def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant þ |
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
The Williams Companies,
Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
FRANK T. MACINNIS
CHAIRMAN OF THE BOARD
Dear Williams Stockholders:
You are cordially invited to attend the 2011 annual meeting of
stockholders of The Williams Companies, Inc. The meeting will be
held on Thursday, May 19, 2011, in the Williams Resource
Center Theater, One Williams Center, Tulsa, Oklahoma, at
11:00 a.m., Central Daylight Time. We look forward to
greeting personally as many of our stockholders as possible at
the annual meeting.
The notice of the annual meeting and proxy statement
accompanying this letter provide information concerning matters
to be considered and acted upon at the annual meeting. Also at
the annual meeting we will provide a report on our operations,
followed by a
question-and-answer
and discussion period.
For security reasons, briefcases, backpacks, and other large
bags are not permitted in the theater. All such items can be
checked with security upon arrival at the theater.
I know that most of our stockholders are unable to attend the
annual meeting in person. However, it is important that your
shares be represented and voted at the meeting. Whether or not
you plan to attend, you can be sure your shares are represented
by promptly voting and submitting your proxy by phone, by
Internet, or by completing, signing, dating, and returning your
proxy card in the enclosed postage-paid envelope.
Thank you for your continued interest in our Company.
Very truly yours,
Frank T. MacInnis
Enclosures
April 7, 2011
TABLE OF
CONTENTS
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THE
WILLIAMS COMPANIES, INC.
One Williams Center
Tulsa, Oklahoma 74172
May 19, 2011
Details for the annual meeting of stockholders of The Williams
Companies, Inc. are below:
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TIME
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11:00 a.m., Central Daylight Time, on Thursday, May 19, 2011
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PLACE
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Williams Resource Center Theater, One Williams Center, Tulsa,
Oklahoma 74172
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ITEMS OF BUSINESS
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1. To elect the six director nominees identified in this proxy statement each for a one-year term;
2. To ratify the appointment of Ernst & Young LLP as our independent auditors for 2011;
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3. To conduct an advisory vote on executive compensation;
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4. To conduct an advisory vote on the frequency of say-on-pay;
and
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5. To transact such other business as may properly come before
the annual meeting or any adjournment of the meeting.
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RECORD DATE
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You can vote and attend the annual meeting if you were a
stockholder of record at the close of business on March 28, 2011.
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ANNUAL REPORT
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Our 2010 annual report, which includes a copy of our annual
report on Form 10-K, accompanies this proxy statement.
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VOTING
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Even if you intend to be present at the annual meeting, please
promptly vote in one of the following ways so that your shares
of common stock may be represented and voted at the annual
meeting:
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1. Call the toll-free telephone number shown on the proxy card;
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2. Vote via the Internet on the website shown on the proxy card;
or
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3. Mark, sign, date, and return the enclosed proxy card in the
postage-paid envelope.
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Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting To Be Held on May 19,
2011:
The annual report and proxy statement are available at
www.edocumentview.com/wmb.
By order of the Board of Directors,
La Fleur C. Browne
Corporate Secretary
Tulsa, Oklahoma
April 7, 2011
THE
WILLIAMS COMPANIES, INC.
One Williams Center
Tulsa, Oklahoma 74172
PROXY
STATEMENT
GENERAL
We are providing this proxy statement as part of a solicitation
by the Board of Directors (the Board) of The
Williams Companies, Inc. for use at our 2011 annual meeting of
stockholders and at any adjournment or postponement thereof. We
will hold the meeting in the Williams Resource Center Theater,
One Williams Center, Tulsa, Oklahoma, 74172 on Thursday,
May 19, 2011, at 11:00 a.m., Central Daylight Time.
As permitted by the rules of the Securities and Exchange
Commission (SEC), we have elected to send you this
full set of proxy materials, including a proxy card, and
additionally to notify you of the availability of these proxy
materials on the Internet. This proxy statement and our 2010
Annual Report are available at www.edocumentview.com/wmb, which
does not have cookies that identify visitors to the
site.
We expect to mail this proxy statement and accompanying proxy
card to stockholders beginning on April 7, 2011.
Unless the context otherwise requires, all references in this
proxy statement to Williams, the
Company, we, us, and
our refer to The Williams Companies, Inc. and its
consolidated subsidiaries.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
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Why am I receiving these materials? |
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You are receiving these materials because, at the close of
business on March 28, 2011 (the Record Date),
you owned shares of Williams common stock. All stockholders of
record on the Record Date are entitled to attend and vote at the
annual meeting. Each stockholder will have one vote on each
matter for every share of common stock owned on the Record Date.
On the Record Date, we had 587,958,791 shares of common
stock outstanding. (The shares held in our treasury are not
considered outstanding and will not be voted or considered
present at the meeting.) |
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What information is contained in this proxy statement? |
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This proxy statement includes information about the nominees for
director and other matters to be voted on at the annual meeting.
It also explains the voting process and requirements, describes
the compensation of the principal executive officer, the
principal financial officer, and the three other most highly
compensated officers (collectively referred to as our
Named Executive Officers or NEOs),
describes the compensation of our directors, and provides
certain other information required under SEC rules. |
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What matters can I vote on? |
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You can vote on the following matters: |
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election of six of our
directors, each for a one-year term;
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ratification of the
appointment of Ernst & Young LLP as our independent
auditors for 2011;
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an advisory vote on
executive compensation;
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an advisory vote on
the frequency of
say-on-pay;
and
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any other business
properly coming before the annual meeting.
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In the election of directors, you may vote FOR or
AGAINST each individual nominee or indicate that you wish
to ABSTAIN from voting on one or more nominee. For the
advisory vote on the frequency of
say-on-pay,
you may vote in favor of the Company seeking an advisory vote on
executive compensation EVERY YEAR, EVERY TWO
YEARS, or EVERY THREE YEARS, or you may indicate you
wish to ABSTAIN from voting on the matter. For the
advisory vote on executive compensation and for the ratification
of Ernst & Young LLP as independent auditors, you may
vote FOR or AGAINST the respective matter, or you
may indicate that you wish to ABSTAIN from voting on the
matter. |
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We are not aware of any matter to be presented at the annual
meeting that is not included in this proxy statement. However,
your proxy authorizes the persons named on the proxy card to
take action on additional |
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matters that may properly arise. These individuals will exercise
their best judgment to vote on any other matter, including a
question of adjourning the annual meeting. |
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All votes are confidential unless disclosure is legally
necessary. |
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How does the Board recommend that I vote on each of the
matters? |
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FOR
ITEMS 1-3:
The Board recommends that you vote FOR each of the
director nominees, FOR the ratification of
Ernst & Young LLP as our independent auditors for
2011, and FOR the approval, on an advisory basis, of the
Companys executive compensation. |
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FOR ITEM 4: The Board recommends that you vote in
favor of the Company seeking an advisory vote on executive
compensation EVERY YEAR. |
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What is the difference between a stockholder of record and a
stockholder who holds stock in street name? |
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If your shares are registered in your name with our transfer
agent, Computershare Trust Company, N.A.
(Computershare), you are a stockholder of record,
and the Companys proxy materials, including a proxy card,
were sent to you directly by Computershare. |
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If you hold your shares with a broker or in an account at a
bank, then you are a beneficial owner of shares held in
street name. The Companys proxy materials were
forwarded to you by your broker or bank, who is considered the
stockholder of record for purposes of voting at the annual
meeting. Your broker or bank should also have provided you with
instructions for directing the broker or bank how to vote your
shares. |
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How do I vote if I am a stockholder of record? |
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As a stockholder of record, you may vote your shares in any one
of the following ways: |
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Call the toll-free
number shown on the proxy card;
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Vote on the Internet
on the website shown on the proxy card;
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Mark, sign, date, and
return the enclosed proxy card in the postage-paid envelope; or
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Vote in person at the
annual meeting.
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How do I vote if I am a beneficial owner? |
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As the beneficial owner, you have the right to direct your
broker or bank how to vote your shares by following the
instructions sent to you by your broker or bank. You will
receive proxy materials and voting instructions for each account
you have with a broker or bank. As a beneficial owner, if you
wish to change the directions you have provided your broker or
bank, you should follow the instructions sent to you by your
broker or bank. |
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As a beneficial owner, you are also invited to attend the annual
meeting. However, since you are not the stockholder of record,
you may not vote your shares in person at the meeting unless you
obtain a signed legal proxy from your broker or bank giving you
the right to vote the shares. |
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Will my shares held in street name be voted if I do not tell
my broker or bank how I want them voted? |
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Under the rules of the New York Stock Exchange
(NYSE), if you are a beneficial owner, your broker
or bank only has discretion to vote on certain
routine matters without your voting instructions.
The proposal to ratify Ernst & Young LLP as our
independent auditors is considered a routine matter. However,
the election of directors, the advisory vote on executive
compensation, and the advisory vote on the frequency of
say-on-pay
are not considered routine matters. Accordingly, your broker or
bank will not be permitted to vote your shares on such matters
unless you provide proper voting instructions. |
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How do I vote if I participate in The Williams Investment
Plus Plan? |
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If you hold shares in The Williams Investment Plus Plan,
Computershare sent you the Companys proxy materials
directly. You may direct the trustee of the plan how to vote
your plan shares by calling the toll-free number shown on the
proxy card, voting on the Internet on the website shown on the
proxy card, or completing and returning the enclosed proxy card
in the postage-paid envelope. Please note, in order to permit
the trustee to tally and vote all shares of Williams common
stock held in The Williams Investment Plus Plan, your
instructions, whether by Internet, by telephone, or by proxy
card, must be completed prior to 1:00 a.m. Central |
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Daylight Time on Monday, May 16, 2011. You may not change
your vote related to such plan shares after this deadline. |
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If you do not instruct the trustee how to vote, your plan shares
will be voted by the trustee in the same proportion that it
votes shares in other plan accounts for which it did receive
timely voting instructions. The proportional voting policy is
detailed under the terms of the plan and the trust agreement. |
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What if I return my proxy card or vote by Internet or phone
but do not specify how I want to vote? |
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If you are a stockholder of record and sign and return your
proxy card or complete the Internet or telephone voting
procedures, but do not specify how you want to vote your shares,
we will vote them as follows: |
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FOR the
election of each of the director nominees.
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FOR the
approval ratifying the appointment of Ernst & Young
LLP as our independent auditors for the fiscal year ending
December 31, 2011.
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FOR the
approval, on an advisory basis, of the Companys executive
compensation.
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For the approval, on
an advisory basis, of the frequency of
say-on-pay
on executive compensation EVERY YEAR.
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Can I change my vote or revoke my proxy? |
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If you are a stockholder of record, you can change your vote
within the regular voting deadlines by voting again by telephone
or on the Internet, executing and returning a later dated proxy,
or attending the annual meeting and voting in person. If you are
a stockholder of record, you can revoke your proxy by delivering
a written notice of your revocation to our corporate secretary
at One Williams Center, MD 47, Tulsa, Oklahoma 74172. |
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What shares are included on my proxy card? |
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You will receive one proxy card for all the shares of common
stock you hold in certificate form, in book-entry form, and in
The Williams Investment Plus Plan. |
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If you hold your shares in street name, you will receive voting
instructions for each account you have with a broker or bank. |
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How may I obtain directions to attend the meeting? |
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If you need assistance with directions to attend the meeting,
call us at 1-(800)-945-5426 or write us at The Williams
Companies, Inc., One Williams Center, MD 47, Tulsa, Oklahoma
74172, Attn: Corporate Secretary. |
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What is the quorum requirement for the meeting? |
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There must be quorum to take action at the meeting (other than
adjournment or postponement of the meeting). A quorum will exist
at the meeting if stockholders holding a majority of the shares
entitled to vote at the annual meeting are present in person or
by proxy. Stockholders of record who return a proxy or vote in
person at the meeting will be considered part of the quorum.
Abstentions are counted as present for determining a
quorum. Uninstructed broker votes, also called broker
non-votes, are also counted as present for
determining a quorum so long as there is at least one matter
that a broker may vote on without specific instructions from a
beneficial owner. See Will my shares held in street
name be voted if I do not tell my broker how I want them
voted? |
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What is the voting requirement to approve each of the
matters? |
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Items 1-3
may be approved by a majority of the votes cast. Item 4 may
be approved by a plurality of the votes cast. Other matters that
may properly come before the annual meeting may require more
than a majority vote under our bylaws, our Restated Certificate
of Incorporation, the laws of Delaware, or other applicable laws. |
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How will the votes be counted? |
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Abstentions from voting on the election of a director nominee
will not be considered a vote cast with respect to that
directors election and therefore will not be counted in
determining whether the director received a majority of the
votes cast. Abstentions from voting on any other proposal will
have the same effect as a vote against that proposal. |
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Broker non-votes (i.e., shares held by brokers or nominees that
cannot be voted because the beneficial owner did not provide
specific voting instructions) will be treated as not present and
not entitled to vote. |
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Who will count the votes? |
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A representative of Computershare will act as the inspector of
elections and count the votes. |
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Where can I find the voting results of the meeting? |
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We will announce the voting results at the meeting. We also will
disclose the voting results in a
Form 8-K
within four business days after the annual meeting. |
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May I propose actions for consideration at the 2012 meeting
of stockholders? |
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Yes. For your proposal to be considered for inclusion in our
proxy statement for the 2012 meeting, we must receive your
written proposal no later than December 9, 2011. If we
change the date of the 2012 meeting by more than 30 days
from the anniversary of the date of this years meeting,
then the deadline to submit proposals will be a reasonable time
before we begin to print and mail our proxy materials. Your
proposal, including the manner in which you submit it, must
comply with SEC regulations regarding stockholder proposals. |
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If you wish to raise a proposal (including a director
nomination) from the floor during our 2012 annual meeting of
stockholders, we must receive a written notice of the proposal
between January 20, 2012 and February 19, 2012. Your
submission must contain the additional information required by
our bylaws. Proposals should be addressed to our corporate
secretary at One Williams Center, MD 47, Tulsa, Oklahoma 74172. |
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Who is paying for this proxy solicitation? |
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Your proxy is solicited by the Board. We expect to solicit
proxies in person, by telephone, or by other electronic means.
We have retained MacKenzie Partners, Inc. to assist in this
solicitation. We expect to pay MacKenzie Partners, Inc. an
estimated $17,500 in fees, plus expenses and disbursements. |
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We also will pay the expenses of this proxy solicitation
including the cost of preparing and mailing the proxy statement
and accompanying proxy card. Such expenses may include the
charges and expenses of banks, brokerage firms, and other
custodians, nominees, or fiduciaries for forwarding proxy
materials to beneficial owners of our common stock. |
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Are you householding for stockholders sharing the
same address? |
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The SECs rules permit us to deliver a single copy of this
proxy statement and our 2010 Annual Report to an address shared
by two or more stockholders. This method of delivery is referred
to as householding and can significantly reduce our
printing and mailing costs. It also reduces the volume of mail
you receive. We will deliver only one proxy statement and 2010
Annual Report to multiple registered stockholders sharing an
address, unless we receive instructions to the contrary from one
or more of the stockholders. We will still send each stockholder
an individual proxy card. |
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If you would like to receive more than one copy of this proxy
statement and our 2010 Annual Report, we will promptly send you
additional copies upon request directed to our transfer agent,
Computershare. You can call Computershare toll free at
1-800-884-4225.
You can call the same phone number to notify us that you wish to
receive a separate annual report or proxy statement in the
future, or to request delivery of a single copy of any materials
if you are receiving multiple copies now. |
4
CORPORATE
GOVERNANCE AND BOARD MATTERS
Corporate
Governance
General
Our Board believes that strong corporate governance is critical
to achieving our performance goals and to maintaining the trust
and confidence of investors, employees, suppliers, business
partners, regulatory agencies, and other stakeholders.
Corporate
Governance Guidelines
Our Corporate Governance Guidelines provide a framework for the
governance of Williams as a whole and also address the
operation, structure, and practice of the Board and its
committees. The Nominating and Governance Committee reviews
these guidelines at least annually.
Strategic
Planning
During the year, the Board meets with management to discuss and
approve strategic plans, financial goals, capital spending, and
other factors critical to successful performance. The Board also
conducts a mid-year review of progress on objectives and
strategies. During Board meetings, directors review key issues
and financial performance. The Board meets privately with the
Chief Executive Officer (CEO) six times per year and
meets in executive session at each regular Board meeting and
additionally as required. Further, the CEO communicates
regularly with the Board on important business opportunities and
developments. In 2010, the Board held one of its regularly
scheduled meetings at one of our field locations to further
educate the directors about our operations.
Board/Committee/Director
Evaluations
The Board and each of its committees conduct annual
self-assessments. In addition, the Nominating and Governance
Committee evaluates each individual director annually.
Chief
Executive Officer Evaluation and Management Succession
The Board and the CEO annually discuss and collaborate to set
the CEOs performance goals and objectives. The Board meets
annually in executive session to assess the CEOs
performance. The Board maintains a process for planning orderly
succession for the CEO and other executive officer positions and
oversees executive officer development.
Board
Leadership Structure
Pursuant to our Bylaws and Corporate Governance Guidelines the
positions of Chairman of the Board and President and CEO may be
held by the same or different persons. At this time, the Board
believes that the Company and its stockholders are best served
by a leadership structure in which an independent director
serves as Chairman of the Board. In this regard, on
October 12, 2010 effective January 3, 2011, the Board
elected Alan S. Armstrong to serve as President and CEO of
Williams and appointed Frank T. MacInnis to serve as Chairman of
the Board. The Board believes that having an independent
Chairman aids in the Boards oversight of management and
promotes communications among the Board, the CEO and other
senior management. In addition, having a separate Chairman of
the Board and CEO allows Mr. Armstrong to focus on his
responsibilities in managing the Company during the transition
to his new role as President and CEO.
The responsibilities of the Chairman of the Board include:
(1) presiding over meetings of the Board and executive
sessions of the independent directors; (2) overseeing the
planning of the annual Board calendar and, in consultation with
the CEO, scheduling and setting the agendas for meetings of the
Board and its committees; (3) overseeing the appropriate
flow of information to the Board; (4) acting as liaison
between the independent directors and management;
(5) assisting the Chairs of the various Board committees in
preparing agendas for committee meetings; (6) chairing the
Companys Annual Meeting of Stockholders; (7) being
available for consultation and communication with stockholders
as appropriate; and (8) performing other functions and
responsibilities referred to in the Corporate Governance
Guidelines or requested by the Board from time to time. In
addition, from time to time, the independent directors may
designate an independent Lead Director who is available to
assist the Chairman in
5
fulfilling these responsibilities. W.R. Howell serves as Lead
Director and will do so until his retirement from the Board at
the annual meeting.
The Board believes that having an independent Chairman of the
Board is the most appropriate leadership structure for the Board
at this time. However, it has the flexibility to revise this
structure in the future based upon the Boards assessment
of the Companys needs and leadership from time to time. In
this regard, the Board periodically reviews the Board structure
and leadership as well as director succession planning.
Board
Oversight of Williams Risk Assurance Process
We employ an annual risk assurance process that is designed to
provide positive assurance to management and the Board that
risks are effectively managed to enable achievement of strategic
and operating objectives. The risk process is governed by the
committees of the Board, our executive officers, and our risk
subject matter experts. We utilize the Enterprise Risk
Management (ERM) framework to identify the top risks to the
Company considering our internal and external environments and
objectives and to measure the likelihood of occurrence and
potential impact of each risk. The Audit Committee annually
reviews and provides feedback about the list of the top risks so
identified. Such top risks are then further reviewed by the most
appropriate Board committee. For example, the risk of
financial reporting and disclosure is reviewed by
the Audit Committee, the risk of capital
availability is reviewed by the Finance Committee, and the
risk of ethics and compliance program is reviewed by
the Nominating and Governance Committee. Each Board committee
annually considers a summary for each of its risks, including
the definition, likelihood, and potential impact of each risk,
the planned response to the risk, managements assessment
of the effectiveness of mitigation efforts, and a status report
of any action required. For so long as any action is required
for the planned response to a risk, such risk is reviewed at
each committee meeting until management assesses the risks
mitigation efforts as effective. Each committee provides
feedback to management about the risk assurance process.
Executive
Sessions of Non-Employee Directors
Non-Employee directors meet without management present at each
regularly scheduled Board meeting. Additional meetings may be
called by the Chairman in his discretion or at the request of
the Board.
Director
Independence
Our Corporate Governance Guidelines require that the Board make
an annual determination regarding the independence of each of
Williams directors. The Board made these determinations on
January 20, 2011, based on an annual evaluation performed
by and recommendations made by the Nominating and Governance
Committee.
The Board has affirmatively determined that each of
Mr. Cleveland, Dr. Cooper, Mr. Engelhardt,
Mr. Granberry, Mr. Green, Ms. Hinshaw,
Mr. Lorch, Mr. Lowrie, Mr. MacInnis,
Ms. Stoney, and Ms. Sugg is an independent
director. In addition, the Board affirmatively determined
that W. R. Howell, who will retire in conjunction with the 2011
annual meeting, is an independent director. In so
doing, the Board determined that each of these individuals met
the bright line independence standards of the NYSE
and our own director independence standards. In addition, the
Board considered transactions and relationships between each
director and any member of his or her immediate family on one
hand, and Williams and its affiliates on the other, to confirm
that those transactions and relationships do not vitiate the
affected directors independence. We discuss these
relationships below.
Ms. Hinshaw is a director of Insituform Technologies, Inc.,
a company whose subsidiaries, Bayou Coating LLC, Bayou Companies
LLC, Corrpro Canada Inc., and Corrpro Companies Inc. provide
services to Williams. In determining that the relationship was
not material, the Board considered these facts: the relationship
arises only because Ms. Hinshaw is a director of
Insituform, that she has no material interest in any
transactions between the subsidiaries and Williams, and that she
had no role in any such transactions.
Mr. Howell is a director of Deutsche Bank
Trust Corporation and Deutsche Bank Trust Company
Americas and a member of the America Advisory Board of Deutsche
Bank AG. Deutsche Bank AG and Deutsche Bank Securities Inc.
provide services to Williams. In determining that this
relationship was not material, the Board considered these facts:
the relationship arises only because Mr. Howell is a
director of Deutsche Bank entities, that he has no material
interest in any transaction between Deutsche Bank and Williams,
and that he had no role in any such transactions.
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Mr. Lorch is a director of HSBC Finance Corporation and
HSBC North America Holdings Inc. HSBC Bank (USA) and HSBC
Business Solutions provide services to Williams. In determining
that the relationship was not material, the Board considered
these facts: the relationship arises only because Mr. Lorch
is a director of HSBC, that he has no material interest in any
transactions between HSBC and Williams, and that he had no role
in any such transactions.
Mr. MacInnis is a director of ITT, whose subsidiary
Specialty Plastics, Inc. provides services to Williams. In
determining that the relationship was not material, the Board
considered these facts: the relationship arises only because
Mr. MacInnis is a director of ITT, that he has no material
interest in any transactions between the ITT subsidiary and
Williams, and that he had no role in any such transactions.
Mr. MacInnis also serves as Chairman of the Board of EMCOR
Group Inc. (EMCOR) where he was also Chief Executive
Officer until his retirement on January 3, 2011. EMCOR and
its subsidiaries Ohmstede Ltd, PPM Global Services Inc., and
Wasatch Electric provide services to Williams. In determining
that the relationship was not material, the Board considered the
fact that Mr. MacInnis is no longer an executive officer of
EMCOR, the relationship arises only because Mr. MacInnis is
a director of EMCOR, that he has no material interest in any
transactions between EMCOR and Williams, and payments made by
Williams to EMCOR subsidiaries did not exceed the greater of
$1 million or 2% of EMCORs consolidated gross
revenues.
No member of our Board serves as an executive officer of any
non-profit organization that has received contributions from
Williams exceeding the greater of $1 million or 2% of such
organizations consolidated gross revenues in any single
fiscal year of the preceding three years. Further, in accordance
with our director independence standards, the Board determined
that there were no discretionary contributions to a non-profit
organization with which a director, or a directors spouse,
has a relationship that affects the directors independence.
Steven J. Malcolm, the Companys former Chairman of the
Board, Chief Executive Officer, and President, was not and
Mr. Armstrong, the current Chief Executive Officer and
President and a director, is not independent, because of their
roles as executive officers of the Company.
Transactions
with Related Persons
The Board has adopted policies and procedures with respect to
related person transactions as part of the Audit Committee
charter. Any proposed related person transaction involving a
member of the Board must be reviewed and approved by the full
Board. The Audit Committee reviews proposed transactions with
any other related persons, promoters, and certain control
persons that are required to be disclosed in our filings with
the SEC. If it is impractical to convene an Audit Committee
meeting before a related person transaction occurs, the chair of
the committee may review the transaction alone.
No director may participate in any review, consideration or
approval of any related person transaction with respect to which
such director or any of his or her immediate family members is
the related person. The Audit Committee or its chair, or the
Board, as the case may be, in good faith, may approve only those
related person transactions that are in, or not inconsistent
with, Williams best interests and the best interests of
our stockholders. In conducting a review of whether a
transaction is, or is not inconsistent with the best interest of
Williams and its stockholders, the Audit Committee or its chair,
or the Board, as the case may be, will consider the benefits of
the transaction to the Company, the availability of other
sources for comparable products or services, the terms of the
transaction, the terms available to unrelated third parties and
to employees generally, and the nature of the relationship
between the Company and the related party, among other things.
