From The Wall Street Journal

Anadarko Petroleum Corp., a day before announcing its sale for $33 billion, sweetened the payout its top executives can reap in the event of a deal by millions of dollars, according to a compensation firm’s analysis of the company’s changes.

Anadarko Chief Executive Al Walker is set to receive a minimum of about $43 million—as much as $6.7 million more than the prior low range he would have been given before the changes in executive pay—and possibly more once the acquisition by Chevron Corp. is completed, said Equilar Inc., a data tracker that analyzed the executive payouts at the request of The Wall Street Journal.

The changes were approved by the company’s board on April 11, a day before the merger announcement, according to a securities filing April 17. The changes also benefited other senior executives, including the chief financial officer and general counsel.

Collectively, the top executives are set to receive as much as $125 million, according to securities filings and the Equilar analysis, including up to $22 million more than before the changes. The additional compensation is tied to bonus payments for the deal and additional funds to offset the impact of taxes, documents show.

The added payments also will boost Mr. Walker’s compensation during his tenure as Anadarko CEO, even as the company has underperformed major peers and the S&P 500. Mr. Walker is expected to leave Anadarko after the deal is completed.

Anadarko declined to comment.

Hefty payouts for departing executives—often called golden parachutes—have been controversial in the past, even prompting new tax laws meant to restrict the payments. Mr. Walker’s compensation won’t exceed some of the most notable examples, including a few corporate leaders that received in excess of $100 million.

In 2005, the state of Massachusetts opened an investigation after it was revealed that Gillette Co. CEO James Kilts would receive a pay package of as much as $185 million when its sale to Procter & Gamble Co. was complete, including $32 million more than a previous estimate. The deal was later approved by investors.

Anadarko shareholders will weigh whether to approve the deal in the coming months even as some analysts have speculated that a rival bid could emerge. Anadarko shares traded at about a 1% premium to the Chevron offer Monday, a signal that some investors believe the offer could improve.

The Woodlands, Texas-based company has been the subject of takeover speculation for years. Anadarko also had talks with Occidental Petroleum Corp. before the deal with Chevron was announced, and Occidental was willing to pay a higher price than Chevron, according to people familiar with the matter.

A Chevron spokesman said the company expected the deal to close as announced, echoing remarks by Chevron Chief Executive Mike Wirth on April 12. An Occidental spokeswoman declined to comment.

Governance experts said aspects of Anadarko’s pay changes were unusual and generally frowned upon by shareholder advocacy groups, such as voting on the changes so close to announcing a deal and looking to offset the impact of taxes meant to limit such payouts. A 2012 severance agreement for Mr. Walker also has a provision specifying that in the event that a payout reached from a deal would trigger the tax, the compensation would be reduced.

Compensation in the event of a deal, often called a “change in control” provision, should be negotiated well in advance as part of a company’s normal proxy process approved by shareholders to ensure that management will act in the best interest of investors, said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

“The sweeteners aren’t for the shareholders, and when they’re present, it always calls into question why management accepted a deal,” said Mr. Elson. “That’s why they’re a bad idea.”

The bump in Mr. Walker’s pay includes a new transaction bonus of about $3.4 million, as revealed in the April 17 filing, and $1.3 million more in cash because of changes in how his severance is calculated.

The increase due to the changes was at least $4.7 million and could be $2 million higher because of a revision in how a separate termination-related bonus was prorated, according to Equilar.

The Anadarko board also voted to pay any added taxes Mr. Walker and other executives will face, a decision that could push the compensation related to the deal up by millions more.

If the merger is completed as announced, it will cap a lucrative run as Anadarko’s CEO for Mr. Walker, who assumed the post in 2012. His compensation since becoming CEO would reach almost $127 million, according to Equilar. Since that time, Anadarko shares have risen by about 3%, including reinvested dividends.

Anadarko’s stock had the worst performance among its five closest peers over that span. EOG Resources Inc., ConocoPhillips , Occidental Petroleum, Pioneer Natural Resources Co. and Concho Resources Inc. saw their stock value, including dividends, rise by an average of 62% in that time, according to FactSet data.

Occidental investors didn’t respond well to news that the company had been interested in acquiring Anadarko. Occidental shares fell almost 6% in the two trading days after the deal was announced on April 12. Shareholders and some analysts have said the Chevron offer may be superior, given that the company is much larger and can more easily digest such a large acquisition.

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