SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the registrant [x]
Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2).
[x] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-12.
FRONTIER OIL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
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:
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(2) Aggregate number of securities to which transaction applies:
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(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.)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[Logo}
March 27, 2000
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite all shareholders to
attend the Annual Meeting of Frontier Oil Corporation to be held on Thursday,
April 27, 2000 at 9:00 a.m. in the Company's El Dorado office located at 1401
Douglas Road, El Dorado, Kansas. Proxy materials, which include a Notice of the
Meeting, Proxy Statement and proxy card, are enclosed with this letter. The
Company's 1999 Annual Report to shareholders, which is not a part of the proxy
materials, is also enclosed and provides additional information regarding the
financial results of the Company in 1999.
Even if you plan to attend the meeting, you are requested to sign, date and
return the proxy card in the enclosed envelope. If you attend the meeting after
having returned the enclosed proxy card, you may revoke your proxy, if you wish,
and vote in person. If you would like to attend the meeting and your shares are
not registered in your own name, please ask the broker, trust, bank or other
nominee that holds the shares to provide you with evidence of your share
ownership.
Thank you for your support.
Sincerely,
/s/ James R. Gibbs
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James R. Gibbs
Chairman of the Board,
President and Chief Executive Officer
[Logo]
10000 Memorial Drive, Suite 600
Houston, Texas 77024-3411
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 27, 2000
To Our Shareholders:
The 2000 Annual Meeting of Shareholders of Frontier Oil Corporation (the
"Company") will be held in its El Dorado office at 1401 Douglas Street, El
Dorado, Kansas at 9:00 a.m. on Thursday, April 27, 2000, for the following
purposes:
1. To elect six directors (constituting the entire Board of Directors) to
serve until the next Annual Meeting of Shareholders or until their
respective successors have been elected or appointed.
2. To ratify and approve the appointment of Arthur Andersen LLP,
independent certified public accountants, as the Company's auditors for
the year ending December 31, 2000.
3. To act upon any and all matters incident to the foregoing and to
transact such other business as may properly be brought before the
meeting or any postponement or adjournment thereof.
The Board of Directors recommends that you vote FOR each of the first two
proposals set forth above. The accompanying Proxy Statement contains information
relating to each of such proposals. The holders of record of the Company's
common stock at the close of business on March 20, 2000 are entitled to notice
of and to vote at the meeting with respect to all proposals. We urge you to sign
and date the enclosed proxy and return it promptly by mail in the enclosed
envelope, whether or not you plan to attend the meeting in person. No postage is
required if mailed in the United States. If you do attend the meeting in person,
you may withdraw your proxy and vote personally on all matters brought before
the meeting.
By Order of the Board of Directors,
/s/ Julie H. Edwards
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Julie H. Edwards
Secretary
Houston, Texas
March 27, 2000
FRONTIER OIL CORPORATION
10000 Memorial Drive, Suite 600
Houston, Texas 77024-3411
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PROXY STATEMENT
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SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished by the Board of Directors of Frontier Oil
Corporation (the "Company") in connection with the solicitation of proxies for
use at the Annual Meeting of Shareholders to be held April 27, 2000, and at any
postponement or adjournment thereof. The shares represented by the form of proxy
enclosed herewith will be voted in accordance with the specifications noted
thereon. If no choice is specified, said shares will be voted in favor of the
proposals set forth in the notice attached hereto. The form of proxy also
confers discretionary authority with respect to amendments or variations to
matters identified in the notice of meeting and any other matters which may
properly come before the meeting. This Proxy Statement and the enclosed proxy
form are first being sent to shareholders on or about March 27, 2000.
A shareholder who has given a proxy may revoke it as to any motion on which a
vote has not already been taken by signing a proxy bearing a later date or by a
written notice delivered to the Secretary of the Company in care of Harris Trust
and Savings Bank, 311 West Monroe, Chicago, Illinois 60606 ("Harris") or at the
executive offices of the Company, 10000 Memorial Drive, Suite 600, Houston,
Texas 77024-3411, at any time up to the meeting or any postponement or
adjournment thereof, or by delivering it to the Chairman of the meeting on such
date.
The cost of solicitation of these proxies will be paid by the Company,
including reimbursement paid to brokerage firms and other custodians, nominees
and fiduciaries for reasonable costs incurred in forwarding the proxy material
to and solicitation of proxies from the beneficial record owners of shares. In
addition to such solicitation and the solicitation made hereby, certain
directors, officers and employees of the Company may solicit proxies by fax,
telex, telephone and personal interview.
VOTING SECURITIES
All shareholders of record as of the close of business on March 20, 2000 are
entitled to notice of and to vote at the meeting. Provided that a complete and
executed form of proxy shall have been delivered to Harris prior to the meeting,
any person may attend and vote that number of shares for which he holds a proxy.
On March 20, 2000, the Company had 27,489,044 shares of common stock, without
par value ("Common Stock"), outstanding excluding Common Stock held by the
Company. The Common Stock is the only class of voting securities of the Company.
Shareholders are entitled to vote, exercisable in person or by proxy, for each
share of Common Stock held on the record date. The presence in person or by
proxy of the holders of a majority of the issued and outstanding Common Stock,
excluding Common Stock held by the Company, is necessary to constitute a quorum
at this meeting. In the absence of a quorum at the meeting, the meeting may be
postponed or adjourned from time to time without notice other than announcement
at the meeting until a quorum shall be formed.
Directors shall be elected by a plurality of the votes cast by shareholders
entitled to vote in the election at a meeting at which a quorum is present.
