SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Devon Energy Corporation
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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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[X] No fee required.
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Notes:
[LOGO]
devon
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Devon Energy
Corporation
20 North
Broadway
Oklahoma City,
OK 73102-8260
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2002
To Devon Energy Corporation Stockholders:
We are holding this year's annual stockholders' meeting on May 16, 2002 at
10:00 a.m. (Oklahoma City time) in the Egbert Room on the second floor of The
Renaissance Oklahoma City Hotel, Ten North Broadway, Oklahoma City, Oklahoma,
for the following purposes:
. To elect four directors for terms expiring in the year 2005; and
. To transact such other business as may properly come before the meeting
or any adjournments of the meeting.
Stockholders of record at the close of business on March 19, 2002 are
entitled to notice of and to vote at the meeting. You may examine a complete
list of stockholders entitled to vote at the meeting during normal business
hours for the ten days prior to the meeting at our offices and at the meeting.
For reasons outlined in the attached proxy statement, the board of directors
recommends a vote "FOR" the election of directors nominated by the board of
directors.
IMPORTANT
Your proxy is important to assure a quorum at the meeting. Whether or not
you expect to attend the meeting, please vote in any one of the following ways:
. call the toll-free Please note that all
number listed on votes cast via
the voting telephone or the
instruction form internet must be cast
from the U.S. or before 12:00 a.m.
Canada; Eastern Daylight
Savings Time on
Wednesday, May 15, 2002.
. log on to
http://www.proxyvote.com;
or
. mark, sign, date
and promptly return
the enclosed proxy
card in the
postage-paid
envelope. It
requires no postage
if mailed in the
United States.
BY ORDER OF THE BOARD OF DIRECTORS
Janice A. Dobbs
Corporate Secretary
Oklahoma City, Oklahoma
April 9, 2002
[LOGO]
devon
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2002
We are furnishing you this proxy statement in connection with the
solicitation of proxies by our board of directors to be used at the annual
meeting and any adjournment thereof. The annual meeting will be held on May 16,
2002. We are first sending this proxy statement to our stockholders on or about
April 9, 2002.
About The Company
We are an independent energy company engaged primarily in oil and natural
gas exploration, development and production, acquisition of producing
properties, transportation of oil and gas and processing of natural gas. We
currently own oil and gas properties concentrated in five operating divisions:
. the Permian/Mid-Continent, Rocky Mountain and Gulf divisions including
onshore properties in the continental United States and offshore
properties primarily in the Gulf of Mexico;
. the Canadian division, which includes properties in the Western Canadian
Sedimentary Basin, primarily in Alberta and British Columbia, and
frontier properties in the far north; and
. the International division, which includes properties in Azerbaijan,
China and West Africa.
We are one of the top five public independent oil and gas companies based in
the United States, as measured by oil and gas reserves. As of December 31,
2001, our estimated proved reserves were 1.6 billion barrels of oil equivalent,
of which 56% were natural gas reserves and 44% were oil and natural gas liquids
reserves.
On January 24, 2002, we completed the acquisition of Mitchell Energy &
Development Corp. This acquisition increased the estimated proved reserves to
2.0 billion barrels of oil equivalent, of which 60% are natural gas reserves
and 40% are oil and natural gas liquids reserves. The Mitchell acquisition also
brings significant additional gas transportation and processing facilities to
us. Our U.S. gas processing, transportation and marketing activities are
managed by our newly created midstream operating division.
Since September 29, 1988, our common stock has been traded on the American
Stock Exchange under the symbol "DVN." In addition, following the Northstar
combination, a new class of common stock, which we call the exchangeable
shares, began trading on The Toronto Stock Exchange under the symbol "NSX."
These shares are essentially equivalent to our common stock. However, because
they are issued by our wholly-owned subsidiary, Northstar Energy Corporation,
they qualify as a domestic Canadian investment for Canadian institutional
stockholders. They are exchangeable at any time, on a one-for-one basis, for
our common stock.
All references in this proxy statement to we, our, us, the company or Devon
refer to Devon Energy Corporation including our predecessors and subsidiary
corporations.
About The Meeting
Q: What am I voting on?
A: You are voting on one thing, the election of four directors (John A. Hill,
William J. Johnson, Michael M. Kanovsky and Robert A. Mosbacher, Jr.).
Q: Who is entitled to vote?
A: Stockholders as of the close of business on March 19, 2002 (the record
date). Each share of common stock is entitled to one vote.
Q: How do I vote?
A: Instead of attending the meeting and casting your vote in person, you may
either:
. Dial the toll-free number listed on the voting instruction form from
the U.S. and Canada, enter your control number (found on your proxy
card) and follow the voice prompts; or
. Go to the following website:
http://www.proxyvote.com, enter your control number (found on your
proxy card) and follow the simple instructions on the screen; or
. Mark your selection on the enclosed proxy card, date and sign the
card, and return the card in the enclosed envelope.
Q: If I vote by telephone or internet, do I need to return my proxy card?
A: No.
Q: What is the difference between voting via telephone or the internet or
returning a proxy card versus voting in person?
A: Voting by proxy, regardless of whether it is via telephone or the internet
or by returning your proxy card by mail, appoints J. Larry Nichols and
Marian J. Moon as your proxies. They will be required to vote on the
proposal exactly as you specified. However, if any other matter requiring a
shareholder vote is properly raised at the meeting and you are not present
to cast your vote, then Mr. Nichols and Ms. Moon are authorized to use their
discretion to vote on the issues on your behalf.
Q: How does discretionary authority apply?
A: If you sign your proxy card, but do not make any selections, you give
authority to Mr. Nichols and Ms. Moon to vote on the proposals and any other
matter that may arise at the annual meeting.
Q: If I vote via telephone or the internet or by mailing my proxy card, may I
still attend the meeting?
A: Yes.
Q: What if I want to change my vote?
A: You can revoke your vote at any time before the meeting.
Q: Is my vote confidential?
A: Yes, only Morrow & Co. Inc., our proxy solicitor, and certain employees of
Devon will have access to your voting information. We will act as our own
inspector of election. All comments will remain confidential, unless you ask
that your name be disclosed.
Q: Who will count the votes?
A: ADP Investor Communication Services will tabulate the votes.
Q: What does it mean if I get more than one proxy card?
A: Your shares are probably registered differently or are in more than one
account. Vote all proxy cards to ensure that all your shares are voted.
Contact our transfer agent, EquiServe, Inc., to have your accounts
registered in the same name and address.
Q: Will each stockholder in our household receive a Proxy Statement and Annual
Report?
A: No. Only one proxy statement and annual report will be delivered to multiple
stockholders
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sharing an address unless you notify us to the contrary. However, any
stockholder at a shared address to which a single copy of the proxy
statement and annual report has been sent may request an additional copy of
this proxy statement and annual report or future copies of proxy statements
and annual reports by writing Devon Energy Corporation, Attention: Corporate
Secretary, 20 North Broadway, Oklahoma City, OK 73102, janice.dobbs@dvn.com
or calling (405) 235-3611.
Q: How many shares of Devon common stock are outstanding?
A: As of March 19, 2002, the record date, there were 156,126,700 shares of
common stock outstanding, including exchangeable shares, each of which is
entitled to one vote at the meeting.
Q: What if I hold exchangeable shares?
A: As of the close of business on March 19, 2002, the record date, there were
2,004,636 exchangeable shares outstanding. Each exchangeable share is
entitled to one vote at the meeting. The document governing the voting of
exchangeable share is the Voting and Exchange Trust Agreement dated December
10, 1998, as amended on August 17, 1999, which we call the voting agreement.
Under the voting agreement, CIBC Mellon Trust Company, the trustee, is
entitled to exercise certain voting rights on behalf of holders of the
exchangeable shares. The trustee holds one share of our special voting
stock, which we call the special voting share. The special voting share is
entitled to a number of votes equal to the number of exchangeable shares
outstanding from time to time that are held by persons other than Devon.
Pursuant to the voting agreement, each holder of exchangeable shares, other
than Devon, is entitled to give the trustee voting instructions for a number
of votes equal to the number of that holder's exchangeable shares.
If you own exchangeable shares, we have sent you a voting direction card so
that you may exercise your voting rights at the meeting. The trustee will
cast votes at the meeting only as you direct on your voting direction card.
If you do not mark and return your voting direction card the trustees will
not cast any votes on your behalf.
If you wish to vote at the meeting but do not want the trustee to vote your
shares, you may do one of the following:
. Contact the trustee and request that the trustee give a proxy to
Devon management so they can vote on your behalf at the meeting; or
. Attend the meeting and vote in person.
You may revoke the voting direction card by delivering either a revocation
or a later dated voting direction card to the trustee.
Q: What constitutes a quorum?
A: The common stock and the special voting share vote together as a single
class. A majority of the votes represented by the common stock and the
exchangeable shares, present in person or represented by proxy, constitutes
a quorum. If you vote by telephone or the internet or by returning your
proxy card, you will be considered part of the quorum. The inspector of
election will treat shares represented by a properly executed proxy as
present at the meeting. Abstentions and broker non-votes will be counted for
purposes of determining a quorum. A broker non-vote occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that item
and has not received instructions from the beneficial owner.
Q: How many votes will be required to approve a proposal?
