2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 484 In addition, each year, we: (i) conduct multiple meetings with shareholder groups to discuss governance issues, (ii)conductanin-personmeetingbetweenourCEOandour“leadactiveshareholder,”whoisdesignatedbyagroupofour more involved shareholders to discuss environmental, social, and governance issues and progress on previously set targets and goals for the coming year, (iii) participatewith our shareholders in various governance forums, and (iv) as appropriate,facilitatemeetingsbetweenshareholdersandourdirectors.Ourmeetingsandinteractionswithshareholders aredesignedtobetterunderstandhowourshareholdersperceiveApacheandtoprovideourinvestorsanopportunityto discussmattersthattheythinkdeserve attention.Wealsoremaincommittedtobroadstakeholderengagement.Since 2015,wehaveimplementedanexpandedcommunityengagementtrackingandresponsesystem,tohelpusadequately resolveandlearnfromdiscussionsandoutreachwithcommunityleadersinareaswhereweoperateand,in2016,weset upaseparate,toll-freehotlinenumber,theApacheGoodNeighborLine,specificallyforanycommunitygrievances.This comprehensivefeedbacksystemfacilitatesaggregatedanalysistohelpidentifytrendsandsharelessonslearnedacross Apache. We believe the diversity of our engagement practices – with both shareholders and other key stakeholders – collectively provides for a robust, open exchange of ideas and perspectives, and is an asset for our Board and managementteam. Board Refreshment and Succession BOARDMEMBER TENURE COMMITTED TO BOARD REFRESHMENT Reduction in the Board’s average tenure from 17 years in 2013 to 6 years through year-end 2017 Reduction in the average age of the Board from 68 in 2013 to 61 through year-end 2017 CG&N committee regularly evaluates size and composition of the Board Mandatory director retirement age of 75 Please see the discussion of criteria for new Boardmembers and re-election of Boardmembers on page 24 of this proxy statement. 18 % 55 % 27 % MORE THAN 6 YEARS 3 TO 6 YEARS 0 TO 2 YEARS Board Nominees (pg. 15) Belowarethedirectorsnominatedforelectionbyshareholderstoanadditionalone-yearterm.TheBoardrecommendsa vote“ FOR ”eachofthedirectors. AGE (as ofYE’17) 51 62 57 56 48 63 60 70 2017 MD&C Rene R. Joyce 67 1996 Audit George D. Lawrence 58 2013 Non-Executive Chairman John E. Lowe AGESERVINGCOMMITTEESINDEPENDENT(asofYE’17)SINCESERVEDAnnellR.Bay622014CG&NChairman,MD&CYESJohnJ.ChristmannIV512015NOTAPPLICABLENOChansooJoung572011AuditChairman,CG&NYESReneR.Joyce702017MD&CYESGeorgeD.Lawrence671996AuditYESJohnE.Lowe582013Non-ExecutiveChairmanYESWilliamC.Montgomery562011MD&CChairman,CG&NYESAmyH.Nelson482014AuditYESDanielW.Rabun632015MD&CYESPeterA.Ragauss602014AuditYES ATTENDANCEBOARDAUDITCG&NMD&CRATE% AnnellR.Bay C 100JohnJ.ChristmannIV100ChansooJoung C 100ReneR.Joyce100GeorgeD.Lawrence100JohnE.Lowe C 100WilliamC.Montgomery C 100AmyH.Nelson100RodmanD.Patton*100DanielW.Rabun100PeterA.Ragauss100 6 APACHECORPORATION -2018ProxyStatement Total of 02 pages in section Compensation Discussion and Analysis responsetostockholderfeedback.Atthe2017Annual Meeting,ourexecutivecompensationprogramsreceived thesupportofapproximately91%ofthevotescast. Followingthe2017AnnualMeeting,ourengagementteam continuedtoseekfeedbackfromstockholders,who expressedtheirviewsontheperformancemeasuresthat theyconsiderappropriatetobestassessperformanceinour industry.Specifically,stockholdersexpressedapreference forustomoredirectlyincorporatecapitalefficiencyand financialdisciplineintoperformancemetrics. Basedonthisfeedback,andinlinewithourconsistent historicalfocusonfinancialdiscipline,overthepastyearwe spentadditionaltimeworkingwithinvestorstodevelop compensationmetricsthatreflectcapitalefficiencyand financialdiscipline.Theresultingmetrics,acashreturn calculationandcapitalefficiencyonaperdebt-adjusted sharebasis,areindustry-leadinginapproach. Inlightofourlong-standingprincipleofcapitalefficient investing,theCommitteedeemeditappropriatetoincrease thetransparencyoftheroleofthisprincipleinour compensationprograms.Overtheyears,wehavepublicly andconsistentlypointedtoperdebt-adjustedsharemetrics forproduction,reservesandcashflowgrowthashavingthe bestcorrelationtosharepriceperformance.Moreover,we usethisframeworktodetermineourcapitalallocationand investmentplanseachyear.Webelievethatmovingtothis frameworkforourcompensationprogramswillbetteralign