2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 260 ANADARKO PETROLEUM CORPORATION Compensation Discussion and Analysis 2017PayOutcomesDemonstratePayandPerformanceAlignment Ourfinancialandoperatingresultsin2017werelargelyinlinewithexpectationswhileourrelativeTSRperformancewasinthe bottomquartile.TheincentivecompensationrealizedbyourNEOswassubstantiallybelowtargetandgrantdatevalue,as applicable,demonstratingthatourprogramdesignappropriatelyalignscompensationlevelswithperformanceresults. PayOutcomesDemonstrate aStrongPay-and-PerformanceAlignment 2017TARGETVS.PAYOUT 85% 0% 100% 0% Target ActualPayout PUs AIP Incentivecompensation realizedbyourNEOs for2017wassubstantiallybelow target, demonstrating thatourprogramdesignappropriatelyalignscompensation levelswithperformance results.Performanceunits relate to the three-yearperformanceperiodendedDecember31,2017. TARGET 2017AIPScoreAdjustedDownward. AfteranassessmentoftheCompany’sperformancefortheyearinreview,the CompensationCommittee(referredtointhissectionoftheproxystatementastheCommittee)determineditwasappropriate toreducethecalculatedperformancescoreforthe2017AIPof92.6%to85%fortheexecutiveofficers. Company PerformanceScore 92.6% 85% (~8%) NegativeCommittee Discretion ApprovedAIP PerformanceScore = 2014PerformanceUnits—NoPayoutEarned. BasedonAnadarko’sperformanceresultsforthethree-yearperiodended December31,2017,theexecutiveofficersdidnotearnanyofthe2014performanceunits.Accordingly,therewasnopayout associatedwiththeseawards. PaidOut PUsVested/ (38.3%) *Outof12 companies AbsoluteTSR Performance RelativeTSR Performance 10 th Place* 0 2014PerformanceUnitResults (for the 3-yearperiodendedDecember 31,2017) 34 ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT Total of 06 pages in section Compensation Discussion and Analysis Elementsofour2017CompensationProgram Component Award PerformanceMetrics Purpose BaseSalary Cash N/A Providesafixedlevelofcompetitive compensationtoattractandretainexecutive talent. AnnualIncentive Program(AIP) Cash Operational* • ReserveAdditions • SalesVolumes Provedreservesarethesinglemostimportant assetofanexplorationandproduction company.Sincethisassetdepletesthrough production,thecost-effectiveadditionofnew provedreservesiskeytoincreasingtheintrinsic valueoftheCompanyandultimatelythestock price.TheCompanyalsofocusesonsales volumessinceitisthemeansbywhichreserves areconvertedintocashflow. Financial* • CapitalExpenditures • CashOperating Income/BOE • ControllableCash Costs Thesemetricsfocusonfinancialdiscipline.The Companyallocatesthemajorityofitscapitalto assetsthatgeneratestrongeconomicmargins andreturnswhileaportionisallocatedtolong- termprojectsthatareintendedtoprovidefuture reservesandsalesvolumes.TheControllable CashCostsperformancemetricincentivizes employeestomanageandreducecoststo maximizemarginsandprofitability. Safety* • TotalRecordable IncidentRate Thehealthandsafetyofemployeesisvery importanttotheCompanyandcriticalto success.Accordingly,theperformancemetri s includeatargetTotalRecordableIncidentRate per100employeestofocusemployeeson maintainingasafeworkenvironment. Equity Compensation PerformanceUnits (50%) 3-YearTotalStockholder Return(TSR) TSRprovidesnotonlyaneffectivecomparison ofourperformanceagainstanindustrypeer group,butalsoanabsoluteperformance-based componentasthevalueofvestedawardsistied tothepriceofourcommonstockatthetimeof payout. Non-QualifiedStock Options(25%) AbsoluteStockPrice StockOptionsrewardabsolutevaluecreation andtypicallyvestpro-rataannuallyoverthree years,encouragingbothperformanceand retention. RestrictedStock Units(25%) AbsoluteStockPrice RestrictedStockUnitsalignwithabsolutestock priceperformanceandprovideretentivevalue, especiallyinavolatileandcyclicalindustry. * Theseperformancemetricshavebeenchangedin2018tomoredirectlyalignwithourstrategyandfeedbackreceivedfrom ourstockholders(foradetaileddiscussionofcompensationprogramchangesfor2018,seepage36). ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT 33 Compensation Discussion and Analysis EXECUTIVE SUMMARY OurMissionandStrategy Ourobjectiveistodelivercompetitivereturnson,andof, capitaltostakeholdersbyexploringforandcommercially developingoilandnaturalgasresourcesvitaltotheworld’s healthandwelfareby: • exploringforandcommerciallydeveloping resources globally; • ensuring health,safety,andcommercialexcellence ; • focusingon financialdiscipline,flexibility,andvalue andcreation ; whiledemonstrating theCompany’scorevalues of integrityandtrust,servantleadership,peopleandpassion, commercialfocus,andopencommunicationinallthatwe do. ExecutingonOurStrategy Usingcapitalefficiencyasafoundationalprincipletodeliver onourstrategy,capitalwillbeallocatedattheassetlevel basedonexpectedreturn,andmeasuredonaperdebt- adjustedshare(DAS)basisforcompanyperformance.We