A: Election of each director at the meeting will be by a plurality of votes
cast at the meeting. Votes may be cast in favor of the election of each
director or withheld. With respect to other matters, except as provided by
law or our certificate of incorporation or bylaws, the affirmative vote of
the holders of a majority of the voting shares, present in person or by
proxy, entitled to vote at the meeting is required to take any other action.
Shares cannot be voted at the meeting unless the holder of record is present
in person or by proxy.
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Q: Can brokers who hold shares in street name vote those shares with respect to
the election of directors if they have received no instructions?
A: We believe that brokers that are member firms of the New York Stock Exchange
or NYSE, and who hold common stock in street name for customers, but have
not received instructions from a beneficial owner, have the authority under
the rules of the NYSE to vote those shares with respect to the election of
directors. In Canada, registrants and their nominees may not exercise voting
rights without instructions from a beneficial owner. Therefore, no votes
with respect to the exchangeable shares will be cast without specific
instructions to the trustee.
Q: How will you treat abstentions and broker non-votes?
A: We will (i) count abstentions and broker non-votes for purposes of
determining the presence of a quorum at the meeting; (ii) treat abstentions
as votes not cast but as shares represented at the meeting for determining
results on actions requiring a majority vote; (iii) not consider broker
non-votes for determining actions requiring a majority vote; and (iv)
consider neither abstentions nor broker non-votes in determining results of
plurality votes.
Q: Who pays the solicitation expenses?
A: We will bear the cost of solicitation of proxies. Proxies may be solicited
by mail or personally by our directors, officers or regular employees, none
of whom will receive additional compensation therefor. We have also retained
Morrow & Co., Inc. to assist in solicitation of proxies for a fee of $4,500,
plus reimbursement of certain expenses. Those holding shares of common stock
of record for the benefit of others, or nominee holders, are being asked to
distribute proxy soliciting materials to, and request voting instructions
from, the beneficial owners of such shares. We will reimburse nominee
holders for their reasonable out-of-pocket expenses.
Q: Where can I find the voting results of the meeting?
A: We will announce voting results at the meeting, and we will publish final
results in our quarterly report on Form 10-Q for the second quarter of 2002.
We will file that report with the Securities and Exchange Commission. You
can get a copy by contacting either our investor relations department at
(405) 552-4570 or the Securities and Exchange Commission at 1-800-SEC-0330
or www.sec.gov.
Q: Will your independent accountants be available to respond to stockholder
questions?
A: The board of directors, as recommended by the audit committee, has selected
KPMG LLP to serve as our independent accountants for the fiscal year ending
December 31, 2002. Representatives of KPMG LLP are expected to be present at
the meeting. They will have an opportunity to make a statement if they
desire to do so, and will be available to respond to stockholder questions.
Q: How does management intend to vote?
A: Our officers and directors own a total of 1,403,579 voting shares, or less
than 1% of the total 156,126,700 voting shares entitled to be voted at the
meeting, and intend to vote all of such shares in favor of the election of
the four nominees for director named herein.
Q: Where can I reach you?
A: Our mailing address is:
20 North Broadway
Oklahoma City, OK 73102-8260
Our telephone number is:
(405) 235-3611
YOUR PROXY VOTE IS IMPORTANT. YOU ARE ASKED TO VOTE BY USING EITHER THE
TOLL-FREE TELEPHONE NUMBER SHOWN ON THE PROXY CARD; THE INTERNET WEB SITE SHOWN
ON THE PROXY CARD; OR BY RETURNING THE ACCOMPANYING PROXY CARD OR VOTING
DIRECTION CARD, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
4
ELECTION OF DIRECTORS
Pursuant to provisions of our certificate of incorporation and bylaws, the
board of directors has fixed the number of directors at 10. Our certificate of
incorporation and bylaws provide for three classes of directors, serving
staggered three-year terms, with Class I having three directors, Class II
having four directors and Class III having three directors. The board of
directors has nominated John A. Hill, William J. Johnson, Michael M. Kanovsky
and Robert A. Mosbacher, Jr. for re-election as directors for terms expiring at
the annual meeting in the year 2005, and in each case until their successors
are elected and qualified. Proxies cannot be voted for a greater number of
persons than the number of nominees named. The four nominees are presently our
directors whose terms expire at the meeting. Other directors who are remaining
on the board of directors will continue in office in accordance with their
previous elections until the expiration of their terms at the 2003 or 2004
annual meeting, as the case may be. The board of directors recommends a vote
"FOR" each of the nominees for election to the board of directors.
It is the intention of the persons named in the proxy to vote proxies "FOR"
the election of the four nominees. In the event that any of the nominees should
fail to stand for election, the persons named in the proxy intend to vote for
substitute nominees designated by the board of directors, unless the board of
directors reduces the number of directors to be elected.
Nominees for Re-election as Directors for Terms Expiring in 2005
John A. Hill John A. Hill was elected to the board of directors in 2000. Prior to that, he served
60 years old as a director of Santa Fe Snyder Corporation. Mr. Hill has been with First
Director since 2000 Reserve Corporation, an oil and gas investment management company since
1983 and currently serves as the Vice Chairman and Managing Director. Prior to
joining First Reserve, Mr. Hill was President, Chief Executive Officer and
Director of Marsh & McLennan Asset Management Company and served as the
Deputy Administrator of the Federal Energy Administration during the Ford
administration. Mr. Hill is Chairman of the Board of Trustees of the Putnam
Funds in Boston, a trustee of Sarah Lawrence College, a director of
TransMontaigne Inc., and various companies controlled by First Reserve
Corporation and Continuum Health Partners.
William J. Johnson William J. Johnson was elected to the board of directors in 1999. Mr. Johnson
67 years old has been a private consultant for the oil and gas industry for more than the past
Director since 1999 five years. He is President and a director of JonLoc Inc., an oil and gas company
of which he and his family are sole shareholders. Mr. Johnson has served as a
director of Tesoro Petroleum Corp. since 1996. From 1991 to 1994, Mr. Johnson
was President, Chief Operating Officer and a director of Apache Corporation.
Michael M. Kanovsky Michael M. Kanovsky was elected to the board of directors in 1998.
53 years old Mr. Kanovsky was a co-founder of Northstar Energy Corporation, Devon's
Director since 1998 Canadian subsidiary, and has served on its board of directors since 1982.
Mr. Kanovsky is President of Sky Energy Corporation, a privately held energy
corporation. He is a director of ARC Resources Ltd. and Bonavista Petroleum
Corporation.
Robert A. Mosbacher, Jr. Robert A. Mosbacher, Jr. was elected to the board of directors in 1999. Since
50 years old 1986, Mr. Mosbacher has served as President and Chief Executive Officer of
Director since 1999 Mosbacher Energy Company and, since 1995, as Vice Chairman of Mosbacher
Power Group. Mr. Mosbacher was previously a director of PennzEnergy
Company and served on the Executive Committee. He currently serves as a
director of JPMorgan Chase and Company and is on the Executive Committee of
the U.S. Oil & Gas Association.
5
Directors Whose Terms Expire in 2004
Thomas F. Ferguson Thomas F. Ferguson has been a director of Devon since 1982 and is the
65 years old Chairman of the Audit Committee. He is the Managing Director of United Gulf
Director since 1982 Management Ltd., a wholly-owned subsidiary of Kuwait Investment Projects
Company KSC. Mr. Ferguson represents Kuwait Investment Projects Company
on the boards of various companies in which it invests, including Baltic Transit
Bank in Latvia and Tunis International Bank in Tunisia. Mr. Ferguson is a
Canadian qualified Certified General Accountant and was formerly employed by
the Economist Intelligence Unit of London as a financial consultant.
David M. Gavrin David M. Gavrin has been a director of Devon since 1979, and serves as the
67 years old Chairman of the Compensation and Stock Option Committee. He has been a
Director since 1979 director of United American Energy Corp., an independent power producer,
since 1992, and MetBank Holding Corporation since 1998. From 1978 to 1988,
he was a General Partner of Windcrest Partners and for 14 years prior to that he
was an officer of Drexel Burnham Lambert Incorporated.
Michael E. Gellert Michael E. Gellert has been a director of Devon since 1971 and serves as the
70 years old Chairman of the Nominating Committee. Mr. Gellert is a General Partner of
Director since 1971 Windcrest Partners, a private investment partnership in New York City, having
held that position since 1967. From 1958 until his retirement in 1989, Mr.
Gellert served in executive capacities with Drexel Burnham Lambert
Incorporated and its predecessors in New York City. In addition to serving as a
director of Devon, Mr. Gellert also serves on the boards of High Speed Access
Corporation, Humana Inc., Seacor Smit Inc., Six Flags Inc., Travelers Series
Fund, Inc., Dalet Technologies and Smith Barney World Funds. Mr. Gellert is
also a member of the Putnam Trust Company Advisory Board to The Bank of
New York.
Directors Whose Terms Expire in 2003
J. Todd Mitchell J. Todd Mitchell was elected to the board of directors in January 2002. From
43 years old 1993 to 2002 Mr. Mitchell served on the board of directors of Mitchell Energy &
became a Director in 2002 Development Corp. Mr. Mitchell has served as President of GPM, Inc., a family-
owned investment company, since 1998. He has also served as President of and
geologist to Dolomite Resources, Inc., a privately owned mineral exploration
and investments company, since 1987. Mr. Mitchell has, since 1998, served as
Chairman of Rock Solid Images, a privately owned seismic data analysis
software company.
