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Halliburton Co · DEF 14A · For 5/18/99

Filed On 4/5/99 · SEC File 1-03492 · Accession Number 930661-99-727

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 4/05/99  Halliburton Co                    DEF 14A     5/18/99    1:33                                     Donnelley Rr & So..Co/FA

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Notice & Proxy                             33    177K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Annual Performance Pay Plan Directors' Restricted Stock Plan Directors' Retirement Plan Election of Directors Halliburton Company In their discretion, upon such other business as may properly come before the meeting Robert L. Crandall
1	1st Page
"	Halliburton Company
18	Annual Performance Pay Plan
20	Robert L. Crandall
30	Directors' Restricted Stock Plan
"	Directors' Retirement Plan
33	Item 1 -- . Election of Directors
"	Item 3 -- . In their discretion, upon such other business as may properly come before the meeting

DEF 14A 1st Page of 33 TOC Top Previous Next Bottom Just 1st

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

Halliburton Company
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

-------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

-------------------------------------------------------------------------

(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):

-------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

-------------------------------------------------------------------------

(5) Total fee paid:

-------------------------------------------------------------------------

[_] Fee paid previously with preliminary materials.

[_] 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.

(1) Amount Previously Paid:

-------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

-------------------------------------------------------------------------

(3) Filing Party:

-------------------------------------------------------------------------

(4) Date Filed:

-------------------------------------------------------------------------

Notes:

DEF 14A 2nd Page of 33 TOC 1st Previous Next Bottom Just 2nd

[LOGO OF HALLIBURTON COMPANY]

March 25, 1999

To Our Stockholders:

You are cordially invited to attend the Annual Meeting of Stockholders of
Halliburton Company which will be held on Tuesday, May 18, 1999, at 9:00 a.m.
in the Horchow Auditorium of the Dallas Museum of Art, 1717 North Harwood
Street, Dallas, Texas 75201.

At the meeting, as set forth in the accompanying Notice of Annual Meeting
and Proxy Statement, stockholders are being asked to elect a Board of
Directors of fourteen Directors to serve for the coming year and to ratify the
selection of Arthur Andersen LLP as independent accountants to examine the
financial statements and books and records of the Company for 1999.

It is very important that your shares are represented and voted at the
meeting. Accordingly, please sign, date and return the enclosed proxy card or
call the toll-free number indicated in the enclosed telephone voting
instructions. If you attend the meeting, you may vote in person even if you
have previously mailed a proxy card or voted by telephone. We would appreciate
your informing us on the proxy card if you expect to attend the meeting so
that we can provide adequate seating.

The continuing interest of our stockholders in the business of the Company
is appreciated and we hope many of you will be able to attend the Annual
Meeting.

Sincerely,

/s/ WILLIAM E. BRADFORD /s/ DICK CHENEY

William E. Bradford Dick Cheney
Chairman of the Board Chief Executive Officer

DEF 14A 3rd Page of 33 TOC 1st Previous Next Bottom Just 3rd

[LOGO OF HALLIBURTON COMPANY]

Notice of Annual Meeting of Stockholders

to be Held May 18, 1999

The Annual Meeting of Stockholders of HALLIBURTON COMPANY, a Delaware
corporation (the "Company"), will be held on Tuesday, May 18, 1999, at 9:00
a.m., in the Horchow Auditorium of the Dallas Museum of Art, 1717 North
Harwood Street, Dallas, Texas 75201, to consider and act upon the matters
discussed in the attached Proxy Statement as follows:

1. To elect fourteen (14) Directors to serve for the ensuing year and until
their successors shall be elected and shall qualify.

2. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as independent accountants to examine the financial
statements and books and records of the Company for the year 1999.

3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.

The Board of Directors has fixed Monday, March 22, 1999, at the close of
business, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and at any adjournment thereof. A Proxy
Statement is attached and incorporated herein by reference.

By order of the Board of Directors,

/s/ SUSAN S. KEITH

Susan S. Keith
Vice President and Secretary

March 25, 1999

----------------

Stockholders are urged to vote their shares as promptly as possible by
either (1) signing, dating and returning the enclosed proxy card or (2)
calling the toll-free number indicated in the enclosed telephone voting
instructions.

DEF 14A 4th Page of 33 TOC 1st Previous Next Bottom Just 4th

PROXY STATEMENT

GENERAL INFORMATION

The accompanying proxy is solicited by and on behalf of the Board of
Directors of Halliburton Company (the "Company"). By executing and returning
the enclosed proxy or by following the enclosed telephone voting instructions,
you authorize the persons named in the proxy to represent you and vote your
shares in connection with the matters set forth in the Notice of Annual
Meeting.

If you attend the meeting, you may, of course, vote in person. But, if you
are not present, your shares can be voted only if you have returned a properly
executed proxy or followed the telephone voting instructions. If you have
returned a properly executed proxy or followed the telephone voting
instructions, the related shares will be voted as you specify. If no
specification is made, the shares will be voted in accordance with the
recommendations of the Board of Directors. You may revoke the authorization
given in your proxy or telephone call at any time before the shares are voted
at the meeting.

The record date for determination of the stockholders entitled to vote at
the Annual Meeting is the close of business on March 22, 1999. The Company's
Common Stock, par value $2.50, is the only class of capital stock of the
Company that is outstanding. As of March 22, 1999, there were 440,337,421
shares of Common Stock outstanding. Each of the outstanding shares of Common
Stock is entitled to one vote on each matter submitted to the stockholders for
a vote at the meeting. A complete list of stockholders entitled to vote will
be kept at the Company's offices at the address specified below for ten days
prior to the Annual Meeting.

Votes cast by written proxy, telephone or in person at the Annual Meeting
will be counted by the persons appointed by the Company to act as election
inspectors for the meeting. Except as set forth below, the affirmative vote of
the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders. Shares for which a holder has elected to abstain on a matter
will count for purposes of determining the presence of a quorum and for
purposes of determining the outcome of such matter.

In the election of Directors, the candidates for election receiving the
highest number of affirmative votes of the shares entitled to be voted for
them (whether or not a majority of the shares present), up to the number of
Directors to be elected by those shares, will be elected; shares present but
not voting will be disregarded (except for quorum purposes) and will have no
legal effect.

The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held in street name which cannot be voted by a broker on certain
matters in the absence of instructions from the beneficial owner of the
shares) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome
of any matter as to which the broker has indicated in writing on the proxy
that it does not have discretionary authority to vote, however, such shares
will be treated as not present and not entitled to vote with respect to that
matter (even though those shares may be entitled to vote on other matters).

In accordance with the Company's confidential voting policy, no vote of any
stockholder, whether by written proxy, telephone or in person, will be
disclosed to the officers, Directors or employees of the Company, except (i)
as necessary to meet applicable legal requirements and to assert claims for
and defend claims against the Company, (ii) when disclosure is voluntarily
made or requested by the stockholder, (iii) when stockholders write comments
on proxy cards, or (iv) in the event of a proxy solicitation not approved and
recommended by the Board of Directors. The proxy solicitor, the election
inspectors and the tabulators of all proxies, ballots and voting tabulations
that identify stockholders are independent and are not employees of the
Company.

This Proxy Statement, form of proxy and telephone voting instructions are
being sent to stockholders on or about April 5, 1999. The Company's Annual
Report to Stockholders, including financial statements, for the fiscal year
ended December 31, 1998 accompanies this Proxy Statement. Such Annual Report
is not to be considered as a part of the proxy solicitation material or as
having been incorporated herein by reference.

The principal executive offices of the Company are located at 3600 Lincoln
Plaza, 500 N. Akard Street, Dallas, Texas 75201-3391.

