þ | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
o | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
þ | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
1) | Title of each class of securities to which transaction applies: | |||
2) | Aggregate number of securities to which transaction applies: | |||
3) | Per unit price or other underlying value of 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 transaction: | |||
5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: | |||
By Order of the Board of Directors, | |
![]() | |
Roy W. Jageman | |
Corporate Secretary |
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• | FORthe election of the seven persons named in this proxy statement as nominees for election to the Board. If any nominee becomes unable or unwilling to accept nomination or election, the persons acting under proxy will vote for the election of a substitute nominee that the Board recommends. | |
• | FORthe amendment of the Company’s Second Amended and Restated Certificate of Incorporation to increase the authorized number of shares of the Company’s common stock from 60,000,000 to 144,000,000 and to delete Article Six (an outdated provision renouncing corporate opportunities known to former principal stockholders of the Company) in its entirety. | |
• | FORthe ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm. |
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• | Is a type of relationship addressed in Item 404 of Regulation S-K under the Securities Exchange Act of 1934 (the “Exchange Act”) or Section 303A.02(b) of the NYSE Listed Company Manual, but under those rules neither requires disclosure nor precludes a determination of independence; or | |
• | Consists of charitable contributions by the Company to an organization where a director is an executive officer and does not exceed the greater of $1 million or 2% of the organization’s gross revenue in any of the last 3 years. |
Nominating and | ||||||||||
Name of Director | Audit(1) | Compensation(2) | Corporate Governance | |||||||
Martin C. Bowen | Member | |||||||||
Ted Collins, Jr. | Member | Chair | ||||||||
Ted A Gardner | Chair | |||||||||
John V. Genova | Member | |||||||||
Howard H. Newman(3) | Member | |||||||||
James A. Winne III | Chair | Member |
(1) | Messrs. Collins and Winne served on the Audit Committee until April 2004, when Messrs. Bowen and Genova joined the Audit Committee. |
(2) | Mr. Arnold Chavkin served on the Compensation Committee until April 2004. Mr. Chavkin did not stand for reelection in April 2004. |
(3) | Mr. Newman is not a nominee for director at the annual meeting. |
• | the integrity of the Company’s financial statements; | |
• | the Company’s compliance with legal and regulatory requirements; | |
• | the independence, qualifications and performance of the Company’s independent registered public accounting firm; and |
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• | the performance of the Company’s internal audit function. |
• | review and approve corporate goals and objectives relevant to chief executive officer compensation, evaluate the chief executive officer’s performance in light of those goals and objectives, and, either as a committee or together with the other independent directors (as directed by the Board), determine and approve the chief executive officer’s compensation level based on this evaluation; | |
• | approve, or make recommendations to the Board with respect to, the compensation of other executive officers; | |
• | from time to time consider and take action on the establishment of and changes to incentive compensation plans and equity-based compensation plans, including making recommendations to the Board on plans, goals or amendments to be submitted for action by the Company’s stockholders; | |
• | administer the Company’s compensation plans that it is assigned responsibility to administer, including taking action on grants and awards, determinations with respect to achievement of performance goals, and other matters provided in the respective plans; | |
• | review from time to time when and as it deems appropriate the compensation and benefits of non-employee directors, including compensation pursuant to equity-based plans, and approve, or recommend to the Board for its action, any changes in such compensation and benefits; and | |
• | produce a compensation committee report on executive compensation as required by the Securities and Exchange Commission to be included in the Company’s annual proxy statement or annual report on Form 10-K. |
• | identify individuals qualified to become Board members, consistent with criteria approved by the Board; | |
• | recommend to the Board a slate of director nominees to be elected by the stockholders at the next annual meeting of stockholders and, when appropriate, director appointees to take office between annual meetings; | |
• | develop and recommend to the Board the corporate governance guidelines applicable to the Company; | |
• | oversee the Board’s annual evaluation of its performance of the Board and management; and | |
• | recommend to the Board membership on standing Board committees. |
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Identifying Candidates |
Evaluating Candidates |