Cumulative voting for the election of directors is not permitted. In conformity
with Wyoming law and the bylaws of the Company, action regarding the
ratification of the appointment of auditors will be approved if the votes cast
in favor exceed the votes cast opposing such proposal. Abstentions are counted
as "shares present" at the meeting for purposes of determining the presence of a
quorum while broker non-votes (which result when a broker holding shares for a
beneficial owner has not received timely voting instructions on certain matters
from such beneficial owner) are not considered "shares present" with respect to
any matter. Accordingly, abstentions will have no effect on the outcome of the
election of directors but with respect to any other proposal will operate to
prevent the approval of such proposal to the same extent as a vote against such
proposal.
ANNUAL REPORT
The annual report to shareholders, including consolidated financial
statements, accompanies this Proxy Statement. Such annual report does not form
any part of the proxy solicitation materials.
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PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 20, 2000, the beneficial
ownership of the Company's Common Stock, with respect to each person known by
the Company to be the beneficial owner of more than five percent of the
Company's outstanding voting securities, excluding Common Stock held by the
Company:
Amount and Nature Percentage
of Beneficial of Shares of
Name and Address of Beneficial Owner Ownership Common Stock(l)
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Ingalls & Snyder LLC 4,994,900 (2) 18.2
61 Broadway
New York, NY 10006
FMR Corp. 3,534,700 (3) 12.9
82 Devonshire Street
Boston, MA 02109
Oppenheimer Funds, Inc. 2,996,500 (4) 10.9
Two World Trade Center, Suite 3400
New York, NY 10048-0203
Kornitzer Capital Management, Inc. 2,395,000 (5) 8.7
P.O. Box 918
Shawnee Mission, KS 66201
Great Plains Trust Company 1,639,200 (5) 6.0
4705 Mission Road
Westwood, KS 66205
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(1) Represents percentage of 27,489,044 outstanding shares of the Company as of
March 20, 2000.
(2) Ingalls & Snyder LLC ("Ingalls & Snyder") has filed with the Commission a
Schedule 13G, dated September 6, 1995, and amendments thereto, dated
December 8, 1995, January 17 and June 10, 1996, January 29 and July 28,
1997, February 9, 1998, February 5, 1999 and January 26, 2000. Based on the
most recent amendment, Ingalls & Snyder had sole voting power with respect
to 355,250 of the above shares, sole dispositive power with respect to
355,250 of the above shares and shared dispositive power with respect to
4,639,650 of the above shares of Common Stock.
(3) FMR Corp. has filed with the Commission a Schedule 13G dated February 1,
1999, and amendments thereto, dated September 10, 1999 and February 14,
2000. Based on the recent amendment, Fidelity Management & Research Company
("Fidelity"), 82 Devonshire Street, Boston, Massachusetts 02109, a
wholly-owned subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, is the beneficial
owner of 2,810,500 shares or 10.2% of the Common Stock outstanding of the
Company as a result of acting as investment adviser to various investment
companies registered under Section 8 of the Investment Company Act of 1940.
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Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the
funds each has sole power to dispose of the 2,810,500 shares owned by the
Funds.
Neither FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the
sole power to vote or direct the voting of the shares owned directly by the
Fidelity Funds, which power resides with the Funds' Boards of Trustees.
Fidelity carries out the voting of the shares under written guidelines
established by the Funds' Boards of Trustees.
Fidelity Management Trust Company, 82 Devonshire Street, Boston,
Massachusetts 02109, a wholly-owned subsidiary of FMR Corp. and a bank as
defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the
beneficial owner of 724,200 shares or 2.6% of the Common Stock outstanding
of the Company as a result of its serving as investment manager of the
institutional account(s).
Edward C. Johnson 3d and FMR Corp., through its control of Fidelity
Management Trust Company, each has sole dispositive power over 724,200
shares and sole power to vote or to direct the voting of 724,200 shares of
Common Stock owned by the institutional account(s) as reported above.
Strategic Advisers, Inc., 82 Devonshire Street, Boston, MA 02109, a
wholly-owned subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, provides
investment advisory services to individuals. It does not have sole power to
vote or direct the voting of shares of certain securities held for clients
and has sole dispositive power over such securities. As such, FMR Corp.'s
beneficial ownership may include shares beneficially owned through Strategic
Advisers, Inc.
Members of the Edward C. Johnson 3d family are the predominant owners of
Class B Shares of common stock of FMR Corp., representing approximately 49%
of the voting power of FMR Corp. Mr. Johnson 3d owns 12.0% and Abigail
Johnson owns 24.5% of the aggregate outstanding voting stock of FMR Corp.
Mr. Johnson 3d is Chairman of FMR Corp. and Abigail P. Johnson is a Director
of FMR Corp. The Johnson family group and all other Class B shareholders
have entered into a shareholders' voting agreement under which all Class B
shares will be voted in accordance with the majority vote of Class B shares.
Accordingly, through their ownership of voting common stock and the
execution of the shareholders' voting agreement, members of the Johnson
family may be deemed, under the Investment Company Act of 1940, to form a
controlling group with respect to FMR Corp.
(4) Oppenheimer Funds, Inc. ("Oppenheimer") has filed with the Commission a
Schedule 13G, dated October 22, 1999. Based on such filing, Oppenheimer has
sole voting power with respect to no shares, sole dispositive power with
respect to no shares and shared dispositive power with respect to 2,996,500
shares of Common Stock.