DEF 14A 5th Page of 33 TOC 1st Previous Next Bottom Just 5th

ELECTION OF DIRECTORS

(Item 1)

Effective as of the consummation of the merger with Dresser Industries, Inc.
(the "Dresser Merger") on September 29, 1998 (the "Effective Date"), the
number of Directors constituting the Board of Directors of the Company was
increased from 10 to 14 and Messrs. William E. Bradford, Lawrence S.
Eagleburger, Ray L. Hunt, J. Landis Martin and Jay A. Precourt were elected as
Directors. Mr. Dale P. Jones, who served as a Director since 1988, retired
from the Board of Directors as of the Effective Date.

Fourteen Directors are to be elected to serve for the ensuing year and until
their successors are elected and qualify. All of the fourteen nominees
hereinafter named are presently Directors of the Company. It is intended that
the Common Stock represented by the proxies, in the absence of instructions to
the contrary, will be voted for the election as Directors of the fourteen
nominees or, if any such nominee shall be unwilling or unable to serve,
favorable and uninstructed proxies will be voted for a substitute nominee
designated by the Board of Directors, unless the Board of Directors, because
of the unavailability of a suitable substitute, reduces the number of
Directors to be elected. Each nominee has indicated approval of his or her
nomination and his or her willingness to serve if elected.

Information With Respect to Nominees for Director

ANNE L. ARMSTRONG, 71, Regent, Texas A&M University System;
Member, Board of Trustees, Center for Strategic and
International Studies; Member, National Security Advisory Board,
Department of Defense; former Chairman of the President's
Foreign Intelligence Advisory Board, 1981-1990; former
Ambassador to Great Britain; joined Halliburton Company Board in
1977; Chairman of the Health, Safety and Environment Committee
and member of the Management Oversight and the Nominating and
Corporate Governance Committees; Director of American Express
Company and Boise Cascade Corporation.
[PHOTO OF ARMSTRONG]

WILLIAM E. BRADFORD, 64, Chairman of the Board of the Company;
Chairman of the Board of Dresser Industries, Inc., 1996-1998;
Chief Executive Officer of Dresser Industries, Inc., 1995-1998;
President of Dresser Industries, Inc., 1992-1996; Chief
Operating Officer of Dresser Industries, Inc., 1992-1995;
President and Chief Executive Officer of Dresser-Rand Company, a
51% joint venture partnership, 1988-1992; Senior Vice President-
Operations of Dresser Industries, Inc., 1984-1992; joined
Halliburton Company Board in 1998; Director of Ultramar Diamond
Shamrock Corporation and Kerr-McGee Corporation.
[PHOTO OF BRADFORD]

RICHARD B. (DICK) CHENEY, 58, Chief Executive Officer of the
Company; Chairman of the Board and Chief Executive Officer of
the Company, 1997-1998; Chairman of the Board, President and
Chief Executive Officer of the Company, 1996-1997; President and
Chief Executive Officer of the Company, 1995; Senior Fellow,
American Enterprise Institute for Public Policy Research, 1993-
1995; United States Secretary of Defense, 1989-1993; Member,
United States House of Representatives, 1979-1989; joined
Halliburton Company Board in 1995; Director of Union Pacific
Corporation, The Procter & Gamble Company and Electronic Data
Systems Corporation; Member of the Board of Trustees, American
Enterprise Institute for Public Policy Research.
[PHOTO OF CHENEY]

DEF 14A 6th Page of 33 TOC 1st Previous Next Bottom Just 6th

LORD CLITHEROE, 69, Chairman, The Yorkshire Bank, PLC; Deputy
Chief Executive, The RTZ Corporation PLC, 1987-1989; Executive
Director, The RTZ Corporation PLC, 1968-1987; joined Halliburton
Company Board in 1987; Chairman of the Management Oversight
Committee and member of the Health, Safety and Environment and
the Nominating and Corporate Governance Committees.
[PHOTO OF CLITHEROE]

ROBERT L. CRANDALL, 63, Chairman Emeritus, AMR
Corporation/American Airlines, Inc. (engaged primarily in the
air transportation business); Chairman, President and Chief
Executive Officer, AMR Corporation and Chairman and Chief
Executive Officer, American Airlines, Inc. 1985-1998; President,
American Airlines, Inc., 1985-1995; joined Halliburton Company
Board in 1986; Chairman of the Audit Committee and member of the
Compensation and the Management Oversight Committees; Director
of MediaOne Group, Inc. and Director and non-executive Chairman
of Celestica, Inc.
[PHOTO OF CRANDALL]

CHARLES J. DIBONA, 67, President and Chief Executive Officer
(retired), American Petroleum Institute (a major petroleum
industry trade association), 1979-1997; joined Halliburton
Company Board in 1997; member of the Health, Safety and
Environment, the Nominating and Corporate Governance and the
Management Oversight Committees; Chairman of the Board of
Trustees, Logistics Management Institute.
[PHOTO OF DIBONA]

LAWRENCE S. EAGLEBURGER, 68, Senior Foreign Policy Advisor,
Baker, Donelson, Bearman & Caldwell (a Washington, D.C. law
firm); Chairman, International Commission on Holocaust Era
Insurance Claims; United States Secretary of State, Department
of State, 1992-1993; Acting Secretary of State, 1992; Deputy
Secretary of State, 1989-1992; joined Halliburton Company Board
in 1998; member of the Management Oversight and the Nominating
and Corporate Governance Committees; Director of Phillips
Petroleum Company, Stimsonite, Universal Corporation and COMSAT.
[PHOTO OF EAGLEBURGER]

W. R. HOWELL, 63, Chairman Emeritus, J.C. Penney Company, Inc.
(a major retailer); Chairman of the Board, J.C. Penney Company,
Inc., 1983-1996; Chief Executive Officer, J.C. Penney Company,
Inc., 1983-1995; joined Halliburton Company Board in 1991;
Chairman of the Compensation Committee and member of the
Management Oversight and the Audit Committees; Director of Exxon
Corporation, Warner-Lambert Company, Bankers Trust Company,
Bankers Trust New York Corporation, The Williams Companies, Inc.
and Central and South West Corporation.
[PHOTO OF HOWELL]

RAY L. HUNT, 55, For more than five years, Chairman of the
Board and Chief Executive Officer, Hunt Oil Company (oil and gas
exploration and development); Chairman of the Board, Chief
Executive Officer and President, Hunt Consolidated, Inc. and
Chairman of the Board, Chief Executive Officer and President,
RRH Corporation; joined Halliburton Company Board in 1998;
member of the Compensation and the Management Oversight
Committees; Director of Electronic Data Systems Corporation,
PepsiCo, Inc., Ergo Science Incorporated, Security Capital Group
Incorporated and Federal Reserve Bank of Dallas.
[PHOTO OF HUNT]

DELANO E. LEWIS, 60, President and Chief Executive Officer
(retired), National Public Radio (produces and distributes
original programming and provides support to member stations),
1994-1998; President and Chief Executive Officer, C&P Telephone
Company, a subsidiary of Bell Atlantic Corporation, 1990-1993;
joined Halliburton Company Board in 1996; member of the
Compensation, the Health, Safety and Environment and the
Management Oversight Committees; Director of Colgate-Palmolive
Company, Eastman Kodak Company, BET Holdings, Inc. and the
Poynter Institute.
[PHOTO OF LEWIS]

DEF 14A 7th Page of 33 TOC 1st Previous Next Bottom Just 7th

J. LANDIS MARTIN, 53, For more than five years, President and
Chief Executive Officer, NL Industries, Inc. (a manufacturer and
marketer of titanium dioxide pigments) and Chairman, Titanium
Metals Corporation (an integrated producer of titanium metals);
Chief Executive Officer, Titanium Metals Corporation, since
1995; Chairman of the Board and Chief Executive Officer, Baroid
Corporation (and its predecessor), acquired by Dresser
Industries, Inc. in 1994, 1990-1994; joined Halliburton Company
Board in 1998; member of the Audit and the Management Oversight
Committees; Director of NL Industries, Inc., Titanium Metals
Corporation, Tremont Corporation and Apartment Investment and
Management Corporation.
[PHOTO OF MARTIN]

JAY A. PRECOURT, 61, Chairman of the Board, Wyoming Refining
Company; Vice Chairman and Chief Executive Officer, Tejas Gas
Corporation, 1986-1999; President, Tejas Gas Corporation, 1996-
1998; joined Halliburton Company Board in 1998; member of the
Health, Safety and Environment and the Management Oversight
Committees; Chairman of the Board of Founders Funds, Inc. and
Director of the Timken Company.

