UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities
Exchange Act of 1934 (Amendment
(Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
x | ||||||
| Preliminary Proxy Statement | ||||||
¨ | Definitive Proxy Statement | |||
¨ | Definitive Additional Materials | |||
¨ | Soliciting Material Pursuant to §240.14a-12 |
UNIT CORPORATION
Payment of Filing Fee (Check the appropriate box):
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| Title of each class of securities to which the transaction applies: |
| (2) | Aggregate number of securities to which the transaction applies: |
| (3) | Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of the transaction: |
| (5) | Total fee paid: |
| Fee paid previously with preliminary materials. |
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UNIT CORPORATION
NOTICE OF THE ANNUAL MEETING OF OUR STOCKHOLDERS
AND
PROXY STATEMENT
| Meeting | Wednesday, May | |||
| Meeting | 11:00 a.m., Central Time | |||
| Meeting Place | Tulsa Room | |||
| Bank of Oklahoma Tower | ||||
| One Williams Center | ||||
| Tulsa, Oklahoma 74172 | ||||
Dear Stockholder:
On behalf of the board of directors and management, I would like to invite you to attend our Annual Meeting of Stockholders to be held on Wednesday, May 5, 20043, 2006 at 11:00 a.m., Central Time. This year’s meeting will be held in the Tulsa Room on the ninth floor of the Bank of Oklahoma Tower, One Williams Center, Tulsa, Oklahoma.
By attending the meeting you will have an opportunity to hear a report on our operations and to meet our directors and officers.
Information about the meeting, including the various matters on which you as a stockholder will act, may be found in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.
Whether or not you plan to attend the meeting in person, it is important that your shares be represented. Please vote your shares using one of the methods available to you.
If you have any further questions concerning the annual meeting or any of the proposals, please contact our investor relations department at (918) 493-7700. For questions regarding your stock ownership, you may contact our transfer agent, Mellon Investor Services LLC at:
(800) 851-9677
710-0929
TDD for Hearing Impaired: (800) 231-5469
Foreign Shareholders: (201) 329-8660
680-6579
TDD Foreign Shareholders: (201) 329-8354
680-6610
Web Site Address: www.melloninvestor.comwww.melloninvestor.com/isd
I look forward to your participation and thank you for your continued support.
Dated this 5th30 day of April, 2004.March, 2006.
Sincerely, | ||||
 | ||||
 | ||||
| John G. Nikkel | ||||
| Chairman | ||||
| of the Board | ||||
7130 S. Lewis, Suite 1000, Tulsa, OK 74136 • PO Box 702500, Tulsa, OK 74170
Phone: (918) 493-7700 ** Fax: (918) 493-7711 or (918) 493-7714
UNIT CORPORATION
7130 South Lewis, Suite 1000
Tulsa, Oklahoma 74136
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
| Time and Date | 11:00 a.m., Central | ||||||
| Place | Tulsa Room on the ninth floor of the Bank of Oklahoma Tower, One Williams Center, Tulsa, Oklahoma | ||||||
| Items of Business | |||||||
• | elect three directors for a three-year term expiring in | ||||||
• | ratify the selection of PricewaterhouseCoopers LLP, Tulsa, Oklahoma, as our independent | ||||||
• approve an amendment to the company’s amended and restated certificate of incorporation to increase the shares of the company’s authorized common stock(Item No. 3 on the Proxy); | |||||||
• approve an amendment of the company’s amended and restated certificate of incorporation to increase the shares of the company’s authorized preferred stock(Item No. 4 on the Proxy); | |||||||
• approve the adoption of the Unit Corporation Stock and Incentive Compensation Plan(Item No. 5 on the Proxy); and | |||||||
• transact any other business that may properly come before the meeting or any adjournment(s) of the meeting. | |||||||
| Record Date | March | ||||||
| Voting Options | |||||||
Most stockholders have four options for submitting their vote: | |||||||
• | via the Internet at http:// | ||||||
• | by phone (please see your proxy card for instructions), | ||||||
• | by mail, using the paper proxy, and | ||||||
• | in person at the meeting. | ||||||
| Date of this Notice | |||||||
By Order of the Board of Directors, |
 |
Mark E. Schell |
Senior Vice President, |
Secretary and General Counsel |
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting, we urge you to vote.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 20043, 2006
This Proxy Statement and the accompanying proxy card are being mailed to our stockholders in connection with the solicitation of proxies by the board of directors for the 20042006 Annual Meeting of Stockholders. Mailing of this Proxy Statement commencedwill commence on or about April 5, 2004.March 30, 2006.
Table of Contents Ownership of (i) Termination of Employment and Deductibility of Compensation Under Internal Revenue Code Section 162 (M) Item 2: Ratification of Appointment of Page 1 5 5 5 6 8 9 9 9 9 10 10 11 ourOur Common Stock by Beneficial Owners and Management 1312 1514 1514 16 17 19 19 20 20 20 20 20 20 20 20 1821 Change in ControlChange-In-Control Arrangements 1821 21 20 21 22 23 23 25 25 26 26 26 27 28 28 29 30 31 23 31 31 2333 33 24 34 34 AuditorsIndependent Registered Public Accounting Firm 2538 25
QUESTIONS AND ANSWERS
(ii)
| 48 | ||
| 49 | ||
| 49 | ||
Appendixes:
A – Copy of the Unit Corporation Stock and Incentive Compensation Plan
(iii)
| Q: | Why am I receiving these materials? |
| A: | The board of directors (the “Board”) of Unit Corporation, a Delaware corporation, is providing these proxy materials to you in connection with the company’s annual meeting of stockholders, which will take place on May |
| Q: | Who can vote? |
| A: | You can vote if you were a stockholder at the close of business on the record date, March |
| Q: | What information is contained in this proxy statement? |
| A: | The information included in this proxy statement relates to the proposals to be voted on at the annual meeting, the voting process, the compensation of our directors and |
| Q: | How may I obtain the company’s 10-K? |
| A: | A copy of our |
Unit Corporation
Attn: Investor Relations
7130 South Lewis, Suite 1000
Tulsa, Oklahoma 74136
(918) 493-7700
http://www.unitcorp.com
The company will also furnish any exhibit to the 2005 Form 10-K if specifically requested.
| Q: | Who can attend the meeting? |
| A: | All stockholders can attend. |
| Q: | What am I voting on? |
| A: | You are voting on: |
| Q: |
| A: | ||||||
Proposal | Vote | Discretionary | ||||
| Election of | Plurality | Yes | ||||
| Ratification of | Majority | Yes | ||||
| Amendment to Certificate of Incorporation to increase Common Stock shares | Majority of Outstanding Shares | Yes | ||||
| Amendment to Certificate of Incorporation to increase Preferred Stock shares | Majority of Outstanding Shares | No | ||||
Proposal | Discretionary | Voting | ||||
| Approve the Stock and Incentive Compensation Plan | Majority | No |
| Q: | How do I cast my vote? |
| A: | If you hold your shares as a stockholder of record, you can vote in person at the annual meeting or you can vote by mail, telephone or the Internet. If you are a street-name stockholder, you will receive instructions from your bank, broker or other nominee describing how to vote your shares. |
The enclosed proxy contains instructions for mail voting or for voting by way of telephone or the Internet. The proxies identified on the back of the proxy will vote the shares of which you are the stockholder of record in accordance with your instructions. If you submit a proxy without giving specific voting instructions, the proxies will vote those shares as recommended by the Board.
| Q: | How does the Board recommend I vote on the proposals? |
| A: | |
| The Board recommends you vote |
| Q: | Can I revoke my proxy? |
| A: | Yes. You can revoke your proxy by: |
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| Q: | Who will count the vote? |
| A: | Mellon Investor Services LLC, our transfer agent, will count the vote. |
| Q: | What is a “quorum”? |
| A: | A quorum is the number of shares that must be present to hold the annual meeting. The quorum requirement for the annual meeting is a majority of the outstanding shares as of the record date, present in person or represented by proxy. If you submit a valid proxy or attend the annual meeting, your shares will be counted to determine whether there is a quorum. |
Abstentions and broker non-votes count toward the quorum. “Broker non-votes” occur when nominees (such as banks and brokers) that hold shares on behalf of beneficial owners do not receive voting instructions from the beneficial owners by 15 days before the meeting and do not have discretionary voting authority to vote those shares.
| Q: | What is the difference between holding shares as a stockholder of record and as a beneficial owner? |
| A: | Most company stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. |
Stockholder of Record:If your shares are registered directly in your name with the company’s transfer agent, Mellon Investor Services LLC, you are considered, with respect to those shares, thestockholder of record, and these proxy materials are being sent directly to you by the company. As thestockholder of record, you have the right to grant your voting proxy directly to the company or to vote in person at the meeting. The company has enclosed or sent a proxy card for you to use.
Beneficial Owner:If your shares are held in a brokerage account or by another nominee, you are considered thebeneficial ownerof shares heldin street name, and these proxy materials are being forwarded to you together with a voting instruction card. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote and are also invited to attend the annual meeting.
Since a beneficial owner is not thestockholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares.
| Q: | Will broker non-votes or abstentions affect the voting results? |
| A: | In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, assuming that a quorum is |
| Q: | What shares are included on my proxy? |
| A: | Your proxy represents all shares registered to your account in the same social security number and address. |
| Q: | What does it mean if I get more than one proxy? |
| A: | Your shares are probably registered in more than one account. You should vote each proxy you receive. We encourage you to consolidate all your accounts by registering them in the same name, social security number and address. |
| Q: | How many votes can I cast? |
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| A: | On each matter, including each director position, you are entitled to one vote per share. |
| Q: | What happens if additional matters are presented at the annual meeting? |
| A: | Other than the |
| Q: | What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors? |
| A: | You may submit proposals, including director nominations, for consideration at future stockholder meetings. |
Stockholder Proposals:For a stockholder proposal to be considered for inclusion in the company’s proxy statement for next year’s annual meeting, the written proposal must be received by our Corporate Secretary at our principal executive offices no later than December 4, 2006. If the date of next year’s annual meeting is moved more than 30 days before or after the anniversary date of this year’s annual meeting, the deadline for inclusion of proposals in the company’s proxy statement is instead a reasonable time before the company begins to print and mail its proxy materials. Such proposals also will need to comply with Securities and Exchange Commission (“SEC”) regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:
Corporate Secretary
Unit Corporation
7130 South Lewis, Suite 1000
Tulsa, Oklahoma 74136
Fax: (918) 493-7711
For a stockholder proposal that is not intended to be included in the company’s proxy statement under Rule 14a-8, the stockholder must deliver a proxy statement and form of proxy to holders of a sufficient number of shares of the company common stock to approve that proposal, provide the information required by the bylaws of the company and give timely notice to the Corporate Secretary of the company in accordance with the bylaws of the company, which, in general, require that the notice be received by the Corporate Secretary of the company:
If the date of the stockholder meeting is moved more than 30 days before or 70 days after the anniversary of the company’s annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in the company’s proxy statement under Rule 14a-8 must be received no earlier than the close of business 120 days prior tobefore the meeting and no later than the close of business on the later of the following two dates:
Nomination of Director Candidates:You may propose director candidates for consideration by the Board’s Nominating & Governance Committee. Any such recommendations should include the nominee’s name and qualifications for Board membership and should be directed to the Corporate Secretary of the company at the address of our principal executive offices set forth above. In addition, the
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bylaws of the company permit a stockholder to nominate directors for election at an annual stockholder meeting. To nominate a director, the stockholder must deliver a proxy statement and form of proxy to holders of a sufficient number of shares of the company common stock to elect such nominee and provide the information required by the bylaws of the company, including a statement by the stockholder identifying (i) the name and address of such stockholder, as they appear on the company’s books, and of such beneficial owner, (ii) the class and number of shares of capital stock of the company which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the company’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such proposal or nomination. In addition, the stockholder must give timely notice to the Corporate Secretary of the company in accordance with the bylaws of the company, which, in general, require that the notice be received by the Corporate Secretary of the company within the November 20, 2006 through December 20, 2006 time period described above.
| Q: | How is this proxy solicitation being conducted? |
| A: | We hired Regan & Associates, New York, New York, to assist in the distribution of proxy materials and solicitation of votes for a fee of |
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CORPORATE GOVERNANCE AND BOARD MATTERS
We are committed to having sound corporate governance principles. Our Corporate Governance Guidelines and Code of Business Conduct and Ethics are available at http://www.unitcorp.com/corpgov.html.corpgov.html and copies of these documents may also be obtained from our Corporate Secretary. These provisions are applicable to our employees, including our principal executive officer, principal financial officer and principal financialaccounting officer. We intend to post any amendments to or waivers from our Code of Business Conduct and Ethics (to the extent applicable to the company’s chief executive officer, principal financial officer or principal financialaccounting officer) on our website.
Board Independence
The Board has determined that all of the current directors, except Messrs. King Kirchner,Don Cook, William B. Morgan, John NikkelH. Williams, J. Michael Adcock, Gary R. Christopher and Larry Pinkston,Robert J. Sullivan, Jr. have no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company) and is independent within the meaning of the company’s director independence standards, which reflect the New York Stock Exchange (“NYSE”) director independence standards, as currently in effect and as they may be changed from time to time. Furthermore, theThe Board has also determined that each of the members of each of its various committees has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company) and is “independent” within the meaning of the company’s director independence standards.
Director Independence Criteria
The Board has defined an independent director as a director who meets all of the following criteria:
neither the director or an immediate family member receives more than $100,000 per year in compensation from the company, other than director and committee fees or deferred compensation for prior services; is not affiliated with or employed by, and does not have an immediate family member who is affiliated with or employed by, a present or former external auditor of the company; has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company), for this purpose material relationships can, for example, include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships; has no other relationships with the company or its subsidiaries that would interfere in the exercise of independent judgment as a director; | ||||
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Disqualifying relationships
Any person who, or whose immediate family member(s), has within the prior five years had any of the following relationships with the company does not qualify as an independent director.
Former employees. A person who, or whose immediate family member(s) is, a former employee of the company or its subsidiaries, or who is affiliated with such an employee, cannot be an “independent director” until five years after the end of the employment or affiliation. Significant Customers and Vendors. A person who is an executive officer or an employee, or whose immediate family member(s) is an executive officer, of a company (A) that accounts for 2 percent or more of the company’s consolidated gross revenues, or (B) for which the company accounts for at least 2 percent or $1 million, whichever is greater, of such other company’s consolidated gross revenues, cannot be an “independent director” until five years after falling below such threshold. Former auditor. A person who, or whose immediate family member(s), is an auditor of the company or its subsidiaries, or who is employed by a present or former auditor of the company or its subsidiaries, or who is affiliated with such auditors, cannot be an “independent director” until five years after the end of the affiliation or the auditing relationship. Interlocking directorships. A person who, or whose immediate family member(s), is employed by a company as to which an executive officer of the company serves as a director and member of the compensation committee for that company cannot be an “independent director” until five years after the end of employment by that company or service by the executive officer on the compensation committee of that company.
| ||||
Board Structure and Committee Composition
As of the date of this proxy statement, our Board has nine directors and the following three committees:
The membership during the last fiscal year and the function of each of the committees are described below. Each of the committees operates under a written charter adopted by the Board. All of the committee charters are available at our website at http://www.unitcorp.com/corpgov.html.corpgov.html and copies of these charters may also be obtained from our Corporate Secretary.
During 2003,2005, the Board held nine11 meetings. All directors except Mr. John Zink, attended at least 75%100% of all Board meetings except Mr. Adcock who missed one Board meeting and applicableMr. Williams who missed one Board meeting and two committee meetings. All directors are encouraged to attend our annual meeting of stockholders. All directors except one attended our last annual meeting of stockholders. In addition to its meetings, the Board and its various committees may act, from time to time, by unanimous consent.
The following table identifies the membership of each of the Audit, Compensation and Nominating & Governance CommitteesBoard’s committees and the number of committee meetings held during 2003.2005. A summary of each committee’s responsibilities follows the table.
Director | Audit | Compensation | Nominating & Governance | ||||||
Don Cook | x | * | x | ||||||
William B. Morgan | x | x | x | * | |||||
John H. Williams | x | x | |||||||
J. Michael Adcock | x1 | x | * | x | |||||
Gary R. Christopher | x2 | ||||||||
Mark E. Monroe3 | x | x | |||||||
Number of meetings in 2005 | 5 | 3 | 1 |
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| Nominating | ||||||||||||
| & | ||||||||||||
| Director | Audit | Compensation | Governance | |||||||||
| John S. Zink | x | |||||||||||
| William B. Morgan | x | x | x | * | ||||||||
| John H. Williams | x | x | ||||||||||
| Don Cook | x | * | ||||||||||
| J. Michael Adcock | x | x | * | x | ||||||||
| Number of meetings in 2003 | 4 | 1 | 3 | |||||||||
| * | Current Chairman of the committee. |
Notes to table:
| (1) | Mr. Adcock resigned from the Audit Committee on May 4, 2005. |
| (2) | Mr. Christopher was elected to the Audit Committee on October 17, 2005. |
| (3) | Mr. Monroe resigned from the Board on October 3, 2005. |
The Audit Committee:
and takes such action with respect to these matters as may be deemed appropriate.
The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the company for, outside legal, accounting or other advisors as the committee deems necessary to carry out its duties.
The report of the Audit Committee is included on page 22. The charter of the Audit Committee is included as Appendix A.30.
The Compensation Committee:
The report of the Compensation Committee is included at page 20. The charter of the Compensation Committee is included as Appendix B.25.
The Nominating & Governance Committee:
Advises the Board as a whole on corporate governance matters. Advises the Board on the size and composition | ||||
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The Chair of the Nominating & Governance Committee has been designated asBoard.
The charter of the Nominating & Governance Committee is included as Appendix C.
Consideration of Director Nominees
Stockholder nominees:The policy of the Nominating & Governance Committee is to consider properly-submitted stockholder nominations for candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Directors.” In evaluating such nominations, the Nominating & Governance Committee seeks to achieve a balance of knowledge, experience and diversity on the Board. Any stockholder nominations proposed for consideration by the Nominating & Governance Committee should include the nominee’s name and qualifications for Board membership and should be addressed to:
Corporate Secretary Unit Corporation 7130 South Lewis, Suite 1000 Tulsa, Oklahoma 74136 |
In addition, our bylaws permit stockholders to nominate directors for consideration at an annual stockholders meeting. For a description of the process for nominating directors in accordance with our bylaws, see “Questions and Answers"—Answers- What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors?” on page 3.
Director Qualifications:The company’sOur Corporate Governance Guidelines contain Board membership criteria that apply to Nominating & Governance Committee-recommended nominees for a position on the company’s Board. Under these criteria, members of the Board should meet the Board’s qualifications as independent (as applicable) and should have sufficient time to carry out their duties and to provide insight
and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. Each director must represent the interests of the company and its stockholders.
Identifying and Evaluating Nominees for Directors:The Nominating & Governance Committee utilizesuses a variety of methods for identifying and evaluating nominees for director. The Nominating & Governance Committee regularly assesses the appropriate size of the Board, and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, the Nominating & Governance Committee considers various potential candidates for director. Candidates may come to the attention of the Nominating & Governance Committee through current Board members, professional search firms, stockholders or other persons. These candidates are evaluated at regular or special meetings of the Nominating & Governance Committee and may be considered at any point during the year. As described above, the Nominating & Governance Committee considers properly-submitted stockholder nominations for candidates for the Board. Following verification of the stockholder status of persons proposing candidates, recommendations are considered by the Nominating & Governance Committee. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials are forwarded to the Nominating & Governance Committee. The Nominating & Governance Committee also reviews materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder.
Executive Sessions
Executive sessions of non-management directors are held as neededperiodically during the year. The sessions are scheduled and chaired by Mr. J. Michael Adcock who was elected by the Board to Chairchair each executive session. Meetings are also held from time to time with the Chairman and the Chief Executive Officer for a general discussion of relevant subjects. Any non-management director can request that an executive session be scheduled.
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Communications with the Board
Individuals may communicate with the Board by submitting an e-mail to the company’s Board in care of the company’s Corporate Secretary at mark.schell@unitcorp.com or sending a letter to:
Board of Directors, c/o Corporate Secretary, Unit Corporation, 7130 S. Lewis, Suite 1000, Tulsa, Oklahoma 74136.
The chair of the Nominating & Governance Committee has been designated as the person to receive communications directed to non-management directors. Our stockholders may write to the Chairman of this or any other Board committee or to the outside directors as a group c/o Mark E. Schell, Senior Vice President and General Counsel, Unit Corporation, 7130 South Lewis, Suite 1000, Tulsa, Oklahoma 74136.
Stockholder communications are distributed to the Board, or to the appropriate individual director or directors, depending on the facts and circumstances of the communication. However, at the request of the Board, certain items that are not related to the duty and responsibilities of the Board be excluded, such as: advertisements, junk mail, mass mailings, spam and surveys.
Each year the Board evaluates its performance and effectiveness. Each director completes a Board evaluation form developed by the Nominating & Governance Committee to solicit feedback on specific aspects of the Board’s role, organization and meetings. The collective ratings and comments are then compiled by the Chairman of the Nominating & Governance
Committee and presented by him to the full Board. Additionally, each Board committee conducts an annual self-evaluation of its performance through a Committee evaluation form.
