APACHE CORPORATION
NON-EMPLOYEE DIRECTORS’ COMPENSATION PLAN
As Amended and Restated
November 20, 2008; Effective as of January 1,
2009
The purpose of
the Non-Employee Directors’ Compensation Plan (the
“Plan” ) is to set forth certain of the
compensation arrangements for members of the board of directors
(the “Board” ) of Apache Corporation (
“Apache” ) who are not also employees of Apache
( “Non-Employee Directors” ). The Plan does not
supersede or amend in any way any other arrangements relating to
Non-Employee Directors including specifically, without limitation,
the Outside Directors’ Retirement Plan, the 2007 Omnibus
Equity Compensation Plan, indemnification provisions of
Apache’s charter or bylaws, or policies with respect to
reimbursement of expenses.
It is
Apache’s express intention that this Plan comply with the
requirements of Code §409A, and the Plan shall be interpreted
in that light.
1. Board
Retainer . Each
Non-Employee Director shall be paid $37,500 at the end of each
calendar quarter (or as soon thereafter as is administratively
practicable) during which he or she served as a member of
Apache’s Board ( “Cash Retainer Fee” ). If
a Non-Employee Director serves as a member of Apache’s Board
for less than an entire calendar quarter, the Cash Retainer Fee for
that quarter shall be prorated on the basis of the number of weeks
served during that calendar quarter.
2.
Committee Chairperson Retainers . Each Non-Employee Director serving as
chairperson of any committee of Apache’s Board shall be paid
$3,750 at the end of each calendar quarter (or as soon thereafter
as is administratively practicable) ( “Committee
Chairperson Retainer Fee” ). If a Non-Employee Director
serves as chairperson of any committee of Apache’s Board for
less than an entire calendar quarter, the Committee Chairperson
Retainer Fee for that quarter shall be prorated on the basis of the
number of weeks as chairperson during that calendar
quarter.
3.
Attendance Fees . No attendance fee shall be paid to any
Non-Employee Director for any meeting of the Board or any committee
thereof attended in person or by teleconference, video conference,
or other similar means.
4.
Optional Deferral of Fees .
(a)
Deferrable Fees . A Non-Employee Director may defer
all or any portion of any unpaid Cash Retainer Fees and Committee
Chairperson Retainer Fees ( “Deferrable Fees”
).
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(b)
Election to Defer . A Non-Employee Director’s
election to defer all or any portion of Deferrable Fees (
“Deferral Election” ) shall be effected by the
completion of a Deferral Election form. A Deferral Election form
must be executed by the deferring Non-Employee Director and
received by Apache on or before December 31 of the year prior
to the year in which the Deferrable Fees are earned, except that a
new Non-Employee Director may enter into a Deferral Election within
30 days of becoming a Non-Employee Director. A Deferral
Election shall apply only to Deferrable Fees paid for services
rendered after the date of the Deferral Election. Each
December 31, a Deferral Election made for the following year
shall become irrevocable. A new Deferral Election must be made each
year for the upcoming year.
(c)
Memorandum Account . Apache shall maintain a separate
account ( “Memorandum Account” ) for each
deferring Non-Employee Director. Each Memorandum Account shall be
subdivided into a “Cash Account” and a
“Stock Account . ” The Memorandum
Accounts are merely for recordkeeping purposes, and do not
represent any actual property that has been set aside for
Non-Employee Directors. Nothing contained in this Plan shall be
construed to require Apache to fund any Memorandum Account. Neither
the deferring Non-Employee Director nor his or her Beneficiary
shall have any property interest whatsoever in any specific assets
of Apache. A Non-Employee Director shall have no ownership rights
with respect to any balance in his or her Memorandum Account, and
thus shall have no right to vote any Stock in his or her Stock
Account.
(d)
Crediting of Cash Accounts . Any deferred Cash
Retainer Fees and deferred Committee Chairperson Retainer Fees
shall be credited to the Cash Account. Any dividends paid on Stock
in the Stock Accounts shall be credited to the Cash Account. All
amounts credited to a Cash Account shall be credited with
investment earnings at the rate of interest earned by
Apache’s short-term marketable securities portfolio or an
equivalent index or market rate for similar investments in
short-term marketable securities.
(e)
Crediting of Stock Accounts . No deferrals shall be
credited to a Stock Account; however, see section 4(f) for
transfers from the Cash Account to the Stock Account. All amounts
credited to a Stock Account shall be treated as if such amounts
were invested in Stock. Apache shall at all times have reserved
from its treasury shares for issuance under this Plan a number of
shares at least equal to the number of shares of Stock in the Stock
Accounts.
(f)
Transfers from Cash Account to Stock Account . Each
year, a Non-Employee Director may elect to transfer all or a
portion of his or her Cash Account to his or her Stock Account (but
only in whole-share increments) by completing an election form that
must be received by Apache on or before December 31. Any such
transfer shall be made as of the first trading day of the following
year, and shall be based on the per share closing price of the
Stock as reported on the Composite Tape for the first trading day
of the year. Transfers are not permitted from a Stock Account to a
Cash Account.
(g)
Payout Elections . If a Non-Employee Director’s
directorship terminated before January 1, 2005, his or her
benefit payments shall be determined under the terms of the Plan on
December 31, 2004 and the payout elections in effect at
the
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time his or her
directorship terminated. If a Non-Employee Director had a
Separation from Service after December 31, 2004 and before
January 1, 2009, his or her benefits shall be determined under
the terms of the Plan in effect at the time of his or her
Separation from Service (defined in paragraph (v) below). The
remainder of this section 4(g) shall only apply to individuals who
continue as Non-Employee Directors after December 31, 2008, or
who become Non-Employee Directors after December 31,
2008.
(i)
Election . Each individual who is Non-Employee Director on
January 1, 2009 has made a payout election for his or her
Memorandum Account, which specified both the timing and form of
distribution. A new Non-Employee Director shall make a payout
election at the same time that he or she makes his or her first
Deferral Election. If no payout election is timely made, the
Non-Employee Director shall be deemed to have elected to be paid a
single lump-sum payment in January after his or her Separation from
Service. The payout election with respect to a Memorandum Account
is irrevocable after the deadline for making the payout election.
The payout election will not apply if there is a change of control
(see section 4(h)) or the Non-Employee Director dies (see section
4(i)).
(ii) Form of
Payout . A Non-Employee Director may elect to be paid out in a
single lump-sum payment or in two to ten annual installments. Each
installment from a Stock Account shall be equal to the number of
shares in the Stock Account on the second trading day of that year,
divided by the number of remaining installments, rounded down to
the nearest whole share. For example, the first installment from a
Stock Account payable in seven installments beginning in 2010 shall
be one-seventh of the shares in the account on the second trading
day of 2010; the second installment shall be one-sixth of the
shares in the account on the second trading date of 2011; etc. Each
installment from a Cash Account shall be equal to the balance of
the Cash Account on the second trading day of the year, divided by
the number of remaining installments, except that the last
installment shall equal the balance of the Cash Account at the time
the distribution is processed. Distributions from the Stock Account
shall be paid in whole shares of Stock. Distributions from the Cash
Account shall be paid in cash.
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