[PHOTO OF PRECOURT]
C. J. SILAS, 66, Chairman of the Board and Chief Executive
Officer (retired), Phillips Petroleum Company (engaged in
exploration and production of crude oil, natural gas and natural
gas liquids on a worldwide basis, the manufacture of plastics
and petrochemicals and other activities), 1985-1994; joined
Halliburton Company Board in 1993; member of the Compensation,
the Audit and the Management Oversight Committees; Director of
Reader's Digest Association, Inc.

[PHOTO OF SILAS]
RICHARD J. STEGEMEIER, 70, Chairman Emeritus, Unocal
Corporation (an integrated petroleum company); Chairman of the
Board, Unocal Corporation, 1989-1995; Chief Executive Officer,
Unocal Corporation, 1988-1994; President, Unocal Corporation,
1985-1992; Chief Operating Officer, Unocal Corporation, 1985-
1988; joined Halliburton Company Board in 1994; Chairman of the
Nominating and Corporate Governance Committee and member of the
Audit and the Management Oversight Committees; Director of
Foundation Health Systems, Inc., Northrop Grumman Corporation,
Sempra Energy and Montgomery Watson, Inc.
[PHOTO OF STEGEMEIER]

DEF 14A 8th Page of 33 TOC 1st Previous Next Bottom Just 8th

Stock Ownership of Certain Beneficial Owners and Management

The following table sets forth information with respect to persons or groups
who, to the Company's knowledge (based on information contained in Schedules
13G filed with the Securities and Exchange Commission with respect to
beneficial ownership at December 31, 1998), own or have the right to acquire
more than five percent of the Common Stock of the Company.

[Download Table]

Amount and
Nature of Percent
Name and Address Beneficial of
of Beneficial Owner Ownership Class
------------------- ---------- -------

FMR Corp. ............................................... 46,213,273(1) 10.511%
82 Devonshire Street
Boston, MA 02109
Barrow, Hanley, Mewhinney & Strauss, Inc. ............... 22,045,960(2) 5.00%
One McKinney Plaza
3232 McKinney Avenue, 15th Floor
Dallas, TX 75204-2429

--------
(1) The number of shares reported includes 40,906,307 shares beneficially
owned by Fidelity Management & Research Company, 4,628,866 shares owned by
Fidelity Management Trust Company and 678,100 shares held by Fidelity
International Limited. FMR Corp., through control of Fidelity Management &
Research Company and Fidelity Management Trust Company, has sole
dispositive power over the shares with the exception of those held
beneficially by Fidelity International Limited. FMR Corp. has sole power
to vote or to direct the vote of 3,193,666 shares of Common Stock.
(2) Barrow, Hanley, Mewhinney & Strauss, Inc. has sole power to dispose of all
such shares, sole power to vote or to direct the vote of 4,169,700 shares
and shared power to vote or direct the vote of 17,876,260 shares.

DEF 14A 9th Page of 33 TOC 1st Previous Next Bottom Just 9th

The following table sets forth, as of March 22, 1999, the amount of Company
Common Stock owned beneficially by each Director and nominee for Director,
each of the executive officers named in the Summary Compensation Table on page
19 and all Directors, nominees for Director and executive officers as a group.

[Download Table]

Amount and Nature of
Beneficial Ownership
--------------------------------
Shared
Sole Voting Voting or
Name of Beneficial Owner or and Invest- Investment Percent
Number of Persons in Group ment Power Power(1) of Class
--------------------------- ----------- ---------- --------

Anne L. Armstrong............................. 4,400 *
William E. Bradford(3)........................ 472,033 *
Richard B. Cheney(3).......................... 969,667 *
Lord Clitheroe................................ 3,000 *
Lester L. Coleman(3).......................... 177,104 *
Robert L. Crandall............................ 3,400 *
Charles J. DiBona............................. 400 *
Lawrence S. Eagleburger(3).................... 9,756 *
W. R. Howell.................................. 2,300 *
Ray L. Hunt(3)................................ 70,446 52,284(2) *
Dale P. Jones (3)............................. 396,102 *
David J. Lesar(3)............................. 391,782 *
Ken R. LeSuer(3).............................. 379,228 3,772(2) *
Delano E. Lewis............................... 1,500 *
J. Landis Martin(3)........................... 91,145 *
Jay A. Precourt(3)............................ 7,809 *
C. J. Silas................................... 2,400 *
Richard J. Stegemeier......................... 2,000 2,000(2) *
Donald C. Vaughn(3)........................... 193,527 *
Shares owned by all current Directors,
nominees for Director and
executive officers as a group (25
persons)(3).................................. 3,640,797 58,056 *

--------
* Less than 1% of shares outstanding.
(1) The Halliburton Stock Fund, an investment fund established under the
Halliburton Company Employee Benefit Master Trust to hold Company Common
Stock for certain of the Company's profit sharing, retirement and savings
plans (the "Plans"), held 3,286,282 shares of Company Common Stock at
March 12, 1999. Two executive officers not named in the above table have
beneficial interests in the Halliburton Stock Fund. Shares of Company
Common Stock held in the Halliburton Stock Fund are not allocated to any
individual's account and an aggregate 2,218 shares which might be deemed
to be beneficially owned as of March 12, 1999 by such unnamed executive
officers are not included in the table above. Shares held in the
Halliburton Stock Fund are voted by the Trustee, State Street Bank and
Trust Company, in accordance with voting instructions from the
participants. Under the terms of the Plans, a participant has the right,
from time to time, to determine whether up to 15% of his account is
invested in the Halliburton Stock Fund or in alternative investments
permitted by the Plans. The Trustee, however, determines when sales or
purchases are to be made.
Mr. Martin has a beneficial interest in the NL Industries, Inc. Savings
Plan. Shares of Company Common Stock held by that plan are not allocated to
any individual's account and, accordingly, 2,373 shares which might be
deemed to be beneficially owned by Mr. Martin as of February 18, 1999 are
not included in the above table.
(2) Mr. Hunt holds 52,284 shares as the trustee of trusts established for the
benefit of his children. Mr. Hunt disclaims beneficial ownership of 17,428
shares owned by another trust established for one of his children as to
which he is not the trustee. 3,772 shares are held in joint tenancy by Mr.
LeSuer and his wife. Mr. LeSuer and his wife share voting and investment
power with respect to such shares. Mr. Stegemeier and his wife hold 2,000
shares as co-trustees of a family trust and share voting and investment
power with respect to such shares.
(3) Included in the table are shares of Common Stock that may be purchased
pursuant to outstanding stock options (and, in the case of Messrs.
Bradford and Vaughn, related restricted incentive stock awards under
certain Dresser Industries, Inc. stock compensation plans) within 60 days
of the date hereof for the following: Mr. Bradford-270,605; Mr. Cheney-
726,667; Mr. Coleman-139,334; Mr. Eagleburger-499; Mr. Hunt-499; Mr.
Jones-320,002; Mr. Lesar-185,336; Mr. LeSuer-303,001; Mr. Martin-499; Mr.
Precourt-499; Mr. Vaughn-112,429 and five unnamed executive officers-
282,168. Until such time as the options are exercised, the aforesaid
individuals will neither have voting nor investment power with respect to
the underlying shares of Common Stock but only have the right to acquire
beneficial ownership thereof through exercise of their respective options.