DIRECTORS’ COMPENSATION AND BENEFITS
Only non-employee directors receive compensation for serving as a director. The following identifies the various components of the cash compensation paid or to be paid to our directors during 2005 and 2006, respectively.
| 2005 | 2006 | |||||
Annual retainer payable quarterly | $ | 24,000 | $ | 30,000 | ||
Annual retainer for each committee a Board member serves on payable quarterly | $ | 2,000 | $ | 2,000 | ||
Each Board meeting attended | $ | 1,000 | $ | 1,500 | ||
Each committee meeting attended | $ | 1,000 | $ | 1,500 | ||
Additional compensation for service as Chairman of the Audit Committee | $ | 5,000 | $ | 7,500 | ||
Additional compensation for service as Chairman for each of the Compensation Committee and Nominating & Governance Committee | $ | 2,000 | $ | 3,500 | ||
Reimbursement for travel expenses incurred attending stockholder, Board and committee meetings | Yes | Yes | ||||
Range of total compensation (excluding travel reimbursement) earned by directors (for the year 2005) | $ | 19,500 - $53,000 | — | |||
The following table shows the cash compensation for 2003.
AMOUNTS RECEIVED IN 2005 BY EACH NON-EMPLOYEE DIRECTOR CASH COMPENSATION TABLEFOR FISCAL 2003
| Annual retainer payable quarterly | $ | 24,000 | ||
| Annual retainer for each committee a Board member serves on payable quarterly | $ | 2,000 | ||
| Each Board meeting attended | $ | 1,000 | ||
| Each committee meeting attended | $ | 1,000 | ||
| Additional compensation for service as Chairman of the Audit Committee | $ | 5,000 | ||
| Additional compensation for service as Chairman for each of the Compensation Committee and Nominating & Governance Committee | $ | 2,000 | ||
| Reimbursement for travel expenses incurred attending stockholder, Board and committee meetings | Yes | |||
Range of total compensation earned by directors (for the year)(1) | $ | 31,000 - $44,500 |
Director | Annual Board/Committee Retainer($) | Board and Business Meeting Fees($) | Committee Meeting Fees($) | Chairman Fees($) | Total($) | |||||
J. Michael Adcock | 30,000 | 10,000 | 5,500 | 2,000 | 47,500 | |||||
Don Cook | 29,500 | 11,000 | 7,000 | 5,000 | 52,500 | |||||
John H. Williams | 29,500 | 10,000 | 2,000 | 0 | 41,500 | |||||
William B. Morgan | 31,500 | 11,000 | 8,500 | 2,000 | 53,000 | |||||
King P. Kirchner | 25,500 | 11,000 | 0 | 0 | 36,500 | |||||
Mark E. Monroe | 21,000 | 9,000 | 4,500 | 0 | 34,500 | |||||
John G. Nikkel | 19,500 | 9,000 | 0 | 0 | 28,500 | |||||
Gary R. Christopher | 14,000 | 6,000 | 1,000 | 0 | 21,000 | |||||
Robert J. Sullivan, Jr. | 13,500 | 6,000 | 0 | 0 | 19,500 | |||||
Totals | 214,000 | 83,000 | 28,500 | 9,000 | 334,500 | |||||
shares of common stock that have been held by the director for at least one year. No stock option may be exercised during the first six months of its term except in the case of death. Each option has a ten-year term. In 20032005, stock options were granted for an aggregate of 21,00024,500 shares at $20.46$39.50 per share. As of March 23, 2004, 80,5007, 2006, 92,500 shares were subject to outstanding options.
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Director | Date of Option | Shares Subject to Option (#) | Exercise Price ($) | |||
J. Michael Adcock | 5/8/03 5/6/04 5/5/05 | 3,500 3,500 3,500 | 20.46 28.23 39.50 | |||
Don Cook | 5/6/99 5/4/00 5/3/01 5/2/02 5/8/03 5/6/04 5/5/05 | 2,500 3,500 3,500 3,500 3,500 3,500 3,500 | 6.90 12.1875 17.54 20.10 20.46 28.23 39.50 | |||
John H. Williams | 5/3/01 5/2/02 5/8/03 5/6/04 5/5/05 | 3,500 3,500 3,500 3,500 3,500 | 17.54 20.10 20.46 28.23 39.50 | |||
William B. Morgan | 5/6/99 5/3/01 5/2/02 5/8/03 5/6/04 5/5/05 | 2,500 3,500 3,500 3,500 3,500 3,500 | 6.90 17.54 20.10 20.46 28.23 39.50 | |||
King P. Kirchner | 5/2/02 5/8/03 5/6/04 5/5/05 | 3,500 3,500 3,500 3,500 | 20.10 20.46 28.23 39.50 | |||
Mark E. Monroe(1) | 5/6/04 | 3,500 | 28.23 | |||
John G. Nikkel | 5/5/05 | 3,500 | 39.50 | |||
Gary R. Christopher(2) | n/a | n/a | n/a | |||
Robert J. Sullivan, Jr.(2) | n/a | n/a | n/a |
Notes to table:
ITEM 1: ELECTION OF DIRECTORS
Item 1 is the election of three directors to the Board. Our Board is composed of nine members and is divided into three classes with each director serving for a three-year term. At each annual meeting, the term of one class expires. The term of service for those directors serving in Class II expires at this meeting.
We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board, or the Board may reduce the number of directors to be elected.
If any director resigns, dies or is otherwise unable to serve out his or her term, or the Board increases the number of directors, the Board may fill the vacancy or elect the new director.
Our Nominating & Governance Committee has recommended, and the Board has approved, the nominees listed below to stand for election. Information concerning each nominee and each continuing director is provided below.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ELECTING THE THREE NOMINEES.
| (1) | ||||||
| Mr. | ||||||
| (2) | Mr. Christopher and | |||||
| effective July 1, 2005. | ||||||
10
11
12
OWNERSHIP OF OUR COMMON STOCK BY BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerningshows the beneficial ownershipnumber of shares of our common stock beneficially owned as of March 7, 2006 by each director, each executive officer named in the Summary Compensation
Table and by all directors and executive officers as a group. Except as otherwise noted, all shares are directly owned.
STOCK OWNED BY OUR DIRECTORS AND EXECUTIVE OFFICERS AS OF MARCH 23, 2004
| Aggregate Number of | Percent of Outstanding | |||||||||||
| Name of Beneficial Owner | Beneficially Owned Shares | Common Stock(1) | ||||||||||
| King P. Kirchner | 226,820 | (4) | * | |||||||||
| Don Cook | 32,118 | (4) | * | |||||||||
| William B. Morgan | 23,000 | (4) | * | |||||||||
| John G. Nikkel | 410,242 | (2)(3)(6) | * | |||||||||
| John H. Williams | 11,500 | (4) | * | |||||||||
| John S. Zink | 9,100 | (4) | * | |||||||||
| J. Michael Adcock | 278,391 | (4)(5) | * | |||||||||
| Mark E. Monroe | 2,000 | * | ||||||||||
| Philip M. Keeley | 88,005 | (2) | * | |||||||||
| Larry D. Pinkston | 69,608 | (2)(6) | * | |||||||||
| Mark E. Schell | 69,657 | (2)(6) | * | |||||||||
| David T. Merrill | 40 | (3) | * | |||||||||
| Earle Lamborn | 107,794 | (3) | * | |||||||||
| All Directors and Executive Officers as a Group** | 1,220,481 | (2)- | (6) | 2.67 | ||||||||
Name of Beneficial Owner* | Common Stock(1) | Options Exercisable within 60 days | Shares of Restricted Stock(3) | ||||
King P. Kirchner | 134,720 | 14,000 | n/a | ||||
Don Cook | 7,618 | 23,500 | n/a | ||||
William B. Morgan | 7,500 | 20,000 | n/a | ||||
John G. Nikkel | 294,528 | (2) | 3,500 | n/a | |||
John H. Williams | 1,000 | 17,500 | n/a | ||||
J. Michael Adcock | 78,091 | (2) | 10,500 | n/a | |||
Larry D. Pinkston | 51,411 | 37,500 | 1,715 | ||||
Mark E. Schell | 43,916 | 36,200 | 1,086 | ||||
David T. Merrill | 578 | 4,200 | 1,001 | ||||
Gary R. Christopher | 1,000 | 0 | n/a | ||||
Robert J. Sullivan, Jr. | 0 | 0 | n/a | ||||
John Cromling | 13,307 | 4,100 | 1,029 | ||||
Bradford J. Guidry | 5,064 | 6,100 | 972 | ||||
All Directors and Named Executive Officers as a Group* | 638,733 | 177,100 | 5,803 | ||||
| * | ||||
Notes to table:
13
Notes to table:
| Includes shares of common stock held under our401(k) thrift plan as of March |
| Of the shares listed as being beneficially owned, the following individuals disclaim any beneficial interest in shares held by spouses or for the benefit of family members: | ||||
| (3) | These shares of restricted stock were issued on December 13, 2005. The recipient will receive one-half of these shares on January 1, 2007 and one-half on January 1, 2008 if the recipient is still employed with the company on those dates. |
The following table sets forth information concerning the beneficial ownership of our
common stock by stockholders who own at least five percent of our common stock.
STOCKHOLDERS WHO OWN AT LEAST 5% OF OUR COMMON STOCK
| Amount and Nature | ||||
| of Beneficial | ||||
| Name and Address | Ownership(1) | Percent of Class | ||
| Royce & Associates, LLC 1414 Avenue of the Americas New York, New York 10019 | 4,761,700 | 10.93 | ||
| Forstmann-Leff Associates, LLC 590 Madison Avenue New York, New York 10022 | 2,182,810 | 5.0 | ||
| George Kaiser Family Foundation(2) 124 East Fourth Street, Suite 100 Tulsa, Oklahoma 74103 | 7,616,400 | 17.5 | ||
| Barclays Global Investors, NA(3) 45 Fremont Street San Francisco, California 94105 | 2,225,975 | 5.10 |
Name and Address | Amount and Nature of Beneficial Ownership(1) | Percent of Class | |||
Royce & Associates, LLC 1414 Avenue of the Americas New York, New York 10019 | 3,893,600 | 8.44 | % | ||
Neuberger Berman Inc. 605 Third Avenue New York, New York 10158 | 3,204,440 | 6.95 | % |
NotesNote to Table:table:
| (1) | Beneficial ownership is based on the Schedule 13G most recently filed by the stockholder or other information provided to us. Beneficial ownership may under certain circumstances include both voting power and investment power. Information is provided for reporting purposes only and should not be construed as an admission of actual beneficial ownership. |
14
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation information for theour Chief Executive Officer and each of our other four
most highly compensated executive officers for services in all capacities in 2001, 20022003, 2004 and 2003.2005.
SUMMARY COMPENSATION TABLE
| Long Term Compensation | ||||||||||||||||
| Annual Compensation(1) | Awards | Payouts | ||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||
| Restricted | Securities | |||||||||||||||
| Name and | Other Annual | Stock | Underlying | LTIP | All Other | |||||||||||
| Principal | Salary | Bonus | Compensation | Award(s) | Options | Payout | Compensation | |||||||||
| Position(s) | Year | ($) | ($) | ($)(2) | ($) | (#) | ($) | ($)(3) | ||||||||
| John G. Nikkel Chairman and CEO | 2003 | 360,000 | 143,333 | 7,332 | 0 | 15,000 | 0 | 14,000 | ||||||||
| 2002 | 315,000 | 148,333 | 7,332 | 0 | 25,000 | 0 | 12,000 | |||||||||
| 2001 | 297,500 | 121,666 | 7,239 | 0 | 0 | 0 | 10,500 | |||||||||
| Larry D. Pinkston President and COO | 2003 | 170,750 | 68,333 | 4,136 | 0 | 10,000 | 0 | 12,000 | ||||||||
| 2002 | 142,000 | 69,000 | 4,136 | 0 | 7,500 | 0 | 11,000 | |||||||||
| 2001 | 142,000 | 50,666 | 4,173 | 0 | 0 | 0 | 10,497 | |||||||||
| Earle Lamborn Sr. V. P. —Drilling | 2003 | 205,000 | 93,333 | 4,909 | 0 | 0 | 0 | 12,000 | ||||||||
| 2002 | 190,000 | 118,333 | 4,909 | 0 | 10,000 | 0 | 11,000 | |||||||||
| 2001 | 190,000 | 80,000 | 4,213 | 0 | 0 | 0 | 10,500 | |||||||||
| Philip M. Keeley Sr. V. P.—Exploration & Production | 2003 | 205,000 | 93,333 | 3,588 | 0 | 0 | 0 | 14,000 | ||||||||
| 2002 | 190,000 | 98,333 | 8,247 | 0 | 10,000 | 0 | 12,000 | |||||||||
| 2001 | 190,000 | 80,000 | 8,600 | 0 | 0 | 0 | 10,500 | |||||||||
| Mark E. Schell Sr. V. P., Secretary and General Counsel | 2003 | 153,333 | 68,333 | 7,400 | 0 | 7,500 | 0 | 12,000 | ||||||||
| 2002 | 132,000 | 68,333 | 7,399 | 0 | 7,500 | 0 | 11,000 | |||||||||
| 2001 | 132,000 | 46,666 | 6,788 | 0 | 0 | 0 | 10,500 | |||||||||
| Long Term Compensation | ||||||||||||||||||
| Annual Compensation(1) | Awards | Payouts | ||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||
Name and Principal Position(s) | Year | Salary ($) | Bonus ($)(2) | Other Annual Compensation ($)(3) | Restricted Stock Award(s) ($)(4) | Securities Underlying Options (#) | LTIP Payout ($) | All Other Compensation ($)(5) | ||||||||||
John G. Nikkel Chairman and CEO(6) | 2005 2004 2003 | 93,750 375,000 360,000 | (7) | 93,333 153,333 143,333 | 12,310 12,594 14,901 | n/a 0 0 | 0 0 15,000 | 0 0 0 | 456,820 12,300 12,000 | (7) | ||||||||
Larry D. Pinkston President and COO(6) | 2005 | 250,000 | 103,333 | 8,260 | 99,984 | 0 | 0 | 14,000 | ||||||||||
| 2004 | 215,000 | 83,333 | 4,635 | 0 | 10,000 | 0 | 12,300 | |||||||||||
| 2003 | 170,750 | 68,333 | 7,500 | 0 | 10,000 | 0 | 10,054 | |||||||||||
Mark E. Schell Sr. V. P., Secretary and General Counsel | 2005 | 190,000 | 88,333 | 8,170 | 63,313 | 0 | 0 | 13,081 | ||||||||||
| 2004 | 175,000 | 76,666 | 8,050 | 0 | 8,500 | 0 | 12,300 | |||||||||||
| 2003 | 153,333 | 68,333 | 8,147 | 0 | 7,500 | 0 | 12,000 | |||||||||||
David T. Merrill CFO and Treasurer(8) | 2005 | 178,200 | 33,333 | 12,811 | 58,358 | 0 | 0 | 14,000 | ||||||||||
| 2004 | 162,500 | 13,333 | 11,764 | 0 | 5,000 | 0 | 10,910 | |||||||||||
| 2003 | 51,212 | 0 | 4,380 | 0 | 8,000 | 0 | 1,006 | |||||||||||
John Cromling Executive V.P. – Drilling(9) | 2005 | 174,750 | 49,666 | 5,547 | 59,990 | 7,500 | 0 | 14,000 | ||||||||||
| 2004 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||
| 2003 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||
Bradford J. Guidry Senior V.P. – Exploration(10) | 2005 | 167,083 | 56,666 | 6,716 | 56,667 | 7,500 | 0 | 14,000 | ||||||||||
| 2004 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||
| 2003 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||
Notes to Table:table:
| (1) | Compensation deferred at the election of an executive is included in the year earned. During the fiscal years covered by the above table, the following named executives deferred, on a discretionary basis, the following amounts of salary or bonus into the company’s compensation deferral plans: |
Fiscal Year Paid: John G. Nikkel Larry D. Pinkston Mark E. Schell David T. Merrill John Cromling Bradford J. Guidry 2005 2004 2003 Bonus($) Salary($) Bonus($) Salary($) Bonus($) Salary($) 4,666 10,625 15,333 37,500 14,333 36,733 48,000 70,107 30,000 60,199 20,500 38,475 9,451 20,329 5,366 12,250 4,783 11,251 2,666 11,333 — — — — 7,973 10,026 n/a n/a n/a n/a 5,666 12,333 n/a n/a n/a n/a
| (2) | These bonus amounts represent the combined amounts of the various installments of bonuses previously awarded to each named officer and paid in 2005. |
| (3) | Other Annual Compensation consists of the following: |
| Mr. Nikkel | Mr. Pinkston | Mr. Schell | Mr. Merrill | Mr. Cromling | Mr.Guidry | |||||||||
Personal Car Allowance ($) | 2005 2004 2003 | 10,175 3,866 7,332 | 7,500 3,764 7,500 | 7,500 7,399 7,500 | 6,000 6,000 2,000 | 0 n/a n/a | 6,000 n/a n/a | |||||||
Club Membership ($) | 2005 2004 2003 | 2,135 8,728 7,569 | 760 871 0 | 670 651 647 | 6,811 5,764 2,380 | 5,547 n/a n/a | 716 n/a n/a |
| (4) | The |
| (5) | With the | |||
| (6) | Effective April 1, 2005, Mr. Nikkel retired as our Chief Executive Officer and the Board elected Mr. Pinkston to succeed him as the company’s Chief Executive Officer. |
| (7) | Mr. Nikkel retired from the company effective as of April 1, 2005. The amounts reflected for Mr. Nikkel in the all “All Other Compensation” column include the following: |
| a. | Payment for earned but unused vacation in the amount of $18,750.16 for the period of January 1, 2005 to April 1, 2005; |
| b. | Payments for 2005 after retirement in the amount of $281,250 under the company’s Senior Management Separation Benefit Plan; |
| c. | $46,666.64 under the consulting agreement that the company entered into with Mr. Nikkel effective on his retirement; |
| d. | Distribution of $101,112.66 from the company’s salary deferral plan; and |
| e. | $9,041 representing the matching contribution to the company’s 401(k) Thrift Plan on behalf of Mr. Nikkel. |
| (8) | Mr. Merrill began his employment with the company on August 25, 2003. |
15
| (9) | Mr. Cromling was elected to his position as Executive Vice President, Drilling of Unit Drilling Company on April 1, 2005. |
STOCK OPTIONS
| (10) | Mr. Guidry was elected to his position as Senior Vice President, Exploration of Unit Petroleum Company on March 1, 2005. |
The following table below shows options thatthe outstanding unvested restricted stock awards to the named executive officers exercised during 2003at December 31, 2005.
RESTRICTED STOCK AWARDS NOT YET VESTED
Name | Grant Date | Vesting Date | Initial Price | Initial Shares | Initial Value | Remaining Shares | Current Value* | ||||||||||
Larry D. Pinkston | 12/13/05 | (1 | ) | $ | 58.30 | 1,715 | 99,984.50 | 1,715 | $ | 92,832.95 | |||||||
Mark E. Schell | 12/13/05 | (1 | ) | $ | 58.30 | 1,086 | 63,313.80 | 1,086 | $ | 58,785.18 | |||||||
David T. Merrill | 12/13/05 | (1 | ) | $ | 58.30 | 1,001 | 58,358.30 | 1,001 | $ | 54,184.13 | |||||||
John Cromling | 12/13/05 | (1 | ) | $ | 58.30 | 1,029 | 59,990.70 | 1,029 | $ | 55,699.77 | |||||||
Bradford J. Guidry | 12/13/05 | (1 | ) | $ | 58.30 | 972 | 56,667.60 | 972 | $ | 52,614.36 | |||||||
| * | Determined based on $54.13, the closing price of our common stock on March 6, 2006. |
Note to table:
| (1) | These restricted stock shares are scheduled to vest in two installments: 50% vests on January 1, 2007, and the other 50% on January 1, 2008. To receive the installment, the recipient must be employed with the company on the vesting date. |
Present Value of 2005 Total Compensation
Because elements of the Summary Compensation Table may not lend themselves to being totaled due to different presentation requirements, to provide additional transparency on the total compensation for our named executive officers, we are providing the following Present Value of Total Compensation table. The components of executive compensation included in this table are as follows:
outstanding as of December 31, 2003 for each named officer.
