2018 Guide to Effective Proxies

2.4 Proxy summary | 71 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES ANADARKO PETROLEUM CORPORATION Proxy Summary In2017,performanceandresultingpaycontinuedtodemonstratethisalignment.Theincentivecompensationrealizedbyour namedexecutiveofficers(NEOs)wassubstantiallybelowgrantdatevalue,demonstratingthatourprogramdesign appropriatelyalignscompensationlevelswithperformanceresults. Asdemonstratedbelow,thevalueactuallyreceivedbytheCEOcandiffersubstantiallyfromthegrantdatevalue(whereas valuesarecalculatedandreportedintheSummaryCompensationTable(SCT)andrelatedproxytablesasrequiredbythe U.S.SecuritiesandExchangeCommission(SEC)). CEORealizedPayAlignedwithCompanyPerformance The valueactually receivedby theCEO candiffer substantially from the grantdate compensation reported in theSCTand related proxy tables. SCTREPORTEDVS.REALIZED PAY (2015 –2017) SCT Realized APCStockPrice StockPrice InMillions $14.4 $15.2 $13.9 $6.4 2015 2016 2017 $100 $0 $50 $16 $0 $8 $9.6 $7.9 Thechartabovecomparesreportedpayandrealizedpayfor2015,2016and2017.Theamountsincludeeachdirect compensationelement,i.e.,salary,non-equityincentiveplancompensation,performanceunits(PU),restrictedstockunitsand non-qualifiedstockoptions.TheSCTcolumninthechartdepictsthedatareportedinthe2017SCT,whiletheRealized columndepictstheactualvaluereceived(orvested)bytheCEOineachyear,includingactualperformance-based compensationpaidforpriorperformanceperiods.Themethodologyforcalculatingrealizedpayforpurposesofthischartis morefullydescribedinthetableinAppendixA. Ourfinancialandoperatingresultsin2017werelargelyinlinewithbudgetexpectationswhileourrelativeTSRperformance wasinthebottomquartile. 2017AnnualIncentiveProgram(AIP)Results Company PerformanceScore 92.6% 85% (~8%) NegativeCommittee Discretion Approved PerformanceScore = PaidOut PUsVested/ (38.3%) *Outof12 companies AbsoluteTSR Performance RelativeTSR Performance 10 th Place* 0 2014PerformanceUnitResults (for the3-yearperiodendedDecember 31, 2017) 4 ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT Total of 04 pages in section Proxy Summary OurMissionandStrategy Ourobjectiveistodelivercompetitivereturnson,andof, capitaltostakeholdersbyexploringforandcommercially developingoilandnaturalgasresourcesvitaltotheworld’s healthandwelfareby: • exploringforandcommerciallydeveloping resources globally; • ensuring health,safety,andcommercialexcellence ; and • focusingon financialdiscipline,flexibility,andvalue creation ; 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. OperationalandFinancialResults Activeportfoliomanagementanddeliveringcapital- fficient growthwerecentraltooureffortsin2017: • ContinuedtoHigh-GradethePortfolio— Weclosed morethan$4billionofassetsalesin2017,andhave completedover$8billionsince2015,whilerefocusingthe portfolioonhigher-marginliquidassets. • DeliveredSalesVolumeGrowth— Ourfull-yearsales volumesfor2017increased14%onadivestiture- adjustedbasisascomparedtotheprioryear. • ProgressedMozambiqueLNGProject— Inadditionto manyfoundationaldevelopmentsin2017,sinceyearend wereceivedapprovalfromtheGovernmentof MozambiquefortheplanofdevelopmentfortheGolfino/ Atumfield,andnowhaveagreementstokeytermsfor morethan5milliontonnesperannumofLNGsalesto long-term,high-qualitybuyers. • AnnouncedShareRepurchaseProgram— We announceda$2.5billionsharerepurchaseprogramin September2017,completingtherepurchaseof