DEF 14A 10th Page of 33 TOC 1st Previous Next Bottom Just 10th

CORPORATE GOVERNANCE

The Board of Directors believes that the primary responsibility of Directors
is to provide effective governance over the Company's affairs for the benefit
of its stockholders. That responsibility includes:

. Evaluating the performance of the Chief Executive Officer and taking
appropriate action, including removal, when warranted;

. Selecting, evaluating and fixing the compensation of senior management
of the Company and establishing policies regarding the compensation of
other members of management;

. Reviewing succession plans and management development programs for
members of senior management;

. Reviewing and approving periodically long-term strategic and business
plans and monitoring corporate performance against such plans;

. Adopting policies of corporate conduct, including compliance with
applicable laws and regulations and maintenance of accounting, financial
and other controls, and reviewing the adequacy of compliance systems and
controls;

. Evaluating periodically the overall effectiveness of the Board; and

. Deciding on matters of corporate governance.

In 1997, the Board adopted Guidelines to assist it in the exercise of its
responsibilities. Effective as of the Dresser Merger, the Guidelines were
revised as set forth below in order to reflect the management and
organizational changes resulting therefrom. These Guidelines are in addition
to and are not intended to change or interpret any Federal or state law or
regulation, including the Delaware General Corporation Law, or the Certificate
of Incorporation or By-laws of the Company. The Guidelines are subject to
modification from time to time by the Board of Directors.

Guidelines on Governance
(Revised as of September 29, 1998)

Operation of The Board; Meetings

1. Chairman of the Board; Chief Executive Officer. The Board believes that,
under normal circumstances, the Chief Executive Officer of the Company should
also serve as the Chairman of the Board. However, given the current
circumstances of the strategic combination of the Company and Dresser
Industries, Inc. and the need to integrate the two companies' businesses, the
Board believes it is in the best interests of the Company at the present time
for the positions of Chief Executive Officer and Chairman of the Board to be
split and for the office of Chairman of the Board to be held by the former
Chairman and Chief Executive Officer of Dresser. The Chief Executive Officer
is responsible to the Board for the overall management and functioning of the
Company. The Chairman of the Board will preside at meetings of the Board of
Directors and stockholders and have such other duties as may be prescribed,
from time to time, by the Board of Directors.

The Chairman of the Management Oversight Committee, which is composed of all
of the outside Directors, will function as the lead director when such
Committee meets in executive session outside the presence of the Chief
Executive Officer and other Company personnel and will serve as the interface
between that Committee and the Chief Executive Officer in communicating the
matters discussed during the executive sessions.

2. Executive Sessions of Outside Directors. The Management Oversight
Committee is composed of all of the outside Directors and meets in executive
session outside the presence of the Chief Executive Officer and other Company
personnel during a portion of each of its five regular meetings per year. In
addition, any member of the Management Oversight Committee may request the
Committee Chairman to call an executive session of such Committee at any time.

DEF 14A 11th Page of 33 TOC 1st Previous Next Bottom Just 11th

Each December, the Management Oversight Committee will meet in executive
session to evaluate the performance of the Chief Executive Officer. In
evaluating the Chief Executive Officer, such Committee takes into
consideration the executive's performance in both qualitative and quantitative
areas, such as: leadership and vision; integrity; keeping the Board informed
on matters affecting the Company and its operating units; performance of the
business (including such measurements as total shareholder return and
achievement of financial objectives and goals); development and implementation
of initiatives to provide long-term economic benefit to the Company;
accomplishment of strategic objectives and development of management. The
evaluation will be communicated to the Chief Executive Officer by the Chairman
of the Management Oversight Committee and will be used by the Compensation
Committee in the course of its deliberations when considering the Chief
Executive Officer's compensation for the ensuing year.

3. Regular Attendance of Non-Directors at Board Meetings. The Chief
Financial Officer and the General Counsel will be present at all times during
Board meetings, except where there is a specific reason for one or both of
them to be excluded. In addition, the Chairman of the Board may invite one or
more members of management to be in regular attendance at Board meetings and
may include other officers and employees from time to time as appropriate to
the circumstances.

4. Frequency of Board Meetings. The Board has five regularly scheduled
meetings per year. Special meetings are called as necessary. It is the
responsibility of the Directors to attend the meetings.

Long-term strategic and business plans will be reviewed annually at one of
the Board's regularly scheduled meetings.

5. Board Access to Senior Management. Directors have open access to the
Company's management, subject to reasonable time constraints. In addition,
senior management of the Company routinely attend Board and Committee meetings
and they and other managers frequently brief the Board and the Committees on
particular topics. The Board encourages senior management to bring managers
into Board or Committee meetings and other scheduled events who (a) can
provide additional insight into matters being considered or (b) represent
managers with future potential whom senior management believe should be given
exposure to the members of the Board.

6. Selection of Agenda Items for Board Meetings. The Chairman of the Board
and the Chief Executive Officer jointly establish the agenda for each Board
meeting, although other Board members are free to suggest items for inclusion
on the agenda. Each Director is free to raise at any Board meeting subjects
that are not on the agenda for that meeting.

7. Board/Committee Forward Agenda. A forward agenda of matters requiring
recurring and focused attention by the Board and each Committee will be
prepared and distributed prior to the beginning of each calendar year in order
to ensure that all required actions are taken in a timely manner and are given
adequate consideration.

8. Information Flow; Pre-meeting Materials. In advance of each Board or
Committee meeting, a proposed agenda will be distributed to each member. In
addition, to the extent feasible or appropriate, information and data
important to the members' understanding of the matters to be considered,
including background summaries of presentations to be made at the meeting,
will be distributed prior to the meeting. Directors also routinely receive
monthly financial statements, earnings reports, press releases, analyst
reports and other information designed to keep them informed of the material
aspects of the Company's business, performance and prospects.

Board Structure

1. Majority of the Members of the Board Must Be Independent Directors. The
Board believes that as a matter of policy a majority of the members of the
Board should be independent Directors. A Director will be considered
independent if he or she: (a) has not been employed by the Company or an
affiliate in an executive

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capacity; (b) is not, and is not an employee of a company or firm that is, a
significant* advisor or consultant to the Company or its affiliates; (c) is
not an employee or beneficial owner of more than 10% of a significant*
customer or supplier of the Company or its affiliates; (d) does not have a
significant* personal services contract(s) with the Company or its affiliates;
(e) is not affiliated as an employee with a tax-exempt entity that receives
significant contributions from the Company or its affiliates; (f) is not a
spouse, parent, sibling or child of an officer or former officer of the
Company or one of its affiliates; and (g) is not part of an interlocking
directorate in which the Chief Executive Officer or another executive officer
of the Company serves on the board of another corporation that employs the
Director. (* "Significant" means a business relationship which would be
required to be disclosed under SEC rules.)

The definition of independence and compliance with the foregoing policy will
be reviewed periodically by the Nominating and Corporate Governance Committee.

Furthermore, the Board believes that employee Directors should number not
more than two. While such number is not an absolute limitation, other than
with respect to the Chief Executive Officer, who should at all times be a
member of the Board, employee Directors should be limited only to those
officers whose positions or potential make it appropriate for them to sit on
the Board.

2. Size of the Board. The Board currently has 14 members. The By-laws
prescribe that the number of Directors will not be less than eight nor more
than 20.

3. Service of Former Chief Executive Officers and Other Former Employees on
the Board. Employee Directors shall retire from the Board at the time of their
retirement as an employee unless continued service as a Director is requested
and approved by the Board.

4. Annual Election of All Directors. As provided in the Company's By-laws,
all Directors are elected annually.

5. Board Membership Criteria. Candidates nominated for election or
reelection to the Board of Directors should possess the following
qualifications:

. Personal characteristics:

. highest personal and professional ethics, integrity and values;
. an inquiring and independent mind; and
. practical wisdom and mature judgment.

. Broad training and experience at the policy-making level in business,
government, education or technology.

. Expertise that is useful to the Company and complementary to the background
and experience of other Board members, so that an optimum balance of
members on the Board can be achieved and maintained.