• | the ability to represent the interests of all stockholders of the Company and not just one particular constituency; | |
• | independence of thought and judgment; | |
• | the ability to dedicate sufficient time, energy and attention to the performance of his or her duties, taking into consideration the nominee’s service on other public company boards; | |
• | skills and expertise complementary to the existing Board members’ skills; and | |
• | a high degree of personal and professional integrity. |
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Fiscal 2005 | Fiscal 2004 | |||||||
Annual Retainer | $40,000 | $40,000 | ||||||
Additional Retainer for Chair of Audit Committee | $10,000 | $0 | ||||||
Additional fee for attendance at Board meetings | $2,000 | $2,000 | ||||||
Additional fee for attendance at committee meetings | $1,000 | $1,000 | ||||||
Equity-based compensation | 3,000 shares of restricted stock issued upon the director’s election or reelection to the Board(1) | Options to purchase 5,000 shares of the Company’s common stock issued upon the director’s election or reelection to the Board(2) | ||||||
Reimbursement of expenses attendant to Board membership | Yes | Yes |
(1) | Shares of restricted stock vest in three equal annual installments beginning three years from the date of grant, subject to earlier vesting in the event of a change in control, death or disability and to such other terms as are set forth in the award agreement. |
(2) | Options vest in three equal annual installments beginning one year from the date of grant, subject to earlier vesting in the event of a change in control, death or disability and to such other terms as are set forth in the award agreement. |
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I. Jon Brumley Age 65 | Mr. I. Jon Brumley has been Chairman of the Board, Chief Executive Officer and a director of the Company since its inception in April 1998. He also served as President of the Company from its inception in April 1998 until August 2002. Beginning in August 1996, Mr. Brumley served as Chairman and Chief Executive Officer of MESA Petroleum (an independent oil and gas company) until MESA’s merger in August 1997 with Parker & Parsley to form Pioneer Natural Resources Company (an independent oil and gas company). He served as Chairman and Chief Executive Officer of Pioneer until joining the Company in 1998. Mr. Brumley serves as a director of Hanover Compressor Company. Mr. Brumley received a Bachelor of Business Administration from the University of Texas and a Master of Business Administration from the University of Pennsylvania Wharton School of Business. He is the father of Jon S. Brumley. | |
Jon S. Brumley Age 34 | Mr. Jon S. Brumley has been President of the Company since August 2002 and a director of the Company since November 2001. He also held the positions of Executive Vice President — Business Development and Corporate Secretary from inception in April 1998 until August 2002 and was a director of the Company from April 1999 until May 2001. Prior to joining the Company, Mr. Brumley held the position of Manager of Commodity Risk and Commercial Projects for Pioneer Natural Resources Company. He was with Pioneer since its creation by the merger of MESA and |
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Parker & Parsley in August 1997. Prior to August 1997, Mr. Brumley served as Director — Business Development for MESA. Mr. Brumley received a Bachelor of Business Administration in Marketing from the University of Texas. He is the son of I. Jon Brumley. | ||
Martin C. Bowen Age 61 | Mr. Bowen has been a director of the Company since May 2004. Since 1993, Mr. Bowen has been Vice President and Chief Financial Officer of Fine Line, Inc., a private holding company. He also serves on the Board of Directors of AZZ, Inc. and several privately held companies. In addition, he is a Director and Executive Committee Member of the Southwestern Exposition and Livestock Show, President and Chief Executive Officer of Performing Arts Fort Worth and a Council Member of the World Wildlife Fund. Mr. Bowen received a Bachelor of Business Administration in Finance from Texas A&M University, a Bachelor of Foreign Trade from the American Graduate School of International Management and a J.D. from Baylor University School of Law. | |
Ted Collins, Jr. Age 66 | Mr. Collins has been a director of the Company since May 2001. From 1988 to July 2000, he was a co-founder and president of Collins & Ware, Inc. (an independent oil and gas exploration company which was sold in July 2000). Since that time he has engaged in private oil and gas investments. Mr. Collins is a past President of the Permian Basin Petroleum Association, the Permian Basin Landmen’s Association, Midland Petroleum Club and serves as Chairman of the Midland Wildcat Committee. He is a graduate of the University of Oklahoma with a Bachelor of Science in Geological Engineering. Mr. Collins serves on the Board of Directors of Hanover Compressor Company and U.S. Propane L.L.C., the general partner of the general partner of Energy Transfer Partners, L.P. Mr. Collins in also an active board member on the Midland Metropolitan YMCA, the University of Oklahoma Sarkey’s Energy Center and the University of Texas Development Board. | |