During 2010, there were no transactions that required review or
approval by the Audit Committee or the full Board.
Majority
Vote Standard
Our Board has adopted a majority vote standard for the election
of directors in uncontested elections. Each of our directors has
executed an irrevocable resignation that will become effective
if he or she fails to receive a majority of the votes cast in an
uncontested election and the Board accepts such resignation. If
a director fails to receive the required votes for election, the
Nominating and Governance Committee will act on an expedited
basis to determine whether to accept the resignation. The
Nominating and Governance Committee will then submit its
recommendation for consideration by the Board. The Board will
act on the recommendation and publicly disclose its decision
within 90 days from the date of the certification of the
election results. The Board expects the director whose
7
tendered resignation is under consideration to abstain from
participating in any decision regarding that resignation. The
Nominating and Governance Committee and the Board may consider
any factors they deem relevant in deciding whether to accept a
directors tendered resignation. If the Board accepts a
directors resignation, the Nominating and Governance
Committee will recommend to the Board whether to fill such
vacancy or reduce the size of the Board.
Director
Attendance at Annual Meeting of Stockholders
We have a policy that all Board members are expected to attend
our annual meeting of stockholders. All of the then-current
Board members attended the 2010 annual meeting of stockholders,
except Mr. Lowrie.
Communications
with Directors
Any stockholder or other interested party may communicate with
our directors, individually or as a group, by contacting our
corporate secretary or the Chairman of the Board. The contact
information is maintained on the Investor page of our website at
www.williams.com.
The current contact information is as follows:
The Williams Companies, Inc.
One Williams Center, MD 49
Tulsa, Oklahoma 74172
Attn: Chairman of the Board
The Williams Companies, Inc.
One Williams Center, MD 47
Tulsa, Oklahoma 74172
Attn: Corporate Secretary
Email: lafleur.browne@williams.com
Communications will be forwarded to the relevant director(s)
except for solicitations or other matters not related to the
Company.
Code of
Ethics
We have adopted a code of ethics specific to the CEO, Chief
Financial Officer, and Chief Accounting Officer, which was filed
with the SEC as Exhibit 14 to our annual report on
Form 10-K
for the year ended December 31, 2003. In addition, we have
adopted a code of business conduct that is applicable to all
employees and directors.
How to
Obtain Copies of our Governance-Related Materials
The following documents are available on our website at
www.williams.com from the Corporate Responsibility/Corporate
Governance tab.
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Corporate Governance Guidelines,
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Code of Ethics for Senior Officers,
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Williams Code of Business Conduct, and
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Charters for the Audit Committee, the Compensation Committee,
the Finance Committee, and the Nominating and Governance
Committee.
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If you want to receive these documents in print, please send a
written request to our corporate secretary at The Williams
Companies, Inc., One Williams Center, MD 47, Tulsa, Oklahoma
74172.
Board and
Committee Structure and Meetings
Board
Meetings
Board members actively participate in Board and committee
meetings. Generally, materials are distributed one week in
advance of each regular Board meeting so that members can be
prepared for the discussion.
8
The full Board met eleven times in 2010. Further, the
non-employee directors met 6 times without the then Chairman of
the Board and CEO present. Each director attended at least 75%
of the aggregate of the Board and applicable committee meetings
held in 2010.
Board
Committees
The Board has four standing committees Audit,
Compensation, Finance, and Nominating and Governance. Each
standing committee has a charter adopted by the Board. The
standing committees report to the full Board at each regular
Board meeting.
The Board elects each committees members and chair
annually. The chart below shows the composition of the standing
committees and the number of committee meetings in 2010.
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Nominating
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and
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Audit
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Compensation
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Finance
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Governance
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Committee
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Committee
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Committee
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Committee
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Alan S. Armstrong
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Joseph R. Cleveland
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Kathleen B. Cooper
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Irl F. Engelhardt
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William R. Granberry
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William E. Green
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Juanita H. Hinshaw
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George A. Lorch
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William G. Lowrie
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Frank T. MacInnis
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Janice D. Stoney
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Laura A. Sugg
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Number of Meetings in 2010
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11
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Audit
Committee
Williams has a separately designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (Exchange
Act). The Audit Committee:
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appoints, evaluates, and approves the compensation of
Ernst & Young LLP, our independent registered public
accounting firm;
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assists the Board in fulfilling its responsibilities for
generally overseeing Williams financial reporting
processes and the audit of Williams financial statements,
including the integrity of Williams financial statements,
Williams compliance with legal and regulatory
requirements, and risk assessment and risk management;
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reviews the qualifications and independence of the independent
registered public accounting firm;
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reviews the performance of Williams internal audit
function and the independent registered public accounting firm;
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reviews Williams earnings releases;
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reviews transactions between Williams and related persons that
are required to be disclosed in our filings with the SEC;
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oversees investigations into complaints concerning financial
matters;
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reviews with the General Counsel, as needed, any actual and
alleged violations of the Companys code of conduct;
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annually reviews its charter and performance; and
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prepares the Audit Committee report for inclusion in the annual
proxy statement.
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9
The Board has determined that all members of the Audit Committee
are financially literate as defined by the NYSE
rules and that Ms. Juanita H. Hinshaw and Mr. Irl F.
Engelhardt qualify as audit committee financial
experts as defined by the rules of the SEC. No Audit
Committee member serves on more than three public company audit
committees.
Compensation
Committee
The Compensation Committee oversees the design and
implementation of strategic compensation programs for our
executive officers that align the interests of our executive
officers with those of our stockholders. The Compensation
Committees key responsibilities include:
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approving executive compensation philosophy, policies, and
programs;
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overseeing the material risks associated with compensation
structure, policies, and programs;
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recommending to the Board equity-based compensation plans;
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recommending to the Board cash-based incentive compensation
plans for the NEOs and other executives;
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setting corporate goals and objectives for compensation for the
NEOs and other executives;
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evaluating the NEOs and certain other executives
performance in light of those goals and objectives;
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approving the NEOs and certain other executives
compensation, including salary, incentive compensation,
equity-based compensation, and any other remuneration;
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approving, amending, modifying, or terminating, in its settlor
(non-fiduciary) capacity, the terms of any benefit plan that
does not require stockholder approval;
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reviewing and revising (if necessary) annual succession and
development plans for the positions of CEO and certain other
executives;
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reviewing and discussing with management and, based on the
review and discussions, recommending to the Board the
Compensation Discussion and Analysis required by the SEC for
inclusion in the annual proxy statement and annual report on
Form 10-K;
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monitoring the executive officers compliance with
Williams stock ownership policies; and
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reviewing annually its charter and performance.
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The Compensation Committee has authority under its charter to
retain, approve fees for, and terminate advisors, consultants,
and agents as it deems necessary to assist in the fulfillment of
its responsibilities. The Compensation Committee reviews the
total fees paid to its outside advisors to ensure that the
advisors maintain objectivity and independence when rendering
advice to the Committee. The Compensation Committee has selected
and retained Frederic W. Cook & Co., an independent
executive compensation consulting firm, to:
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provide competitive market data and advice related to the
CEOs compensation level and incentive design;
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review and evaluate management-developed market data and
recommendations on compensation levels, incentive mix, and
incentive design for NEOs and certain other executives
(excluding the CEO);
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develop the selection criteria and recommend comparator
companies for executive compensation and performance
comparisons; and
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provide information on executive compensation trends and their
implications to Williams.
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Frederic W. Cook & Co. also provides competitive
market data and advice to the Nominating and Governance
Committee on non-employee director compensation. Frederic W.
Cook & Co. does not provide any additional services to
Williams. The independent compensation consultant reports to the
chairs of the Compensation Committee and the Nominating and
Governance Committee.
The Compensation Committee chair works with the Senior Vice
President, Strategic Services and Administration, and Chief
Administrative Officer (CAO) to determine the agenda
for committee meetings. The CEO and the CAO are invited to
attend the Compensation Committee meetings, though they leave
the room during discussions of compensation actions that could
affect them personally. Williams Human Resources
department supports the Compensation Committee in its duties
and, along with the CEO, may perform certain functions regarding
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compensation programs. For more information on the Compensation
Committee, please see the Compensation Discussion and Analysis
in this proxy statement.
Finance
Committee
The Finance Committee oversees Williams finances. Among
other tasks, this committee:
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reviews and recommends to the Board Williams capital
spending;
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oversees Williams financial strategies, plans, and
policies;
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reviews and approves any amendments to Williams financing
agreements; and
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reviews annually its charter and performance.
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Nominating
and Governance Committee
The Nominating and Governance Committee:
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develops and recommends to the Board director qualifications;
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identifies and recommends to the Board director candidates;
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reviews candidates recommended or nominated by stockholders;
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recommends to the Board the individual, or individuals, to be
the Chairman of the Board and the CEO;
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reviews the CEOs recommendations for individuals to be
officers;
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monitors significant developments in the regulation and practice
of corporate governance;
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reviews the size and composition of the Board and its committees
and recommends to the Board any changes;
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determines if a Lead Director shall be designated, and if so
determined, recommend a director to serve as Lead Director;
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conducts a preliminary review of director independence and the
financial literacy and expertise of the Audit Committee members;
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recommends assignments to the Board committees;
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oversees and assists the Board in the review of the Boards
performance and reviews its own performance;
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annually reviews each committee charter, the Corporate
Governance Guidelines, the Code of Ethics for Senior Officers,
and the Williams Code of Business Conduct;
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oversees and reviews risks relating to Williams ethics and
compliance programs and annually reviews the codes of conduct,
Williams policies and procedures regarding compliance with
these codes, and the results of the Code of Business Conduct and
Ethics survey;
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reviews, on an annual basis, the implementation and
effectiveness of the Companys ethics and compliance
program with the General Counsel, and, as applicable, considers
any actual and alleged violations of the codes of conduct,
including any matters involving criminal or potential criminal
conduct communicated by the General Counsel to the committee;
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reviews stockholder proposals and recommends responses to the
Board;
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develops and monitors stock ownership guidelines for directors;
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reviews annually the performance of individual
directors; and
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reviews and recommends to the Board compensation of non-employee
directors.
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Consideration of nominees. The process for
selecting a director nominee starts with a preliminary
assessment of each candidate based upon
his/her
resume and other biographical and background information, and
his/her
willingness to serve. The Committee considers prior Williams
Board performance and contributions for any director nominee who
is a current or former Board member. A candidates
qualifications are then evaluated against the criteria set forth
in Proposal 1 Election of
Directors, as well as the specific needs of Williams at
the time. Qualified candidates are interviewed by the Chairman
of the Board and at least one member of the Nominating and
Governance Committee. Candidates may then meet with other
members of the Board and senior management. At
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the conclusion of this process, if the Board and senior
management determine that the candidate will be a good fit, the
Nominating and Governance Committee may appoint the candidate to
the Board and recommend him or her for election by our
stockholders at the next annual meeting.
The Nominating and Governance Committee uses the same process to
evaluate all candidates regardless of the source of the
nomination. The Committee has in the past and may in the future
engage third party consultants to identify and evaluate
potential director nominees, as it deems appropriate.
Stockholder nominations. The Nominating and
Governance Committee will consider written recommendations from
stockholders for director nominations. If you wish to nominate a
candidate, please forward the candidates name and a
detailed description of the candidates qualifications, a
document indicating the candidates willingness to serve,
and evidence that you own Williams stock to: Corporate
Secretary, One Williams Center, MD 47, Tulsa, Oklahoma 74172. A
stockholder wishing to nominate a candidate must also comply
with the notice and other requirements described above under the
question May I propose actions for consideration at the
2012 meeting of stockholders?
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PROPOSAL 1
ELECTION OF DIRECTORS
Our restated certificate of incorporation provides that the
Board must consist of between five and 17 members, with the
actual number of directors at any time to be determined by the
Board. Until 2009 our Board was divided into three classes and
the members of each class were elected to serve a three-year
term with the term of office for each class ending in
consecutive years. At last years annual meeting, our
stockholders approved amendments to our restated certificate of
incorporation that provided for the phased-in elimination of the
classification of our Board and the annual election of our
directors. These amendments resulted in the directors at our
2011 annual meeting and thereafter being elected to one-year
terms but did not shorten the term of any director elected at or
prior to our 2010 annual meeting.
Four of the 2011 nominees for the office of director
Mr. Cleveland, Ms. Hinshaw, Mr. MacInnis, and
Ms. Stoney were elected in 2008 by
Williams stockholders to a three-year term that expires
this year. Ms. Sugg was first appointed to the Board in
November 2010 after she expressed interest to the Nominating and
Governance Committee to be considered for Board membership.
Mr. Armstrong was appointed to the Board effective
January 3, 2011 simultaneously with his promotion to Chief
Executive Officer and President of the Company. Unless otherwise
instructed, the individuals designated by the Board as proxies
intend to vote to elect Mr. Armstrong, Mr. Cleveland,
Ms. Hinshaw, Mr. MacInnis, Ms. Stoney, and
Ms. Sugg. Should any of these nominees become unable for
any reason to stand for election as a director, the designated
proxies will vote to elect another nominee recommended by the
Nominating and Governance Committee. Alternatively, the Board
may choose to reduce its size. Mr. Malcolm served as
Chairman of the Board until his retirement as a director on
January 3, 2011. Mr. Howell has reached retirement age
and is not standing for re-election.
Director and Nominee Experience and
Qualifications. At each of its regularly
scheduled meetings, in satisfaction of our Corporate Governance
Guidelines, the Nominating and Governance Committee evaluates
the composition of the Board to assess the skills and experience
that are currently represented on the Board, as well as the
skills and experience that the Board will find valuable in the
future, given the Companys current situation and strategic
plans. The Nominating and Governance Committee seeks a variety
of occupational and personal backgrounds on the Board in order
to obtain a range of viewpoints and perspectives and to enhance
the diversity of the Board in such areas as geography, race,
gender, ethnicity, and age. This assessment enables the Board to
update (if necessary) the skills and experience it seeks in the
Board as a whole, and in individual directors, as the
Companys needs evolve and change over time. For Board
membership, the Nominating and Governance Committee considers
the appropriate balance of experience, skills, and
characteristics that best suits the needs of the Company and our
stockholders. The Committee develops long-term Board succession
plans to ensure that the appropriate balance is maintained.
The minimum qualifications and attributes that the Nominating
and Governance Committee believes a director nominee must
possess include:
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an understanding of business and financial affairs and the
complexities of a business organization.
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genuine interest in Williams and in representing all of its
stockholders.
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a willingness and ability to spend the time required to function
effectively as a director.
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an open-minded approach and the resolve to make independent
decisions on matters presented for consideration.
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a reputation for honesty and integrity beyond question.
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In evaluating the director nominees and in reviewing the
qualifications and experience of the directors continuing in
office, the Nominating and Governance Committee considered a
variety of factors. These include each nominees
independence, financial literacy, personal and professional
accomplishments, and experience in light of the needs of the
Company. For incumbent directors, the factors also include past
performance on the Board. Among other things, the Board has
determined that it is important to have individuals with the
following skills and experiences on the Board:
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Industry Experience in the oil and natural gas business.
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Financial Experience with which to evaluate our financial
statements and capital investments.
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13
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Corporate Governance Experience to support our goals of
greater transparency, accountability for management and the
Board, and protection of stockholders interests.
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Legal Experience is valuable to the Board oversight of
the Companys legal and regulatory compliance.
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Public Policy and Government Experience is relevant to
the Company as it operates in a highly regulated industry.
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Operating Experience, which is relevant to the
understanding of the Companys operating plan and strategy.
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Compensation Experience to help us attract, motivate and
retain world class talent.
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Technology Experience, which is relevant to understand
the operations of the Companys networking technology, data
requirements, and security.
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We have included below certain information about the nominees
for election as directors as well as the directors who will
continue in office after the annual meeting.
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Alan S. Armstrong, Age 48
Director
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Director since 2011. Mr. Armstrong became one of our
directors and our Chief Executive Officer and President
effective January 3, 2011. From February 2002 until January
2011, he was Senior Vice President Midstream and
acted as President of our Midstream business. From 1999 to
February 2002, Mr. Armstrong was Vice President, Gathering
and Processing for Midstream. From 1998 to 1999 he was Vice
President, Commercial Development for Midstream. As of January
2011, Mr. Armstrong serves as Chairman of the Board and
Chief Executive Officer of Williams Partners GP LLC, the general
partner of Williams Partners L.P., where he was Senior Vice
President Midstream from February 2010, and Chief
Operating Officer and a director from February 2005. He also
serves as Chairman of the Board of Directors of Junior
Achievement of Oklahoma, Inc., President of the Gas Processors
Association, a member of the Board for the Natural Gas Supply
Association, and Chairman of the University of Oklahoma College
of Engineering Board of Visitors.
As our current Chief Executive Officer and due to his roles of
increasing responsibilities in our Midstream business,
Mr. Armstrongs qualifications include industry,
financial, public policy and government, and operating
experience.
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Joseph R. Cleveland, Age 66
Member
Audit Committee
Member
Finance Committee
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Director since 2008. Mr. Cleveland was the Chief
Information Officer of Lockheed Martin Corporation (an advanced
technology company) from 2001 to 2008. Mr. Cleveland was
responsible for Lockheed Martins information technology
vision, consolidating its resources, implementing
e-commerce
initiatives, leveraging economies of scale, and supporting its
businesses. He was also President of Lockheed Martin Enterprise
14
Information Systems from 1995 to 2008. From 2001 to 2008,
Mr. Cleveland served as a director of Exostar (a joint
venture formed to support the supply chain and security
requirements of the aerospace and defense industry). Prior to
the merger of Lockheed and Martin Marietta in 1995,
Mr. Cleveland was Vice President and General Manager of
Martin Marietta Internal Information Systems. From 1982 to 1986,
Mr. Cleveland held an international assignment as Managing
Director of GE Medical Systems Operations in Radlett, England.
Mr. Cleveland began his career in 1970 as a member of
General Electric Medical Systems engineering department.
Mr. Cleveland is a member of the board of Aerospace
Industries Association, the Florida High Tech Corridor
Committee, and the Metro Orlando Economic Development
Commission, among other civic and charitable organizations.
As the former Chief Information Officer of Lockheed Martin
Corporation, a former Vice President of Martin Marietta, and due
to his multiple executive operating positions with G.E.,
Mr. Clevelands qualifications include operating and
technology experience.
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Juanita H. Hinshaw, Age 66
Member
Audit Committee
Chair
Finance Committee
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Director since 2004. Ms. Hinshaw is President and Chief
Executive Officer of H&H Advisors (a financial consulting
firm she founded in 2005). From 2000 to 2005 she was Senior Vice
President and Chief Financial Officer of Graybar Electric
Company (a distributor of electrical and communications products
and provider of related supply chain management and logistics
services), where she was responsible for the treasury, tax,
auditing, and accounting areas. Ms. Hinshaw was a director
of Graybar from 2000 to 2005. Prior to joining Graybar, she was
with Monsanto Company (an agricultural company) for fifteen
years, retiring as Monsantos Vice President and Treasurer
in 1999. Ms. Hinshaw was a director of IPSCO (a supplier of
steel products, tubular products, and coil processing services
and products) from 2001 until the company was sold in 2007.
Ms. Hinshaw is a director of Insituform Technologies Inc.
(a provider of technologies and services for the rehabilitation
of pipeline systems) and Synergetics USA, Inc. (which designs,
manufactures, and markets instruments used for eye and
neurosurgery).
As the President and Chief Executive Officer of a consulting
firm, the former Senior Vice President and Chief Financial
Officer of Graybar Electric Company, and the former Vice
President and Treasurer of Monsanto Company,
Ms. Hinshaws qualifications include financial and
operating experience.
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Frank T. MacInnis, Age 64
Chairman
of the Board
Member
Compensation Committee
Chair
Nominating and Governance Committee
|
Director since 1998. Mr. MacInnis was named Chairman of our
Board effective January 3, 2011. He is Chairman of the
Board of EMCOR Group Inc. (an electrical and mechanical
construction company and energy infrastructure service
provider), where he also served as Chief Executive Officer from
1994 to 2010 and managed the reorganization and emergence from
bankruptcy of its predecessor. Mr. MacInnis also is
Chairman of the Board
15
and Chief Executive Officer of ComNet Communications, LLC (a
provider of turnkey voice, data, and video infrastructure
support). From 1981 to 1984, Mr. MacInnis served as
Chairman and Chief Executive Officer of H.C. Price Construction
(a builder of large diameter oil and gas pipelines). He has
managed construction and operations all over the world,
including in Tehran, Baghdad, Bangkok, the United Arab Emirates,
London, the United States, and Canada. Mr. MacInnis has a
law degree, having graduated from the University of Alberta Law
School in 1971. He is a director of ITT Corporation (a
high-technology engineering and manufacturing company) and the
Greater New York Chapter of the March of Dimes.
As the Chairman of our Board and of EMCORs, the former
Chief Executive Officer of EMCOR Group Inc., and the current
Chairman of the Board and Chief Executive Officer of ComNet
Communications, LLC, Mr. MacInnis qualifications
include industry, financial, corporate governance, legal,
operating, and compensation experience.
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Janice D. Stoney, Age 70
Chair
Compensation Committee
Member
Nominating and Governance Committee
|
Director since 1999. Ms. Stoney served as Executive Vice
President of US West Communications Group, Inc. from March 1991
until retiring in January 1993 after a
33-year
career. Previously she served as the President, Consumer
Division, of US West (the Denver-based parent company of
Northwestern Bell Telephone Company, Mountain States
Telephone & Telegraph Company, and Pacific Northwest
Bell Telephone Company) from 1989 to 1991. Beginning in 1980,
Ms. Stoney held officer positions at Northwestern Bell,
including as its Chief Operating Officer and ultimately its
President and Chief Executive Officer. Ms. Stoney was the
1994 Nebraska Republican nominee for the U.S. Senate. She
served as a national vice-chair finance and the Nebraska chair
finance for the Dole for President campaign in 1995 to 1996, and
as a delegate to the 2000 and 2004 national Republican
conventions. Ms. Stoney was a director of Gordmans (a chain
of mid-western discount department stores) from 1998 to 2008,
Bridges Investment Fund (a venture capital fund) from 1999 to
2006, and Swanson Corporation (a vending and food service
corporation) from 1999 to 2006. Ms. Stoney has been a
director of Whirlpool Corporation (a manufacturer of home
appliances) since 1987. Through 22 years as a director in
manufacturing, consumer products, retailing, and investment
funds industries, Ms. Stoney has board experience with
director searches, CEO and management succession, management
development, executive compensation, and strategic planning. She
has chaired compensation and audit committees for other
entities. She has served on the Federal Reserve Bank, Tenth
District, Omaha Branch and the Omaha Community Foundation.
As a former Executive Vice President of US West Communications
Group, Inc., Chief Executive Officer of Northwestern Bell, and
through her engagement in the political process,
Ms. Stoneys qualifications include corporate
governance, public policy and government, operating, and
compensation experience.
16
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Laura A. Sugg, Age 50
Member
Compensation Committee
Member
Finance Committee
|
Ms. Sugg retired from ConocoPhillips in April 2010, having
served as President, Australasia Division, a position
responsible for the profit & loss and growth
responsibility of ConocoPhillips operations in Australia
and East Timor. Ms. Sugg began her career in 1983 at Sohio
Petroleum and joined Phillips Petroleum, now ConocoPhillips, in
1986 and performed various business development, human resources
and operations roles. From 2003 to 2005, Ms. Sugg was
ConocoPhillips General Manager E&P Human Resources,
with responsibility for global compensation &
benefits, leadership succession planning, and all HR functions
for 10,000 worldwide employees in 16 countries. From 2002
to 2003, Ms. Sugg was a ConocoPhillips midstream
executive responsible for profit & loss, health,
safety and environment, and operations for its gas gathering,
processing, and fractionation business in the U.S., Canada, and
Trinidad. From 2000 to 2002, Ms. Sugg was Vice President
Worldwide Gas for Phillips with responsibility for its global
liquefied natural gas and coal bed methane business development
and the profit & loss for its North American gas
marketing operations. Ms. Sugg was a director of Mariner
Energy, Inc. (an independent oil and gas exploration and
production company) from November 2009 until its merger with
Apache Corporation in November 2010. She is a member of the
National Association of Corporate Directors and the Oklahoma
State University Engineering Advisory Board.
As the former President, Australasia Division, General Manager
E&P Human Resources, and midstream executive, each with
ConocoPhillips, Ms. Suggs qualifications include
industry, financial, operating, and compensation experience.
Board of Directors Recommendation: THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE ELECTION OF THE DIRECTORS NAMED IN PROPOSAL 1.
Directors
Continuing in Office
Directors
Whose Terms Expire at the Annual Meeting in 2012
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Irl F. Engelhardt, Age 64, Class II
Member
Audit Committee
Member
Finance Committee
|
Director since 2005. Mr. Engelhardt has served as Chairman
of Patriot Coal Corporation (a producer and marketer of coal in
the eastern United States) since November 2007. He was Chairman
of Peabody Energy Corporation (a private-sector coal company) or
its predecessor companies from 1993 to 2007, and chief executive
officer from 1990 through 2005. He was also co-Chief Executive
Officer of The Energy Group (comprising Eastern Electricity in
the United Kingdom, Peabody in the United States and Australia,
and Citizens Power in the United States) from 1997 to 1998
and Chairman of Citizens Power (a power marketer, formerly a
subsidiary of
17
Peabody) from 1998 to 2000. Mr. Engelhardt served as a
director of Valero Energy Corporation (an independent petroleum
refiner and marketer) from 2006 to 2010. He is a director of
Patriot Coal and the former Chairman of The Federal Reserve Bank
of St. Louis.