(5) Kornitzer Capital Management, Inc. ("KCM") has filed with the Commission a
Schedule 13G, dated March 29, 1996, and amendments thereto, dated February
10, 1997, February 17, 1998 (filed jointly with Great Plains Trust Company
("Great Plains")) and two amendments dated February 27, 1999 (one of which
was filed jointly with Great Plains). Based on the most recent amendments,
(i) KCM had shared voting power and shared dispositive power with respect to
2,395,000 shares of Common Stock, and (ii) Great Plains had shared voting
power and shared dispositive power with respect to 1,639,200 shares of
Common Stock.
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COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 20, 2000, the amount of Common
Stock beneficially owned by: (i) each director of the Company, (ii) the Chief
Executive Officer and the four most highly compensated officers other than the
Chief Executive Officer and (iii) all directors and executive officers as a
group:
Amount and Nature Percentage
of Beneficial of Shares of
Name Ownership Common Stock(1)
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James R. Gibbs (2) . . . . . . . . . . . 782,000 (4) 2.8
Douglas Y. Bech (2)(3) . . . . . . . . . 14,500 *
G. Clyde Buck (2)(3) . . . . . . . . . . 4,500 *
Paul B. Loyd, Jr. (2)(3) . . . . . . . . 4,500 *
Derek A. Price (2) . . . . . . . . . . . 7,000 *
Carl W. Schafer (2)(3) . . . . . . . . . 9,500 *
S. Clark Johnson . . . . . . . . . . . . 278,250 (5) *
Julie H. Edwards . . . . . . . . . . . . 247,400 (6) *
J. Currie Bechtol. . . . . . . . . . . . 48,500 (7) *
Jon D. Galvin. . . . . . . . . . . . . . 102,000 (8) *
Directors and executive officers
as a group (11 persons) . . . . . . . 1,562,200 5.4
* Less than 1%
(1) Represents percentage of outstanding shares plus shares issuable upon
exercise of all stock options owned by the individual listed that are
currently exercisable or that will become exercisable within 60 days of the
date for which beneficial ownership is provided in the table, assuming stock
options owned by all other shareholders are not exercised. As of March 20,
2000, 27,489,044 shares of Common Stock were outstanding.
(2) Director.
(3) Includes 2,500 shares with respect to which he has the right to acquire
beneficial ownership under one of the Company's stock option plans within 60
days of the date for which beneficial ownership is provided in the table.
(4) Includes 627,800 shares with respect to which Mr. Gibbs has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in the
table. Of the 782,000 that Mr. Gibbs is deemed to beneficially own, Mr.
Gibbs has sole voting and sole dispositive power with respect to 154,200.
(5) Includes 185,750 shares with respect to which Mr. Johnson has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in the
table. Of the 278,250 shares that Mr. Johnson is deemed to beneficially own,
Mr. Johnson has sole voting power and sole dispositive power with respect to
92,500 shares.
(6) Includes 202,500 shares with respect to which Ms. Edwards has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in the
table. Of the 247,400 shares that Ms. Edwards is deemed to beneficially own,
Ms. Edwards has sole voting power and sole dispositive power with respect to
44,900 shares.
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(7) Includes 48,500 shares with respect to which Mr. Bechtol has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in the
table.
(8) Includes 102,000 shares with respect to which Mr. Galvin has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in the
table.
PROPOSAL 1:
ELECTION OF DIRECTORS
A Board of Directors is to be elected, with each director to hold office
until the next Annual Meeting of Shareholders and until his successor shall be
elected or appointed. The persons whose names are set forth as proxies in the
enclosed form of proxy will vote all shares over which they have control "FOR"
the election of the Board of Directors' nominees, unless otherwise directed.
Although the Board of Directors of the Company does not contemplate that any of
the nominees will be unable to serve, if such a situation should arise prior to
the meeting, the appointed proxies will use their discretionary authority
pursuant to the proxy and vote in accordance with their best judgment.
Nominees
All of the persons listed below except Mr. Lee are members of the present
Board of Directors and have consented in writing to be named in this Proxy
Statement and to serve as a director, if elected.
Mr. James R. Gibbs (55) joined the Company in February 1982 and has been
President and Chief Operating Officer since January 1987. He assumed the
additional position of Chief Executive Officer on April 1, 1992 and additionally
became Chairman of the Board on April 29, 1999. Mr. Gibbs is a member of the
Board of Directors of Smith International, Inc., an oil field service company;
an advisory director of Frost National Bank in Houston ; a director of Veritas
DGC Inc., a seismic service company; and a director of Talon International, an
oil and gas company. Mr. Gibbs was elected a director of the Company in 1985.
Mr. Douglas Y. Bech (54) has been Chairman and Chief Executive Officer of
Raintree Resorts International, Inc. since August 1997. From 1994 to 1997, Mr.
Bech was a partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
of Houston, Texas. Since 1994, he has also been a managing director of Raintree
Capital Company, L.L.C., a merchant banking firm. From 1993 to 1994, Mr. Bech
was a partner of Gardere & Wynne, L.L.P. of Houston, Texas. From 1970 until
1993, Mr. Bech was associated with and a senior partner of Andrews & Kurth
L.L.P. of Houston, Texas. Mr. Bech is a member of the Board of Directors of
Pride Refining, Inc., the general partner of Pride Companies, L.P., a products
pipeline and crude gathering company; and eFax.com, Inc., an internet document
communications company. He was appointed a director of the Company in 1993.