AGGREGATE OPTION EXERCISES IN 2003 AND FISCAL YEAR END OPTION VALUES
| (b) | (c) | (d) | (e) | |||||||||||||||||||||
| Number of Securities | Value of Unexercised | |||||||||||||||||||||||
| Underlying Unexercised | In-the-Money Options | |||||||||||||||||||||||
| Options at FY-End | at FY-End | |||||||||||||||||||||||
| (a) | Shares Acquired on | Value Realized | (#) | ($)(2) | ||||||||||||||||||||
| Name | Exercise (#) | ($)(1) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
| John G. Nikkel | 64,500 | 999,120 | 47,500 | 43,000 | 740,965 | 167,920 | ||||||||||||||||||
| Earle Lamborn | 58,500 | 805,270 | 0 | 4,000 | 0 | 28,760 | ||||||||||||||||||
| Philip M. Keeley | 33,500 | 544,885 | 19,000 | 4,000 | 151,800 | 28,760 | ||||||||||||||||||
| Larry D. Pinkston | 0 | 0 | 25,500 | 19,000 | 394,440 | 59,750 | ||||||||||||||||||
| Mark E. Schell | 0 | 0 | 25,500 | 16,500 | 394,440 | 57,450 | ||||||||||||||||||
PRESENT VALUE OF 2005 TOTAL COMPENSATION
| Cash Compensation | Long-Term Incentive Compensation | ||||||||||||||
Name | Salary ($) | Bonus ($) | Stock Options ($)(1) | Restricted Shares ($)(2) | 401(k) Plan Match ($)(3) | Value Realized on Exercise of Options ($)(4) | Other Benefits & Perquisites ($)(5) | ||||||||
John G. Nikkel | 93,750 | 93,333 | — | — | 9,041 | 789,194 | 447,779 | (6) | |||||||
Larry D. Pinkston | 250,000 | 103,333 | — | 99,984 | 14,000 | — | 14,398 | ||||||||
Mark E. Schell | 190,000 | 88,333 | — | 63,331 | 13,081 | — | 14,308 | ||||||||
David T. Merrill | 178,200 | 33,333 | — | 58,358 | 14,000 | — | 18,943 | ||||||||
John Cromling | 174,750 | 49,666 | 282,675 | 59,990 | 14,000 | 106,610 | 11,685 | ||||||||
Bradford J. Guidry | 167,083 | 56,666 | 282,675 | 56,667 | 14,000 | 105,488 | 12,823 | ||||||||
Notes to Table:table:
| (1) | Represents the value of the stock options awarded in May 2005 based on the grant closing market price of our common stock on the date of the grant. The company cautions that the actual amount ultimately realized by a named executive officer from the disclosed equity awards will likely vary based on a number of factors, including stock price fluctuations and the timing of exercise or applicable vesting. |
| (2) | These have been valued based on the closing sale price of our common stock on the date of the grant, December 13, 2005 ($58.30) and may not reflect the value of the award on payment. |
| (3) | The amounts shown in the 401(k) Plan Match column represent the value of the company’s matching contribution under the company’s 401(k) plan (a tax-qualified retirement savings plan), which is discussed under the heading “Employee Compensation and Benefit Plans.” |
| (4) | Value realized equals fair market value of the stock on date of exercise, less the exercise price, times the number of shares acquired. |
| (5) | The Other Benefits and Perquisites column represents the employer portion of active employee benefits including medical, dental, life insurance and disability coverage, which are available to all corporate employees, as well as the amounts disclosed in footnote 2 to the Summary Compensation Table. |
| (6) | See Note 7 to the Summary Compensation Table for a discussion of the other items comprising this amount excluding the matching contribution from the company to the 401(k) Thrift Plan. |
The following table shows a summary of the stock options exercised by the named executive officers in 2005, as well as the total number and value (stock price less exercise price, using the average of the high and low trading prices of the company’s common stock on December 30, 2005 - $54.71) of unexercised stock options held by the named executive officers as of December 31, 2005.
AGGREGATE OPTION EXERCISES IN 2005 AND FISCAL YEAR END OPTION VALUES
(a) | (b) | (c) | (d) | (e) | |||||||||
Name | Shares Acquired on Exercise (#) | Value Realized ($)(1) | Number of Securities Underlying Unexercised Options at FY-End (#) | Value of Unexercised In-the-Money Options at FY-End ($)(2) | |||||||||
| Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||
John G. Nikkel | 29,000 | (3) | 789,190 | 0 | 0 | 0 | 0 | ||||||
Larry D. Pinkston | 0 | 0 | 37,500 | 17,000 | 1,562,685 | 432,610 | |||||||
Mark E. Schell | 0 | 0 | 36,200 | 14,300 | 1,525,855 | 364,714 | |||||||
David T. Merrill | 0 | 0 | 4,200 | 8,800 | 121,412 | 224,318 | |||||||
John Cromling | 6,000 | 106,610 | 4,100 | 14,400 | 129,973 | 312,950 | |||||||
Bradford J. Guidry | 3,000 | 105,488 | 7,100 | 14,400 | 239,335 | 312,950 | |||||||
Notes to table:
| (1) | Value realized equals fair market value of the stock on date of exercise, less the exercise price, times the number of shares acquired. |
| (2) | The value of unexercised in-the-money options at year end assumes a fair market value for the company’s common stock of |
| (3) | As provided under our Stock Option Plan, Mr. Nikkel elected to pay the exercise price for these shares by having the total exercise price otherwise due netted against the number of option shares. As a result, of the 29,000 option shares, he received a total of 17,406 shares of common stock. |
Certain of the named executive officers were awarded stock options in 2005. The table below shows all the common stock options granted to each of the named executive officers in 2005 and the potential value of such grants at stock appreciation rates of 0%, 5% and 10% compounded annually over the maximum ten-year term of the options, as well as the value of the grant on the award date.
16
OPTIONS GRANTED IN 2003
| Individual Grants(1) | ||||||||||||||||||||||||
| Potential Realizable Value at Assumed | ||||||||||||||||||||||||
| Number of Securities | Percent of Total Options | Annual Rate of Stock Price Appreciation for | ||||||||||||||||||||||
| Underlying Options | Granted to Employees In | Exercise | Expiration | Option Terms(3) | ||||||||||||||||||||
| Granted (#) | 2003(2) | Price ($/Sh) | Date | 5% ($) | 10% ($) | |||||||||||||||||||
| Name | (a) | (b) | (c) | (d) | (e) | (f) | ||||||||||||||||||
| John G. Nikkel | 15,000 | 12.8 | % | 22.95 | 12/17/13 | 216,497 | 548,646 | |||||||||||||||||
| Larry D. Pinkston | 10,000 | 8.6 | % | 22.95 | 12/17/13 | 144,331 | 365,764 | |||||||||||||||||
| Mark E. Schell | 7,500 | 6.4 | % | 22.95 | 12/17/13 | 108,248 | 274,323 | |||||||||||||||||
| Philip M. Keeley | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Earle Lamborn | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Individual Grants(1) | Potential Realizable Value at Assumed Annual Rate of Stock Price Appreciation for Option Terms(3) | ||||||||||||||
Name | Number of Securities Underlying Options Granted (#) | Percent of Total Options Granted to Employees In 2005(2) | Exercise Price ($/Sh) | Expiration Date | 5% ($) | 10% ($) | Grant Date Fair Value($)(4) | ||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (h) | (i) | ||||||||
Larry D. Pinkston | 0 | 0 | — | — | — | — | — | ||||||||
Mark E. Schell | 0 | 0 | — | — | — | — | — | ||||||||
David T. Merrill | 0 | 0 | — | — | — | — | — | ||||||||
John Cromling | 7,500 | 22.06 | $ | 37.69 | 5/25/15 | 177,773 | 450,511 | 282,675 | |||||||
Bradford J. Guidry | 7,500 | 22.06 | $ | 37.69 | 5/25/15 | 177,773 | 450,511 | 282,675 | |||||||
Notes to table:
| (1) | All options were granted on |
| (2) | Based on a total of |
| (3) | Caution is recommended in interpreting the financial significance of these figures. They are calculated by multiplying the number of options granted by the difference between a future hypothetical stock price and the option exercise price and are shown pursuant to rules of the |
| (4) | The value of the stock option awards granted in 2005, based on the grant date closing market price of our common stock. Certain of the material terms of these grants are discussed in the section of this proxy statement entitled “Employee Compensation and Benefit Plans.” |
The company also provides other benefits such as medical, dental and life insurance and disability coverage to each named executive officer through our various benefit plans, which are also provided to most other eligible company employees.
Medical, Dental, Life Insurance and Disability Coverage
Active employee benefits such as medical, dental, life insurance and disability coverage are available to most full time company employees, including the named executive officers, through our active employee benefits plans. The value of these benefits is not required to be included in the Summary Compensation Table since they are made available on a company-wide basis.
The company also provides vacation and other paid holidays to most of its full time corporate employees, including the named executive officers, which, we believe, are comparable to those provided at other similar size companies.
Employee Compensation and Benefit Plans
The Unit Corporation Amended and Restated Stock Option Plan
Under this plan, our employees may be granted stock options from time to time.
Generally the terms of the stock options granted under this plan are as follows:
This plan, which is administered by the Compensation Committee, was approved by our stockholders. Our non-employee Directors are not eligible to participate in this Plan.
Under the this plan our employees may be awarded bonuses either in cash or stock (including restricted stock awards) or a combination of both. Awards may be payable in a lump sum or in annual installments subject to certain restrictions.
This plan is administered by our Compensation Committee. Our non-employee Directors are not eligible to participate in this Plan.
The plan was also approved by our stockholders.
Unit Corporation Employee Thrift Plan
Under the Unit Corporation Employee Thrift Plan, which is tax-qualified retirement savings plan, participating employees may contribute up to 99 percent of compensation on a before-tax basis into their plan accounts. Total contributions may not exceed IRS determined maximums for any given year. In addition, under the plan, we can make a matching contribution. The amount of our matching contributions is generally determined by our Compensation Committee each year and is generally made in shares of our common stock. For the 2006 Plan Year, the Compensation Committee has approved a match of 117% of the first 6% of salary contributed by participants.
We have funded a trust to secure the obligations to make payments under this plan.
Unit Corporation Salary Deferral Plan
We have also established a salary deferral plan which allows certain participants to defer the recognition of salary for income tax purposes until actual distribution of benefits which occurs at either termination of employment, death or certain defined unforeseeable emergency hardships. This is a non-qualified plan.
We indemnify our directors and some of our elected officers to the fullest extent permitted by law so that they will be free from undue concern about personal liability in connection with their service to the company. This is required under our bylaws, and we have also entered into agreements with certain of those individuals contractually obligating us to provide this indemnification to them.
The following table summarizes information, as of December 31, 2003,2005, relating to our equity
compensation plans under which grants of options may be granted from time to time.plans.
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EQUITY COMPENSATION PLANS AS OF DECEMBER 31, 2003
| Number of securities | ||||||||||||
| remaining available for | ||||||||||||
| future issuance under | ||||||||||||
| equity | ||||||||||||
| Number of securities to | Weighted-average | compensation plans | ||||||||||
| be issued upon exercise | exercise price of | (excluding securities | ||||||||||
| of outstanding options | outstanding options | reflected in column (a)) | ||||||||||
| Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders(1) | 617,250 | $ | 14.66 | 1,384,306 | (2) | |||||||
| Equity compensation plans not approved by security holders | n/a | n/a | n/a | |||||||||
| Total | 617,250 | $ | 14.66 | 1,384,306 | (2) | |||||||
Plan Category | Number of securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||
| (a) | (b) | (c) | ||||
Equity compensation plans approved by security holders(1) | 530,713 | 24.28 | 1,514,210 | |||
Equity compensation plans not approved by security holders | 0 | N/A | 0 | |||
Total | 530,713 | 24.28 | 1,514,210 |
Note to table:
| (1) | These plans are the |
Long Term Performance Plans and Pension Plans
We do not currently have any long term
performance plans or pension plans.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROLCHANGE-IN-CONTROL ARRANGEMENTS
OurAs allowed for in our stock option plan, each option agreement contains a provision vesting all stock options in the event of a “change-in-control” of us.the company. A “change-in-control” is deemed to have occurred at such time as any person or group, other than Unitthe company or an Exempt Person,“Exempt Person”, is or becomes the beneficial owner, directly or indirectly, of our securities representing 50% or more of the combined voting power of our then outstanding securities. An Exempt Person is generally defined to be any person (or estate or trust of such person) who, on the date of the plan, owned securities representing more than 20% of the combined voting power of our then outstanding securities, and any spouse, parent or issue of such person.
On December 20, 1996, effective as of January 1, 1997, the Board adopted the Separation Benefit Plan of Unit Corporation and Participating Subsidiaries (the “Plan”).Subsidiaries. The Planplan is generally applicable to all of our full timefull-time salaried employees and to the salaried employees of our two principal subsidiaries, excluding any employees who are also our directors, who have been with their employer for at least one year. Subject to the terms of the Plan,plan, any eligible employee whose employment is terminated is entitled to receive a separation benefit in an amount calculated by dividing the eligible
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employee’s average annual base salary
in effect immediately prior to suchbefore the employee’s separation by 52 to determine a weekly separation benefit amount. The number of weekly separation benefit payments then payable to an eligible employee is calculated based on the employee’s years of service in accordance with a schedule set forth in the Plan.plan. Employees who voluntarily leave their employment are not entitled to receive a separation benefit unless they have completed at least 20 years of service. Any eligible employee who has completed 20 years of service or more is vested in his or her separation benefit, subject to fulfilling the other requirements of the Plan.plan. Separation benefit payments are limited to a maximum of 104 weekly payments. The Planplan also provides that, unless otherwise provided by our Board prior tobefore a “change-in-control” of us,the company, as defined in the Plan,plan, all eligible employees shall be vested in their separation benefit as of the date of suchthe “change-in-control” based on their years of service. As a condition to receiving the separation benefits, employees must sign a separation agreement waiving any claims the employee may have against our subsidiariesthe company or us.its subsidiaries.
The following table identifies the amounts that would be due each of the officers identified in the Summary Compensation Table assuming that those amounts were determined as of December 31, 2005.
ESTIMATED BENEFIT AMOUNTS AS OF DECEMBER 31, 2005
Name | Amount Earned Under Plan ($) | |
Larry D. Pinkston | 461,538 | |
Mark E. Schell | 263,077 | |
David T. Merrill | 27,415 | |
John Cromling | 110,769 | |
Bradford J. Guidry | 222,307 |
Senior Management Separation Benefit Plan
On October 28, 1997, the boardBoard adopted the Separation Benefit Plan for Senior Management. This plan is similar in terms to the benefits and requirements described above for the Separation Benefit Plan, with the exception that the Compensation Committee determines who will participate in this plan. In addition, the Committee is given the authority to increase (up to a maximum of 104) the number of weekly separation benefit payments a participant would otherwise be entitled to receive under the plan if the participant is involuntarily terminated.
Effective with their retirement from the company, both Mr. KirchnerKeeley, Mr. Lamborn and Mr. LambornNikkel are receiving payments under this plan. Mr. Kirchner’s total compensation under the plan is $560,000 and Mr. Lamborn’s is $410,000.these plans. Their compensation is paid out over a period not to exceed 26 month period.months. Currently there are no other participants in this Plan.
Change
The following table identifies the amounts due to certain of Controlour retired former executive officers under the Senior Management Separation Benefit Plan and the amount paid to each as of December 31, 2005:
Individual | Total Amount Earned Under Plan ($) | Amount Paid As of 12/31/05 ($) | ||||
Earle Lamborn | $ | 410,000 | $ | 401,458 | ||
Philip M. Keeley | $ | 315,384 | $ | 315,384 | ||
John G. Nikkel | $ | 605,769 | $ | 281,250 | ||
Special Separation Benefit Plan
This plan is identical to the Separation Benefit Plan with the exception that a participant will vest in his or her earned benefit on the earliest of the participant reaching the age of 65 or serving 20 years with us. As of December 31, 2005, there were no participants in this plan, however in January 2006, the Compensation Committee elected to allow 33 employees to participate in the plan. Participation in this plan is in lieu of participation in any of the other Separation Benefit Plans.
Change-in-Control Arrangements
We have entered into key employee change of controlchange-in-control contracts with Messrs. Nikkel, Keeley, Pinkston, Schell, Merrill and Belitz. Mr. Merrill is our Chief Financial Officer and Mr. Belitz is our Controller. These severance contracts have an initial three-year term that is automatically extended for one year upon each anniversary, unless a notice not to extend is given by us. If a change of controlchange-in-control of the company (as defined below) occurs during the term of the severance contract, then the contract becomes operative for a fixed three-year period. The severance contracts generally provide that the executive’s terms and conditions of employment (including position, work location, compensation and benefits) will not be adversely changed during the three-year period after a change of control.change-in-control. If the executive’s employment is terminated by the company (other than for cause, death or disability), the executive terminates for good reason during such three-year period, or the executive terminates employment for any reason during the 30-day period following the first anniversary of the change of control,change-in-control, and uponon certain terminations prior tobefore a change of controlchange-in-control or in connection with or in anticipation of a change of control,change-in-control, the executive is generally entitled to receive the following payment and benefits:
In addition, the severance contract provides for a continuation of various medical, dental, disability and life insurance plans and financial counseling for a period of up to three years, outplacement services and the payment of all legal fees and expenses incurred by the executive in enforcing any right or benefit provided by the severance contracts.contract. The severance contract provides that the executive is
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entitled to receive a payment in an amount sufficient to make the executive whole for any excise tax on excess parachute payments imposed under Section 4999 of the Code. As a condition to receipt of these severance benefits, the executive must remain in the employ of the company and render services commensurate with his position. The executive must also agree to retain in confidence any and all confidential information known to him concerning the company and its business so long as the information is not otherwise publicly disclosed. As of the date of this proxy statement, no amounts have been paid under the severance contracts.
For purposes of the severance contracts, a change of controlchange-in-control is generally defined as:
(1) Any individual, entity or group acquiring beneficial ownership of 15% or more of either the outstanding shares of the company’s common stock or the combined voting power of the outstanding voting securities of the company entitled to vote generally for the election of directors;
(2) Individuals who constitute the Board on the date hereofthereof cease to constitute a majority of the Board, provided that an individual whose election or nomination as a director is approved by a vote of at least a majority of the directors as
of the date hereofthereof will be deemed a member of the incumbent Board;
(3) Approval by the company’s stockholders of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the company or the acquisition of assets of another entity, unless following the business combination:
(4) Approval by the company’s stockholders of a complete liquidation or dissolution of the company.
Under the individual severance agreements with the named executive officers that address their termination of employment following a change-in-control of the company, each executive would be entitled to receive the following estimated benefits. These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the executive, which would only be known at the time that they become eligible for payment and would only be payable if a change-in-control were to occur. The table reflects the amount that could be payable under the various arrangements assuming that the change-in-control occurred at December 31, 2005, including a gross-up for certain taxes in the event that any payments made in connection with a change-in-control would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code.
(a) | (b) | (c) | (d) | (e) | (f) | |||||
Name | Severance Amount(1) | Early Vesting of | Early Vesting of Stock(3) | Estimated Tax Gross Up(4) | Total | |||||
Larry D. Pinkston | 2,491,038 | 432,610 | 93,828 | 821,703 | 3,839,179 | |||||
Mark E. Schell | 1,687,611 | 364,714 | 59,415 | 528,576 | 2,640,316 | |||||
David T. Merrill | 1,298,483 | 224,318 | 54,762 | 521,147 | 2,098,710 |
Notes to table:
| (1) | This amount represents the 2.99 times the greater of (i) the executive officer’s base amount, as defined above or (ii) the sum of the executive officer’s (a) base salary in effect at the time of termination and (b) the higher of the (x) last full-year annual incentive payment or (y) target annual incentive payment for the year |
in which termination occurs. These amounts are based on the 2005 salary and declared bonus for 2005. This amount also includes the amounts shown as earned under the Separation Benefit Plan on page 22 and amounts for previously declared but unpaid bonus installments. |
| (2) | The value of stock options assumes a fair market value for the company’s common stock of $54.71, the average of the high and low prices of the company’s common stock on the NYSE on December 30, 2005. Value is calculated on the basis of the difference between $54.71 and the option exercise price multiplied by the number of shares of common stock underlying the options. |
| (3) | The value of restricted stock assumes a fair market value for the company’s common stock of $54.71, the average of the high and low prices of the company’s common stock on the NYSE on December 30, 2005. |
| (4) | The estimated tax gross up is based on the 20% excise tax, grossed up for taxes, on the amount of severance and other benefits above each individual’s average five-year W-2 earnings times 2.99. |
Retirement or Consulting Agreements
In connection with the retirement of Mr. King Kirchner from his position as Chief Executive Officer of the company, we entered into a Separation Agreement with Mr. Kirchner on May 11, 2001. Under this agreement, Mr. Kirchner is entitled to receive a total of $2.4 million. For the first two years under the agreement, Mr. Kirchner received, as part of the total due him, payments under the terms of the company’s Separation Benefit Plan for Senior Management or a total of $560,000. Then, commencing in July 2003 (and continuing through June 2009), Mr. Kirchner is receiving the $1,840,000 balance at the rate of $300,000 per year paid in monthly installments of $25,000. As of December 31, 2005, Mr. Kirchner had received monthly payments totaling $770,000.
We have also entered into an agreement with Mr. John Nikkel, our former Chief Executive Officer, providing for him to serve as a consultant to the company when he retired on April 1, 2005. Under this agreement, for the term of the agreement which is for a one year term extendable for successive one year periods by mutual agreement, Mr. Nikkel receives, on an annual basis, $70,000 per year. In addition, we provided him with office space and secretarial services for the time he serves as a consultant. In addition, at its February 2005 meeting, the Compensation Committee elected to reward Mr. Nikkel for his 21 years of service to the company by awarding him with a cash bonus of $750,000 payable in 24 monthly installments commencing on the 20th month following his retirement on April 1, 2005.