As Chairman of Patriot Coal Corporation, and former Chairman and
Chief Executive Officer of Peabody Energy Corporation,
Mr. Engelhardts qualifications include industry,
financial, corporate governance, operating, and compensation
experience.
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William E. Green, Age 74, Class II
Member
Audit Committee
Member
Nominating and Governance Committee
|
Director since 1998. Mr. Green is the founder of William
Green & Associates, a Palo Alto, California law firm,
and has been with the firm since 1974. He is also the Vice
President, General Counsel and Secretary of AIM Broadcasting,
LLC. From 1971 to 1974, Mr. Green was Assistant General
Counsel for Boise Cascade Corporation (which manufactures paper,
corrugated containers, and wood products and distributes office
products and building materials). From 1963 through 1971,
Mr. Green was a member of the legal staff of Sybron
Corporation (an equipment manufacturer for the brewing,
chemical, food processing and dental equipment markets), serving
as Associate Patent Counsel and Associate General Counsel.
Mr. Green was employed by the Applied Research Laboratories
of United States Steel Corporation as a chemist from 1957 to
1961 and as a patent coordinator from 1961 to 1963. He is a
former trustee of Rochester Savings Bank. Mr. Green was
Chairman of the City Planning Commission for Rochester, New York
from 1966 to 1971 and a candidate for the New York State
Assembly in 1968. Mr. Green is a director of Philanthropic
Ventures, Inc., Ramsell Holding Corporation, Flowers Heritage
Foundation, and Shiloh Energy Group Corporation.
As a member of the law firm Williams Green &
Associates; Vice President, General Counsel and Secretary of AIM
Broadcasting, LLC; and former Associate General Counsel for each
of Boise Cascade Corporation and Sybron Corporation,
Mr. Greens qualifications include corporate
governance and legal experience.
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George A. Lorch, Age 69, Class II
Member
Compensation Committee
Member
Nominating and Governance Committee
|
Director since 2001. Mr. Lorch is Chairman Emeritus of
Armstrong Holdings, Inc., the holding company for Armstrong
World Industries, Inc. (a manufacturer and marketer of floors,
ceilings, and cabinets). He was the Chief Executive Officer and
President of Armstrong World Industries, Inc. from 1993 to 1994
and Chairman of the Board and Chief Executive Officer from 1994
to 2000. From May 2000 to August 2000 he was Chairman of the
Board and Chief Executive Officer of Armstrong Holdings, Inc.
Mr. Lorch has 37 years of sales and marketing
experience at Armstrong, including 17 years experience as a
head of operations, with responsibility for profit and loss
statements, balance sheets, and stockholder relations. During
his 21 years as a director in varied industries,
Mr. Lorch has
18
participated in CEO searches, succession planning, strategy
development, takeover defense and offense, and director
recruitment, and he has served on dozens of board committees.
Mr. Lorch is Chairman of the Board of Pfizer, Inc. (a
research-based pharmaceutical company) and a director of
Autoliv, Inc. (a developer, manufacturer, and supplier of
automotive safety systems); HSBC Finance Corporation and HSBC
North America Holdings Inc., non-public, wholly-owned
subsidiaries of HSBC LLC (a banking and financial services
provider); and Masonite (a door manufacturer). Mr. Lorch
also serves as an advisor to the Carlyle Group (a private equity
firm).
As Chairman of Pfizer, Inc.s board of directors and the
former Chief Executive Officer and President of Armstrong World
Industries, Inc., Mr. Lorchs qualifications include
financial, corporate governance, operating, and compensation
experience.
Nominees
for Director Whose Terms Will Expire at the Annual Meeting in
2013
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Kathleen B. Cooper, Age 66, Class III
Member
Compensation Committee
Member
Finance Committee
|
Director since 2006. Dr. Cooper has served as Senior Fellow
of the Tower Center for Political Studies at Southern Methodist
University since August 2007. From 2005 to 2007, she was the
Dean of the College of Business Administration at the University
of North Texas. From 2001 to 2005, she was the Under Secretary
for Economic Affairs at the U.S. Department of Commerce.
Dr. Cooper was at Exxon Mobil Corporation (an international
oil and gas company) from 1990 to 2001, serving as Chief
Economist the entire time and adding the position of Manager,
Economics & Energy Division, Corporate Planning in
1999. Dr. Cooper also acted as Chief Economist for Security
Pacific Bank (1981 to 1990) and United Banks of Colorado
(1971 to 1981). Dr. Cooper served as a founding director of
Texas Security Bank from 2008 through January 2010. She has
participated in numerous professional and community service
organizations, including Harvard Universitys Higher
Education Leadership Forum, the Oxford Energy Forum, and the
International Womens Forum. She currently serves as vice
chair of the National Bureau of Economic Research.
As Senior Fellow of the Tower Center for Political Studies at
Southern Methodist University, former Under Secretary for
Economic Affairs at the U.S. Department of Commerce, and
former executive of a Fortune 500 energy company,
Dr. Coopers qualifications include industry,
financial, and public policy and government experience.
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William R. Granberry, Age 68, Class III
Member
Compensation Committee
Member
Finance Committee
|
Director since 2005. Mr. Granberry has been a member of
Compass Operating Company LLC (a small, private oil and gas
exploration, development, and producing company) since October
2004. From 1999 to 2004, as an independent consultant, he
managed investments and consulted with oil and gas companies.
From 1996 to 1999,
19
Mr. Granberry was President and Chief Operating Officer of
Tom Brown, Inc. (a public oil and gas company with exploration,
development, acquisition, and production activities throughout
the central United States). He has worked in the oil and gas
industry in various capacities for 44 years, including as a
manager of engineering at Amoco (a global energy company) and in
executive positions for smaller independent energy companies.
Mr. Granberry has served on committees and boards of
industry organizations, including the Society of Petroleum
Engineers, the American Petroleum Institute, and the Independent
Producers Association of America. A start up Internet company,
Just4Biz.com, where he served on the board of directors and as
interim chief executive officer for periods in 2000 and 2001,
filed for bankruptcy in May 2001. He is a director of Legacy
Reserves GP, LLC (an independent acquirer and developer of oil
and natural gas properties) and a trustee of Manor Park, Inc.
As a member of Compass Operating Company LLC, former President
and Chief Operating Officer of Tom Brown, Inc., and with his
varied experiences as an executive in the oil and gas industry,
Mr. Granberrys qualifications include industry,
public policy and government, and operating experience.
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William G. Lowrie, Age 67, Class III
Chair
Audit Committee
Member
Nominating and Governance Committee
|
Director since 2003. In 1999 Mr. Lowrie retired as Deputy
Chief Executive Officer and director of BP Amoco PLC (a global
energy company), where he spent his entire
33-year
career. At Amoco, Mr. Lowrie held various positions of
increasing responsibility, developing expertise in drilling,
reservoir engineering, financial analysis of projects, and other
skills related to the oil and natural gas exploration,
production, and processing businesses. At various times in his
Amoco tenure, Mr. Lowrie managed natural gas and natural
gas liquids pipeline operations, hedging and other hydrocarbon
price risk mitigation functions, international contract
negotiations, petroleum product refining and marketing
operations, environmental health and safety program design, and
the development and execution of a process for managing capital
investment projects. Mr. Lowrie also worked closely with
all financial functions, internal and external auditors, and
industry organizations such as the American Petroleum Institute.
From 1995 to 1999, Mr. Lowrie served on the board of Bank
One Corporation (now JP Morgan Chase), including on such
boards audit committee. He has attended the Executive
Program at the University of Virginia. Mr. Lowrie is a
director of The Ohio State University Foundation and a trustee
of the South Carolina chapter of The Nature Conservancy.
As the former Deputy Chief Executive Officer of BP Amoco PLC,
Mr. Lowries qualifications include industry,
financial, corporate governance, operating, and compensation
experience.
20
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 28, 2011 there were no beneficial holders of
five percent or more of our common stock.
The following table sets forth, as of February 28, 2011,
the number of shares of our common stock beneficially owned by
each of our directors and nominees for directors, by the NEOs,
and by all directors and executive officers as a group.
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Shares of
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Common Stock
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Shares Underlying
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Owned Directly or
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Options Exercisable
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Percent
|
Name of Individual or Group
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Indirectly(1)(2)
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Within 60 Days(3)
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Total
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of Class(4)
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Alan S. Armstrong
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323,157
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289,320
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612,477
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*
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Donald R. Chappel
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414,487
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539,168
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953,655
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*
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Joseph R. Cleveland
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21,477
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0
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21,477
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*
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Kathleen B. Cooper
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24,235
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4,500
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28,735
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*
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Irl F. Engelhardt
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54,226
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12,000
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66,226
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*
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William R. Granberry
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26,495
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9,000
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35,495
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*
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William E. Green
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55,407
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22,000
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77,407
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*
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Ralph A. Hill
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244,401
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192,236
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436,637
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*
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Juanita H. Hinshaw
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30,186
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15,000
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|
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45,186
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*
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W. R. Howell
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79,813
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40,000
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119,813
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*
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George A. Lorch
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69,305
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43,631
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112,936
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*
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William G. Lowrie
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77,570
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0
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77,570
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*
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Frank T. MacInnis
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73,307
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40,000
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113,307
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*
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Steve J. Malcolm(5)
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1,141,666
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1,523,965
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2,665,631
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*
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Janice D. Stoney
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61,244
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40,000
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101,244
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*
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Laura A. Sugg
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3,023
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0
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3,023
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*
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Phillip D. Wright
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434,960
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421,403
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856,363
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*
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All directors and executive officers as a group (22 persons)
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3,770,236
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3,647,380
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7,417,616
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1.26
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* |
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Less than 1%. |
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(1) |
|
Includes shares held under the terms of incentive plans as
follows: Mr. Armstrong, 258,917 restricted stock units;
Mr. Chappel, 270,224 restricted stock units; Mr. Hill,
229,274 restricted stock units and 632 shares in The
Williams Investment Plus Plan; Mr. Malcolm, 428,893
restricted stock units and 927 shares in The Williams
Investment Plus Plan; and Mr. Wright, 220,202 restricted
stock units. Restricted stock units include both time-based and
performance-based units and do not have voting or investment
power. Shares held in The Williams Investment Plus Plan have
voting and investment power. |
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(2) |
|
Includes restricted stock units over which directors have no
voting or investment power held under the terms of compensation
plans as follows: Mr. Cleveland, 17,546; Dr. Cooper,
17,546; Mr. Engelhardt, 17,546; Mr. Granberry, 17,546;
Mr. Green, 17,546; Ms. Hinshaw, 17,546;
Mr. Lorch, 56,842; Mr. Lowrie, 17,546;
Mr. MacInnis, 17,546; Ms. Stoney, 40,986; and
Ms. Sugg, 3,023. |
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(3) |
|
The SEC deems a person to have beneficial ownership of all
shares that the person has the right to acquire within
60 days. The shares indicated represent stock options
granted under our current or previous stock option plans that
are currently exercisable or will become exercisable within
60 days of February 28, 2011. Shares subject to
options cannot be voted. |
|
(4) |
|
Ownership percentage is reported based on
587,610,368 shares of common stock outstanding on
February 28, 2011, plus, as to the holder thereof only and
no other person, the number of shares (if any) that the person
has the right to acquire as of February 28, 2011, or within
60 days from that date, through the exercise of all options
and other rights. |
|
(5) |
|
Mr. Malcolm retired as Chairman of the Board, Chief
Executive Officer, and President of the Company, effective
January 3, 2011. |
21
The following table sets forth, as of February 28, 2011,
the number of shares of common units of Williams Partners L.P.
beneficially owned by each of our directors and nominees for
directors, by the NEOs, and by all directors and executive
officers as a group.
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|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
Common Units
|
|
Shares Underlying
|
|
|
|
|
|
|
Owned Directly or
|
|
Options Exercisable
|
|
|
|
Percent
|
Name of Individual or Group
|
|
Indirectly
|
|
Within 60 Days(1)
|
|
Total
|
|
of Class(2)
|
|
Alan S. Armstrong(3)
|
|
|
20,000
|
|
|
|
0
|
|
|
|
20,000
|
|
|
|
*
|
|
Donald R. Chappel
|
|
|
22,584
|
|
|
|
0
|
|
|
|
22,584
|
|
|
|
*
|
|
Joseph R. Cleveland
|
|
|
2,000
|
|
|
|
0
|
|
|
|
2,000
|
|
|
|
*
|
|
Kathleen B. Cooper
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
Irl F. Engelhardt
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
William R. Granberry
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
William E. Green
|
|
|
1,239
|
|
|
|
0
|
|
|
|
1,239
|
|
|
|
*
|
|
Ralph A. Hill
|
|
|
4,292
|
|
|
|
0
|
|
|
|
4,292
|
|
|
|
*
|
|
Juanita H. Hinshaw
|
|
|
1,758
|
|
|
|
0
|
|
|
|
1,758
|
|
|
|
*
|
|
W. R. Howell
|
|
|
12,584
|
|
|
|
0
|
|
|
|
12,584
|
|
|
|
*
|
|
George A. Lorch
|
|
|
8,792
|
|
|
|
0
|
|
|
|
8,792
|
|
|
|
*
|
|
William G. Lowrie
|
|
|
8,821
|
|
|
|
0
|
|
|
|
8,821
|
|
|
|
*
|
|
Frank T. MacInnis
|
|
|
8,792
|
|
|
|
0
|
|
|
|
8,792
|
|
|
|
*
|
|
Steven J. Malcolm(4)
|
|
|
32,684
|
|
|
|
0
|
|
|
|
32,684
|
|
|
|
*
|
|
Janice D. Stoney
|
|
|
8,792
|
|
|
|
0
|
|
|
|
8,792
|
|
|
|
*
|
|
Laura A. Sugg
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
Phillip D. Wright
|
|
|
12,084
|
|
|
|
0
|
|
|
|
12,084
|
|
|
|
*
|
|
All directors and executive officers as a group (22 persons)
|
|
|
165,022
|
|
|
|
0
|
|
|
|
165,022
|
|
|
|
*
|
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
The SEC deems a person to have beneficial ownership of all
shares that the person has the right to acquire within
60 days. |
|
(2) |
|
Ownership percentage is reported based on
289,844,576 shares of common units outstanding on
February 28, 2011. |
|
(3) |
|
Represents 10,000 units held by the Shelly Stone Armstrong
Trust dated August 10, 2004. |
|
(4) |
|
Mr. Malcolm retired as Chairman of the Board, Chief
Executive Officer, and President, effective January 3, 2011. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Companys directors and certain of its officers to file
reports of their ownership of Williams common stock and of
changes in such ownership with the SEC and the NYSE. Regulations
also require Williams to identify in this proxy statement any
person subject to this requirement who failed to file any such
report on a timely basis. Based solely on a review of the copies
of such reports furnished to the Company and written
representations from certain reporting persons, we believe that
all of our officers, directors, and greater than 10%
stockholders complied with all Section 16(a) filing
requirements applicable to them during the fiscal year ended
December 31, 2010, except that, due to an administrative
oversight, Ted T. Timmermans, Vice President,
Controller & Chief Accounting Officer, filed one late
Form 4 on August 17, 2010 with respect to the
disposition of 6,500 shares of stock on August 3, 2010.
22
NAMED
EXECUTIVE OFFICER PROFILES
The following individual executive profiles provide biographical
information and summarize total targeted compensation for 2010
to our NEOs. These profiles are provided in addition to the
detailed compensation tables required by the SEC.
|
|
|
|
|
|
|
|
Steven J. Malcolm Former Chairman of the Board, Chief Executive Officer and President Position held since September 2001. Age: 62
Mr. Malcolm became Chairman of the Board in May 2002, Chief Executive Officer in January 2002, and President in September 2001. Mr. Malcolm retired from the Company effective January 3, 2011.
|
2010
Target
Compensation1
|
|
|
|
|
Long-Term Incentives (LTI)
|
|
|
|
|
Performance-Based RSUs
|
|
$
|
2,800,000
|
|
Stock Options
|
|
$
|
2,800,000
|
|
Time-Based RSUs
|
|
$
|
0
|
|
Annual Incentive Plan (AIP) at Target
|
|
$
|
1,100,000
|
|
Base Pay
|
|
$
|
1,100,000
|
|
Retirement Benefits
|
|
|
|
|
Pension (year over year change)
|
|
$
|
31,116
|
|
Restoration Plan (year over year change)
|
|
$
|
713,310
|
|
401(k) Company Match
|
|
$
|
14,700
|
|
Payment
Upon Termination
(As of December 31,
2010)
|
|
|
|
|
Voluntary Termination
|
|
$
|
0
|
|
Termination with Cause
|
|
$
|
0
|
|
Involuntary Termination without Cause
|
|
$
|
7,483,155
|
|
Retirement
|
|
$
|
13,128,419
|
|
Death or Disability
|
|
$
|
13,128,419
|
|
Change in Control
|
|
$
|
36,022,217
|
|
Stock
Ownership Requirements
As of December 31, 2010, Mr. Malcolms ownership
in our common stock exceeded the then required CEO ownership
threshold of five times base salary.
1 Please
note that 2010 Compensation reflects target pay and consists of
annual base pay, AIP at target, and the targeted long-term
incentive grant. These amounts will differ from the Summary
Compensation Table. The retirement benefits are valued in the
same manner shown in the Summary Compensation Table.
2010
Target Compensation Chart
23
|
|
|
|
|
Donald R. Chappel Senior Vice President and Chief Financial Officer Position held since April 2003. Age: 59
Prior to joining Williams, Mr. Chappel held various financial, administrative, and operational leadership positions. Mr. Chappel is included in Institutional Investor magazines Best CFOs listing for 2011, 2010, 2008, 2007, and 2006. Mr. Chappel also serves as Chief Financial Officer and a director of Williams Partners GP LLC, the general partner of Williams Partners L.P. Mr. Chappel was Chief Financial Officer, from August 2007, and a director, from January 2008, of Williams Pipeline GP LLC, the general partner of Williams Pipeline Partners L.P., until its merger with Williams Partners L.P. in August 2010. Mr. Chappel is a director of SUPERVALU Inc. (a grocery and pharmacy company) and Energy Insurance Mutual Limited (an energy/utility industry sponsored mutual insurance company). Mr. Chappel also serves as a director of The Childrens Hospital Foundation at St. Francis and of Family & Childrens Services of Oklahoma.
|
2010
Target
Compensation1
|
|
|
|
|
Long-Term Incentives (LTI)
|
|
|
|
|
Performance-Based RSUs
|
|
$
|
700,000
|
|
Stock Options
|
|
$
|
600,000
|
|
Time-Based RSUs
|
|
$
|
700,000
|
|
Annual Incentive Plan (AIP) at Target
|
|
$
|
459,000
|
|
Base Pay
|
|
$
|
612,000
|
|
Retirement Benefits
|
|
|
|
|
Pension (year over year change)
|
|
$
|
30,033
|
|
Restoration Plan (year over year change)
|
|
$
|
195,506
|
|
401(k) Company Match
|
|
$
|
14,700
|
|
Payment
Upon Termination
(As of December 31,
2010)
|
|
|
|
|
Voluntary Termination
|
|
$
|
0
|
|
Termination with Cause
|
|
$
|
0
|
|
Involuntary Termination without Cause
|
|
$
|
5,504,554
|
|
Retirement
|
|
$
|
5,371,267
|
|
Death or Disability
|
|
$
|
6,728,841
|
|
Change in Control
|
|
$
|
14,991,971
|
|
Stock
Ownership Requirements
As of December 31, 2010, Mr. Chappels ownership
in our common stock exceeded the required NEO ownership
threshold of three times base salary.
1 Please
note that 2010 Compensation reflects target pay and consists of
annual base pay, AIP at target, and the targeted long-term
incentive grant. These amounts will differ from the Summary
Compensation Table. The retirement benefits are valued in the
same manner shown in the Summary Compensation Table.
2010
Target Compensation Chart
24
|
|
|
|
|
Ralph A. Hill Senior Vice President, Exploration and Production Position held since December 1998. Age: 51
Mr. Hill acts as President of our Exploration and Production business. He was Vice President and General Manager of the Exploration and Production business from 1993 to 1998, as well as Senior Vice President and General Manager of Petroleum Services from 1998 to 2003. Mr. Hill has served as the Chairman of the Board and Chief Executive Officer of Apco Oil and Gas International Inc. (an international oil and gas exploration and production company with a focus on South America) since 2002. Mr. Hill has served as a director of Petrolera Entre Lomas S.A. (a hydrocarbon production and development company based in Argentina) since 2003. He also serves as a member of the board of directors of the Tulsa, Oklahoma division of the American Heart Association and has been a board member of numerous other nonprofit Boards. He joined Williams in June 1981 as a member of a management training program and has worked in numerous capacities within the Williams organization.
|
2010
Target
Compensation1
|
|
|
|
|
Long-Term Incentives (LTI)
|
|
|
|
|
Performance-Based RSUs
|
|
$
|
612,500
|
|
Stock Options
|
|
$
|
525,000
|
|
Time-Based RSUs
|
|
$
|
612,500
|
|
Annual Incentive Plan (AIP) at Target
|
|
$
|
321,555
|
|
Base Pay
|
|
$
|
494,700
|
|
Retirement Benefits
|
|
|
|
|
Pension (year over year change)
|
|
$
|
65,096
|
|
Restoration Plan (year over year change)
|
|
$
|
250,530
|
|
401(k) Company Match
|
|
$
|
14,700
|
|
Payment
Upon Termination
(As of December 31,
2010)
|
|
|
|
|
Voluntary Termination
|
|
$
|
0
|
|
Termination with Cause
|
|
$
|
0
|
|
Involuntary Termination without Cause
|
|
$
|
4,600,481
|
|
Retirement
|
|
$
|
4,479,062
|
|
Death or Disability
|
|
$
|
5,646,219
|
|
Change in Control
|
|
$
|
9,970,278
|
|
Stock
Ownership Requirements
As of December 31, 2010, Mr. Hills ownership in
our common stock exceeded the required NEO ownership threshold
of three times base salary.
1 Please
note that 2010 Compensation reflects target pay and consists of
annual base pay, AIP at target, and the targeted long-term
incentive grant. These amounts will differ from the Summary
Compensation Table. The retirement benefits are valued in the
same manner shown in the Summary Compensation Table.
2010
Target Compensation Chart
25
|
|
|
|
|
Alan S. Armstrong Former Senior Vice President Midstream Position held since February 2002 Age: 48
Mr. Armstrong became one of our directors and our Chief Executive Officer and President effective January 3, 2011. From February 2002 until January 2011 he was Senior Vice President Midstream and acted as President of our Midstream business. From 1999 to February 2002, Mr. Armstrong was Vice President, Gathering and Processing for Midstream. From 1998 to 1999 he was Vice President, Commercial Development for Midstream. As of January 2011, Mr. Armstrong serves as Chairman of the Board and Chief Executive Officer of Williams Partners GP LLC, the general partner of Williams Partners L.P., where he was Senior Vice President Midstream from February 2010, and Chief Operating Officer and a director from February 2005. He also serves as Chairman of the Board of Directors of Junior Achievement of Oklahoma, Inc., President of the Gas Processors Association, a member of the Board for the Natural Gas Supply Association, and Chairman of the University of Oklahoma College of Engineering Board of Visitors.
|
2010
Target
Compensation1
|
|
|
|
|
Long-Term Incentives (LTI)
|
|
|
|
|
Performance-Based RSUs
|
|
$
|
595,000
|
|
Stock Options
|
|
$
|
510,000
|
|
Time-Based RSUs
|
|
$
|
595,000
|
|
Annual Incentive Plan (AIP) at Target
|
|
$
|
321,555
|
|
Base Pay
|
|
$
|
494,700
|
|
Retirement Benefits
|
|
|
|
|
Pension (year over year change)
|
|
$
|
64,399
|
|
Restoration Plan (year over year change)
|
|
$
|
208,915
|
|
401(k) Company Match
|
|
$
|
14,700
|
|
Payment
Upon Termination
(As of December 31,
2010)
|
|
|
|
|
Voluntary Termination
|
|
$
|
0
|
|
Termination with Cause
|
|
$
|
0
|
|
Involuntary Termination without Cause
|
|
$
|
4,201,241
|
|
Retirement
|
|
$
|
4,078,903
|
|
Death or Disability
|
|
$
|
5,190,837
|
|
Change in Control
|
|
$
|
9,267,393
|
|
Stock
Ownership Requirements
As of December 31, 2010, Mr. Armstrongs
ownership in our common stock exceeded the required NEO
ownership threshold of three times base salary. As newly
promoted CEO, Mr. Armstrongs ownership in our stock
also exceeds the CEO ownership threshold that, newly effective
for 2011, is six times base salary.
1 Please
note that 2010 Compensation reflects target pay and consists of
annual base pay, AIP at target, and the targeted long-term
incentive grant. These amounts will differ from the Summary
Compensation Table. The retirement benefits are valued in the
same manner shown in the Summary Compensation Table.
