7. Stockholders' Equity

The authorized capital stock of Devon consists of 800 million shares of common stock, par value $0.10 per share, and 4.5 million shares of preferred stock, par value $1.00 per share. The preferred stock may be issued in one or more series, and the terms and rights of such stock will be determined by the Board of Directors.

Effective August 17, 1999, Devon issued 1.5 million shares of 6.49% cumulative preferred stock, Series A, to holders of PennzEnergy 6.49% cumulative preferred stock, Series A. Dividends on the preferred stock are cumulative from the date of original issue and are payable quarterly, in cash, when declared by the Board of Directors. The preferred stock is redeemable at the option of Devon at any time on or after June 2, 2008, in whole or in part, at a redemption price of $100 per share, plus accrued and unpaid dividends to the redemption date.

Devon's Board of Directors has designated a certain number of shares of the preferred stock as Series A Junior Participating Preferred Stock (the "Series A Junior Preferred Stock") in connection with the adoption of the shareholder rights plan described later in this note. On April 25, 2003, the Board increased the designated shares from 2.0 million to 2.9 million. At December 31, 2007, there were no shares of Series A Junior Preferred Stock issued or outstanding. The Series A Junior Preferred Stock is entitled to receive cumulative quarterly dividends per share equal to the greater of $1.00 or 200 times the aggregate per share amount of all dividends (other than stock dividends) declared on common stock since the immediately preceding quarterly dividend payment date or, with respect to the first payment date, since the first issuance of Series A Junior Preferred Stock. Holders of the Series A Junior Preferred Stock are entitled to 200 votes per share (subject to adjustment to prevent dilution) on all matters submitted to a vote of the stockholders. The Series A Junior Preferred Stock is neither redeemable nor convertible. The Series A Junior Preferred Stock ranks prior to the common stock but junior to all other classes of Preferred Stock.

Stock Repurchases

In June 2007, Devon's Board of Directors approved an ongoing, annual stock repurchase program to minimize dilution resulting from restricted stock issued to, and options exercised by, employees. This repurchase program authorized the repurchase of up to 4.5 million shares in 2007. In 2008, the ongoing annual stock repurchase program authorizes the repurchase of up to 4.8 million shares or $422 million, whichever amount is reached first. In anticipation of the completion of the West African divestitures (see Note 13), Devon's Board of Directors has approved a separate program to repurchase up to 50 million shares. This program expires on December 31, 2009.

These programs are in addition to a 50 million share repurchase program approved by Devon's Board of Directors in August 2005, which expired on December 31, 2007. Additionally, in October 2004 Devon's Board of Directors approved a 50 million share repurchase program that was completed in August 2005.

During the three-year period ended December 31, 2007, Devon repurchased 55.2 million shares at a total cost of $2.8 billion, or $51.49 per share, under these repurchase programs. During 2007, Devon repurchased 4.1 million shares at a cost of $326 million, or $79.80 per share. During 2006, Devon repurchased 4.2 million shares at a cost of $253 million, or $59.61 per share. During 2005, Devon repurchased 46.9 million shares at a cost of $2.3 billion, or $48.28 per share.

Shareholder Rights Plan

Under Devon's shareholder rights plan, stockholders have one-half of one right for each share of common stock held. The rights become exercisable and separately transferable ten business days after (a) an announcement that a person has acquired, or obtained the right to acquire, 15% or more of the voting shares outstanding, or (b) commencement of a tender or exchange offer that could result in a person owning 15% or more of the voting shares outstanding

Each right entitles its holder (except a holder who is the acquiring person) to purchase either (a) 1/100 of a share of Series A Preferred Stock for $185.00, subject to adjustment or, (b) Devon common stock with a value equal to twice the exercise price of the right, subject to adjustment to prevent dilution. In the event of certain merger or asset sale transactions with another party or transactions that would increase the equity ownership of a shareholder who then owned 15% or more of Devon, each Devon right will entitle its holder to purchase securities of the merging or acquiring party with a value equal to twice the exercise price of the right.

The rights, which have no voting power, expire on August 17, 2009. The rights may be redeemed by Devon for $0.01 per right until the rights become exercisable.

Dividends

Devon paid common stock dividends of $249 million (or $0.56 per share), $199 million (or $0.45 per share) and $136 million (or $0.30 per share) in 2007, 2006 and 2005 respectively. Devon paid $10 million in 2007, 2006 and 2005 to preferred stockholders.