WMB Williams Companies Inc

Annual Report

Our 2015 Annual Report, which includes a copy of our annual report on Form 10-K, accompanies this proxy statement.

Voting

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:

The Board unanimously recommends that you vote FOR the election of each of the Board’s director nominees, FOR the ratification of the appointment of Ernst & Young LLP as our independent auditors for 2016, and FOR the advisory approval of the Company’s executive compensation.

Please refer to the enclosed proxy statement for the 2016 annual meeting for more information, including a detailed explanation of the matters being submitted to a vote of the shareholders.

By Order of the Board of Directors,

Sarah C. Miller

Corporate Secretary

Senior Vice President and General Counsel

October 19, 2016

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Proxy Statement

We are providing this proxy statement as part of a solicitation by the Board for use at our 2016 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 Wednesday, November 23, 2016, at 8:00 a.m., Central Standard Time.

We expect to mail this proxy statement and accompanying proxy card to stockholders beginning on October 19, 2016.

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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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, customers, business partners, regulatory agencies, and other stakeholders.

Recent Developments

On June 30, 2016, Frank T. MacInnis stepped down as Chairman of the Board and Kathleen B. Cooper was appointed as Chairman of the Board. Also on June 30, 2016, each of Ralph Izzo, Frank T. MacInnis, Eric W. Mandelblatt, Keith A. Meister, Steven W. Nance and Laura A. Sugg resigned from the Board. From July to August, 2016, the Board, with the assistance of leading global executive search and leadership consulting firm, Spencer Stuart, undertook a comprehensive process to identify new, highly qualified and independent directors. Considering input and recommendations by shareholders, non-management directors, the Chief Executive Officer (“CEO”), other executive officers, and Spencer Stuart, on August 28, 2016, the Board appointed three new independent directors to the Board: Stephen W. Bergstrom, Scott D. Sheffield and William H. Spence, and on September 23, 2016, the Board appointed two additional new independent directors to the Board: Stephen I. Chazen and Peter A. Ragauss. In connection with the appointments of the new directors, the Board updated the composition of its committees. On September 26, 2016, the Company announced a goal to appoint two more independent directors by the 2016 annual meeting, and on October 6, 2016, the Company announced that Joseph R. Cleveland, John A. Hagg, and Juanita H. Hinshaw had each determined not to stand for re-election at the 2016 annual meeting.

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. During 2015, the Board commenced a process to explore and evaluate a range of strategic alternatives, including potential standalone and other strategic alternatives available to the Company, and formed a strategic review administrative committee to oversee, on behalf of the Board, the administration of the strategic alternatives review process. The Board, with the assistance of the strategic review administrative committee, the Company’s management and financial and legal advisors, conducted a thorough strategic review process which included, among other things, an evaluation of the range of possible benefits to Company stockholders of the strategic alternatives, an assessment of numerous potential counterparties, an evaluation of various risks and solicitation of feedback from Company stockholders. During Board meetings, directors review key issues and financial performance. In 2015 the Board met privately with the CEO at least 17 times and met 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.

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.

Our Corporate Governance Guidelines provide that the normal retirement date for a director shall be the first annual meeting following such director’s 75th birthday, unless the Nominating and Governance Committee has voted, on an annual basis, to waive or to continue to waive, the mandatory retirement age of such person as director. Ms. Stoney has reached the mandatory retirement age for this annual meeting. The Nominating and

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Governance Committee has voted to waive the mandatory retirement age for Ms. Stoney for this annual meeting, in recognition of her strong contributions on the board, to facilitate continuity on the board, and to permit orderly succession planning for chairmanship of the compensation committee, in the wake of recent events.

Chief Executive Officer Evaluation and Management Succession

The Board and the CEO annually discuss and collaborate to set the CEO’s performance goals and objectives. The Board meets annually in executive session to assess the CEO’s 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 By-laws 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, Alan S. Armstrong serves as President and CEO of Williams and Dr. Kathleen Cooper serves as Chairman of the Board. The Board believes that having an independent Chairman aids in the Board’s 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.

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 Company’s 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.

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 Board’s assessment of the Company’s 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 Management Processes

We use the Committee of Sponsoring Organizations of the Treadway Commission Enterprise Risk Management (“ERM”) framework to provide positive assurance to management and the Board that risks are effectively managed to enable achievement of strategic, financial, operating, compliance, and reporting objectives. Our risk assessment process is integrated with our strategy process to better facilitate identification of the most significant risks to achieving our strategic objectives. We maintain a decentralized, cross functional approach to ERM; management functions – including internal audit, accounting, legal, and compliance – support our strategy and risk assessment with established control activities, monitoring, and reporting. The Board maintains responsibility for oversight of the Company’s risk management activities. In conjunction with the Board’s strategy review , management presents to the Board an enterprise-wide risk appetite statement, strategic risk profile, and management’s risk response via risk management and monitoring metrics. The Board considers whether management has appropriately identified our risk appetite, has established effective enterprise risk management processes, and is managing the risk portfolio consistent with such processes considering the risk appetite. Throughout the year, management reviews any critical issues or opportunities with the Board or relevant committees. Also, as stated in “Proposal 1 – Election of Directors,” the Board has determined that it is important to have individuals on the Board with strategy development and risk management experience, and many of our directors have such experience.

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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 her 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 our directors. The Board made these determinations in February, August, and September, 2016, for the then current or to be newly appointed directors, based on evaluations performed by the Board.

The Board has affirmatively determined that each of Mr. Bergstrom, Mr. Chazen, Mr. Cleveland, Dr. Cooper, Mr. Hagg, Ms. Hinshaw, Mr. Ragauss, Mr. Sheffield, Mr. Smith, Mr. Spence and Ms. Stoney is an independent director. The Board also determined each of the following former directors to be independent: Ralph Izzo, Frank T. MacInnis, Eric W. Mandelblatt, Keith A. Meister, Steven W. Nance and Laura A. Sugg. In so doing, the Board determined that each of these individuals met independence standards of the NYSE. In making these determinations, the Board considered the following 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 director’s independence. We discuss these relationships below.

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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 organization’s 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 director’s spouse, has a relationship that affects the director’s independence.

Mr. Armstrong, the current Chief Executive Officer and President and a director, is not independent, because of his role as an executive officer of the Company.

Transactions with Related Persons

The Board has adopted written policies and procedures with respect to related person transactions. 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 in, or is not inconsistent with the best interest of Williams and its

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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. Since the beginning of 2015, there were no transactions that required review or approval by the Audit Committee or the full Board.

Outside Board Service

Our corporate governance guidelines limit the service of our board members on publicly held companies and investment company boards to no more than four (including our Board), provided that our CEO is limited to service on one non-affiliated public company 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 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 director’s tendered resignation. If the Board accepts a director’s 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 13 then-current Board members attended the 2015 annual meeting of stockholders.

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 through the Investors page of our website at www.williams.com.

The current contact information is as follows:

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 through the Investors page of our website.

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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.

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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.

The full Board met 43 times in 2015. Each director attended at least 75% of the aggregate of the Board and applicable committee meetings held in 2015.

Board Committees

The Board has three standing committees — Audit, Compensation, and Nominating and Governance. Each standing committee has a charter adopted by the Board. The Board also has a special Safety Committee. The committees report to the full Board at each regular Board meeting. The Board elects each committee’s members and chair annually. Each committee has authority to retain, approve fees for, and terminate advisors as it deems necessary to assist in the fulfillment of its responsibilities. The chart below shows the current composition of the committees and the number of committee meetings in 2015.

Director		Audit		Compensation		Nominating &   Governance		Safety
Alan S. Armstrong
Stephen W. Bergstrom
Stephen I. Chazen
Joseph R. Cleveland
Kathleen B. Cooper
John A. Hagg
Juanita H. Hinshaw
Peter A. Ragauss
Scott D. Sheffield
Murray D. Smith
William H. Spence
Janice D. Stoney
Number of meetings in 2015		9		5		3		4

    Chair

      Committee Member

During 2015, the Company had a separate Finance Committee, which held 2 meetings in 2015. The members of this Committee were Kathleen B. Cooper, John A Hagg, Juanita H. Hinshaw (Chair), Ralph Izzo, Eric W. Mandelblatt, and Murray D. Smith.

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On June 20, 2015, the Board formed a Strategic Review Administration Committee which oversaw the administration of the strategic review process conducted by the Board during 2015. The members of this Committee were Laura A. Sugg (Chair), Steven W. Nance, and Janice D. Stoney. The Committee met 34 times in 2015. On June 30, 2016, the Committee was dissolved by the Board.

		AUDIT COMMITTEE		Responsibilities
				The Board has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee:
				•    appoints, evaluates, and approves the compensation of our independent registered public accounting firm;   •    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;   •    reviews the qualifications and independence of the independent registered public accounting firm;   •    reviews the performance of Williams’ internal audit function and the independent registered public accounting firm;   •    reviews Williams’ earnings releases;   •    reviews transactions between Williams and related persons that are required to be disclosed in our filings with the SEC;   •    oversees investigations into complaints concerning financial matters;   •    reviews with the General Counsel, as needed, any actual and alleged violations of the Company’s Code of Business Conduct;   •    annually reviews its charter and performance; and   •    prepares the Audit Committee report for inclusion in the annual proxy statement.   Independence Requirements   The Board has determined that all members of the Audit Committee meet the heightened independence requirements under the NYSE’s rules for persons serving on audit committees.   Financial Literacy, Experts   • In addition, the Board has determined that all members of the Audit Committee are “financially literate” as defined by the NYSE rules, and Kathleen B. Cooper, Juanita H. Hinshaw, Peter A. Ragauss, and William H. Spence 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.