2010
Target Compensation Chart
26
|
|
|
|
|
Phillip D. Wright Senior Vice President Corporate Development Position held since February 2011. Age: 55
From January 2005 to February 2011, Mr. Wright was Senior Vice President Gas Pipeline and acted as President of our Gas Pipeline business. From October 2002 to January 2005, he served as Chief Restructuring Officer. From September 2001 to October 2002, Mr. Wright served as President and Chief Executive Officer of our subsidiary Williams Energy Services, LLC. Mr. Wright served as a director, Senior Vice President, and Chief Operating Officer of Williams Pipeline GP LLC, the general partner of Williams Pipeline Partners L.P from August 2007 until its merger with Williams Partners L.P. in 2010. He served as a director from April 2005 to October 2007 and as both a director and Senior Vice President Gas Pipeline from February 2010 to February 2011 of Williams Partners GP LLC, the general partner of Williams Partners L.P. Mr. Wright is a director and the former Chairman of the Interstate Natural Gas Association of America. He is the former Chairman of the Association of Oil Pipelines of America. Mr. Wright serves on the Executive Committee and as a director of the Board of Trustees of the United Way of Greater Houston and is the First Vice Chairman of the Southern Gas Association.
|
2010
Target
Compensation1
|
|
|
|
|
Long-Term Incentives (LTI)
|
|
|
|
|
Performance-Based RSUs
|
|
$
|
595,000
|
|
Stock Options
|
|
$
|
510,000
|
|
Time-Based RSUs
|
|
$
|
595,000
|
|
Annual Incentive Plan (AIP) at Target
|
|
$
|
331,500
|
|
Base Pay
|
|
$
|
510,000
|
|
Retirement Benefits
|
|
|
|
|
Pension (year over year change)
|
|
$
|
46,737
|
|
Restoration Plan (year over year change)
|
|
$
|
219,204
|
|
401(k) Company Match
|
|
$
|
14,700
|
|
Payment
Upon Termination
(As of December 31,
2010)
|
|
|
|
|
Voluntary Termination
|
|
$
|
0
|
|
Termination with Cause
|
|
$
|
0
|
|
Involuntary Termination without Cause
|
|
$
|
4,189,906
|
|
Retirement
|
|
$
|
4,067,568
|
|
Death or Disability
|
|
$
|
5,179,502
|
|
Change in Control
|
|
$
|
9,461,403
|
|
Stock
Ownership Requirements
As of December 31, 2010, Mr. Wrights ownership
in our common stock exceeded the required NEO ownership
threshold of three times base salary.
1 Please
note that 2010 Compensation reflects target pay and consists of
annual base pay, AIP at target, and the targeted long-term
incentive grant. These amounts will differ from the Summary
Compensation Table. The retirement benefits are valued in the
same manner shown in the Summary Compensation Table.
2010
Target Compensation Chart
27
COMPENSATION
DISCUSSION AND ANALYSIS
Objective
of Our Compensation Programs
The role of compensation is to attract and retain the talent
needed to drive stockholder value and to help enable each of our
businesses to meet or exceed financial and operational
performance targets. Our compensation programs objective
is to reward our NEOs and employees for successfully
implementing our strategy to grow our business and create
long-term stockholder value. To that end, we use relative and
absolute Total Shareholder Return (TSR) to measure
long-term performance, and Economic Value
Added®
(EVA®)1
to measure annual performance. We believe using both TSR and
EVA®
to incent and pay NEOs helps ensure that the business decisions
made are aligned with the long-term interests of our
stockholders.
Our Pay
Philosophy
Our pay philosophy throughout the entire organization is to pay
for performance, be competitive in the marketplace, and consider
the value a job provides to the Company. Our compensation
programs reward NEOs not just for accomplishing goals, but also
for how those goals are pursued. We strive to reward the right
results and the right behaviors while fostering a culture of
collaboration and teamwork.
The principles of our pay philosophy influence the design and
administration of our pay programs. Decisions about how we pay
NEOs are based on these principles. The Compensation Committee
(Committee) uses several different types of pay that
are linked to both our long-term and short-term performance in
the executive compensation programs. Included are long-term
incentives, annual cash incentives, base pay, and benefits. The
chart below illustrates the linkage between the types of pay we
use and our pay principles.
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
Annual Cash
|
|
|
|
|
Pay Principles
|
|
Incentives
|
|
Incentives
|
|
Base Pay
|
|
Benefits
|
|
Pay should reinforce business objectives and values
|
|
ü
|
|
ü
|
|
ü
|
|
|
A significant portion of an NEOs total pay should be
variable based on performance
|
|
ü
|
|
ü
|
|
|
|
|
Incentive pay should balance long-term, intermediate, and
short-term performance
|
|
ü
|
|
ü
|
|
|
|
|
Incentives should align interest of NEOs with stockholders
|
|
ü
|
|
ü
|
|
|
|
|
Pay opportunity should be competitive
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
A portion of pay should be provided to compensate for the core
activities required for performing in the role
|
|
|
|
|
|
ü
|
|
ü
|
Pay should foster a culture of collaboration with shared focus
and commitment to our Company
|
|
ü
|
|
ü
|
|
|
|
|
2010
Compensation Summary
In 2010, we continued to focus on creating stockholder value by
delivering solid financial and operational performance. The
effects of the economic recession during late 2008 and 2009
eased during 2010. Crude oil and natural gas liquids prices
returned to attractive levels, but natural gas prices remained
low. We continued to respond to the changing landscape and
completed a number of significant business transactions as
detailed on pages 34-35. We also took several actions, described
below, to ensure that our executive pay program remains
affordable and competitive in the current market and after
market conditions improve.
2010 Pay
Decisions
As indicated above, significant consideration was given to the
need to balance our pay philosophy and practices with
affordability and sustainability. We continued to grant
long-term incentives in the form of performance-based restricted
stock units (RSUs), stock options, and time-based
RSUs in 2010 to emphasize our commitment to pay for performance.
Continuing our past practice, the former CEOs 2010 annual
long-term incentive award did not include any time-based RSUs.
1
Economic Value
Added®
(EVA®)
is a registered trademark of Stern, Stewart & Co.
28
Consistent with our commitment to provide a meaningful
connection between pay and performance, we have granted
performance-based RSUs to our NEOs since 2004. The
performance-based RSUs granted in 2008 for the
2008-2010
performance period did not meet threshold targets set at the
beginning of the period as a result of the global economic
crisis. The challenging performance targets established in 2008
for the three-year performance period included economic
assumptions that could not anticipate the significant decline in
economic conditions. In accordance with the design of the
awards, these awards were cancelled. This is the second
consecutive year the performance-based RSUs were not earned.
This resulted in each NEO losing a significant portion of pay
that was targeted for
2007-2009
and
2008-2010.
The following chart demonstrates the impact on Steven J.
Malcolm, the companys former CEO:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Disclosed Value of Award(a)
|
|
|
Value Realized by CEO
|
|
|
% of Total Compensation(b)
|
|
|
2007
|
|
$
|
2,731,000
|
|
|
$
|
0
|
|
|
|
33
|
%
|
2008
|
|
$
|
2,906,309
|
|
|
$
|
0
|
|
|
|
29
|
%
|
|
|
|
(a) |
|
The Disclosed Value reflects the amount disclosed for each
performance-based RSU award in the Companys Summary
Compensation Table. |
|
(b) |
|
Reflects the grant date value disclosed in (a) above for
the performance-based RSU award as a percentage of the total
compensation reflected in the Summary Compensation Table. |
The performance-based RSUs represented 33% and 29% respectively
of Mr. Malcolms 2007 and 2008 total compensation
disclosed in the Summary Compensation Table. During this time
period, the majority of the Companys comparator group of
companies did not include performance-based restricted stock or
restricted stock unit awards in their compensation program. This
approach demonstrates Williams commitment to linking our
pay package to long-term company performance and aligning it
with the stockholder experience.
It is important to note that the Summary Compensation Table
displays a value for equity awards on the date of grant. This
approach does not reflect the actual realized value associated
with equity award grants. While the grant date values make it
appear that our NEOs pay has been fairly consistent in
recent years, the value realized by our NEOs has significantly
declined in recent years due to our pay for performance
philosophy. As discussed above, performance-based RSUs represent
a significant portion of our NEOs compensation. The performance
targets established for the 2008 performance-based RSUs were
based on economic assumptions that did not anticipate the
significant decline in economic conditions. As an example, the
Summary Compensation Table reflects nearly $5.7 million in
overall equity awards for our former CEO, Steve Malcolm, in
2008. This represents 57% of his total value displayed on the
Summary Compensation Table. Due to the performance-based RSUs
referenced above and the performance of the stock option awards,
Mr. Malcolm has not realized any value from these awards.
This is a key differentiator for our pay program as
Mr. Malcolm has not received any time-based restricted
stock awards in recent years.
Each year, we set performance targets for our Annual Incentive
Program (AIP) during the first quarter. The targets established
in 2010 anticipated an improving economic environment and
required significantly improved performance over 2009. While
EVA®
performance exceeded 2009 levels, the 2010 AIP results paid less
than 2009 due to higher 2010 performance targets.
Our former CEO did not receive a base pay increase in 2009 or
2010. The remaining NEOs received a two percent base pay
increase in 2010 after not receiving an increase in 2009.
Plan
Design Decisions
The Committee regularly reviews our existing pay
programs to ensure we are able to attract and retain the talent
needed to deliver the strong financial and operating performance
necessary to create stockholder value while ensuring our program
effectively links pay to the performance of the Company. As part
of this process, the Committee reached several important
decisions. The Committee decided to continue awarding a
significant portion of long-term incentive awards in the form of
performance-based RSUs. The metric for these awards utilizes
absolute and relative TSR. NEOs will earn their targeted
performance-based RSUs for the 2010 to 2012 period only if we
deliver real absolute TSR and also achieve solid TSR in relation
to our comparator group of companies. While several companies in
our industry utilize relative TSR as a long-term incentive
metric, we believe it is important to impact the results by
including the absolute TSR actually delivered to our
stockholders. The majority of our
29
comparator companies do not grant performance-based restricted
stock or restricted stock unit awards. Our commitment to these
awards combined with the utilization of both relative and
absolute TSR metrics demonstrates our emphasis on linking pay to
long-term performance and aligning our pay programs with the
interest of stockholders.
The Committee also decided to grant the same mix of long-term
incentives as in 2009. We continue to deliver a significant
portion of equity in performance-based awards and stock options
because these awards have the strongest alignment to
stockholders. Shown below is the long-term incentive mix for
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers
|
|
|
|
CEO
|
|
|
(excluding CEO)
|
|
|
Performance-Based RSUs
|
|
|
50
|
%
|
|
|
35
|
%
|
Stock Options
|
|
|
50
|
%
|
|
|
30
|
%
|
Time-Based RSUs
|
|
|
0
|
%
|
|
|
35
|
%
|
As to our AIP,
EVA®
improvement remained the performance metric in 2010. The
difficult economic and commodity price environment made
establishing a target level of performance very challenging. In
anticipation of an improving economic environment, the Committee
approved a 2010
EVA®
performance target that was substantially higher than targets
established for 2009. The Committee also continued a decision
reached in 2009 to require that the AIP performance necessary to
move from threshold to target was doubled from 2008 levels.
Likewise, the performance required to move from target to
stretch was doubled from 2008 levels. This design attempts to
keep the AIP as a meaningful performance incentive throughout
the year while ensuring a payout significantly above target only
occurs if we significantly exceed established performance
targets.
The Committee also adopted a number of additional changes
beginning in 2011. These changes address the Change in Control
agreements, stock ownership guidelines and CEO perquisites.
These changes include:
|
|
|
|
|
Eliminating excise tax
gross-ups
from the Change in Control agreements. Communication to
executives will occur in 2011 and the elimination will occur in
2012.
|
|
|
|
Increasing the CEOs stock ownership guideline from
five-times base salary to six-times base salary.
|
|
|
|
Changing the CEO perquisites to eliminate a home security
benefit and to no longer require the CEO to use a company
aircraft for all air travel.
|
|
|
|
Amending the 2007 Incentive Plan to require a minimum three-year
vesting period for all RSU awards and at least a portion of all
stock option awards.
|
|
|
|
Adjusting the equity mix for Mr. Armstrongs 2011
equity award. As the new CEO, he will receive 50% of his equity
award in the form of performance-based RSUs, which is consistent
with Mr. Malcolms recent awards. Recognizing
Mr. Armstrongs move into the CEO role, the Committee
is providing 25% of his 2011 equity award in the form of
time-based RSUs. This is intended to assist him in building
stock ownership appropriate for his new role. The remaining 25%
will be granted in the form of stock options.
|
The Committee also recommended an annual
say-on-pay
stockholder vote. While the stockholders will provide a
non-binding vote regarding the frequency of the
say-on-pay
vote, the Committee believes an annual vote is consistent with
its desire to engage and receive feedback from stockholders
regarding our pay programs.
In addition to the Committee actions, the Nominating and
Governance Committee also increased the Board of Director stock
ownership guidelines from three-times the annual cash retainer
to five-times the annual cash retainer.
As shown, we are actively working to ensure that our pay
programs continue to be aligned with our pay philosophy, be
affordable and competitive, drive and motivate performance, and
align management and employees with our stockholders.
Mitigating
Risk
Although no compensation-related risk was identified as a top
risk for 2010, the approach to determine if there were adverse
compensation risk was similar to the process detailed in the
Corporate Governance and Board Matters
Corporate Governance Board Oversight of
Williams Risk Assurance Process section of this
proxy statement. After this thorough review and analysis, it was
determined that we do not have material adverse
compensation-related risks. Our compensation plans are
effectively designed and functioning to reward positive
30
performance and motivate NEOs and employees to behave in a
manner consistent with our stockholder interests, business
strategies and objectives, ethical standards, and prudent
business practices along with our Core Values &
Beliefs that are the foundation on which we conduct business.
Our Core Values & Beliefs can be found on our website
at www.williams.com from the Who We Are tab. In fact, many
elements of our executive pay program serve to mitigate
excessive risk taking. For example:
|
|
|
|
|
Target Pay Mix: The target pay mix weighting to long-term
incentives, annual cash incentives and base pay is consistent
with comparator company practices and avoids placing too much
value on any one element of compensation, particularly the
annual cash incentive. The mix of our pay program is intended to
motivate NEOs to consider the impact of decisions on
stockholders in the short, intermediate, and long terms.
|
|
|
|
Annual Cash Incentive: Our annual cash incentive program does
not allow for unlimited payouts. Cash incentive payments cannot
exceed 250% of target levels.
|
|
|
|
Performance-based Awards:
|
|
|
|
|
|
To strengthen the relationship between pay and performance, our
annual cash incentive and long-term incentive programs include
performance-based awards. The entire annual cash incentive award
is measured against performance targets, while a significant
portion of the long-term equity awards provided to NEOs is in
the form of performance-based RSUs and stock options.
Performance-based RSUs have no value unless we achieve
pre-determined three-year performance target thresholds. Stock
options will have no value unless the stock price increases from
the date of grant.
|
|
|
|
To drive a long-term perspective, all RSU awards vest at the end
of three years rather than vesting ratably on an annual basis.
|
|
|
|
NEOs incentive compensation performance is measured at the
enterprise level rather than on a business unit level to ensure
a focus on the overall success of the Company.
|
|
|
|
|
|
Stock Ownership Guidelines As discussed later in
this Compensation Discussion and Analysis, all NEOs, consistent
with their responsibilities to stockholders, must hold an equity
interest in the Company equal to a stated percentage of their
base pay.
|
|
|
|
Recoupment Policy In the event we are required to
restate our financial statements due to fraud or intentional
misconduct, we have a recoupment policy that enables us to
recover incentive-based compensation from NEOs.
|
Compensation
Recommendation and Decision Process
Role of
Management
In order to make pay recommendations, management provides the
CEO with data from the annual proxy statements of companies in
our comparator group along with pay information compiled from
nationally recognized executive and industry related
compensation surveys. The survey data is used to confirm that
pay practices among companies in the comparator group are
aligned with the market as a whole.
Role of
the CEO
Before recommending base pay adjustments and long-term incentive
awards to the Committee, our CEO reviews the competitive market
information related to each of our other NEOs while also
considering internal equity and individual performance.
For our annual cash incentive program, the CEOs
recommendation is based on
EVA®
attainment with a potential adjustment for individual
performance. Individual performance includes business unit
EVA®
results for the business unit leaders, achievement of business
goals, and demonstrated key leadership competencies (for more on
leadership competencies, see the section entitled Base
Pay in this Compensation Discussion and Analysis). The
modifications made are fairly modest. For 2010 the adjustments
made to all NEOs annual cash incentive awards were on average
less than 5%.
Role of
the Other NEOs
Our other NEOs have no role in setting compensation for any of
the NEOs.
31
Role of
the Compensation Committee
For all NEOs, except the CEO, the Committee reviews the
CEOs recommendations, supporting market data, and
individual performance assessments. In addition, the
Committees independent compensation consultant, Frederic
W. Cook & Co., Inc., reviews all of the data and
advises on the reasonableness of the CEOs pay
recommendations.
For the CEO, the Board meets in executive session without
management present to review the CEOs performance. In this
session, the Board reviews:
|
|
|
|
|
Evaluations of the CEO completed by the board members and the
executive officers (excluding the CEO);
|
|
|
|
The CEOs written assessment of
his/her own
performance compared with the stated goals;
|
|
|
|
EVA®
performance of the Company relative to established targets as
well as the financial and safety metrics presented as a
supplement to
EVA®
performance.
|
The Committee uses these evaluations and competitive market
information provided by its independent compensation consultant
to determine the CEOs long-term incentive amounts, annual
cash incentive target, base pay, and any performance adjustments
to be made to the CEOs annual cash incentive payment.
Role of
the Independent Compensation Consultant
Frederic W. Cook & Co., Inc. assists the Committee in
determining or approving the compensation for our NEOs. Please
refer to the section Corporate Governance and Board
Matters Board and Committee Structure and
Meetings Compensation Committee of this proxy
statement for a discussion of the independent compensation
consultant.
To assist the Committee in discussions and decisions about
compensation for our CEO, the Committees independent
compensation consultant presents competitive market data that
includes proxy data from the approved comparator group and
published compensation data, using the same surveys and
methodology used for our other NEOs (described in the Role
of Management section in this Compensation Discussion and
Analysis). Our comparator group is developed by the
Committees independent compensation consultant, with input
from management, and is approved by the Committee.
2010
Comparator Group
How We
Use Our Comparator Group
We refer to publicly available data showing how much our
comparator group pays, as well as how that pay is divided among
base pay, annual incentive, equity, and other forms of
compensation. This allows the Committee to ensure
competitiveness and appropriateness of proposed compensation
packages. When setting pay, the Committee uses market median
information of our comparator group, as opposed to market
averages, to ensure that the impact of any unusual events that
may occur at one or two companies during any particular year is
diminished from the analysis. If an event is particularly
unusual and surrounds unique circumstances, the data is
completely removed from the assessment. The pay of one
higher-paid CEO in our comparator group was not considered when
determining pay for our CEO.
Composition
of the Comparator Group
Each year the Committee reviews the prior years comparator
group to ensure that it is still appropriate. We last made
changes to this group for 2009. The 2008 group consisted of
companies in the broader energy industry. In contrast, for 2009
and 2010 we focused more on companies that work in the same
industry segment and reflect where we compete for business and
talent. The new comparator group is smaller than our prior group
in terms of revenue, assets, and market capitalization.
32
The 2010 comparator group includes the following
20 companies, which comprise a mix of both direct
competitors and companies whose primary business was similar to
at least one of our business segments. We typically aim for a
comparator group of 15 to 25 companies so our comparisons
will be valid.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2009
|
|
|
|
|
|
|
|
|
2009 Business Lines
|
|
2009
|
|
|
Total
|
|
|
Market
|
|
Company Name
|
|
Ticker
|
|
E&P
|
|
|
Midstream
|
|
|
Pipeline
|
|
Revenue
|
|
|
Assets
|
|
|
Cap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
Anadarko Petroleum Corp
|
|
APC
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
8,210
|
|
|
|
50,123
|
|
|
|
30,748
|
|
Apache Corp
|
|
APA
|
|
|
X
|
|
|
|
|
|
|
|
|
|
8,574
|
|
|
|
28,186
|
|
|
|
34,711
|
|
Centerpoint Energy Inc
|
|
CNP
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
8,281
|
|
|
|
19,773
|
|
|
|
5,698
|
|
Chesapeake Energy Corp
|
|
CHK
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
7,702
|
|
|
|
29,914
|
|
|
|
16,762
|
|
Devon Energy Corp
|
|
DVN
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
8,015
|
|
|
|
29,686
|
|
|
|
32,832
|
|
Dominion Resources Inc
|
|
D
|
|
|
X
|
|
|
|
|
|
|
X
|
|
|
15,131
|
|
|
|
42,554
|
|
|
|
23,313
|
|
El Paso Corp
|
|
EP
|
|
|
X
|
|
|
|
|
|
|
X
|
|
|
4,631
|
|
|
|
22,505
|
|
|
|
6,894
|
|
EOG Resources Inc
|
|
EOG
|
|
|
X
|
|
|
|
|
|
|
|
|
|
4,238
|
|
|
|
18,119
|
|
|
|
24,569
|
|
EQT Corporation
|
|
EQT
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
1,270
|
|
|
|
5,957
|
|
|
|
5,750
|
|
Hess Corp
|
|
HES
|
|
|
X
|
|
|
|
|
|
|
|
|
|
29,614
|
|
|
|
29,465
|
|
|
|
19,797
|
|
Murphy Oil Corp
|
|
MUR
|
|
|
X
|
|
|
|
|
|
|
|
|
|
18,896
|
|
|
|
12,756
|
|
|
|
10,359
|
|
NiSource Inc
|
|
NI
|
|
|
|
|
|
|
|
|
|
X
|
|
|
6,649
|
|
|
|
19,272
|
|
|
|
4,255
|
|
Noble Energy Inc
|
|
NBL
|
|
|
X
|
|
|
|
|
|
|
|
|
|
2,143
|
|
|
|
11,807
|
|
|
|
12,464
|
|
Oneok Inc
|
|
OKE
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
11,112
|
|
|
|
12,828
|
|
|
|
4,720
|
|
Plains
All-American
Pipeline
|
|
PAA
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
18,520
|
|
|
|
12,358
|
|
|
|
7,195
|
|
Questar Corp
|
|
STR
|
|
|
X
|
|
|
|
X
|
|
|
X
|
|
|
3,038
|
|
|
|
8,898
|
|
|
|
2,339
|
|
Sempra Energy
|
|
SRE
|
|
|
|
|
|
|
|
|
|
X
|
|
|
8,106
|
|
|
|
28,512
|
|
|
|
13,827
|
|
Southern Union Co
|
|
SUG
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
2,179
|
|
|
|
8,075
|
|
|
|
2,809
|
|
Spectra Energy Corp
|
|
SE
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
4,552
|
|
|
|
24,079
|
|
|
|
13,270
|
|
XTO Energy Inc.
|
|
XTO
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Count:
|
|
20
|
|
|
13
|
|
|
|
11
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25th Percentile
|
|
|
4,395.2
|
|
|
|
12,557.2
|
|
|
|
6,003.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median
|
|
|
8,015.0
|
|
|
|
19,773.0
|
|
|
|
13,125.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75th Percentile
|
|
|
9,842.8
|
|
|
|
28,988.5
|
|
|
|
21,490.6
|
|
|
|
Williams Companies
|
|
WMB
|
|
|
X
|
|
|
|
X
|
|
|
X
|
|
|
8,255
|
|
|
|
25,280
|
|
|
|
12,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent Rank
|
|
|
64.6
|
%
|
|
|
62.7
|
%
|
|
|
49.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: XTO Energy Inc. was acquired by ExxonMobil and has been
removed from the 2011 comparator group.
Characteristics
of our Comparator Group
Companies in our comparator group have a range of revenues,
assets, and market capitalization. Business consolidation and
unique operating models today create some challenges in
identifying comparator companies. Accordingly, we take a broader
view of comparability to include organizations that are similar
to us in some, but not all, respects. This results in
compensation that is appropriately scaled and reflects
comparable complexities in business operations.
The Pay
Setting Process
Setting pay is an annual process that occurs during the first
quarter of the year. The Committee completes a review to ensure
that we are paying competitively, equitably and in a way that
encourages and rewards performance.
The compensation data of our comparator group disclosed in proxy
statements is the primary market data we use when benchmarking
the competitive pay of our NEOs. Aggregate market data obtained
from recognized third-party executive compensation survey
companies (e.g. Towers Watson, Mercer, AonHewitt) is used to
supplement and validate comparator group market data. Typically,
the Committee is presented with a range of annual revenues of
the companies whose data is included in the aggregate analysis
provided by the third party survey, but does not know the
identities of the specific companies included.
Although the Committee reviews relevant data as it designs
compensation packages, setting pay is not an exact science.
Since market data alone does not reflect the strategic
competitive value of various roles within the Company, internal
pay equity is also considered when making pay decisions. Because
we take on an enterprise-wide perspective to promote
collaboration and ensure our overall success, paying the NEOs
equitably is important. Other
33
considerations when making pay decisions for the NEOs include
historical pay and tally sheets that include annual pay and
benefit amounts, wealth accumulated over the past five years,
and the total aggregate value of the NEOs equity awards
and holdings.
When setting pay, we determine a target pay mix (distribution of
pay among long-term incentives, annual incentives, base pay, and
other forms of compensation) for the NEOs. The target pay mix
for all NEOs can be found in the Named Executive Officer Profile
section included in this proxy statement. Consistent with our
pay-for-performance
philosophy, the actual amounts paid, excluding benefits, are
determined based on Company and individual performance. Because
performance is a factor, the target and actual pay mix will vary
specifically as it relates to the annual cash incentives.