J. Larry Nichols J. Larry Nichols is a co-founder of Devon. He was named Chairman of the
59 years old Board of Directors in 2000. He has been a director since 1971, President since
Director since 1971 1976 and Chief Executive Officer since 1980. Mr. Nichols is a director of the
Domestic Petroleum Council, the National Association of Manufacturers, the
Independent Petroleum Association of America, the Natural Gas Supply
Association, the Independent Petroleum Association of New Mexico, the
Oklahoma Independent Petroleum Association and the National Petroleum
Council. Mr. Nichols serves on the Board of Governors of the American Stock
Exchange. He serves as a director of BOK Financial Corporation which is listed
on the NASDAQ, and also serves as a director of New York Stock Exchange
listed companies Smedvig asa and Baker Hughes Incorporated.
6
Robert B. Weaver Robert B. Weaver was elected to the board of directors in 1999. He served as an
63 years old energy finance specialist at Chase Manhattan Bank, N.A., where he was in
Director since 1999 charge of its worldwide energy group from 1981 until his retirement in 1994.
Mr. Weaver was previously a director of PennzEnergy Company beginning in
1998, where he served as Chairman of the Audit Committee and was a member
of the Compensation Committee.
Chairman Emeritus
John W. Nichols John W. Nichols one of our co-founders, was named Chairman Emeritus in 1999.
87 years old He was Chairman of our board of directors since we began operations in 1971
Director since 1971 and continued in this capacity until 1999. He is a founding partner of Blackwood
& Nichols Co., which developed the conventional reserves in the Northeast
Blanco Unit of the San Juan Basin. Mr. Nichols is a non-practicing Certified
Public Accountant.
Board and Committee Meetings
Our board of directors met 13 times in 2001. All directors attended at least
75% of the meetings. The board of directors has standing audit, compensation
and stock option and nominating committees, as follows:
Number of
Meetings
Committee and Members Functions of Committee in 2001
--------------------- --------------------------------------------------------------- ---------
Audit . Recommends independent accountants to the board of 5
Thomas F. Ferguson* directors
Michael M. Kanovsky . Approves the nature and scope of services performed by
Robert B. Weaver the independent accountants and reviews the range of
fees for such services
. Confers with the independent accountants and reviews
the results of their audit
. Reviews our accounting and financial controls and
provides assistance to the board of directors with respect
to our corporate and reporting practices
Compensation and Stock Option . Determines the nature and amount of compensation of 8
David M. Garvin* all of our executive officers who are also directors and
Michael E. Gellert the amount and terms of stock options granted to all
John A. Hill employees
William J. Johnson . Provides guidance to and makes recommendations to
management regarding employee benefit programs
. Administers stock option and incentive plans
Nominating . Recommends to the board of directors nominees to fill 1
Michael E. Gellert* vacancies as they occur among the directors
J. Todd Mitchell . Recommends to the board of directors, prior to each
Robert A. Mosbacher, Jr. annual meeting of stockholders, a slate of nominees for
election or re-election as directors by our stockholders at
the annual meeting
. Considers nominees recommended by our stockholders
*Chairperson
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INFORMATION ABOUT EXECUTIVE OFFICERS
The positions held by our executive officers are as follows:
Brian J. Jennings Brian J. Jennings was elected to the position of Senior Vice President -
41 years old Corporate Development in 2001. Mr. Jennings joined Devon in 2000 as Vice
Senior Vice President - President - Corporate Finance. Prior to joining Devon, Mr. Jennings was,
Corporate Development since 1997, a Managing Director in the Energy Investment Banking Group of
PaineWebber, Inc. He began his banking career at Kidder, Peabody in 1989
before moving to Lehman Brothers in 1992 and later to PaineWebber in
1995. Mr. Jennings specialized in providing strategic advisory and corporate
finance services to public and private companies in the E&P and oilfield
service sectors. He began his energy career with ARCO International Oil &
Gas, a subsidiary of Atlantic Richfield Company. Mr. Jennings received his
Bachelor of Science in Petroleum Engineering from the University of Texas
at Austin and his Master of Business Administration from the University of
Chicago's Graduate School of Business.
J. Michael Lacey J. Michael Lacey was elected to the position of Senior Vice President -
56 years old Exploration and Production in 1999. Mr. Lacey had previously joined Devon
Senior Vice President - as Vice President of Operations and Exploration in 1989. Prior to his
Exploration and Production employment with Devon, Mr. Lacey served as General Manager in Tenneco
Oil Company's Mid-Continent and Rocky Mountain Divisions. He is a
registered professional engineer, and a member of the Society of Petroleum
Engineers and the American Association of Petroleum Geologists. Mr. Lacey
holds both undergraduate and graduate degrees in petroleum engineering
from the Colorado School of Mines.
Duke R. Ligon Duke R. Ligon was elected to the position of Senior Vice President - General
60 years old Counsel in 1999. Mr. Ligon had previously joined Devon as Vice President -
Senior Vice President - General Counsel in 1997. In addition to Mr. Ligon's primary role of
General Counsel managing Devon's corporate legal matters (including litigation), he has direct
involvement with Devon's governmental affairs, purchasing and its merger
and acquisition activities. Prior to joining Devon, Mr. Ligon practiced energy
law for 12 years, most recently as a partner at the law firm of Mayer, Brown
& Platt in New York City. In addition, he was a Senior Vice President and
Managing Director for investment banking at Bankers Trust Company in
New York City for 10 years. Mr. Ligon also served for three years in various
positions with the U. S. Departments of the Interior and Treasury, as well as
the Department of Energy. Mr. Ligon holds an undergraduate degree in
chemistry from Westminister College and a law degree from the University
of Texas School of Law.
Marian J. Moon Marian J. Moon was elected to the position of Senior Vice President -
51 years old Administration in 1999. Ms. Moon is responsible for human resources, office
Senior Vice President - administration, information technology, process development and corporate
Administration governance. Ms. Moon has been with Devon for 18 years, serving in various
capacities, including Manager of Corporate Finance. Prior to joining Devon,
Ms. Moon was employed for 11 years by Amarex, Inc., where she served
most recently as Treasurer. Ms. Moon is a member of the American Society
of Corporate Secretaries. She is a graduate of Valparaiso University.
8
John Richels John Richels was elected to the position of Senior Vice President - Canadian
51 years old Division in 2001. Prior to his election to Senior Vice President, Mr. Richels
Senior Vice President - was Chief Executive Officer of Northstar Energy Corporation, acquired by
Canadian Division Devon in 1998. Mr. Richels served as Northstar's Executive Vice President
and Chief Financial Officer from 1996 to 1998 and was on its board of
directors from 1993 to 1996. Prior to joining Northstar, Mr. Richels was
Managing Partner, Chief Operating Partner and a member of the Executive
Committee of the Canadian-based national law firm, Bennett Jones. Mr.
Richels also served, on a secondment from Bennett Jones, as General Counsel
of the XV Olympic Winter Games Organizing Committee in Calgary,
Alberta. Mr. Richels has previously served as a director of a number of
publicly traded companies and is a member of the Board of Governors of the
Canadian Association of Petroleum Producers and the Mount Royal College
Foundation. He holds a bachelor's degree in economics from York University
and a law degree from the University of Windsor.
Darryl G. Smette Darryl G. Smette was elected to the position of Senior Vice President -
54 years old Marketing in 1999. Mr. Smette previously held the position of Vice
Senior Vice President - President - Marketing and Administrative Planning since 1989. He joined
Marketing Devon in 1986 as Manager of Gas Marketing. His marketing background
includes 15 years with Energy Reserves Group, Inc./BHP Petroleum
(Americas), Inc., most recently as Director of Marketing. He is also an oil and
gas industry instructor, approved by the University of Texas Department of
Continuing Education. Mr. Smette is a member of the Oklahoma Independent
Producers Association, Natural Gas Association of Oklahoma and the
American Gas Association. He holds an undergraduate degree from Minot
State College and a master's degree from Wichita State University.
William T. Vaughn William T. Vaughn was elected to the position of Senior Vice President -
55 years old Finance in 1999. Mr. Vaughn previously served as Devon's Vice President of
Senior Vice President - Finance Finance in charge of commercial banking functions, accounting, tax and
information services since 1987. Prior to that, he was Controller of Devon
from 1983 to 1987. Mr. Vaughn's previous experience includes serving as
Controller of Marion Corporation for two years and employment with Arthur
Young & Co. for seven years, most recently as Audit Manager. He is a
Certified Public Accountant and a member of the American Institute of
Certified Public Accountants. He is a graduate of the University of Arkansas
with a Bachelor of Science degree.
Other Officers
Rick D. Clark Rick D. Clark was elected to the position of Vice President and General
54 years old Manager - Permian/Mid-Continent Division in 1999. Mr. Clark previously
Vice President and served as Production/Operations Manager since joining Devon in 1995. As
General Manager - such, he was responsible for the company's drilling and production activities.
Permian/Mid-Continent Division Prior to joining Devon, Mr. Clark was employed by Patrick Petroleum
Company where he served since 1988 as Executive Vice President,
Operations and Corporate Development. Prior to 1988, Mr. Clark worked in
various production engineering, reservoir engineering, financial and
managerial capacities for Ladd Petroleum Corporation and Conoco Inc. He is
a member of the Society of Petroleum Engineers. Mr. Clark holds a
professional degree in Petroleum Engineering from the Colorado School of
Mines.