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				Responsibilities
				The Compensation Committee:
		COMPENSATION COMMITTEE		•    approves executive compensation philosophy, policies, and programs that align the interests of our executive officers with those of our stockholders;   •    oversees the material risks associated with compensation structure, policies, and programs;   •    assesses the results of the advisory votes on executive compensation;   •    recommends to the Board equity-based compensation plans;   •    recommends to the Board cash-based incentive compensation plans for the NEOs and other executives;   •    sets corporate goals and objectives for compensation for the NEOs and other executives;   •    evaluates the NEOs’ and certain other executives’ performance in light of those goals and objectives;   •    approves the NEOs’ and certain other executives’ compensation, including salary, incentive compensation, equity-based compensation, and any other remuneration;   •    approves, amends, modifies, or terminates, in its settlor (non-fiduciary) capacity, the terms of any benefit plan that do not require stockholder approval;   •    reviews and discusses with management and, based on the review and discussions, recommends 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;   •    reviews annually and recommends to the Board the appropriate compensation of non-employee directors;   •    develops, reviews, recommends for Board approval, and then monitors the directors’ and executive officers’ compliance with, Williams’ stock ownership policy;   •    reviews and recommends the terms of Williams’ change in control program;   •    assesses any potential conflicts of interest raised by the compensation consultants retained by management or the Committee and assesses the independence of any Compensation Committee advisor; and   •    reviews annually its charter and performance.   Independence Requirements   The Board has determined that all members of the Compensation Committee meet the heightened independence requirements under the NYSE’s rules for persons serving on compensation committees.   Independent Executive Compensation Advisor   The Compensation Committee has selected and retained Frederic W. Cook & Co., an independent executive compensation consulting firm, to provide competitive market data and advice related to the CEO’s compensation level and incentive design; 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); develop the selection criteria and recommend comparator companies for executive compensation and performance comparisons; provide information on executive compensation trends and their implications to Williams; and provide competitive market data and advice on non-employee director compensation.   The Compensation Committee evaluates the independence of Frederic W. Cook & Co., including consideration of the factors specified in Rule 10C-1 under the Exchange Act and the NYSE’s rules to ensure that the advisors maintain objectivity and independence when rendering advice to the Committee. Frederic W. Cook & Co. does not provide any additional services to Williams. The compensation consultant reports to the Compensation Committee and is independent of management. The Compensation Committee has determined that the services Frederic W. Cook & Co. provides to the Committee are not subject to a conflict of interest.

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				Responsibilities
				The Nominating and Governance Committee:
		NOMINATING & GOVERNANCE COMMITTEE		• develops and recommends to the Board director qualifications;   • identifies and recommends to the Board director candidates;   • reviews candidates recommended or nominated by stockholders;   • recommends to the Board the individual, or individuals, to be the Chairman of the Board and the CEO;   • reviews the CEO’s recommendations for individuals to be officers;   • reviews annually succession plans for the positions of CEO and certain other executives;   • monitors significant developments in the regulation and practice of corporate governance;   • reviews the size and composition of the Board and its committees and recommends to the Board any changes;   • determines if a Lead Director shall be designated, and if so determined, recommends a director to serve as Lead Director;   • conducts a preliminary review of director independence and the financial literacy and expertise of the Audit Committee members;   • recommends assignments to the Board committees;   • oversees and assists the Board in the review of the Board’s performance and reviews its own performance;   • annually reviews each standing committee’s charter, the Corporate Governance Guidelines, and the Williams Code of Business Conduct;   • oversees and reviews risks relating to Williams’ ethics and compliance programs and annually reviews Williams’ policies and procedures regarding compliance with the Code of Business Conduct and the results of the Code of Business Conduct and Ethics survey;   • reviews, on an annual basis, the implementation and effectiveness of the Company’s 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;   • reviews stockholder proposals and recommends responses to the Board;   • reviews our directors’ current service and requests to serve on boards of other companies; and   • reviews annually the performance of individual directors.

				Responsibilities   The Safety Committee
		SAFETY COMMITTEE		• oversees, considers, and evaluates all matters related to safety (“Safety Matters”) and engages directly with the Company’s management and its advisors, who will from time-to-time provide reports, analyses, and other information as may be requested by the Safety Committee;   • to the extent deemed advisable by the Safety Committee, engages independent advisors to serve the Safety Committee’s needs, at the Company’s expense, and enter into on behalf of the Company engagement agreements with any such advisors; and   • makes recommendations to the full Board as to any actions to be taken with respect to Safety Matters.

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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 candidate’s 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 the conclusion of this process, the Nominating and Governance Committee may recommend and the Board act to 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 currently engaged nationally recognized search firm Spencer Stuart to identify and evaluate potential director nominees.

Stockholder Recommendation of Nominees

The Nominating and Governance Committee will consider written recommendations from stockholders for director nominations. If you wish to recommend a candidate for consideration of the Nominating and Governance Committee, please forward the candidate’s name and a detailed description of the candidate’s qualifications, a document indicating the candidate’s willingness to serve, and evidence that you own Williams’ stock to: The Williams Companies, Inc., One Williams Center, MD 47, Tulsa, Oklahoma 74172, Attn: Corporate Secretary. A stockholder wishing to nominate a director candidate for election at the annual meeting of stockholders must comply with the notice and other requirements described above under the question “ May I propose actions for consideration at the 2017 meeting of stockholders? ”.

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PROPOSAL 1         ELECTION OF DIRECTORS

The Board unanimously recommends a vote “FOR” the election of the directors named in Proposal 1.

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. Our Board is declassified; each director nominee is considered for a term expiring at the Company’s next annual meeting. Unless otherwise instructed, the individuals designated by the Board as proxies intend to vote to elect Messrs. Armstrong, Bergstrom, Chazen, Ragauss, Sheffield, Smith and Spence, Dr. Cooper, and Ms. Stoney. 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.

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 Company’s current situation and strategic plans. While the Nominating and Governance Committee does not have a formal diversity policy, it 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, and annually assesses the diversity of the Board as part of the director selection and nomination process. 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 Company’s 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:

 

•

an understanding of business and financial affairs and the complexities of a business organization,

 

•

genuine interest in Williams and in representing all of its stockholders,

 

•

a willingness and ability to spend the time required to function effectively as a director,

 

•

an open-minded approach and the resolve to make independent decisions on matters presented for consideration,

 

•

a reputation for honesty and integrity beyond question,

 

•

independence as defined by the NYSE, and qualifications otherwise required in accordance with applicable law or regulation,

 

•

strong intellectual capital, performance enhancing ideas, and strong networks that contribute to stockholder value,

 

•

ability to enhance decision-making process by bringing respected knowledge, understanding of rigorous analysis, and constructive engagement,

 

•

keen awareness that Board meetings must be productive in order to maintain a high level of governance, and

 

•

demonstrated seasoned judgment for decisions involving broad and multi-faceted issues.

 

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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 nominee’s 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 on the Board with the following skills and experiences:

 

• Oil, Natural Gas, and Petrochemicals Industry		• Legal
• Engineering and Construction		• Public Policy and Government
• Financial and Accounting		• Strategy Development and Risk Management
• Corporate Governance		• Operating
• Securities and Capital Markets		• Human Resource Management
• Executive Leadership		• Information Technology

 

•

Marketplace Knowledge (knowledge of the marketplace and political and regulatory environments relevant to the energy sector in the locations where we operate currently or plan to in the future)

We have included on the following pages certain information about the nominees for election as directors.

 

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ALAN S. ARMSTRONG   Director since  2011		A strong, accomplished leader and industry visionary, Alan S. Armstrong, 54, became a director and Chief Executive Officer and President in 2011. During his tenure, Williams has expanded its reach, currently touching about 30 percent of all U.S. natural gas volumes, through gathering, processing, transportation and storage services. In addition, Williams has been recognized with major awards, including Platt’s Global Energy Awards 2014 Deal of the Year and 2015 Midstream Leader Award, and the FORTUNE 2015 Most Admired U.S. Energy Company. Mr. Armstrong also serves as Chairman of the Board and Chief Executive Officer for Williams Partners L.P., the master limited partnership that owns most of Williams’ gas pipeline and domestic midstream assets. Prior to being named as Williams’ CEO, Mr. Armstrong led the Company’s North American midstream and olefins businesses through a prosperous period of growth and expansion as Senior Vice President – Midstream. Previously, Mr. Armstrong served as Vice President of Gathering and Processing from 1999 to 2002; Vice President of Commercial Development from 1998 to 1999; Vice President of Retail Energy Services from 1997 to 1998 and Director of Commercial Operations for the company’s midstream business in the Gulf Coast region from 1995 to 1997. He joined Williams in 1986 as an engineer. Mr. Armstrong serves on the Board of Directors of the American Petroleum Institute, the Board of Directors of BOK Financial Corporation and as a member of the National Petroleum Council and the Business Roundtable. He is a former board member of Access Midstream Partners, GP, LLC. and also served as the 2015 Board Chair of the Tulsa Regional Chamber. Mr. Armstrong also serves as board member and past Chairman of the Board of Visitors for the University of Oklahoma’s College of Engineering. He serves on the Boards of Directors of several education-focused organizations: Junior Achievement, USA; Junior Achievement of Oklahoma, where he also served as Chairman; Teach for America – Oklahoma; and the Oklahoma Business Education Coalition. Mr. Armstrong is also a member of the boards of The Williams Foundation and Philbrook Museum of Art. Mr. Armstrong graduated from the University of Oklahoma in 1985 with a bachelor’s degree in civil engineering.   As Chief Executive Officer and President of Williams, Chairman of the Board and Chief Executive Officer of Williams Partners L.P. and due to his various senior leadership roles at Williams, Mr. Armstrong’s qualifications include industry, engineering and construction, financial and accounting, corporate governance, securities and capital markets, executive leadership, strategy development and risk management, and operating experience, and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Engineering and Construction   Financial and Accounting   Corporate Governance   Securities and Capital Markets   Executive Leadership   Strategy Development and Risk Management   Operating   Marketplace Knowledge       *Williams Partners L.P. merged with Access Midstream Partners, L.P. (“ACMP”), each subsidiaries of the Company, in February 2015 (the “ACMP Merger”). ACMP was the surviving entity in the Merger and changed its name to Williams Partners L.P. Unless the context indicates otherwise, references in this document to (a) “Pre-merger Williams Partners” will mean Williams Partners L.P. prior to its Merger into ACMP and (b) “Williams Partners” will refer to both ACMP prior to and after the Merger, when it changed its name to Williams Partners L.P.