Ted A. Gardner Age 47 | Mr. Gardner has been a director of the Company since May 2001. Mr. Gardner is currently an independent investor. Mr. Gardner was a Managing Partner of Wachovia Capital Partners (a private equity investment group) and a Senior Vice President of Wachovia Corporation (a provider of commercial and retail banking and trust services) from 1990 until 2003. Mr. Gardner received a Bachelor of Arts degree in Economics from Duke University and a J.D. and Masters of Business Administration from the University of Virginia. He currently serves on the Board of Directors of Kinder Morgan, Inc. and COMSYS IT Partners Inc. | |
John V. Genova Age 50 | Mr. Genova has been a director of the Company since May 2004. Beginning January 2005, Mr. Genova became an independent consultant to the energy industry. In 2004, Mr. Genova was Executive Vice President — Refining and Marketing of Holly Corporation (an independent U.S. petroleum refiner). Prior to Holly, Mr. Genova worked over 27 years with ExxonMobil. From January 1999 to December 1999, he served as Vice President of the Gas Department of Exxon Company, International. From |
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December 1999 to March 2002, he served as Director of International Gas Marketing of ExxonMobil International Limited in London. From April 2002 through 2003, Mr. Genova served as Executive Assistant to the Chairman and General Manager, Corporate Planning of ExxonMobil Corporation. Mr. Genova received a Bachelor of Science degree in Chemical and Petroleum Refining Engineering from the Colorado School of Mines. | ||
James A. Winne III Age 53 | Mr. Winne has been a director of the Company since May 2001. Mr. Winne has been a director of Belden & Blake Corporation (an independent oil and gas company) since September 2004 and was elected Chairman of the Board and Chief Executive Officer of Belden & Blake in December 2004. He has been President and Chief Executive Officer of Legend Natural Gas II, L.P. (an independent oil and gas company) since its inception in September 2004. In addition, Mr. Winne has been President and Chief Executive Officer of Legend Natural Gas, L.P. (an independent oil and gas company) since its inception in September 2001. From March 2001 until September 2001, Mr. Winne developed plans for a business that became Legend Natural Gas. He formerly was employed by North Central Oil Corporation (an independent oil and gas company) for 18 years and was President and CEO from September 1993 until March 2001. After attending the University of Houston, he started his career as an independent landman and also worked at Tomlinson Interest, Inc. (an independent oil and gas company) and Longhorn Oil and Gas (an independent oil and gas company) before joining North Central’s land department in January 1983. Mr. Winne is a registered land professional with 26 years of experience in the oil and gas industry. |
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• | shares of common stock were issued and outstanding, including shares of restricted stock; | |
• | shares of common stock were reserved for issuance upon the exercise of stock options granted by the Company; | |
• | shares of common stock were available for issuance under the Company’s 2000 Incentive Stock Plan; and | |
• | shares of common stock were available for future corporate purposes. |
• | paying stock dividends or effecting stock splits; | |
• | raising capital; | |
• | providing equity incentives to employees, officers and directors; | |
• | expanding the Company’s business through acquisitions; and | |
• | other general corporate purposes. |
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NOW, THEREFORE, BE IT RESOLVED, that the Second Amended and Restated Certificate of Incorporation of the Company be amended by deleting the first sentence of Article Four and substituting the following in lieu thereof: |
The total number of shares of all classes of stock which the Corporation shall have authority to issue is 149,000,000 shares, consisting solely of (i) 144,000,000 shares of common stock, par value $.01 per share (the “Common Stock”), and (ii) 5,000,000 shares of preferred stock, par value $.01 per share (the “Preferred Stock”). | |
; and |
FURTHER RESOLVED, that the Second Amended and Restated Certificate of Incorporation of the Company be further amended by deleting Article Six thereof in its entirety. |
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• | all persons known by the Company to be beneficial owners of more than five percent of the Company’s stock; | |
• | each director nominee; | |
• | each of the Company’s executive officers named in the Summary Compensation Table below; and | |
• | all directors and named executive officers of the Company as a group. |
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Shares Beneficially | Percent of | ||||||||
Name and Address of Beneficial Owner | Owned(1)(2) | Class | |||||||
FMR Corp.(3) | 4,083,072 | [ ] | |||||||
82 Devonshire Street | |||||||||
Boston, Massachusetts 02109 | |||||||||
T. Rowe Price Associates, Inc.(4) | 3,232,532 | [ ] | |||||||
100 East Pratt Street | |||||||||
Baltimore, Maryland 21202 | |||||||||
Baron Capital Group, Inc.(5) | 2,925,350 | [ ] | |||||||
767 Fifth Avenue | |||||||||
New York, NY 10153 | |||||||||
Wellington Management Company, LLP(6) | 1,744,300 | [ ] | |||||||
75 State Street | |||||||||