REPORT OF THE COMPENSATION COMMITTEE
The following report of the Compensation Committee shall not be incorporated by reference into any of our prior filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that incorporated future filings or portions thereof (including this proxy statement or the “Executive Compensation” section of this proxy statement), except to the extent that we specifically incorporate this information by reference.
The Compensation Committee is responsible for for:
The committee is composed entirely of independent outside directors. There are no interlocking relationships between any of our executive officers and any
entity whose directors or executive officers serve on the committee.
Typically the committee reviews and approves the compensation for the company’s executive officers (as well as that of the company’s other salaried employees) at its meeting held each December. At this meeting, the committee members review the information and recommendations regarding the company’s salary employees previously submitted to each committee member by the company’s management. The committee may also, as it did in the case of the Unit Corporation Stock and Incentive Compensation Plan, approve and recommend for submission to our stockholders any new equity compensation plans.
The determinations of the committee at its December meeting are, in the case of salaries and bonuses, generally implemented as of January 1 of the year following the meeting. Any stock awards have, until the committee’s December 2005 meeting, only been made in the form of stock options and are effective as of the date of the committee’s decision to award the options.
The committee feels that by waiting until December of each year to make its decisions regarding the compensation levels of the executive officers for the following year, it has the benefit of being able to take into account the full annual performance of the company, both financially and operationally.
If, during the year, circumstances warrant that the committee make adjustments to its previously approved compensation decisions, the committee will evaluate those needs at one or more meetings scheduled throughout the year. Until recently, such decisions generally related to the compensation to be paid to newly hired executive officers. However, because of the recent industry growth in all segments of the company’s operations, the company has been faced with increasing compensation pressure from industry competitors. This pressure has, especially during 2005, forced the company and the committee to make certain adjustments during the course of the year to its compensation program for specific individuals, including that related to Mr. John Cromling and Mr. Brad Guidry, as more fully discussed below.
Objectives and Considerationsof the Committee’s Compensation Program
The objectives of the committee in determining executive compensation are to to:
Each year the committee relies primarily on salary, annual bonuses (awardable either in stock or cash) and awards under our stock option plan. In making its decisions,reviews the committee takes into account executive officers’ compensation with regard to:
Individual performances are also reviewed, taking into account the individual’s responsibilities,
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experience and potential and his or her period of service and current salary andwith the individual’s compensation level as compared to similar positions at other companies. company.
The committee’s evaluation of these considerations is, for the most part, subjective and, to date, it has not established any specific written compensation plans or formulas pursuant tounder which the executive officers’ annual compensation is determined.
Base Salary
We do
The committee has not historically used outside consultants to assist the committee with regard to its executive compensation policies and decisions. The committee does, however, use each year the Mercer Energy Compensation Survey published by Mercer Human Resource Compensation, Inc. as a guide to informing the committee of the compensation programs of many of the company’s competitors.
Elements of Executive Compensation
The company’s executive compensation program (as well as its overall program) has historically consisted of the following elements:
The company does not currently have an employment agreementagreements with any of ourits executive officers.
Base Salary. In determining the base salaries for the executive pensationofficers for 2005, the committee relied primarily on its evaluation of the compensation being paid to individuals holding comparable positions in our industry. In doing so, the committee relied on the results of the Mercer Energy Compensation Survey, which surveyed the compensation and benefit programs of a number of oil and gas-related companies, one of which was us.the company. It was the committee’s objective to set the executives’ base salary at approximately the competitive mid-range75% range reflected in the survey. Within this range, the committee then made any adjustments based on individual performance evaluations. Taking these factors into consideration, the committee decided to recommend to the full Board that it increase the 20032004 salaries of the following officers by the percentages indicated: Larry D. Pinkston 20.2%; Earle Lamborn 7.9% Philip M. Keeley 7.9%; and16%, Mark E. Schell 16.2%8.5% and David T. Merrill 9.7%.
BonusesAs noted elsewhere in this proxy statement, Mr. Cromling and Mr. Guidry were promoted to their current positions with two of our subsidiaries on April 1, 2005 and March 1, 2005, respectively. At those times, the committee approved, based on the recommendations of the company’s management, that Mr. Guidry’s salary be increased from $152,500 to $170,000 and Mr. Cromling’s salary be increased from $162,000 to $180,000. These increases were based on the added responsibilities assumed by these individuals as well as a desire to keep the company’s compensation for them at a competitive level.
Bonuses. Executive officers are eligible to earn annual bonuses either in cash or in stock. Stock bonuses are awarded pursuant tounder the bonus planEmployee Bonus Plan approved by our stockholders on May 1, 1985 and, as amended, on May 3, 1995. The amount and type of any bonuses awarded to the executive officers is determined solely at the subjective discretion of the committee. The committee does not base its decisions on predetermined formulas, choosing instead to rely on its evaluation of the various considerations set forth above. In addition, when appropriate, bonuses are awarded to recognize short-term individual performance.
Generally the bonuses awarded to the company’s executive officers are structured to be paid in three annual installments, with the first payment to be made in the first month of the year following the committee’s decision to award the bonuses. The next two installments are made in January of the next two succeeding years. Receipt of the remaining installments is contingent on the recipient’s continued employment with the company.
Bonus awards to the executive officers for the 2005 year were: Mr. Pinkston, $180,000; Mr. Schell, $100,000; Mr. Merrill, $40,000; Mr. Cromling, $50,000; and Mr. Guidry, $60,000. Consistent with the committee’s previous bonus awards, the first installment of these bonuses was paid as part of the total bonus amount paid to each executive officer in January, 2005.
Stock Options
. Stock options are granted under the stock option plan approved by our stockholders on May 2, 1984 and, as amended, on May 3, 1989 and May 3, 1995. The committee believes that stock options provide an incentive for the executive officers to maximize long-term stockholder value. Stock option grants are made at 100% of the market price on the date of grant. Generally, options become exercisable in annual 20% increments after one year and have a ten-year life. The number of options that are granted to an executive officer is based on the individual’s performance and level of responsibility. Option awards will vary in size based on position level (more senior managers receive a higher multiple). Stock options are granted to the executive officers at the discretion of the committee. The committee’s decisions with respect to awarding stock options are generally made late each year thus allowing the committee to evaluate our annual results as part of its decision-making process.
In 2005, no stock options were granted to Mr. Pinkston, Schell or Merrill. However, as part of the compensation awarded to Mr. Cromling and Guidry on their promotions in 2005, the committee authorized the award of a stock option to each of these individuals covering 7,500 shares of common stock.
From January 1, 2005 until his retirement effective April 1, 2005, Mr. John Nikkel served as the company’s Chief Executive Officer. In view of his pending retirement, the committee elected not to adjust Mr. Nikkel’s salary andor award him a bonus are determined byat its December 2004 meeting. However, at its February 2005 meeting, the committee substantiallydid elect to reward Mr. Nikkel for his 21 years of service by awarding him a cash bonus of $750,000 payable in accordance24 monthly installments commencing on the 20th month following his retirement.
Effective with Mr. Nikkel’s retirement, Mr. Pinkston was elected to the policies describedposition of the company’s Chief Executive Officer. Mr. Pinkston’s compensation for 2005 was not adjusted from that previously discussed as a result of his election to the position as Chief Executive Officer.
2005 Actions with regard to 2006 Compensation
On December 13, 2005, the committee approved and the Board ratified (and approved, where required), the following compensation for the company’s executive officers for 2006:
Name and Principal Position(s) | Salary($) | Cash Bonus($) | Restricted Stock Award(s)(#) | |||
Larry D. Pinkston President and CEO | 450,000 | 200,015 | 1,715 | |||
Mark E. Schell Sr. V. P., Secretary and General Counsel | 220,000 | 126,686 | 1,086 | |||
David T. Merrill CFO and Treasurer | 200,000 | 116,642 | 1,001 | |||
John Cromling Exec. V. P., Drilling | 210,000 | 101,666 | 1,029 | |||
Bradford J. Guidry Sr. V. P., Exploration | 200,000 | 106,667 | 972 |
The cash bonuses represented above relating to all executive officers. Based on its review, andare payable in particular, the successes attainedthree annual installments, commencing in January 2006. The first installment in the areasamount of rig growth, oil50% of the award was paid in January 2006 and gas acquisitions, net income, cash flowthe balance will be paid in two equal annual installments. Receipt of these amounts is contingent on the employee remaining in the employment of the company.
The restricted stock awards were issued under the company’s Employee Bonus Plan and evidenced by a restricted stock performance,bonus agreement entered into between each of the above employees and the company. Each agreement, in addition to certain other provisions, provides that one-half of the Restricted Shares vests on January 1, 2007 and the other one-half vests on January 1, 2008, subject in each case to the employee remaining in the employment of the company. In the event of a “change in control” of the company (as defined in the agreement), any unvested shares will immediately vest in the recipient. This is the first time the committee has used restricted stock awards as part of its compensation program. The committee chose to raise Mr. Nikkel’s 2003 salary by 14.3%.use restricted stock awards in lieu of stock options as a means of more closely linking the executive’s compensation to that of the company’s stock price.
1993 OBRA — ExecutiveAt this meeting the committee also decided to proceed with the preparation of a new incentive plan to replace the company’s existing Employee Bonus Plan and its employee Stock Option Plan. The committee thought that the company needed to update its equity plans in view of recent tax and accounting changes as well as desiring to have a plan that would allow the committee a greater range of options in structuring its equity based compensation. The result of this effort is the Unit Corporation Stock and Incentive Compensation Tax DeductibilityPlan that is being submitted for approval to the company’s stockholders with this proxy statement. The committee views the adoption and approval of this plan as an important step in the ability of the company to maintain a competitive compensation program.
TheDeductibility of Compensation Under Internal Revenue Code Section 162 (m)
Section 162(m), limits our ability to deduct, for federal income tax purposes, certain non-performance based compensation of the Internal Revenue Code, adopted in excess of1993, imposes a $1 million per year paidcap, subject to individual officers named in the Summary Compensation Table. Basedcertain exceptions, on the amountdeductibility to the company of compensation paid to eachthe executive officers named in our proxy statement. Currently, the compensation paid under our stock option plan is not deductible. Cash compensation voluntarily deferred by the executive officers under the deferred compensation plan is not subject to the Section 162(m) cap until the year paid. After reviewing the compensation to be paid in 2005 that was subject to the Section 162(m) cap, the committee did not expect that compensation to exceed $1 million for any of the named officers in fiscal 2003, it doesexecutive officers. Therefore, the committee believes that the company will not appear thatbe subject to any Section 162(m) will have a significant impactlimitations on usthe deductibility of compensation paid to the company’s named executive officers for fiscal year 2005.
The committee continues to consider other steps which might be in the near term. However,company’s best interests to comply with Section 162(m), while reserving the right to award future compensation which would not comply with the Section 162(m) requirements for nondeductibility if the committee will continue to monitor whether its executive compensation plans should be
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amended to meet the deductibility requirements of the tax law.
Members of the Compensation Committee:
J. Michael Adcock —- Chairman
William B. Morgan
John H. Williams John S. Zink
REPORT OF THE AUDIT COMMITTEE
The following report of the Audit Committee shall not be incorporated by reference into any of our prior filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that incorporated future filings or portions thereof, except to the extent that we specifically incorporate this information by reference.
The Securities and Exchange CommissionSEC rules now require that we include in our proxy statement a report from the Audit Committee of the Board. The following report concerns the committee’s activities regarding oversight of our financial reporting and auditing process.
In accordance with its written charter, the Audit Committee of the Board assists the Board in fulfilling its responsibility for oversight of the quality and integrity of our accounting, auditing and financial reporting practices. During the year 2003,2005, the committee met fourfive times. The committee chair, as representative of the committee, discussed the interim financial information contained in each quarterly earnings announcement and Form 10-Q with the CFOcompany’s Chief Financial Officer and independent auditors prior toregistered public accounting firm before public release.
The Board and the Audit Committee believe that the Audit Committee’s current member composition satisfies the rule of the New York Stock ExchangeNYSE that governs audit committee composition, including the requirement that audit committee members all be “independent directors” as that term is defined by applicable NYSE rule.
ManagementThe company’s management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the committee reviewed the audited financial statements in the Annual Report with management including a discussion
of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The committee reviewed with the company’s independent auditors,registered public accounting firm, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of ourthe company’s accounting principles and such other matters as are required to be discussed with the committee under generally-accepted auditing standards, including Statement on officers for 2003, the committee relied primarily on its evaluation of the compensation being paid to individuals holding comparable positions in the industry. In doing so, the committee relied, to a large extent, on the results of the Mercer Energy Compensation Survey, which surveyed the com Auditing Standards No. 61. The committee has discussed with the independent auditorsregistered public accounting firm the auditors’ independence from management, including the implications of the SEC regulations regarding the provisions of non-audit services by the independent auditorsregistered public accounting firm and determined that the provisions of the non-audit services were not inconsistent with the independent auditors’registered public accounting firm’s status as independent auditors.registered public accounting firm. In addition, the committee received the written disclosures and letter from the independent auditorsregistered public accounting firm required by the Independence Standards Board, Standard No. 1.
The committee also reviewed the report of management contained in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the SEC, as well as PricewaterhouseCoopers LLP’s Report of Independent Registered Public Accounting Firm (included in the company’s Annual Report on Form 10-K). This report related to its audit of (i) the consolidated financial statements, (ii) management’s assessment of the effectiveness of internal control over financial reporting and (iii) the effectiveness of internal control over financial reporting. The committee continues to oversee the company’s efforts related to its internal control over financial reporting and management’s preparations for the evaluation in fiscal 2006.
Based on the above-mentioned review and discussions with management and the independent auditors,registered public accounting firm, the committee recommended to the Board that ourthe company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 2003,2005, for filing with the Securities and Exchange Commission.SEC.
Each member of our Audit Committee is financially literate, knowledgeable and qualified to review financial statements. The Board has
determined that Don Cook qualifies as an “audit committee financial expert” designated by our Board is Don Cook.
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Members of the Audit Committee:
Don Cook —- Chairman J. Michael Adcock
William B. Morgan
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Audit Committee has appointed PricewaterhouseCoopers LLP as the company’s independent auditorsregistered public accounting firm for the fiscal year ending December 31, 2004. Representatives of PricewaterhouseCoopers LLP are expected to be present at the annual meeting and will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.2006.
Fees Incurredincurred by the Companycompany for PricewaterhouseCoopers LLP
The following table shows the fees for professional audit services provided by PricewaterhouseCoopers LLP for the integrated audit of the company’s annual financial statements for the years ended December 31, 20032005 and 2002,2004, and fees billed for other services during those periods.
| 2003 | 2002 | |||||||
Audit Fees(1) | $ | 177,920 | $ | 116,080 | ||||
Audit-Related Fees(2) | 35,400 | 14,525 | ||||||
Tax Fees(3) | 10,300 | 14,195 | ||||||
| All Other Fees | — | — | ||||||
| Total | $ | 223,620 | $ | 144,800 | ||||
| 2005 | 2004 | |||||
Audit Fees(1) | $ | 525,000 | $ | 584,875 | ||
Audit-Related Fees(2) | $ | 164,635 | $ | 78,700 | ||
Tax Fees(3) | $ | 18,950 | $ | 55,245 | ||
All Other Fees | — | — | ||||
Total | $ | 708,585 | $ | 718,820 | ||
Notes to table:
| (1) | Audit fees represent fees for professional services provided in connection with the integrated audit of our financial statements and review of our quarterly financial statements and audit services provided in connection with the issuance of comfort letters, consents, and assistance with review of documents filed with the SEC. |
| (2) | Audit-related fees consisted primarily of services provided in connection with financial activities, consultations related to accounting and reporting standards and audits of an employee benefit plan and oil and gas partnerships. |
| (3) | For fiscal |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm.
Before incurring the following, management will submit a list of services and related fees expected to be rendered during that year within each of the following four categories of services to the Audit Committee for approval:
| 1. | Auditservices include audit work performed on the financial statements, internal control over financial reporting, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort |
letters, statutory audits, and discussions surrounding the proper application of financial accounting and/or reporting standards. |
| 2. | Audit-Relatedservices are for assurance and related services that are traditionally performed by the independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements. |
| 3. | Taxservices include all services, except those services specifically related to the audit of the financial statements, performed by the independent registered public accounting firm’s tax personnel, including tax analysis; assisting with coordination of execution of tax related activities, primarily in the area of corporate development; supporting other tax related regulatory requirements; and tax compliance and reporting. |
| 4. | Other Feesare those associated with services not captured in the other categories. The company generally doesn’t request such services from the independent registered public accounting firm. |
The Audit Committee has delegated topre-approves the Chair ofindependent registered public accounting firms services within each category. The fees are budgeted and the Audit Committee requires the independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm.
The Audit Committee may (and has at various times in the past) delegate pre-approval authority to pre-approve audit-related and non-audit services not prohibited by lawone or more of its members. The member to be performed by the company’s independent auditors and associated
fees, provided the Chair reportswhom such authority is delegated must report, for informational purposes only, any pre-approval decisions to pre-approve such audit-related or non-audit services and fees to the full Audit Committee at its next regularscheduled meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2003,2005, the following directors (none of whom was or had been an officer or employee of the company or any of its subsidiaries) served on the Compensation Committee: J. Michael Adcock, William B. Morgan, John H. Williams
and John S. Zink.Don Cook. There are no committee interlocks with other companies within the meaning of the Securities and Exchange Commission’sSEC’s rules during 2003.
23
PERFORMANCE GRAPH
The performance graph and the related disclosure contained in this section of the Proxy Statementproxy statement shall not be incorporated by reference into any of our prior filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that incorporated future filings or portions thereof (including this proxy statement or the “Executive Compensation” section of this proxy statement), except to the extent that we specifically incorporate this information by reference.
The following graph reflects a comparison of the cumulative total return (change in stock price plus reinvested dividends, assuming $100
invested on December 31, 1998)2000) in our common stock during the five-year period from December 31, 19992001 through December 31, 2003,2005, with the Standard & Poor’s 500 Composite Index, the S&P 600 Oil & Gas Exploration and Production Index and a Unitcompany determined peer group index. OurThe graph reflects a peer group index consistsconsisting of Grey Wolf Inc., Patterson-UTI Energy Inc., Pioneer Drilling Co., and TMBR/SHARP DrillingHelmrich & Payne Inc. The comparisons in this table are required by the Securities and Exchange CommissionSEC and, therefore, are not intended to forecast or be indicative of possible future performance of our stock.
| DOLLAR VALUE OF $100 INVESTMENT AT DECEMBER 31, | ||||||||||||||||||||
| 1999 | 2000 | 2001 | 2002 | 2003 | ||||||||||||||||
| Unit | 183.58 | 452.24 | 308.06 | 442.99 | 562.39 | |||||||||||||||
| S&P 500 | 121.04 | 110.02 | 96.95 | 75.52 | 97.18 | |||||||||||||||
| S&P 600 Oil & Gas | 125.32 | 247.66 | 210.92 | 221.90 | 308.10 | |||||||||||||||
| Peer Group | 337.94 | 824.80 | 490.94 | 634.81 | 675.48 | |||||||||||||||
24
| DOLLAR VALUE OF $100 INVESTMENT AT DECEMBER 31, | ||||||||||
| 2001 | 2002 | 2003 | 2004 | 2005 | ||||||
Unit | 68.12 | 97.95 | 124.36 | 201.77 | 290.59 | |||||
S&P 500 | 88.11 | 68.64 | 88.33 | 97.94 | 102.75 | |||||
S&P 600 Oil & Gas | 85.17 | 89.60 | 124.41 | 189.55 | 317.27 | |||||
Peer Group | 67.11 | 81.88 | 85.76 | 107.22 | 182.87 | |||||
Item 1 is the election of three directors to the Board. Our Amended and Restated Certificate of Incorporation provides that the number of directors the company may have may not be less than three nor more than ten. Our Board currently is composed of nine members and is divided into three classes with each director serving for a three-year term. At each annual meeting, the term of one class expires. The term of service for those directors serving in Class I expires at this meeting.
If any director resigns, dies or is otherwise unable to serve out his or her term, or the Board increases the number of directors, the Board may fill the vacancy or elect the new director.
Mr. Sullivan and Mr. Christopher are standing for their first election by our stockholders. Both were elected to our Board effective July 1, 2005 at the recommendation of the Nominating and Governance Committee and on the unanimous
vote of the Board. One of our non-management directors initially recommended Mr. Sullivan for consideration as a Board member while Mr. Christopher was considered on the initial recommendation of the Chairman of the Board of Directors.