plantocreateattractivereturnson,andof,capitalin2018 by: • investingwithincashflow, whichhasbeena foundationalprincipleforoveradecade,basedonan expected$50oiland$3naturalgasenvironment,andif realizedpricesarehigherthanexpected, returning capital tostakeholdersversusmateriallyincreasingour investmentplans; • producingvalueandgrowth frominvestmentsthat generate peer-leadingperDAScorporate performance; • continuingtorepurchasestockunderour$3billion sharerepurchaseprogram ,withanexpectedmid-year 2018completion; • raisingourdividend toacompetitiveyield;and • retiringdebt atparforover$1billionoffixedincome securitiesoverthebalanceof2018and2019. % $ ReturningCapital toStakeholders SHARE REPURCHASES CASH DIVIDEND DEBT REDUCTION $3.0BillionCurrentProgram Fivefold Increase to $0.25perShare RetiringNear-TermMaturities Ourstrategydrivesthedesignofourcompensation programs,whichreflectourpay-for-performance philosophy. ThefollowingsummarizestheCompany’sperformanceresultsinour2017compensationprogramsalongwith2018changes inresponsetostockholderfeedback. AIPPerformanceMetrics: −Operational − Financial −Safety PerDebt-AdjustedShare −ReserveAdditions Growth −Sales-VolumeGrowth AIP −Below Target 85% Payout Cash FlowReturn on InvestedCapital EnhancedHSE PerformanceMetrics PerformanceUnits 0% Payout PerformanceUnits: − TSR OurBusinessStrategy CompensationPrograms AlignedwithStrategy 2017PayOutcomes DemonstratePay for Performance 2018Compensation Changes toLead Industry 32 ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT BANK OF AMERICA CORPORATION CompensationDiscussionandAnalysis 1. Executive Summary a. Executive Compensation Philosophy Ourcompensationphilosophyistopayforperformanceoverthelong-term,aswellasonanannualbasis.Ourperformance considerationsincludebothfinancialandnon-financialmeasures—includingthemannerinwhichresultsareachieved—forthe company,lineofbusiness,andtheindividual.TheseconsiderationsreinforceandpromoteResponsibleGrowthandmaintain alignmentwithourriskframework.Ourexecutivecompensationprogramprovidesamixofsalary,incentives,andbenefitspaid overtimetoalignexecutiveofficerandstockholderinterests.OurCompensationandBenefitsCommitteehastheprimary responsibilityforapprovingourcompensationstrategy andphilosophyandthecompensationprogramsapplicabletoournamed executiveofficerslistedbelow.WithrespecttoMr.Moynihan’scompensation,ourCompensationandBenefitsCommittee makesarecommendationthatisfurtherreviewedandapprovedbytheindependentmembersoftheBoard. Named Executive Officers BrianT.Moynihan ChairmanandChiefExecutiveOfficer PaulM.Donofrio ChiefFinancialOfficer GeoffreyS.Greener ChiefRiskOfficer TerrenceP.Laughlin ViceChairmanandHeadofGlobalWealth&InvestmentManagement ThomasK.Montag ChiefOperatingOfficer b. 2017 Executive Compensation Highlights ‰ Our design is aligned with our focus on Responsible Growth and has been consistent for more than five years, receiving over 93%stockholdersupportsince2013 ‰ Mixoffixedandvariablepay ‰ Cancellationandclawbackfeaturesinallequity-basedincentives ‰ Deferralofmajorityofvariablepaythroughequity-basedincentives ‰ Riskmanagementpracticesthatencouragesustainableperformanceovertime ‰ ComprehensiveCommitteereviewoffinancialandnon-financialperformance ‰ Paydecisionsconsistentwithpay-for-performancephilosophyand2017companyandindividualperformance ‰ TotalcompensationawardedtoMr.Moynihanof$23.0millionfor2017,comparedto$20.0millionfor2016 ‰ 93.5%ofMr.Moynihan’stotalcompensationisvariableanddirectlylinkedtocompanyperformance ‰ Half of Mr. Moynihan’s variable pay was awarded as performance restricted stock units and must be re-earned based on three-yearaverageperformanceofkeymetrics(returnonassetsandgrowthinadjustedtangiblebookvalue) ‰ Returnonassetsgoalincreasedby10basispointsfromprioryears ‰ 50%ofnetafter-taxsharesMr.Moynihanreceivesascompensationmustberetaineduntiloneyearafterretirement c. Stockholder Engagement & Say on Pay Results Weconductstockholderengagementthroughouttheyearandprovidestockholderswithanannualopportunitytocastan advisorySayonPayvote.Atour2017annualmeetingofstockholders,over95%ofthevotescastfavoredourSayonPay proposal.Additionallyin2017andearly2018,managementanddirectorsmetwithinvestorsowningapproximately38%of outstandingsharesanddiscussedourexecutivecompensationprogram,humancapitalmanagement,andothercompensation- relatedmatters. Thesediscussions,togetherwiththe2017SayonPayresults,indicatedstrongsupportforour2016 compensationprogramandinfluencedourdecisiontomaintainaconsistentoverallapproachfor2017.Stockholder engagementandtheoutcomeofSayonPayvoteresultswillcontinuetoinformfuturecompensationdecisions. Historical Say on Pay Vote 2017 95.6% 2013 93.8% 2014 93.5% 2015 94.8% 2016 93.1% 38 BankofAmericaCorporation2018ProxyStatement