Boston, Massachusetts 02109 | |||||||||
I. Jon Brumley(7) | 1,972,540 | [ ] | |||||||
Jon S. Brumley | 470,340 | [ ] | |||||||
Robert S. Jacobs | 93,391 | * | |||||||
Thomas H. Olle | 32,001 | * | |||||||
Roy W. Jageman | 28,885 | * | |||||||
Martin C. Bowen | 1,667 | * | |||||||
Ted Collins, Jr. | 7,000 | * | |||||||
Ted A. Gardner | 5,000 | * | |||||||
John V. Genova | 1,667 | * | |||||||
Howard H. Newman | 583 | * | |||||||
James A. Winne III | 7,000 | * | |||||||
Ronald Baron(5) | 2,925,350 | [ ] | |||||||
All directors and named executive officers as a group (11 persons) | 2,620,074 | [ ] |
* | Less than 1%. |
(1) | Includes common stock for which the indicated owner has sole or shared voting or investment power. |
(2) | Includes options that are or become exercisable within 60 days of March 15, 2005 as follows: Mr. I. Jon Brumley (148,382), Mr. Jon S. Brumley (132,021), Mr. Olle (16,881), Mr. Jageman (14,852), Mr. Jacobs (10,289), Mr. Gardner (5,000), Mr. Collins (7,000), Mr. Winne (7,000), Mr. Bowen (1,667) and Mr. Genova (1,667), and all directors and named executive officers as a group (344,759) upon the exercise of stock options granted pursuant to the Company’s 2000 Incentive Stock Plan. |
(3) | Based on an amendment to Schedule 13G filed with the Securities and Exchange Commission on February 14, 2005 by FMR Corp., Edward C. Johnson 3d, chairman of FMR Corp. and Abigail P. Johnson, a director of FMR Corp. Such filing indicates that FMR Corp. has sole voting power with respect to 824,200 shares and that FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson each have sole dispositive power with respect to 4,083,072 shares. Fidelity Management & Research Company, an investment advisor and wholly owned subsidiary of FMR Corp. (“Fidelity”), is the beneficial owner of 3,258,872 shares as a result of acting as investment adviser to various investment companies. Fidelity Management Trust Company, a wholly owned subsidiary of FMR Corp., is the beneficial owner of 824,200 shares as a result of its serving as investment manager of the institutional account(s). Members of the Johnson family, including Edward C. Johnson 3d and Abigail P. Johnson, are the predominant owners of Class B shares of common stock of FMR Corp., representing approximately 49% of the voting power of FMR Corp. |
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(4) | Based on an amendment to Schedule 13G filed with the Securities and Exchange Commission on February 10, 2005 by T. Rowe Price Associates, Inc. (“Price Associates”). Such filing indicates that Price Associates has sole voting power with respect to 964,817 shares and sole dispositive power with respect to 3,232,532 shares. These securities are owned by various individual and institutional investors which Price Associates serves as investment advisor with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. |
(5) | Based on a Schedule 13G filed with the Securities and Exchange Commission on February 15, 2005 by Baron Capital Group, Inc. (“BCG”), BAMCO, Inc., an investment advisor (“BAMCO”), Baron Capital Management, Inc., an investment advisor (“BCM”), Baron Growth Fund, a registered investment company (“BGF”), and Ronald Baron. Such filing indicates that (i) each of BCG and Ronald Baron has shared voting power with respect to 2,688,350 shares and shared dispositive power with respect to 2,925,350 shares, (ii) BAMCO has shared voting power with respect to 2,508,000 shares and shared dispositive power with respect to 2,738,000 shares, (iii) BCM has shared voting power with respect to 180,350 shares and shared dispositive power with respect to 187,350 shares, and (iv) BCF has shared voting and dispositve power with respect to 2,325,000 shares. BAMCO and BCM are subsidiaries of BCG. Ronald Baron owns a controlling interest in BCG. By virtue of investment advisory agreements with their respective clients, BAMCO and BCM have been given the discretion to direct the disposition of the securities in the advisory accounts. BCG and Ronald Baron disclaim beneficial ownership of shares held by their controlled entities (or the investment advisory clients thereof) to the extent such shares are held by persons other than BCG and Ronald Baron. BAMCO and BCM disclaim beneficial ownership of shares held by their investment advisory clients to the extent such shares are held by persons other than BAMCO, BCM and their affiliates. |
(6) | Based on a Schedule 13G filed with the Securities and Exchange Commission on February 14, 2005 by Wellington Management Company, LLP, an investment advisor (“WMC”). Such filing indicates that WMC has shared voting power with respect to 1,485,100 shares and shared dispositive power with respect to 1,744,300 shares. WMC, in its capacity as investment advisor, may be deemed to beneficially own 1,744,300 shares which are held of record by clients of WMC. Those clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such securities. |
(7) | Mr. Brumley directly owns 100 shares. Two limited partnerships own a total of [1,719,272] shares. Mr. Brumley is the sole officer, director and shareholder of the corporation that is the sole general partner of each of the partnerships. Accordingly, Mr. Brumley has sole voting and dispositive power with respect to the shares owned by these partnerships. Furthermore, Mr. Brumley has the power to vote or to direct the vote of 104,781 shares of restricted common stock. Mr. Brumley is also deemed to beneficially own 148,382 shares of common stock that may be acquired upon the exercise of options that were or would have become exercisable within 60 days of March 15, 2005. |