Our Nominating & Governance Committee has recommended, and the Board has approved, the nominees listed below to stand for election. Information concerning each nominee and each continuing director is provided below.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF ELECTING THE THREE NOMINEES.
| NOMINEES FOR DIRECTOR | ||||
Terms expiring at this annual meeting (Class I) | John G. Nikkel Age 71 Director since 1983 | Mr. Nikkel joined Unit as its President, Chief Operating Officer and a director in 1983. He was elected its Chief Executive Officer in July, 2001 and Chairman of the Board in August, 2003. Mr. Nikkel retired as an employee and as the Chief Executive Officer of the company on April 1, 2005. He currently holds the position of Chairman of the Board. From 1976 until January, 1982 when he co-founded Nike Exploration Company, Mr. Nikkel was an officer and director of Cotton Petroleum Corporation, serving as the President of Cotton from 1979 until his departure. Prior to joining Cotton, Mr. Nikkel was employed by Amoco Production Company for 18 years, last serving as Division Geologist for Amoco’s Denver Division. Mr. Nikkel presently serves as President and a director of Nike Exploration Company, a family owned oil and gas investment company. From August 16, 2000 until August 23, 2002 Mr. Nikkel, in connection with Unit’s investment in the company, also served as a director of Shenandoah Resources Ltd., a Canadian company. Shenandoah Resources Ltd. filed for creditors’ protection under The Companies’ Creditor Arrangement Act in April 2002 with the Court of Queen’s Bench of Alberta, Judicial District of Calgary. Mr. Nikkel received a Bachelor of Science degree in Geology and Mathematics from Texas Christian University. | ||
Robert J. Sullivan, Jr. Age 60 Director since 2005 | Mr. Robert J. Sullivan Jr. is a Principal with Sullivan and Company LLC, a family-owned independent oil and gas exploration and production company founded in 1958. He is also the Founder (1989) and served as Chairman and Chief Executive Officer of Lumen Energy Corporation prior to its sale in 2004. Mr. Sullivan was appointed to Oklahoma Governor Frank Keating’s Cabinet as Secretary of Energy in March, 2002. He received a BBA from the University of Notre Dame, and a MBA from the University of Michigan. Mr. Sullivan is a Board Member of the Oklahoma Independent Petroleum Association, Oklahoma Energy Resources Board, St. John Medical Center, St. Joseph Residence, University of Notre Dame Alumni Association, and former Board Member of Catholic Charities and Gatesway Foundation. He also is Trustee for the Monte Cassino Endowment Trust, a Member of the University of Notre Dame, Graduate School Advisory Council and Past Chairman of the following School Boards: Cascia Hall Preparatory School; Monte Cassino School and School of St. Mary. | |||
Gary R. Christopher Age 56 Director since 2005 | Mr. Gary R. Christopher has been engaged in personal investments and consulting. Between August, 1999 and January, 2004, he served as President and Chief Executive Officer of PetroCorp Incorporated (a public oil and gas exploration company), and from March 1996 to August 1999 he served as the Acquisition Coordinator of Kaiser-Francis Oil Company. His other past professional experience includes serving as Vice President of Acquisitions for Indian Wells Oil Company, Senior Vice President and Manager of the Energy Lending Division of First National Bank of Tulsa and from 1991 to 1996 Senior Vice President and Manager of Energy Lending for Bank of Oklahoma. Previous to that, Mr. Christopher worked for Amerada Hess Corporation as a Reservoir Engineer and for Texaco, Inc. as a Production Engineer. Mr. Christopher is a Registered Professional Engineer for the State of Oklahoma, a member of the Society of Petroleum Engineers, Society of Petroleum Evaluation Engineers, and the Oklahoma Independent Petroleum Association. Mr. Christopher received a B.S. degree in Petroleum Engineering from the University of Missouri at Rolla. Mr. Christopher is a past Director of the Petroleum Club of Tulsa, Middle Bay Oil Company, Three Tech Energy, PetroCorp Incorporated and a present Director of the Summit Bank of Oklahoma. | |||
| CONTINUING DIRECTORS | ||||
Terms expiring at 2007 annual meeting (Class II) | William B. Morgan Age 61 Director since 1988 | Mr. Morgan was elected a director of Unit in February, 1988. For over five years, Mr. Morgan has been Executive Vice President and General Counsel of St. John Health System, Inc., Tulsa, Oklahoma, and the President of its principal for-profit subsidiary Utica Services, Inc. Before that, he was a Partner in the law firm of Doerner, Saunders, Daniel & Anderson, Tulsa, Oklahoma, for over 20 years. | ||
John H. Williams Age 87 Director since 1988 | Mr. Williams was elected a director of Unit in December, 1988. Mr. Williams is engaged in personal investments and has been for more than five years. He was Chairman of the Board and Chief Executive Officer of The Williams Companies, Inc. before retiring in 1978 and continues to serve as an honorary director. Mr. Williams is a director of Apco Argentina, Inc. and also an honorary director of Willbros Group, Inc. He formerly served as a director of Petrolera Entre Lomas S.A. In addition, Mr. Williams is a member of the Tulsa Performing Arts Center Trust. | |||
Larry D. Pinkston Age 51 Director since 2004 | Mr. Pinkston joined Unit in December, 1981. He had served as Corporate Budget Director and Assistant Controller before being appointed Controller in February, 1985. In December, 1986, he was elected Treasurer of Unit and was elected to the position of Vice President and Chief Financial Officer in May, 1989. In August, 2003, he was elected to the position of President. He was elected a director by the Board in January, 2004. In February, 2004, in addition to his position as President, he was elected to the office of Chief Operating Officer. Effective April 1, 2005, Mr. Pinkston was elected to the additional position of Chief Executive Officer. He holds a Bachelor of Science Degree in Accounting from East Central University of Oklahoma and is a Certified Public Accountant. | |||
| CONTINUING DIRECTORS | ||||
Terms expiring at 2008 annual meeting (Class III) | King P. Kirchner Age 78 Director since 1963 | Mr. Kirchner, a co-founder of Unit, has been a director since 1963. He served as Unit’s President until November, 1983, as its Chief Executive Officer until June 30, 2001, and served as the Chairman of the Board until July 31, 2003. Mr. Kirchner is a Registered Professional Engineer within the State of Oklahoma, having received degrees in Mechanical Engineering from Oklahoma State University and in Petroleum Engineering, with honors, from the University of Oklahoma. Following graduation, he was employed by Lufkin Manufacturing as a development engineer for hydraulic pumping units. Prior to co-founding Unit, he served in the U.S. Army during the Korean War and after that as vice-president engineering and operations for Woolaroc Oil Company. | ||
Don Cook Age 81 Director since 1963 | Mr. Cook has served as a director of Unit since Unit’s inception. He is a Certified Public Accountant and was a partner in the accounting firm of Finley & Cook, Shawnee, Oklahoma, from 1950 until 1987, when he retired. Mr. Cook has been designated by the company’s board of directors as the Audit Committee’s financial expert. | |||
J. Michael Adcock Age 57 Director since 1997 | Mr. Adcock was elected a director of Unit in December, 1997. He is an attorney and currently manages a private business trust that deals in real estate, oil and natural gas properties and other equity investments. He is Chairman of the Board of Arvest Bank, Shawnee, and a director of Community Health Partners, Inc. Between 1997 and September, 1998 he was the Chairman of the Board of Ameribank and President and Chief Executive Officer of American National Bank and Trust Company of Shawnee, Oklahoma, and Chairman of AmeriTrust Corporation, Tulsa, Oklahoma. Prior to holding these positions, he was engaged in the private practice of law and served as General Counsel for Ameribank Corporation. | |||
The following table identifies our executive officers who are not directors as well as certain of the officers of our subsidiaries.
Name and Age as of the | Position, Principal Occupation, Business Experience and Directorships | |||
Mark E. Schell Age 49 | Senior Vice President, General Counsel and Secretary | |||
David T. Merrill Age 45 | Chief Financial Officer and Treasurer | |||
John Cromling Age 58 | Executive Vice President of Unit Drilling Company | |||
Bradford J. Guidry Age 50 | Senior Vice President of Unit Petroleum Company | |||
Robert H. Parks, Jr. Age 51 | Manager of Superior Pipeline Company, L.L.C. | |||
ITEM 2: RATIFICATION OF APPOINTMENT OF AUDITORSRatification of Appointment of Independent Registered Public Accounting Firm
Our Audit Committee has unanimously selected PricewaterhouseCoopers LLP as our independent auditorsregistered public accounting firm for our 20042006 fiscal year. We are asking you to ratify and approve this action. A representative of PricewaterhouseCoopers LLP, will attend the annual meeting, will have the opportunity to make a statement if he or she desires to do so and will be available to answer appropriate questions.
Although the law does not require such ratification, the Audit Committee believes that you should be given the opportunity to express your views on this matter. However, even if you
ratify the selection, the Audit Committee may still appoint a new independent auditorsregistered public accounting firm at any time if it believes that such change would be in the best interest of the company and its stockholders. Failure to ratify suchthis selection is not binding on the Audit Committee. However, if our stockholders do not ratify this selection, the Audit Committee will reconsider the appointment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL, WHICH VOTE WILL ACT TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP.
ITEM 3: Approval of Increase in the Authorized Shares of Common Stock
The Board believes that the proposed increase to the authorized number of shares of common stock, par value $.20 per share, is necessary for the continued success and growth of the company. The proposed amendment to our Amended and Restated Certificate of Incorporation will amend Article Four to increase the number of authorized shares of common stock, par value $.20 per share, from 75,000,000 shares to 175,000,000 shares.
The proposed amendment is as follows:
“The aggregate number of shares of all classes of stock which the corporation shall have the authority to issue is [180,000,000], 175,000,000 of which shall be Common Stock of the par value of $.20 per share (hereinafter called “Common Stock”) and [5,000,000] of which shall be Preferred Stock of the par value of $1.00 per share (hereinafter called “Preferred Stock”).”
Note that the numbers contained in the brackets above are subject to change depending on the outcome of the voting on Item No. 4 as set out in this proxy statement. If our stockholders approve Item No. 4 as well and this proposal, the numbers in the brackets above would change to 185,000,000 and 10,000,000, respectively.
As of March 13, 2006, there were
If this proposal is approved, taking into account the number of shares reserved for issuance, the Board will have the authority to issue approximately 128,212,641 shares of common stock without further stockholder approval, except as may be required for a particular transaction by applicable law, regulatory agencies or the rules of the NYSE or any other securities exchange on which our securities may then be listed.
The additional authorized shares of common stock may be used for such corporate purposes as may be determined by the Board from time to time to be necessary or desirable. These purposes may include, without limitation: raising capital through the sale of common stock; effecting a stock split or issuing a stock dividend; acquiring other businesses in exchange for shares of common stock; and attracting and retaining employees by the issuance of additional securities under the company’s equity
compensation plans. At the present time, the company has no commitments, agreements or undertakings to issue any such additional shares, except in connection with existing equity compensation plans and agreements.
The Board believes that the authorized number of shares of common stock should be increased to provide the Board with the ability to issue additional shares of common stock for the potential corporate purposes described above, without having to incur the delay and expense incident to holding a special meeting of the stockholders to approve an increase in the authorized shares of common stock at that time.
The authorization of the additional shares by this proposal would not have any immediate dilutive effect on the proportionate voting power or other rights of existing stockholders, but, to the extent that the additional authorized shares are issued in the future, they may decrease existing stockholders’ percentage equity ownership and, depending on the price at which they are issued, could be dilutive to existing stockholders and have a negative effect on the market price of the company’s common stock. Under the company’s Amended and Restated Certificate of Incorporation, stockholders do not have preemptive rights with respect to the issuance of shares of common stock, which means that current stockholders do not have a prior right to purchase shares in any new issue of common stock in order to maintain their proportionate ownership of common stock.
Anti-Takeover Considerations
The increase in the number of authorized shares of common stock could have an anti-takeover effect, although this is not the intent of the Board. For example, if the Board issues additional shares in the future, such issuance could dilute the stock ownership and voting power of, or increase the cost to, a person seeking to obtain control of the company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or other extraordinary transaction. To the extent that it impedes any such attempts, the proposed amendment may serve to perpetuate the Board and the company’s management. The proposed amendment is not being proposed in response to any known effort or threat to acquire control of the company and is not part of a plan by management to adopt a series of amendments to the Amended and Restated Certificate of Incorporation and the company’s bylaws having an anti-takeover effect.
In addition, other provisions of the company’s Amended and Restated Certificate of Incorporation and bylaws may have an anti-takeover effect, including provisions that require stockholders to give the company advance notice to nominate candidates for election to its Board or to make stockholder proposals at a stockholder meeting, and that permit the Board to issue, without stockholder approval, preferred stock with such terms as the Board may determine. Further, Section 203 of the Delaware General Corporation Law provides certain restrictions on business combinations between the company and any party acquiring a 15 percent or greater interest in its voting stock. These provisions of the company’s Amended and Restated Certificate of Incorporation, our bylaws, our shareholder rights plan and Delaware law could discourage potential acquisition proposals and could delay or prevent a change-in-control of the company, even if the stockholders support such proposals.
Voting Information
A majority of the outstanding shares or our common stock must vote FOR this proposal to approve the proposed Amendment. Abstentions and broker non-votes will have the same effect as votes against the proposal.
The Board reserves the right to abandon the proposed amendment set forth in this proposal at any time before its effectiveness whether before or after stockholder approval under Delaware General Corporation Law §242(c). If this proposal is approved, we intend to promptly file a Certificate of Amendment with the Secretary of State of the State of Delaware. On filing, all stockholders will be bound by the terms of the Certificate of Amendment, whether or not they voted to approve it.
THE BOARD HAS APPROVED AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE PROPOSED AMENDMENT.
ITEM 4: Approval of Increase in the Authorized Shares of Preferred Stock
The Board believes that the proposed increase to the authorized number of shares of preferred stock is necessary for the continued success and growth of the company. The proposed amendment to our Amended and Restated Certificate of Incorporation will amend Article Four to increase the number of authorized shares of preferred stock from 5,000,000 shares to 10,000,000 shares.
The proposed amendment is as follows:
“The aggregate number of shares of all classes of stock which the corporation shall have the authority to issue is [85,000,000], [75,000,000] of which shall be Common Stock of the par value of $.20 per share (hereinafter called “Common Stock”) and 10,000,000 of which shall be Preferred Stock of the par value of $1.00 per share (hereinafter called “Preferred Stock”).”
Note that the numbers contained in the brackets above are subject to change depending on the outcome of the voting on Item No. 3 as set out in this proxy statement. If our stockholders approve Item No. 3 as well and this proposal, the numbers in the brackets above would change to 185,000,000 and 175,000,000, respectively.
Under the laws of the state of Delaware and our Amended and Restated Certificate of Incorporation, our Board has the authority, without further action by our stockholders, to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the privileges and rights of each series. The Board is now requesting that the stockholders approve an increase in the number of shares of preferred stock which we can issue from 5,000,000 to 10,000,000. Currently, we do not have any shares of preferred stock outstanding.
The additional shares of preferred stock may be used for such corporate purposes as may be determined by the Board from time to time to be necessary or desirable. These purposes may include, without limitation: raising capital through the sale preferred stock; and acquiring other businesses in exchange for shares of preferred stock At the present time, the company has no commitments, agreements or undertakings to issue any such additional shares.
The Board believes that the authorized number of shares of preferred stock should be increased to provide the Board with the ability to issue additional shares of preferred stock for the potential corporate purposes described above, without having to incur the delay and expense incident to holding a special meeting of the stockholders to approve an increase in the authorized shares of preferred stock at that time.
Anti-Takeover Considerations
The increase in the number of authorized shares of preferred stock could have an anti-takeover effect, although this is not the intent of the Board. For example, if the Board issues shares in the future, such issuance could dilute the stock ownership and voting power of, or increase the cost to, a person seeking to obtain control of the company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or other extraordinary transaction. To the extent that it impedes any such attempts, the proposed amendment may serve to perpetuate the company’s Board or management. The proposed amendment is not being proposed in response to any known effort or threat to acquire control of the company and is not part of a plan by management to adopt a series of amendments to the Amended and Restated Certificate of Incorporation and the company’s bylaws having an anti-takeover effect.
In addition, other provisions of the company’s Amended and Restated Certificate of Incorporation and bylaws may have an anti-takeover effect, including provisions that require stockholders to give the company advance notice to nominate candidates for election to its Board or to make stockholder proposals at a stockholder meeting, and that permit the Board to issue, without stockholder approval, preferred stock with such terms as the Board may determine. Further, Section 203 of the Delaware General Corporation Law provides certain restrictions on business combinations between
the company and any party acquiring a 15 percent or greater interest in its voting stock. These provisions of the company’s Amended and Restated Certificate of Incorporation, our bylaws, our shareholder rights plan and Delaware law could discourage potential acquisition proposals and could delay or prevent a change-in-control of the company, even if the stockholders support such proposals.
Voting Information
A majority of the outstanding shares or our common stock must vote FOR this proposal to approve the proposed Amendment. Abstentions and broker non-votes will have the same effect as votes against the proposal.
The Board reserves the right to abandon the proposed amendment set forth in this proposal at any time before its effectiveness whether before or after stockholder approval under Delaware General Corporation Law §242(c). If this proposal is approved, we intend to promptly file a Certificate of Amendment with the Secretary of State of the State of Delaware. On filing, all stockholders will be bound by the terms of the Certificate of Amendment, whether or not they voted to approve it.
THE BOARD HAS APPROVED AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE PROPOSED AMENDMENT.
ITEM 5: Proposal to Approve the Unit Corporation Stock and Incentive Compensation Plan
General
The Board believes that the growth of our company depends on the efforts of our employees, and that the Unit Corporation Stock and Incentive Compensation Plan (the “Plan”) will provide an effective means of attracting and retaining qualified employees while enhancing their long-term focus on maximizing stockholder value.
The Plan has been adopted by the Board, subject to approval by our stockholders at the annual meeting. The principal features of the Plan are summarized below. This summary is qualified in its entirety, however, by reference to the Plan, which is attached to this proxy statement as Appendix A.
If approved by our stockholders, the Plan will serve as the successor to the Unit Corporation Amended and Restated Stock Option Plan and the Employee Bonus Plan, both of which were previously approved by our stockholders, and no further grants will be made under those plans from and after the date our stockholders approve this Plan.
Purpose of the Proposal
The Board believes that providing selected employees with a proprietary interest in the growth and performance of our company (and its subsidiaries) is crucial to stimulating individual performance while at the same time enhancing stockholder value. Currently, approximately 1,167,116 shares of common stock remain available for grant under the two previously approved plans mentioned above. The Board believes that adoption of the Plan is necessary to provide us with the continued ability to attract, retain and motivate employees in a manner that is tied to the interests of our stockholders.
Terms of the Plan
Administration of the Plan.The Compensation Committee of the Board administers the Plan and has authority to make awards under the Plan, to set the terms of the awards, to interpret the Plan, to establish any rules or regulations relating to the Plan that it determines to be appropriate and to make any other determination that it believes necessary or advisable for the proper administration of the Plan. Subject to the limitations specified in the Plan, the Compensation Committee may delegate its authority to appropriate company personnel.
Eligibility.Employees of our company (and its subsidiaries) will be eligible to receive awards (the “Awards”) under the Plan when designated as Plan participants. Awards under the Plan may be granted in any one or a combination of the following forms:
Shares Issuable Through the Plan.A total of 2,500,000 shares of common stock are authorized to be issued under the Plan, representing approximately 5.4% of our outstanding shares of common stock. The closing sale price of a share of common stock, as quoted on the NYSE on March 16, 2006 was $55.50.
Limitations and Adjustments to Shares Issuable Through the Plan.The Plan limits the maximum number of shares that can be issued as “incentive stock options” to 2,000,000 shares. The Plan also contains the following limits to the Awards granted to an insider in any one year as follows:
All Awards shall be subject to the minimum vesting periods, determined by the Compensation Committee and included in the Award agreement.
For purposes of determining the maximum number of shares of common stock available for delivery under the Plan, shares of common stock that are not delivered because the Award is forfeited, canceled or settled in cash will not be deemed to have been delivered under the Plan. With respect to stock appreciation rights, the net number of shares of common stock delivered on exercise of the stock appreciation right will be counted against the Plan limits.
Proportionate adjustments will be made to all of the share limitations provided in the Plan, including shares subject to outstanding Awards, in the event of any recapitalization, stock dividend, stock split, combination of shares or other change in the shares of common stock, and the terms of any Award will be adjusted to the extent appropriate to provide participants with the same relative rights before and after the occurrence of any such event.
Amendments to the Plan.The Compensation Committee or Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan in whole or in part; provided however, that:
to the extent necessary under any applicable law, regulation or exchange requirement, no amendment shall be
effective unless approved by the stockholders of the company in accordance with applicable law, regulation, or exchange requirement. |
Types of Awards.Each type of Award that may be granted under the Plan is described below:
Stock Options. The Compensation Committee may grant non-qualified stock options or incentive stock options to purchase shares of common stock. The Compensation Committee will determine the number and exercise price of the options, and the time or times that the options become exercisable, provided that the option exercise price may not be less than the fair market value of a share of common stock on the date of grant, except for an option granted in substitution of an outstanding award in an acquisition transaction in accordance with Section 424(h) of the Code. The term of an option will also be determined by the Compensation Committee; provided that the term of an option may not exceed 10 years.