Mr. G. Clyde Buck (62) has been a Managing Director of the investment banking
firm Sanders, Morris, Harris Inc. (which recently merged with Harris, Webb &
Garrison, Inc.) since 1998. From 1983 to 1998, he was a Managing Director of
Dain Rauscher Corporation, also an investment banking firm. Mr. Buck is a
member of the Board of Directors of Smith International, Inc., an oil field
service company. He was appointed a director of the Company in 1999.
Mr. James H. Lee (51) is Managing General Partner and principal owner of Lee,
Hite & Wisda Ltd., an oil and gas consulting firm which he founded in 1984. From
1981 to 1984, Mr. Lee was a Principal with the oil and gas advisory firm of
Schroder Energy Associates. He had prior experience in investment management,
corporate finance and mergers and acquisitions at Cooper Industries Inc. and at
White, Weld & Co. Incorporated. Mr. Lee is a member
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of the Board of Directors of Forest Oil Corporation, an oil and gas exploration
and production company. Mr. Lee is being nominated to the Board of Directors of
the Company for the first time to fill a vacancy.
Mr. Paul B. Loyd, Jr. (53) serves as Chairman and Chief Executive Officer of
R&B Falcon Corporation, the world's largest offshore drilling company since
December 1997. R&B Falcon Corporation was the result of the 1997 merger of
Reading & Bates Corporation and Falcon Drilling, Inc. and the subsequent
acquisition of Cliffs Drilling Company in late 1998. Mr. Loyd was the Chairman
of the Board of Reading & Bates from April 1991 until December 1997. Mr. Loyd
was Assistant to the president of Atwood Oceanics International, President of
Griffin-Alexander Company from 1984 to 1987, Chief Executive Officer of
Chiles-Alexander International, Inc. from 1987 to 1989, all of which are
companies in the offshore drilling industry. He has served as consultant to the
Government of Saudi Arabia, and was a founder and principal of Loyd &
Associates, Inc., an investment company focusing on the energy industry. Mr.
Loyd is a member of the Board of Directors of Carrizo Oil & Gas, Inc., an oil
and gas exploration and production company. He was appointed a director of the
Company in 1994.
Mr. Carl W. Schafer (64) has been the President of the Atlantic Foundation, a
charitable foundation, since 1990. From 1987 until 1990, Mr. Schafer was a
principal of the investment management firm of Rockefeller & Co., Inc. Mr.
Schafer presently serves on the Board of Directors of Roadway Express, Inc., a
transportation company; the PaineWebber and Guardian Groups of Mutual Funds,
registered investment companies; Electronic Clearing House, Inc., an electronic
financial transactions processing company; Evans Systems, Inc., a fuel
distribution and convenience store company; Nutraceutix Inc., a biotechnology
company; and Labor Ready, Inc., a temporary labor company. Mr. Schafer was
elected a director of the Company in 1984.
The Board of Directors and Its Committees
The Board of Directors met four times and held one telephonic meeting in
1999, during which each incumbent director of the Company, other than Mr. Loyd,
attended 75 percent or more of the aggregate number of meetings of the Board of
Directors and meetings held by committees of the Board on which he served. The
Board of Directors has standing audit, compensation, safety and environmental,
executive and nominating committees that are composed of directors of the
Company.
Audit Committee: The Audit Committee is comprised of three outside directors,
currently Messrs. Loyd, Price and Schafer. The Audit Committee's functions
include recommendations concerning the engagement of independent public
accountants, reviewing with the independent public accountants the plan and
results of the audit engagement, approving professional services provided by the
independent public accountants, reviewing the independence of the independent
public accountants, considering the range of audit and non-audit fees and
reviewing the adequacy of the Company's internal accounting controls. The Audit
Committee met twice during 1999.
Compensation Committee: The Compensation Committee is comprised of three
outside directors, currently Messrs. Bech, Loyd and Schafer. The Compensation
Committee's functions include the approval of officers' salaries and
administration of all of the Company's employee benefit plans. The Compensation
Committee met three times during 1999.
Safety and Environmental Committee: The Safety and Environmental Committee
is comprised of three members of the Board of Directors, currently Messrs. Buck,
Gibbs and Price. The Safety and Environmental Committee's functions include the
adoption and review of the Company's safety, health and environmental policies
and programs. The Safety and Environmental Committee met once during 1999.
Executive Committee: The Executive Committee is comprised of Mr. Gibbs and
two outside directors, currently Messrs. Bech and Buck. The Executive Committee
functions in the place of the Board of Directors between regular meetings of the
Board and has all the power and authority of the Board of Directors, except for
certain matters that may not be delegated under the Company's bylaws. The
Executive Committee did not meet during 1999.
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Nominating Committee: The Nominating Committee is comprised of three members
of the Board of Directors, currently Messrs. Gibbs, Bech and Schafer. The
purpose of the committee is to review possible candidates for the Board of
Directors and recommend nomination of appropriate candidates by the Board. The
Nominating Committee did not meet during 1999.
Pursuant to the Company's bylaws, nominations for candidates for election to
the Board of Directors may be made by any shareholder entitled to vote at a
meeting of shareholders called for the election of directors. Nominations made
by a shareholder must be made by giving notice of such in writing to the
Secretary of the Company before the later to occur of (i) 60 days prior to the
date of the meeting of shareholders called for the election of directors or (ii)
ten days after the Board first publishes the date of such meeting. Such notice
shall include all information concerning each nominee as would be required to be
included in a proxy statement soliciting proxies for the election of such
nominee under the Securities Exchange Act of 1934, as amended (the "1934 Act").
Such notice shall also include a signed consent of each nominee to hold office
until the next Annual Meeting of Shareholders or until his successor shall be
elected or appointed.