Game Plan
for Growth
Our goal is to grow our natural gas-based businesses in order to
generate superior value for investors in Williams and Williams
Partners L.P. (Williams Partners). The performance
of our NEOs and other employees is measured by progress made
towards these Game Plan for Growth goals. Individual adjustments
within our annual cash incentive program are based on each
NEOs contributions to the Game Plan for Growth. The goals
defined in our Game Plan for Growth include:
Invest in Growth
|
|
|
|
|
Enhance our relationships with customers so that we continue to
grow our competitive advantage and earn recognition for the
reliable service and value that is essential to their success.
|
|
|
|
Invest in our businesses in ways that grow
EVA®,
earnings, and cash flows for Williams and Williams Partners;
meet our customers needs; and enhance our competitive
position.
|
|
|
|
Pursue additional investment opportunities in new and emerging
basins to capture significant, strategic, long-lived growth.
|
|
|
|
Expand our intellectual, operational, and leadership capacities
so that we can successfully grow and develop high-performing
employees and businesses.
|
Support our Growth
|
|
|
|
|
Comply with applicable laws and regulations.
|
|
|
|
Continuously improve our safety and environmental compliance
performance in all of our operations.
|
|
|
|
Assess and manage risks effectively; take appropriate,
well-considered risks in order to create value. Exercise
financial discipline so that Williams and Williams
Partners financial condition is strong and credit ratings
are investment-grade.
|
Deliver
the Growth
|
|
|
|
|
Achieve or exceed Williams
EVA®,
earnings, and cash flow goals. Also achieve attractive growth in
value for Williams and Williams Partners investors.
|
|
|
|
Openly engage with communities, vendors, and other stakeholders
crucial to our success so that we grow the competitive advantage
we enjoy as a preferred partner.
|
|
|
|
Operate our business in a way that grows our reputation as a
leader in environmental stewardship.
|
During 2010, we made significant strides toward achieving our
Game Plan for Growth. The following are some of the most
impactful 2010 accomplishments:
|
|
|
|
|
Completed the transformation of Williams Partners to a large
diversified master limited partnership with reliable access to
capital markets. This was accomplished through:
|
|
|
|
|
¡
|
Strategic asset drop-downs from Williams to Williams Partners
|
|
|
¡
|
The merger of Williams Partners and Williams Pipeline Partners
L.P.
|
|
|
|
|
|
Completed significant asset acquisitions in the Marcellus basin.
All of our businesses have a strategic presence in the Marcellus
Shale allowing us to leverage the strengths of each business
unit.
|
34
|
|
|
|
|
Invested $2.8 billion in drilling activity and acquisitions
in our Exploration and Production business. This included
$1.7 billion related to acquisitions in the Bakken and
Marcellus Shale areas. The Bakken transaction creates more
diversification in our Exploration and Production business by
expanding the long-term crude oil portfolio.
|
|
|
|
Invested $1 billion in capital and investment expenditures
in the midstream businesses and invested $473 million in
capital expenditures in our gas pipelines business in 2010.
|
|
|
|
Expanded ownership of the Overland Pass Pipeline.
|
|
|
|
Maintained Williams investment grade credit rating while
achieving an upgrade of Williams Partners to an investment grade
credit rating.
|
|
|
|
In addition to continuing to expand our natural gas businesses
and drive stockholder value, we were recognized for our efforts
to make the Company a great place to work for our employees:
|
|
|
|
|
¡
|
The Houston Business Journal recognized Williams as a Best Place
to Work in Houston among companies not based in Houston. This
was the third year in a row Williams was recognized on the Best
Place to Work in Houston list.
|
|
|
¡
|
Utah Business magazine named Williams as a finalist in its Best
Companies to Work for program, where the Company was recognized
as one of the four best medium-sized companies in Utah for the
second year in a row.
|
|
|
¡
|
OKCBiz magazine recognized Williams on its Best Places to Work
in Oklahoma list for the third year in a row.
|
|
|
¡
|
Tulsa Business Journals Economic Development Impact Awards
recognized Williams as a finalist for the Best Workplace for
Young Professionals.
|
How We
Determine the Amount for Each Type of Pay
Long-term incentives, annual cash incentives, base pay, and
benefits accomplish different objectives.
Long-Term
Incentives
We award long-term incentives to reward performance and align
NEOs with long-term stockholder interests by providing NEOs an
ownership stake in the Company, encouraging sustained long-term
performance, and providing an important retention element to
their compensation program. Long-term incentives are provided in
the form of equity and may include performance based RSUs, stock
options, and time-based RSUs. Unlike the majority of our
comparator companies, we award a significant portion of the
annual long-term award in the form of performance-based RSUs. We
believe this better aligns our NEOs interests with long-term
stockholders by requiring that stated targets are met prior to
earning these awards.
To determine the value for long-term incentives granted to an
NEO each year, we consider the following factors:
|
|
|
|
|
the proportion of long-term incentives relative to base pay;
|
|
|
|
the NEOs impact on Company performance and ability to
create value;
|
|
|
|
long-term business objectives;
|
|
|
|
awards made to executives in similar positions within our
comparator group of companies;
|
|
|
|
the market demand for the NEOs particular skills and
experience;
|
|
|
|
the amount granted to other NEOs in comparable positions at the
Company;
|
|
|
|
the NEOs demonstrated performance over the past few
years; and
|
|
|
|
the NEOs leadership performance.
|
35
The allocation of our long-term incentive program for 2010 is
shown on page 30. The long-term incentive mix for the CEO
differs from the mix for the other NEOs. Since the CEO has more
opportunity to influence our financial results, the Committee
considers it appropriate that 100% of his long-term incentives
are directly tied to the performance of the Companys stock
price. Again in 2010, the CEO did not receive any time-based
RSUs.
|
|
|
|
|
|
|
|
|
|
|
CEO
|
|
|
Other NEOs
|
|
|
Performance-Based Restricted Stock Units
|
|
|
50
|
%
|
|
|
35
|
%
|
Stock Options
|
|
|
50
|
%
|
|
|
30
|
%
|
Time-Based RSUs
|
|
|
0
|
%
|
|
|
35
|
%
|
The primary objectives for each type of equity awarded are shown
below. The size of the circles in the chart indicates how
closely each equity type aligns with each objective.
2010
Performance-Based RSUs
Performance-based RSU awards further strengthen the relationship
between pay and performance and over time will more closely link
the long-term pay of our NEOs to the experience of our long-term
stockholders. The performance-based RSUs awarded in 2010 will be
earned only if we attain specific TSR targets.
We believe it is important to measure TSR on both an absolute
and a relative basis. In absolute terms, we want to ensure we
are delivering a responsible return to stockholders.
Additionally, we believe awards should be influenced by how our
TSR compares to the TSR of companies in our comparator group.
Shown in the chart below are the absolute and relative TSR
targets for the performance-based restricted stock unit awards
for the 2010 to 2012 performance period and the continuum that
will determine the resulting potential payout level:
36
2008 Performance-Based RSUs
The performance cycle for our 2008 performance-based RSUs ended
in 2010. The following is a chart of the threshold, target, and
stretch goals that were established in early 2008.
|
|
|
|
|
Payout Level as a % of Target
|
EVA®
|
|
(Attainment %)
|
(In millions)
|
|
|
|
$191
|
|
Threshold
(where incentives start to be earned)
|
$299
|
|
100%
|
$407
|
|
200%
|
As discussed earlier in the Compensation Discussion and
Analysis, we did not attain threshold performance during the
three-year period as a result of the global economic crisis. No
performance-based RSU awards that were granted in 2008 were paid
out under this plan. This resulted in each NEO losing a
significant portion of pay that was targeted for
2008-2010.
The performance goals for this award were set during a less
volatile time based on market guidance and expectations for our
Companys performance at that time.
Stock Option Awards
For recipients, stock options have value only to the extent the
price of our common stock is higher on the date the options are
exercised than it was on the date the options were granted. Most
of the companies in our comparator group grant stock options to
their NEOs.
Time-Based RSUs
We introduced time-based RSU grants in 2002, primarily to
encourage NEOs to stay with the Company during a period of
uncertainty and instability in our executive population. We
continue to use this type of equity to retain executives and to
facilitate stock ownership. The use of time-based RSUs is also
consistent with the practices of our comparator group of
companies. Most of the companies in our comparator group grant
time-based RSUs to their NEOs.
Grant Practices
The Committee typically approves our annual equity grant in
February or early March of each year shortly after the annual
earnings release. The grant date for awards is on or after the
date of such approval to ensure the market has time to absorb
material information disclosed in the earnings release and
reflect that information in the stock price. Our grant practices
in 2010 were consistent with prior years.
Our program provides stock ownership guidelines for each of our
NEOs, and each NEO currently exceeds these guidelines. The
Committee has increased the stock ownership guideline for the
CEO from five-times base salary to six-times base salary.
Mr. Armstrong assumed this role on January 3, 2011 and
exceeds the stock ownership guideline.
The grant date for off-cycle grants for individuals who are not
NEOs, for reasons such as retention or new hires, is the first
business day of the month following the approval of the grant.
By using this consistent approach, we remove grant timing from
the influence of the release of material information.
Annual Cash Incentives
We pay annual cash incentives to encourage and reward our NEOs
for making decisions that improve our performance as measured by
EVA®.
EVA®
measures the value created by a company. Simply stated, it is
the financial return in a given period less the capital charge
for that period. The calculation we use is as follows:
|
|
|
|
|
|
|
|
|
EVA®
|
|
=
|
|
Adjusted Net Operating Profits after Taxes
(NOPAT)
|
|
Less
|
|
Adjusted Capital Charge (the amount of capital
invested by Williams multiplied by the cost
of capital)
|
37
Generating profits in excess of both operating and capital costs
(debt and equity) creates
EVA®.
If
EVA®
improves, value has been created. The objectives of our
EVA®
-based incentive program are to:
|
|
|
|
|
Motivate and incent management to choose strategies and
investments that maximize long-term stockholder value;
|
|
|
|
Offer sufficient incentive compensation to motivate management
to put forth extra effort, take prudent risks and make tough
decisions to maximize stockholder value;
|
|
|
|
Provide sufficient total compensation to retain
management; and
|
|
|
|
Limit the cost of compensation to levels that will maximize the
wealth of current stockholders without compromising the other
objectives.
|
The
EVA®
Calculation
EVA®
is first calculated as NOPAT less Capital Charge. Our incentive
program allows for the Committee to make adjustments to
EVA®
calculations to reflect certain business events. After studying
companies that utilize
EVA®
as an incentive measure, we determined that it is standard
practice to make adjustments to
EVA®
calculations to create better alignment with stockholders.
When determining which adjustments are appropriate, we are
guided by the principle that incentive payments should not
result in unearned windfalls or impose undue penalties. In other
words, we make adjustments to ensure NEOs are not rewarded for
positive results they did not facilitate nor are they penalized
for certain unusual circumstances outside their control. We
believe the adjustments improve the alignment of incentives with
stockholder value creation and ensure
EVA®
is an incentive measure that effectively encourages NEOs to take
actions to create value for stockholders. The categories of
potential adjustments to our
EVA®
calculation are:
|
|
|
|
|
Gains, losses, and impairments;
|
|
|
|
Mark-to-market,
commodity price collar, and construction
work-in-progress; and
|
|
|
|
Other unusual items that could result in unearned windfalls or
undue penalties to NEOs such as certain litigation matters and
natural disasters.
|
Management regularly reviews with the Committee a supplemental
scorecard reflecting the Companys segment profit, earnings
per share, cash flow from operations, and safety to provide
updates regarding the Companys performance as well as to
ensure alignment between these measures and
EVA®.
This scorecard provides the Committee with additional data to
assist in determining final AIP awards. There is strong
correlation between our
EVA®
performance and other metrics included on the supplemental
scorecard.
The Committees independent compensation consultant
annually compares our relative performance on various measures,
including total stockholder return, earnings per share, and cash
flow, with our comparator group of companies. The Committee also
uses this analysis to validate the reasonableness of our
EVA®
results.
Annual
Cash Incentives Target
The starting point to determine annual cash incentive targets
(expressed as a percent of base pay) is competitive market
information, which gives us an idea of what other companies
target to pay in annual cash incentives for similar jobs. We
also consider the internal value of each job - i.e., how
important the job is to executing our strategy compared to other
jobs in the Company- before the target is set for the year. The
annual cash incentive targets as a percentage of base pay for
the NEOs in 2010 were as follows:
|
|
|
|
|
CEO
|
|
|
100
|
%
|
CFO
|
|
|
75
|
%
|
Other NEOs
|
|
|
65
|
%
|
Annual
Cash Incentives Actual
For NEOs, the annual cash incentive program is funded when we
attain an established level of
EVA®
performance. Applying
EVA®
measurement to this annual cash incentive process encourages
management to
38
make business decisions that help drive long-term stockholder
value. To determine the funding of the annual cash incentive, we
use the following calculation for each NEO:
|
|
|
|
|
|
|
|
|
Base Pay received in 2010
|
|
X
|
|
Incentive Target %
|
|
X
|
|
EVA®
Goal Attainment %
|
Actual payments may be adjusted upwards to recognize individual
performance that exceeded expectations, such as success toward
our Game Plan for Growth and individual goals and successful
demonstration of the leadership competencies discussed below.
Payments may also be adjusted downwards if performance warrants.
How We
Set the
EVA®
Goals
Setting the
EVA®
goals for the annual cash incentive program begins with internal
budgeting and planning. This rigorous process includes an
evaluation of the challenges and opportunities for the Company
and each of our business units. The key steps are as follows:
|
|
|
|
|
Business and financial plans are submitted by the business units
and consolidated by the corporate planning department.
|
|
|
|
The business and financial plans are reviewed and analyzed by
the CEO, CFO, and other NEOs.
|
|
|
|
Using the plan guidance, Management establishes the
EVA®
goal and recommends it to the Committee.
|
|
|
|
The Committee reviews, discusses, and makes adjustments as
necessary to managements recommendations and sets the goal
at the beginning of each fiscal year.
|
|
|
|
Thereafter, progress toward the goal is regularly monitored and
reported to the Committee throughout the year.
|
2010 EVA®
Goal for the Annual Cash Incentive Program
The attainment percentage of
EVA®
goals results in payment of annual cash incentives along a
continuum between threshold and stretch levels, which
corresponds to 0% through 250% of the NEOs annual cash
incentive target. The chart below shows the
EVA®
improvement goals for the 2010 annual cash incentive and the
resulting payout level. It is important to note that setting the
EVA®
goal for 2010 was again challenging considering the uncertain
economic and commodity price environment. The
EVA®
goal established in 2010 was more challenging than the 2009
EVA®
goal, reflecting an anticipated improvement in economic
conditions.
|
|
|
|
|
Payout Level as a % of Target
|
EVA®
|
|
(Attainment %)
|
(In millions)
|
|
|
|
|
|
Threshold
|
($563)
|
|
(where incentives start to be earned)
|
($347)
|
|
100%
|
($131)
|
|
200%
|
As noted,
EVA®
considers both financial earnings and a cost of capital in
measuring performance. The two main components of
EVA®
are NOPAT and a charge for the cost of capital.
EVA®,
like other performance metrics, has been impacted by the
economic environment. NOPAT improved from 2009, but fell
slightly below the 2010 plan while the 2010 charge for the cost
of capital was better than 2009 and better than plan. As a
result of the NOPAT and capital charge changes, total
EVA®
improved significantly from 2009 but was only modestly above the
2010 plan target.
Based on
EVA®
performance relative to the established goals, the Committee
certified performance results of ($337) million in
EVA®
and approved payment of the annual cash incentive program at
105% of target.
Base
Pay
Base pay compensates the NEOs for carrying out the duties of
their jobs, and serves as the foundation of our pay program.
Most other major components of pay are set based on a
relationship to base pay, including annual and long-term
incentives, and retirement benefits.
Base pay for the NEOs, including the CEO, is set considering the
market median, with potential individual variation from the
median due to experience, skills, and sustained performance of
the individual as part of our
pay-for-performance
philosophy. Performance is measured in two ways: through the
Right Results obtained in the Right Way.
Right Results considers the NEOs success in attaining
their annual goals as they relate to the Game Plan for Growth,
business unit strategies, and personal development plans. Right
Way reflects the NEOs behavior
39
as exhibited through our leadership competencies. The following
table contains these competencies grouped within our five
leadership areas.
|
|
|
|
|
|
|
|
|
|
|
INSPIRE A
|
|
|
|
|
|
OPTIMIZE
|
MODEL THE
|
|
SHARED
|
|
CHAMPION
|
|
LEVERAGE
|
|
BUSINESS
|
WAY
|
|
VISION
|
|
INNOVATION
|
|
TALENT
|
|
PERFORMANCE
|
|
Caring About People
|
|
Enterprise Perspective
|
|
Change Leadership
|
|
Building Effective
Teams
|
|
Business Acumen
|
|
|
|
|
|
|
|
|
|
Integrity
|
|
Vision
and Strategic Perspective
|
|
Entrepreneurial Spirit
|
|
Communication
|
|
Customer and Market Focus
|
|
|
|
|
|
|
|
|
|
Loyalty and Commitment
|
|
|
|
Promoting Diversity and Creativity
|
|
Developing People Resources
|
|
Decision Making
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Willingness to Take Risks
|
|
Empowering Others
|
|
Drive for Results
|
|
|
|
|
|
|
Managerial Courage
|
|
Functional/Technical Skills
|
|
|
|
|
|
|
Motivating and Inspiring Others
|
|
|
The ratio of 2010 base pay to the market median remained
appropriate when we considered the current environment and the
experience, skills, and sustained performance of the NEOs. The
following chart includes the 2010 market ratio for the NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Base Pay
|
|
|
|
|
|
|
as a % of
|
|
|
|
|
% Increase
|
|
Market
|
Executive Officer
|
|
Position
|
|
from 2009
|
|
Median
|
|
Steven J. Malcolm
|
|
Former President & CEO
|
|
|
0%
|
|
|
|
105%
|
|
Donald R. Chappel
|
|
CFO
|
|
|
2%
|
|
|
|
107%
|
|
Ralph A. Hill
|
|
Senior Vice President - Exploration & Production
|
|
|
2%
|
|
|
|
102%
|
|
Alan S. Armstrong*
|
|
Senior Vice President - Midstream
|
|
|
2%
|
|
|
|
102%
|
|
Phillip D. Wright
|
|
Senior Vice President - Gas Pipelines
|
|
|
2%
|
|
|
|
105%
|
|
|
|
|
* |
|
Reflects Mr. Armstrongs base pay as a percent of market
median for his 2010 role as Senior Vice President, Midstream. |
Benefits
Consistent with our philosophy to emphasize pay for performance,
our NEOs receive very few perquisites (perks) or supplemental
benefits. They are as follows:
|
|
|
|
|
Retirement Restoration Benefits: NEOs participate in our
qualified retirement program on the same terms as our other
employees. We offer a retirement restoration plan to our NEOs to
maintain a proportional level of pension benefits to our NEOs as
provided to other employees. The Internal Revenue Code of 1986,
as amended (the Internal Revenue Code), limits
qualified pension benefits based on an annual compensation
limit. For 2010, the limit was $245,000. Any reduction in an
NEOs pension benefit in the tax-qualified pension plan due
to this limit is made up for (subject to a cap) in the unfunded
restoration retirement plan. Benefits for NEOs are calculated
using the same benefit formula as that used to calculate
benefits for all employees in the qualified pension plan. The
value of pay in the form of stock option or other equity is not
used in the formula to calculate benefits under the pension plan
or restoration plan for NEOs, which is consistent with the
treatment for all employees. Additionally, we do not provide a
nonqualified benefit related to our qualified 401(k) defined
contribution retirement plan.
|
40
|
|
|
|
|
Financial Planning Allowance: We offer financial planning
to provide expertise on current tax laws to assist NEOs with
personal financial planning and preparations for contingencies
such as death and disability. In addition, by working with a
financial planner, NEOs gain a better understanding of and
appreciation for the programs the Company provides, which helps
to maximize the retention and engagement aspects of the dollars
the Company spends on these programs.
|
|
|
|
Home Security: We paid 2010 home security system and
monitoring fees for our former CEO. This perquisite will no
longer be provided beginning in 2011.
|
|
|
|
Personal Use of Company Aircraft: We provide limited
personal use of the Company aircraft at the CEOs
discretion. As shown in the footnotes to the 2010 Summary
Compensation Table, the incremental cost associated with
aircraft usage for personal reasons in 2010 was limited to
Mr. Malcolm. The incremental cost to the Company of all
trips was approximately $12,047. The CEO was required to use the
Company aircraft for all air travel. This requirement has been
eliminated and the CEO will no longer be required to use the
Company aircraft for all air travel. The CEO will still have
access to the Company aircraft for personal travel. Our policy
for all other executive officers is to discourage personal use
of the aircraft, but the CEO retains discretion to permit its
use when he deems appropriate, such as when the destination is
not well served by commercial airlines, personal emergencies,
and the aircraft is not being used for business purposes.
|
|
|
|
Event Center: We have a suite and club seats at an event
center that were purchased for business purposes. If it is not
being used for business purposes, we make them available to all
employees, including our NEOs, as a form of reward and
recognition.
|
|
|
|
Executive Physicals: The Committee approved physicals for
the NEOs beginning in 2009. NEO physicals align with our
wellness initiative as well as assist in mitigating risk. NEO
physicals reduce vacancy succession risk because they help to
identify and prevent issues that would leave an NEO role vacated
unexpectedly.
|
Additional
Components of our Executive Compensation Program
In addition to establishing the pay elements described above, we
have adopted a number of policies to further the goals of the
executive compensation program, particularly with respect to
strengthening the alignment of our NEOs interests with
stockholder long-term interests.
Recoupment
Policy
In 2008, the Committee approved a recoupment policy to allow the
Company to recover incentive-based compensation from NEOs in the
event we are required to restate our financial statements due to
fraud or intentional misconduct. The policy provides the Board
discretion to determine situations where recovery of incentive
pay is appropriate.
Stock
Ownership Guidelines
All NEOs must hold an equity interest in the
Company. The chart below shows the NEO stock
ownership guidelines, which have been in effect since 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holding Requirement as a
|
|
|
|
|
|
|
multiple of Base Pay
|
|
|
|
Time Frame for
|
Position
|
|
2010
|
|
2011
|
|
Compliance
|
|
CEO
|
|
|
5
|
|
|
|
6
|
|
|
|
5 Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
|
3
|
|
|
|
3
|
|
|
|
5 Years
|
|
Annually the Committee reviews the guidelines for
competitiveness and alignment with best practice and monitors
the NEOs progress toward compliance. The Committee
increased the CEOs ownership guideline from five times
base pay to six times base pay beginning in 2011. Shares owned
outright and unvested performance-based and time-based RSUs
count as owned for purposes of the program. Stock options are
not included. An NEO or newly promoted CEO has five years after
moving into
his/her role
to reach the ownership requirement. The Committee maintains
discretion to modify the guidelines in special circumstances of
financial hardship such as illness of the NEO or a family member.
41
Derivative
Transactions
Our insider trading policy applies to transactions in positions
or interests whose value is based on the performance or price of
our common stock. Because of the inherent potential for abuse,
Williams prohibits officers, directors, and certain key
employees from entering into short sales or use of equivalent
derivative securities.
Accounting
and Tax Treatment
We consider the impact of accounting and tax treatment when
designing all aspects of pay, but the primary driver of our
program design is to support our business objectives. Stock
options and performance-based RSUs are intended to satisfy the
requirements for performance-based compensation as defined in
Section 162(m) of the Internal Revenue Code and are
therefore considered a tax deductible expense. Time-based RSUs
do not qualify as performance-based and may not be fully
deductible.
The annual cash incentive program satisfies the requirements for
performance-based compensation as defined in Section 162(m)
of the Internal Revenue Code and is therefore a tax deductible
expense. For payments under our annual cash incentive program to
be considered performance-based compensation under
Section 162(m), the Committee can only exercise negative
discretion relative to actual performance when determining the
amount to be paid. In order to ensure compliance with
Section 162(m), the Committee has established a target in
excess of the maximum individual payout allowed to NEOs under
our annual cash incentive program. Reductions are made each year
and are not a reflection of the performance of the NEOs but
rather ensure flexibility with respect to paying based upon
performance.
Employment
Agreements
We do not enter into employment agreements with our NEOs. We can
remove an NEO when it is in the best interest of the Company.
Termination
and Severance Arrangements
The NEOs are not covered under a severance plan. However the
Committee may exercise judgment and consider the circumstances
surrounding each departure and may decide a severance package is
appropriate. In designing a severance package, the Committee
takes into consideration the NEOs term of employment, past
accomplishments, reasons for separation from the Company, and
competitive market practice. The only pay or benefits an
employee has a right to receive upon termination of employment
are those that have already vested or which vest under the terms
in place when equity was granted.
Rationale
for Change in Control Agreements
Our change in control agreements, in conjunction with the
NEOs RSU agreements, provide separation benefits for our
NEOs. Our program includes a double trigger for benefits and
equity vesting. This means there must be a change in control and
the NEOs employment must terminate prior to receiving
benefits under the agreement. While a double trigger for equity
is not the competitive norm of our comparator group, this
practice creates security for the NEOs but does not provide an
incentive for the NEO to leave the Company. Our program is
designed to encourage the NEOs to focus on the best interests of
stockholders by alleviating their concerns about a possible
detrimental impact to their compensation and benefits under a
potential change in control, not to provide compensation
advantages to NEOs for executing a transaction.