The option exercise price may be paid in cash; by check; in shares of common stock, subject to certain limitations; through a “cashless” exercise arrangement with a broker approved in advance by us; or in any other manner authorized by the Compensation Committee. Incentive stock options will be subject to certain additional requirements necessary in order to qualify as incentive stock options under Section 422 of the Code.
Except for certain permitted adjustments, unless approved by our stockholders, (a) the exercise price for any outstanding option granted under the Plan may not be decreased after the date of grant and (b) an outstanding option that has been granted under the Plan may not, as of any date that such option has a per share exercise price that is greater than the then current fair market value of our common stock, be surrendered as consideration for the grant of a new option with a lower exercise price, shares of common stock, shares of restricted stock, restricted stock units, another “stock-based” award or a cash payment.
Restricted Stock. Shares of common stock may be granted by the Compensation Committee to an eligible employee and made subject to restrictions on sale, pledge or other transfer by the employee for a certain period (the restricted period). All shares of restricted stock will be subject to such restrictions as the Compensation Committee may provide in an Award agreement with the participant, including provisions obligating the participant to forfeit or resell the shares to us in the event of termination of employment or if specified performance goals or targets are not met. Participant’s rights with respect to such shares shall be subject to the restrictions provided in the Award agreement and the Plan.
Restricted Stock Units. A restricted stock unit represents the right to receive from us, on the respective scheduled vesting or payment date for such restricted stock unit, one share of common stock. An award of restricted stock units may be subject to the attainment of specified performance goals or targets, forfeitability provisions and such other terms and conditions as the Compensation Committee may determine, subject to the provisions of the Plan. To the extent an award of restricted stock units is intended to qualify as performance based compensation under Section 162(m), it must be granted subject to the attainment of performance goals and meet the additional requirements imposed by Section 162(m).
Stock Appreciation Rights. A stock appreciation right may be granted by the Compensation Committee in its discretion. The Compensation Committee may grant free standing stock appreciation rights, tandem stock appreciation rights or any combination of these forms of stock appreciation rights. The grant price for each stock appreciation right shall be determined by the Compensation Committee and shall be specified in the Award agreement, but in no event shall the grant price be less than the fair market value of the shares of common stock of the company on the date the stock appreciation right is granted. The grant price of tandem stock appreciation rights shall be equal to the option price of the related option. The term of the stock appreciation right shall be determined by the Compensation Committee and specified in the Award agreement, which relates to the stock appreciation right. No stock appreciation right will be exercised after the tenth anniversary
from the date of its grant. However, for employees employed outside the United States and who are third-country nationals, the Compensation Committee may grant stock appreciation rights with a term of more than 10 years. Outstanding stock appreciation rights may be exercised on whatever terms the condition the Compensation Committee imposes. Tandem stock appreciation rights may be exercised for all or part of the shares subject to the related option on the surrender of the right to exercise equivalent portions of the related option. A tandem stock appreciation right may be exercised only with respect to the shares for which the related option is unexercisable. With respect to a tandem stock appreciation right granted in connection with an incentive stock option, (a) the tandem stock appreciation right will expire no later than the expiration of the underlying incentive stock option; (b) the value of the payout with respect to the tandem stock appreciation right will be for no more than 100% of the difference between the option price of the underlying incentive stock option and the fair market value of the shares subject to the underlying incentive stock option at the time the tandem stock appreciation right is exercised; and (c) the tandem stock appreciation right may be exercised only when the fair market value of the shares subject to the incentive stock option exceeds the option price of the incentive stock option.
On the exercise of a stock appreciation right, a participant will be entitled to receive payment in an amount determined by multiplying: (a) the difference between the fair market value of a share of common stock on the date of exercise and the grant price; by (b) the number of shares with respect to which the stock appreciation right is exercised. In the discretion of the Compensation Committee, the payment of the stock appreciation right exercised may be in cash, shares of equivalent value (based on the fair market value on the date of exercise of a stock appreciation right) in some combination thereof or in any other form approved by the Compensation Committee.
Other Stock-Based Awards. The Plan also authorizes the Compensation Committee to grant participants awards of common stock and other awards that are denominated in, payable in, valued in whole or in part by reference to, or are otherwise based on the value of, or the appreciation in value of, shares of common stock (other stock-based awards). The Compensation Committee has discretion to determine the participants to whom other stock-based awards are to be made, the times at which such awards are to be made, the size of such awards, the form of payment, and all other conditions of such awards, including any restrictions, deferral periods or performance requirements.
Performance-Based Compensation Under Section 162(m). Stock options and stock appreciation rights granted in accordance with the terms of the Plan, the exercise of which is based on the attainment of performance goals, will qualify as performance-based compensation under Section 162(m). Grants of any restricted stock, restricted stock units or other stock-based awards that we intend to qualify as performance-based compensation under Section 162(m) must be made subject to the achievement of pre-established performance goals. The pre-established performance goals will be based on any or a combination of the following business criteria applied to our company as a whole, a company division or a subsidiary:
| (a) | Net earnings or net income (before or after taxes); |
| (b) | Earnings per share; |
| (c) | Net operating profit; |
| (d) | Operating earnings; |
| (e) | Operating earnings per share; |
| (f) | Return measures (including, but not limited to, return on assets, capital, equity, or sales); |
| (g) | Cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); |
| (h) | Earnings before or after taxes, interest, depreciation, and/or amortization and including/excluding capital gains and losses; |
| (i) | Gross or operating margins; |
| (j) | Share price (including, but not limited to, growth measures and total shareholder return); |
| (k) | Margins; |
| (l) | Operating efficiency; |
| (m) | Customer satisfaction; |
| (n) | Employee satisfaction; |
| (o) | Working capital targets; |
| (p) | Revenue growth; and |
| (q) | Growth of Assets. |
Any performance goal (s) may be used to measure the performance of the company as a whole or any business unit of the company or any combination thereof, as the Compensation Committee may deem appropriate, or any of the above performance measures as compared to the performance of a group of comparative companies, or published or special index that the Compensation Committee, in its sole discretion, deems appropriate.
The Compensation Committee has authority to use different targets from time to time under the performance goals provided in the Plan. As a result, the regulations under Section 162(m) require that the material terms of the performance goals be re-approved by the stockholders every five years. To qualify as performance-based compensation, grants of restricted stock, restricted stock units and other stock-based awards will be required to satisfy the other applicable requirements of Section 162(m).
Termination of Employment.If a participant ceases to be employed by us or provide services to us for any reason, including death, his outstanding Awards may be exercised or shall expire at such time or times as may be determined by the Compensation Committee and described in the Award agreement.
Change-in- Control.In the event of a change-in-control of our company, as defined in the Plan, all Awards will become fully vested and exercisable, all restrictions or limitations on any Awards will generally lapse and, unless otherwise provided in the Award agreement, all performance criteria and other conditions relating to the payment of Awards will generally be deemed to be achieved or waived.
Transferability of Awards.The Awards awarded under the Plan may not be transferred except
Payment of Withholding Taxes.We may withhold from any payments or stock issuances under the Plan, or collect as a condition of payment, any taxes required by law to be withheld. Any participant may, but is not required to, satisfy his or her withholding tax obligation by electing to deliver currently owned shares of common stock or to have us withhold, from the shares the participant would otherwise receive, shares of common stock, in each case having a value equal to the minimum amount required to be withheld. This election must be made before the date on which the amount of tax to be withheld is determined and is subject to the Compensation Committee’s right of disapproval.
Awards to be Granted
If our stockholders approve the Plan at the annual meeting, grants of awards to selected employees will be made in the future by the Compensation Committee as necessary to attract and retain employees.
Federal Income Tax Consequences of Stock Options
Under existing federal income tax provisions, a participant who is granted a stock option normally will not realize any income, nor will we normally receive any deduction for federal income tax purposes, in the year the option is granted.
When a non-qualified stock option granted under the Plan is exercised, the participant will realize ordinary income measured by the difference between the aggregate purchase price of the shares of common stock acquired and the
aggregate fair market value of the shares of common stock acquired on the exercise date and, subject to the limitations of Section 162(m) of the Code, we will be entitled to a deduction in the year the option is exercised equal to the amount the participant is required to treat as ordinary income.
An employee generally will not recognize any income upon the exercise of any incentive stock option, but the excess of the fair market value of the shares at the time of exercise over the option price will be an item of tax preference, which may, depending on particular factors relating to the employee, subject the employee to the alternative minimum tax imposed by Section 55 of the Code. The alternative minimum tax is imposed in addition to the federal individual income tax, and it is intended to ensure that individual taxpayers do not completely avoid federal income tax by using preference items. An employee will recognize capital gain or loss in the amount of the difference between the exercise price and the sale price on the sale or exchange of stock acquired pursuant to the exercise of an incentive stock option, provided the employee does not dispose of such stock within two years from the date of grant and one year from the date of exercise of the incentive stock option (the holding periods). An employee disposing of such shares before the expiration of the holding periods will recognize ordinary income generally equal to the difference between the option price and the fair market value of the stock on the date of exercise. The remaining gain, if any, will be capital gain. We will not be entitled to a federal income tax deduction in connection with the exercise of an incentive stock option, except where the employee disposes of the shares of common stock received upon exercise before the expiration of the holding periods.
If the exercise price of a non-qualified option is paid by the surrender of previously owned shares, the basis and the holding period of the previously owned shares carry over to the same number of shares received in exchange for the previously owned shares. The compensation income recognized on exercise of these options is added to the basis of the shares received. If the exercised option is an incentive stock option and the shares surrendered were acquired through the exercise of an incentive stock option and have not been held for the holding periods, the optionee will recognize income on such exchange, and the basis of the shares received will be equal to the fair market value of the shares surrendered. If the applicable holding period has been met on the date of exercise, there will be no income recognition and the basis and the holding period of the previously owned shares will carry over to the same number of shares received in exchange, and the remaining shares will begin a new holding period and have a zero basis.
If, on a change-in-control of our company, the exercisability or vesting of an Award is accelerated, any excess on the date of the change-in-control of the fair market value of the shares or cash issued under accelerated Awards over the purchase price of such shares, if any, may be characterized as “parachute payments” (within the meaning of Section 280G of the Code) if the sum of such amounts and any other such contingent payments received by the employee exceeds an amount equal to three times the “base amount” for such employee. The base amount generally is the average of the annual compensation of such employee for the five years preceding such change in ownership or control. An “excess parachute payment,” with respect to any employee, is the excess of the parachute payments to such person, in the aggregate, over and above such person’s base amount. If the amounts received by an employee upon a change-in-control are characterized as parachute payments, such employee will be subject to a 20% excise tax on the excess parachute payment and we will be denied any deduction with respect to such excess parachute payment.
Vote Required
Approval of the Plan requires the affirmative vote of the holders of a majority of the votes cast on the proposed plan, and the total votes cast on the proposal must represent more than 50% of our outstanding common stock as of the record date of the stockholders’ meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO APPROVE THE PLAN
Certain Transactions Between the Company and Its Officers, Directors, Nominees for Directors and Their Associates
Since 1984, one of our subsidiaries, or its predecessor, has formed employee-limited partnerships for investment by certain of our employees and directors. The limited
partnerships participate with Unit Petroleum Company, a subsidiary of ours, in its exploration and production operations.
Certain of our officers and directors have invested in these employee programs. The following table shows their investments in the 20032005 and 20042006 employee programs.
| AGGREGATE OF DIRECT OR INDIRECT INVESTMENT | ||||||||
| 2003 Employee | 2004 Employee | |||||||
| Officer/Director | Program($) | Program($) | ||||||
| John G. Nikkel | 140,000 | 200,000 | ||||||
| King P. Kirchner | 40,000 | 40,000 | ||||||
| Don Cook | 2,000 | 2,000 | ||||||
| J. Michael Adcock | 48,000 | 56,000 | ||||||
| Philip M. Keeley | 20,000 | 20,000 | ||||||
| Larry D. Pinkston | 0 | 4,000 | ||||||
AGGREGATE OF DIRECT OR INDIRECT INVESTMENT
Officer/Director | 2005 Employee Program($) | 2006 Employee Program($) | ||
John G. Nikkel | 150,000 | 200,000 | ||
King P. Kirchner | 40,000 | 40,000 | ||
Don Cook | 2,000 | 2,000 | ||
J. Michael Adcock | 51,000 | 71,000 | ||
Larry D. Pinkston | 4,000 | 20,000 | ||
John H. Williams | 10,000 | 25,000 | ||
Gary R. Christopher | 0 | 100,000 |
With respect to their review and approval of any material transactions between us and any related party, including, if applicable, those discussed above, our Board considers the terms that are or
would be available to us in similar transactions with non-affiliated parties dealing at arm’s-length.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers and persons who own more than 10% of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange CommissionSEC and the New York Stock Exchange.NYSE. These persons are required by Securities and Exchange CommissionSEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based solely uponon a review of the copies of such forms furnished to us, we believe that during our preceding fiscal year2005 all Section 16(a) filing requirements applicable to our Reporting Persons were complied with except the following: (1)
Matters Which May Come Before the Meeting
The Board does not intend to bring any other matters before the meeting, nor do we know of any matters that other persons intend to bring before the meeting. However, should other
matters not mentioned in this proxy statement properly come before the meeting, the persons named in the accompanying proxy card will vote on them in accordance with their best judgment.
20052006 Stockholder Proposals or Nominations
Stockholder Proposals:For a stockholder proposal to be considered for inclusion in the company’s proxy statement for next year’s annual meeting, the written proposal must be received by our Corporate Secretary at our principal executive offices no later than December 6, 2004.4, 2006. If the date of next year’s annual meeting is moved more than 30 days before or after the anniversary date of this year’s annual meeting, the deadline for inclusion of
proposals in the company’s proxy statement is instead a reasonable time before the company begins to print and mail its proxy materials. Such proposals also will need to comply with Securities and Exchange CommissionSEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:
Corporate Secretary
Unit Corporation
7130 South Lewis, Suite 1000
Tulsa, Oklahoma 74136
Fax: (918) 493-7711
For a stockholder proposal that is not intended to be included in the company’s proxy statement under Rule 14a-8, the stockholder must deliver a proxy statement and form of proxy to holders of a sufficient number of shares of the company common stock to approve that proposal, provide the information required by the bylaws of the company and give timely notice to the Corporate Secretary of the company in accordance with the bylaws of the company, which, in general, require that the notice be received by the Corporate Secretary of the company:
If the date of the stockholder meeting is moved more than 30 days before or 70 days after the anniversary of the company’s annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in the company’s proxy statement under Rule 14a-8 must be received no earlier than the close of business 120 days prior to the meeting and no later than the close of business on the later of the following two dates:
Nomination of Director CandidatesCandidates:: You may propose director candidates for consideration by the Board’s Nominating & Governance Committee. Any such recommendations should
26
include the nominee’s name and qualifications for Board membership and should be directed to the Corporate Secretary of the company at the address of our principal executive offices set forth above. In addition, the bylaws of the company permit a stockholder to nominate directors for election at an annual stockholder meeting. To nominate a director, the stockholder must deliver a proxy statement and form of proxy to holders of a sufficient number of shares of the company common stock to elect such nominee and provide the information required by the bylaws of the company, including a statement by the stockholder identifying (i) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, (ii) the class and number of shares of capital stock of the corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form a proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such proposal or nomination. In addition, the stockholder must give timely notice to the Corporate Secretary of the company in accordance with the bylaws of the company,
which, in general, require that the notice be received by the Corporate Secretary of
the company within the time period described above under “Stockholder Proposals.”
From time to time, we receive calls from stockholders asking how they can communicate with us. The following communication options are available.
Our home page on the Internet, located at http://www.unitcorp.com, gives you access to certain information regarding the company. This site contains our press releases, financial information and stock quotes, as well as our SEC filings. An online version of this proxy statement is also located on the site.
Linda Swanson
Unit Corporation
7130 South Lewis, Suite 1000
Tulsa, Oklahoma 74136
Form 10-K Annual Report to the Securities and Exchange CommissionSEC
COPIES OF OUR ANNUAL REPORT (FORM 10-K) FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003,2005, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,SEC, MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO: MARK E. SCHELL, SECRETARY, UNIT CORPORATION, 7130 S. LEWIS, SUITE 1000, TULSA, OKLAHOMA 7413674136.
27
Unit Corporation
Stock and Incentive Compensation Plan
Effective as of May 3, 2006
Appendix A
OUR AUDIT COMMITTEE CHARTER
PurposeTable of Contents
i
ii
Unit Corporation
Stock and Incentive Compensation Plan
Effective: May 3, 2006
Establishment, Purpose, and Duration
1.1 Establishment of this Plan. Unit Corporation, a Delaware corporation (hereinafter referred to as the “Company”), establishes an incentive compensation plan to be known as the Stock and Incentive Compensation Plan (hereinafter referred to as the “Plan”), as set forth in this document.
This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Stock-Based Awards.
This Plan shall become effective, if approved by the Board and shareholders, on May 3 2006 (the “Effective Date”) and shall remain in effect as provided in Section 1.3 of this document.
1.2 Purpose of this Plan.The Auditpurpose of this Plan is to promote the success and enhance the value of the Company and Affiliates by linking the personal interests of the Participants to those of the Company’s shareholders, and by providing Participants with an incentive for outstanding performance.
This Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants on whose judgment, interest, and special effort the successful conduct of its operation largely is dependent.
1.3 Duration of this Plan. This Plan shall commence as of the Effective Date and shall remain in effect, subject to the right of the Committee is appointed by and amongstor the Board to assistamend or terminate this Plan at any time under Article 15, until all Shares subject to this Plan have been purchased or acquired according to this Plan’s provisions.
1.4 Successor Plan. This Plan shall serve as the successor to the Unit Corporation Amended and Restated Stock Option Plan and the Employee Bonus Plan (the “Predecessor Plans”), and no further grants shall be made under the Predecessor Plans from and after the Effective Date of this Plan.
Definitions
Whenever used in this Plan, the following terms shall have the meaning set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.
“Affiliate” shall have the meaning given to that term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act, with reference to the Company, and shall also include any corporation, partnership, joint venture, limited liability company, or other entity in which the Company owns, directly or indirectly, at least fifty percent (50%) of the total combined Voting Power of such corporation or of the capital interest or profits interest of such partnership or other entity.
“Award” means, individually or collectively, a grant under this Plan of NQSOs, ISOs, SARs, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, or Stock-Based Awards, in each case subject to the terms of this Plan.
“Award Agreement” means either (i) a written agreement entered into by the Company or an Affiliate and a Participant setting forth the terms and provisions applicable to Awards granted under this Plan; or (ii) a written statement issued by the Company or an Affiliate to a Participant describing the terms and provisions of such Award.
“Beneficial Owner” or “Beneficial Ownership” shall have the meaning given to that term in rule 13d-3 of the General Rules and Regulations under the Exchange Act.
“Board” or “Board Of Directors” means the Board of Directors of the Company.
“Cash-Based Award” means an Award granted under Article 10, the value of which is denominated in monitoringcash as determined by the Committee and which is not any other form of Award described in this Plan.
“Cause” means (i) the willful failure by the Participant to perform substantially the Participant’s duties as an Employee (other than due to physical or mental illness) after reasonable notice to the Participant of such failure, (ii) the Participant’s engaging in serious misconduct that is injurious to the Company or any Affiliate in any way, including, but not limited to, by way of damage to their respective reputations or standings in their respective industries, (iii) the Participant’s having been convicted of, or having entered a plea of nolo contendere to, a crime that constitutes a felony or (iv) the breach by the Participant of any written covenant or agreement with the Company or any Affiliate not to disclose or misuse any information pertaining to, or misuse any property of, the Company or any Affiliate or not to compete or interfere with the Company or any Affiliate.
“Change of Control” of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:
(a) On the close of business on the tenth day following the time the Company learns of the acquisition by any individual entity or group (a ���Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of Directors (the “Outstanding Company Voting Securities”); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company); (B) any acquisition by the Company; (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; (D) any acquisition by any corporation pursuant to a transaction with complies with clauses (i), (ii) and (iii) of subsection (iii) of this definition; and (E) if the Board of Directors of the Company determines in good faith that a Person became the beneficial owner of 15% or more of the Outstanding Company Common Stock inadvertently (including, without limitation, because (A) such Person was unaware that it beneficially owned a percentage of Outstanding Company Common Stock that would cause a Change of Control or (B) such Person was aware of the extent of its beneficial ownership of Outstanding Company Common Stock but had no actual knowledge of the consequences of such beneficial ownership under this Plan) and without any intention of changing or influencing control of the Company, then the beneficial ownership of Outstanding Company Common Stock by that Person shall not be deemed to be or to have become a Change of Control for any purposes of this Plan unless and until such Person shall have failed to divest itself, as soon as practicable (as determined, in good faith, by the Board of Directors of the Company), of beneficial ownership of a sufficient number of Outstanding Company Common Stock so that such Person’s beneficial ownership of Outstanding Company Common Stock would no longer otherwise qualify as a Change of Control.
(b) individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a Director of the Company subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the Directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a Director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;
(c) approval by the stockholders of the company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction Pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 70% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of Directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than: the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Company Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of Directors and (iii) individuals who were members of the Incumbent Board will constitute a majority of the members of the Board of Directors of the corporation resulting from such Corporate Transaction; or
(d) approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company.