Compensation of Directors
Directors' fees are presently $1,666.67 per month and $1,500.00 for each
Board meeting attended in person, plus $1,250.00 for any committee meeting
attended. Additionally, committee chairmen receive a fee of $2,000 per year and
outside directors are eligible to participate in the Company's Directors' Stock
Grant Plan which is described on page 14. On March 1, 2000, each continuing
outside director (Messrs. Bech, Buck, Loyd and Schafer) was granted options to
purchase 10,000 shares under the Company's 1999 Stock Option Plan.
No member of the Board of Directors was paid any remuneration in 1999 for his
service as a director of the Company other than pursuant to the standard
compensation arrangement for directors. Directors who are officers of the
Company do not receive any compensation for their services as a director. The
Company reimburses its directors for travel expenses incurred in attending Board
meetings. Mr. Palmer joined the Board of Directors of the Company in 1975 and
served through the date of the 1999 Annual Meeting. In addition to the six
directors elected by shareholders, Mr. James S. Palmer now serves as Director
Emeritus at the request of the Board. As compensation for his services as
Director Emeritus, Mr. Palmer is paid a retainer of $833.34 per month, $1,500
for each board meeting attended in person plus reimbursement for related travel
expenses.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors recommends the ratification of the appointment of
Arthur Andersen LLP as independent auditors for the Company for the year ending
December 31, 2000. This firm has served in such capacity since 1974 and is
familiar with the Company's affairs and financial procedures. Their appointment
as auditors for the year ended December 31, 1999 was approved by the
shareholders at the last Annual Meeting on April 29, 1999.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting and will have an opportunity to make a statement if he desires to
do so and to respond to appropriate questions from those attending the meeting.
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OTHER BUSINESS
The Board of Directors of the Company knows of no matters expected to be
presented at the Annual Meeting other than those described above; however, if
other matters are properly presented to the meeting for action, it is intended
that the persons named in the accompanying form of proxy, and acting thereunder,
will vote in accordance with their best judgment on such matters.
EXECUTIVE AND OTHER OFFICERS
Set forth below are the executive officers of the Company as of year end 1999
along with the age as of March 20, 2000 and office held by each officer.
Mr. James R. Gibbs (55) is Chairman of the Board, President and Chief
Executive Officer. Information about Mr. Gibbs is included on page six with the
information on nominees for the Board.
Ms. Julie H. Edwards (41) is Senior Vice President-Finance & Chief Financial
Officer . She joined the Company in March 1991 as Vice President-Secretary &
Treasurer and was promoted to her current position in August 1994. From 1985 to
February 1991, she was employed by Smith Barney, Harris Upham & Co. Inc. in the
Corporate Finance Department. Prior to 1985, she was employed by Amerada Hess
Corporation and American Ultramar, Ltd., which are oil companies, as a
geologist. Ms. Edwards is a member of the Board of Directors of Evans Systems,
Inc., a fuel distribution and convenience store company.
Mr. S. Clark Johnson (54) is Senior Vice President-Refining Operations and
serves as president of the refining subsidiaries of the Company. He has over 25
years of experience in refining and marketing. Prior to joining the Company,
Mr. Johnson served as Senior Vice President-Marketing, Supply & Terminals at
Kerr-McGee Refining Corporation since 1990. In 1989, Mr. Johnson served as
President of Coastal Mart, Inc., a retail subsidiary of Coastal Corporation.
Previously, Mr. Johnson was with Tenneco Oil Company for 20 years where he held
numerous positions, including Vice President-Retail Marketing from 1987 to 1988.
Mr. Johnson is a member of the Board of Directors of Pride Refining, Inc., the
general partner of Pride Companies, L.P., a products pipeline and crude oil
gathering company.
Mr. J. Currie Bechtol (58) has been Vice President-General Counsel of the
Company since January 1998. Prior to joining the Company, Mr. Bechtol has been
in private legal practice for 28 years, most recently as a partner of Hutcheson
& Grundy L.L.P. from 1984 until joining the Company.
Mr. Jon D. Galvin (46) is Vice President-Controller of the Company. He was
appointed to this position in September 1997. Mr. Galvin has been the Chief
Financial Officer of the Company's Frontier refining subsidiaries since February
1992. Previously, he had spent 15 years with Arthur Andersen, ultimately as
Audit Principal.
Mr. Gerald B. Faudel (50) has been Vice President-Corporate Affairs since
February 2000. Mr. Faudel had previously been Vice President-Safety and
Environmental Affairs and had served in similar capacities since November 1993.
From October 1991 through November 1993, Mr. Faudel was Director of Safety,
Environmental and External Affairs of the refining subsidiaries of the Company.
Mr. Faudel was employed by Frontier Oil Corporation from October 1989 through
October 1991 as Director of Safety, Environmental and External Affairs. Prior to
October 1989, Mr. Faudel was employed with Tosco Corporation's Avon Refinery as
Manager of Hazardous Waste and Wastewater Program.
- 9 -
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
All members of the Compensation Committee are independent, non-employee
directors. The Committee regularly reviews and, with any changes it believes
appropriate, approves the Company's executive compensation program. An
independent compensation consultant employed by Price Waterhouse has been
retained by the Committee and has advised the Committee on all compensation
matters since 1988. The Company's executive compensation program is structured
to help the Company achieve its business objectives by:
- setting levels of compensation designed to attract and retain key
executives;
- providing incentive compensation that varies directly with both Company
performance and individual contribution to that performance; and
- linking compensation to financial targets that affect short and long term
share price performance.