withtheexpectationsofinvestorsandtransparently incentivizestockholdervaluecreation. TheCommitteealsoenhancedthefocusonsafety performanceinourcompensationprogramsbyexpanding theSafetyperformancemetric(nowknownastheHSE performancemetric)inthe2018AIPtoincludea combinationofTotalRecordableIncidentRate(forboth employeesandcontractors)andserious(“Level3”)safety andenvironmentalincidents.Level3incidentsaregenerally definedasanincidentinvolvingasignificantenvironmental impact,impacttothepublicand/orsignificantmonetary damages,orafatalityorpermanentdisability. Summarizedbelowarethechangestothe2018AIP performancemetrics(seeAppendixAfordefinitionsand calculationmethods): AIP Performance Metrics 2017 2018 OPERATIONAL FINANCIAL HSEPERFORMANCE* ReserveAdditions SalesVolumes OPERATIONAL CapitalExpenditures CashOperating Income/BOE ControllableCashCosts FINANCIAL TotalRecordable IncidentRate SAFETY ReserveAdditionsGrowth perDAS Sales-VolumeGrowth perDAS CashFlowReturn on InvestedCapital ControllableCashCosts 20% 20% 20% 20% TotalRecordable IncidentRate Level3 Incidents * Includes employees and contractors 10% 10% 15% 20% 15% 25% 15% 10% AnnualMetricsDriveLong-TermPerformance. TheAIP metricsaredesignedtomotivateandrewardnear-term performancebasedonkeymetrics,whichcontributeto long-termstrategicresultsthatproducedifferentiatingequity performanceovertime.TheCommitteeconsideredonce againwhethertoaddaninvestmentreturn componenttothelong-termincentiveprogram,but concludedthechangesmadetoAIPperformancemetrics, takentogetherwiththeexistingTSR-centricdesignforthe long-termprogram,createbetterinvestoralignmentfor optimalperformance. ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT 37 Total of 02 pages in section ANADARKO PETROLEUM CORPORATION APACHE CORPORATION Compensation Discussion and Analysis CEOTargetTotalCompensationOpportunity UnchangedSince2012. Aspartofitsannualreviewof executivecompensationinNovember2017,the CompensationCommitteeonceagaindeterminedthetarget totalcompensationopportunityforMr.Walkershould remainflatandthatnochangesshouldbemadetohisbase salary,targetbonus,andtargetgrantvalueofhisannual long-termincentiveawards.Mr.Walker’stargettotal compensationopportunityhasremainedflatsincehis appointmenttoCEOinMay2012,atwhichtimethe CommitteepositionedhimatthemedianofCEOsofour industrypeergroup. WeSeekandRespondtoStockholderFeedback Ourcompensationdecisionsareguidedbythefeedbackwereceivefromstockholders.Since2012,wehavereachedouttoat leastourtop50stockholders’governanceandvotingteamsaminimumoftwiceayeartosolicitfeedbackonAnadarko’s executivecompensationprograms,aswellascorporategovernance,sustainabilityandenvironmentalissuesandother matters. R e a c h O u t t o T o p S t o c k h o l d e r s S o l i c i t F e e d b a c k I n c o r p o r a t e F e e d b a c k i n t o C o m p a n y P r o g r a m s C o m m u n i c a t e S t o c k h o l d e r F e e d b a c k t o t h e B o a r d SPRING Reach out to stockholders to discuss governance,executive compensation andESG issues, and communicate feedback to theBoard. Incorporate changes to programsbased on feedback , as appropriate. FALL Reachout to stockholders to discuss governance,executive compensation andESG issues, and communicate feedback to theBoard. Incorporate changes toprogramsbasedon feedback ,asappropriate. WINTER Engagewith stockholder proposal proponents, if any, and communicate feedback to theBoard. Update proxy to reflect any governance and/or compensation changesmade and describe significant engagement feedback. SUMMER Reviewand analyze results from annualmeeting andadditional stockholder feedback received, if any. Incorporate changes toprograms based on feedback , asappropriate. ANNUAL STOCKHOLDER ENGAGEMENT CYCLE Duringthespringof2017wesoughtfeedbackfromourtop stockholdersrepresentingapproximately61%ofthe Company’soutstandingcommonstock.Additionally,inthe fallof2017wesoughtfeedbackfromstockholders representingapproximately64%oftheCompany’s outstandingcommonstock.Ourstockholderengagement teamconsistsofseniormanagementfromourHuman Resources,Legal,InvestorRelations,Corporate CommunicationsandHealth,SafetyandEnvironment departmentsandhasalsoincludedtheChairofour CompensationCommitteefromtimetotime.Membersof ourengagementteamalsoparticipateinvarious governanceforumswithourstockholders. Ourstockholders’viewsonexecutivecompensationand corporategovernanceareimportanttous,andwevalue