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I. | Jon Brumley, age 67, Chairman of the Board and Chief Executive Officer |
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Long-Term Compensation | |||||||||||||||||||||||||
Annual Compensation | Restricted | Securities | All Other | ||||||||||||||||||||||
Stock Awards | Underlying Options | Compensation | |||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | ($)(a) | (#)(b)(c) | ($)(d) | |||||||||||||||||||
I. Jon Brumley | 2004 | 421,875 | 700,000 | 2,100,505 | — | 12,300 | |||||||||||||||||||
Chairman and Chief Executive | 2003 | 400,000 | 450,000 | 728,500 | 62,641 | 12,000 | |||||||||||||||||||
Officer | 2002 | 375,000 | 337,500 | 441,750 | 87,096 | 12,000 | |||||||||||||||||||
Jon S. Brumley | 2004 | 306,875 | 450,000 | 899,932 | 20,180 | 12,300 | |||||||||||||||||||
President | 2003 | 285,000 | 275,000 | 267,100 | 45,643 | 12,000 | |||||||||||||||||||
2002 | 220,000 | 150,000 | 199,280 | 38,710 | 11,000 | ||||||||||||||||||||
Roy W. Jageman(e) | 2004 | 244,375 | 160,000 | 318,560 | 7,175 | 12,300 | |||||||||||||||||||
Executive Vice President, | 2003 | 30,000 | 175,000 | 155,410 | 44,556 | — | |||||||||||||||||||
Chief Financial Officer, | |||||||||||||||||||||||||
Treasurer and Corporate Secretary | |||||||||||||||||||||||||
Thomas H. Olle(f) | 2004 | 203,125 | 150,000 | 300,641 | 6,700 | 12,300 | |||||||||||||||||||
Senior Vice President — | 2003 | 181,250 | 125,000 | 121,400 | 20,747 | 10,875 | |||||||||||||||||||
Asset Management | 2002 | 116,667 | 90,000 | 53,140 | 20,332 | 5,670 | |||||||||||||||||||
Robert S. Jacobs | 2004 | 204,375 | 125,000 | 250,070 | 5,600 | 12,300 | |||||||||||||||||||
Senior Vice President — | 2003 | 192,500 | 120,000 | 116,600 | 19,917 | 11,550 | |||||||||||||||||||
Business Development | 2002 | 161,000 | 60,000 | 79,701 | 15,433 | 6,572 | |||||||||||||||||||
and Planning |
(a) | The value of the restricted stock awards is based on the price of the common stock as of the date of grant. At December 31, 2004, Mr. I. Jon Brumley held 52,031 shares of restricted stock with a value of $1,816,402; Mr. Jon S. Brumley held 21,084 shares of restricted stock with a value of $736,042; Mr. Jageman held 6,033 shares of restricted stock with a value of $210,612; Mr. Olle held 7,570 shares of restricted stock with a value of $264,269; and Mr. Jacobs held 8,810 shares of restricted stock with a value of $307,557. Each restricted stock award vests in three equal installments beginning on the third anniversary of the date of grant, subject to the achievement of performance objectives and to earlier vesting on a change in control or the termination of the employee’s employment due to death or disability and to such other terms as are set forth in the award agreement. Holders of restricted stock have the right to vote and to receive dividends paid with respect to shares of restricted stock. |
(b) | Securities Underlying Options represent options to purchase shares of the Company’s common stock. The 2000 Incentive Stock Plan provides for employee and non-employee director awards in the form of stock options and restricted stock. | |
(c) | Stock option awards listed for 2004 were granted on February 14, 2005 as compensation for fiscal year 2004. The options were granted at an exercise price equal to the fair market value of the Company’s common stock on the date of grant. For fiscal year 2002 and prior years, annual stock option awards were granted to executive officers in the fourth quarter of each year. Starting with fiscal year 2003, stock option awards were granted in the first quarter of the following year. As a result, no stock options were granted to the named executive officers in fiscal year 2003. However, the stock option awards granted to the named executive officers in February 2004, as compensation for performance in 2003, are listed as compensation for 2003. | |
(d) | Represents contributions to the Company’s 401(k) Plan for each named officer in 2004, 2003 and 2002. | |
(e) | Mr. Jageman joined the Company in November 2003. | |
(f) | Mr. Olle joined the Company in March 2002. |
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Individual Grants | ||||||||||||||||||||||||
Number of | Percent of Total | Assumed Annual Rates of | ||||||||||||||||||||||
Securities | Options/SARs | Stock Price Appreciation for | ||||||||||||||||||||||
Underlying | Granted to | Exercise or | Option Term | |||||||||||||||||||||
Options/SARs | Employees in | Base Price | ||||||||||||||||||||||
Name | Granted (#)(a) | Fiscal Year (%) | ($/share) | Expiration Date | 5% ($) | 10% ($) | ||||||||||||||||||
I. Jon Brumley | — | — | — | — | — | — | ||||||||||||||||||
Jon S. Brumley | 20,180 | 26.3 | 39.82 | 02/14/2015 | 505,359 | 1,280,680 | ||||||||||||||||||
Roy W. Jageman | 7,175 | 9.3 | 39.82 | 02/14/2015 | 179,681 | 455,346 | ||||||||||||||||||
Thomas H. Olle | 6,700 | 8.7 | 39.82 | 02/14/2015 | 167,785 | 425,201 | ||||||||||||||||||
Robert S. Jacobs | 5,600 | 7.3 | 39.82 | 02/14/2015 | 140,238 | 355,392 |