9
Don D. DeCarlo Don D. DeCarlo was elected to the position of Vice President and General
45 years old Manager - Rocky Mountain Division in 2000. Mr. DeCarlo previously served
Vice President and as Vice President and General Manager, Rocky Mountain Division, for Santa
General Manager - Fe Snyder Corporation. Mr. DeCarlo began his professional career in 1978
Rocky Mountain Division with Tenneco Oil Company in Oklahoma City. In 1989 he joined Santa Fe
Energy Resources as an Engineering Manager in Tulsa, Oklahoma. During
his 11-year tenure with Santa Fe, Mr. DeCarlo held management positions of
increasing responsibilities in Bakersfield, California; Midland, Texas and
most recently in Denver, Colorado. He received a Bachelor of Science degree
in Petroleum Engineering from West Virginia University. He is a member of
the Society of Petroleum Engineers and currently holds the position of Vice
President for the Independent Petroleum Association of the Mountain States.
Janice A. Dobbs Janice A. Dobbs was elected to the position of Corporate Secretary in 2001.
53 years old Ms. Dobbs joined Devon in 1999 as the Manager of Corporate Governance
Corporate Secretary and Assistant Corporate Secretary. From 1993 to 1999 Ms. Dobbs served as
the Corporate Secretary and Compliance Manager of Chesapeake Energy
Corporation. From 1975 until her association with Chesapeake, Ms. Dobbs
was the corporate/securities legal assistant with the law firm of Andrews
Davis Legg Bixler Milsten & Price, Inc. in Oklahoma City. Prior to that she
was the corporate/securities legal assistant with Texas International
Petroleum Company. Ms. Dobbs is a Certified Legal Assistant, an associate
member of the American Bar Association and a member of the American
Society of Corporate Secretaries.
Danny J. Heatly Danny J. Heatly was elected to the position of Vice President - Accounting in
46 years old 1999. Mr. Heatly had previously served as Devon's Controller since 1989.
Vice President - Accounting Prior to joining Devon, Mr. Heatly was associated with Peat Marwick Main
& Co. (now KPMG LLP) in Oklahoma City for 10 years with various duties,
including Senior Audit Manager. He is a Certified Public Accountant and a
member of the American Institute of Certified Public Accountants and the
Oklahoma Society of Certified Public Accountants. He graduated with a
Bachelor of Accountancy degree from the University of Oklahoma.
Richard E. Manner Richard E. Manner, was elected to the position of Vice President -
55 years old Information Services in 2000. Mr. Manner has been an information
Vice President - technology professional for 25 years. Prior to joining Devon, he was
Information Services employed by Unisys in Houston, Texas. There he served for 14 years in
various positions including Director of Information Systems. Prior to his
tenure with Unisys, Mr. Manner spent two years with a National Aeronautics
and Space Administration contractor as a software engineer, and eight years
with AMF Tuboscope where he supervised the design of oilfield inspection
instrumentation and facilities. He is a registered professional engineer and a
member of the Society of Professional Engineers. Mr. Manner received his
electrical engineering degree from the University of Oklahoma.
10
R. Alan Marcum R. Alan Marcum was elected to the position of Controller in 1999. Mr.
35 years old Marcum has been with Devon since 1995, most recently as Assistant
Controller Controller. He is responsible for international and operations accounting for
Devon. Prior to joining Devon, Mr. Marcum was employed by KPMG Peat
Marwick (now KPMG LLP) as a senior auditor, with responsibilities
including special engagements involving due diligence work, agreed upon
procedures and SEC filings. He holds a Bachelor of Science degree from East
Central University, majoring in Accounting and Finance. He is a Certified
Public Accountant and a member of the Oklahoma State Society of Certified
Public Accountants.
Gary L. McGee Gary L. McGee was elected to the position of Vice President - Government
52 years old Relations in 1999. Mr. McGee had previously served as Devon's Treasurer
Vice President - since 1983, having first served as Controller. Mr. McGee also held various
Government Relations accounting positions with Adams Resources and Energy Company and Mesa
Petroleum Company. Mr. McGee is a member of the Petroleum Association
of Wyoming and the New Mexico Oil & Gas Association. He served as Vice
President of Finance with KSA Industries, Inc., a private holding company
with various interests including oil and gas exploration. He received his
accounting degree from the University of Oklahoma.
Paul R. Poley Paul R. Poley was elected to the position of Vice President - Human
48 years old Resources in 2000. Mr. Poley was previously employed by Fleming
Vice President - Human Companies in Oklahoma City most recently as Director of Human Resources
Resources Planning and Development. At Fleming, his responsibilities included human
resources development, management succession, strategic planning,
performance management and training for 39,000 employees. Prior to his 11
years at Fleming, Mr. Poley was Regional Personnel Manager for
International Mill Service, Inc. He is a member of the board of the Southwest
Benefits Association. He received his Bachelor of Arts degree in Sociology
from Bucknell University.
Terrence L. Ruder Terrence L. Ruder was elected to the position of Vice President & General
49 years old Manager - Marketing & Midstream Division in 2001. Mr. Ruder has been
Vice President & General with Devon since 1999, most recently as President of Thunder Creek Gas
Manager - Marketing & Services, a gas pipeline subsidiary located in Wyoming. He has over 25 years
Midstream Division of energy industry experience in both domestic and international capacities.
Prior to joining Devon, Mr. Ruder held a variety of marketing and business
development positions with BHP Petroleum and BHP Power, most recently
as Senior Vice President & General Manager of BHP Power in Brazil. Mr.
Ruder graduated with a Bachelor of Business Administration degree in
Finance from Wichita State University.
11
David J. Sambrooks David J. Sambrooks was elected to the position of Vice President and General
43 years old Manager - International Division in 2001. Mr. Sambrooks previously served
Vice President and General as Production Manager, South America. Prior to the merger with Devon, Mr.
Manager - International Sambrooks served as General Manager of International Business
Division Development and Western Hemisphere Production for Santa Fe Snyder
Corporation. Mr. Sambrooks began his professional career in 1980 with Sun
Exploration and Production Company (later Oryx Energy) and held positions
of increasing responsibility in Houston, Corpus Christi and Midland before
joining Santa Fe Energy Resources in 1990. During his 10-year tenure with
Santa Fe, Mr. Sambrooks held progressive positions in engineering and
management covering South Texas, offshore Gulf of Mexico, and beginning
in 1993, international. Mr. Sambrooks received a Bachelor of Science degree
in Mechanical Engineering from the University of Texas, Austin and a
M.B.A. from the Executive Program at the University of Houston.
William A. Van Wie William A. Van Wie was elected to the position of Vice President and General
56 years old Manager - Gulf Division in 1999. Mr. Van Wie previously served as Senior
Vice President and General Vice President and General Manager - Offshore for PennzEnergy Company.
Manager - Gulf Division Mr. Van Wie began his career as a geologist for Tenneco Oil Company's
Frontier Projects Group in 1974. Following the sale of Tenneco's Gulf of
Mexico properties to Chevron in 1988, he joined that company as Division
Geologist. In 1992, he moved to Pennzoil Exploration and Production
Company as Vice President/Exploitation Manager. He then served as
Manager of Offshore Exploration for Amerada Hess Corporation, before he
rejoined Pennzoil in 1997. He is an active member of the American
Association of Petroleum Geologists, serves as a trustee for the American
Geological Institute Foundation, is a Vice Chairman of Independent
Petroleum Association of America's Offshore Committee and is also a
member of the National Ocean Industries Association. Mr. Van Wie received
his Bachelor of Science degree in Geology from St. Lawrence University in
Canton, New York and a Master's degree and Ph.D. in geology from the
University of Cincinnati.
Vincent W. White Vincent W. White was elected to the position of Vice President -
44 years old Communications and Investor Relations in 1999. He has primary
Vice President - responsibility for Devon's investor communications, media relations and
Communications and Investor employee communications. Mr. White previously served as Devon's Director
Relations of Investor Relations since 1993. Prior to joining Devon, he served as
Controller of Arch Petroleum Inc. and was an auditor with KPMG Peat
Marwick (now KPMG LLP). Mr. White is a Certified Public Accountant and
a member of the Petroleum Investor Relations Association, the National
Investor Relations Institute and the American Institute of Certified Public
Accountants. Mr. White received his Bachelor of Accounting degree from the
University of Texas at Arlington.
Dale T. Wilson Dale T. Wilson was elected to the position of Treasurer in 1999. He has
42 years old primary responsibility for the company's treasury and risk management
Treasurer functions. Prior to joining Devon, Mr. Wilson was employed in the banking
industry for 17 years where he was employed by Bank of America for 15
years as a Managing Director of the Energy Finance Group. Mr. Wilson has
been active in oil and gas trade associations and is currently a member of the
Association for Financial Professionals. He is a graduate of Baylor University
with a Bachelor's degree in finance and accounting.
12
PRINCIPAL SECURITY OWNERSHIP
The table below sets forth, as of March 19, 2002, the names and addresses of
each person known by management to own beneficially more than 5% of our
outstanding voting shares, the number of voting shares beneficially owned by
each such stockholder and the percentage of outstanding voting shares owned.
The table also sets forth the number and percentage of outstanding voting
shares beneficially owned by our Chief Executive Officer or "CEO", each of our
directors, the four most highly compensated executive officers other than the
CEO and by all of our officers and directors as a group.