. Willingness to devote the required amount of time to carrying out the
duties and responsibilities of Board membership.

. Commitment to serve on the Board over a period of several years to develop
knowledge about the Company's principal operations.

. Willingness to represent the best interests of all stockholders and
objectively appraise management performance.

. Involvement only in activities or interests that do not create a conflict
with the Director's responsibilities to the Company and its stockholders.

The Nominating and Corporate Governance Committee is responsible for
assessing the appropriate mix of skills and characteristics required of Board
members in the context of the perceived needs of the Board at a given

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point in time and shall periodically review and update the criteria as deemed
necessary. Diversity in personal background, race, gender, age and nationality
for the Board as a whole may be taken into account in considering individual
candidates.

The Nominating and Corporate Governance Committee will evaluate the
qualifications of each Director candidate against the foregoing criteria in
connection with its recommendation to the Board concerning his or her
nomination for election or reelection as a Director.

6. Selection of Directors. The Board is responsible for nominating members
to the Board and for filling vacancies on the Board that may occur between
annual meetings of stockholders. The Nominating and Corporate Governance
Committee, with direct input from the Chief Executive Officer and other Board
members, is responsible for identifying and screening candidates for Board
membership.

7. Director Retirement. The Nominating and Corporate Governance Committee,
in consultation with the Chief Executive Officer, will review each Director's
continuation on the Board annually in connection with its recommendation to
the Board concerning his or her nomination for election or reelection as a
Director.

It is the policy of the Board that each non-employee Director shall retire
from the Board immediately prior to the annual meeting of stockholders
following his or her seventy-second birthday. Employee Directors shall retire
at the time of their retirement from employment with the Company unless
continued service as a Director is approved by the Board.

8. Director Compensation Review. It is appropriate for senior management of
the Company to report periodically to the Compensation Committee on the status
of the Company's Director compensation practices in relation to other
companies of comparable size and the Company's competitors.

Changes in Director compensation, if any, should come upon the
recommendation of the Compensation Committee, but with full discussion and
concurrence by the Board.

9. Conflicts of Interest. If an actual or potential conflict of interest
develops because of a change in the business operations of the Company or a
subsidiary, or in a Director's circumstances (for example, significant and
ongoing competition between the Company and a business with which the Director
is affiliated), the Director should report such matter immediately to the
Chairman of the Board for evaluation. A significant conflict must be resolved
or the Director should resign.

If a Director has a personal interest in a matter before the Board, the
Director shall disclose the interest to the full Board and excuse himself or
herself from participation in the discussion and shall not vote on the matter.

Committees of the Board

1. Number and Types of Committees. A substantial portion of the analysis and
work of the Board is done by standing Board Committees. A Director is expected
to participate actively in the meetings of each Committee to which he or she
is appointed.

The Board has established the following standing Committees: Management
Oversight; Audit; Compensation; Nominating and Corporate Governance; and
Health, Safety and Environment. Each Committee's charter is to be reviewed
periodically by the Committee and the Board.

2. Composition of Committees. It is the policy of the Board that only non-
employee Directors serve on Board Committees.

A Director who is part of an interlocking directorate (i.e. one in which the
Chief Executive Officer or another executive officer of the Company serves on
the board of another corporation that employs the Director) may not serve on
the Compensation Committee. The composition of the Compensation Committee will
be reviewed annually to ensure that each of its members meet the criteria set
forth in applicable SEC and IRS rules and regulations.

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3. Assignment and Rotation of Committee Members. The Nominating and
Corporate Governance Committee, with direct input from the Chief Executive
Officer, recommends to the Board the membership of the various Committees and
their Chairmen and the Board approves the Committee assignments. In making its
recommendations to the Board, such Committee takes into consideration the need
for continuity, subject matter expertise, tenure and the desires of individual
Board members.

4. Frequency and Length of Committee Meetings. The Board and Committee
meeting schedule for each year is submitted and approved by the Board in
advance. The number of regularly scheduled meetings per year are as follows:
Management Oversight--5; Audit--3; Compensation--3; Nominating and Corporate
Governance--2; and Health, Safety and Environment--2. In addition, the
Chairman of a Committee may call a special meeting at any time if deemed
advisable. Accommodations will be made on a case by case basis should a
Committee agenda require more time than initially scheduled.

5. Committee Agendas; Reports to the Board. Appropriate members of
management and staff will prepare draft agenda and related background
information for each Committee meeting which, to the extent desired by the
relevant Committee Chairman, will be reviewed and approved by such Chairman in
advance of distribution to the other members of the Committee. A forward
agenda of recurring topics to be discussed during the year will be prepared
for each Committee and furnished to all Directors. Each Committee member is
free to suggest items for inclusion on the agenda and to raise at any
Committee meeting subjects that are not on the agenda for that meeting.

Reports on each Committee meeting (other than Management Oversight Committee
meetings) are made to the full Board. All Directors are furnished copies of
each Committee's minutes.

Other Board Practices

1. Director Orientation. It is the sense of the Board that an orientation
program be developed for new Directors which will include comprehensive
information about the Company's business and operations; general information
about the Board and its Committees, including a summary of Director
compensation and benefits; and a review of Director duties and
responsibilities. Some of such topics will be included in a Director's
handbook and others will be covered in meetings with key executives.

2. Board Interaction With Institutional Investors and Other
Stakeholders. The Board believes that it is senior management's responsibility
to speak for the Company. Individual Board members may, from time to time,
meet or otherwise communicate with outside constituencies that are involved
with the Company. In those instances, however, it is expected that Directors
will do so only with the knowledge of senior management and, absent unusual
circumstances, only at the request of senior management.

3. Periodic Review of These Guidelines. The operation of the Board of
Directors is a dynamic and evolving process. As such these Guidelines will be
reviewed periodically by the Nominating and Corporate Governance Committee and
any recommended revisions will be submitted to the full Board for action
thereon.

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THE BOARD OF DIRECTORS AND STANDING COMMITTEES OF DIRECTORS

The Board of Directors of the Company has standing Audit; Compensation;
Nominating and Corporate Governance; Health, Safety and Environment; and
Management Oversight Committees. Each of the standing Committees is comprised
entirely of outside Directors, none of whom is an employee or former employee
of the Company. During the last fiscal year, the Board of Directors met on 9
occasions, the Audit Committee met on 3 occasions, the Compensation Committee
met on 4 occasions, the Nominating and Corporate Governance Committee met on 2
occasions, the Health, Safety and Environment Committee met on 2 occasions,
and the Management Oversight Committee met on 5 occasions. Except for Lawrence
S. Eagleburger, no member of the Board attended fewer than 75 percent of the
aggregate number of meetings of the Board and the Committees on which he or
she served during the last fiscal year.

Audit Committee

The Audit Committee has, among other things, responsibility for recommending
the appointment of independent auditors to the Board of Directors; reviewing
the scope of the independent auditors' examination and the scope of activities
of the internal audit department; reviewing the Company's financial policies
and accounting systems and controls; and approving and ratifying the duties
and compensation of the independent auditors, both with respect to audit and
non-audit services. The Committee also reviews the Company's compliance with
its Code of Business Conduct. The Committee meets separately from time to time
with the independent auditors and with members of the internal audit staff,
outside the presence of Company management or other employees, to discuss
matters of concern, to receive recommendations or suggestions for change and
to exchange relevant views and information.