Compensation Program Components
The particular elements of the compensation program for executive officers
are further explained below.
Base Salary. Base pay levels are largely determined through comparisons with
a peer group of companies of similar size, activity and complexity to the
Company as determined by Price Waterhouse and which companies are included in
the Peer Group Index in the graph on page 15. The relative stock price
performance of the Company compared to the peer group is one factor used in
determining compensation. In addition, salaries are based on the Company's
recent performance and on individual performance contributions within a
competitive salary range for each position that is established through job
evaluation and market comparisons. Base pay levels for the executive officers
are generally in the middle of a competitive range of salaries.
Annual Incentive Compensation. The Company's officers and certain other
employees are eligible to participate in an annual incentive compensation plan
with awards based primarily on the attainment of certain earnings and cash flow
goals established by the Company's annual budget, which is approved by the Board
of Directors. The objective of this incentive plan is to deliver competitive
levels of compensation for the attainment of financial targets that the
Committee believes are important determinants of share price over time.
In 1995 and 1996, no awards were made due to net losses for the years. In
1997, the Company both exceeded its budget earnings and cash flow and was
profitable. Accordingly, awards were made to all employees in early 1998 based
on 1997 results. In 1998, the Company was again profitable, achieving record
earnings from continuing operations. However, the results failed to meet
budget. Accordingly, awards were proportionally reduced and were made to all
employees in early 1999 based on 1998 results. In 1999, the Company did not
meet its budget but completed a major acquisition late in the year. In
recognition of the immense amount of effort put into the acquisition by certain
employees, acquisition bonuses were made in early 2000 to approximately 15
individuals.
Stock Option Program. The Committee strongly believes that by providing those
persons who have substantial responsibility for the management and growth of the
Company with an opportunity to increase their ownership of the Company stock,
the best interests of the shareholders and executives will be closely aligned.
Therefore, executives and managers are eligible to receive stock options from
time to time at the discretion of the Compensation Committee, giving them the
right to purchase shares of Common Stock at a specified price in the future. The
number of stock options granted to executive officers is based on such officer's
ability to influence the Company's performance as determined by the Compensation
Committee.
- 10 -
CEO Compensation
In accordance with the discussion above of the Company's philosophy for
executive compensation, a significant portion of the compensation for the Chief
Executive Officer is based upon the Company's performance. Mr. Gibbs, who has
served as Chief Executive Officer since April 1992 and Chairman of the Board
since 1999, joined the Company in 1982 and has served in a number of executive
positions. A significant portion of Mr. Gibbs' total cash compensation is tied
to the performance of the Company. In 1995, his salary was increased slightly in
recognition of the strong operational performance of 1994 and additional tasks
of winding down the U.S. oil and gas operations. He received no increase in
1996 or 1997 nor bonus in 1995 or 1996 due to the Company's net losses in 1995
and 1996. He received meaningful bonus awards in early 1998 based on 1997
results and in early 1999 based on 1998 results. Mr. Gibbs received a meaningful
acquisition bonus in early 2000 as described two paragraphs above. As is
reflected in the Summary Compensation Table, Mr. Gibbs also participated in the
Company's savings plans.
Compensation Committee Members:
Douglas Y. Bech
Paul B. Loyd, Jr.
Carl W. Schafer
- 11 -
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth information regarding compensation earned by
the Company's Chief Executive Officer and the four most highly compensated
officers other than the Chief Executive Officer for services rendered in all
capacities to the Company and its subsidiaries in the years 1997 through 1999.
SUMMARY COMPENSATION TABLE
Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Other Securities
Annual Restricted Underlying
Compen- Stock Options/ LTIP All Other
Name and Salary Bonus sation Awards SARS Payouts Compensation(1)
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- ------- ------- ------- ---------- ---------- ------- ---------------
James R. Gibbs 1999 500,000 300,000 0 0 230,000 0 96,554 (2)
Chairman of the Board, 1998 445,000 232,000 0 0 0 0 110,891
President and Chief 1997 415,000 415,000 0 0 242,800 0 64,820
Executive Officer
S. Clark Johnson 1999 305,000 152,500 0 0 104,000 0 54,884 (3)
Senior Vice President- 1998 280,000 112,000 0 0 0 0 60,456
Refining Operations 1997 265,000 185,500 0 0 28,000 0 40,541
Julie H. Edwards 1999 260,000 130,000 0 0 88,000 0 33,113 (4)
Senior Vice President-Finance 1998 227,000 91,000 0 0 0 0 34,647
& Chief Financial Officer 1997 210,000 147,000 0 0 23,000 0 23,866
J. Currie Bechtol 1999 170,000 59,500 0 0 58,000 0 26,256 (5)
Vice President-General 1998 150,000 42,000 0 0 0 0 17,952
Counsel 1997 0 0 0 0 0 0 0
Jon D. Galvin 1999 190,000 66,500 0 0 44,000 0 30,842 (6)
Vice President-Controller 1998 175,000 49,000 0 0 0 0 32,781
1997 163,264 79,000 0 0 37,200 0 18,019
(1) Includes amounts contributed under the Company's retirement/savings plans,
deferred compensation plan and premiums paid by the Company for individual
life insurance. Detail is given in the following notes.
(2) Mr. Gibbs' Other Compensation includes $17,022 of Company contribution to
his retirement/savings plan account, $70,818 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$8,714 of life insurance premiums paid by the Company.