Name and Address of Beneficial Owner Number of Shares (1) Percent of Class
------------------------------------ -------------------- ----------------
Massachusetts Financial Services Co...................... 16,177,124 (2) 10.36%
500 Boylston Street
Boston, MA 02116
George P. Mitchell....................................... 13,879,585 (3) 8.89%
2001 Timberloch Place
The Woodlands, TX 77380
Davis Selected Advisors, L.P............................. 12,481,174 (4) 7.99%
2949 East Elvira Road, Suite 101
Tucson, AZ 85706
Kerr-McGee Corporation & Kerr-McGee Operating Corporation 9,954,000 (5) 6.38%
123 Robert S. Kerr Avenue
Oklahoma City, OK 73102
J. Larry Nichols*........................................ 918,201 (6) **
J. Todd Mitchell*........................................ 351,000 (7) **
Michael E. Gellert*...................................... 326,720 (8) **
William T. Vaughn........................................ 190,859 (9) **
Darryl G. Smette......................................... 190,300 (10) **
J. Michael Lacey......................................... 91,001 (11) **
David M. Gavrin*......................................... 87,181 (12) **
Duke R. Ligon............................................ 74,244 (13) **
John A. Hill*............................................ 57,264 (14) **
Michael M. Kanovksy*..................................... 46,526 (15) **
Thomas F. Ferguson*...................................... 15,000 (16) **
William J. Johnson*...................................... 14,533 (17) **
Robert B. Weaver*........................................ 6,523 (18) **
Robert A. Mosbacher, Jr.*................................ 6,223 (19) **
All of our directors and officers as a group (30 persons) 2,951,292 (20) 1.89%
--------
* Director. The business address of each director is 20 North Broadway,
Oklahoma City, Oklahoma 73102-8260.
** Less than 1%.
(1) Shares beneficially owned includes shares of common stock, exchangeable
shares and shares of common stock issuable within 60 days of March 19, 2002.
(2) Massachusetts Financial Services Co. has reported ownership on Schedule 13G
filed on February 11, 2002. These shares of common stock include 19,005
shares of common stock which may be acquired through conversion of
convertible preferred stock.
13
(3) George P. Mitchell has reported ownership on Schedule 13G filed on January
28, 2002. Mr. Mitchell disclaims beneficial ownership of 598,166 of these
shares which are deemed beneficially owned by Mr. Mitchell's wife.
(4) Davis Selected Advisors, L.P. has reported ownership on Schedule 13G filed
on February 15, 2002.
(5) Kerr-McGee Corporation has reported beneficial ownership of these shares on
Schedule 13G filed on August 10, 2001. Kerr-McGee acquired these shares on
December 31, 1996, in connection with a transaction whereby we acquired the
North American onshore oil and gas exploration and production properties
and businesses of Kerr-McGee in exchange for 9,954,000 shares of common
stock. On August 2, 1999, Kerr-McGee completed an offering of exchangeable
notes which are due on August 2, 2004. These notes are exchangeable into
our common stock owned by Kerr-McGee or, at Kerr-McGee's option, the cash
equivalent of the value of that common stock. Kerr-McGee reports sole
voting and investment power with respect to these shares.
(6) Includes 42,965 shares owned of record by Mr. Nichols as trustee of a
family trust, 78,624 shares owned by Mr. Nichols' wife, and 389,000 shares
which are deemed beneficially owned pursuant to stock options held by Mr.
Nichols.
(7) Represents shares of Devon Energy Corporation (DVN) common stock acquired
as a result of the merger of Mitchell Energy & Development Corp. (MND) into
DVN at a conversion rate of .585 shares of DVN common stock for each share
of MND Class A common stock. These shares are held by a family limited
partnership, the general partner of which is a limited liability company
that is owned in equal shares by the 10 adult children of George P.
Mitchell and Cynthia Woods Mitchell and for which J. Todd Mitchell acts as
the sole manager. The limited liability company owns a 0.1% general
partnership interest in the partnership. Mr. & Mrs. Mitchell own a 5%
limited partnership interest in the partnership, and the trusts for the 10
adult children of Mr. & Mrs. Mitchell (including J. Todd Mitchell) each
owns a 9.49% limited partnership interest in the partnership. J. Todd
Mitchell is the sole trustee of each of the trusts. J. Todd Mitchell
disclaims beneficial ownership of the shares of common stock referred to in
this footnote except to the extent of his pecuniary interest therein.
(8) Includes 309,149 shares owned by Windcrest Partners, a limited partnership,
in which Mr. Gellert shares investment and voting power and 15,000 shares
which are deemed beneficially owned pursuant to stock options held by Mr.
Gellert.
(9) Includes 185,200 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Vaughn.
(10) Includes 176,700 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Smette.
(11) Includes 85,836 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Lacey.
(12) Includes 10,320 shares owned by Mr. Gavrin's wife and 15,000 shares that
are deemed beneficially owned pursuant to stock options held by Mr. Gavrin.
(13) Includes 67,954 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Ligon.
(14) Includes 11,942 shares owned by a partnership in which Mr. Hill shares
voting and investment power, 4,727 shares owned by Mr. Hill's immediate
family and 9,656 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Hill.
(15) Includes exchangeable shares that are convertible into 36,116 shares of
common stock and 9,705 shares that are deemed beneficially owned pursuant
to stock options held by Mr. Kanovsky.
(16) Includes 15,000 shares that are deemed beneficially owned pursuant to
stock options held by Mr. Ferguson.
(17) Includes 8,256 shares that are deemed beneficially owned pursuant to stock
options held by Mr. Johnson.
(18) Includes 6,000 shares that are deemed beneficially owned pursuant to stock
options held by Mr. Weaver.
(19) Includes 6,000 shares that are deemed beneficially owned pursuant to stock
options held by Mr. Mosbacher.
(20) Includes exchangeable shares that are convertible into 37,924 shares of
common stock and 1,547,713 shares that are deemed beneficially owned
pursuant to stock options held by officers and directors.
14
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding annual and long-term
compensation during 1999, 2000 and 2001 for the CEO and the four most highly
compensated executive officers, other than the CEO, who were serving as
executive officers of the company on December 31, 2001.
Long-term
Compensation
Annual Compensation (1)
------------------- -------------
Awards of
Options All Other
Name Principal Position Year Salary Bonus (# of Shares) Compensation
---- --------------------- ---- -------- ---------- ------------- ------------
J. Larry Nichols Chairman, President 2001 $650,000 $1,000,000 105,000 $10,200(2)
and CEO 2000 600,000 1,000,000 70,000 10,200(2)
1999 450,000 900,000 70,000 9,600(2)
J. Michael Lacey Senior Vice President 2001 $350,000 $ 325,000 53,000 $10,200(2)
2000 325,000 300,000 35,000 10,200(2)
1999 267,800 250,000 35,000 9,600(2)
Duke R. Ligon Senior Vice President 2001 $290,000 $ 250,000 53,000 $10,200(2)
2000 275,000 250,000 35,000 10,200(2)
1999 226,600 225,000 35,000 9,600(2)
Darryl G. Smette Senior Vice President 2001 $350,000 $ 325,000 53,000 $14,238(3)
2000 300,000 300,000 35,000 10,200(2)
1999 226,600 250,000 35,000 9,600(2)
William T. Vaughn Senior Vice President 2001 $290,000 $ 275,000 53,000 $13,546(3)
2000 275,000 250,000 35,000 10,200(2)
1999 203,500 225,000 35,000 9,600(2)
--------
(1) No awards of restricted stock or payments under long-term incentive plans
were made by the company to any of the named executives in any periods
covered by the table.
(2) Consists of company matching contributions to the Devon Energy Incentive
Savings Plan.
(3) Consists of company matching contributions to the Devon Energy Incentive
Savings Plan and the Devon Energy Deferred Compensation Savings Plan.
15
Option Grants in 2001
The following table sets forth information concerning options to purchase
common stock granted in 2001 to the five individuals named in the Summary
Compensation Table. The material terms of such options appear in the following
table and the footnotes thereto.
Individual Grants
-----------------------------------------------------------------------
Percent of
Options Total Options Exercise Price Expiration Grant Date
Name Granted Granted in 2001 Per Share (1) Date Present Value (2)
---- ----------- --------------- -------------- ---------- -----------------
J. Larry Nichols. 105,000 (3) 4% $34.85 12/4/2011 $1,500,450
J. Michael Lacey. 53,000 (3) 2% $34.85 12/4/2011 $ 757,370
Duke R. Ligon.... 53,000 (3) 2% $34.85 12/4/2011 $ 757,370
Darryl G. Smette. 53,000 (3) 2% $34.85 12/4/2011 $ 757,370
William T. Vaughn 53,000 (3) 2% $34.85 12/4/2011 $ 757,370
--------
(1) Exercise Price is the closing price of common stock as reported by the
American Stock Exchange or "AMEX" on the date of grant.
(2) The Grant Date Present Value is an estimation of the possible future value
of the option based upon the Black-Scholes Option Pricing Model. The
following assumptions were used in the model: volatility (a measure of the
historic variability of a stock price) - 42.2%; risk-free interest rate
(the interest paid by zero-coupon U.S. government issues with a remaining
term equal to the expected life of the options) - 3.8% per annum; annual
dividend yield - 0.6%; and expected life of the options - five years from
grant date. The option value estimated using this model does not
necessarily represent the value to be realized by the named officers.
(3) These options were granted as of December 4, 2001. 20% of such grant was
immediately vested and exercisable. An additional 20% of such grant becomes
vested and exercisable on each of the next four anniversary dates of the
original grant.