(a) | The options vest and become exercisable in three equal installments beginning on February 14, 2006. |
Number of Shares of | ||||||||||||||||||||||||
Common | Common Stock Underlying | Value of Unexercised In-the- | ||||||||||||||||||||||
Stock | Unexercised Stock | Money Common Stock | ||||||||||||||||||||||
Acquired | Options at 12/31/04 (#) | Options at 12/31/04 ($)(a) | ||||||||||||||||||||||
on | Value | |||||||||||||||||||||||
Name | Exercise | Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
I. Jon Brumley | 32,000 | 509,160 | 137,064 | 91,273 | 2,654,914 | 1,043,017 | ||||||||||||||||||
Jon S. Brumley | — | — | 116,807 | 58,546 | 2,379,717 | 628,087 | ||||||||||||||||||
Roy W. Jageman | — | — | 6,000 | 38,556 | 87,120 | 417,227 | ||||||||||||||||||
Thomas H. Olle | — | — | 13,548 | 27,521 | 251,368 | 315,519 | ||||||||||||||||||
Robert S. Jacobs | 50,000 | 612,000 | 10,289 | 25,061 | 167,808 | 266,145 |
(a) | Computed based on the difference between the option exercise price and $34.91 (the closing price of the common stock at December 31, 2004). |
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• | base salaries should be at levels competitive with peer group companies that compete with the Company for business opportunities and executive talent; | |
• | annual cash bonuses, stock option awards and restricted stock awards should reflect progress toward the Company’s goals and individual performance; and | |
• | the Company should encourage significant executive stock ownership through stock options and restricted stock awards. |
• | create a proper balance between building stockholder wealth and executive wealth while maintaining good corporate governance; | |
• | produce long-term, positive results for the Company’s stockholders; | |
• | align executive compensation with Company performance and appropriate peer group comparisons; |
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• | provide market-competitive compensation and benefits that will enable the Company to attract and retain a talented workforce; and | |
• | prevent short-term manipulation to the extent possible. |
• | budgeted oil and natural gas production; | |
• | rates of return on invested capital; | |
• | finding and development costs; | |
• | efficiency ratios (defined as EBITDA divided by three year finding and development costs); and | |
• | reserve replacement. |
• | the Company’s success in integrating acquisitions; | |
• | implementation of the Company’s development program, including results of the Company’s high-pressure air injection project; | |
• | the Company’s safety record; | |
• | accomplishments of the Company’s land, acquisition, finance and accounting groups; |
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• | the Company’s financial performance; and | |
• | the Company’s compliance with Section 404 of the Sarbanes-Oxley Act of 2002. |
21
Compensation Committee of the Board | |
James A Winne III, Chairman | |
Ted Collins, Jr. | |
Howard H. Newman |
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![(PERFORMANCE GRAPH)](https://capedge.com/proxy/PRE 14A/0000950134-05-004771/d23210pd2321001.gif)
03/09/2001 | 12/31/2001 | 12/31/2002 | 12/31/2003 | 12/31/2004 | ||||||||||||||||||||||
Encore Acquisition Company | $ | 100.00 | $ | 91.50 | $ | 126.62 | $ | 169.45 | $ | 239.98 | ||||||||||||||||
S&P 500 | $ | 100.00 | $ | 93.08 | $ | 71.33 | $ | 90.15 | $ | 98.26 | ||||||||||||||||
Independent Oil & Gas Index | $ | 100.00 | $ | 87.88 | $ | 90.28 | $ | 135.47 | $ | 177.61 | ||||||||||||||||
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Audit Committee of the Board | |
Ted A. Gardner, Chairman | |
Martin C. Bowen | |
John V. Genova |
Year Ended December 31, | |||||||||
2004 | 2003 | ||||||||
Audit Fees(1) | $ | 413,266 | $ | 207,935 | |||||
Audit-Related Fees(2) | 55,528 | — | |||||||
Tax Fees(3) | 200,465 | 139,653 | |||||||
All Other Fees | — | — | |||||||
Total | $ | 669,259 | $ | 347,588 | |||||
(1) | Audit fees represent fees for professional services provided in connection with the audit of our consolidated financial statements and review of our quarterly consolidated financial statements and audit services provided in connection with filings with the Securities and Exchange Commission, including comfort letters, consents and comment letters. |
(2) | Audit-related fees consisted of services related to business acquisitions. |
(3) | For fiscal 2004 and 2003, respectively, tax fees included tax compliance fees of $120,000 and $47,500, and tax advice and tax planning fees of $80,465 and $92,153. |
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• | as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Schedule 14A under the Exchange Act and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), and | |
• | as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (1) the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner and (2) the class or series and number of shares of the Company which are owned beneficially and of record by such stockholder and such beneficial owner. |
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By Order of the Board of Directors | |
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Roy W. Jageman | |
Corporate Secretary |