 

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STEPHEN W. BERGSTROM        Director since  2016   Committees Compensation; Nominating and Governance (Chair)		A seasoned executive with more than 35 years of experience in the energy and utility sectors, Stephen W. Bergstrom, 59, has served as a director of the Company since 2016. Mr. Bergstrom is well-known in the industry for his record as an outstanding operator. He is a director on the Board of American Midstream Partners GP, LLC, a natural gas gathering, processing and transporting company, and from 2013 to 2015, he served as President and Chief Executive Officer and Executive Chairman of the board of directors of the American Midstream Partners general partner. During his tenure as president and chief executive officer of American Midstream Partners, Mr. Bergstrom established a strong platform and led the company through a period of substantial growth while increasing geographic and operational diversity and enhancing fee-based cash flow. Mr. Bergstrom acted as an exclusive consultant to ArcLight Capital Partners, an energy-focused investment firm, from 2003 to 2015, assisting ArcLight in connection with its energy investments. From 1986 to 2002, Mr. Bergstrom served in several leadership roles for Natural Gas Clearinghouse, which became Dynegy Inc., a major electric utility company. Mr. Bergstrom acted in various capacities at Dynegy, ultimately serving as President and Chief Operating Officer. Mr. Bergstrom began his career with Transco Energy Company, Inc. in 1980. Mr. Bergstrom earned a Bachelor of Science in Industrial Administration from Iowa State University.   As former President and Chief Executive Officer of the American Midstream Partners general partner, former exclusive consultant to ArcLight Capital Partners and due to his various leadership roles for Natural Gas Clearinghouse, Mr. Bergstrom’s qualifications include industry, engineering and construction, financial and accounting, corporate governance, securities and capital markets, executive leadership, strategy development and risk management, operating, and human resource management experience, and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Engineering and Construction   Financial and Accounting   Corporate Governance   Securities and Capital Markets   Executive leadership   Strategy Development and Risk Management   Operating   Human Resource Management   Marketplace knowledge

 

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STEPHEN I. CHAZEN        Director since  2016        Committees Nominating and Governance		A prominent figure in energy as both a corporate leader and industry advocate, Mr. Chazen, 70, has served as a director of the Company since 2016. Mr. Chazen retired as Chief Executive Officer of Occidental Petroleum Corporation, an oil and gas exploration and production company, in April 2016, and has remained on Occidental’s Board of Directors, on which he has served since May 2010. During his tenure as Chief Executive Officer, Mr. Chazen recommended and implemented the company’s acquisition and divestiture strategy, which was a key factor in Occidental’s transformation into a major oil and gas company. He previously served as President of Occidental Petroleum from 2007 to 2015; Chief Operating Officer from 2010 to 2011; and Chief Financial Officer from 2007 to 2010. Prior to being named President and Chief Financial Officer, Mr. Chazen was Chief Financial Officer and Senior Executive Vice President from 2004 to 2007, Chief Financial Officer and Executive Vice President-Corporate Development from 1999 to 2004, and Executive Vice President-Corporate Development from 1994 to 1999. Before joining Occidental, Mr. Chazen was a Managing Director in Corporate Finance and Mergers and Acquisitions at Merrill Lynch. Mr. Chazen is a former Chairman of the American Petroleum Institute and continues to serve on its board. Mr. Chazen holds a Ph.D. in Geology from Michigan State University, a master’s degree in Finance from the University of Houston and a bachelor’s degree in Geology from Rutgers College.   Mr. Chazen brings to the Williams Board decades of executive leadership experience in the oil and gas industry, as well as significant mergers and acquisition and valuation expertise. Mr. Chazen’s qualifications include industry, financial and accounting, corporate governance, securities and capital markets, executive leadership, public policy and government, strategy development and risk management, operating, and human resource management experience, and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Financial and Accounting   Corporate Governance   Securities and Capital Markets   Executive leadership   Public Policy and Government   Strategy Development and Risk Management   Operating   Human Resource Management   Marketplace knowledge

 

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KATHLEEN B. COOPER        Director since  2006     Chairman of the Board   Committees Audit (Chair); Nominating and Governance		A proven leader in both the U.S. government and the world’s largest corporations, Kathleen B. Cooper, 71, has served as a director of the Company since 2006. Currently President of Cooper Strategies International LLC, Dr. Cooper previously served as Under Secretary for Economic Affairs of the U.S. Department of Commerce from 2001 to 2005. Prior to this role, she spent ten years as Chief Economist of the Exxon Mobil Corporation, advising senior management on the global business environment and energy markets and playing a leadership role in the planning process for this top tier energy company. In addition to her accomplished leadership in the energy sector, Dr. Cooper is distinguished in the financial services industry. She serves as a director of Deutsche Bank Trust Corporation and Deutsche Bank Trust Company of the Americas, subsidiaries of Deutsche Bank AG, and was a founding director of Texas Security Bank from 2008 to 2010. Earlier in her career, she was Executive Vice President and Chief Economist of Security Pacific National Bank and Chief Economist of the United Banks of Colorado. Currently a Senior Fellow of the Tower Center for Political Studies at Southern Methodist University, Dr. Cooper’s academic experience includes two years as Dean of the College of Business Administration at the University of North Texas. She holds a Ph.D. degree in economics from the University of Colorado. Dr. Cooper also has chaired the National Bureau of Economic Research in Cambridge, Massachusetts, among many professional and non-profit organizations for which she has served in leadership roles.   As former Under Secretary for Economic Affairs at the U. S. Department of Commerce, former executive of both a Fortune 500 energy company and banking organization, and former academic dean, Dr. Cooper’s qualifications include industry, financial and accounting, executive leadership, public policy and government experience, and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Financial and Accounting   Executive Leadership   Public Policy and Government   Marketplace knowledge

 

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PETER A. RAGAUSS   Director since  2016        Committees Audit		A respected executive with decades of energy industry leadership, Mr. Ragauss, 58, has served as a director of the Company since 2016. Mr. Ragauss retired from Baker Hughes, an oilfield services company, in November 2014 after serving eight years as Senior Vice President and Chief Financial Officer. He joined the Board of Directors of Apache Corporation in December 2014. From 2003 to 2006, prior to joining Baker Hughes, Mr. Ragauss was controller, Refining and Marketing, for BP Plc. From 2000 to 2003, he was Chief Executive Officer for Air BP. From 1998 to 2000, he was assistant to group chief executive for BP Amoco. He was vice president of Finance and Portfolio Management for Amoco Energy International when Amoco Corporation merged with BP in 1998. Earlier in his career, from 1996 to 1998, Mr. Ragauss served as vice president of Finance for El Paso Energy International. He held positions of increasing responsibility at Tenneco Inc. from 1993 to 1996, and Kidder, Peabody & Co. Incorporated from 1987 to 1993. Mr. Ragauss holds a master’s degree from Harvard Business School and bachelor’s degree in Mechanical Engineering from Michigan State University.   With a wealth of accounting, financial and executive experience to the Williams Board, having held senior positions including chief executive officer, chief financial officer, controller and vice president of finance, Mr. Ragauss’s qualifications include industry, financial and accounting, corporate governance, securities and capital markets, executive leadership, strategic development and risk management, and information technology experience, and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Financial and Accounting   Corporate Governance   Securities and Capital Markets   Executive Leadership   Strategy Development and Risk Management   Information Technology   Marketplace Knowledge

 

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SCOTT D.SHEFFIELD   Director since  2016       Committees Compensation; Safety		A renowned innovator and proven executive in the global energy industry, Mr. Sheffield, 64, has served as a director of the Company since 2016. Mr. Sheffield is Chairman and Chief Executive Officer of Pioneer Natural Resources Company, an international oil and gas exploration and production company. He has served as Chief Executive Officer since August 1997 and assumed the position of Chairman of the Board of Directors in August 1999. He was President of the company from August 1997 to November 2004. Mr. Sheffield was the Chairman of the Board of Directors and Chief Executive Officer of Parker & Parsley Petroleum Company, a predecessor company of Pioneer Natural Resources Company, from January 1989 until August 1997. Mr. Sheffield joined Parker & Parsley as a petroleum engineer in 1979, was promoted to Vice President of Engineering in 1981, was elected President and a director in 1985, and became Parker & Parsley’s Chairman of the Board and Chief Executive Officer in 1989. Mr. Sheffield also serves as a director of Santos Limited, an Australian exploration and production company, since 2014. He previously served as a director from 1996 to 2004 on the board of Evergreen Resources, Inc., an independent natural gas energy company. Mr. Sheffield is a distinguished graduate of The University of Texas with a Bachelor of Science degree in Petroleum Engineering.   With more than 41 years of experience in the energy industry, including his position as Chairman of the Board and Chief Executive Officer of Pioneer Natural Resources, as well as a director on the board of Santos Limited, Mr. Sheffield’s qualifications include industry, engineering and construction, corporate governance, securities and capital markets, executive leadership, strategic development and risk management, and operating experience, and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Engineering and Construction   Corporate Governance   Securities and Capital Markets   Executive Leadership   Strategy Development and Risk Management   Operating   Marketplace Knowledge

 

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MURRAY D. SMITH   Director since  2012   Committees Compensation; Safety (Chair)		A highly respected political and energy industry leader in Canada, Mr. Smith, 67, has served as a director of the Company since 2012. Mr. Smith is currently president of Murray D. Smith and Associates, an energy consulting firm. Previously, he held various positions in the Canadian government. As an elected member of the Legislative Assembly of Alberta, Canada, Mr. Smith served in four different Cabinet portfolios between 1993 and 2004. As Minister of Energy of Alberta from 2001 to 2004, Mr. Smith oversaw the transformation of the electricity sector into a competitive wholesale generation market and initiated the largest industrial tax reduction in the Province’s history. During his eight-year tenure on the Treasury Board of Alberta, Mr. Smith guided Alberta on its way to becoming debt free. Mr. Smith served as Representative of the Province of Alberta to the United States of America in Washington, D.C., from 2005 to 2007. In that role, Mr. Smith collaborated on significant U.S. energy legislation and participated in Senate and Congressional hearings. Prior to becoming an elected official, Mr. Smith was an independent businessman, owning a number of Alberta-based energy services companies. Currently, he is a director of Surge Energy Inc., a public oil and gas company with operations throughout Alberta and Saskatchewan and NSolv Corporation, the owner of proprietary technology for water-free oil sands in-situ extraction.   As a former member of the Legislative Assembly of Alberta, Canada and diplomat and now an energy consultant, Mr. Smith’s qualifications include industry, engineering and construction, corporate governance, securities and capital markets, executive leadership, and public policy and government experience and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Engineering and Construction   Corporate Governance   Securities and Capital Markets   Executive Leadership   Public Policy and Government   Marketplace knowledge

 

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WILLIAM H. SPENCE   Director since  2016   Committees Audit; Safety		Bringing more than three decades of executive leadership experience in the global utility industry, Mr. Spence, 59, has served as a director of the Company since 2016. Mr. Spence is Chairman, President and Chief Executive Officer of PPL Corporation, where he leads distribution and transmission subsidiaries of one of the largest companies in the U.S. utility sector. The PPL family of companies delivers electricity and natural gas to approximately 10 million customers in the United States and the United Kingdom. Since joining PPL in 2006 as Executive Vice President and Chief Operating Officer, Mr. Spence has led the corporation through a period of significant growth and expansion. He was named President and CEO in 2011 and Chairman in 2012. Previously, he served in several senior management positions with Pepco Holdings, Inc., including president of Conectiv Energy and president of Pepco Energy Services. Mr. Spence currently serves on the board of the Electric Power Research Institute, the Executive Committee of the Edison Electric Institute and as co-chairman of EEI’s CEO Policy Committee on Reliability and Business Continuity. He is a member of both EEI’s CEO Policy Committee on Environment and the Electricity Subsector Coordinating Council, which serves as the principal liaison between the federal government and the electric power sector to protect the grid from cyber and physical threats to critical infrastructure. Mr. Spence serves on the executive board of the Lehigh Valley Partnership, as a trustee adviser to the Delaware Museum of Natural History and as a council member of the Pennsylvania Society. He is a member of the executive committee of the Downtown Allentown Community Development Initiative and serves on Allentown School District’s Building 21 Executive Committee. Mr. Spence earned a bachelor’s degree in petroleum and natural gas engineering from The Pennsylvania State University and a master’s degree in business administration from Bentley College. He is a graduate of the Executive Development Program at the University of Pennsylvania’s Wharton School and the Nuclear Technology Program of the Massachusetts Institute of Technology.   As Chairman, President and Chief Executive Officer of PPL Corporation, former Executive Vice President and Chief Operating Officer of PPL Corporation, and due to his several senior management positions with Pepco Holdings, Inc., Mr. Spence’s qualifications include industry, engineering and construction, corporate governance, executive leadership, public policy and government, strategy development and risk management, and operating experience, and marketplace knowledge.		AREAS OF EXPERTISE   Industry   Engineering and Construction   Corporate Governance   Executive Leadership   Public Policy and Government   Strategy Development and Risk Management   Operating   Marketplace knowledge

