Exhibit 10.3
                    , 200_
Director Name
Address
Address
Dear Name:
It is my pleasure to confirm to you that on                     , you were
granted ___deferred shares of Anadarko common stock and non-qualified stock
options to purchase ___shares of Anadarko common stock pursuant to the
provisions of the Company’s 2008 Director Compensation Plan (the “Plan”). A copy
of the Plan is attached for your reference.
Your deferred shares will become payable to you within 30 days after the date
you cease to be a director of the Company for any reason (including your
retirement from the Board). The deferred shares will not be issued in your name,
but will be held by the Company, either in book-entry form or by the Company’s
Executives and Directors Benefits Trust (the “Trust”), until they become
transferable to you. Although you will not have beneficial ownership of the
deferred shares until they are actually transferred to you, will have the
opportunity to direct the voting of your deferred shares (which voting
instructions the Trustee of the Trust may not follow, in its sole discretion)
and such deferred shares will be counted toward your stock ownership
requirements. You will also receive a cash payment equal to the cash dividends
that are paid on the Company’s common stock each quarter, with such cash amount
to be paid within 30 days after the date that such dividends are paid to the
Company’s regular stockholders. You should note that the deferred shares held in
the Trust are considered an unsecured obligation of the Company and any and all
assets held in the Trust are subject to the general creditors of the Company.
Your deferred shares are subject to the terms of the Plan (including the
restrictions on transfer, assignment and pledge) and this letter.
Your options will vest at the rate of 100% on                      and have an
exercise price equal to the closing stock price on                      of $___.
Any unexercised stock options shall expire ten years from the date of grant, or
on                     . Your stock options are subject to the terms of the Plan
and this letter.
Upon vesting, the Options may be exercised in whole or in part by filing a
written notice with the Company’s Corporate Secretary at its corporate
headquarters. Such notice shall be in the form specified by the Company.
Payments of all amounts due (e.g., Exercise Price and applicable withholding
taxes) may be made either (i) in cash; (ii) in Common Stock (by either actual
delivery of Common Stock or by attestation presenting satisfactory proof of
beneficial ownership of such Common Stock) already owned; or (iii) any
combination of cash and Common Stock. The Fair Market Value of such Common Stock
as delivered shall be valued as of the closing sales price at which Common Stock
is sold on the date of exercise, as reported in the NYSE-Composite Transactions
by The Wall Street Journal. No Shares shall be issued or delivered until full
payment of the Exercise Price and applicable withholding taxes, if any, has been
made.

 

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Unexercised Options shall expire and be forfeited (without value) in the event
you cease to be a director of the Company, unless otherwise provided below
(provided that in no event may the options be exercised more than ten (10) years
from the date of grant):
     (i) Retirement. If you cease to be a director of the Company by reason of
Retirement (as defined below), all unvested Options shall be forfeited and you
(or, in the event of your death, your legal representative) may, within a period
of not more than twenty-four (24) months after the date of such cessation,
exercise vested Options if and to the extent they were exercisable on the date
of cessation. “Retirement” for purposes hereof is defined as (i) 10 years of
service as a director of the Company (ii) attainment of age 55 and five years
service as a director of the Company, or (iii) attainment of age 65.
     (ii) Death. If you cease to be a director of the Company by reason of
death, any outstanding Options granted to you shall vest and be immediately
exercisable with respect to all or any part of the Options which remain
unexercised. Your legal representative or other person or persons to whom your
rights under the Options shall pass to by will or the laws of descent and
distribution, may, within a period of not more than twelve (12) months after the
date of death, exercise the Options. In the event of your death after your
cessation as a director, your legal representative will have the remaining
exercise period awarded to you by your reason of cessation as provided in this
letter or the Plan.
     (iii) Permanent Disability. If you cease to be a director of the Company by
reason of Permanent Disability (as defined below), any outstanding Options
granted to you shall vest and be immediately exercisable with respect to all or
any part of the Options which remain unexercised. You (or, in the event of your
death, your legal representative) may, within a period of not more than
twenty-four (24) months after the date of your cessation as a director, exercise
the Options. You shall be deemed to have become “Permanently Disabled” if you
(i) are unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, or (ii) are, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three
(3) months under an accident and health plan of the Company.
     (iv) Resignation from the Board of Directors. If you resign from the
Company’s Board of Directors, all unvested Options shall be forfeited and you
(or, in the event of your death, your legal representative) may, within a period
of not more than three (3) months after the effective date of such resignation,
exercise vested Options.
The Options granted hereunder are not transferable except by will or the laws of
descent and distribution. Options are exercisable, during your lifetime, only by
you. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of the Options, or of any right or privilege conferred hereby, contrary
to the provisions hereof, or upon the levy of any attachment

 

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or similar process upon the Options or any right or privilege conferred hereby,
the Options and the right and privilege conferred hereby shall immediately
become null and void.
You shall have no rights as a stockholder with respect to any shares of common
stock subject to the Options prior to the date you are issued a certificate or
certificates for such shares, or until such shares are recorded on the books of
the Company’s stock transfer agent.
Please note that this letter serves as your notice of award and is for your
personal files. You are not required to sign and return any documents.
For your personal records, we have enclosed a summary of all your stock option
and deferred share grants as of                     .
If you have any questions or concerns, please contact
                                         or        
                                 .
Sincerely,