Our Committee reviews our change in control benefits annually to
ensure they are consistent with competitive practice and aligned
with our compensation philosophy. As part of the review,
calculations are performed to determine the overall program
costs to the Company if a change in control event were to occur
and all covered NEOs were terminated as a result. An assessment
of competitive norms including the reasonableness of the
elements of compensation received is used to validate benefit
levels for a change in control. In reviewing the change in
control program in 2010 and 2011, the Committee concluded that
certain changes to the benefits provided are appropriate. The
Committee approved eliminating the excise tax
gross-up
provision from the change in control program. The Committee
opted to provide a best net provision providing our
NEOs with the better of their after-tax benefit capped at the
safe harbor amount or their benefit paid in full subjecting them
to possible excise tax payments. Therefore, in 2011 we will
provide the one year notice required by the NEOs change in
control agreements in order
42
to effect the change in 2012. After this provision is
implemented, the Company will no longer provide additional
compensation to address excise taxes. The Committee continues to
believe that offering a change in control program is appropriate
and critical to attracting and retaining executive talent and
keeping them aligned with stockholder interests in the event of
a change in control.
The following chart details the benefits received if an NEO were
to be terminated or resigned for a defined good reason following
a change in control as well as an analysis of those benefits as
it relates to the Company, stockholders, and the NEO. Please
also see the Change in Control Agreements section in
this proxy statement for further discussion of our change in
control program.
|
|
|
|
|
|
|
What does the
|
|
|
|
|
benefit provide to
|
|
What does the
|
Change in Control
|
|
the Company and
|
|
benefit provide to
|
Benefit
|
|
stockholders?
|
|
the NEO?
|
|
Multiple of 3x base pay plus annual cash incentive at target
|
|
Encourages NEOs to remain engaged and stay focused on
successfully closing the transaction.
|
|
Financial security for the NEO equivalent to three years of
continued employment.
|
Accelerated vesting of stock awards
|
|
An incentive to stay during and after a change in control. If
there is risk of forfeiture, NEOs may be less inclined to stay
or to support the transaction.
|
|
The NEOs are kept whole, if they have a separation from service
following a change in control.
|
|
|
|
|
|
Up to 18 months of medical or health coverage through COBRA
|
|
This is a minimal cost to the Company that creates a competitive
benefit.
|
|
Access to health coverage.
|
3x the previous years retirement restoration allocation
|
|
This is a minimal cost to the Company that creates a competitive
benefit.
|
|
May allow those NEOs who are nearing retirement to receive a
cash payment to make up for lost allocations due to a change in
control.
|
|
|
|
|
|
Reimbursement of legal fees to enforce benefit
|
|
Keeps NEOs focused on the Company and not concerned about
whether the acquiring company will honor commitments after a
change in control.
|
|
Security during a non-stable period of time.
|
Outplacement assistance
|
|
Keeps NEOs focused on supporting the transaction and less
concerned about trying to secure another position.
|
|
Assists NEOs in finding a comparable executive position.
|
43
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
We have reviewed and discussed the foregoing Compensation
Discussion and Analysis with management. Based on our review and
discussions with management, we recommend to the Board of
Directors that the Compensation Discussion and Analysis be
included in this proxy statement and in our Annual Report on
Form 10-K
for the year ended December 31, 2010.
By the members of the Compensation Committee of the Board of
Directors:
Janice D. Stoney, Chair
Kathleen B. Cooper
William R. Granberry
W. R. Howell
George A. Lorch
Frank T. MacInnis
Laura A. Sugg
44
EXECUTIVE
COMPENSATION AND OTHER INFORMATION
2010
Summary Compensation Table
The following table sets forth certain information with respect
to the compensation of the NEOs earned during fiscal years 2010,
2009, and 2008.
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
Name and Principal
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Position(1)
|
|
Year
|
|
|
Salary(2)
|
|
|
Bonus
|
|
|
Awards(3)
|
|
|
Awards(4)
|
|
|
Compensation(5)
|
|
|
Earnings(6)
|
|
|
Compensation(7)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven J. Malcolm
|
|
|
2010
|
|
|
$
|
1,100,000
|
|
|
$
|
|
|
|
$
|
2,936,283
|
|
|
$
|
1,902,806
|
|
|
$
|
1,276,378
|
|
|
$
|
744,426
|
|
|
$
|
43,805
|
|
|
$
|
8,003,698
|
|
Former Chairman,
|
|
|
2009
|
|
|
|
1,142,308
|
|
|
|
|
|
|
|
2,116,863
|
|
|
|
2,846,407
|
|
|
|
1,903,360
|
|
|
|
1,399,796
|
|
|
|
71,100
|
|
|
|
9,479,835
|
|
President & Chief
|
|
|
2008
|
|
|
|
1,094,231
|
|
|
|
|
|
|
|
2,906,309
|
|
|
|
2,789,127
|
|
|
|
2,000,000
|
|
|
|
1,201,514
|
|
|
|
56,134
|
|
|
|
10,047,315
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald R. Chappel
|
|
|
2010
|
|
|
|
610,154
|
|
|
|
|
|
|
|
1,436,882
|
|
|
|
407,743
|
|
|
|
559,052
|
|
|
|
225,539
|
|
|
|
16,320
|
|
|
|
3,255,690
|
|
Senior Vice President -
|
|
|
2009
|
|
|
|
623,077
|
|
|
|
|
|
|
|
1,242,734
|
|
|
|
618,783
|
|
|
|
765,047
|
|
|
|
383,380
|
|
|
|
16,320
|
|
|
|
3,649,341
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
|
597,115
|
|
|
|
|
|
|
|
2,114,349
|
|
|
|
651,405
|
|
|
|
780,008
|
|
|
|
330,531
|
|
|
|
15,744
|
|
|
|
4,489,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ralph A. Hill
|
|
|
2010
|
|
|
|
493,208
|
|
|
|
|
|
|
|
1,257,287
|
|
|
|
356,777
|
|
|
|
384,479
|
|
|
|
315,626
|
|
|
|
16,304
|
|
|
|
2,823,681
|
|
Senior Vice President -
|
|
|
2009
|
|
|
|
503,654
|
|
|
|
|
|
|
|
1,056,319
|
|
|
|
525,969
|
|
|
|
566,473
|
|
|
|
427,867
|
|
|
|
37,786
|
|
|
|
3,118,068
|
|
Exploration &
|
|
|
2008
|
|
|
|
480,962
|
|
|
|
|
|
|
|
1,606,867
|
|
|
|
495,071
|
|
|
|
579,633
|
|
|
|
363,151
|
|
|
|
30,371
|
|
|
|
3,556,055
|
|
Production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan S. Armstrong
|
|
|
2010
|
|
|
|
493,208
|
|
|
|
|
|
|
|
1,221,327
|
|
|
|
346,584
|
|
|
|
425,314
|
|
|
|
273,314
|
|
|
|
16,304
|
|
|
|
2,776,051
|
|
Senior Vice President -
|
|
|
2009
|
|
|
|
503,654
|
|
|
|
|
|
|
|
994,187
|
|
|
|
495,029
|
|
|
|
567,308
|
|
|
|
293,795
|
|
|
|
16,271
|
|
|
|
2,870,244
|
|
Midstream
|
|
|
2008
|
|
|
|
480,962
|
|
|
|
|
|
|
|
1,268,581
|
|
|
|
390,840
|
|
|
|
580,884
|
|
|
|
273,091
|
|
|
|
15,371
|
|
|
|
3,009,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillip D. Wright
|
|
|
2010
|
|
|
|
508,461
|
|
|
|
|
|
|
|
1,221,327
|
|
|
|
346,584
|
|
|
|
381,646
|
|
|
|
265,941
|
|
|
|
16,352
|
|
|
|
2,740,311
|
|
Senior Vice President -
|
|
|
2009
|
|
|
|
519,231
|
|
|
|
|
|
|
|
994,187
|
|
|
|
495,029
|
|
|
|
561,642
|
|
|
|
419,915
|
|
|
|
22,320
|
|
|
|
3,012,324
|
|
Gas Pipelines
|
|
|
2008
|
|
|
|
497,692
|
|
|
|
|
|
|
|
1,268,581
|
|
|
|
390,840
|
|
|
|
557,418
|
|
|
|
381,705
|
|
|
|
10,820
|
|
|
|
3,107,056
|
|
|
|
|
|
|
|
(1) |
|
Name and Principal Position. On January 3, 2011
Mr. Malcolm retired as Chairman, President, and Chief
Executive Officer of the Company. Mr. Armstrong, Senior
Vice President Midstream, succeeded Mr. Malcolm
as President and Chief Executive Officer on January 3, 2011. |
|
(2) |
|
Salary. Mr. Malcolm did not receive a salary
increase in 2009 or 2010. All other NEOs did not receive a
salary increase in 2009 and received a 2% increase in 2010. The
increase in 2009 salary was due to a payroll timing issue
resulting in a 27th bi-weekly paycheck being issued in the
calendar year. |
|
(3) |
|
Stock Awards. Awards were granted under the terms of the
2007 Incentive Plan and include time-based and performance-based
RSUs. Amounts shown are the grant date fair value of awards
computed in accordance with FASB ASC Topic 718. The assumptions
used to value the stock awards can be found in our Annual Report
on
Form 10-K
for the year-ended December 31, 2010. Mr. Malcolm had
no outstanding time-based RSUs. |
|
|
|
The potential maximum values of the performance-based RSUs,
subject to changes in performance outcomes, are as follows: |
|
|
|
|
|
|
|
2010 Performance-Based
|
|
|
RSU Maximum potential
|
|
Steven J. Malcolm
|
|
$
|
5,872,566
|
|
Donald R. Chappel
|
|
|
1,468,141
|
|
Ralph A. Hill
|
|
|
1,284,639
|
|
Alan S. Armstrong
|
|
|
1,247,897
|
|
Phillip D. Wright
|
|
|
1,247,897
|
|
|
|
|
(4) |
|
Option Awards. Awards are granted under the terms of the
2007 Incentive Plan and include non-qualified stock options.
Amounts shown are the grant date fair value of awards computed
in accordance with FASB ASC Topic 718. The assumptions used to
value the option awards can be found in our Annual Report on
Form 10-K
for the year-ended December 31, 2010. |
|
(5) |
|
Non-Equity Incentive Plan. The maximum annual incentive
pool funding for NEOs is 250% of target and the incentive
reserve has been eliminated, beginning in 2009. Any existing
reserve balance for NEOs will continue to be at risk and will be
paid if the threshold performance target is met or the balance
will be reduced if threshold is not met in accordance with
previous plan provisions. Threshold performance was met in 2009
and 2010 and a portion of the respective reserve balance was
paid to each NEO each year. |
45
|
|
|
|
|
The annual cash incentive and reserve amounts paid in 2011 as it
relates to 2010 performance are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of
|
|
|
Total AIP plus
|
|
|
|
Reserve
|
|
|
AIP
|
|
|
Reserve
|
|
|
Reserve
|
|
|
|
Balance
|
|
|
for 2010
|
|
|
Paid in 2011
|
|
|
for 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven J. Malcolm
|
|
$
|
242,756
|
|
|
$
|
1,155,000
|
|
|
$
|
121,378
|
|
|
$
|
1,276,378
|
|
Donald R. Chappel
|
|
|
60,103
|
|
|
|
529,000
|
|
|
|
30,052
|
|
|
|
559,052
|
|
Ralph A. Hill
|
|
|
72,958
|
|
|
|
348,000
|
|
|
|
36,479
|
|
|
|
384,479
|
|
Alan S. Armstrong
|
|
|
74,628
|
|
|
|
388,000
|
|
|
|
37,314
|
|
|
|
425,314
|
|
Phillip D. Wright
|
|
|
63,293
|
|
|
|
350,000
|
|
|
|
31,646
|
|
|
|
381,646
|
|
|
|
|
(6) |
|
Change in Pension Value and Nonqualified Deferred
Compensation Earnings. The amount shown is the aggregate
change from December 31, 2009 to December 31, 2010 in
the actuarial present value of the accrued benefit under the
qualified pension and supplemental plan. Please refer to the
Pension Benefits table for further details of the
present value of the accrued benefit. The underlying benefit
programs have been consistent during the time period displayed.
The primary reason for the fluctuation in the change in present
value during this time is due to the use of updated discount
rates and conversion rates. |
|
(7) |
|
All Other Compensation. Amounts shown represent payments
made on behalf of the NEOs and includes life insurance premium,
a 401(k) matching contribution, and perquisites (if applicable).
Perquisites include financial planning services, mandated annual
physical exam, home security monitoring for the CEO and personal
use of the Company aircraft. The incremental cost method was
used to calculate the personal use of the Company aircraft. The
incremental cost calculation includes such items as fuel,
maintenance, weather and airport services, pilot meals, pilot
overnight expenses, aircraft telephone and catering. The amount
of perquisites for Mr. Malcolm is included because the
aggregate amount exceeds $10,000. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
Company
|
|
|
Financial
|
|
Physical
|
|
Home
|
|
Aircraft
|
|
|
Planning
|
|
Exam
|
|
Security
|
|
Personal Usage
|
|
Steven J. Malcolm
|
|
$
|
15,000
|
|
|
$
|
0
|
|
|
$
|
438
|
|
|
$
|
12,047
|
|
(A) The company did not incur any additional charges for
Mr. Malcolms mandatory physical exam, other than what
was covered by the regular benefit plan, as is available to all
employees.
Notable
Items
The Compensation Committee considers the compensation of CEOs
from similarly-sized comparator companies when setting
Mr. Malcolms pay. It is the competitive norm for CEOs
to be paid more than other NEOs. In addition, the Compensation
Committee believes the difference in pay between the CEO and
other NEOs is consistent with our compensation philosophy
(summarized in the Compensation Discussion and Analysis), which
considers the external (market) and internal value of each job
to the Company along with the incumbents experience and
performance of the job in setting pay. The CEOs job is
different from the other NEOs because the CEO has ultimate
responsibility for performance results and is accountable to the
Board and stockholders. Consequently, the Compensation Committee
believes it is appropriate for the CEOs pay to be higher.
Mr. Chappels base pay, annual cash incentive target
and long-term incentive amounts for 2010 are higher than other
NEOs (other than the CEO) because of the impact of his role and
market data. Because Mr. Chappel directly interfaces with
stockholders and has greater accountability to stockholders, his
pay is greater than that of the other NEOs, excluding the CEO.
46
Grants of
Plan Based Awards
The following table sets forth certain information with respect
to the grant of stock options, RSUs and awards payable under the
Companys annual cash incentive plan during the last fiscal
year to the NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Number of
|
|
|
or Base
|
|
|
Fair Value
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Estimated Future Payouts Under
|
|
|
of Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
of Stock
|
|
|
|
Grant
|
|
Non-Equity Incentive Plan Awards(1)
|
|
|
Equity Incentive Plan Awards
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
Name
|
|
Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target(2)
|
|
|
Maximum
|
|
|
or Units(3)
|
|
|
Options(4)
|
|
|
Awards
|
|
|
Awards
|
|
|
Steven J. Malcolm
|
|
2/23/2010
|
|
$
|
121,378
|
|
|
$
|
1,221,378
|
|
|
$
|
2,871,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
271,055
|
|
|
$
|
21.22
|
|
|
$
|
1,902,806
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,492
|
|
|
|
280,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,936,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald R. Chappel
|
|
2/23/2010
|
|
|
30,052
|
|
|
|
487,667
|
|
|
|
1,174,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,083
|
|
|
|
21.22
|
|
|
|
407,743
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,123
|
|
|
|
70,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
734,071
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,123
|
|
|
|
|
|
|
|
|
|
|
|
702,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ralph A. Hill
|
|
2/23/2010
|
|
|
36,479
|
|
|
|
357,064
|
|
|
|
837,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,823
|
|
|
|
21.22
|
|
|
|
356,777
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,733
|
|
|
|
61,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
642,320
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,733
|
|
|
|
|
|
|
|
|
|
|
|
614,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan S. Armstrong
|
|
2/23/2010
|
|
|
37,314
|
|
|
|
357,899
|
|
|
|
838,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,371
|
|
|
|
21.22
|
|
|
|
346,584
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
59,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
623,949
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
|
|
|
|
|
|
|
|
597,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillip D. Wright
|
|
2/23/2010
|
|
|
31,646
|
|
|
|
362,146
|
|
|
|
857,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,371
|
|
|
|
21.22
|
|
|
|
346,584
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
59,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
623,949
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
|
|
|
|
|
|
|
|
597,379
|
|
|
|
|
(1) |
|
Non-Equity Incentive Awards. Awards from the 2010 AIP are shown. |
|
|
|
|
|
Threshold: Because one-half of the AIP reserve balance from
prior years is payable in 2011 upon meeting threshold
performance, one-half of the NEOs reserve balance is shown.
|
|
|
|
Target: The amount shown is based upon an
EVA®
attainment of 100%, plus one-half of the existing AIP reserve
balance.
|
|
|
|
Maximum: The maximum amount the NEOs can receive is 250% of
their AIP target, plus one-half of the AIP reserve balance.
|
|
|
|
(2) |
|
Represents performance-based RSUs granted under the 2007
Incentive Plan. Performance-based RSUs can be earned over a
three-year period only if the established performance target is
met and the NEO is employed on the certification date, subject
to certain exceptions such as the executives death or
disability. These shares will be distributed no earlier than the
third anniversary of the grant date other than due to a
termination upon a change in control. If performance plan goals
are exceeded, the NEO can receive up to 200% of target. If plan
goals are not met, the NEO can receive as little as 0% of target. |
|
(3) |
|
Represents time-based RSUs granted under the 2007 Incentive
Plan. Time-based units vest three years from the grant date of
2/23/2010 on
2/23/2013. |
|
(4) |
|
Represents stock options granted under the 2007 Incentive Plan.
Stock options granted in 2010 become exercisable in three equal
annual installments beginning one year after the grant date.
One-third of the options vested on
2/23/2011.
Another one-third will vest on
2/23/2012,
with the final one-third vesting on
2/23/2013.
Once vested, stock options are exercisable for a period of
10 years from the grant date. |
47
Outstanding
Equity Awards
The following table sets forth certain information with respect
to the outstanding equity awards held by the NEOs at the end of
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Payout Value
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
of Unearned
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Stock or
|
|
|
or Other
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Other Rights
|
|
|
Rights That
|
|
|
|
Grant
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Grant
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That Have
|
|
|
Have Not
|
|
Name
|
|
Date(1)
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options
|
|
|
Price
|
|
|
Date
|
|
|
Date
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Vested(4)
|
|
|
Steven J. Malcolm
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
271,055
|
|
|
|
|
|
|
|
21.22
|
|
|
|
2/23/2020
|
|
|
|
2/23/2010(3
|
)
|
|
|
|
|
|
|
|
|
|
|
140,492
|
|
|
$
|
3,472,962
|
|
|
|
|
2/23/2009
|
|
|
|
169,429
|
|
|
|
338,858
|
|
|
|
|
|
|
|
10.86
|
|
|
|
2/23/2019
|
|
|
|
2/23/2009(3
|
)
|
|
|
|
|
|
|
|
|
|
|
288,401
|
|
|
|
7,129,273
|
|
|
|
|
2/25/2008
|
|
|
|
144,927
|
|
|
|
72,464
|
|
|
|
|
|
|
|
36.50
|
|
|
|
2/25/2018
|
|
|
|
2/25/2008(3
|
)
|
|
|
|
|
|
|
|
|
|
|
82,192
|
|
|
|
2,031,786
|
|
|
|
|
2/26/2007
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
28.30
|
|
|
|
2/26/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/3/2006
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
21.67
|
|
|
|
3/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2005
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
19.29
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/5/2004
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
9.93
|
|
|
|
2/5/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2002
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
15.86
|
|
|
|
2/11/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/19/2001
|
|
|
|
33,333
|
|
|
|
|
|
|
|
|
|
|
|
26.79
|
|
|
|
9/19/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/2/2001
|
|
|
|
27,232
|
|
|
|
|
|
|
|
|
|
|
|
39.98
|
|
|
|
4/2/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/18/2001
|
|
|
|
114,373
|
|
|
|
|
|
|
|
|
|
|
|
34.77
|
|
|
|
1/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald R. Chappel
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
58,083
|
|
|
|
|
|
|
|
21.22
|
|
|
|
2/23/2020
|
|
|
|
2/23/2010(2
|
)
|
|
|
|
|
|
|
|
|
|
|
35,123
|
|
|
|
868,241
|
|
|
|
|
2/23/2009
|
|
|
|
36,832
|
|
|
|
73,665
|
|
|
|
|
|
|
|
10.86
|
|
|
|
2/23/2019
|
|
|
|
2/23/2010(3
|
)
|
|
|
|
|
|
|
|
|
|
|
35,123
|
|
|
|
868,241
|
|
|
|
|
2/25/2008
|
|
|
|
33,848
|
|
|
|
16,924
|
|
|
|
|
|
|
|
36.50
|
|
|
|
2/25/2018
|
|
|
|
2/23/2009(2
|
)
|
|
|
|
|
|
|
|
|
|
|
73,145
|
|
|
|
1,808,144
|
|
|
|
|
2/26/2007
|
|
|
|
48,450
|
|
|
|
|
|
|
|
|
|
|
|
28.30
|
|
|
|
2/26/2017
|
|
|
|
2/23/2009(3
|
)
|
|
|
|
|
|
|
|
|
|
|
73,145
|
|
|
|
1,808,144
|
|
|
|
|
3/3/2006
|
|
|
|
41,921
|
|
|
|
|
|
|
|
|
|
|
|
21.67
|
|
|
|
3/3/2016
|
|
|
|
2/25/2008(2
|
)
|
|
|
|
|
|
|
|
|
|
|
19,911
|
|
|
|
492,200
|
|
|
|
|
2/25/2005
|
|
|
|
55,000
|
|
|
|
|
|
|
|
|
|
|
|
19.29
|
|
|
|
2/25/2015
|
|
|
|
2/25/2008(3
|
)
|
|
|
|
|
|
|
|
|
|
|
39,822
|
|
|
|
984,400
|
|
|
|
|
2/5/2004
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
9.93
|
|
|
|
2/5/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/16/2003
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
5.10
|
|
|
|
4/16/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ralph A. Hill
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
50,823
|
|
|
|
|
|
|
|
21.22
|
|
|
|
2/23/2020
|
|
|
|
2/23/2010(2
|
)
|
|
|
|
|
|
|
|
|
|
|
30,733
|
|
|
|
759,720
|
|
|
|
|
2/23/2009
|
|
|
|
31,307
|
|
|
|
62,616
|
|
|
|
|
|
|
|
10.86
|
|
|
|
2/23/2019
|
|
|
|
2/23/2010(3
|
)
|
|
|
|
|
|
|
|
|
|
|
30,733
|
|
|
|
759,720
|
|
|
|
|
2/25/2008
|
|
|
|
25,724
|
|
|
|
12,863
|
|
|
|
|
|
|
|
36.50
|
|
|
|
2/25/2018
|
|
|
|
2/23/2009(2
|
)
|
|
|
|
|
|
|
|
|
|
|
62,173
|
|
|
|
1,536,917
|
|
|
|
|
2/26/2007
|
|
|
|
43,605
|
|
|
|
|
|
|
|
|
|
|
|
28.30
|
|
|
|
2/26/2017
|
|
|
|
2/23/2009(3
|
)
|
|
|
|
|
|
|
|
|
|
|
62,173
|
|
|
|
1,536,917
|
|
|
|
|
3/3/2006
|
|
|
|
30,488
|
|
|
|
|
|
|
|
|
|
|
|
21.67
|
|
|
|
3/3/2016
|
|
|
|
2/25/2008(2
|
)
|
|
|
|
|
|
|
|
|
|
|
15,132
|
|
|
|
374,063
|
|
|
|
|
2/25/2005
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
19.29
|
|
|
|
2/25/2015
|
|
|
|
2/25/2008(3
|
)
|
|
|
|
|
|
|
|
|
|
|
30,264
|
|
|
|
748,126
|
|
|
|
|
1/18/2001
|
|
|
|
22,875
|
|
|
|
|
|
|
|
|
|
|
|
34.77
|
|
|
|
1/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan S. Armstrong
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
49,371
|
|
|
|
|
|
|
|
21.22
|
|
|
|
2/23/2020
|
|
|
|
2/23/2010(2
|
)
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
737,991
|
|
|
|
|
2/23/2009
|
|
|
|
29,466
|
|
|
|
58,932
|
|
|
|
|
|
|
|
10.86
|
|
|
|
2/23/2019
|
|
|
|
2/23/2010(3
|
)
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
737,991
|
|
|
|
|
2/25/2008
|
|
|
|
20,308
|
|
|
|
10,155
|
|
|
|
|
|
|
|
36.50
|
|
|
|
2/25/2018
|
|
|
|
2/23/2009(2
|
)
|
|
|
|
|
|
|
|
|
|
|
58,516
|
|
|
|
1,446,516
|
|
|
|
|
2/26/2007
|
|
|
|
33,915
|
|
|
|
|
|
|
|
|
|
|
|
28.30
|
|
|
|
2/26/2017
|
|
|
|
2/23/2009(3
|
)
|
|
|
|
|
|
|
|
|
|
|
58,516
|
|
|
|
1,446,516
|
|
|
|
|
3/3/2006
|
|
|
|
24,136
|
|
|
|
|
|
|
|
|
|
|
|
21.67
|
|
|
|
3/3/2016
|
|
|
|
2/25/2008(2
|
)
|
|
|
|
|
|
|
|
|
|
|
11,946
|
|
|
|
295,305
|
|
|
|
|
2/25/2005
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
19.29
|
|
|
|
2/25/2015
|
|
|
|
2/25/2008(3
|
)
|
|
|
|
|
|
|
|
|
|
|
23,893
|
|
|
|
590,635
|
|
|
|
|
2/5/2004
|
|
|
|
55,000
|
|
|
|
|
|
|
|
|
|
|
|
9.93
|
|
|
|
2/5/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/27/2002
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
2.58
|
|
|
|
11/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/16/2002
|
|
|
|
7,917
|
|
|
|
|
|
|
|
|
|
|
|
15.71
|
|
|
|
5/16/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2002
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
15.86
|
|
|
|
2/11/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/18/2001
|
|
|
|
14,297
|
|
|
|
|
|
|
|
|
|
|
|
34.77
|
|
|
|
1/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillip D. Wright
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
49,371
|
|
|
|
|
|
|
|
21.22
|
|
|
|
2/23/2020
|
|
|
|
2/23/2010(2
|
)
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
737,991
|
|
|
|
|
2/23/2009
|
|
|
|
29,466
|
|
|
|
58,932
|
|
|
|
|
|
|
|
10.86
|
|
|
|
2/23/2019
|
|
|
|
2/23/2010(3
|
)
|
|
|
|
|
|
|
|
|
|
|
29,854
|
|
|
|
737,991
|
|
|
|
|
2/25/2008
|
|
|
|
20,308
|
|
|
|
10,155
|
|
|
|
|
|
|
|
36.50
|
|
|
|
2/25/2018
|
|
|
|
2/23/2009(2
|
)
|
|
|
|
|
|
|
|
|
|
|
58,516
|
|
|
|
1,446,516
|
|
|
|
|
2/26/2007
|
|
|
|
33,915
|
|
|
|
|
|
|
|
|
|
|
|
28.30
|
|
|
|
2/26/2017
|
|
|
|
2/23/2009(3
|
)
|
|
|
|
|
|
|
|
|
|
|
58,516
|
|
|
|
1,446,516
|
|
|
|
|
3/3/2006
|
|
|
|
24,136
|
|
|
|
|
|
|
|
|
|
|
|
21.67
|
|
|
|
3/3/2016
|
|
|
|
2/25/2008(2
|
)
|
|
|
|
|
|
|
|
|
|
|
11,946
|
|
|
|
295,305
|
|
|
|
|
2/25/2005
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
19.29
|
|
|
|
2/25/2015
|
|
|
|
2/25/2008(3
|
)
|
|
|
|
|
|
|
|
|
|
|
23,893
|
|
|
|
590,635
|
|
|
|
|
2/5/2004
|
|
|
|
55,000
|
|
|
|
|
|
|
|
|
|
|
|
9.93
|
|
|
|
2/5/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/27/2002
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
2.58
|
|
|
|
11/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2002
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
15.86
|
|
|
|
2/11/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/19/2001
|
|
|
|
17,500
|
|
|
|
|
|
|
|
|
|
|
|
26.79
|
|
|
|
9/19/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/18/2001
|
|
|
|
9,803
|
|
|
|
|
|
|
|
|
|
|
|
34.77
|
|
|
|
1/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Options
|
|
|
(1) |
|
The following table reflects the vesting schedules for
associated stock option grant dates for awards that had not been
100% vested as of December 31, 2010: |
|
|
|
|
|
|
|
|
|
Grant Date
|
|
Vesting Schedule
|
|
|
Vesting Dates
|
|
|
2/23/2010
|
|
|
One-third vests each year for three years
|
|
|
|
2/23/2011, 2/23/2012, 2/23/2013
|
|
2/23/2009
|
|
|
One-third vests each year for three years
|
|
|
|
2/23/2010, 2/23/2011, 2/23/2012
|
|
2/25/2008
|
|
|
One-third vests each year for three years
|
|
|
|
2/25/2009, 2/25/2010, 2/25/2011
|
|
48
Stock
Awards
|
|
|
(2) |
|
The following table reflects the vesting dates for associated
time-based restricted stock unit award grant dates: |
|
|
|
|
|
|
|
Grant Date
|
|
Vesting Schedule
|
|
Vesting Dates
|
|
|
2/23/2010
|
|
100% vests in three years
|
|
|
2/23/2013
|
|
2/23/2009
|
|
100% vests in three years
|
|
|
2/23/2012
|
|
2/25/2008
|
|
100% vests in three years
|
|
|
2/25/2011
|
|
|
|
|
(3) |
|
All performance-based RSUs are subject to attainment of
performance targets established by the Compensation Committee.