 

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JANICE D. STONEY   Director since  1999   Committees Compensation (Chair)		Recognized as one of the 100 most influential U.S. board leaders, Ms. Stoney, 76, has served as a director of the Company since 1999. In 1993, Ms. Stoney retired as Executive Vice President of US West Communications Group, Inc. following a 33-year career marked by senior officer positions at US West and its subsidiary, Northwestern Bell. These positions include President, Consumer Division, of US West and President, Chief Executive Officer and Chief Operating Officer of Northwestern Bell. Highly regarded for her track record of leadership, Ms. Stoney in 1994 was nominated to run for the U.S. Senate as a Republican representing Nebraska. In 2016, the National Association of Corporate Directors (NACD) named Ms. Stoney to its list of the 100 most influential people in the boardroom community. Through 22 years as a director in manufacturing, consumer products, retailing, and investment-fund industries, Ms. Stoney brings extensive experience with director searches, CEO and management succession, management development, executive compensation, and strategic planning, including as chair of compensation and audit committees. Ms. Stoney was a director of Whirlpool Corporation from 1987 to 2011 and has served on the Federal Reserve Bank, Tenth District, Omaha Branch, and chaired the Omaha Community Foundation.   As a top executive in a major U.S. telecommunications company, and through her engagement in the political process, Ms. Stoney’s qualifications include corporate governance, executive leadership, public policy and government, strategy development and risk management, operating, and human resource management experience.		AREAS OF EXPERTISE   Corporate Governance   Executive Leadership   Public Policy and Government   Strategy Development and Risk Management   Operating   Human Resource Management

 

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Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information concerning beneficial ownership by holders of more than five percent of our common stock. Unless otherwise indicated, the persons named have sole voting and investment power with respect to the shares listed.

 

Name		Number of Shares of Common Stock				Percent of Class  (4)
BlackRock, Inc. (1)			39,077,588				5.20	%
FMR LLC (2)			76,828,500				10.23	%
The Vanguard Group (3)			43,934,329				5.85	%

 

(1)

According to a Schedule 13G filed with the SEC on February 9, 2016, BlackRock, Inc., a Delaware corporation may beneficially own the shares of common stock listed in the table above. The 13G indicates that BlackRock, Inc. may have sole voting power over 32,810,001 shares of our common stock and sole dispositive power over 39,077,588 shares of our common stock. The address of BlackRock, Inc. is 55 East 52 nd Street, New York, New York 10055.

(2)

According to a Schedule 13G filed with the SEC on September 12, 2016, FMR LLC may beneficially own the shares of common stock listed in the table above. The 13G indicates that FMR LLC may have sole voting power over 7,406,055 shares of our common stock and sole dispositive power over 76,828,500 shares of our common stock. The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.

(3)

According to a Schedule 13G/A filed with the SEC on February 11, 2016 (as amended, the “Vanguard 13G”), The Vanguard Group, an investment advisor, may beneficially own the shares of common stock listed in the table above. The Vanguard 13G indicates that The Vanguard Group may have sole voting power over 1,353,754 shares of our common stock, sole dispositive power over 42,561,560 shares of our common stock, shared voting power over 70,200 shares of our common stock, and shared dispositive power over 1,372,769 shares of our common stock. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

(4)

Ownership percentage is reported based on 750,883,424 shares of common stock outstanding on October 7, 2016.

 

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The following table sets forth, as of October 7, 2016, 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.

 

Name of Individual or Group		Shares of Williams Common Stock Owned Directly or Indirectly		Williams Shares Underlying Stock Options (1)		Williams Shares Underlying RSUs (2)		Total		Percent of Class  (3)
Alan S. Armstrong (4)		338,998		767,804		—		1,106,802		*
Stephen W. Bergstrom		—		—		4,144		4,144		*
Donald R. Chappel		310,991		724,956		31,432		1,067,379		*
Stephen I. Chazen		—		—		3,428		3,428		*
Joseph R. Cleveland (5)		30,543		—		16,881		47,424		*
Kathleen B. Cooper		35,945		5,527		12,010		53,482		*
John A. Hagg		13,848		—		16,881		30,729		*
Juanita H. Hinshaw (6)		61,572		—		5,604		67,176		*
Rory L. Miller		119,780		251,663		21,201		392,644		*
Robert S. Purgason		—		83,659		10,945		94,604		*
Peter A. Ragauss		—		—		3,428		3,428
John D. Seldenrust		—		4,126		—		4,126		*
Scott D. Sheffield		—		—		4,144		4,144		*
Murray D. Smith (7)		19,998		—		16,881		36,879		*
William H. Spence		—		—		4,144		4,144		*
Janice D. Stoney (8)		71,710		—		37,021		108,731		*
All directors and executive officers as a group (22 persons)		1,220,072		2,528,700		226,939		3,975,711		*%

 

*

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. Amounts reflect shares that may be acquired upon the exercise of stock options granted under Williams’ current or previous equity plans that are currently exercisable, will become exercisable, or would become exercisable upon the voluntary retirement of such person, within 60 days of October 7, 2016.

(2)

The SEC deems a person to have beneficial ownership of all shares that the person has the right to acquire within 60 days. Amounts reflect shares that would be acquired upon the vesting of restricted stock units (“RSUs”) granted under Williams current or previous equity plans that will vest or that would vest upon the voluntary retirement of such person, within 60 days of October 7, 2016. RSUs have no voting or investment power.

(3)

Ownership percentage is reported based on 750,883,424 shares of common stock outstanding on October 7, 2016, 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 October 7, 2016, or within 60 days from that date, through the exercise of all options and other rights.

(4)

Includes 34,264 shares held in the Alan and Shelly S. Armstrong Family Foundation dated December 16, 2015, Alan S. and Shelly S. Armstrong, Trustees.

(5)

Includes 3,047 shares held in the Joe R. Cleveland and Evelyn Cleveland Family Trust dated November 21, 2008, Joe R. and Evelyn Cleveland, Trustees.

(6)

Includes 9,640 shares held in the Juanita H. Hinshaw Revocable Trust dated January 27, 1998, Juanita H. Hinshaw, Trustee.

(7)

Includes 10,150 shares held by Murray D. Smith and Associates Limited.

(8)

Includes 70,710 shares held in the Larry and Janice Stoney Family Trust dated March 25, 2008, Larry D. & Janice D. Stoney, Trustees.

 

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The following table sets forth, as of October 7, 2016, the number 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. None of the persons in the table below own any Class B Convertible Units of Williams Partners L.P.

 

Name of Individual or Group		Williams Partners Common Units Owned Directly		Percent of Class  (1)
Alan S. Armstrong (2)		32,334			*
Stephen W. Bergstrom		—			*
Donald R. Chappel		19,574			*
Stephen I. Chazen		—			*
Joseph R. Cleveland (3)		1,733			*
Kathleen B. Cooper		—			*
John A. Hagg		—			*
Juanita H. Hinshaw		2,159			*
Rory L. Miller		1,752			*
Robert S. Purgason		29,726			*
Peter A. Ragauss		—			*
John D. Seldenrust		1,262			*
Scott D. Sheffield		—			*
Murray D. Smith		—			*
William H. Spence		—			*
Janice D. Stoney (4)		7,620			*
All directors and executive officers as a group (22 persons)		105,518			*

 

*

Less than 1%.

(1)

Ownership percentage is reported based on 595,916,792 common units, which is the number of common units outstanding on October 7, 2016.

(2)

23,667 units are held in the Alan Stuart Armstrong Trust dated June 16, 2010, with Alan Armstrong as trustee, and 8,667 units are held in the Shelly Stone Armstrong Trust dated June 16, 2010, with Shelly Armstrong as trustee.

(3)

Units are held in the Joe R. Cleveland and Evelyn Cleveland Family Trust dated November 21, 2008, Joe R. and Evelyn Cleveland, Trustees.

(4)

Units are held in the Larry and Janice Stoney Family Trust dated March 25, 2008, Larry D. and Janice D. Stoney, Trustees.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s 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. 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 percent stockholders complied with all Section 16(a) filing requirements applicable to them during the fiscal year ended December 31, 2015.

 

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Named Executive Officer Profiles

The following profiles provide biographical information and summarize total targeted compensation for 2015 for our NEOs. These profiles are provided in addition to the detailed compensation tables required by the SEC.

 

ALAN S.   ARMSTRONG   Chief Executive Officer and President   Position held since 2011   Stock ownership (1) >6x base salary   Performance-based compensation (2) 69% of total compensation		A strong, accomplished leader and industry visionary, Alan S. Armstrong, 54, became a director and Chief Executive Officer and President in 2011. During his tenure, Williams has expanded its reach, currently touching about 30 percent of all U.S. natural gas volumes, through gathering, processing, transportation and storage services. In addition, Williams has been recognized with major awards, including Platt’s Global Energy Awards 2014 Deal of the Year and 2015 Midstream Leader Award, and the FORTUNE 2015 Most Admired U.S. Energy Company. Mr. Armstrong also serves as Chairman of the Board and Chief Executive Officer for Williams Partners L.P., the master limited partnership that owns most of Williams’ gas pipeline and domestic midstream assets. Prior to being named as Williams’ CEO, Mr. Armstrong led the Company’s North American midstream and olefins businesses through a prosperous period of growth and expansion as Senior Vice President – Midstream. Previously, Mr. Armstrong served as Vice President of Gathering and Processing from 1999 to 2002; Vice President of Commercial Development from 1998 to 1999; Vice President of Retail Energy Services from 1997 to 1998 and Director of Commercial Operations for the company’s midstream business in the Gulf Coast region from 1995 to 1997. He joined Williams in 1986 as an engineer. Mr. Armstrong serves on the Board of Directors of the American Petroleum Institute, the Board of Directors of BOK Financial Corporation and as a member of the National Petroleum Council and the Business Roundtable. He is a former board member of Access Midstream Partners, GP, LLC. and also served as the 2015 Board Chair of the Tulsa Regional Chamber. Mr. Armstrong also serves as board member and past Chairman of the Board of Visitors for the University of Oklahoma’s College of Engineering. He serves on the Boards of Directors of several education-focused organizations: Junior Achievement, USA; Junior Achievement of Oklahoma, where he also served as Chairman; Teach for America – Oklahoma; and the Oklahoma Business Education Coalition. Mr. Armstrong is also a member of the boards of The Williams Foundation and Philbrook Museum of Art. Mr. Armstrong graduated from the University of Oklahoma in 1985 with a bachelor’s degree in civil engineering.
								2015 Target Compensation (1)
2015 Target Compensation (3)
Long-Term Incentives (LTI)					$5,750,000
Performance-based RSUs					$3,162,500
Time-based RSUs					$1,437,500
Stock Options					$1,150,000
Short-Term Incentive at Target
Annual Incentive Program (“AIP”)					$1,400,000
Base Pay					$1,120,000
Total Target Compensation					$8,270,000
Retirement Benefits
Pension (year-over-year change)					($144,401	)
Restoration Plan (year-over-year change)					($431,144	)
401(k) Company Match					$15,600
Payment Upon Termination (as of Dec 31, 2015)
Voluntary Termination					$0
Termination with Cause					$0
Involuntary Termination without Cause					$8,828,652
Retirement					$0
Death or Disability					$8,828,562
Change in Control					$19,625,547

 

(1)	Mr. Armstrong’s ownership in our common stock exceeded the required CEO ownership threshold of six times base salary.