Aggregate Option Exercises in 2001 and Year-End Option Values
The following table sets forth information for the five individuals named in
the Summary Compensation Table concerning the exercise of options to purchase
common stock in 2001 and unexercised options to purchase common stock held at
December 31, 2001.
Number of Unexercised Value of Unexercised In-the-
Options at 12/31/01 Money Options at 12/31/01 (1)
------------------------- -----------------------------
Number of
Shares Acquired Value
Name Upon Exercise Realized (2) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
J. Larry Nichols. -- -- 429,000 84,000 $3,728,875 $319,200
J. Michael Lacey. 38,464 $ 991,863 85,836 42,400 $ 251,356 $161,120
Duke R. Ligon.... 49,646 $1,188,186 67,954 42,400 $ 176,070 $161,120
Darryl G. Smette. 33,500 $1,296,597 176,700 42,400 $1,263,551 $161,120
William T. Vaughn 25,000 $1,106,776 185,200 42,400 $1,474,458 $161,120
--------
(1) The value is based on the aggregate amount of the excess of $38.65 (the
closing price as reported by the AMEX for December 31, 2001) over the
relevant exercise price for outstanding options that were exercisable and
in-the-money at year-end.
(2) The value is based on the excess of the market price over the relevant
exercise price for the options exercised.
16
Compensation Pursuant to Plans
Long-term Incentive Plans. We have outstanding stock options issued to
certain of our directors, executive officers and employees under seven separate
stock option plans as follows:
As of December 31, 2001
------------------------------------
Number of Number of
Number of Shares to be Shares
Plan Description Participants Issued Upon Remaining
---- ----------- ------------ Exercise of Available
Northstar Plan Stock option plan adopted by Northstar. Devon 64 62,270 None
shares were substituted under the plan for
previously granted options in connection with
the acquisition of Northstar.
PennzEnergy Plan Stock option plan adopted by PennzEnergy. 1,416 1,410,158 None
Devon shares were substituted under the plan for
previously granted options in connection with
the acquisition of PennzEnergy.
Santa Fe Snyder Stock option plan adopted by Santa Fe Snyder. 248 1,053,807 None
Plan Devon shares were substituted under the plan for
previously granted options in connection with
the acquisition of Santa Fe Snyder.
Mitchell Plan Stock option plan adopted by Mitchell. Devon 213(1) 1,553,878 None
shares were substituted under the plan for
previously granted options in connection with
the acquisition of Mitchell Energy.
1988 Plan Stock option plan adopted by Devon and its 2 63,000 None
shareholders in 1988.
1993 Plan Stock option plan adopted by Devon and its 12 320,860 None
shareholders in 1993.
1997 Plan Stock option plan originally reserving 2,000,000 618 5,233,487 3,784,133
shares approved by the Devon stockholders in
1997; in 1998 Devon stockholders approved an
increase of the shares reserved to 3,000,000; in
1999 the stockholders approved the increase of
the number of shares reserved to 6,000,000; and
in 2000 Devon stockholders approved the
increase of the number of shares reserved to
10,000,000.
Restricted Stock 200,000 shares of common stock were reserved 271 N/A 53,561
Bonus Plan to grant to those employees who do not receive
stock options.(2)
--------
(1) The Mitchell merger had not yet been consummated on December 31, 2001,
however, on the date of closing, January 24, 2002, there were 213
participants.
(2) No awards of common stock have been or will be made to officers or
directors under the Restricted Stock Plan.
17
The exercise price of options granted under the 1997 Plan may not be less
than the estimated fair market value of the stock on the date of grant (plus
10% if the grantee owns or controls more than 10% of the total voting stock of
Devon prior to the grant). Options granted are exercisable during a period
established for each grant, which period may not exceed 10 years from the date
of grant. Under the 1997 Plan, the grantee must pay the exercise price in cash
or in common stock, or a combination thereof, at the time the option is
exercised. The 1997 Plan expires on March 25, 2007.
We have no other plans that provide compensation intended to serve as
incentive for performance to occur over a period longer than one fiscal year.
Retirement Plans. We have three applicable retirement plans, as follows:
Basic Plan The Basic Plan is a qualified defined benefit retirement plan which provides benefits
based upon past and future employment service with Devon. Each eligible employee
who retires is entitled to receive annual retirement income, computed as a percentage of
"final average compensation" (which consists of the average of the highest three
consecutive years' salaries, wages, and bonuses out of the last 10 years), and credited
years of service up to 25 years. Contributions by employees are neither required nor
permitted under the Basic Plan. Benefits are computed based on straight-life annuity
amounts and are reduced by Social Security benefits. Benefits under the Basic Plan are
reduced for certain highly compensated employees in order to comply with certain
requirements of the Employment Retirement Income Security Act of 1974.
The following table sets forth the credited years of service as of December 31, 2001
under Devon's Basic Plan for each of the five individuals named in the Summary
Compensation Table.
Credited Years
Name of Individual of Service
------------------ --------
J. Larry Nichols................................ 25
J. Michael Lacey................................ 13
Duke R. Ligon................................... 5
Darryl G. Smette................................ 15
William T. Vaughn............................... 19
Benefit The Benefit Restoration Plan is a non-qualified retirement benefit plan, the purpose of
Restoration Plan which is to restore retirement benefits for certain selected key management and highly
compensated employees because their annual compensation is greater than the
maximum annual compensation that can be considered in computing their benefits
under the Basic Plan. An employee must be selected by the Compensation and Stock
Option Committee in order to be eligible for participation in the Benefit Restoration
Plan. All other provisions of the Benefit Restoration Plan mirror those of the Basic
Plan. All of the five individuals named in the Summary Compensation Table have been
selected to participate in the Benefit Restoration Plan. The Benefit Restoration Plan has
been partially funded through a rabbi trust arrangement.
18
Supplemental The Supplemental Retirement Plan is another non-qualified retirement plan for a small
Retirement Plan group of executives, the purpose of which is to provide additional retirement benefits
for long-service executives. The plan vests after 10 years of service, and provides
retirement income equal to 65% of the executive's final average compensation,
multiplied by a fraction, the numerator of which is his credited years of service (not to
exceed 20) and the denominator of which is 20 (or less, if so determined by the
Compensation and Stock Option Committee), less any offset amounts. Offset amounts
are (i) benefits payable under the Basic Plan, (ii) benefits payable under the Benefit
Restoration Plan, (iii) benefits due to the participant under Social Security, and (iv) any
benefits paid to the participant under the company's long-term disability plan.
In general, benefits will be paid under the Supplemental Retirement Plan when the
participant retires from the company. However, in the event that the executive's
employment with the company is terminated under conditions that qualify him or her to
a severance benefit under the Employment Agreement (see below), then the executive
will be 100% vested in his or her benefit and entitled to receive the actuarial equivalent
of such benefit earned as of the date of termination of employment. If the executive is
terminated within two years following a "change of control," his or her benefit will be
paid in a single lump sum payment. Otherwise, the benefit will be paid monthly for the
life of the executive. "Change of control" is defined as the date on which one of the
following occurs: (i) an entity or group acquires 30% or more of the company's
outstanding voting securities, (ii) the incumbent board ceases to constitute at least a
majority of the company's board, or (iii) a merger, reorganization or consolidation is
consummated, after shareholder approval, unless (a) substantially all of the
shareholders prior to the transaction continue to own more than 50% of the voting
power after the transaction, (b) no person owns 30% or more of the combined voting
securities, and (c) the incumbent board constitutes at least a majority of the board after
the transaction. The Supplemental Retirement Plan is also partially funded through a
rabbi trust arrangement.
The following table shows the estimated aggregate annual retirement benefits
payable under the Basic Plan, the Benefit Restoration Plan and the Supplemental
Retirement Plan to the participants therein, including the five individuals
named in the Summary Compensation Table. The amount presented assumes a normal
retirement in 2001 at age 65.
Years of Service
-------------------------------------
Final Average Compensation 5 10 15 20 or more
-------------------------- -------- -------- -------- ----------
$ 500,000 $ 76,642 $153,284 $229,926 $ 306,568
600,000 92,892 185,784 278,676 371,568
700,000 109,142 218,284 327,426 436,568
800,000 125,392 250,784 376,176 501,568
900,000 141,642 283,284 424,926 566,568
1,000,000 157,892 315,784 473,676 631,568
1,500,000 239,142 478,284 717,426 956,568
2,000,000 320,392 640,784 961,176 1,281,568
19
Employment Agreements
A small number of senior executives, including the five individuals named in
the Summary Compensation Table, are entitled to certain additional compensation
under the following events:
(1) employment with the company is involuntarily terminated other than for
"Cause;" or
(2) employee voluntarily terminates for "Good Reason", as those terms are
defined in each of the officers' employment agreements.
In either case the payment due to the officer would be equal to three times
their annual compensation. In addition, the Employment Agreement provides for
the officer to receive the same basic health and welfare benefits that he or
she would otherwise be entitled to receive if he or she were an employee of the
company for three years after termination. If the executive is terminated
within two years of a "change in control," he or she is also entitled to an
additional three years of service credit and age in determining eligibility for
retiree medical and supplemental retirement benefits. "Change of control" is
defined in the Employment Agreements the same as in the Retirement Plans
described above.
Director Compensation
Non-management directors of Devon receive:
. an annual retainer of $30,000, payable quarterly.