These awards will vest no earlier than the end of the
performance period and therefore do not have a specific vesting
date. The awards included on the table are outstanding as of
December 31, 2010. |
|
(4) |
|
Values are based on a closing stock price of $24.72 on
December 31, 2010. |
Option
Exercises and Stock Vested
The following table sets forth certain information with respect
to options exercised by the NEO and stock that vested during
fiscal year 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
Name
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
|
Steven J. Malcolm
|
|
|
475,000
|
|
|
$
|
10,096,083
|
|
|
|
|
|
|
$
|
|
|
Donald R. Chappel
|
|
|
|
|
|
|
|
|
|
|
19,069
|
|
|
|
410,746
|
|
Ralph A. Hill
|
|
|
|
|
|
|
|
|
|
|
17,162
|
|
|
|
369,669
|
|
Alan S. Armstrong
|
|
|
|
|
|
|
|
|
|
|
13,349
|
|
|
|
287,537
|
|
Phillip D. Wright
|
|
|
|
|
|
|
|
|
|
|
13,349
|
|
|
|
287,537
|
|
Mr. Malcolm did not receive any time-based restricted stock
awards in 2007 and did not have any stock awards vest in 2010.
Mr. Malcolm was the only NEO to exercise stock option
awards in 2010 and exercised options granted in 2002.
The Compensation Committee determines pay based on a target
total compensation amount. While the Compensation Committee
reviews tally sheet and wealth accumulation information on each
NEO, thus far amounts realized from previous equity grants have
not been a material factor when the Committee determines pay.
How much compensation the NEOs actually receive is significantly
impacted by the stock market performance of the Companys
shares.
Retirement
Plan
The retirement plan for the Companys executives consists
of two plans: the pension plan and the retirement restoration
plan as described below. Together these plans provide the same
level of benefits to our executives as the pension plan provides
to all other employees of the Company. The retirement
restoration plan was implemented to address the annual
compensation limit of the Internal Revenue Code.
Pension
Plan
Our executives who have completed one year of service
participate in our pension plan on the same terms as our other
employees. Our pension plan is a noncontributory, tax qualified
defined benefit plan (with a cash balance design) subject to the
Employee Retirement Income Security Act of 1974, as amended.
Each year, participants earn compensation credits that are
posted to their cash balance account. The annual compensation
credits are equal to the sum of a percentage of eligible pay
(base pay and certain bonuses) and a
49
percentage of eligible pay greater than the social security wage
base. The percentage credited is based upon the
participants age as shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
Percent of Eligible Pay Greater
|
Age
|
|
Eligible Pay
|
|
|
|
than the Social Security Wage Base
|
|
Less than 30
|
|
|
4.5
|
%
|
|
|
+
|
|
|
|
from 1
|
% to 1.2%
|
30-39
|
|
|
6
|
%
|
|
|
+
|
|
|
|
2
|
%
|
40-49
|
|
|
8
|
%
|
|
|
+
|
|
|
|
3
|
%
|
50 or over
|
|
|
10
|
%
|
|
|
+
|
|
|
|
5
|
%
|
For participants who were active employees and participants
under the plan on March 31, 1998, and April 1, 1998,
the percentage of eligible pay is increased by 0.3% multiplied
by the participants total years of benefit service earned
as of March 31, 1998.
In addition, interest is credited to account balances quarterly
at a rate determined annually in accordance with the terms of
the plan.
The monthly annuity available to those who take normal
retirement is based on the participants account balance as
of the date of retirement. Normal retirement age is 65. Early
retirement eligibility begins at 55. At retirement, participants
may choose to receive a single-life annuity (for single
participants) or a qualified joint and survivor annuity (for
married participants) or they may choose one of several other
forms of payment having an actuarial value equal to that of the
relevant annuity.
Retirement
Restoration Plan
The Internal Revenue Code limits pension benefits based on the
annual compensation limit that can be accrued in tax-qualified
defined benefit plans, such as our pension plan. Any reduction
in an executives pension benefit accrual due to these
limits will be compensated, subject to a cap, under an unfunded
top hat plan our retirement restoration plan.
The elements of compensation that are included in applying the
payment and benefit formula for the retirement restoration plan
are the same elements that are used, except for application of a
cap, in the base pension plan for all employees. The elements of
pay included in that definition are total base pay, including
any overtime, base pay-reduction amounts, and cash bonus awards,
if paid (unless specifically excluded under a written bonus or
incentive-pay arrangement). Specifically excluded from the
definition are severance pay,
cost-of-living
pay, housing pay, relocation pay (including mortgage interest
differential), taxable and non-taxable fringe benefits, and all
other extraordinary pay, including any amounts received from
equity compensation awards.
With respect to bonuses, annual cash incentives are considered
in determining eligible pay under the pension plan. Long-term
equity compensation incentives are not considered.
Pension
Benefits
The following table sets forth certain information with respect
to the actuarial present value of the accrued benefit as of
December 31, 2010 under the qualified pension plan and
retirement restoration plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Payments
|
|
|
|
|
|
Years Credited
|
|
|
Present Value of
|
|
|
During Last
|
|
Name
|
|
Plan Name
|
|
Services
|
|
|
Accrued Benefit(1)
|
|
|
Fiscal Year
|
|
|
Steven J. Malcolm(2)(3)
|
|
Pension Plan
|
|
|
27
|
|
|
$
|
829,307
|
|
|
|
|
|
|
|
Retirement Restoration Plan
|
|
|
27
|
|
|
|
5,497,857
|
|
|
|
|
|
Donald R. Chappel(3)
|
|
Pension Plan
|
|
|
8
|
|
|
|
245,359
|
|
|
|
|
|
|
|
Retirement Restoration Plan
|
|
|
8
|
|
|
|
1,319,741
|
|
|
|
|
|
Ralph A. Hill
|
|
Pension Plan
|
|
|
27
|
|
|
|
586,869
|
|
|
|
|
|
|
|
Retirement Restoration Plan
|
|
|
27
|
|
|
|
1,321,013
|
|
|
|
|
|
Alan S. Armstrong
|
|
Pension Plan
|
|
|
25
|
|
|
|
420,570
|
|
|
|
|
|
|
|
Retirement Restoration Plan
|
|
|
25
|
|
|
|
925,523
|
|
|
|
|
|
Phillip D. Wright(3)
|
|
Pension Plan
|
|
|
22
|
|
|
|
522,254
|
|
|
|
|
|
|
|
Retirement Restoration Plan
|
|
|
22
|
|
|
|
1,404,473
|
|
|
|
|
|
50
|
|
|
(1) |
|
The primary actuarial assumptions used to determine the present
values include an annual interest credit to normal retirement
age equal to 5% and a discount rate equal to 5.29% for the
pension plan and discount rate equal to 5.1% for the retirement
restoration plan. |
|
(2) |
|
By retiring prior to age 65, Mr. Malcolm is eligible
to receive an enhanced retirement based on his Rule of
55 eligibility. The Rule of 55 is a transition benefit that
was provided to all employees meeting the eligibility criteria
at the time the Companys pension plan was converted from a
final average pay formula to a cash balance formula. To be
eligible for the Rule of 55 enhancement an employees age
and years of service at the time of the cash balance conversion
in 1998 must have totaled 55. |
|
(3) |
|
Mr. Malcolm, Mr. Chappel, and Mr. Wright are the
only NEOs eligible to retire as of 12/31/2010. |
Nonqualified
Deferred Compensation
We do not provide nonqualified deferred compensation for any of
our NEOs or other employees.
Change in
Control Agreements
We have entered into change in control agreements with each of
our NEOs to facilitate continuity of management if there is a
change in control of the Company. The provisions of such
agreements are described below. The definitions of words in
quotations are also provided below.
If during the term of a change in control agreement, a
change in control occurs and (i) the employment
of any NEO is terminated other than for cause,
disability, death or a disqualification
disaggregation or (ii) an NEO resigns for good
reason, such NEO is entitled to the following:
|
|
|
|
|
Within 10 business days after the termination date:
|
|
|
|
|
|
Accrued but unpaid base salary, accrued earned but unpaid cash
incentive, accrued but unpaid paid time off, and any other
amounts or benefits due but not paid (lump sum payment);
|
|
|
|
|
|
On the first business day following six months after the
termination date:
|
|
|
|
|
|
Prorated annual bonus for the year of separation through the
termination date (lump sum payment);
|
|
|
|
A severance amount equal to three times
his/her base
salary as of the termination date plus an annual bonus amount
equal to
his/her
target percentage multiplied by
his/her base
salary in effect at the termination date as if performance goals
were achieved at 100% (lump sum payment);
|
|
|
|
An amount equal to three times the total allocations made by
Williams for the NEO in the preceding calendar year under our
retirement restoration plan (lump sum payment);
|
|
|
|
An amount equal to the sum of the value of the unvested portion
of the NEOs accounts or accrued benefits under the
Companys 401K plan that would have otherwise been
forfeited (lump sum payment);
|
|
|
|
|
|
Continued participation in the Companys medical benefit
plans for so long as the NEO elects coverage or 18 months
from the termination, whichever is less, in the same manner and
at the same cost as similarly situated active employees;
|
|
|
|
All restrictions on stock options held by the NEO will lapse,
and the options will vest and become immediately exercisable;
|
|
|
|
All restricted stock will vest and will be paid out only in
accordance with the terms of the respective award agreements;
|
|
|
|
Continued participation in the Companys directors
and officers liability insurance for six years or any
longer known applicable statute of limitations period;
|
|
|
|
Indemnification as set forth under the Companys
bylaws; and
|
|
|
|
Outplacement benefits for six months at a cost not exceeding
$25,000.
|
In addition, each NEO is generally entitled to receive a
gross-up
payment in an amount sufficient to make him/her whole for any
federal excise tax on excess parachute payments imposed under
Section 280G and 4999 of the Internal Revenue Code or any
similar tax under any state, local, foreign or other law (other
than Section 409A of the
51
Internal Revenue Code). However, in reviewing the change in
control agreements in 2010 and 2011, our Compensation Committee
approved eliminating this excise tax
gross-up
provision. The Compensation Committee opted to provide a
best net provision providing our NEOs with the
better of their after-tax benefit capped at the safe harbor
amount or their benefit paid in full subjecting them to possible
excise tax payments. Therefore, in 2011 we will provide the one
year notice required by the NEOs change in control
agreements in order to effect the change in 2012. After this
change is implemented, the Company will no longer provide
additional compensation to address excise taxes.
If an NEOs employment is terminated for cause
during the period beginning upon a change of control and
continuing for two years or until the termination of the
agreement, whichever happens first, the NEO is entitled to
accrued but unpaid base salary, accrued earned but unpaid cash
incentive, accrued but unpaid paid time off, and any other
amounts or benefits due but not paid (lump sum payment).
The agreements with our NEOs use the following definitions:
Cause means an NEOs
|
|
|
|
|
conviction of or a plea of nolo contendere to a felony or a
crime involving fraud, dishonesty or moral turpitude;
|
|
|
|
willful or reckless material misconduct in the performance of
his/her
duties that has an adverse effect on Williams or any of its
subsidiaries or affiliates;
|
|
|
|
willful or reckless violation or disregard of the code of
business conduct of Williams or the policies of Williams or its
subsidiaries; or
|
|
|
|
habitual or gross neglect of
his/her
duties.
|
Cause generally does not include bad judgment or negligence
(other than habitual neglect or gross negligence); acts or
omissions made in good faith after reasonable investigation by
the NEO or acts or omissions with respect to which the Board
could determine that the NEO had satisfied the standards of
conduct for indemnification or reimbursement under the
Companys bylaws, indemnification agreement, or applicable
law; or failure (despite good faith efforts) to meet performance
goals, objectives, or measures for a period beginning upon a
change of control and continuing for two years or until the
termination of the agreement, whichever happens first. An
NEOs act or failure to act (except as relates to a
conviction or plea of nolo contendere described above), when
done in good faith and with a reasonable belief after reasonable
investigation that such action or non-action was in the best
interest of Williams or its affiliate or required by law shall
not be Cause if the NEO cures the action or non-action within
10 days of notice. Furthermore, no act or failure to act
will be Cause if the NEO acted under the advice of
Williams counsel or required by the legal process.
Change in control means:
|
|
|
|
|
Any person or group (other than an affiliate of Williams or an
employee benefit plan sponsored by Williams or its affiliates)
becomes a beneficial owner, as such term is defined under the
Exchange Act, of 20% or more of the Companys common stock
or 20% or more of the combined voting power of all securities
entitled to vote generally in the election of directors
(Voting Securities), unless such person owned both
more than 75% of common stock and Voting Securities, directly or
indirectly, in substantially the same proportion immediately
before such acquisition;
|
|
|
|
The Williams directors as of a date of the agreement
(Existing Directors) and directors approved after
that date by at least two-thirds of the Existing Directors cease
to constitute a majority of the directors of Williams;
|
|
|
|
Consummation of any merger, reorganization, recapitalization
consolidation, or similar transaction (Reorganization
Transaction), other than a Reorganization Transaction that
results in the person who was the direct or indirect owner of
outstanding common stock and Voting Securities of the Company
prior to the transaction becoming, immediately after the
transaction, the owner of at least 65% of the then outstanding
common stock and Voting Securities representing 65% of the
combined voting power of the then outstanding Voting Securities
of the surviving corporation in substantially the same
respective proportion as that persons ownership
immediately before such Reorganization Transaction; or
|
|
|
|
approval by the stockholders of Williams of the sale or other
disposition of all or substantially all of the consolidated
assets of Williams or the complete liquidation of Williams other
than a transaction that would
|
52
|
|
|
|
|
result in (i) a related party owning more than 50% of the
assets that were owned by Williams immediately prior to the
transaction or (ii) the persons who were the direct or
indirect owners of outstanding Williams common stock and Voting
Securities prior to the transaction continuing to own, directly
or indirectly, 50% or more of the assets that were owned by
Williams immediately prior to the transaction.
|
A change in control will not occur if:
|
|
|
|
|
the NEO agrees in writing prior to an event that such an event
will not be a change in control; or
|
|
|
|
the Board determines that a liquidation, sale or other
disposition approved by the stockholders, as described in the
fourth bullet above, will not occur, except to the extent
termination occurred prior to such determination.
|
Disability means a physical or mental infirmity that
impairs the NEOs ability to substantially perform
his/her
duties for twelve months or more and for which
he/she is
receiving income replacement benefits from a Company plan for
not less than three months.
Disqualification disaggregation means:
|
|
|
|
|
the termination of an NEO from Williams or an affiliates
employment before a change in control for any reason; or
|
|
|
|
the termination of an NEOs employment by a successor
(during the period beginning upon a change of control and
continuing for two years or until the termination of the
agreement, whichever happens first), if the NEO is employed in
substantially the same position and the successor has assumed
the Williams change in control agreement.
|
Good reason means, generally, a material adverse
change in the NEOs title, position, or responsibilities, a
reduction in the NEOs base salary, a reduction in the
NEOs annual bonus, required relocation, a material
reduction in the level of aggregate compensation or benefits not
applicable to Company peers, a successor companys failure
to honor the agreement, or the failure of the Board to provide
written notice of the act or omission constituting
cause.
53
Termination
Scenarios
The following table sets forth circumstances that provide for
payments to the NEOs following or in connection with a change in
control of the Company or an NEOs termination of
employment for cause, upon retirement, upon death and
disability, or not for cause. NEOs are generally eligible to
retire at the earlier of age 55 and completion of
3 years of service or age 65.
All values are based on a hypothetical termination date of
December 31, 2010 and a closing stock price of $24.72 on
such date. The values shown are intended to provide reasonable
estimates of the potential benefits the NEOs would receive upon
termination. The values are based on various assumptions and may
not represent the actual amount an NEO would receive. In
addition to the amounts disclosed in the following table, a
departing NEO would retain the amounts
he/she has
earned over the course of
his/her
employment prior to the termination event, including accrued
retirement benefits and previously vested stock options and
restricted stock units.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
|
|
|
|
Death &
|
|
|
Not for
|
|
|
|
|
Name
|
|
Payment
|
|
Cause(1)
|
|
|
Retirement(2)
|
|
|
Disability(3)
|
|
|
Cause(4)
|
|
|
CIC(5)
|
|
|
Malcolm, Steven J
|
|
AIP Reserve
|
|
|
|
|
|
|
$242,756
|
|
|
|
$242,756
|
|
|
|
$242,756
|
|
|
|
$242,756
|
|
|
|
Stock options
|
|
|
|
|
|
|
5,645,264
|
|
|
|
5,645,264
|
|
|
|
|
|
|
|
5,645,264
|
|
|
|
Stock awards
|
|
|
|
|
|
|
7,240,399
|
|
|
|
7,240,399
|
|
|
|
7,240,399
|
|
|
|
12,634,022
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,600,000
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,170
|
|
|
|
Retirement Restoration Plan Enhancement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,207,808
|
|
|
|
Tax Gross Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,649,197
|
|
|
|
|
Total
|
|
|
|
|
|
|
$13,128,419
|
|
|
|
$13,128,419
|
|
|
|
$7,483,155
|
|
|
|
$36,022,217
|
|
|
Chappel, Donald R
|
|
AIP Reserve
|
|
|
|
|
|
|
60,103
|
|
|
|
60,103
|
|
|
|
60,103
|
|
|
|
60,103
|
|
|
|
Stock options
|
|
|
|
|
|
|
1,224,287
|
|
|
|
1,224,287
|
|
|
|
|
|
|
|
1,224,287
|
|
|
|
Stock awards
|
|
|
|
|
|
|
4,086,877
|
|
|
|
5,444,451
|
|
|
|
5,444,451
|
|
|
|
6,829,365
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,213,000
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,699
|
|
|
|
Retirement Restoration Plan Enhancement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
646,557
|
|
|
|
Tax Gross Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,966,960
|
|
|
|
|
Total
|
|
|
|
|
|
|
$5,371,267
|
|
|
|
$6,728,841
|
|
|
|
$5,504,554
|
|
|
|
$14,991,971
|
|
|
Hill, Ralph A
|
|
AIP Reserve
|
|
|
|
|
|
|
72,958
|
|
|
|
72,958
|
|
|
|
72,958
|
|
|
|
72,958
|
|
|
|
Stock options
|
|
|
|
|
|
|
1,045,738
|
|
|
|
1,045,738
|
|
|
|
|
|
|
|
1,045,738
|
|
|
|
Stock awards
|
|
|
|
|
|
|
3,360,366
|
|
|
|
4,527,523
|
|
|
|
4,527,523
|
|
|
|
5,715,453
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,448,765
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,346
|
|
|
|
Retirement Restoration Plan Enhancement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
636,018
|
|
|
|
Tax Gross Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
$4,479,062
|
|
|
|
$5,646,219
|
|
|
|
$4,600,481
|
|
|
|
$9,970,278
|
|
|
Armstrong, Alan S
|
|
AIP Reserve
|
|
|
|
|
|
|
74,628
|
|
|
|
74,628
|
|
|
|
74,628
|
|
|
|
74,628
|
|
|
|
Stock options
|
|
|
|
|
|
|
989,596
|
|
|
|
989,596
|
|
|
|
|
|
|
|
989,596
|
|
|
|
Stock awards
|
|
|
|
|
|
|
3,014,679
|
|
|
|
4,126,613
|
|
|
|
4,126,613
|
|
|
|
5,254,953
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,448,765
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,699
|
|
|
|
Retirement Restoration Plan Enhancement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
447,752
|
|
|
|
Tax Gross Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
$4,078,903
|
|
|
|
$5,190,837
|
|
|
|
$4,201,241
|
|
|
|
$9,267,393
|
|
|
Wright, Phillip D
|
|
AIP Reserve
|
|
|
|
|
|
|
63,293
|
|
|
|
63,293
|
|
|
|
63,293
|
|
|
|
63,293
|
|
|
|
Stock options
|
|
|
|
|
|
|
989,596
|
|
|
|
989,596
|
|
|
|
|
|
|
|
989,596
|
|
|
|
Stock awards
|
|
|
|
|
|
|
3,014,679
|
|
|
|
4,126,613
|
|
|
|
4,126,613
|
|
|
|
5,254,953
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,524,500
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,388
|
|
|
|
Retirement Restoration Plan Enhancement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
585,673
|
|
|
|
Tax Gross Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
$4,067,568
|
|
|
|
$5,179,502
|
|
|
|
$4,189,906
|
|
|
|
$9,461,403
|
|
|
|
|
|
(1) |
|
If an NEO is terminated for cause or leaves the company
voluntarily, no additional benefits will be received. |
|
(2) |
|
If an NEO retires, then all unvested stock options will fully
accelerate. A pro-rated portion of the unvested time based
restricted stock units will accelerate and a pro-rated portion
of any performance-based restricted stock units will vest on the
original vesting date if the Compensation Committee certifies
that the performance measures were met. |
54
|
|
|
(3) |
|
If an NEO dies or becomes disabled, then all unvested stock
options will fully accelerate. All unvested time-based
restricted stock units will fully accelerate, and a pro-rated
portion of any performance-based restricted stock units will
vest if the Compensation Committee certifies that the
performance measures were met. |
|
(4) |
|
For an NEO who is involuntarily terminated who receives
severance or for an NEO whose job is outsourced with no
comparable internal offer, all unvested time-based restricted
stock units will fully accelerate and a pro-rated portion of any
performance-based restricted stock units will vest if the
Compensation Committee certifies that the performance measures
were met. However all unvested stock options cancel. |
|
(5) |
|
See Change In Control Agreements above. |
Please note that we make no assumptions as to the achievement of
performance goals as it relates to the performance based
restricted stock units. If an award is covered by
Section 409A of the Internal Revenue Code, lump sum
payments and distributions occurring from these events will
occur six months after the triggering event as required by the
Internal Revenue Code and our award agreements.