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.
“Committee” means the Compensation Committee of the Board of Directors, or any other duly authorized committee of the Board appointed by the Board to administer this Plan.
“Company” means Unit Corporation, a Delaware corporation, and any successor thereto as provided in Article 18.
“Constructively Terminated” means, unless otherwise specified by the Committee in the Award Agreement, a voluntary termination of employment by an Employee within ten (10) business days after any of the following actions by the Company, Affiliate, or person acting on behalf of either:
| Requiring the | ||||
| one in which the | ||||
| Employee performed his/her duties immediately before the Change of Control, in each case except for travel reasonably required in the performance of the | ||||
| In the case of an Employee, reducing the Employee’s base salary below the rate in effect at the time of a Change of Control; or |
| (iii) | In the |
The Audit Committee shall prepare“Employee” means any employee of the audit committee report requiredCompany or an Affiliate. Directors who are not otherwise employed by the rulesCompany or an Affiliate shall not be considered Employees under this Plan. For greater clarity, and without limiting the generality of the Securities and Exchange Commission to be includedforegoing, individuals described in the Company’s annual proxy statement.
Committee Membership
The Audit Committee shall consistfirst sentence of no fewer than three members. The membersthis definition who are foreign nationals or are employed outside of the Audit Committee shall meetUnited States, or both, are Employees and may be granted Awards on the independence requirements of the New York Stock Exchange.
At least one member of the Audit Committee shall,terms and conditions set forth in this Plan, or on such other terms and conditions as may, in the judgment of the Board, have an accounting background orCommittee, be a financial management expert in accordance with the rules and regulations of the Securities and Exchange Commission.
At least one member of the Audit Committee (who may also serve as the financial expert), shall, in the judgment of the Board, have accounting or related financial management expertise in accordance with the New York Stock Exchange listing standards.
The members of the Audit Committee shall be appointed by the Board on the recommendation of the Nominating & Governance Committee. Audit Committee members may be replaced by the Board.
Committee Authority and Responsibilities
The Audit Committee
A-1
Financial Statement and Disclosure Matters
The Audit Committee, to the extent it deems necessary or appropriate, will:desirable to further the purposes of this Plan.
1. Review and discuss with management and the independent auditor the annual audited financial statements, including disclosures made in management’s discussion and analysis, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K.
2. Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditors’ reviews of the quarterly financial statements.
3. Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles, any major issues as to the adequacy of the Company’s internal controls, the development, selection and disclosure of critical accounting estimates, and analyses of the effect of alternative assumptions, estimates or GAAP methods on the Company’s financial statements.
4. Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies.
5. Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements.
A-2
6. Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
7. Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit. In particular, discuss:
(a) The adoption of, or changes to, the Company’s significant auditing and accounting principles and practices as suggested by the independent auditor, internal auditors or management.
(b) The management letter provided by the independent auditor and the Company’s response to that letter.
(c) Any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, and any significant disagreements with management
Oversight of the Company’s Relationship with the Independent Auditor
8. Review the experience and qualifications of the senior members of the independent auditor team.
9. Obtain and review a report from the independent auditor at least annually regarding
(a) the auditor’s internal quality-control procedures,
(b) any material issues raised by the most recent quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm,
(c) any steps taken to deal with any such issues, and
(d) all relationships between the independent auditor and the Company.
Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management and the internal auditor. The Audit Committee shall present its conclusions to the Board and, if so determined by the Audit Committee, recommend that the Board take additional action to satisfy itself of the qualifications, performance and independence of the auditor.
10. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the lead audit partner or even the independent auditing firm itself on a regular basis.
11. Recommend to the Board policies for the Company’s hiring of employees or former employees of the independent auditor who were engaged on the Company’s account.
12. Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
A-3
Oversight of the Company’s Internal Audit Function
13. Review the appointment and replacement of the senior internal auditing executive.
14. Review the significant reports to management prepared by the internal auditing department and management’s responses.
15. Discuss with the independent auditor the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.
Compliance Oversight Responsibilities
16. Obtain from the independent auditor assurance that Section 10A of“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
“Fair Market Value” or “FMV” means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share on the New York Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Such definition(s) of FMV shall be specified in each Award Agreement and may differ depending on whether FMV is in reference to the grant, exercise, vesting, settlement, or payout of an Award. If, however, the accounting standards used to account for equity awards granted to Participants are substantially
modified subsequent to the Effective Date of this Plan, the Committee shall have the ability to determine an Award’s FMV based on the relevant facts and circumstances. If Shares are not traded on an established stock exchange, FMV shall be determined by the Committee based on objective criteria.
“Fiscal Year” means the year commencing on January 1 and ending December 31 or other time period as approved by the Board.
“Freestanding SAR” means an SAR that is not a Tandem SAR, as described in Article 7.
“Grant Price” means the price against which the amount payable is determined on exercise of an SAR.
“Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 and that is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code, or any successor provision.
“Insider” shall mean an individual who is, on the relevant date, subject to the reporting requirements of Section 16 of the Exchange Act, as determined by the Board.
“Nonqualified Stock Option” or “NQSO” means an Option to purchase Shares, granted under Article 6, which is not intended to be an Incentive Stock Option or that otherwise does not meet such requirements.
“Option” means the conditional right to purchase Shares at a stated Option Price for a specified period of time in the form of an Incentive Stock Option or a Nonqualified Stock Option subject to the terms of this Plan.
“Option Price” means the price at which a Share may be purchased by a Participant under an Option, as determined by the Committee.
“Participant” means an Employee who has been complied with.selected to receive an Award, or who has an outstanding Award granted under this Plan.
17. Obtain reports from management,“Performance-Based Compensation” means compensation under an Award that is granted in order to provide remuneration solely on account of the Company’s senior internal auditing executiveattainment of one or more Performance Goals under circumstances that satisfy the requirements of Section 162(m) of the Code.
“Performance Goal” means a performance criterion selected by the Committee for a given Award for purposes of Article 11 based on one or more of the Performance Measures.
“Performance Measures” means measures as described in Article 11, the attainment of one or more of which shall, as determined by the Committee, determine the vesting, payability, or value of an Award to an Insider that are designated to qualify as Performance-Based Compensation.
“Performance Period” means the period of time during which the assigned performance criteria must be met in order to determine the degree of payout and/or vesting with respect to an Award.
“Performance Share” means an Award granted under Article 9 and subject to the terms of this Plan, denominated in Shares, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.
“Performance Unit” means an Award granted under Article 9 and subject to the terms of this Plan, denominated in units, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.
“Period Of Restriction” means the period when an Award of Restricted Stock or Restricted Stock Unit is subject to forfeiture based on the passage of time, the achievement of performance criteria, and/or on the occurrence of other events as determined by the Committee, in its discretion.
“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof; provided, however, that “Person” shall not include (i) the Company or any Affiliate or (ii) any employee benefit plan (including an employee stock ownership plan) sponsored by the Company or any Affiliate.
“Restricted Stock” means an Award of Shares subject to a Period of Restriction, granted under Article 8 and subject to the terms of this Plan.
“Restricted Stock Unit” means an Award denominated in units subject to a Period of Restriction, granted under Article 8 herein and subject to the terms of this Plan.
“Shares” means the shares of common stock of the Company, $0.20 par value per Share.
“Stock Appreciation Right” or “SAR” means the conditional right to receive the difference between the FMV of a Share on the date of exercise over the Grant Price, under the terms of Article 7 and subject to the terms of this Plan.
“Stock-Based Award” means an equity-based or equity-related Award granted under Article 10 and subject to the terms of this Plan, and not otherwise described by the terms of this Plan.
“Tandem SAR” means an SAR that the Committee specifies is granted in connection with a related Option under Article 7 and subject to the terms of this Plan, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be cancelled). Regardless of whether an Option is granted coincident with an SAR, an SAR is not a Tandem SAR unless so specified by the Committee at time of grant.
“Voting Power” shall mean that number of Voting Securities as shall enable the holders thereof to cast all the votes which could be cast in an annual election of directors of a company.
“Voting Securities” shall mean all securities entitling the holders thereof to vote in an annual election of directors of a company.
Administration
3.1 General. The Committee shall be responsible for administering this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the independent auditor thatCommittee, the Company, and its subsidiary/foreign affiliated entities are in conformity with applicable legal requirementsofficers and Directors shall be entitled to rely on the advice, opinions, or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee shall be final, conclusive, and binding on the Participants, the Company, and all other interested parties.
3.2 Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the Company’sintent of this Plan and any Award Agreement or other agreement ancillary to or in connection with this Plan, to determine eligibility for Awards, and to adopt such rules, regulations, and guidelines for administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions and, subject to Article 15, adopting modifications and amendments, or subplans to this Plan (as described in Section 18.5) or any Award Agreement, including, without limitation, any that are necessary or appropriate to comply with the laws or compensation practices of the countries and other jurisdictions in which the Company and Affiliates operate.
3.3 Delegation. The Committee may delegate to one or more of its members or to one or more officers of the Company or its Affiliates, any of its duties or powers as it may deem advisable; provided, however, that the Committee may not delegate any of its non-administrative powers with respect to Awards intended to be Performance-Based Compensation; and provided further, that the member(s) or officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted under the authority delegated under this Section 3.3. Subject to the terms of the previous sentence, the Committee may delegate to any individual(s) such administrative duties or powers as it may deem advisable
Shares Subject to this Plan and Maximum Awards
4.1 Number of Shares Available for Awards. Subject to adjustment as provided in Section 4.2, the number of Shares hereby reserved for issuance to Participants under this Plan shall be Two Million Five Hundred Thousand (2,500,000) (such total number of Shares, including such adjustment and remaining Shares, the “Total Share Authorization”). The maximum aggregate number of Shares that may be granted in the form of Nonqualified Stock Options shall be equal to the Total Authorization. The maximum aggregate number of Shares that may be granted in the form of Incentive Stock Options shall be Two Million (2,000,000).
For greater clarity, any Awards that are not settled in Shares shall not reduce any of these reserves. Any Shares related to Awards which (i) terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, (ii) are settled in cash either in lieu of Shares or otherwise, or (iii) are exchanged with the Committee’s permission for
Awards not involving Shares, shall be available again for grant under this Plan. Moreover, if the Option Price of any Option granted under this Plan or the tax withholding requirements with respect to any Award granted under this Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if an SAR is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for issuance under this Plan. The maximum number of Shares available for issuance under this Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional Shares or credited as additional Restricted Stock, Restricted Stock Units, Performance Shares, or Stock-Based Awards. The Shares available for issuance under this Plan may be authorized and unissued Shares or treasury Shares.
Unless and until the Committee determines that an Award to an Insider shall not be designed to qualify as Performance-Based Compensation, the following limits (“Award Limits”) shall apply to grants of Awards to Insiders under this Plan:
(a)OPTIONS AND SARS: The maximum aggregate number of Shares that may be granted in the form of Options or Stock Appreciation Rights, under any Award granted in any one Fiscal Year to any one Participant, shall be 100,000.
(b)RESTRICTED STOCK/RESTRICTED STOCK UNITS: The maximum aggregate grant with respect to Awards of Restricted Stock/Restricted Stock Units granted in any one Fiscal Year to any one Participant shall be 50,000.
(c)PERFORMANCE SHARES/PERFORMANCE UNITS: The maximum aggregate Award of Performance Shares or Performance Units that a Participant may receive in any one Fiscal Year shall be 50,000 Shares, or equal to the value of 50,000 Shares determined as of the date of vesting or payout, as applicable.
(d)CASH-BASED AWARDS: The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Participant in any one Fiscal Year may not exceed $1,000,000 determined as of the date of vesting or payout, as applicable.
(e)STOCK AWARDS: The maximum aggregate grant with respect to Awards of Stock-Based Awards in any one Fiscal Year to any one Participant shall be 50,000.
4.2 Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, extraordinary dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of securities, exchange of securities, dividend in kind, or other like change in capital structure or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under this Plan, may substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Award Limits, the limit on issuing Awards other than Options granted with an Option Price equal to at least the FMV of a Share on the date of grant or Stock Appreciation Rights with a Grant Price equal to at least the FMV of a Share on the date of grant, and any other value determinations applicable to outstanding Awards or to this Plan provided that any such substitution or adjustment is made in accordance with Section 424(h) of the Code.
The Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under this Plan to reflect, or related to, such changes or distributions and may modify any other terms of outstanding Awards, including modifications of performance criteria and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.
Subject to the provisions of Article 14 and any applicable law or regulatory requirement, without affecting the number of Shares reserved or available under this Plan, the Committee may authorize the issuance, assumption, substitution, or conversion of Awards under this Plan in connection with any such corporate event or transaction on such terms and conditions as it may deem appropriate. Additionally, the Committee may amend this Plan, or adopt supplements to this Plan, in such manner as it deems appropriate to provide for such issuance, assumption, substitution, or conversion as provided in the previous sentence.
Eligibility and Participation
5.1 Eligibility. Individuals eligible to participate in this Plan include all Employees.
5.2 Actual Participation. Subject to the provisions of this Plan, the Committee may from time to time, select from all eligible Employees, those to whom Awards shall be granted and shall determine in its discretion, the nature, terms, and amount of each Award.
Stock Options
6.1 Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and on such terms, and at any time and from time to time as shall be determined by the Committee in its discretion. Despite the foregoing, no ISOs may be granted more than ten (10) years after the earlier of (a) adoption of this Plan by the Board, and (b) the Effective Date.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, the conditions on which an Option shall become vested and exercisable, and any such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.
6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be determined by the Committee and shall be specified in the Award Agreement but in no event shall the Option Price be less than the FMV of the Shares on the date of grant.
6.4 Duration of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. Despite the forgoing, for Options granted to Participants employed outside the United States and who are third country nationals, the Committee has the authority to grant Options that have a term greater that ten (10) years.
6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and on the occurrence of such events, and be subject to such restrictions and conditions, as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.
6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price on exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate FMV at the time of exercise equal to the total Option Price; (c) by a combination of (a) and (b); or (d) any other method approved or accepted by the Committee in its sole discretion subject to such rules and regulations as the Committee may establish.
Subject to Section 6.7 and any governing rules or regulations, as soon as practicable after receipt of a notification of exercise and full payment, the Committee shall cause to be delivered to the Participant Share certificates or evidence of book entry Shares in an appropriate amount based on the number of Shares purchased under the Option(s). Unless otherwise determined or accepted by the Committee, all payments in cash shall be paid in United States dollars.
6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired under the exercise of an Option granted under this Plan as it may deem advisable, including, without limitation, requiring the Participant to hold the Shares acquired under exercise for a specified period of time, or restrictions under applicable laws or under the requirements of any stock exchange or market on which such Shares are listed and/or traded.
6.8 Termination of Employment. Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment with the Company or Affiliates. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued under this Article 6, and may reflect distinctions based on the reasons for termination.
6.9 Nontransferability of Options.
(a)INCENTIVE STOCK OPTIONS. No ISO granted under this Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.
(b)NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a Participant’s Award Agreement at the time of grant, or thereafter by the Committee, NQSO granted under this Article 6 may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, all NQSOs granted to a Participant under this Article 6 shall be exercisable during the Participant’s lifetime only by such Participant.
6.10 Notification of Disqualifying Disposition. The Participant will notify the Company on the disposition of Shares issued under the exercise of an ISO. The Company will use such information to determine whether a disqualifying disposition as described in Section 421(b) of the Code has occurred.
Stock Appreciation Rights
7.1 Grant of Business ConductSARs. Subject to the terms and Ethics. Review reportsconditions of this Plan, SARs may be granted to Participants at any time and disclosuresfrom time to time and on such terms as shall be determined by the Committee in its discretion. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of insiderthese forms of SARs.
The SAR Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and affiliated party transactions. Adviseshall be specified in the BoardAward Agreement but in no event shall the Grant Price be less than FMV of the Shares on the date of grant The Grant Price of Tandem SARs shall be equal to the Option Price of the related Option.
7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, and any such other provisions as the Committee shall determine.
7.3 Term of SAR. The term of an SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th) anniversary date of its grant. Despite the forgoing, for SARs granted to Participants employed outside the United States and who are third country nationals, the Committee has the authority to grant Options that have a term greater that ten (10) years.
7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised on whatever terms and conditions the Committee, in its sole discretion, imposes.
7.5 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option on the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Company’s policiesShares for which its related Option is then exercisable.
Despite any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will expire no later than the expiration of the underlying ISO; (b) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and proceduresthe FMV of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (c) the Tandem SAR may be exercised only when the FMV of the Shares subject to the ISO exceeds the Option Price of the ISO.
7.6 Payment of SAR Amount. On the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
(a) The difference between the FMV of a Share on the date of exercise over the Grant Price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment on SAR exercise may be in cash, Shares of equivalent value (based on the FMV on the date of exercise of the SAR, as defined in the Award Agreement or otherwise defined by the Committee thereafter), in some combination thereof, or in any other form approved by the Committee at its sole discretion. The Committee’s determination regarding compliancethe form of SAR payout shall be set forth or reserved for later determination in the Award Agreement pertaining to the grant of the SAR.
7.7 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with the Company or Affiliates. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued under this Plan, and may reflect distinctions based on the reasons for termination.
7.8 Nontransferability of SARs. Except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, an SAR granted under this Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, all SARs granted to a Participant under this Plan shall be exercisable during his or her lifetime only by such Participant.
7.9 Other Restrictions. Without limiting the generality of any other provision of this Plan, the Committee may impose such other conditions and/or restrictions on any Shares received on exercise of an SAR granted under this Plan as it may deem advisable. This includes, but is not limited to, requiring the Participant to hold the Shares received on exercise of an SAR for a specified period of time.
Restricted Stock and Restricted Stock Units
8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts and on such terms as the Committee shall determine.
8.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and any such other provisions as the Committee shall determine.
8.3 Nontransferability of Restricted Stock and Restricted Stock Units. Except as otherwise provided in this Plan or the Award Agreement, the Shares of Restricted Stock and/or Restricted Stock Units granted may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction specified in the Award Agreement (and in the case of Restricted Stock Units until the date of delivery or other payment), or on earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Award Agreement at the time of grant or thereafter by the Committee. All rights with respect to the Restricted Stock and/or Restricted Stock Units granted to a Participant under this Plan shall be available during his or her lifetime only to such Participant, except as otherwise provided in the Award Agreement at the time of grant or thereafter by the Committee.
8.4 Other Restrictions. The Committee shall impose, in the Award Agreement at the time of grant or anytime thereafter, such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted under this Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based on the achievement of specific performance criteria, time-based restrictions on vesting following the attainment of the performance criteria,
time-based restrictions, restrictions under applicable laws or under the requirements of any stock exchange or market on which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company on vesting of such Restricted Stock or Restricted Stock Units.
To the extent deemed appropriate by the Committee and regulationssubject to Section 18.6, the Company may retain the certificates representing Shares of Restricted Stock, or Shares and delivered in consideration of Restricted Stock Units, in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.
Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse, and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine.
8.5 Certificate Legend. In addition to any legends placed on certificates under Section 8.4, each certificate representing Shares of Restricted Stock granted under this Plan may bear a legend such as the following:
The sale or other transfer of the Shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Unit Corporation Stock and Incentive Compensation Plan, and in the associated Award Agreement. A copy of this Plan and such Award Agreement may be obtained from Unit Corporation.
8.6 Voting Rights. To the extent provided by the Committee in the Award Agreement, Participants holding Shares of Restricted Stock may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.
8.7 Dividends and Other Distributions. During the Period of Restriction, Participants holding Shares of Restricted Stock or Restricted Stock Units may, if the Committee so determines and provides in the Participant’s Award Agreement, be credited with dividends paid with respect to the underlying Shares or dividend equivalents while they are so held in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including cash, Shares, Restricted Stock, or Restricted Stock Units.
8.8 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant’s employment with the Company’s CodeCompany or Affiliates. These provisions shall be determined in the sole discretion of Business Conductthe Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued under this Plan, and Ethics.may reflect distinctions based on the reasons for termination.
18. Discuss8.9 Payment In Consideration of Restricted Stock Units. When and if Restricted Stock Units become payable, a Participant having received the grant of such units shall be entitled to receive payment from the Company in cash, Shares of equivalent value (based on the FMV, as defined in the Award Agreement at the time of grant or thereafter by the Committee), in some combination thereof, or in any other form determined by the Committee at its sole discretion. The Committee’s determination regarding the form of payout shall be set forth or reserved for later determination in the Award Agreement pertaining to the grant of the Restricted Stock Unit.
Performance Shares and Performance Units
9.1 Grant of Performance Shares and Performance Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Shares and/or Performance Units to Participants in such amounts and on such terms as the Committee shall determine.
9.2 Value of Performance Shares and Performance Units. Each Performance Share shall have an initial value equal to the FMV of a Share on the date of grant. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant which shall in no event be less than the FMV of a Share. The Committee shall set performance criteria for a Performance Period in its discretion which, depending on the extent to which they are met, will determine, in the manner determined by the Committee and documented in the Award Agreement the value and/or number of each Performance Share or Performance Unit that will be paid to the Participant.