(3) Mr. Johnson's Other Compensation includes $17,022 of Company contribution to
his retirement/savings plan
- 12 -
account, $33,018 of Company contribution to his retirement/savings plan
account through a deferred compensation program and $4,844 of life insurance
premiums paid by the Company.
(4) Ms. Edwards' Other Compensation includes $17,022 of Company contribution to
her retirement/savings plan account, $13,638 of Company contribution to her
retirement/savings plan account through a deferred compensation program and
$2,453 of life insurance premiums paid by the Company.
(5) Mr. Bechtol's Other Compensation includes $17,022 of Company contribution to
his retirement/savings plan account, $5,298 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$3,936 of life insurance premiums paid by the Company.
(6) Mr. Galvin's Other Compensation includes $17,022 of Company contribution to
his retirement/savings plan account, $11,658 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$2,162 of life insurance premiums paid by the Company.
Stock Options
The Company currently maintains four stock option plans in which employees
are eligible to participate, and one plan, the 1999 Stock Option Plan, in which
directors and other non-employee agents of the Company are eligible to
participate, pursuant to which options to purchase shares of Common Stock are
outstanding or available for future grants. The purpose of the stock option
plans is to advance the best interest of the Company by providing those persons
who have substantial responsibility for the management and growth of the Company
with additional incentive by increasing their proprietary interest in the
success of the Company. As of March 20, 2000, there were 1,316,290 shares of
Common Stock available for grants under the Company's existing stock option
plans.
OPTION GRANTS IN 1999
Individual Grants
- ----------------------------------------------------------------------
Percent of Potential Realizable
Total Value at Assumed
Number of Options Annual Rates of Stock
Options Granted to Exercise Price Appreciation for
Granted(1) Employees Price Expiration Option Term(2)
----------------------
Name (#) in 1999 ($/sh) Date 5% 10%
- ---- ---------- ---------- -------- ---------- --------- ---------
James R. Gibbs. . . . 170,000 18.2 5.625 4/28/04 $264,194 $583,800
60,000 (1) 6.4 5.625 4/28/04 93,245 206,047
S. Clark Johnson. . . 76,000 8.1 5.625 4/28/04 118,110 260,993
28,000 (1) 3.0 5.625 4/28/04 43,514 96,115
Julie H. Edwards. . . 65,000 6.9 5.625 4/28/04 101,015 223,218
23,000 (1) 2.5 5.625 4/28/04 35,744 78,985
J. Currie Bechtol . . 28,000 3.0 5.625 4/28/04 43,514 96,155
30,000 (1) 3.2 5.625 4/28/04 46,623 103,024
Jon D. Galvin . . . . 32,000 3.4 5.625 4/28/04 49,731 109,892
12,000 (1) 1.3 5.625 4/28/04 18,649 41,209
- ------------
(1) 50% were exercisable on their grant date of 4/29/99. All other options
listed in the above table are exercisable according to the following
schedule: first year - 25%, second year - 50%, third year - 75%, third
anniversary and thereafter until expiration - 100%.
- 13 -
(2) The Securities and Exchange Commission requires disclosure of the potential
realized value or present value of each grant. The disclosure assumes the
options will be held for the full term of the option prior to exercise. Such
options may be exercised prior to the end of such term. The actual value, if
any, an executive officer may realize will depend on the excess of the stock
price over the exercise price or the date the option is exercised. There
can be no assurance that the stock price will appreciate at the rates shown
in the table.
AGGREGATE OPTION EXERCISES IN 1999
AND OPTION VALUES AT DECEMBER 31, 1999
Shares Number of Securities Value of Unexercised
Acquired on Underlying Unexercised In-the-Money Options at
Exercise Value Options at Dec. 31, 1999 Dec. 31, 1999
Name (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- ----------- -------- ------------------------- ----------------------------
James R. Gibbs . . . 0 0 584,660/197,340 $1,535,173/$266,828
S. Clark Johnson . . 25,000 $12,500 173,500/71,000 473,910/79,875
Julie H. Edwards . . 0 0 184,250/60,250 525,624/67,781
J. Currie Bechtol. . 0 0 22,000/36,000 24,750/40,500
Jon D. Galvin. . . . 0 0 70,440/37,560 215,935/59,265
(1) Computed based on the difference between aggregate fair market value and
aggregate exercise price. The fair market value of the Company's Common
Stock on December 31, 1999 as $6.75 based on the closing sale price on
December 31, 1999.
Directors' Stock Grant Plan
In 1995, the Board of Directors established a stock grant plan for
non-employee directors. The purpose of the stock grant plan is to advance the
best interest of the Company by increasing the non-employee directors'
proprietary interest in the success of the Company. Further, the stock grant
plan allows for additional compensation to the non- employee directors without
incurring cash expenses to the Company.
Under the Directors' Stock Grant Plan, automatic grants of a fixed number of
shares (currently 500 shares per non- employee director) are made on certain
predetermined dates (currently approximately every 15 months) out of the
Treasury shares owned by the Company in 1995. In 1995, 1996, 1997 and again in
early 1999, each of five non- employee directors received 500 shares of common
stock. As of March 20, 2000, 50,000 shares of common stock are in the Company's
Treasury which are available for grant under this plan.
Employment Agreements
In April 1998, the Company entered into employment agreements with Mr. Gibbs,
Ms. Edwards, Mr. Johnson, Mr. Bechtol, Mr. Galvin and Mr. Faudel. These
agreements provide that in the event of a change of control of the Company, the
executive will remain in his or her position as of the date of the agreement
with commensurate duties for a period of three years from the change of control.
