SCHEDULE 14A
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:
[x] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-b(e)(2)
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WAINOCO 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.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(I)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) 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:(1)
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(4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
[ ] 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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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
(Letterhead of Wainoco Oil Corporation)
March 27, 1998
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite all shareholders to
attend the Annual Meeting of Wainoco Oil Corporation to be held on Monday, April
27, 1998, at 9:00 a.m. in the Churchill Room of the Omni Houston Hotel, Four
Riverway, Houston, Texas. Proxy materials, which include a Notice of the
Meeting, Proxy Statement and proxy card, are enclosed with this letter. The
Company's 1997 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 1997.
The Board of Directors and management sincerely desire your presence at the
meeting. 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 you 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,
James R. Gibbs
President and Chief Executive Officer
[Logo]
10000 Memorial Drive, Suite 600
Houston, Texas 77024-3411
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 27, 1998
To Our Shareholders:
The 1998 Annual Meeting of Shareholders of Wainoco Oil Corporation (the
"Company") will be held in the Churchill Room of the Omni Houston Hotel, Four
Riverway, Houston, Texas, at 9:00 a.m. on Monday, April 27, 1998, 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, 1998.
3. To consider and act upon a proposal of the Board of Directors to approve
and adopt an Amendment of the Company's Restated Articles of
Incorporation to change the name of the Company to "Frontier Oil
Corporation".
4. 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 three
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, 1998 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,
Julie H. Edwards
Secretary
Houston, Texas
March 27, 1998
WAINOCO OIL CORPORATION
10000 Memorial Drive, Suite 600
Houston, Texas 77024-3411
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished by the Board of Directors of Wainoco Oil
Corporation (the "Company") in connection with the solicitation of proxies for
use at the Annual Meeting of Shareholders to be held April 27, 1998, 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, 1998.
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
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, 1998 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, 1998, the Company had 28,092,789 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.
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 1, 1998, 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 Ownership Common Stock(l)
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Ingalls & Snyder LLC 5,819,591 (2) 20.7
61 Broadway
New York, NY 10006
Kornitzer Capital Management, Inc. 5,809,121 (3) 18.8
P.O. Box 918
Shawnee Mission, KS 66201
The Guardian Life Insurance Company of America 2,693,700 (4) 9.6
201 Park Avenue South
New York, NY 10003
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(1) Represents percentage of outstanding shares plus shares issuable upon
conversion of all convertible securities of the Company owned by such
shareholder, assuming convertible securities owned by all other shareholders
are not converted.
(2) Ingalls & Snyder has filed a Schedule 13G dated September 6, 1995 and
amendments dated December 8, 1995, January 7 and June 6, 1996, January 29
and July, 1997 and February 9, 1998 with the Commission. Based on the most
recent amendment, Ingalls & Snyder has sole voting power on 381,000 of the
above shares and sole dispositive power on 5,819,591 shares. Includes 571
shares assuming conversion of the Company's convertible securities owned by
Ingalls & Snyder.
(3) Kornitzer Capital Management, Inc. has filed a Schedule 13G dated March 29,
1996 and amendments dated February 10, 1997 and February 17, 1998 with the
Commission. Based on the most recent amendment, Kornitzer Capital has shared
voting and shared dispositive power on 5,809,121 shares. Includes 2,743,321
shares assuming conversion of the Company's convertible securities owned by
Kornitzer Capital.
(4) The Guardian Life Insurance Company of America and related entities have
filed a Schedule 13G dated February 14, 1996 and an amendment dated February
11, 1998 with the Commission. Based on the amendment, Guardian Life and
affiliates have sole voting and sole dispositive power on 1,097,400 of the
above shares and shared voting and shared dispositive power on 1,596,300 of
the above shares.
