
Gas Company, Noble Affiliates, Inc., Pogo Producing Company, and Vintage
Petroleum, Inc. The Louisiana Land and Exploration Company ("LL&E") and Seagull
Energy Corporation ("Seagull") were included in the Company's Peer Group and the
Stockholder Return Performance Presentation shown below until October 1997 and
March 1999, respectively. As neither Burlington Resources, which acquired LL&E
in October 1997, nor Ocean Energy Inc., which merged with Seagull in March 1999,
are members of the Company's Peer Group, LL&E and Seagull are not included in
the Peer Group after such transactions. However, for purposes of the Stockholder
Return Performance Presentation, the LL&E investment and the Seagull investment
were allocated pro rata based on investment value among the remainder of the
Peer Group companies at the times of their respective acquisitions.
CUMULATIVE RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 12/29/95
[PERFORMANCE GRAPH]
---------------------------------------------------------------------------------------
Total Return Analysis 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
---------------------------------------------------------------------------------------
Newfield Exploration $100.00 $192.62 $172.58 $154.54 $198.03 $351.20
Peer Group $100.00 $130.71 $132.77 $ 95.56 $118.16 $280.94
S&P 500 $100.00 $122.69 $163.29 $209.57 $253.66 $230.56
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AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors consists of the four
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 the Company's financial reporting process and systems
of internal controls regarding finance, accounting and legal and
regulatory compliance; and
-- the independence and performance of the Company's independent auditors
and any internal audit function that may be utilized in the future.
Its specific responsibilities are set forth in its charter, which is attached as
Appendix A to this proxy statement.
The Audit Committee has reviewed and discussed with the Company's
management and PricewaterhouseCoopers LLP, the Company's independent
accountants, the audited financial statements of the Company contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.
The Audit Committee has also discussed with the Company's independent
accountants the matters required to be discussed pursuant to Statements on
Auditing Standards No. 61, "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 has also considered whether the provision of non-audit services to the
Company 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 the Company's Annual Report on Form 10-K for the year ended December
31, 2000 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
AUDIT FEES
PricewaterhouseCoopers LLP has billed the Company $121,000, in the
aggregate, for professional services rendered by them for the audit of the
Company's annual financial statements for the year ended December 31, 2000 and
the reviews of the interim financial statements included in the Company's
Quarterly Reports on Form 10-Q filed with the SEC during 2000.
ALL OTHER FEES
The aggregate fees for non-audit services rendered by
PricewaterhouseCoopers LLP to the Company for the fiscal year ended December 31,
2000 were $231,600. Such non-audit services did not include financial
information systems design or implementation. The Audit Committee has considered
whether the rendering of such non-audit services by PricewaterhouseCoopers LLP
is compatible with maintaining the principal accountant's independence.
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ITEM 2
RATIFICATION OF APPOINTMENT OF AUDITORS
Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed PricewaterhouseCoopers LLP, independent public accountants,
to audit the consolidated financial statements of the Company for the year
ending December 31, 2001. The Company is advised that no member of
PricewaterhouseCoopers LLP has any direct or material indirect financial
interest in the Company or, during the past three years, has had any connection
with the Company in the capacity of promoter, underwriter, voting trustee,
director, officer or employee.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Delaware
law, an abstention would have the same effect as a vote against this proposal,
but a broker non-vote would not be counted for purposes of determining whether a
majority had been achieved.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THIS APPOINTMENT.
In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting, will
be offered the opportunity to make a statement if such representative desires to
do so and will be available to respond to appropriate questions.
ITEM 3
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.
STOCKHOLDER PROPOSALS
Any stockholder who desires to submit a proposal for inclusion in the proxy
material for presentation at the Company's 2002 Annual Meeting of Stockholders
must forward such proposal to the Secretary of the Company at the address
indicated on the cover page of this proxy statement, so that the Secretary
receives it no later than November 21, 2001. Any notice of a proposal to be
considered at the Company's 2002 Annual Meeting of Stockholders should also be
submitted to the Secretary of the Company. Any such notice will be considered
untimely if not received by the Secretary on or before February 9, 2002.
By order of the Board of Directors,
/s/ TERRY W. RATHERT
Terry W. Rathert
Secretary
March 21, 2001
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APPENDIX A
NEWFIELD EXPLORATION COMPANY
CHARTER OF THE
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS*
BACKGROUND
The Board of Directors (the "Board") of Newfield Exploration Company (the
"Company") established an Audit Committee (the "Committee") on May 10, 1990. On
October 18, 1993 the Board adopted certain resolutions regarding, among other
things, the composition of the Committee and its functions, duties,
responsibilities and powers (the "Existing Charter"). The Existing Charter is
superceded by this Charter effective as of its date of adoption by the Board.
PURPOSE
The primary purpose of the Committee is to assist the Board in monitoring:
- the integrity of the Company's financial reporting process and systems of
internal controls regarding finance, accounting and legal and regulatory
compliance; and
- the independence and performance of the Company's independent auditors
and any internal audit function that may be utilized in the future.
COMPOSITION
The Committee must be composed of no less than three members of the Board,
such members to be appointed from time to time by a majority of the Board.
Members of the Committee must meet the independence and experience requirements
promulgated by the New York Stock Exchange. A member may be removed with or
without cause at any time by a vote of a majority of the Board.