9.3 Earning of Performance Shares and Performance Units. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Shares/Performance Units shall be entitled to receive payout on the value and number of Performance Shares/Performance Units determined as a function of the extent to which the corresponding performance criteria have been achieved. Despite the foregoing, the Company has the ability to require the Participant to hold the Shares received under such Award for a specified period of time.
9.4 Form and Timing of Payment of Performance Shares and Performance Units. Payment of earned Performance Shares/Performance Units shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Shares/Performance Units in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Shares/Performance Units at the close of the applicable Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with managementrespect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award or reserved for later determination.
9.5 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Performance Shares/Performance Units following termination of the Participant’s employment or Agency with the Company or an Affiliate. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Shares/Performance Units issued under this Plan, and may reflect distinctions based on the reasons for termination.
9.6 Nontransferability of Performance Shares and Performance Units. Except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, Performance Shares/Performance Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
Cash-Based Awards and Stock-Based Awards
10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of this Plan, the Committee, at any time and from time and time, may grant Cash-Based Awards to Participants in such amounts and on such terms as the Committee may determine.
10.2 Value of Cash-Based Awards. Each Cash-Based Award shall have a value as may be determined by the Committee. For each Cash-Based Award, the Committee may establish performance criteria in its discretion. If the Committee exercises its discretion to establish such performance criteria, the number and/or value of Cash-Based Awards that will be paid out to the Participant will be determined, in the manner determined by the Committee, the extent to which the performance criteria are met.
10.3 Payment in Consideration of Cash-Based Awards. Subject to the terms of this Plan, the holder of a Cash-Based Award shall be entitled to receive payout on the value of Cash-Based Award determined as a function of the extent to which the corresponding performance criteria, if any, have been achieved.
10.4 Form and Timing of Payment of Cash-Based Awards. Payment of earned Cash-Based Awards shall be as determined by the Committee and evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Cash-Based Awards in the form of cash or in Shares (or in a combination thereof) that have an aggregate FMV equal to the value of the earned Cash-Based Awards (the applicable date regarding which aggregate FMV shall be determined by the Committee). Such Shares may be granted subject to
any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.
10.5 Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions including, but not limited to being subject to performance criteria, or in satisfaction of such obligations, as the Committee shall determine. Such Awards may entail the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.
10.6 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to receive Cash-Based Awards and Stock-Based Awards following termination of the Participant’s employment with the Company or Affiliates. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the applicable Award Agreement, need not be uniform among all Awards of Cash-Based Awards and Stock-Based Awards issued under this Plan, and may reflect distinctions based on the reasons for termination.
10.7 Nontransferability of Cash-Based Awards and Stock-Based Awards. Except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, Cash-Based Awards and Stock-Based Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
Performance Measures
Despite any other terms of this Plan, the vesting, payment, or value (as determined by the Committee) of each Award other than an Option or SAR that, at the time of grant, the Committee intends to be Performance-Based Compensation to an Insider shall be determined by the attainment of one or more Performance Goals as determined by the Committee in conformity with Section 162(m) of the Code. The Committee shall specify in writing, by resolution or otherwise, the Participants eligible to receive such an Award (which may be expressed in terms of a class of individuals) and the independent auditor any correspondencePerformance Goal(s) applicable to such Awards within ninety (90) days after the commencement of the period to which the Performance Goal(s) relate(s) or such earlier time as required to comply with regulatorsSection 162(m) of the Code. No such Award shall be payable unless the Committee certifies in writing, by resolution or governmental agenciesotherwise, that the Performance Goal(s) applicable to the Award were satisfied. In no case may the Committee increase the value of an Award of Performance-Based Compensation above the maximum value determined under the performance formula by the attainment of the applicable Performance Goal(s), but the Committee may retain the discretion to reduce the value below such maximum.
Unless and establishuntil the Committee proposes for shareholder vote and maintain procedures for the confidential and anonymous receipt, retention and treatment of any employee complaints or published reports which raise material issues regardingshareholders approve a change in the Company’s financial statements or accounting policies.
19. Discuss with the Company’s General Counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies.
Limitation of Audit Committee’s Role
While the Audit Committee has the responsibilities and powersgeneral Performance Measures set forth in this Charter,Article 11, the Performance Goal(s) on which the payment or vesting of an Award to an Insider that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures:
(a) Net earnings or net income (before or after taxes);
(b) Earnings per share;
(c) Net operating profit;
(d) Operating earnings;
(e) Operating earnings per share;
(f) Return measures (including, but not limited to, return on assets, capital, equity, or sales);
(g) Cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital);
(h) Earnings before or after taxes, interest, depreciation, and/or amortization and including/excluding capital gains and losses;
(i) Gross or operating margins;
(j) Share price (including, but not limited to, growth measures and total shareholder return);
(k) Margins;
(l) Operating efficiency;
(m) Customer satisfaction;
(n) Employee satisfaction;
(o) Working capital targets;
(p) Revenue growth; and
(q) Growth of Assets
Any Performance Measure (s) may be used to measure the performance of the Company as a whole or any business unit of the Company or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate. In the Award Agreement, the Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goal(s).
The Committee may provide in any Award Agreement that any evaluation of attainment of a Performance Goal may include or exclude any of the following events that occurs during the relevant period: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year; (f) acquisitions or divestitures; and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Insiders, they shall be prescribed in a form that meets the requirements of Section 162(m) of the Code for deductibility for federal income tax purposes.
In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards to Insiders that shall not qualify as Performance-Based Compensation, the dutyCommittee may make such grants without satisfying the requirements of Code Section 162(m).
Beneficiary Designation
A Participant’s “beneficiary” is the person or persons entitled to receive payments or other benefits or exercise rights that are available under this Plan in the event of the AuditParticipant’s death. A Participant may designate a beneficiary or change a previous beneficiary designation at such times prescribed by the Committee by using forms and following procedures approved or accepted by the Committee for that purpose. If no beneficiary designated by the Participant is eligible to planreceive payments or conduct auditsother benefits or exercise rights that are available under this Plan at the Participant’s death the beneficiary shall be the Participant’s estate.
Despite the above, the Committee may in its discretion, after notifying the affected Participants, modify the foregoing requirements, institute additional requirements for beneficiary designations, or suspend the existing beneficiary designations of living Participants or the process of determining beneficiaries under this Article 12, or both, in favor of another method of determining beneficiaries.
Rights of Employees
13.1 Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or an Affiliate to determineterminate any Participant’s employment or other service relationship at any time,
nor confer on any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or an Affiliate.
Neither an Award nor any benefits arising under this Plan shall constitute part of an employment contract with the Company or an Affiliate and, accordingly, subject to the terms of this Plan, this Plan may be terminated or modified at any time in the sole and exclusive discretion of the Committee without giving rise to liability on the part of the Company or an Affiliate for severance payments or otherwise except as provided in this Plan.
For purposes of this Plan, unless otherwise provided by the Committee, transfer of employment of a Participant between the Company and an Affiliate or among Affiliates, shall not be deemed a termination of employment. The Committee may stipulate in a Participant’s Award Agreement or otherwise the conditions under which a transfer of employment or Agency to an entity that is spun-off from the Company or an Affiliate, if any, shall not be deemed a termination of employment for purposes of an Award.
13.2 Participation. No Employee shall have the right to be selected to receive an Award. No Employee, having been selected to receive an Award, shall have the right to be selected to receive a future Award or (if selected to receive such a future Award) the right to receive such a future Award on terms and conditions identical or in proportion in any way to any prior Award.
13.3 Rights as a Shareholder. Except to the extent otherwise provided in an Award Agreement, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.
Change of Control
14.1 Accelerated Vesting and Payment. Subject to the provisions of Section 14.2 or as otherwise provided in the Award Agreement, in the event of a Change of Control, unless otherwise specifically prohibited under law or by the rules and regulations of a national security exchange:
(a) Any and all Options and SARs granted under this Plan shall become immediately exercisable; additionally, if a Participant’s employment is involuntarily terminated for any reason except Cause within twelve (12) months of such Change in Control, the Participant shall have until the earlier of (i) twelve (12) months following such termination date , or (ii) the term of the Option or SAR, to exercise such Options or SARs;
(b) Any Period of Restriction and other restrictions imposed on Restricted Stock or Restricted Stock Units shall lapse, and Restricted Stock Units shall be immediately payable;
(c) The target payout opportunities attainable under all outstanding Awards of performance-based Restricted Stock, performance-based Restricted Stock Units, Performance Units, and Performance Shares (including but not limited to Awards intended to be Performance-Based Compensation) shall be deemed to have been fully earned based on targeted performance being attained as of the effective date of the Change of Control:
| (i) | The vesting of all Awards denominated in Shares shall be accelerated as of the effective date of the Change of Control, and shall be paid out to Participants within thirty (30) days following the effective date of the Change of Control; and |
| (ii) | Awards denominated in cash shall be paid to Participants in cash within thirty (30) days following the effective date of the Change of Control; and |
(d) On a Change of Control, unless otherwise specifically provided in a written agreement entered into between the Participant and the Company or an Affiliate, the Committee shall immediately vest and pay out all Cash-Based Awards and Other Stock-Based Awards as determined by the Committee.
14.2 Alternative Awards. Despite Section 14.1, no cancellation, acceleration of vesting, lapsing of restrictions, payment of Award, cash settlement or other payment shall occur with respect to any Award if the Committee reasonably determines in good faith before the occurrence of a Change of Control that such Award shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted Award hereinafter called an “Alternative Award”) by any successor as described in Article 17; provided that any such Alternative Award must:
(a) Be based on stock which is traded on an established U.S. securities market, or that the Committee reasonably believes will be so traded within sixty (60) days after the Change of Control;
(b) Provide such Participant with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such Award, including, but not limited to, an identical or better exercise or vesting schedule and identical or better timing and methods of payment;
(c) Have substantially equivalent economic value to such Award (determined at the time of the Change of Control); and
(d) Have terms and conditions which provide that in the event that the Participant’s employment is involuntarily terminated or Constructively Terminated, any conditions on a Participant’s rights under, or any restrictions on transfer or exercisability applicable to, each such Alternative Award shall be waived or shall lapse, as the case may be.
Amendment, Modification, Suspension, and Termination
15.1 Amendment, Modification,Suspension, and Termination. The Committee or Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan in whole or in part; provided however, that:
(a) Without the prior approval of the Company’s financial statementsshareholders, Options and disclosures are complete and accurate and areSARs issued under this Plan will not be repriced, replaced, or regranted through cancellation or by lowering the exercise price of a previously granted Option.
(b) To the extent necessary under any applicable law, regulation or exchange requirement, no amendment shall be effective unless approved by the shareholders of the Company in accordance with generally acceptedapplicable law, regulation, or exchange requirement.
15.2 Adjustment of Awards on the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.2 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, and applicable rules and regulations. Thesewhenever the Committee determines that such adjustments are the responsibilities of management and the independent auditor.
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Appendix B
OUR COMPENSATION COMMITTEE CHARTER
Purpose
The Compensation Committee is appointed by the Board of Directorsappropriate in order to discharge the Board’s responsibilities relating to compensationprevent unintended dilution or enlargement of the Company’s directors and officers.benefits or potential benefits intended to be made available under this Plan. The Committee has overall responsibility for approving and evaluating the director and officer compensation plans, policies and programsdetermination of the Company.
TheCommittee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan. To the extent such adjustment affects Awards to Insiders intended to be Performance-Based Compensation, Committee is also responsible for producing an annual report on executive compensation for inclusionthey shall be prescribed in a form that meets the Company’s proxy statement.
Committee Membership
The Compensation Committee shall consistrequirements of no fewer than three members.
The membersSection 162(m) of the Compensation CommitteeCode for deductibility for federal income tax purposes.
Committee Authority and ResponsibilitiesArticle 16.
1. Withholding
The Compensation CommitteeCompany or any Affiliate shall have the sole authoritypower and the right to retaindeduct or withhold, or require a Participant to remit to the Company or any Affiliate, an amount sufficient to satisfy federal, state, and terminate any compensation consultantlocal taxes, domestic or foreign (including the Participant’s FICA obligation), required by law or regulation to be used to assist in the evaluation of director, CEO or senior executive compensation and shall have sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors.
2. The Compensation Committee shall annually review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and determines the CEO’s compensation levels based on this evaluation. In determining the long-term incentive component of CEO compensation, the Compensation Committee will consider the Company’s performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the CEO in past years.
3. The Compensation Committee shall annually review and make recommendations to the Boardwithheld with respect to any taxable event arising or as a result of this Plan. The Committee may provide for Participants to satisfy withholding requirements by having the compensation of all directors, officers (other thanCompany withhold Shares or the CEO) andParticipant making such other key executives, including incentive-compensation plans and equity-based plans.arrangements, in either case on such conditions as the Committee specifies.
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4. The Compensation Committee shall annually review and approve, for the CEO and the senior executivesAny obligations of the Company or an Affiliate under this Plan with respect to Awards granted under this Plan, shall be binding on any successor to the Company or Affiliate, respectively, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company or Affiliate, as applicable.
General Provisions
18.1 Forfeiture Events. Without limiting in any way the generality of the Committee’s power to specify any terms and conditions of an Award consistent with law, and for greater clarity, the Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment on the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.Such events shall include, but shall not be limited to, failure to accept the terms of the Award Agreement, termination of employment under certain or all circumstances, violation of material Company and Affiliate policies, breach of noncompetition, confidentiality, nonsolicitation, noninterference, corporate property protection, or other agreement that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and Affiliates.
18.2 Legend. The certificates for Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer of such Shares.
18.3 Delivery Of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan before:
(a) Obtaining any approvals from governmental agencies that the annual base salary level, Company determines are necessary or advisable; and
(b) Completion of any registration or other qualification of the annual incentive opportunity level, Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.
18.4 Investment Representations. The Committee may require each Participant receiving Shares under an Award under this Plan to represent and warrant in writing that the Participant is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.
18.5 Employees Based Outside of The United States. Without limiting in any way the generality of the Committee’s powers under this Plan, including but not limited to the power to specify any terms and conditions of an Award consistent with law, in order to comply with the laws in other countries in which the Company or an Affiliate operates or has Employees, the Committee, in its sole discretion, shall have the power and authority, notwithstanding any provision of this Plan to the contrary, to:
(a) Determine which Affiliates shall be covered by this Plan;
(b) Determine which Employees outside the United States are eligible to participate in this Plan;
(c) Modify the long-term incentive opportunity level, terms and conditions of any Award granted to Employees outside the United States to comply with applicable foreign laws;
(d) employment agreements, severance arrangements,Establish subplans and changemodify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 18.5 by the Committee shall be attached to this Plan document as appendices; and
(e) Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.
Despite the above, the Committee may not take any actions under this Plan and no Awards shall be granted that would violate the Exchange Act, the Code, any securities law, or governing statute or any other applicable law.
18.6 Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis to the extent not prohibited by applicable law or the rules of any stock exchange.
18.7 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in control agreements/or to any investments that the Company or an Affiliate may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken under its provisions, in each caseshall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company or an Affiliate and any Participant, beneficiary, legal representative, or any other person. Awards shall be general, unsecured obligations of the Company, except that if an Affiliate signs an Award Agreement instead of the Company the Award shall be a general, unsecured obligation of the Affiliate and not any obligation of the Company. To the extent that any individual acquires a right to receive payments from the Company or an Affiliate, such right shall be no greater than the right of an unsecured general creditor of the Company or Affiliate, as whenapplicable. All payments to be made under this Plan shall be paid from the general funds of the Company or Affiliate, as applicable, and if appropriate, and (e) anyno special or supplemental benefits.separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan. This Plan is not intended to be subject to ERISA.
5.18.8 No Fractional Shares. No fractional Shares shall be issued or delivered under this Plan or any Award Agreement. In such an instance, unless the Committee determines otherwise, fractional Shares and any rights thereto shall be forfeited or otherwise eliminated.
18.9 Other Compensation and Benefit Plans. Nothing in this Plan shall be construed to limit the right of the Company or an Affiliate to establish other compensation or benefit plans, programs, policies, or arrangements. Except as may be otherwise specifically stated in any other benefit plan, policy, program, or arrangement, no Award shall be treated as compensation for purposes of calculating a Participant’s rights under any such other plan, policy, program, or arrangement.
18.10 No Constraint on Corporate Action. Nothing in this Plan shall be construed (i) to limit, impair or otherwise affect the Company’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets, or (ii) to limit the right or power of the Company or an Affiliate to take any action which such entity deems to be necessary or appropriate.
Legal Construction
19.1 Gender And Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.
19.2 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
19.3 Requirements of Law. The Compensation Committeegranting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may form and delegatebe required. The Company or an Affiliate shall receive the consideration required by law for the issuance of Awards under this Plan.
The inability of the Company or an Affiliate to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s or the Affiliate’s counsel to subcommittees when appropriate.
6. The Compensation Committee shall make regular reportsbe necessary to the Board.lawful issuance and sale of any Shares under this Plan, shall relieve the Company or Affiliate of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
7. The Compensation Committee19.4 Governing Law. This Plan and each Award Agreement shall review and reassessbe governed by the adequacylaws of the State of Oklahoma, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Charter annually and recommend any proposed changesPlan to the Board for approval.substantive law of another jurisdiction.
8. The Compensation Committee shall annually review its own performance.
B-2
Appendix C
OUR NOMINATING & GOVERNANCE COMMITTEE CHARTER
Purpose
The Nominating & Governance Committee is appointed by the Board of Directors
Committee Membership
The Nominating & Governance Committee
Committee Authority and Responsibilities
The Nominating & Governance Committee
C-1
C-2
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, or on behalf of a corporation or partnership as an authorized officer, please give full title as such.
Internet and telephone voting is available through 11:59 PM Eastern Timethe day prior to annual meeting day.UNIT CORPORATION
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manneras if you marked, signed and returned your proxy card.
If you vote your proxy by Internet or by telephone,you do NOT need to mail back your proxy card.PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
You can view the Annual Report and Proxy Statementon the internet at www.unitcorp.comMAY 3, 2006
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE UNIT CORPORATION’S
BOARD OF DIRECTORS OFUNIT CORPORATION
The undersigned hereby appoints John G. NikkelLarry D. Pinkston and Mark E. Schell andproxies for the undersigned, each of them with power to act without the other and withfull power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote as provided on the other side, all the shares of Unit Corporation Common Stock which the undersigned ismay be entitled to vote at the Annual Meeting of Stockholders of Unit Corporation, Tulsa, Oklahoma, on Wednesday, May 3, 2006 at 11:00 AM, or at any adjournment thereof, on the matters set forth on the reverse side and described in their discretion, to vote uponthe accompanying Proxy Statement and on such other business as may properly come before the Annual Meetingmeeting or any adjournment thereof.
Please mark this proxy as indicated on the reverse side to vote on any item. If you wish to vote in accordance with the Board of Stockholders ofDirectors’ recommendation, please sign the companyreverse side; no boxes need to be held May 5, 2004 or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Meeting.checked.
(Continued, and to be marked, dated and signed on the other side.)
Address Change/Comments (Mark the corresponding box on the reverse side.)
| Address Change/Comments (Mark the corresponding box on the reverse side.) |
éÙFOLD AND DETACH HEREéÙ
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| THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE PROPOSALS. | Please Mark Here for Address Change or Comments | ¨ | ||
| SEE REVERSE SIDE | ||||
The Board of Directors recommends a vote FOR Items 1 through 5
Item 1–ELECTION OF DIRECTORS Nominees: 01 John G. Nikkel 02 Gary R. Christopher 03 Robert J. Sullivan, Jr. | FOR the nominees listed below (except as marked to the contrary) ¨ | WITHHOLD AUTHORITY to vote for the nominee(s) listed below ¨ | Item 3 – Approve an amendment to the company’s Amended and Restated Certificate of Incorporation to increase the shares of the company’s authorized common stock | FOR ¨ | AGAINST ¨ | ABSTAIN ¨ | ||||||||||
Withheld for: (Write that nominee’s name in the space provided below.) | Item 4 – Approve an amendment to the company’s Amended and Restated Certificate of Incorporation to increase the shares of the company’s authorized preferred stock | FOR ¨ | AGAINST ¨ | ABSTAIN ¨ | ||||||||||||
Item 2 – RATIFICATION OF AUDITORS | FOR ¨ | AGAINST ABSTAIN ¨¨ | Item 5 – Approve the Unit Corporation Stock and Incentive Compensation Plan | FOR ¨ | AGAINST ¨ | ABSTAIN ¨ | ||||||||||
| PLEASE MARK THIS BOX IF YOU | ||||||||||||||||
| PLAN TO ATTEND THE MEETING | ||||||||||||||||
Receipt is hereby acknowledged of the Unit Corporation | ||||||||||||||||
Notice of Meeting and Proxy Statement. | ||||||||||||||||
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| Signature | Signature | Date |
Note: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Ù FOLD AND DETACH HEREÙ
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time
the day before the annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet http://www.proxyvoting.com/unt Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. You will be prompted to enter your control number, located in the box below, to create and submit an electronic ballot. | OR | Telephone 1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. You will be prompted to enter your control number, located in the box below, and then follow the directions given. | OR | Mark, sign and date your proxy card and return it in the enclosed postage-prepaid envelope. | ||||
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.