andusetheirfeedbackandinsights.TheBoardandits committeesregularlydiscussandconsiderthesignificant concernsthatareidentifiedthroughthisengagement processaswellastheoutcomeoftheannualadvisoryvote onexecutivecompensation.Asaresult,wehavemade numerouschangestoourexecutivecompensation programsandgovernancepracticesovertheyears, includinganumberofchangesfor2018. CompensationProgramChanges. InFebruary2017,the Committeemadechangestoour2017AIPprogramin 36 ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT Corporate Governance Highlights SeparatechairmanandCEO Independentnon-executivechairman Majorityvotestandardfortheelectionofdirectors Nopoisonpill Righttocallaspecialmeetingat15percent Officeranddirectorstockownershiprequirements, includingpaymultiplesandhold-until-retirement provisions 20percentfemalerepresentationamongournon- employeedirectors Policiesagainsthedging,pledging,andstockoption repricing Clawbacksofincentiveawardsintheeventofa materialnegativerestatement Doubletriggersforcashseveranceandaccelerated vestingofequityuponachangeincontrol Board-adoptedhumanrightsprinciplesandstatement onindigenouspeoples Expandeddisclosureofourpoliticalexpenditures RobustBoardreviewandBoardrefreshmentpractic s Long-standingshareholderengagementpractices ProxyaccessbylawadoptedinFebruary2016 Boarddeclassificationandannualelectionofall directors Board and Shareholder Engagement TheBoardmaintainsaprocessforshareholdersandinterestedpartiestocommunicatewiththeBoard.Shareholdersand interestedpartiesmaywriteorcallourBoardasprovidedbelow: We are committedtoa robustshareholder engagement program.TheBoardvalues ourshareholders’ perspectives, and feedbackfromshareholdersonourbusiness,corporategovernance,executivecompensation,andsustainabilitypractices are important considerations for Board discussions throughoutthe year. Over the course of the year, our team held 82 meetingswithshareholdersrepresenting58percentofsharesoutstanding,intotal,includingmeetingswith17ofourtop 25investors.Membersofmanagementparticipatedineachmeeting,withcertainengagementsincludinganindependent director.Ouryear-roundfocusonshareholderoutreachisdescribedinmoredetailbelow. 2017- 2018 Meetwith shareholders and consider issues raised. Review and summarize feedback Complete shareholdermeetings,meet internally to review feedback received, and considermodification of governance policies and compensation plans. Continue tomeetwith shareholders,modify meeting content based on early feedback, and identify any other areas of concern. MAY TO JULY AUGUST TO OCTOBER NOVEMBER TO JANUARY FEBRUARY TO APRIL potential areas of concern. from annualmeeting and identify writecorporatesecretaryapachecorporation2000postoakblvd.suite100houston,tx77056-4400callinvestorrelations713-296-6000emailir@apachecorp.comattendapacheannualmeetingwww.apachecorp.com/annualmeeting2017-2018augusttooctobermeetwithshareholdersandconsiderissuesraised.novembertojanuarycontinuetomeetwithshareholders,modifymeetingcontentbasedonearlyfeedback,andidentifyanyotherareasofconcern.februarytoaprilcompleteshareholdermeetings,meetinternallytoreviewfeedbackreceived,andconsidermodificationofgovernancepoliciesandcompensationplans.maytojulyreviewandsummarizefeedbackfromannualmeetingandidentifypotentialareasofconcern.writecorporatesecretaryapachecorporation2000postoakblvd.suite100houston,tx77056-4400callinvestorrelations713-296-6000emailir@apachecorp.comattendapacheannualmeetingwww.apachecorp.com/annualmeeting2017-2018augusttooctobermeetwithshareholdersandconsiderissuesraised.novembertojanuarycontinuetomeetwith sharehldes,modifymeetingontentbsedonearlyfeedback,andidentifyanyoherareasofconcern.februarytoaprilcompleteshareholdrmeetings,metinternallyoreviewfedbackrecived,andconsidermodificatioofgovrnancepoliciesandcompensationplans.maytojulyreviwsummaizefedbackfromannualmeetingandidentifypotntialareasofconcern.BoardRfreshmeandSuccessionBOARDMEMBERTENURECOMMITTEDTOBOARDREFRESHMENTRedutionintheBoard’saveragetenurefrom17yearsin2013to6yersthroughyear-end2017ReuctionitheavergeageoftheBoardfrom68in2013to61thrughyar-end2017CG&NcommitteeregulrlyevaluatessizeancompositionofthBardMandatoydirectorretirementageof75PleaseseethediscusionofcriteriafornewBoardmembersandre-electionofBoardmembersonpage[_]ofthisproxystatement.18%55%27%MORETHAN6YEARS3TO6YEARS0TO2YEARS APACHECORPORATION -2018ProxyStatement 5