. $2,000 for each Board meeting attended. Directors participating in a
telephonic meeting receive a fee of $1,000.
. an additional $3,000 per year for serving as chairmen of a standing
committee of the Board.
. $2,000 for each committee meeting attended that requires separate travel.
. $1,000 for each committee meeting that does not require separate travel.
Non-management directors are eligible to receive stock options in addition
to their cash remuneration. Such directors are eligible to receive stock option
grants of up to 3,000 shares immediately after each annual meeting of
stockholders at an exercise price equal to the fair market value of the common
stock on that date. Any unexercised options will expire 10 years after the date
of grant. The Compensation and Stock Option Committee, which awards options to
non-management directors, may elect to grant awards that are less than the
3,000 shares maximum. However, the Compensation and Stock Option Committee has
no other discretion regarding the award of stock options to non-management
directors. The directors were eligible to receive stock options beginning in
1997. The following table sets forth information concerning options granted to
non-management directors in 2001:
20
Individual Grants in 2001
------------------------------------------------------------------------------
Percent of
Options Total Options Exercise Price Expiration Grant Date
Name Granted (1) Granted in 2001 Per Share (2) Date Present Value (3)
---- ----------- --------------- -------------- ---------- -----------------
Thomas F. Ferguson...... 3,000 0.1% $60.51 5/17/2011 $78,840
David M. Gavrin......... 3,000 0.1% $60.51 5/17/2011 $78,840
Michael E. Gellert...... 3,000 0.1% $60.51 5/17/2011 $78,840
John A. Hill............ 3,000 0.1% $60.51 5/17/2011 $78,840
William J. Johnson...... 3,000 0.1% $60.51 5/17/2011 $78,840
Michael M. Kanovsky..... 3,000 0.1% $60.51 5/17/2011 $78,840
Robert A. Mosbacher, Jr. 3,000 0.1% $60.51 5/17/2011 $78,840
Robert B. Weaver........ 3,000 0.1% $60.51 5/17/2011 $78,840
--------
(1) The options were granted on May 17, 2001, and immediately became vested and
exercisable.
(2) Exercise price is the fair market value on the date of grant, which is the
closing price of common stock on the AMEX.
(3) The grant date present value is an estimation of the possible future value
of the option grant based upon the Black-Scholes Option Pricing Model. The
following assumptions were used in the model: volatility (a measure of the
historic variability of a stock price) - 42.2%; risk-free interest rate
(the interest paid by zero-coupon U.S. government issues with a remaining
term equal to the expected life of the options) - 4.9% per annum; annual
dividend yield - 0.6%; and expected life of the options - five years from
grant date. The option value estimated using this model does not
necessarily represent the value to be realized by the named directors.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the board of directors or the
"Committee" establishes the general compensation policies of the company. The
Committee meets in November or December of each year to establish specific
compensation levels for the CEO and to review the executive officers'
compensation in general. (The compensation for executive officers other than
the CEO is determined by the CEO.)
The Committee's goal in setting executive compensation is to motivate,
reward and retain management talent who support the company's goals of
increasing absolute and per share value for stockholders. This goal is carried
out through awards of base salary, annual cash bonuses and stock options.
The Committee generally believes that the total cash compensation of its CEO
and other executive officers should be similar to the total cash compensation
of similarly situated executives of peer group public companies within the oil
and gas industry. Further, a significant portion of the complete compensation
package should be tied to the company's success in achieving long-term growth
in per share earnings, cash flow, reserves, production and stock price.
21
Base Salary. A competitive base salary is considered vital to support the
continuity of management and is consistent with the long-term nature of the oil
and gas business. The Committee believes that the base salaries of the
executive officers should be similar to the base salaries of executive officers
of similar companies within the oil and gas industry. Therefore, no performance
criteria are applied to the base salary portion of the total compensation.
Performance of the company versus its peers is, however, given significant
weight in the cash bonus and stock option portions of compensation.
The CEO's base salary for 2001 was based upon information available to the
Committee at its November 2000 meeting. At that meeting the Committee reviewed
the results of a group of nine companies to which the Committee believed Devon
should be compared. This peer group included companies that are similar to
Devon in total revenues, balance sheet ratios, oil and gas reserves and overall
oil and gas operations. (The industry group index in the Performance Graph
included in this proxy statement includes, but is not limited to, the companies
used for this compensation analysis. In its analysis, the Committee
specifically focused on those companies that are most similar to Devon in size,
financial structure and operations, believing that the most direct comparisons
would not necessarily include all of the more than 200 companies included in
the industry group index used for the performance graph.)
A review of the base salaries for the highest-paid executive at each of
these peer companies revealed that the 2000 base salary of Devon's CEO was at
the low end of the range of all base salaries in the group, and only 77% of the
average base salary for the group. As a result of this finding, the Committee
increased the CEO's base salary for 2001 by 8% to $650,000.
The Committee advised the CEO that a similar procedure, using both
publicly-available and private survey data, should be used in evaluating the
base salaries of the other executive officers of the company.
Cash Bonuses. The Committee believes that the officers' cash bonuses should
be tied to Devon's success in meeting its corporate goals and budgets and in
achieving growth in comparison to those of the company's industry peers and to
the individual officers' contribution to such success. Cash bonuses for
calendar year 2001 were set at the December 2001 Committee meeting. In setting
the cash bonus for the CEO for the calendar year 2001, the Committee reviewed
the performance of the peer group of seven oil and gas companies. (Two
companies were eliminated from the group due to their mergers into other
companies.)
The Committee reviewed Devon's growth over the last one, three and five
years, compared with the peer group average on a number of different measures,
notably, change in earnings per share, cash flow per share, reserves per share
and stock price. Devon's growth in all of these measures exceeded that of the
peer group average for the years reviewed, except stock price performance for
the last year. The Committee considered the CEO's efforts in successfully
negotiating both the Mitchell and Anderson mergers and completing the Anderson
transaction. The Committee also noted that the Mitchell merger and announced
property sales had yet to be completed. In light of this analysis, the
Committee awarded the CEO a cash bonus of $1,000,000. This award resulted in
his total cash compensation for 2001 being 54% of the average total 2000 cash
compensation for the highest-paid executives of the companies in the peer group.
The Committee advised the CEO that similar criteria should be used in
establishing cash bonuses for the other executive officers.
Stock Options. The Committee desires to reward key management and
professional employees for long-term strategic management practices and
enhancement of stockholder value by awarding stock options. Stock options are
granted at an option price equal to the fair market value of the common stock
on the grant date. The grant of these options and the optionees' holdings of
unexercised options and/or ownership of exercised option shares is designed to
closely align the interests of the executive officers with those of the
stockholders. The ultimate value of the stock options will depend on the
continued success of the company, thereby creating a continuing incentive for
executive officers to perform long after the initial grant.
The Committee considered stock option grants in connection with 2001 company
performance at its meeting in December 2001. Stock options were awarded to the
CEO and other executive officers at this meeting.
22
The Committee has established stock option targets for each participating
level of responsibility within the company. Corporate financial performance may
be considered by the Committee in determining the number of stock options
granted. The Committee wants to encourage executives to maintain ownership of
company stock and/or unexercised options. Although there are no specific
ownership criteria used in awarding options, long-term ownership is viewed
favorably. The Committee noted that Devon's senior officers as a group still
retained 82% of all options (both vested and unvested) that had been granted to
them through November 2001.
The Committee generally seeks to award no more than 2% of the outstanding
shares in any one year, and further desires to keep the total number of shares
under option and available for option to less than 10% of the total shares
outstanding. As of November 30, 2001, and pro forma for the then-pending merger
with Mitchell, there were 9,958,985 shares under option (including options on
6,416,540 shares granted by Northstar, PennzEnergy, Santa Fe Snyder and
Mitchell which were assumed by Devon) and 6,259,035 shares available for
option, which were 5.6% and 3.7%, respectively, of total shares on a fully
diluted basis.
Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code limits the tax deduction to $1 million for compensation paid to
any one executive officer, unless certain requirements are met. The Committee
may award compensation which is not deductible under Section 162(m) if it
believes that such awards would be in the best interest of the company or its
stockholders.
Submission of Compensation Plans to Stockholders. The Committee has no
present intention of submitting any compensation plans to the stockholders for
approval that would result in the issuance of more than 5% of the company's
outstanding common stock.
We believe that the company has an appropriate compensation structure that
properly rewards and motivates its executive officers to build stockholder
value.
As to compensation of the As to compensation of
CEO Executive Officers other
than the CEO
David M. Gavrin, Chairman J. Larry Nichols
Michael E. Gellert
John A. Hill
William J. Johnson
Compensation Committee Interlocks
The compensation committee is composed of four independent, non-employee
directors, Messrs. Gavrin, Gellert, Hill and Johnson. These directors have no
interlocking relationships as defined by the Securities and Exchange Commission.
REPORT OF THE AUDIT COMMITTEE
The board of directors maintains an audit committee comprised of three of
our outside directors. The board of directors and the audit committee believe
that the audit committee's current member composition satisfies the rules of
the AMEX that govern audit committee composition, including the requirement
that audit committee members all be "independent directors" as that term is
defined by AMEX Listing Standards, Policies and Requirements--Section 121(A).