(2)	Performance-based compensation includes performance-based RSUs, stock options, and AIP.

(3)

2015 Target Compensation reflects target pay and consists of annual base pay, Annual Incentive Program (“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.

 

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DONALD R. CHAPPEL   Senior Vice President & Chief Financial Officer   Position held since 2003   Stock ownership (1) >3x base salary   Performance-based compensation (2) 57% of total compensation		Prior to joining Williams, Mr. Chappel, 64, held various financial, administrative, and operational leadership positions. Mr. Chappel has served as a director of the general partner of Williams Partners since 2012 and as Chief Financial Officer of the general partner of Williams Partners since December 31, 2014. From 2002 to 2014, Mr. Chappel served as a member of the Management Committee of Northwest Pipeline LLC (an interstate natural gas transmission company indirectly owned by Williams Partners) since 2007. Mr. Chappel served as Chief Financial Officer and a director of the general partner of Pre-merger Williams Partners from 2005 until the ACMP Merger. Mr. Chappel was Chief Financial Officer from 2007 and a director from 2008 of the general partner of Williams Pipeline Partners L.P. (WMZ), until its merger with Pre-merger Williams Partners in 2010. Mr. Chappel is a director of SUPERVALU, Inc. (a grocery and pharmacy company).
								2015 Target Compensation (1)
2015 Target Compensation (3)
Long-Term Incentives (LTI)					$2,000,000
Performance-based RSUs					$900,000
Time-based RSUs					$700,000
Stock Options					$400,000
Short-Term Incentive at Target
Annual Incentive Program (“AIP”)					$506,250
Base Pay					$675,000
Total Target Compensation					$3,181,250
Retirement Benefits
Pension (year-over-year change)					($29,133	)
Restoration Plan (year-over-year change)					($229,739	)
401(k) Company Match					$15,600
Payment Upon Termination (as of Dec 31, 2015)
Voluntary Termination					$0
Termination with Cause					$0
Involuntary Termination without Cause					$4,244,714
Retirement					$0
Death or Disability					$4,244,714
Change in Control					$9,570,891

 

(1)	Mr. Chappel’s ownership in our common stock exceeded the required NEO ownership threshold of three times base salary.

(2)	Performance-based compensation includes performance-based RSUs, stock options, and AIP.

(3)	2015 Target 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.

 

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ROBERT S. PURGASON   Senior Vice President - Central OA and Operational Excellence   Position held since 2015   Stock ownership (1) <3x base salary   Performance-based compensation (2) 55% of total Compensation		Mr. Purgason, 60, has served as a director of the general partner of Williams Partners since 2012 and as Senior Vice President-Access of the general partner of Williams Partners since the ACMP Merger. Mr. Purgason served as Chief Operating Officer of the general partner of Williams Partners from 2010 until the ACMP Merger. Prior to joining the general partner of Williams Partners, Mr. Purgason spent five years at Crosstex Energy Services, L.P. (an independent midstream energy company engaged in the gathering, transmission, treating, processing and marketing of natural gas and natural gas liquids) and was promoted to Senior Vice President - Chief Operating Officer in 2006. Prior to Crosstex, Mr. Purgason spent 19 years with us in various senior business development and operational roles. Mr. Purgason began his career at Perry Gas Companies in Odessa, Texas working in all facets of the natural gas treating business. Mr. Purgason has also served on the Board of Directors of L.B. Foster Company (a manufacturer, fabricator, and distributor of products and services for the rail, construction, energy, and utility markets) since December 2014.
								2015 Target Compensation (1)
2015 Target Compensation (3)
Long-Term Incentives (LTI)					$1,400,000
Performance-based RSUs					$630,000
Time-based RSUs					$490,000
Stock Options					$280,000
Short-Term Incentive at Target
Annual Incentive Program (“AIP”)					$385,000
Base Pay					$550,000
Total Target Compensation					$2,435,000
Retirement Benefits
Pension (year-over-year change)					$39,935
Restoration Plan (year-over-year change)					$48,741
401(k) Company Match					$15,600
Payment Upon Termination (as of Dec 31, 2015)
Voluntary Termination					$0
Termination with Cause					$0
Involuntary Termination without Cause					$3,838,575
Retirement					$2,128,889
Death or Disability					$3,838,575
Change in Control					$7,503,564

 

(1)	Mr. Purgason’s ownership in our common stock did not meet the required NEO ownership threshold of three times base salary. Mr. Purgason joined the company with the ACMP acquisition.

(2)	Performance-based compensation includes performance-based RSUs, stock options, and AIP.

(3)	2015 Target 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.

 

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JOHN D. SELDENRUST   Senior Vice President - E&C (Engineering & Construction)   Position held since 2015   Stock ownership (1) <3x base salary   Performance-based compensation (2) 61% of total compensation		Mr. Seldenrust, 52, served as Senior Vice President - Eastern Operations for us from January 2015 to July 2015, and for Williams Partners from 2013 to July 2015. Mr. Seldenrust also previously served in a variety of operations and engineering leadership roles at Williams Partners and Chesapeake Energy Corporation (an oil and natural gas liquids producer) from 2004 to August 2013. Prior to joining Chesapeake, Mr. Seldenrust held reservoir, production and facilities engineering positions with ARCO Oil & Gas, Vastar Resources and BP America.
								2015 Target Compensation (1)
2015 Target Compensation (3)
Long-Term Incentives (LTI)					$1,400,000
Performance-based RSUs					$630,000
Time-based RSUs					$490,000
Stock Options					$280,000
Short-Term Incentive at Target
Annual Incentive Program (“AIP”)					$332,500
Special Incentive (4)					$250,000
Base Pay					$475,000
Total Target Compensation					$2,457,500
Retirement Benefits
Pension (year-over-year change)					$30,673
Restoration Plan (year-over-year change)					$25,106
401(k) Company Match					$15,600
Payment Upon Termination (as of Dec 31, 2015)
Voluntary Termination					$0
Termination with Cause					$0
Involuntary Termination without Cause					$3,202,828
Retirement					$0
Death or Disability					$3,202,828
Change in Control					$6,538,931

 

(1)	Mr. Seldenrust’s ownership in our common stock did not meet the required NEO ownership threshold of three times base salary. Mr. Seldenrust joined the company with the ACMP acquisition.

(2)	Performance-based compensation includes performance-based RSUs, stock options, AIP, and special incentive.

(3)

2015 Target 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. The target compensation models a full year of compensation. Mr. Seldenrust was promoted to Senior Vice President - E&C mid-year 2015.

(4)	Details on Mr. Seldenrust’s special incentive can be found in the Compensation Discussion and Analysis under “John Seldenrust Special Incentive Payment”.

 

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RORY L. MILLER   Senior Vice President - Atlantic - Gulf   Position held since 2013   Stock ownership (1) >3x base salary   Performance-based compensation (2) 57% of total compensation		Mr. Miller, 56, was Senior Vice President — Midstream of Williams and the general partner of Pre-merger Williams Partners, acting as President of Williams’ midstream business, from 2011 until 2013. Mr. Miller was a Vice President of Williams’ midstream business from 2004 until 2011. Mr. Miller served as a director and Senior Vice-President — Atlantic-Gulf of the general partner of Pre-merger Williams Partners from 2011 until the ACMP Merger and has served in those roles for the general partner of Williams Partners since the ACMP Merger. Mr. Miller has also served as a member of the Management Committee of Transcontinental Gas Pipe Line Company, LLC (an interstate natural gas transmission company indirectly owned by Williams Partners), since 2013.
								2015 Target Compensation (1)
2015 Target Compensation (3)
Long-Term Incentives (LTI)					$1,500,000
Performance-based RSUs					$675,000
Time-based RSUs					$525,000
Stock Options					$300,000
Short-Term Incentive at Target
Annual Incentive Program (“AIP”)					$343,000
Base Pay					$490,000
Total Target Compensation					$2,333,000
Retirement Benefits
Pension (year-over-year change)					($122,445	)
Restoration Plan (year-over-year change)					(79,285	)
401(k) Company Match					$15,600
Payment Upon Termination (as of Dec 31, 2015)
Voluntary Termination					$0
Termination with Cause					$0
Involuntary Termination without Cause					$2,540,765
Retirement					$2,152,670
Death or Disability					$2,540,765
Change in Control					$6,132,444

 

(1)	Mr. Miller’s ownership in our common stock exceeded the required NEO ownership threshold of three times base salary.

(2)	Performance-based compensation includes performance-based RSUs, stock options, and AIP.

(3)	2015 Target 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.

 

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Compensation Discussion & Analysis

The Compensation Discussion and Analysis (CD&A) provides a detailed description of the objectives and principles of Williams’ executive compensation programs. It explains how compensation decisions are linked to performance as compared to the Company’s strategic goals and stockholder interests. Generally, Williams’ executive compensation programs apply to all officers; however, this CD&A focuses on the Named Executive Officers (NEOs) for the Company for the 2015 fiscal year. The NEOs for the Company for the 2015 fiscal year are Mr. Armstrong, Mr. Chappel, Mr. Purgason, Mr. Seldenrust, and Mr. Miller.

We seek stockholder support on our executive compensation pay programs annually. In 2015, our stockholders supported our programs with 98.04 percent “for” votes. In considering this positive response, along with our analysis of the competitive market, we have not made any material changes to our overall executive compensation program.

Our Commitment to Pay for Performance

Pay for Performance

We design our compensation programs to support our commitment to performance. At target, 76 percent or more of an NEO’s compensation will vary based on our company performance.