approximately$1.6billionofsharesbyearly2018,while increasingthesharerepurchaseprogramto$3billion during2018. • IncreasedDividend400%— Subsequenttoye rend, theBoardincreasedthequarterlydividendpaidtoour commonstockholdersfrom5centspershareto25cents pershare. PayforPerformancePhilosophy Ourcompensationprogramsaredesignedtobealigned withtotalstockholderreturn(TSR)andthecapitalefficiency objectivesofourstockholders. Asthefollowingpagesdemonstrate , realizedpayfor Anadarko’sCEOwasapproximatelyone-halfofthe grantvalue overthelastthreeyearsduetothe underperformanceofourstock,demonstratingtheefficacy ofourplan’spayforperformanceconstruction. Seepages32-52formoredetails. ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT 3 Proxy Summary Thissummaryhighlightsinformationcontainedelsewhereintheproxystatement.Thissummarydoesnotcontainallofthe informationthatyoushouldconsider,andyoushouldreadtheentireproxystatementcarefullybeforevoting.Formore completeinformationregardingtheCompany’s2017performance,pleasealsoreviewtheCompany’sAnnualReporton Form10-KfortheyearendedDecember31,2017. 2018AnnualMeetingofStockholders: DateandTime: Tuesday,May15,2018 Location: TheWestinatTheWoodlands 2WaterwaySquarePlace TheWoodlands,Texas77380 RecordDate: March20,2018 MailDate: March30,2018 ProposalsandBoardRecommendations: Proposal BoardVote Recommendation Page Reference 1.ElectionofDirectors FOREACH DIRECTOR NOMINEE 7 ManagementProposals 2.RatificationofKPMGLLPasIndependentAuditorfor2018 FOR 72 3.AdvisoryVotetoApprovetheCompany’sNamedExecutiveOfficer2017 Compensation FOR 73 StockholderProposal 4.ClimateChangeRiskAnalysis AGAINST 74 DirectorNominees: Name Age Director Since Independent Audit Committee Compensation andBenefits Committee Governance andRisk Committ e Executive Committee AnthonyR.Chase 63 2014 Yes M DavidE.Constable 56 2016 Yes M H.PaulettEberhart* 64 2004 Yes C M ClaireS.Farley 59 2017 Yes M PeterJ.Fluor 70 2007 Yes M JosephW.Gorder 60 2014 Yes C M JohnR.Gordon 69 1988 Yes M SeanGourley 38 2015 Yes M MarkC.McKinley 61 2015 Yes M EricD.Mullins 55 2012 Yes C M R.A.Walker(CEO) 61 2012 No C *LeadDirector C=Chair M=Member 2 ANADARKOPETROLEUMCORPORATION 2018PROXYSTATEMENT APACHE CORPORATION 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 RobustBoardreviewandBoardrefreshmentpractices Long-standingshareholderengagementpractices ProxyaccessbylawadoptedinFebruary2016 Boarddeclassificationandannualelectionofall directors Board and Shareholder Engagement TheBoardmaintainsaprocessforshareholdersandinterestedpartiestocommunicatewiththeBoard.Shareholdersand interestedpartiesmaywriteorcallourBoardasprovidedbelow: Wearecommittedtoarobustshareholderengagementprogram.TheBoardvaluesourshareholders’perspectives,and feedbackfromshareholdersonourbusiness,corporategovernance,executivecompensation,andsustainabilitypractices areimportantconsiderationsforBoarddiscussionsthroughouttheyear.Overthecourseoftheyear,ourteamheld82 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 Total of 07 pages in section 2017 Business Highlights In2017,Apachecontinueditsmissiontogrowinaninnovative,safe,environmentallyresponsible,andprofitablemanner for the long-term benefit of our shareholders. We also progressed Apache’s strategy of delivering top-tier returns by maximizingrecoveryandminimizingcoststhroughcontinuousimprovement.Highlightsofouroperational,strategic,and financialachievementsareprovidedbelow: Exited Canada Proceeds