The audit committee oversees our financial reporting process on behalf of
the board of directors. Management has the primary responsibility for the
preparation of the financial statements and the establishment and maintenance
of the system of internal controls. This system is designed to provide
reasonable assurance regarding the achievement of objectives in the areas of
reliability of financial reporting, effectiveness and efficiency of operations
and compliance with applicable laws and regulations. In fulfilling its oversight
23
responsibilities, the committee reviewed the audited financial statements in
the annual report with management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements. The board has adopted a written charter of the audit committee
which was included in our proxy statement for our 2001 annual meeting.
In fulfilling its duties in the 2001 fiscal year, the audit committee has
done each of the following:
. reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of our audited financial
statements with accounting principles generally accepted in the United
States of America, their judgments as to the quality, not just the
acceptability, of our accounting principles and other matters;
. discussed with the independent auditors other matters under generally
accepted auditing standards, including Statement on Auditing Standards
No. 61, Communications with Audit Committee;
. discussed with the independent auditors the auditors' independence from
management and us, including the matters in the written disclosures and
the letter from the independent auditors required by the Independence
Standards Board Standard No. 1;
. discussed with our independent auditors the overall scope and plans for
their audit; and
. met with the independent auditors, with and without management present,
to discuss the results of their audit, their evaluation of our internal
controls, and the overall quality of our financial reporting.
Under the terms of its charter, the audit committee approves fees paid by
Devon to our independent auditors. For the fiscal year ended December 31, 2001,
we paid the following fees to KPMG LLP:
Audit fees, excluding audit related.................... $703,000
========
Financial information systems design and implementation $ --
========
All other fees:
Audit related fees.................................. $366,204
Other non-audit services............................ 318,960
--------
Total all other fees................................... $685,164
========
Audit related fees consisted principally of audits of financial statements
of employee benefit plans and certain affiliates and subsidiaries, reviews of
registration statements and offering memorandums and issuance of consents to
use the auditors' reports in registration statements, and issuances of letters
to underwriters and first purchasers. Other non-audit services consisted of tax
compliance and tax consulting fees. The audit committee considered whether the
provision of such services is compatible with maintaining KPMG LLP's
independence.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors, and the board has approved,
that the audited financial statements be included in our annual report on Form
10-K for the fiscal year ended December 31, 2001 for filing with the Securities
and Exchange Commission. The audit committee also recommended to the board of
directors, and the board has approved, KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2002.
Thomas F. Ferguson, Chairman
Michael M. Kanovsky
Robert B. Weaver
24
Performance Graph
The following performance graph compares our cumulative total stockholder
return on its common stock for the five-year period from December 31, 1996 to
December 31, 2001, with the cumulative total return of the Standard & Poor's
500 stock index and the Stock Index by Standard Industrial Classification Code,
or SIC Code, for Crude Petroleum and Natural Gas. The SIC Code for Crude
Petroleum and Natural Gas is 1311. The identities of the 200+ companies
included in the index will be provided upon request.
CUMULATIVE TOTAL RETURN*
DEVON ENERGY CORP., S&P 500, AND SIC CODE INDEX
FOR CRUDE PETROLEUM AND NATURAL GAS
[CHART]
DEVON ENERGY CORP.
1996 100.0
1997 111.0
1998 89.3
1999 96.3
2000 179.0
2001 114.0
SIC CODE INDEX
1996 100.0
1997 101.0
1998 81.2
1999 99.2
2000 126.0
2001 116.0
S&P 500
1996 100.0
1997 133.0
1998 171.0
1999 208.0
2000 189.0
2001 166.0
Assumes $100 invested on December 31, 1996, in our common stock, S&P 500 Index
and SIC Code Index for Crude Petroleum and Natural Gas.
* Total return assumes reinvestment of dividends.
SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINEES
The company received a stockholder proposal regarding board diversity. The
proposal was withdrawn as a result of the board adopting the resolution below.
The company has always had a policy to select the most qualified candidates for
board positions and not to limit such selection either by gender or race. The
board resolution adopted reaffirms that policy.
UNANIMOUSLY RESOLVED: That the company take reasonable steps to ensure that
qualified women and qualified persons from minority racial groups are in the
pool from which the board member nominees are chosen.
25
The nominating committee will consider nominees recommended by our
stockholders. In order to recommend a nominee for the next annual meeting,
stockholders must deliver the recommendation in writing to us on or before
December 12, 2002, addressed to the attention of our corporate secretary and
must provide the full name, address and business history of the recommended
nominee.
Any stockholder desiring to present a proposal for inclusion in our proxy
statement for our 2003 annual meeting of stockholders must present the proposal
to our corporate secretary not later than December 12, 2002. Only those
proposals that comply with the requirements of Rule 14a-8 promulgated under the
Securities Exchange Act of 1934 will be included in our proxy statement for the
2003 annual meeting. Written notice of stockholder proposals submitted outside
the process of Rule 14a-8 for consideration at the 2003 annual meeting of
stockholders, but not included in our proxy statement, must be received by our
corporate secretary between January 17, 2003 and February 16, 2003 in order to
be considered timely, subject to any provisions of our bylaws. The chairman of
the meeting may determine that any proposal for which we did not receive timely
notice shall not be considered at the meeting. If in the discretion of the
chairman any such proposal is to be considered at the meeting, the persons
designated in our proxy statement shall be granted discretionary authority with
respect to the untimely stockholder proposal.
OTHER MATTERS
Our board of directors knows of no other matter to come before the meeting
other than that set forth herein and in the accompanying notice of annual
meeting of stockholders. However, if any other matters should properly come
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote such proxies, as they deem advisable in accordance
with their best judgment.
Your cooperation in giving this matter your immediate attention and in
returning your proxy promptly will be appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
Janice A. Dobbs
Corporate Secretary
April 9, 2002
26
DEVON ENERGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Devon Energy Corporation, a Delaware
corporation, hereby nominates and appoints J. Larry Nichols and Marian J. Moon
with full power of substitution, as true and lawful agents and proxies to
represent the undersigned and vote all shares of stock of Devon Energy
Corporation owned by the undersigned in all matters coming before the Annual
Meeting of Stockholders (or any adjournment thereof) of Devon Energy Corporation
to be held in the Egbert Room on the second floor of The Renaissance Oklahoma
City Hotel, Ten North Broadway, Oklahoma City, Oklahoma, on Thursday, May 16,
2002, at 10:00 a.m., Oklahoma City time. The Board of Directors recommends a
vote "FOR" the matters set forth on the reverse side.
Do not return your Proxy Card if you are voting by Telephone or Internet
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please mark
[X] votes as in this
example.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER SPECIFIED BELOW
BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS ARE NOT GIVEN, THIS
PROXY WILL BE VOTED "FOR" THE NOMINEES LISTED IN ITEM 1.
1. ELECTION OF DIRECTORS
Nominees: John A. Hill, William J. Johnson,
Michael M. Kanovsky and Robert A. Mosbacher, Jr.
FOR WITHHELD
(all nominees) (as to all nominees)
[ ] [ ]
WITHHELD
(as to nominees listed below)
[ ]
--------------------------------------------------------------------------------
You may withhold your vote for a particular nominee by marking this box and
naming the nominee for which your vote is being withheld.
2. OTHER MATTERS:
In their discretion, to vote with respect to any other matters that may
come before the meeting or any adjournment thereof, including matters incident
to its conduct.
I RESERVE THE RIGHT TO REVOKE THE PROXY AT ANY TIME BEFORE THE EXERCISE THEREOF.
Mark here for address change and note at left / /
Mark here if you plan to attend the meeting / /
Please sign exactly as your name appears at left, indicating your official
position or representative capacity, if applicable. If shares are held jointly,
each owner should sign.
Signature:_______________ Date: ______ Signature: ________________ Date:_______
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DEVON ENERGY CORPORATION
The undersigned holder of Exchangeable Shares of Northstar Energy
Corporation hereby directs CIBC Mellon Trust Company (the "Trustee") to cast a
number of votes equal to the number of Exchangeable Shares owned by the
undersigned in accordance with the instructions indicated below at the Annual
Meeting of Stockholders (or any adjournment thereof) in the Egbert Room on the
second floor of The Renaissance Oklahoma City Hotel, Ten North Broadway,
Oklahoma City, Oklahoma, on Thursday, May 16, 2002, at 10:00 a.m. Oklahoma City
time.
PLEASE SIGN THIS VOTING DIRECTION CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
WHEN PROPERLY EXECUTED, THE TRUSTEE WILL CAST A NUMBER OF VOTES AT THE MEETING
EQUAL TO THE NUMBER OF EXCHANGEABLE SHARES OF RECORD OWNED BY THE
UNDERSIGNED IN THE MANNER SPECIFIED BELOW. IF NO INSTRUCTIONS ARE GIVEN, NO
VOTES WILL BE CAST ON BEHALF OF THE UNDERSIGNED.
Please mark
[x] votes as in this
example.
1. ELECTION OF DIRECTORS
Nominees: John A. Hill, William J. Johnson, Michael M. Kanovsky and Robert A.
Mosbacher, Jr.
FOR WITHHELD
(all nominees) (as to all nominees)
[ ] [ ]
WITHHELD
(as to nominees listed below)
[ ]
--------------------------------------------------------------------------------
You may withhold your vote for a particular nominee by marking this box and
naming the nominee for which your vote is being withheld.
Please sign exactly as your name appears below, indicating your official
position or representative capacity, if applicable. If shares are held jointly,
each owner should sign.
Signature ___________________________________ Date _________________
Signature ___________________________________ Date _________________