55
COMPENSATION
OF DIRECTORS
Only non-employee directors receive director fees. In 2010, the
Company paid non-employee directors:
|
|
|
|
|
$110,000 annual retainer in cash; and
|
|
|
|
$115,000 in the form of RSUs.
|
The Chair of each of the Audit, Compensation, Finance, and
Nominating and Governance Committees received an additional
annual retainer of $20,000. Mr. Howell received additional
compensation of $50,000 for his services as Lead Director in
2010. Effective January 3, 2011, Mr. Frank T. MacInnis
will be serving as the Companys non-employee Chairman of
the Board. In this role, Mr. MacInnis will receive
additional compensation of $225,000 in cash for his services
each fiscal year.
Through The Williams Companies, Inc. Amended and Restated 2007
Incentive Plan, each non-employee director annually receives a
form of long-term equity compensation as approved by the
Nominating and Governance Committee.
Non-employee directors generally receive their compensation on
the date of the annual stockholders meeting. The following table
shows how compensation is paid to individuals who become
non-employee directors after the annual meeting.
|
|
|
|
|
|
|
An individual who
|
|
|
|
|
|
|
became a non-
|
|
|
|
|
|
|
employee director...
|
|
...but before...
|
|
...will receive...
|
|
...as of...
|
|
after the annual meeting
|
|
August 1
|
|
full compensation
|
|
December 15
|
on or after August 1
|
|
or on December 15
|
|
pro-rated compensation
|
|
December 15
|
on or after December 16
|
|
the next annual meeting
|
|
pro-rated compensation
|
|
the next annual meeting date
|
Non-employee directors are reimbursed for expenses (including
costs of travel, food, and lodging) incurred in attending Board,
committee, and stockholder meetings. Directors are also
reimbursed for reasonable expenses associated with other
business activities, including participation in director
education programs. In addition, Williams pays premiums on
directors and officers liability insurance policies.
Like all Williams employees, directors are eligible to
participate in the Williams Matching Grant Program for eligible
charitable organizations and the United Way Program. The maximum
gift total for a participant in the Matching Grant Program is
$10,000 in any calendar year. No match is made to the United Way
under the Matching Grant Program unless the giving relates to a
natural disaster or is applied to the funding of a capital
campaign at a United Way funded agency. Under the United Way
Program there are no limits to the match if given through the
annual Williams United Way campaign.
56
Director
Compensation for Fiscal Year 2010
The compensation received by each director in 2010 is outlined
in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
Fees
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
Earned
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
or Paid
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name
|
|
in Cash(1)
|
|
|
in Stock(2)
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation(3)
|
|
|
Total
|
|
|
Joseph R. Cleveland
|
|
|
$110,000
|
|
|
|
$115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$225,534
|
|
Kathleen B. Cooper
|
|
|
110,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$3,250
|
|
|
|
228,784
|
|
Irl F. Engelhardt
|
|
|
110,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
235,534
|
|
William R. Granberry
|
|
|
110,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
234,534
|
|
William E. Green
|
|
|
110,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,534
|
|
Juanita H. Hinshaw
|
|
|
130,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,534
|
|
William R. Howell
|
|
|
160,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
285,534
|
|
George A. Lorch
|
|
|
110,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000
|
|
|
|
236,534
|
|
William G. Lowrie
|
|
|
130,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
255,534
|
|
Frank T. MacInnis
|
|
|
130,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,534
|
|
Janice D. Stoney
|
|
|
130,000
|
|
|
|
115,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
255,534
|
|
Laura A. Sugg(4)
|
|
|
64,167
|
|
|
|
67,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,489
|
|
|
|
|
(1) |
|
The fees paid in cash are itemized in the following chart. |
Committee
and Lead Director Cash Retainers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
|
Nominating
|
|
|
|
|
|
|
|
|
|
|
|
|
Retainer
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
Including
|
|
|
Audit
|
|
|
Compensation
|
|
|
Governance
|
|
|
Finance
|
|
|
|
|
|
|
|
|
|
Service on
|
|
|
Committee
|
|
|
Committee
|
|
|
Committee
|
|
|
Committee
|
|
|
Lead
|
|
|
|
|
|
|
Two
|
|
|
Chair
|
|
|
Chair
|
|
|
Chair
|
|
|
Chair
|
|
|
Director
|
|
|
|
|
|
|
Committees
|
|
|
Retainer
|
|
|
Retainer
|
|
|
Retainer
|
|
|
Retainer
|
|
|
Retainer
|
|
|
Total
|
|
|
Cleveland
|
|
$
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
110,000
|
|
Cooper
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
Engelhardt
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
Granberry
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
Green
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
Hinshaw
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
130,000
|
|
Howell
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
50,000
|
|
|
|
160,000
|
|
Lorch
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
Lowrie
|
|
|
110,000
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
|
MacInnis
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
|
Stoney
|
|
|
110,000
|
|
|
|
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
|
Sugg
|
|
|
64,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,167
|
|
|
|
|
(2) |
|
Awards were granted under the terms of the 2007 Incentive Plan
and represent time-based RSUs. Amounts shown are the grant date
fair value of awards computed in accordance with FASB ASC Topic
718. The assumptions used to value the stock awards can be found
in our Annual Report on
Form 10-K
for the year-ended December 31, 2010. |
|
(3) |
|
All other compensation includes matching contributions made on
behalf of the Board to charitable organizations through the
Matching Grants Program or the United Way Program. Matching
contributions made on the behalf of Mr. Lorch reflect
donations that were made by Mr. Lorch in December 2009 and
in 2010 that were matched by the Company in 2010. |
|
(4) |
|
Laura A. Sugg joined the Board effective November 17, 2010
and the compensation provided represents her partial fiscal year
service on the Board. |
57
Outstanding
Awards as of Fiscal Year End 2010
The aggregate number of stock options and stock awards held by
directors outstanding at fiscal year end is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
Securities
|
|
|
|
Shares or Units
|
|
|
Underlying
|
|
|
|
of Stock
|
|
|
Unexercised Options
|
|
Name
|
|
Outstanding
|
|
|
Exercisable
|
|
|
Joseph R. Cleveland
|
|
|
17,546
|
|
|
|
|
|
Kathleen B. Cooper
|
|
|
17,546
|
|
|
|
4,500
|
|
Irl F. Engelhardt
|
|
|
17,546
|
|
|
|
12,000
|
|
William R. Granberry
|
|
|
17,546
|
|
|
|
9,000
|
|
William E. Green
|
|
|
17,546
|
|
|
|
26,357
|
|
Juanita H. Hinshaw
|
|
|
17,546
|
|
|
|
15,000
|
|
William R. Howell
|
|
|
26,293
|
|
|
|
44,357
|
|
George A. Lorch
|
|
|
56,842
|
|
|
|
43,631
|
|
William G. Lowrie
|
|
|
17,546
|
|
|
|
|
|
Frank T. MacInnis
|
|
|
17,546
|
|
|
|
44,357
|
|
Janice D. Stoney
|
|
|
40,986
|
|
|
|
44,357
|
|
Laura A. Sugg
|
|
|
3,023
|
|
|
|
|
|
EQUITY
COMPENSATION STOCK PLANS
Securities
authorized for issuance under equity compensation
plans
The following table provides information concerning Williams
common stock that may be issued upon the exercise of options,
warrants and rights under all of our existing equity
compensation plans as of December 31, 2010, including The
Williams Companies, Inc. Amended and Restated 2007 Incentive
Plan, The Williams Companies, Inc. 2002 Incentive Plan, The
Williams Companies, Inc. 1996 Stock Plan, The Williams
Companies, Inc. 1996 Stock Plan for Non-Employee Directors, and
2007 Employee Stock Purchase Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Securities
|
|
|
|
|
|
for Future Issuance
|
|
|
|
to be Issued
|
|
|
Weighted-Average
|
|
|
Under Equity Compensation
|
|
|
|
upon Exercise of
|
|
|
Exercise Price of
|
|
|
Plans (Excluding Securities
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Reflected in the
|
|
Plan Category
|
|
Warrants and Rights(1)
|
|
|
Warrants and Rights(2)
|
|
|
1st Column of This Table)(3)
|
|
|
Equity Compensation plans approved by security holders
|
|
|
19,274,415
|
|
|
$
|
17.50
|
|
|
|
20,022,611
|
|
Equity Compensation plans not approved by security holders(4)
|
|
|
90,456
|
|
|
|
28.97
|
|
|
|
|
|
Total
|
|
|
19,364,871
|
|
|
|
17.59
|
|
|
|
20, 022,611
|
|
|
|
|
(1) |
|
Includes 6,626,895 shares of restricted stock units, all of
which were approved by security holders. |
|
(2) |
|
Excludes the shares issuable upon the vesting of restricted
stock units included in the first column of this table for which
there is no weighted-average price. |
|
(3) |
|
Includes 1,048,522 shares remaining to be issued out of the
2007 Employee Stock Purchase Plan. |
|
(4) |
|
These plans were terminated upon stockholder approval of the
2007 Incentive Plan. Options outstanding in these plans remain
subject to their terms. Those options generally expire
10 years after the grant date. |
58
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees Williams financial reporting
process on behalf of the Board. Management has the primary
responsibility for the financial statements and the reporting
process, including the systems of internal controls. The Audit
Committee meets separately with management, the internal
auditors, the independent auditors and the general counsel. The
Audit Committee operates under a written charter approved by the
Board, a copy of which is available on our website at
http://www.williams.com.
The charter, among other things, provides that the Audit
Committee has full authority to appoint, oversee, evaluate, and
terminate when appropriate, the independent auditor. In this
context, the Audit Committee:
|
|
|
|
|
reviewed and discussed the audited financial statements in
Williams annual report on
Form 10-K
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;
|
|
|
|
reviewed with Ernst & Young LLP, Williams
independent auditors, who are responsible for expressing an
opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments
as to the quality and acceptability of Williams accounting
principles and such other matters as are required to be
discussed with the Audit Committee under generally accepted
auditing standards;
|
|
|
|
received the written disclosures and the letter from
Ernst & Young LLP required by applicable requirements
of the Public Company Accounting Oversight Board regarding
Ernst & Young LLPs communications with the Audit
Committee concerning independence;
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discussed with Ernst & Young LLP its independence from
management and Williams and considered whether Ernst &
Young LLP could also provide non-audit services without
compromising the firms independence;
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discussed with Ernst & Young LLP the matters required
to be discussed by statement on Auditing Standards No. 61,
as amended, as adopted by the Public Company Accounting
Oversight Board in Rule 3200T;
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discussed with Williams internal auditors and
Ernst & Young LLP the overall scope and plans for
their respective audits, and then met with the internal auditors
and Ernst & Young LLP, with and without management
present, to discuss the results of their examinations, their
evaluations of Williams internal controls and the overall
quality of Williams financial reporting;
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based on the foregoing reviews and discussions, recommended to
the Board of Directors (and the Board has approved) that the
audited financial statements be included in the annual report on
Form 10-K
for the year ended December 31, 2010, for filing with the
SEC; and
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appointed Ernst & Young LLP to serve as Williams
independent auditors for 2011, subject to ratification by the
Board and the Companys stockholders.
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This report has been furnished by the members of the Audit
Committee of the Board of Directors:
William G. Lowrie, Chair
Joseph R. Cleveland
Irl F. Engelhardt
William E. Green
Juanita H. Hinshaw
59
PROPOSAL 2
RATIFICATION
OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee is responsible for selecting Williams
independent, registered public accounting firm. At a meeting
held on March 15, 2011, the Audit Committee appointed the
firm of Ernst & Young LLP as the independent auditors
to audit our financial statements for calendar year 2011. A
representative of Ernst & Young LLP will attend the
annual meeting and will be available to respond to appropriate
questions. Although the audit firm has indicated that no
statement will be made, an opportunity for a statement will be
provided. Stockholder approval of the appointment of
Ernst & Young LLP is not required, but the Audit
Committee and the Board are submitting the selection of
Ernst & Young LLP for ratification to obtain our
stockholders views. In the event a majority of the
stockholders do not ratify the appointment of Ernst &
Young LLP as the independent auditors to audit our financial
statements for calendar year 2011, the Audit Committee and the
Board will consider the voting results and evaluate whether to
select a different independent auditor.
Board of Directors
Recommendation: THE BOARD OF DIRECTORS OF
WILLIAMS RECOMMENDS A VOTE FOR THE RATIFICATION OF
ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITORS FOR
2011.
Principal
Accounting Fees and Services
Fees for professional services provided by our independent
auditors for each of the last two fiscal years were as follows:
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2010
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2009
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(Millions)
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Audit Fees
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$
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14.2
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$
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15.0
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Audit-Related Fees
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1.1
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1.2
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Tax Fees
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0.5
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0.4
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All Other Fees
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$
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15.8
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$
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16.6
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Audit fees in 2010 and 2009 include fees associated with the
annual audits of all of our registrants for SEC and Federal
Energy Regulatory Commission reporting purposes, the reviews of
our quarterly reports on
Form 10-Q,
the audit of internal controls as required by Section 404
of the Sarbanes-Oxley Act of 2002, and services performed in
connection with other filings with the SEC. Audit-related fees
in 2010 and 2009 primarily include audits of investments and
joint ventures, and audits of employee benefit plans. Tax fees
in 2010 and 2009 include tax planning, tax advice and tax
compliance. Ernst & Young LLP does not provide tax
services to our executives.
Policy on
Audit Committee Pre-Approval of Audit and Non-Audit Services of
Independent Auditors
The Audit Committee is responsible for appointing, setting
compensation for and overseeing the work of Ernst &
Young LLP, our independent auditors. The Audit Committee has
established a policy regarding pre-approval of all audit and
non-audit services provided by Ernst & Young LLP.
On an ongoing basis, our management presents specific projects
and categories of service to the Audit Committee to request
advance approval. The Audit Committee reviews those requests and
advises management if the Audit Committee approves the
engagement of Ernst & Young LLP. On a periodic basis,
our management reports to the Audit Committee regarding the
actual spending for such projects and services compared to the
approved amounts. The Audit Committee may also delegate the
authority to pre-approve audit and permitted non-audit services,
excluding services related to the Companys internal
control over financial reporting, to a subcommittee of one or
more committee members, provided that any such pre-approvals are
reported on at a subsequent Audit Committee meeting. In 2010,
100% of Ernst & Young LLPs fees were
pre-approved by the Audit Committee.
The Audit Committees pre-approval policy with respect to
audit and non-audit services is an attachment to the Audit
Committee Charter, which is available on our website at
www.williams.com at the Corporate Responsibility/Corporate
Governance/Board Committees/Audit Committee Charter tab.
60
PROPOSAL 3
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
Consistent with the recently enacted Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, we are providing to
our stockholders a non-binding, advisory vote on our NEO
Compensation as disclosed in this proxy statement in accordance
with the SECs rules. This proposal is commonly known as a
say-on-pay
proposal.
As discussed in the Compensation Discussion and
Analysis section of this proxy statement on pages 28
to 43 as well as in the tables and narrative in the
Executive Compensation and Other Information section
on pages 45 to 55, our compensation programs are designed
to attract and retain the talent needed to drive stockholder
value and help each of our businesses meet or exceed financial
and performance targets. Our compensation programs are intended
to reward our NEOs for successfully implementing our strategy to
grow our business and create long-term stockholder value. We
believe our programs effectively link executive pay to the
financial performance of the Company while also aligning our
NEOs with the interests of our stockholders. The following are
some key points that demonstrate our commitment to aligning pay
to performance:
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The significant majority of NEO target compensation is provided
in the form of long-term equity awards ensuring pay is linked to
the performance of our Companys common stock and aligned
with stockholders;
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A significant portion of the annual long-term equity award is
provided in the form of performance-based RSU awards. The
performance-based RSU awards granted in 2007 and 2008 for the
respective
2007-2009
and
2008-2010
performance periods were cancelled as our performance did not
meet pre-determined performance targets. This significantly
impacted the value of our NEOs realized compensation in 2010 and
2011;
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Current performance-based RSU awards are measured based on both
relative and absolute TSR. This ensures our stock price
performance must perform well in relation to our comparator
group of companies while also delivering a strong absolute
return to our stockholders in order to deliver the targeted
number of RSUs to our NEOs upon vesting; and
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Our 2010 Annual Incentive Program aligning 2010 payments to
actual performance on pre-established targets effectively
linking the Companys financial performance to NEO pay.
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Additionally, we made several governance changes, as described
in the Compensation Discussion and Analysis, to our compensation
programs effectively demonstrating our commitment to actively
managing our executive compensation programs.
We are seeking our stockholders support for our NEO compensation
as detailed in this proxy statement. This proposal conforms to
SEC requirements and seeks our stockholders views on our NEO
compensation. It is not intended to address any specific element
of compensation, but rather the overall compensation provided to
our NEOs including our pay philosophy, our pay principles and
pay practices as described in this proxy statement. The Board
asks for your FOR advisory vote on the following
resolution:
RESOLVED, that the stockholders of The Williams Companies, Inc.
(the Company) approve, on an advisory basis, the
executive compensation of the Companys named executive
officers as disclosed within this proxy statement pursuant to
the compensation disclosure rules of the Securities Exchange Act
of 1934, as amended (Item 402 of Regulation S-K), which
disclosure includes the Compensation Discussion and Analysis,
the compensation tables, and any related narrative discussion
contained in this proxy statement.
Because your vote is advisory, it will not be binding on the
Board and will not overrule any decision by the Board or require
the Board to take any action. However, the Board will take into
account the outcome of the vote when considering future
executive compensation decisions for NEOs.
Board of Directors
Recommendation: THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE COMPANYS EXECUTIVE
COMPENSATION.
61
PROPOSAL 4
ADVISORY
VOTE ON THE FREQUENCY OF
SAY-ON-PAY
The Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 also provides our stockholders with the opportunity to cast
a separate non-binding advisory vote indicating how frequently
the Company should seek a
say-on-pay
advisory vote on executive compensation from stockholders. The
vote provides stockholders with four choices regarding the
frequency of a
say-on-pay
advisory vote: (i) one year, (ii) two years,
(iii) three years, or (iv) abstain.
As discussed, the Board believes our executive compensation
program effectively links executive pay to the financial
performance of the Company while also aligning our executive
officers interests with the interests of our stockholders.
After careful consideration, the Board believes an annual
say-on-pay
advisory vote will allow our stockholders to provide us with
timely input regarding our executive compensation program. This
annual vote is consistent with our desire to engage with our
stockholders regarding our executive compensation program.
Because your vote is advisory, it will not be binding on the
Board and will not overrule any decision by the Board or require
the Board to take any action. However, the Board will take into
account the outcome of the vote when determining how frequently
to request a stockholder advisory vote on future executive
compensation decisions for NEOs.
Board of Directors
Recommendation: THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE IN FAVOR OF THE COMPANY SEEKING AN ANNUAL ADVISORY
VOTE ON EXECUTIVE COMPENSATION.
62
INCORPORATION
BY REFERENCE
The Compensation Committee Report on Executive Compensation and
the Report of the Audit Committee are not deemed filed with the
SEC and shall not be deemed incorporated by reference into any
prior or future filings made by Williams under the Securities
Act or the Exchange Act, except to the extent that Williams
specifically incorporates such information by reference. In
addition, the website addresses contained in this proxy
statement are intended to provide inactive, textual references
only. The information on these websites is not part of this
proxy statement.
WEBSITE
ACCESS TO REPORTS AND OTHER INFORMATION
We file our annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
proxy statements, and other documents electronically with the
SEC under the Exchange Act. You may read and copy any materials
that we file with the SEC at the SECs Public Reference
Room at 100 F Street, N.E., Washington, DC 20549. You
may obtain information on the operation of the Public Reference
Room by calling the SEC at
1-800-SEC-0330.
You may also obtain such reports from the SECs website at
www.sec.gov.
Our website is www.williams.com. We make available free of
charge through the Investors tab of our website our annual
report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after we electronically file such
material with, or furnish it to, the SEC. Our Corporate
Governance Guidelines, director independence standards, Code of
Ethics for Senior Officers, Board committee charters, and the
Williams Code of Business Conduct are also available on our
website. We will provide, free of charge, a copy of any of
our corporate documents listed above upon written request to our
corporate secretary at Williams, One Williams Center, MD 47,
Tulsa, Oklahoma 74172.
By order of the Board of Directors,
La Fleur Browne
Corporate Secretary
Tulsa, Oklahoma
April 7, 2011
63
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Using
a black ink pen, mark your votes
with an X as shown in this example.
Please do not write outside the
designated areas.
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x |
The Williams Companies, Inc.
Annual Meeting of Stockholders
May 19, 2011
11:00 a.m. Central time
One Williams Center
Tulsa, Oklahoma 74172
PLEASE SEE THE REVERSE SIDE FOR
VOTING INSTRUCTIONS.
You can vote by telephone or Internet
24 hours a day, 7 days a week.
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Annual Meeting Proxy Card |
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▼
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
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+ |
The Board of Directors recommends a vote FOR the election of each of the nominees listed below.
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1.
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Election of Directors:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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01 Alan S. Armstrong
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o
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o
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o
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02 Joseph R. Cleveland
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o
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o
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o
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03 Juanita H. Hinshaw
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o
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04 Frank T. MacInnis
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o
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05 Janice D. Stoney
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o
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06 Laura A. Sugg
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o
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The Board of Directors recommends a vote FOR
proposals 2 and 3.
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The Board of Directors recommends a vote FOR EVERY YEAR on proposal 4. |
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For
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Against
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Abstain
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1 Yr
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2 Yrs
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3 Yrs
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Abstain |
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2.
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Ratification of Ernst & Young LLP as auditors for 2011.
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o
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o
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o
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4. |
Advisory vote on the frequency of future advisory
votes on executive compensation.
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o
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o
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o
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3.
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Advisory vote on executive compensation.
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o
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5. |
To transact such other business as may properly
come before the annual meeting or any adjournment
of the meeting. |
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B Authorized Signatures - Sign and Date Here - This section must be completed for your vote to
be counted. |
The signer hereby revokes all proxies previously given by the signer to vote at said Annual
Meeting or any adjournments thereof. Note: Please sign exactly as name appears hereon . Joint
owners
should each sign. When signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title as such.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box. |
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/ / |
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▼
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
Proxy The Williams Companies, Inc.
Proxy Solicited on Behalf of the Board of Directors of Williams for the Annual Meeting of
Stockholders on May 19, 2011.
The undersigned stockholder of The Williams Companies, Inc. (Williams) hereby appoints ALAN
S. ARMSTRONG, DONALD R. CHAPPEL and JAMES J. BENDER, jointly and severally with full power of
substitution, as proxies to represent and to vote all of the shares of Williams Common Stock the
undersigned is entitled to vote at the Annual Meeting of Stockholders of Williams to be held on the
19th day of May, 2011, and at any and all adjournments thereof, on all matters coming before said
meeting.
THIS PROXY, WHEN PROPERLY EXECUTED AND TIMELY RETURNED, WILL BE VOTED AS INDICATED. IF NO VOTING
DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES AND IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON THE OTHER MATTERS REFERENCED ON THE REVERSE SIDE
HEREOF.
Voting Instructions
Votes by telephone or Internet must be received by 1:00 a.m. Central Time, on May 19, 2011.
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To Vote by Internet
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To Vote by Telephone
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To Vote by Mail |
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Go to the following web site:
WWW.ENVISIONREPORTS.COM/WMB.
Follow the steps outlined on the secured website.
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Call toll free 1-800-652-VOTE (8683) in the United
States or Canada any time on a touch tone
telephone.
Follow the instructions provided by the
recorded message.
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Mark, sign and date the proxy card.
Return the proxy card in the postage-paid
envelope provided.
If you vote by telephone or the Internet, please
DO NOT mail back this proxy card. |
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To participants in The Williams Investment Plus Plan: This proxy/voting instruction card
constitutes your voting instructions to the Trustee(s) of such Plan. Non-voted shares will be voted
in the same proportion on each issue as the Trustees votes those shares for which it receives
voting instructions from Participants. Your instructions must be completed prior to Monday, May 16,
2011 at 1:00 a.m. Central time.
THANK YOU FOR VOTING