Compensation Committee

Duties of the Compensation Committee include developing and approving an
overall executive compensation philosophy consistent with corporate objectives
and stockholder interests; acting as a salary and promotion committee with
respect to certain officers of the Company and its subsidiaries and
affiliates; establishing annual performance criteria and reward schedules
under the Company's Annual Performance Pay Plan and certifying the performance
level achieved and reward payments at the end of each plan year; approving any
other incentive or bonus plans applicable to certain officers of the Company's
subsidiaries and affiliates; administering awards under the Company's 1993
Stock and Long-Term Incentive Plan and Senior Executives' Deferred
Compensation Plan; approving agreements or arrangements relating to the terms
of employment, continued employment or termination of employment for certain
officers of the Company and its subsidiaries and affiliates; acting as a
committee for administration of other forms of non-salary compensation; and
reviewing periodically the Company's Director compensation practices and
recommending to the Board any changes thereto.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee periodically reviews and
updates the criteria for Board membership and evaluates the qualifications of
each Director candidate against such criteria; assesses the appropriate mix of
skills and characteristics required of Board members; identifies and screens
candidates for Board membership; establishes procedures whereby individuals
may be recommended by stockholders for consideration by the Committee as
possible candidates for election to the Board; reviews annually each
Director's continuation on the Board and recommends to the Board a slate of
Director nominees for election at the Annual Meeting of Stockholders;
recommends candidates to fill vacancies on the Board; reviews periodically the
status of each Director to assure compliance with the Board's policy that at
least a majority of Directors meet the Board's definition of "independent
Director"; recommends members to serve on the standing

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Committees of the Board and the Chairmen thereof; and reviews periodically the
corporate governance guidelines adopted by the Board of Directors and
recommends revisions thereto as deemed appropriate.

The Nominating and Corporate Governance Committee will consider qualified
nominees recommended by stockholders who may submit recommendations to the
Committee in care of the Vice President and Secretary at the address of the
Company set forth on page 1 of this Proxy Statement. Stockholder nominations
must be submitted prior to year end and must be accompanied by a description
of the qualifications of the proposed candidate and a written statement from
the proposed candidate that he or she is willing to be nominated and desirous
of serving, if elected.

Nominations by stockholders may also be made at an Annual Meeting of
Stockholders in the manner provided in the Company's By-laws. The By-laws
provide that a stockholder of the Company entitled to vote for the election of
Directors may make nominations of persons for election to the Board at a
meeting of stockholders by complying with required notice procedures. Such
nominations shall be made pursuant to written notice to the Secretary, which
must be received at the principal executive offices of the Company not less
than ninety (90) days prior to the anniversary date of the immediately
preceding Annual Meeting of Stockholders. The notice shall set forth (a) as to
each person the stockholder proposes to nominate for election or re-election
as a Director, (i) the name, age, business address and residence address of
the person, (ii) the principal occupation or employment of the person, (iii)
the class and number of shares of capital stock of the Company that are
beneficially owned by the person, and (iv) all other information relating to
the person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended; and (b) as to the stockholder giving the notice, (i)
the name and record address of the stockholder, and (ii) the class and number
of shares of capital stock of the Company that are beneficially owned by the
stockholder. The Company may require any proposed nominee to furnish such
other information as may reasonably be required by the Company to determine
the eligibility of such proposed nominee to serve as a Director of the
Company. At any meeting of stockholders, the presiding officer may disregard
the purported nomination of any person not made in compliance with the above-
specified procedures.

Health, Safety and Environment Committee

The Health, Safety and Environment Committee has responsibility for
reviewing and assessing the Company's health, safety and environmental
policies and practices and proposing modifications or additions thereto as
needed; overseeing the communication and implementation of such policies
throughout the Company; reviewing annually the health, safety and
environmental performance of the Company's operating units and their
compliance with applicable policies and legal requirements; and identifying,
analyzing and advising the Board on health, safety and environmental trends
and related emerging issues.

Management Oversight Committee

The Management Oversight Committee has responsibility for evaluating the
performance of the Chief Executive Officer of the Company; reviewing
succession plans for senior management of the Company and its major operating
units; evaluating management development programs and activities; and
reviewing other internal matters of broad corporate significance.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The following persons served as members of the Compensation Committee during
1998: Robert L. Crandall, W. R. Howell, Delano E. Lewis, C. J. Silas and Ray
L. Hunt (September 29-December 31, 1998), none of whom is an officer or former
officer of the Company or its subsidiaries or had a relationship with the
Company or its subsidiaries requiring director interlock or insider
participation disclosure.

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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's primary mission is to enhance long-term shareholder value by
providing a broad spectrum of high quality services and related products
within the energy services, engineering and construction and equipment
manufacturing business segments in which the Company operates. The
Compensation Committee of Directors (the "Committee") believes that the
Company's total compensation package for executives should be linked
principally to increased shareholder value and to measures which drive
shareholder value.

The Committee has responsibility for overseeing the compensation program for
the members of the Executive Committee of the Company (composed at the end of
1998 of the four most senior executive officers) and other senior officers of
the Company and its business units.

Overall Executive Compensation Philosophy

The overriding objective of the total compensation package for senior
executives is to emphasize the enhancement of shareholder value. Beyond this,
the Committee's priorities are to establish and maintain competitive executive
compensation programs that enable the Company to attract, retain, and motivate
the high caliber executives required for the success of the business. In
determining what it deems to be appropriate types and amounts of compensation
for executive officers, the Committee consults with outside compensation
consultants and reviews independent compensation data.

In the design and administration of executive compensation programs, the
Committee refers to, but does not necessarily target, current market levels at
the 50th percentile. In doing so, the Committee considers the competitive
market data for two comparator groups: (i) specific peer companies within the
energy services, engineering and construction and equipment manufacturing
industries, and (ii) similarly sized companies within general industry which,
in the Committee's opinion, provide the most comparable references for the
Company's senior executive positions. Regression analysis is used in assessing
all market data to mitigate the impact of company size on compensation levels.

The Committee considers total compensation, as well as each component of the
compensation package, in determining actual compensation levels. The total
compensation package is expected in most instances to result in payments at
market levels, given acceptable corporate and/or business unit performance,
and above market levels, given outstanding performance.

The Committee believes its objectives can be optimized by providing
executives with a compensation package that consists of a cash base salary, a
rewards-oriented compensation program aligned with shareholder value creation,
stock-based awards and supplemental retirement benefits.

Compensation Considerations Related to the Dresser Merger

Anticipating the increase in scope and responsibilities for executives who
would become the management team for the Company after the merger with
Dresser, the Committee sought outside compensation expertise to advise it on
appropriate compensation packages for the new organization. The Committee
considered the consultant's recommendations and concluded that the Company's
current executive compensation philosophy, which resulted in the design of the
existing executive compensation programs, would remain viable and competitive
for the new organization, but that the comparable references for competitive
market data would need to be changed to reflect a much larger company
following the merger. For senior executive officers, a new set of general
industry companies were selected as comparable on the basis of their size and
their superior performance as measured by 5-year total shareholder return and
1- and 5-year return on capital. Senior officer positions within the Company's
business units were compared to specific peer companies in the energy
services, engineering and construction and equipment manufacturing industries.

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Compensation Arrangement For Chief Executive Officer

In 1995, the Company entered into an agreement with Mr. Cheney covering the
terms of his employment by the Company. Mr. Cheney's employment agreement,
which was approved by the Board of Directors and the Committee, provides for a
total compensation package which reflects the Company's objectives of aligning
significant compensation opportunity with the interests of stockholders and
building executive stock ownership. Mr. Cheney's employment agreement with the
Company is summarized beginning on page 23 of this Proxy Statement.

Base Salary

Ordinarily, base salaries for the executive officers, including Mr. Cheney,
are reviewed each December by the Committee. In 1998, executive officer base
salaries were reviewed mid-year in anticipation of the Dresser Merger.
Adjustments to base salaries for executive officers were made effective
October 1, 1998, following the completion of the merger. In addition to
considering market comparisons in making salary decisions, the Committee
exercised discretion and judgment based on the following factors: the
executive's level of responsibility in the new organization, experience in
his/her role, and equity issues relating to pay for other Company executives,
as well as external factors involving competitive positioning, projected
overall corporate performance, and general economic conditions. No specific
formula is applied to determine the weight of each factor.