MEETINGS; QUORUM; ETC.
A majority of the members of the Committee constitute a quorum for the
transaction of business. A majority of the members of the Committee present at
any meeting at which a quorum is present are competent to act. The Committee
shall choose its own chairman and secretary (the secretary need not be a member
of the Committee) and fix its own rules or procedures. The Committee will meet
at times and places as may be determined from time to time by the Committee. The
Committee shall keep minutes of all meetings and of all actions taken by the
Committee, file such minutes with the Secretary of the Company and provide a
copy of such minutes to the Board. Members of the Committee will be reimbursed
by the Company for all reasonable expenses incurred in connection with their
duties as members of the Committee.
FUNCTIONS, DUTIES AND RESPONSIBILITIES
REVIEW OF FINANCIAL STATEMENTS. The Committee has the following duties and
responsibilities with respect to the Company's financial statements:
- review the annual audited financial statements with management and the
independent auditor, including significant issues regarding internal
controls and accounting principles and practices;
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* As adopted by the Board of Directors of Newfield Exploration Company on May 4,
2000.
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- review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements;
- discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of an
audit;
- receive and review periodic reports from the independent auditor
regarding the auditor's independence and discuss such reports with the
auditor;
- based on the foregoing reviews and discussions, make a recommendation to
the Board as to whether the annual audited financial statements should or
should not be included in the Company's Annual Report on Form 10-K; and
- review with management and the independent auditor the Company's
quarterly financial statements prior to the release of quarterly earnings
and the filing of the Company's Form 10-Q (which responsibility may be
delegated by the Committee to one or more members of the Committee).
INTERNAL CONTROLS. The Committee has the following duties and
responsibilities with respect to its monitoring of the integrity of the
Company's financial reporting process and internal controls:
- review with the independent auditor any problems or difficulties the
auditor may have encountered during its audit and any management letter
provided by the auditor and the Company's response to that letter;
- obtain reports from management, the independent auditor and internal
auditors with respect to the Company's policies and procedures regarding
compliance with applicable laws and regulations;
- discuss procedures performed by the independent auditor pursuant to
Section 10A(a) of the Securities Exchange Act of 1934 and the results of
such procedures and obtain assurance from the independent auditor that
Section 10A(b) of the Securities Exchange Act of 1934 has not been
implicated;
- meet at least annually with the chief financial officer, the independent
auditor and the senior personnel of any internal audit function in
separate executive sessions;
- meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control
such exposures;
- review significant changes to the Company's internal controls and
accounting principles and practices as suggested by the independent
auditor, internal auditors or management;
- review the significant reports to management prepared by internal
auditors and management's responses; and
- review with the Company's legal counsel or other appropriate persons
legal matters that may have a material impact on the financial
statements, the Company's compliance policies and any material reports or
inquiries received from regulators or governmental agencies.
AUDITORS. The Committee has the following duties and responsibilities with
respect to the Company's independent and internal auditors:
- recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Committee and the Board;
- approve the fees to be paid to the independent auditor;
- evaluate together with the Board the performance of the independent
auditor and, if so determined by the Committee, recommend that the Board
replace the independent auditor;
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- if determined by the Committee to be necessary or advisable, recommend
that the Board take appropriate action to satisfy itself of the
independence of the auditor; and
- review the appointment and replacement of any senior internal auditing
personnel.
OTHER DUTIES. The Committee has the following additional duties and
responsibilities:
- make regular reports (at least twice each calendar year) to the Board
regarding the Committee's activities and such other reports as may be
requested by the Board;
- review and reassess the adequacy of this Charter annually and recommend
changes to the Board for approval;
- prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement;
- review the expense reports of the chief executive officer of the Company
at least once each calendar year; and
- perform such additional special functions, duties or responsibilities as
may from time to time be designated by the Board.
POWERS AND LIMITATIONS
The Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Committee may request any
officer or employee of the Company or the Company's outside legal counsel or
independent auditor to attend any meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
While the Committee has the duties, responsibilities and powers set forth
in this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Committee to conduct investigations, to resolve disagreements
between management and the independent auditor or to assure compliance with laws
and regulations and the policies of the Company.
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NEWFIELD EXPLORATION COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2001
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 3, 2001 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.
COMMENTS/ADDRESS CHANGE PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
o FOLD AND DETACH HERE o
23
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE ITEMS.
Please mark
your votes as
[X] indicated in
this example
Item 1- ELECTION OF DIRECTORS
Joe B. Foster, David A. Trice, Charles W. Duncan, Jr.,
Howard H. Newman, Thomas G. Ricks, Terry Huffington,
Dennis R. Hendrix, C.E. (Chuck) Shultz, Philip J. Burguieres
Randy A. Foutch and Claire S. Farley
FOR WITHHELD
FOR ALL
[ ] [ ]
WITHHELD FOR (write name of nominee(s) in the space provided
below):
-------------------------------------------------------------
Item 2- RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
[ ] [ ] [ }
I PLAN TO ATTEND MEETING [ ]
COMMENTS/ADDRESS CHANGE
Please mark this box if you have [ ]
written comments/address change
on the reverse side.
Signature(s) Date
----------------------------------- -----------------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
o FOLD AND DETACH HERE o