 

 

The Summary Compensation Table provides required disclosures for the calendar years 2013, 2014, and 2015. The values provided for 2015 primarily reflect compensation program design decisions made in late 2014 and early 2015, which was before the significant downturn in the energy industry and the impact to Williams from the energy commodity price environment. These disclosures do not highlight how the recent industry downturn has impacted our Chief Executive Officer (CEO) and NEOs. We want to highlight how our CEO’s compensation has been impacted.

 

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The largest component of compensation for our CEO and NEOs is long-term incentive compensation in the form of equity awards, specifically designed to align our executive team with the experience of our stockholders. The 2015 equity awards were granted on February 23, 2015, well before the changing environment impacted Williams. As required, the Summary Compensation Table disclosure related to these awards reflects the value of the awards on the date of the grant, not the current value. The following demonstrates the difference in grant date values disclosed and the actual values of WMB stock on December 31, 2015 and, more recently, on September 19, 2016 for our CEO:

 

Alan Armstrong - CEO
Disclosed Grant Date Values Compared to Actual Values
Grant Year		Disclosed Grant Date Value				December 31, 2015 Value				Decline from Grant Date Value				September 19, 2016 Value (1)				Decline from Grant Date Value
2015		$	5,235,556			$	2,680,716				49	%		$	3,129,240				40	%
2014			8,242,083				4,273,139				48	%			4,988,100				39	%
2013			4,073,615				3,182,765				22	%			617,106				85	%

 

(1)

The September 19, 2016 equity value includes the 2013 performance-based RSU result of just 3.53% of target and values the 2013 RSU awards as of the date of vesting and distribution.

If we expand this analysis to include all of our CEO’s outstanding WMB equity awards as of December 31, 2015, not just the awards from 2013, 2014 and 2015, the impact is even greater as detailed in the table below:

 

Alan Armstrong - CEO
Disclosed Grant Date Values Compared to Actual Values
		June 30, 2015 Value				December 31, 2015 Value				Decline in Value				Decline %				September 19, 2016 Value (1)				Decline in Value				Decline %
Equity Value		$	47,760,063			$	12,934,436			$	34,825,627				73	%		$	13,030,902			$	34,729,161				73	%

 

(1)

The September 19, 2016 equity value includes the 2013 performance-based RSU result of just 3.53% of target and values the 2013 RSU awards as of the date of vesting and distribution.

The decline in outstanding equity award value experienced by Mr. Armstrong well exceeds the total compensation disclosed for the calendar years 2013 through 2015 in the Summary Compensation Table.

The details provided above demonstrate how the design of our executive compensation program reflects our focus on pay for performance and aligns our CEO and NEOs with our stockholders.

Long-term Incentives

 

Our most significant differentiator in performance is within our equity awards. We use equity awards to align compensation with the long-term interests of our stockholders. Equity awards consist of performance-based restricted stock units (RSUs), time-based RSUs, and stock options. The largest component of an NEO’s long-term incentive award is performance-based RSUs. Both relative and absolute total stockholder return (TSR) are used to determine the actual number of units that will be distributed to an NEO upon vesting. We are unique among our comparator companies in measuring both relative and absolute TSR to determine results and ultimately the number of units that vest. Relative				We’re unique. We consider both relative and absolute total stockholder return in determining our NEO equity grants.
TSR gauges our TSR performance relative to our comparator companies while absolute TSR requires that we deliver a strong absolute TSR to our stockholders. In February 2015, the performance-based RSUs granted in 2012 for the performance period 2012 through 2014 exceeded our three-year annualized TSR targets by achieving

 

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a relative TSR performance in the second quartile of our comparator group and by achieving more than 24 percent for the annualized absolute TSR delivered to our stockholders. As a result of this strong performance, the performance pay-out for these awards was 169 percent. By contrast, the 2013 performance based RSUs for the performance period 2013 through 2015 generated an award of just 3.5 percent of target and distributed in early 2016. Additionally, we consider stock options to be performance-based compensation. Stock options only provide value to the extent that the Company’s stock price has increased above the grant price and therefore stockholders have benefited.

Annual Incentive Program

Our performance-based cash compensation is paid under our Annual Incentive Program (AIP) which is based on financial performance and individual performance. Under this program, cash compensation reflects annual business performance and is based on weighted measures of distributable cash flow, controllable costs, fee-based revenue, and three safety metrics.

2015 Business Overview

 

We marked 2015 with the continued expansion in the portfolio of opportunities led by growth on the demand side of the natural gas market as we placed four Transco system expansion projects into service during the year. Work was completed on a fifth Transco system expansion project (Leidy Southeast) in 2015, and that project was placed into service in the first quarter of 2016.   Our work to deliver the best supplies to the best markets was enhanced by our ability to deliver on very large complex projects including bringing the Geismar olefins plant back online and placing the new Bucking Horse gas processing facility into service in the Niobrara Shale. In addition, we added to our Eagle Ford Shale assets, acquiring a gathering system there while also increasing our ownership in Utica East Ohio Midstream L.L.C., a joint project to develop infrastructure for the gathering, processing and fractionation of natural gas and natural gas liquids in the Utica Shale play in Eastern Ohio.   Despite the headwinds of low commodity prices, we further positioned Williams in 2015 to take advantage of long-term natural gas demand growth in power generation, manufacturing and exports. In 2016 and 2017, Williams Partners is planning to deploy $5 billion for growth capital and investment expenditures. Substantially all of this planned spending is for fee-based projects, with approximately 75 percent of the total spending directed to fully contracted Transco projects supported by demand charges.

2015 Projects and milestones

 

•

In first quarter 2015, Williams Partners’ Bucking Horse gas processing facility, located in Converse County, Wyoming, became operational. Bucking Horse adds 120 MMcf/d of processing capacity in the Powder River basin Niobrara Shale play. Processed volumes at Bucking Horse continued to increase throughout 2015 as existing rich gas production was re-directed from other third-party processing facilities. Bucking Horse has led to higher gathering volumes in 2015 as previously curtailed production has increased due to the additional processing capability.

 

•

In first quarter 2015, Williams’ Texas Belle Pipeline (Texas Belle) went into service. Texas Belle is a 32-mile open access, service focused pipeline that transports NGLs and was designed to deliver butanes and natural gasolines from Mont Belvieu, Texas, to new demand in the Houston Ship Channel area.

 

•

In second quarter 2015, Williams Partners’ Mobile Bay South III expansion south from Station 85 in west central Alabama to delivery points along the Mobile Bay line was placed into service, which enabled us to begin providing 225 Mdth/d of additional firm transportation service on the Mobile Bay Lateral as part of this Transco expansion.

 

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•

In second quarter 2015, Williams Partners’ Rockaway Delivery Lateral expansion between Transco’s transmission pipeline and the National Grid distribution system was placed in service, which enabled us to begin providing 647 Mdth/d of additional firm transportation service to a distribution system in New York.

 

•

In second quarter 2015, Williams Partners’ Northeast Connector project was placed into service, which increased firm transportation capacity by 100 Mdth/d from Transco’s Station 195 in southeastern Pennsylvania to the Rockaway Delivery Lateral.

 

•

In second quarter 2015, Williams Partners acquired a gathering system in the Eagle Ford Shale comprised of approximately 140 miles of pipeline and a sour gas compression facility capable of handling up to 100 MMcf/d in the Eagle Ford shale for $112 million. The acquisition is contributing approximately 20 MMcf/d to the existing Eagle Ford throughput of approximately 400 MMcf/d.

 

•

In second quarter 2015, Williams Partners acquired an approximate 13 percent equity interest in UEOM for approximately $357 million, increasing our ownership from 49 percent to approximately 62 percent.

 

•

In third quarter 2015, Williams Partners’ Virginia Southside expansion from New Jersey to a power station in Virginia and delivery points in North Carolina was placed into service. On Dec. 1, 2014, we placed a portion of the project into service, which enabled us to begin providing 250 Mdth/d of additional firm transportation service through the mainline portion of the project on an interim basis, until the in-service date of the project as a whole. We placed the remainder of this Transco expansion project into service in September 2015. In total, the project increased capacity by 270 Mdth/d.

 

•

In third quarter 2015, Williams Partners announced an expansion of gas gathering services for a certain major producer customer in dry gas production areas of the Utica Shale in eastern Ohio and a consolidation of contracts in the Haynesville Shale in northwestern Louisiana.

 

•

In third quarter 2015, Williams Partners executed a long-term fee-based contract in the Utica that extends the length of certain acreage dedication to 2035, increases the area of dedication from 140,000 acres to 190,000 net acres and converts the cost-of-service mechanism to a fixed-fee structure with minimum volume commitments (MVCs).

 

•

In third quarter 2015, Williams Partners announced a new Haynesville contract which consolidated the Springridge and Mansfield contracts into a single agreement with a fixed-fee structure and extends the contract term to 2035. The consolidated contract is supported by MVCs and a drilling commitment to turn 140 equivalent wells online before the end of 2017.

 

•

In fourth quarter 2015, Williams was awarded the Platts 2015 Global Energy Award for its industry leadership in the midstream sector. The award recognized Williams for executing on its strategy to connect the best natural gas supplies to the best markets while helping break new ground in such areas as technology, operational excellence and methane emission research.

 

•

In 2015, we placed in service an expansion of the olefins production facility that increased its ethylene production capacity by 600 million pounds per year, for a total production capacity of 1.95 billion pounds of ethylene and 114 million pounds of propylene per year.

 

•

In first quarter 2016, Williams Partners’ Leidy Southeast was placed into service, which expands Transco’s existing natural gas transmission system from the Marcellus Shale production region on Transco’s Leidy Line in Pennsylvania to delivery points along its mainline as far south as Station 85 in west central Alabama. In March 2015, we began providing firm transportation service through the mainline portion of the project on an interim basis until the in-service date of the project as a whole. We placed the remainder of the project into service during January 2016 increasing capacity by 525 Mdth/d.

 

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•

The accompanying chart compares Williams’ cumulative total stockholder return on our common stock (assuming reinvestment of dividends) to the cumulative total return of the S&P 500 Stock Index and the median of our comparator company group. For more details on our comparator company group, see the CD&A section titled “Determining Our Comparator Group.” The graph below assumes an initial investment of $100 at the beginning of the period on December 31, 2012.

 

Compensation Summary

Objective of Our Compensation Programs

The role of compensation is to attract and retain the talent needed to increase stockholder value and to help our businesses meet or exceed financial and operational performance goals. 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, in 2015 we used relative and absolute TSR to measure long-term performance; and we used distributable cash flow, controllable costs, fee-based revenue, and safety metrics to measure annual performance. We believe using separate long-term and annual metrics to incent and pay NEOs helped ensure that the business decisions made were 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, execution, improvement, teamwork, and safety.