directed tomidstream infrastructure buildout and upstream delineation of Alpine High FINANCIAL 5.2 billion 1.4 billion Year-end liquidity,which includes: $3.5 billion in undrawn credit facility and $1.7 billion in cash and cash equivalents Current credit facilitymatures inMarch 2023 Aggregate proceeds raised from non-core asset/acreage sales Eliminated $818million in future asset retirement obligations $ $ OPERATIONAL 457 Mboe/d Average liquids and natural gas production across operations Mboe/d= thousands of barrels of oil equivalent per day Crude oil represented 82 percent of total liquids production Initiated first sales at Alpine High and ramped to 25,000 boe/d at year end 5,000+ future drilling locations STRATEGIC Increased Alpine High location count to 5,000+ 340,000 net contiguous acres in the southern portion of the Delaware Basin 11% /26% /15% Outperformed targets in key health, safety, security, and environmental goals Total Recordable Incident Rate (TRIR), Days Away, Restricted or Transferred Rate (DART), and Vehicle Incident Rate (VIR), respectively Reserve replacement rate 230MMboe of total proved reserves added in 2017 138% TheBoardandmanagementwillcontinuetotakestepstopositionApacheforfuturesuccessinthecurrentcommodity priceenvironmentandtofurtherourtransitiontobecomingthepremierexplorationandproductioncompanywithglobal assetsfocusedonU.S.growthandanchoredbythePermianBasin. OPERATIONALAverageliquidsandnaturalgasproductionacrossoperations457Mboe/dMboe/d=thousandsofbarrelsofoilequivalentperdayCrudeoilrepresented53percentoftotalliquidsproductionInitiatedfirstsalesatAlpineHighandrampedto25,000boe/datyearend11%/26%/15%Outperformedtargetsinkeyhealth,safety,security,andenvironmentalgoalsTotalRecordableIncidentRate(TRIR),DaysAway,RestrictedorTransferredRate(DART),andVehicleIncidentRate(VIR),respectively124%Reservereplacementrate230 MMboeoftotalprovedreservesaddedin2017STRATEGIC5,000+IncreasedAlpineHighlocationcountto5,000+futuredrilling340,000netcontiguousacresinthesouthernportionoftheDelawareBasinlocationsExitedCanadaProceedsfundedconstructionofourbuildoutofkeyinfrastructureatAlpineHighFINANCIAL$1.4billionAggregateproceedsraisedfromnon-coreasset/acreagesalesEliminated$818millioninfutureassetretirementobligationsYear-endliquidity,whichincludes:$5.2billion$3.5billioninundrawncreditfacilityand $1.7billionincashandcashequivalentsCurrentcreditfacilitymaturesinJune2020 4 APACHECORPORATION -2018ProxyStatement PROXY STATEMENT SUMMARY This executive summary provides an overview of the information contained within this proxy statement. We encourage youtoreadtheentireproxystatementpriortovoting. Annual Meeting of Shareholders Roadmap 64 66 24, 2018 26, 2018 14 2017 On April 9, 2018,we beganmailing this proxy statement to ANNUALMEETINGSHAREHOLDEROFSHAREHOLDERSVOTINGMATTERSTHURSDAY,MAY24,2018BOARD’SVOTINGPAGE10A.M. (Houstontime) PROPOSALRECOMMENDATIONREFERENCEElectionofFOREACHHILTONHOUSTONPOSTOAKdirectorsNOMINEE2001POSTOAKBOULEVARDRatificationofappointmentFORHOUSTON,TEXAS77056ofindependentauditors SHAREHOLDERSASOFTHECLOSEOFBUSINESSMARCH26,2018 AdvisoryvoteapprovingFORexecutivecompensationThisproxystatement,alongwiththeCompany’sAnnual ReportonForm10-KforthefiscalyearendedDecember31,2017,areavailableontheCompany’swebsiteat www.apachecorp.com. OnMarch[_],2018,webeganmailingthisproxystatementtoshareholderswhorequestedpapercopies. APACHECORPORATION -2018ProxyStatement 3