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COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1998, 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). . . . . . . . . . . 546,230 (3) 1.9
Douglas Y. Bech (2) . . . . . . . . . . 11,500 *
Paul B. Loyd, Jr. (2) . . . . . . . . . 1,500 *
James S. Palmer (2) . . . . . . . . . . 42,123 (4) *
Derek A. Price (2). . . . . . . . . . . 6,500 (5) *
Carl W. Schafer (2) . . . . . . . . . . 6,500 *
S. Clark Johnson. . . . . . . . . . . . 157,100 (6) *
Julie H. Edwards. . . . . . . . . . . . 158,100 (7) *
Jon D. Galvin . . . . . . . . . . . . . 39,640 (8) *
Gerald B. Faudel. . . . . . . . . . . . 37,500 (9) *
Robert D. Jones (10). . . . . . . . . . - -
Joel M. Mann (10) . . . . . . . . . . . - -
Directors and executive officers as
a group (10 persons) . . . . . . . . . 1,006,693 3.5
* Less than 1%
(1) Represents percentage of outstanding shares plus (i) shares issuable upon
conversion of all convertible securities of the Company owned by such
shareholder, assuming convertible securities owned by all other
shareholders are not converted, plus (ii) 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 1, 1998,
28,092,789 shares of Common Stock were outstanding.
(2) Director.
(3) Includes 497,320 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 546,230 shares that Mr. Gibbs is deemed to beneficially
own, Mr. Gibbs has sole voting and sole dispositive power with respect to
48,910 shares.
(4) Includes 5,194 shares held by a private corporation of which Mr. Palmer is
the sole shareholder and 11,429 shares assuming conversion of the Company's
convertible securities owned by Mr. Palmer. Of the 42,123 shares that Mr.
Palmer is deemed to beneficially own, Mr. Palmer has sole voting and sole
dispositive power with respect to 30,694 shares.
(5) Five thousand of such shares are held by a private corporation of which Mr.
Price is the sole shareholder.
(6) Includes 132,100 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 157,100 shares that Mr. Johnson is deemed to beneficially
own, Mr. Johnson has sole voting power and sole dispositive power with
respect to 25,000 shares.
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(7) Includes 137,100 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 158,100 shares that Ms. Edwards is deemed to beneficially
own, Ms. Edwards has sole voting power and sole dispositive power with
respect to 21,000 shares.
(8) Includes 39,640 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.
(9) Includes 37,500 shares with respect to which Mr. Faudel 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.
(10) Messrs. Jones and Mann were employed in the Company's Calgary office until
such operations were sold in June 1997. At year end, Messrs. Jones and Mann
were no longer employed by the Company.
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 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 (53) 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. 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, N.A.; and a
director of Veritas DGC Inc., a seismic service company. Mr. Gibbs was elected
a director of the Company in 1985.
Mr. Douglas Y. Bech (52) has been Chairman of Club Regina Resorts, Inc. since
August 1997. From October 1994 to October 1997, Mr. Bech was a partner in the
law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. of Houston, Texas. Since
August 1994, he has also been a managing director of Raintree Capital Company,
L.L.C., a merchant banking firm. From May 1993 to July 1994, Mr. Bech was a
partner of Gardere & Wynne, L.L.P. of Houston, Texas. From 1977 until May 1993,
Mr. Bech was a partner of Andrews & Kurth L.L.P. 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 JetFax,
Inc., a multifunctional peripheral office equipment company. He was appointed a
director of the Company in 1993.
Mr. Paul B. Loyd, Jr. (51) has been Chairman of R&B Falcon Corporation since
December 1997. Mr. Loyd was Chairman and Chief Executive Officer of Reading &
Bates Corporation, an offshore contract drilling company, from June 1991 until
December 1997 and was a director of Reading & Bates from April 1991 until
December 1997. Mr. Loyd has been President of Loyd & Associates, Inc., a
financial consulting firm, since 1989. Mr. Loyd was Chief Executive Officer
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and a director of Chiles-Alexander International, Inc. from 1987 to 1989,
President and a director of Griffin-Alexander Drilling Company from 1984 to
1987, and prior to that, a director and Chief Financial Officer of Houston
Offshore International, all of which are companies in the offshore drilling
industry. Mr. Loyd is a member of the Board of Directors of Carrizo Oil & Gas,
Inc. He was appointed a director of the Company in 1994.