 

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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 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.

 

Pay Principles		Long-term Incentives		Annual Cash Incentives		Base Pay		Benefits
Pay should reinforce business objectives and values.		l		l		l
A significant portion of an NEO’s total pay should be variable based on performance.		l		l
Incentive pay should balance long-term, intermediate, and short-term performance.		l		l
Incentives should align interest of NEOs with stockholders.		l		l
Pay should foster a culture of collaboration with shared focus and commitment to our Company.		l		l
Incentives should enforce the value of safety within our Company.				l
Pay opportunities should be competitive.		l		l		l		l
A portion of pay should be provided to compensate for the core activities required for performing in the role.						l		l

Our Commitment to Pay for Performance

 

 

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2015 Comparator Group

Determining Our Comparator Group

Companies in our comparator group have a range of revenues, assets, market capitalization, and enterprise value. Business consolidation and unique operating models create some challenges in identifying comparator companies. Accordingly, we take a broad view of comparability to include organizations that are similar to Williams. This results in compensation that is appropriately scaled and reflects comparable complexities in business operations. We typically aim for a comparator group of 15 to 20 companies so our comparisons will be valid. The 2015 comparator group includes 19 companies which comprised a mix of both direct business competitors and companies with whom we compete for talent.

How We Use Our Comparator Group

We refer to publicly available information to analyze our comparator companies’ practices including how pay is divided among long-term incentives, annual incentives, base pay, 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 surrounded by unique circumstances, the data is completely removed from the assessment. Three of our comparator companies are not considered in our aggregate pay statistics due to significant pay practice differences, but are still considered in the analysis of company performance with regard to our performance-based equity awards. The Committee determined not to makes any changes to the comparator group for 2016.

 

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The following table shows the range of our 2015 comparator companies’ revenues, assets, market capitalization, and enterprise value as originally reported for 2014. ( dollars in millions )

 

Company Name		Ticker		Revenue				Total Assets				Market Capitalization				Enterprise Value
CENTERPOINT ENERGY INC.		CNP			$9,226				$23,200				$10,075				$17,704
DEVON ENERGY CORP.		DVN			19,566				50,637				25,035				39,619
DOMINION RESOURCES INC.		D			12,436				54,327				44,987				71,026
ENBRIDGE INC.		ENB			34,107				62,697				43,803				82,989
ENERGY TRANSFER EQUITY LP		ETE			55,691				64,469				31,003				82,339
ENTERPRISE PRODUCTS		EPD			47,951				47,100				69,976				92,895
EOG RESOURCES		EOG			17,528				34,763				50,482				54,311
KINDER MORGAN INC.		KMI			16,226				83,198				89,915				130,879
MARK WEST ENERGY PARTNERS LP		MWE			2,176				10,981				13,339				17,835
NISOURCE INC.		NI			6,471				24,866				13,406				23,355
ONEOK INC.		OKE			12,195				15,305				10,372				21,829
PLAINS ALL AMERICAN PIPELINE		PAA			43,464				22,256				19,251				28,955
PG&E		PCG			17,090				60,127				25,338				40,824
PIONEER NATURAL RESOURCES		PXD			4,325				14,926				22,179				23,810
SEMPRA ENERGY CORP.		SRE			11,035				39,732				27,395				41,928
SOUTHERN CO.		SO			18,467				70,923				44,607				70,064
SPECTRA ENERGY CORP.		SE			5,903				34,040				24,357				41,275
TARGA RESOURCES CORP.		TRGP			8,617				6,454				4,469				9,643
TRANSCANADA CORP.		TRP			9,229				50,727				34,795				62,176
75th percentile					$19,017				$57,227				$44,205				$70,545
50th percentile					12,436				39,732				25,338				41,275
25th percentile					8,922				22,728				16,328				23,583
The Williams Companies, Inc.		WMB			$7,637				$50,563				$33,594				$66,307
Percent rank					20%				61%				65%				70%

Our Pay Setting Process

During the first quarter of the year, the Committee completes a review to ensure we are paying competitively, equitably, and in a way that encourages and rewards performance.

The compensation data of our comparator group, disclosed primarily 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 is used to supplement and validate comparator group market data.

 

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Although the Committee reviews relevant data as it designs compensation packages, setting pay is not an exact science. Because market data alone does not reflect the strategic competitive value of various roles within our Company, internal pay equity is also considered when making pay decisions. Other considerations when making pay decisions for the NEOs include individual experience, sustained performance, historical pay, realized and realizable pay over three years, 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.				Multiple internal and external factors are considered when determining NEO compensation packages.

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. 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 versus actual pay mix will vary, specifically as it relates to the annual cash incentives and long-term incentives.

 

CEO 2015 Total Compensation at Target Pay Mix				NEO (Excluding CEO) 2015 Total Compensation at Target Pay Mix

 

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How We Determine the Amount for Each Type of Pay

Long-term incentives, annual cash incentives, base pay, and benefits accomplish different objectives. The table below illustrates a summary of the primary objectives associated with each component of pay listed in the order of most significant to the NEO’s total compensation. The table is followed by specific details regarding each pay component.

 

Long-Term Incentives

To determine the value for long-term incentives granted to an NEO each year, we consider the following factors:

 

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The proportion of long-term incentives relative to base pay;

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The NEO’s impact on Company performance and ability to create value;

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Long-term business objectives;

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Awards made to executives in similar positions within our comparator group of companies;

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The market demand for the NEO’s particular skills and experience;

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The amount granted to other NEOs in comparable positions at the Company;

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The NEO’s demonstrated performance over the past few years; and

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The NEO’s leadership performance.

A summary of the long-term incentive program details for 2015 are shown in the table below. 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 a greater percentage of his long-term incentives are directly tied to the performance of the Company’s stock price.

 

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		Performance-based RSUs		Time-based RSUs		Stock Options
CEO Equity Mix		55%		25%		20%
NEO Equity Mix		45%		35%		20%
Term		Three years		Three years		10 years
Frequency		Granted annually		Granted annually		Granted annually
Performance Criteria		Absolute TSR and Relative TSR		Retention		Stock price appreciation
Vesting		Cliff vesting after three years		Cliff vesting after three years		Ratable vesting over three years
Payout		Upon vesting, shares are distributed based on performance certification (0% - 200%)		Upon vesting, shares are distributed		Upon vesting, options are available to exercise
Dividends		No dividends		Dividend equivalents accrued and paid in cash upon vesting		No dividends

We continued to grant long-term incentives in the form of (1) performance-based RSUs, (2) time-based RSUs, and (3) stock options in 2015 to emphasize our commitment to pay for performance, enable ownership in the Company, and ensure appropriate retention of our NEOs.

Performance-based RSUs. Performance-based RSUs awarded are only earned if we attain specific TSR results. We measure both relative TSR and absolute TSR as interdependent measures in determining the attainment level of our performance-based awards. Including absolute TSR ensures that we are delivering value to our stockholders, not simply performing well against our peers. Relative TSR may place us at the top of our peers; however, if we have not delivered value to our stockholders, awards would be limited. The majority of companies in our comparator group typically consider only their TSR performance relative to a defined peer group. Performance-based equity is a significant portion of our NEO compensation. The performance-based RSU matrix included in this section shows how the two metrics work together to generate a performance multiple.

A maximum payout is achieved only when we exceed our goals both in absolute and relative terms.

Example 1 : If our Relative TSR performance is below the median (i.e., 50 Percentile) of our comparator company group, we only deliver a payout if our Annualized Absolute TSR performance is at least 7.5 percent during the three-year period. At a 7.5 percent annualized TSR result, the payout would be between 0 percent to 50 percent of the original grant.

Example 2: Relative TSR performance near or at the top of our comparator group would be capped at 60 percent of the original grant if we fail to return at least 7.5 percent to our stockholders. This would result in each NEO receiving well below the targeted award despite high relative TSR compared to our peers.

 

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This philosophy is in contrast to the common market practice of utilizing only relative TSR. Without delivering the threshold absolute return to stockholders, relative TSR that fails to exceed the median of the comparator group will not generate any payout.

 

The performance-based RSUs granted in 2012 for the 2012-2014 performance period exceeded targets set for both absolute and relative TSR at the beginning of each performance period resulting in a strong performance score of 169 percent. The 2012 awards were distributed in 2015. Of note, the past six vesting periods through 2015, two of our performance-based RSU grants have not achieved the minimum threshold for payout while four have achieved above target performance.

Minimum Vesting Period.  In 2015, the 2007 Incentive Plan required a minimum three-year vesting period for all RSU awards and at least a portion of all stock option awards.

2012 Performance-based RSUs Earned.  The three-year performance cycle for our 2012 performance-based RSUs was completed at the end of 2014 and earned awards were distributed in 2015 upon vesting and performance certification. As discussed earlier in the CD&A, we surpassed the stretch goal for the annualized TSR and performed well relative to our comparator companies achieving a relative TSR performance in the top quartile of our comparator company group. Applying these results generated a 169 percent of target performance result.

2013 Performance-based RSUs Earned.  Despite TSR performance in the top half of our comparator company group, we did not meet the three-year performance target for our 2013 performance cycle which ran through 2015. As a result of the decline in the WMB share price in late 2015, we did not achieve the threshold level of absolute TSR performance. We finished in the second quartile of TSR performance among our comparator company group. Applying these results to the displayed matrix generated an award of just 3.5 percent of target and earned awards were distributed in 2016 upon vesting and performance certification.

Time-based RSUs.  We grant time-based RSUs 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. In 2012, we began accruing dividend equivalents on our time-based RSUs in line with transformation into a high-growth, high-dividend energy infrastructure company. Accrued dividend equivalents will only distribute upon vesting.

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.

 

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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 2015 were consistent with prior years. 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.

Stock Ownership Guidelines . Our program provides stock ownership guidelines for each of our NEOs and our Board of Directors as shown in the table below:

 

Position		Ownership Multiple		As a Multiple of		Holding / Retention Requirement
CEO		6x		Base Pay		50%, after taxes, until guidelines are met
NEO		3x		Base Pay		50%, after taxes, until guidelines are met
Board of Directors		5x		Annual Cash Retainer		60% until guidelines are met

The Committee annually reviews the guidelines for competitiveness and alignment with best practices and monitors the NEOs’ progress toward compliance. Only WMB shares owned outright and outstanding time-based RSUs count as owned for purposes of the program. Stock options and performance-based equity are not included as owned for purposes of the program. (It is important to note that the majority of NEO equity grants are in the form of performance-based RSUs and stock options.) NEOs must retain 50 percent of any vested equity awards, net of taxes, until their ownership guidelines are met. Board members must retain 60 percent of distributed vested equity awards until their ownership guidelines are met. At Williams, NEOs must hold at least 50 percent of any equity transaction if they have not met their ownership guideline regardless of their time in the role.