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Financial Statement and Disclosure Matters |
• | Review and discuss with management and the independent auditors the annual audited financial statements, as well as the specific disclosures made in management’s discussion and analysis of financial condition and results of operations in the Company’s Annual Report on Form 10-K. |
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• | Recommend to the Board of Directors whether the Company’s annual audited financial statements and accompanying notes should be included in the Company’s Annual Report on Form 10-K. | |
• | Review and discuss with management, the internal auditors and the independent auditors the Company’s annual report on internal control over financial reporting and the independent auditors’ attestation of the report prior to the filing of the Company’s Annual Report on Form 10-K. | |
• | Prepare and approve the audit committee report as required by the SEC to be included in the Company’s proxy statement for the annual meeting (or in the Company’s Annual Report on Form 10-K if required to be included therein). | |
• | Review and discuss with management and the independent auditors the Company’s quarterly financial statements, as well as the specific disclosures made in management’s discussion and analysis of financial condition and results of operations, prior to the filing of the Company’s Quarterly Reports on Form 10-Q, including the results of the independent auditors’ reviews of the Company’s quarterly financial statements. | |
• | Review and discuss with management and the independent auditors: |
• | Major issues regarding accounting principles and financial statement presentations, including any significant changes in the selection or application of accounting principles, any major issues concerning the adequacy of the Company’s internal controls, any special audit steps adopted in light of material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting. | |
• | Analyses prepared by management and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including analyses of the effects of alternative methods of generally accepted accounting principles on the financial statements. |
• | Review and discuss reports from the independent auditors on: |
• | All critical accounting policies and practices to be used. | |
• | All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, including (1) ramifications of the use of such alternative disclosures and treatments and (2) the treatment preferred by the independent auditors. | |
• | Other material written communications between the independent auditors and management, such as any management letters or schedules of unadjusted differences. |
• | Discuss with management the Company’s earnings press releases, with particular emphasis on the use of any “non-GAAP financial measures,” as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be done generally (covering, for example, the types of information to be disclosed and the type of presentation to be made). | |
• | Discuss with management and the independent auditors the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements. | |
• | Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control those exposures, including the Company’s risk assessment and risk management policies. | |
• | Discuss with the independent auditors the matters required to be communicated by the independent auditors pursuant to Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any problems or difficulties encountered in the course of the audit work and management’s response, any restrictions on the scope of activities or access to requested information and any significant disagreements with management. |
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• | Review the disclosures that the Company’s chief executive officer and chief financial officer make to the Audit Committee and the independent auditors in connection with the certification process for the Company’s Reports on Form 10-K and Form 10-Q concerning any significant deficiencies or weaknesses in the design or operation of internal control over financial reporting and any fraud that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
Oversight of the Company’s Relationship with the Independent Auditors |
• | Review the capabilities and performance of the lead partner of the independent auditors. | |
• | Obtain and review a report by the independent auditors describing (i) the independent auditors’ internal quality-control procedures; (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditors, 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, and any steps taken to deal with any such issues; and (iii) all relationships between the independent auditors and the Company. Evaluate the independent auditors’ qualifications, performance and independence, including considering whether the independent auditors’ quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the independent auditors’ independence, taking into account the opinions of management and internal auditors. The Audit Committee shall present its conclusions with respect to the independent auditors to the full Board of Directors. | |
• | Confirm the regular rotation of the audit partners as required by law. Consider whether there should be regular rotation of the independent auditing firm. | |