Mr. Cheney's base salary for 1998 was increased to $1.150 million beginning
January 1, 1998. On October 1, 1998 Mr. Cheney's annual base salary was
increased to $1.283 million to reflect expanded duties and responsibilities of
the new organization. In determining Mr. Cheney's base salary, the Committee
considered each of the above factors, although primary consideration was given
to his individual contributions to the Company. The Committee's action
increasing Mr. Cheney's base salary acknowledges his strong leadership in
guiding the Company through a successful merger, positioning the Company for
long term financial stability, and the successful undertaking of various
initiatives to achieve the synergies of the combined organization and to
better align the business units and reduce overhead costs.

Annual Performance Pay Plan

As a means of strengthening the link between total cash compensation and the
Company's performance, effective January 1, 1995, the Committee adopted an
intermediate term reward-oriented program (the "Annual Performance Pay Plan")
based on cash value added ("CVA"). CVA measures the difference between after
tax cash income and a capital charge based upon the Company's weighted average
cost of capital to determine the amount of value, in terms of cash flow, added
to the business. CVA has been demonstrated to provide a close correlation to
total shareholder return; therefore, incentive awards are closely linked to
the improvement of shareholder value.

At the beginning of each plan year, the Committee establishes a reward
schedule which aligns given levels of CVA performance beyond a threshold level
with reward opportunities, such that the level of achievement of annual CVA
performance will determine the amount of incentive compensation payable to a
participant. In order to maximize the link between the compensation earned
under the Annual Performance Pay Plan and shareholder value creation and to
focus executives' attention on a time frame longer than one year, only one-
half of the bonus earned in the current year is paid in cash. The remaining
one-half of the bonus is converted into Company Common Stock equivalents and
paid in cash in annual installments in each of the next two years, each
installment based on the then value of one-half the stock equivalents.

Officers of the Company and its business units and certain senior managers
were eligible to participate in the Annual Performance Pay Plan during 1998.
In 1998, consolidated CVA performance did not meet the target level
established by the Committee and, accordingly, Messrs. Cheney, Coleman, Jones,
Lesar, and LeSuer earned no incentive award under the provisions of the Annual
Performance Pay Plan. Messrs. Bradford and Vaughn did

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not participate in the Annual Performance Pay Plan during 1998, but rather in
Dresser's annual incentive plan, which plan's 1998 performance goals were
approved by Dresser's board prior to the Dresser Merger. The bonuses earned by
Messrs. Bradford and Vaughn under the Dresser annual incentive plan are shown
in the Summary Compensation Table.

Special Bonus. In December 1998, the Committee authorized a special, one-
time cash bonus to be paid to selected officers (including three of the
executive officers listed in the Summary Compensation Table) and key employees
whose hard work had been instrumental in bringing the Dresser Merger to its
successful completion and whose future contributions will be required to
realize the synergies of the combination. The special bonus amounts received
by Messrs. Cheney, Lesar and Coleman are set forth in the Summary Compensation
Table.

Stock-Based Compensation

The 1993 Plan provides for a variety of cash and stock-based awards
(including stock options, stock appreciation rights, and restricted stock,
among others) which the Committee may, in its discretion, select in
establishing individual long-term incentive awards or use as it deems
appropriate in specific recruiting and hiring situations.

Stock options were an important long-term incentive granted to executive
officers in 1998. Stock options granted in 1998 are exercisable at the fair
market value of the Company Common Stock on the date of grant and become
exercisable during employment over a three-year period (one-third per year).
Options, which have value only if the stock price appreciates following the
date of grant, provide an excellent means for linking executives' interests
directly to those of stockholders. Although a great number of executives'
roles had been expanded at the advent of the merger with Dresser, the number
of option shares awarded to individual executives in the December review was
generally consistent with past practice.

The Committee's determination of the number of option shares granted to
executive officers, including the grants made to Mr. Cheney, was based on a
subjective assessment of organizational roles and internal job relationships,
and on references to competitive practices in long-term incentive
opportunities for comparable positions within similarly sized, high-performing
companies in general industry. An option for 100,000 shares was granted to Mr.
Cheney in December 1998.

In furtherance of the Committee's philosophy to tie shareholder value
enhancement to compensation opportunities, it is a stated objective of the
Committee to broaden the base of employee stock ownership throughout the
Company. Accordingly, in December 1998, stock option grants of an aggregate
3,417,000 shares were made to approximately 3,000 managerial employees. The
Committee's intention is to continue this process with additional grants in
the future in order to drive stock option grants deeper into the organization.

The Committee made use of restricted stock grants at the close of the merger
in the fall of 1998 in order to tie executive management of the new
organization closely to future Company financial performance. Seventeen
officers received restricted stock grants totaling 367,500 shares. These
awards recognized their expanded responsibilities and current and future
contributions, as well as served to build their stock ownership in the
Company. A restricted stock award of 50,000 shares was granted to Mr. Cheney
in October 1998.

Senior Executives' Deferred Compensation Plan

Under the terms of the Senior Executives' Deferred Compensation Plan (the
"SEDC Plan"), which is used for the purpose of providing supplemental
retirement benefits to senior executives, (i) mandatory additions to a
participant's account are made to offset contributions to which each would
have been entitled under the Company's qualified defined contribution plans if
not for the limitation on contributions imposed under the Internal Revenue
Code (commonly known as ERISA Offset Benefits), (ii) additions up to the
amount of any remuneration which would otherwise exceed the deduction limit
under Section 162(m) of the Internal Revenue Code may be allocated to a
participant's account in lieu of the payment of such remuneration, and (iii)

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discretionary additions, in such amounts as the Committee may determine, are
made to provide additional supplemental retirement benefits ("Supplemental
Retirement Benefit"). Interest on active and retired participants'
Supplemental Retirement Benefit accounts is accrued at the rate of five and
ten percent per annum, respectively, while interest on the other two account
balances accrues at the rate of ten percent per annum. No amounts may be
received by a participant under the SEDC Plan prior to termination of such
participant's employment.

In making Supplemental Retirement Benefit contributions under the SEDC Plan,
amounts are determined considering guidelines that include references to
retirement benefits provided from other programs, compensation, length of
service with the Company and as an officer, and years of service to normal
retirement. There is no specific weighting of these factors. The Committee
authorized a 1998 Supplemental Retirement Benefit addition for Mr. Cheney of
$500,000, the minimum amount specified in his employment agreement.

Policy Regarding Section 162(m) of the Internal Revenue Code

Section 162(m) of the Internal Revenue Code and the regulations promulgated
thereunder generally disallow a federal income tax deduction by a public
company for compensation paid to the chief executive officer or any of the
four other most highly compensated officers to the extent such compensation
exceeds $1 million in any year, excluding certain performance-based
compensation and compensation which is deferred.

The Company's policy is to utilize available tax deductions whenever
appropriate, and the Committee, when determining executive compensation
programs, considers all relevant factors, including the tax deductions that
may result from such compensation. Accordingly, the Company has attempted to
preserve the federal tax deductibility of compensation in excess of $1 million
a year to the extent such is consistent with the intended objectives of the
Committee's executive compensation philosophy.

The 1993 Stock and Long-Term Incentive Plan (the "1993 Plan") was amended by
the stockholders in 1996 to qualify stock options and stock appreciation
rights granted thereunder as performance-based compensation under IRS rules.
The Committee decided, however, not to make the necessary changes to qualify
the Annual Performance Pay Plan (which was discussed above) for tax
deductibility under Section 162(m) since to do so would have limited the
Committee's flexibility in the administration of the Plan. The Committee
believes that the best interests of the Company and its stockholders are
served by its current executive compensation programs, which encourage and
promote the Company's principal compensation objective, enhancement of
shareholder value, and permit the Committee to exercise discretion in the
design and implementation of compensation packages. Accordingly, the Company
may from time to time pay compensation to its executive officers that may not
be fully deductible. Because of the mandatory deferral provisions relating to
payment of incentive compensation earned under the Annual Performance Pay Plan
and the elective deferral by certain executive officers of portions of their
salary and incentive compensation, the loss of deductibility for 1998 is not
expected to be significant. The Committee will continue to review the
Company's executive compensation plans periodically to determine what changes,
if any, should be made as the result of the limitation on deductibility.