Annual Cash Incentives

As previously mentioned in the “Our Commitment to Pay for Performance” section, we pay annual cash incentives to encourage and reward our NEOs for making decisions that improve our annual operating performance through our AIP. The objectives of our AIP are to:

 

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Motivate and incent management to choose strategies and investments that maximize long-term stockholder value;

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Offer sufficient incentive compensation to motivate management to put forth extra effort, take prudent risks, and make effective decisions to maximize stockholder value;

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Provide sufficient total compensation to retain management;

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Limit the cost of compensation to levels that will maximize the return of current stockholders without compromising the other objectives.

NEOs’ AIP business performance is based on enterprise results of these business metrics in relation to established targets. We only use enterprise-level performance metrics for our NEOs in order to promote teamwork and collaboration by creating a shared goal for the overall Company performance. Our incentive program allows the Committee to make adjustments to these business performance metrics to reflect certain business events. 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.

 

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Management regularly reviews with the Committee a supplemental scorecard reflecting the Company’s adjusted EBITDA, earnings per share, cash flow from operations, stock price performance, capital expenditures, WMB dividend coverage ratio, and safety to provide updates regarding the Company’s performance as well as to ensure alignment between these measures and the AIP’s business performance metrics. This scorecard provides the Committee with additional data to assist in determining final AIP awards.

The Committee’s independent compensation consultant annually compares our relative performance on various measures, including TSR and earnings per share with our comparator group of companies. The Committee also uses this analysis to validate the reasonableness of our AIP results.

How We Set the 2015 AIP Goals.

 

 

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The AIP Calculation . The 2015 AIP is based on the weighted measures of distributable cash flow, controllable costs, fee-based revenue, and three safety metrics. Each metric is directly aligned with our business strategy to operationally grow the business, operate safely in everything we do, and continue to align with our dividend growth strategy.

 

For 2015, there were three safety metrics, each of which are equally weighted. The metrics include Lost Time Incident Rate, Days Away From Work Rate and Motor Vehicle Accident Rate.

The attainment percentage of AIP goals results in payment of annual cash incentives along a continuum between threshold and stretch levels, which corresponds to 0 percent through 200 percent of the NEO’s annual cash incentive target. NEOs have the possibility to exceed the stretch level up to 250 percent of their annual cash incentive target. The charts below show the goals for the 2015 annual cash incentive and the resulting payout level.

2015 NEO AIP Targets . The starting point to determine annual cash incentive targets (expressed as a percentage 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 2015 were as follows:

 

Position		Target
CEO			125	%
CFO			75	%
SVP, Central OA and Operational Excellence			70	%
SVP, Engineering and Construction			70	%
SVP, Atlantic - Gulf			70	%

 

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Determining 2015 AIP Awards.  To determine the funding of the annual cash incentive, we use the following calculation for each NEO:

 

Based on business performance relative to the established goals, the Committee certified business performance results as follows and the 2015 AIP award payout at 82 percent of target was paid in early March 2016:

 

We calculate (a) Distributable Cash Flow as: Modified EBITDA , adjusted for certain items of income or loss that we characterize as unrepresentative of our ongoing operations; less maintenance capital expenditures; less interest expense; less cash taxes; less income attributable to non-controlling interests, adjusted for certain items outside of EBITDA that we characterize as unrepresentative of our ongoing operations; (b) Controllable Costs as: operating and maintenance costs and selling , general and administrative costs that are under the responsibility of a cost center manager; less certain expenses that are considered less controllable (such as pension and postretirement benefit

 

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costs) or have no net impact on financial performance (such as costs that are passed directly to customers); and (c) Fee-based Revenues as: total service revenues from our reportable segments before intercompany eliminations; less certain tracked revenues that have no net impact on financial performance. In addition, each measure above may be further adjusted as appropriate to avoid undue penalties or windfalls. ( Italicized components include our proportionate share of such items recognized by our equity method investees.)

Individual performance, such as success toward our strategic objectives and individual goals, and successful demonstration of the Company’s leadership competencies, which exceeded expectations may be recognized through adjustments. Payments may also be adjusted downward if performance warrants. The Committee chose to apply an adjustment to certain NEOs. For those receiving an adjustment, the amount of the adjustment was within 11 percent of the original calculated award. Additionally, Mr. Chappel received an incremental adjustment as disclosed in the Summary Compensation Table.

As previously stated, our incentive program allows the Committee to make adjustments to these business performance metrics to reflect certain business events. The Committee rigorously discussed the current industry dynamic of deteriorating commodity prices, and whether or not to adjust NEO annual cash incentives to recognize the negative impact to our stockholders. We have highlighted the loss of value to Mr. Armstrong’s compensation based on his equity holdings earlier in this document. In considering the importance of pay for performance and total compensation including long-term incentives, annual cash incentives and base salary, the Committee elected to manage the 2015 incentive program as it was designed and communicated.

John Seldenrust Special Incentive Payment. Supporting an investment to develop best-in-class engineering and construction capabilities, the Committee provided a special incentive program for John Seldenrust. The program defines performance goals for 2015, 2016 and 2017 and provides an annual payout of $250,000 at target. If the target goal is not achieved, no payment will be made. If both the target and stretch goals are achieved, the payment will be $500,000. In 2015, Mr. Seldenrust achieved the $500,000 payout amount by meeting target and stretch performance goals related to the integration of the gathering compression across our Northeast operating area following the 2014 acquisition of ACMP, completing a standard compression facility design, and eliminating more than 90 percent of the identified gathering compression integration gaps. Mr. Seldenrust’s 2015 special incentive was paid in early 2016.

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 long-term and annual 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, operational and/or functional area strategies, and personal development plans. Right Way reflects the NEOs’ behavior as exhibited through our organizational, operational, and people leadership competencies.

Benefits

Consistent with our philosophy to emphasize pay for performance, our NEOs receive very few perquisites or supplemental benefits. They are as follows:

 

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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 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

 

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limit. For 2015, the limit was $265,000. Any limitation in an NEO’s pension benefit in the tax-qualified pension plan due to this limit is made up for (subject to a cap) in the unfunded retirement restoration plan. Benefits for NEOs are not enhanced and are calculated using the same benefit formula as that used to calculate benefits for all employees in the qualified pension plan. The compensation included in the retirement restoration benefit is consistent with pay considered for all employees in the qualified pension plan. Equity compensation, including RSUs and stock options, is not considered. Additionally, we do not provide a nonqualified benefit related to our qualified 401(k) defined contribution retirement plan.

 

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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. Covered services include estate planning, tax planning, tax return preparation, wealth accumulation planning, and other personal financial planning services. 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.

 

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Personal Use of Company Aircraft . The CEO is allowed, but not required, to use the Company’s private 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. To the extent that NEOs use the Company’s private aircraft for personal travel, imputed income will be applied to the NEO, in compliance with Internal Revenue Code requirements.

 

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Executive Physicals . The Committee requires annual physicals for the NEOs. NEO physicals align with our wellness initiative as well as assist in mitigating risk. NEO physicals are intended to identify any health risks and medical conditions as early as possible in an effort to achieve more effective treatment and outcomes.

 

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Event Center . We have a suite and club seats at certain event centers that were purchased for business purposes. If they are not being used for business purposes, we make them available to all employees, including our NEOs, as a form of reward and recognition. This is not a perquisite to our NEOs because it is available to all employees.

 

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Spousal Travel . When it is deemed necessary or appropriate for spouses of employees to travel for Company business purposes, we provide a tax gross-up under our company-wide policy to cover the personal tax obligations associated with spousal travel for business purposes for all employees.

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.

Employment Agreements. We do not have employment agreements with our NEOs.

Termination and Severance Arrangements. The NEOs were not covered under a severance plan in 2015. However, the Committee may exercise judgment and consider the circumstances surrounding each departure and may decide a severance package is appropriate. Considerations include the NEO’s 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.

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 NEO’s employment must terminate prior to receiving

 

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benefits under the agreement. 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 cost 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. We do not offer a tax gross-up provision in our change in control agreements but instead include 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. 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 following the CD&A for further discussion of our change in control program.

 

Change in Control Benefit		What does the benefit provide to the Company and stockholders?		What does the benefit provide to 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 two or 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 year’s 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 an unstable 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.
‘Best Net’ provision		Enables the change in control benefits to be delivered in as close a manner to the intended value of the benefits as possible.		Provides NEOs with the better of their after-tax benefit capped at the safe harbor amount or their benefit paid in full, which would subject them to possible excise tax payments.

 

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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 using equivalent derivative securities in connection with Williams’ or its affiliates’ securities. Williams also prohibits officers, directors and key employees from including Williams’ securities in a margin account or pledging Williams’ securities as collateral for a loan.

Mitigating Risk

Although no compensation-related risk was identified as a top risk for 2015, the approach to determine if there were adverse compensation risks was similar to the process detailed in the “Corporate Governance and Board Matters — Corporate Governance — Board Oversight of Williams’ Strategic Risk Assessment” section of this proxy statement. After this thorough review and analysis, it was determined we do not have material adverse compensation-related risks. Our compensation plans are effectively designed and functioning to reward positive 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 which are the foundation on which we conduct business. Our Core Values & Beliefs can be found on our website at www.williams.com from the Our Company tab. In fact, many elements of our executive pay program serve to mitigate excessive risk taking. For example:

 

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Target Pay Mix. The target pay mix weighting of 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 long, intermediate, and short terms.

 

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Annual Cash Incentive. Our annual cash incentive program does not allow for unlimited payouts. Cash incentive payments for NEOs cannot exceed 250 percent of target levels.

 

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Performance-based Awards.

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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.

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To drive a long-term perspective, all RSU awards vest at the end of three years rather than vesting ratably on an annual basis.

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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.

 

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Stock Ownership Guidelines. As discussed in this CD&A, all NEOs, consistent with their responsibilities to stockholders, must hold an equity interest in the Company equal to a stated multiple of their base pay.

 

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Recoupment Policy. In the event that financial results of the Company are restated due to fraud or intentional misconduct, the Board will review any performance-based incentive payments, including payments under the AIP and performance-based RSUs, paid to executive officers, who are found by the Board to be personally responsible for the fraud or intentional misconduct that caused the need for the restatement and will, to the extent permitted by applicable law, seek recoupment from all executive officers of any amounts paid in excess of the amounts that would have been paid based on the restated financial results. In addition, the Company will take action to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 upon promulgation of final rules from the SEC.

 

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Insider Trading Policy. Our insider trading policy prohibits NEOs and directors, directly or through family members or other persons or entities, from buying or selling Williams’ securities or engaging in any other action to take personal advantage of material nonpublic information. In addition, if during the course of working for the Company, the NEO or Director learn of material nonpublic information about a competitor or a company with which Williams or an affiliate of Williams does or anticipates doing business with, they may not trade in that company’s securities until the information becomes public or is no longer material.

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.

 

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