Each agreement provides that the executive officer will receive at least the
same level of base compensation and other benefits as were being received by
such executive officer immediately prior to the change of control. In addition,
the agreements each provide for payment of annual performance bonuses determined
by percentages of the base salary (65% for Mr. Gibbs, 50% for Ms. Edwards and
Mr. Johnson and 35% for Messrs. Bechtol, Galvin and Faudel) in effect during the
three year term. In the event of
- 14 -
termination of the executive officer for any reason other than cause during the
three year term of employment, the Company is required to continue to pay the
executive officer the stated compensation, including the value of unexercised
in-the-money stock options, either periodically or in a lump sum, as provided by
the terms of the agreements.
Certain Relationships and Related Transactions
Burnet, Duckworth & Palmer, a law firm of which Mr. Palmer is a partner, is
retained by the Company as its counsel for certain Canadian legal matters.
Comparison of 5 Year Cumulative Total Return of
the Company, Peer Group Indices and Broad Market Index
REFINING PEER
FRONTIER OIL CORP. GROUP S & P 500
------------------ -------------- ------------
1994 100 100 100
1995 68.42 104.74 134.11
1996 65.79 134.28 161.29
1997 167.11 161.94 211.30
1998 103.95 125.20 267.65
1999 142.11 90.90 319.91
Assumes $100 invested December 31, 1994 in (i) the Company's Common Stock, (ii)
a peer group of independent refining companies (the "Refining Peer Group") which
includes Ashland Inc., Giant Industries, Holly Corporation, Sun Company, Tesoro
Petroleum Corporation, Tosco Corporation, Ultramar Diamond Shamrock and Valero
Energy Corporation, and (iii) the S & P 500 Index. The Company's peer group has
changed from prior years to include a larger number of independent refineries
for which five years of data are now available. For the past two years, the
prior peer group consisted of Ashland, Inc., Crown Central Petroleum, Giant
Industries, Holly Corporation, Sun Company and Tosco Corporation.
- 15 -
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee are Messrs. Bech, Loyd and Schafer. No
member of the Compensation Committee of the Board of Directors of the Company
was, during 1999, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries or had any relationships requiring disclosure by the Company.
During 1999 no executive officer of the Company served as (i) a member of the
Compensation Committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served on the
Compensation Committee of the Board of Directors, (ii) a director of another
entity, one of whose executive officers served on the Compensation Committee of
the Company, or (iii) a member of the compensation committee (or other board
committee performing equivalent functions) of another entity, one of whose
executive officers served as a director of the Company.
SECTION 16 FILINGS DISCLOSURE
Section 16(a) of the 1934 Act requires the Company's directors and executive
officers, and persons who own more than ten percent of a registered class of the
Company's equity securities, to file with the Commission and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock of the Company. Officers, directors and greater than ten-percent
shareholders are required by Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the Company's copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be included in the Proxy Statement
relating to the Company's 2001 Annual Meeting of Shareholders (the "2001 Annual
Meeting") pursuant to Rule 14a-8 under the 1934 Act ("Rule 14a-8") must be
received by the Company no later than November 27, 2000 and must otherwise
comply with the requirements of Rule 14a-8.
Proposals of shareholders submitted for considerations at the Company's 2001
Annual Meeting (outside of the Rule 14a-8 process), in accordance with the
Company's bylaws, must be received by the Company by the later of 60 days before
the 2001 Annual Meeting or 10 days after notice of such meeting is first
published. If such timely notice of a proposal is not given, the proposal may
not be brought before the 2001 Annual Meeting.
- 16 -
MISCELLANEOUS
All information contained in this Proxy Statement relating to the
occupations, affiliations and securities holdings of directors and officers of
the Company and their relationship and transactions with the Company is based
upon information received from directors and officers. All information relating
to any beneficial owners of more than 5% of the Company's Common Stock is based
upon information contained in reports filed by such owner with the Commission.
By Order of the Board of Directors,
/s/ Julie H. Edwards
-------------------------------
JULIE H. EDWARDS
Senior Vice President-Finance &
Chief Financial Officer
Secretary
March 27, 2000
Houston, Texas
PROXY
FRONTIER OIL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) JAMES R. GIBBS and JULIE H. EDWARDS, or
either of them, lawful attorneys and proxies of the undersigned with full power
of substitution, for and in the name, place and stead of the undersigned to
attend the Annual Meeting of Shareholders of Frontier Oil Corporation to be held
in its El Dorado office at 1401 Douglas Road, El Dorado, Kansas, on Thursday,
April 27, 2000 at 9:00 a.m., Kansas time, and any adjournment(s) thereof, with
all powers the undersigned would possess if personally present and to vote the
number of votes the undersigned would be entitled to vote if personally present.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
FRONTIER OIL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
For all
(Except
Nominee(s)
1. Election of Directors - For Withhold Written
All All Below)
Nominees: 01-James R. Gibbs, 02-Douglas Y. / / / / / /
Bech; 03-G. Clyde Buck, 04-James H. Lee,
05-Paul B. Loyd, Jr., 06-Carl W. Schafer
2. To ratify and approve the appointment of
Arthur Andersen LLP, independent certified For Against Abstain
public accountants as the Company's auditors / / / / / /
for the year ending December 31, 2000.
- ---------------------
Nominee Exception(s)
In their discretion, said attorneys and proxies are authorized to vote upon
such other business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. IF NO ELECTIOINS ARE MADE, THE PROXIES WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Dated: _________________________________________________________
Signature(s) ___________________________________________________________________
________________________________________________________________________________
Important: Please sign exactly as name appears above. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.