Respectfully submitted,

THE COMPENSATION COMMITTEE OF
DIRECTORS

Robert L. Crandall
W. R. Howell
Ray L. Hunt*
Delano E. Lewis
C. J. Silas

--------
* During 1998, Mr. Hunt served on the Committee from September 29, 1998
through December 31, 1998.

DEF 14A 21st Page of 33 TOC 1st Previous Next Bottom Just 21st

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

The following graph compares the Company's cumulative total stockholder
return on its Common Stock for the five-year period ended December 31, 1998,
with the Standard & Poor's 500 Stock Index ("S&P 500") and the Standard &
Poor's Energy Composite Index ("S&P Energy Composite") over the same period.
This comparison assumes the investment of $100 on December 31, 1993 and the
reinvestment of all dividends. On January 23, 1996, the Company distributed to
stockholders all of the outstanding common stock of Highlands Insurance Group,
Inc. as a special dividend. The graph accounts for this distribution as though
it were paid in cash and reinvested in Company Common Stock. The stockholder
return set forth on the chart below is not necessarily indicative of future
performance.

Total Stockholders' Return--Five Years
Assumes Investment of $100 on December 31, 1993 and Reinvestment of Dividends

[PERFORMANCE GRAPH APPEARS HERE]

[Download Table]

12-31- 12-31- 12-31- 12-31-
12-31-93 94 95 96 97 12-31-98
-------- ------- ------- ------- ------- --------

Halliburton Company......... $100 $107.27 $168.11 $212.64 $370.62 $214.62
S&P 500..................... $100 $101.32 $139.40 $171.40 $228.58 $293.91
S&P Energy Composite........ $100 $103.84 $135.78 $170.78 $213.90 $215.05

DEF 14A 22nd Page of 33 TOC 1st Previous Next Bottom Just 22nd

SUMMARY COMPENSATION TABLE

[Enlarge/Download Table]

Annual Compensation Long-Term Compensation
---------------------------------- ------------------------------
Awards Payouts
--------------------- --------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Bonus Compensation Awards Options Payouts Compensation
Position Year Salary ($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
------------------ ---- ---------- ---------- ------------ ---------- ---------- -------- ------------

William E. Bradford(7).. 1998 $1,001,000 $1,672,708 -- $1,886,086 72,804 $462,194 $436,057
Chairman of the Board
of 1997 N/A N/A N/A N/A N/A N/A N/A
the Company 1996 N/A N/A N/A N/A N/A N/A N/A
Richard B. Cheney....... 1998 1,183,257 1,154,704 -- 1,525,000 100,000 N/A 564,771
Chief Executive Officer
of 1997 1,100,000 1,980,000 -- 0 100,000 N/A 617,943
the Company 1996 1,000,000 1,125,000 -- 0 360,000 N/A 582,147
Lester L. Coleman....... 1998 412,506 225,000 -- 469,375 25,000 N/A 173,581
Executive Vice
President 1997 390,000 390,000 -- 0 20,000 N/A 127,193
and General Counsel of 1996 390,000 202,500 -- 0 74,000 N/A 130,232
the Company
Dale P. Jones(7)........ 1998 500,000 0 -- 0 0 N/A 546,644
Vice Chairman of the 1997 500,000 650,000 -- 0 50,000 N/A 91,759
Company 1996 500,000 540,000 -- 0 180,000 N/A 115,919
David J. Lesar.......... 1998 693,255 534,955 -- 1,525,000 65,000 N/A 308,524
President and Chief 1997 500,000 650,000 -- 3,868,750 60,000 N/A 187,553
Operating Officer of
the 1996 391,875 540,000 -- 1,120,000 110,000 N/A 134,866
Company
Ken R. LeSuer(7)........ 1998 500,000 0 -- 0 0 N/A 696,333
Vice Chairman of the 1997 475,000 617,500 -- 0 50,000 N/A 302,604
Company 1996 425,000 540,000 -- 591,250 160,000 N/A 190,233
Donald C. Vaughn(7)..... 1998 614,417 1,085,000 -- 1,668,155 18,037 N/A 173,569
Vice Chairman of the 1997 N/A N/A N/A N/A N/A N/A N/A
Company 1996 N/A N/A N/A N/A N/A N/A N/A

--------
(1) The Compensation Committee approved a special one-time bonus for selected
officers and key employees, including Messrs. Cheney, Coleman and Lesar.
Messrs. Bradford and Vaughn received the bonuses earned under the Dresser
incentive compensation plan which were approved prior to the Dresser
Merger.
(2) The dollar value of perquisites and other personal benefits for each of
the named executive officers was less than established reporting
thresholds.
(3) In 1996, Mr. Lesar had two awards of 20,000 shares each on which
restrictions will lapse over a 10-year period and Mr. LeSuer was awarded
20,000 shares with restrictions lapsing over a 5-year period. In 1997, Mr.
Lesar was awarded 100,000 shares with restrictions lapsing over a 10-year
period. In 1998, Messrs. Bradford, Cheney and Vaughn were each awarded
50,000 shares with restrictions lapsing over 5 years; Mr. Lesar was
granted 50,000 shares lapsing over 10 years; and Mr. Coleman was granted
15,000 shares lapsing over 10 years. In addition, during 1998, Messrs.
Bradford and Vaughn were issued 8,861 and 3,513 restricted shares,
respectively, pursuant to restricted incentive stock awards granted under
Dresser's stock compensation plan. Restrictions on such shares lapsed on
the Effective Date of the Dresser Merger. The total number and value of
restricted shares held by each of the above individuals as of December 31,
1998 were as follows:

[Download Table]

Total Aggregate
Restricted Market
Name Shares Value
---- ---------- ----------

Mr. Bradford........................................ 50,000 $1,481,250
Mr. Cheney.......................................... 175,000 5,184,375
Mr. Coleman......................................... 32,000 948,000
Mr. Jones*.......................................... 0 0
Mr. Lesar........................................... 186,000 5,510,250
Mr. LeSuer.......................................... 19,900 589,538
Mr. Vaughn.......................................... 50,000 1,481,250

* Restrictions lapsed on 29,800 shares with a market value of $826,245 due
to retirement on October 2, 1998.
Dividends are paid on the restricted shares.

DEF 14A 23rd Page of 33 TOC 1st Previous Next Bottom Just 23rd

(4) Solely as a result of a one-time change in the timing of option grants to
senior executives, the named persons (other than Messrs. Bradford and
Vaughn) received two grants in 1996.
(5) The Company does not have a long-term incentive program. Mr. Bradford
received long-term incentive payouts in January 1998 and 1999 under
Dresser's performance stock unit program.
(6) "All Other Compensation" includes the following accruals for or
contributions to various plans for the fiscal year ending December 31,
1998: (i) Company contributions to qualified defined contribution
retirement plans for Mr. Bradford -- $1,156, Mr. Cheney -- $6,400, Mr.
Coleman -- $6,400, Mr. Jones -- $6,400, Mr. Lesar -- $6,400, Mr. LeSuer --
$6,400 and Mr. Vaughn -- $4,800; (ii) 401(k) plan matching contributions for
Mr. Bradford -- $3,083, Mr. Cheney -- $3,200, Mr. Coleman -- $3,200, Mr.
Jones -- $3,200, Mr. Lesar --$3,200, Mr. LeSuer -- $3,200 and Mr. Vaughn --
$6,400; (iii) ERISA limitation accruals for Mr. Bradford --$387,447, Mr.
Cheney -

Halliburton Co · DEF 14A · For 5/18/99

Filed On 4/5/99 · SEC File 1-03492 · Accession Number 930661-99-727

Definitive Proxy Solicitation Material · Schedule 14AFiling Table of Contents

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