• | Establish hiring policies for the Company’s employment of the independent auditors’ personnel or former personnel, which may take into account whether a proposed employee participated in any capacity in the audit of the Company. | |
• | Discuss with the independent auditors any communication or consultation between the Company’s audit team and the independent auditors’ national office respecting auditing or accounting issues presented by the engagement. | |
• | Meet with the independent auditors prior to the audit to discuss the planning and staffing of the audit. |
Oversight of the Company’s Internal Audit Function |
• | Oversee the internal audit function, including the appointment and replacement of the senior internal auditing executive or other personnel responsible for the internal audit function. | |
• | Review the significant reports to management prepared by the internal auditors and management’s responses. | |
• | Review with management and the independent auditors the responsibilities, budget and staffing of the internal auditors and any recommended changes in the planned scope of the internal audit. The internal audit function (which may be outsourced to a third-party service provider other than the independent auditor) is intended to provide management and the Audit Committee with ongoing assessments of the Company’s risk management processes and system of internal control. |
Compliance Oversight Responsibilities |
• | Obtain from the independent auditors assurance that no illegal acts required to be reported under Section 10A(b) of the Securities Exchange Act of 1934 have been detected or otherwise come to the attention of the independent auditors in the course of the audit. | |
• | Obtain reports from management, the internal auditors and the independent auditors that the Company and its subsidiary entities are in conformity with applicable legal requirements and the |
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Company’s Code of Business Conduct and Ethics. Review reports and disclosures of insider and affiliated party transactions. | ||
• | Advise the Board of Directors with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Business Conduct and Ethics. | |
• | Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. | |
• | Review with the Company’s legal counsel any legal matters that may have a material impact on the Company’s financial statements, the Company’s compliance policies and the Company’s internal controls and any material reports or inquiries received from regulators or governmental agencies. |
Other Matters |
• | Meet with management (including the chief financial officer and chief accounting officer), the internal auditors and the independent auditors in separate executive sessions. | |
• | Review and reassess the adequacy of this charter from time to time and recommend any proposed changes to the Board of Directors for approval. | |
• | Review annually the Audit Committee’s own performance. | |
• | Make regular reports to the Board of Directors. |
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APPENDIX
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRETION | Please mark | |
IS INDICATED, WILL BE | your votes as | |
VOTED “FOR” PROPOSALS 1, 2 AND 3. | indicated in þ | |
this example |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS.
1. ELECTION OF DIRECTORS -
WITHHELD | ||||||||||
Nominees: | FOR | FOR ALL | ||||||||
01 | I. Jon Brumley | |||||||||
02 | Jon S. Brumley | |||||||||
03 | Martin C. Bowen | |||||||||
04 | Ted Collins, Jr. | |||||||||
05 | Ted A. Gardner | |||||||||
06 | John V. Genova | |||||||||
07 | James A. Winne III |
Withheld for the nominees you list below: (Write that nominee’s name in the space provided below.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF “FOR” THE AMENDMENTS TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
2. AMENDMENTS TO SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION-
To approve the amendments to the Second Amended and Restated Certificate of Incorporation.
FOR | AGAINST | ABSTAIN | ||||
o | o | o |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF “FOR” THE RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM-
To ratify the appointment of the independent registered public accounting firm.
FOR | AGAINST | ABSTAIN | ||||
o | o | o |
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. | ||||
Dated: , 2005 | ||||
Signature | ||||
Signature if held jointly |
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 business day prior to 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.
VOTE BY INTERNET
http://www.proxyvoting.com/eac
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
VOTE BY 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
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ENCORE ACQUISITION COMPANY
The undersigned hereby appoints I. Jon Brumley, Jon S. Brumley and Roy W. Jageman, and each of them, with power to act without the other and with 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 Encore Acquisition Company Common Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the Company to be held May 3, 2005 or any adjournment thereof, with all powers which the undersigned would possess if present at the Annual Meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)