Mr. James S. Palmer (69) is Chairman of the law firm of Burnet, Duckworth &
Palmer of Calgary, Alberta, Canada, where he has been a partner since 1956.
Burnet, Duckworth & Palmer has been retained by the Company as its counsel
regarding certain Canadian legal matters. Mr. Palmer is Chairman of the Board
of Telus Corporation, a telecommunications company. Mr. Palmer is also a member
of the Board of Directors of Bank of Canada; Magellan Aerospace Corporation;
Remington Energy Ltd., an oil and gas company; and Westcoast Energy Inc., a
pipeline and transmission company. Mr. Palmer was elected a director of the
Company in 1975.
Mr. Derek A. Price (65) is a trustee of The J.W. McConnell Family Foundation,
a charitable foundation. Prior to April 1991, Mr. Price was Chairman of the
Board of Directors and Chief Executive Officer of Starlaw Holdings Limited, a
private investment company with holdings principally in the areas of financial
services, real estate and manufacturing. Mr. Price was elected a director of
the Company in 1987.
Mr. Carl W. Schafer (62) has been the President of the Atlantic Foundation, a
charitable foundation which mainly supports oceanographic research, 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, convenience store and diversified
company; and Nutraceutix Inc., a biotechnology company. Mr. Schafer was elected
a director of the Company in 1984.
The Board of Directors and Its Committees
The Board of Directors met five times in 1997, 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 1997.
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 once during 1997.
Safety and Environmental Committee: The Safety and Environmental Committee
is comprised of three members of the Board of Directors, currently Messrs.
Palmer, 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 1997.
Executive Committee: The Executive Committee is comprised of Mr. Gibbs and
two outside directors, currently Messrs. Palmer and Bech. The Executive
Committee functions in the place of the Board of Directors between regular
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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 1997.
Nominating Committee: The Nominating Committee is comprised of three members
of the Board of Directors, currently Messrs. Gibbs, Palmer 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 1997.
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
During 1997, directors' fees aggregated $145,250. 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 15.
No member of the Board of Directors was paid any remuneration in 1997 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. In addition to the six directors elected by shareholders, Mr. William
Scheerer, II serves as Director Emeritus at the request of the Board. Mr.
Scheerer served as a director of the Company from 1975 through 1994. As
compensation for his services, Mr. Scheerer is paid $1,000 for each board
meeting attended in person plus reimbursement for related travel expenses.
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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, 1998. 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, 1997 was approved by the
shareholders at the last Annual Meeting on April 24, 1997.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they desire
to do so and to respond to appropriate questions from those attending the
meeting.
PROPOSAL 3:
APPROVAL OF AMENDMENT TO COMPANY'S RESTATED
ARTICLES OF INCORPORATION TO CHANGE CORPORATE NAME
The Board of Directors of the Company has adopted, and is recommending to the
shareholders of the Company for their approval at the Annual Meeting, a
resolution to amend Article One of the Company's Restated Articles of
Incorporation. The applicable text of such resolution is as follows:
"RESOLVED, that Article One of the Company's Restated Articles of
Incorporation be amended, effective as soon as practicable after the 1998
Annual Meeting of Shareholders, to read in its entirety as follows:
Article One
The name of the corporation is Frontier Oil Corporation."
In the judgment of the Board of Directors, the change of the corporate name
is desirable because the name Wainoco is associated with the Company's
exploration and production operations and, with the completion of the sale of
its Canadian operations in 1997, Wainoco is no longer engaged in this line of
business. It currently operates almost exclusively in crude oil refining and the
wholesale marketing of refined petroleum products.
The Board of Directors recommends the name "Frontier Oil Corporation" because
the name "Frontier" has been identified with the Company's refining operations
since 1991 when it acquired the Frontier Refinery located in Cheyenne, Wyoming.
Frontier has operated in the Rocky Mountains since 1940 and at one time had
approximately 2,000 company owned or branded service stations in the area. It is
strongly identified with refining and marketing in the Rocky Mountain region and
particularly in Wyoming where Wainoco is incorporated. The proposed name change
would more closely connect the Company with its operations and state of
incorporation and take advantage of a well known regional name and logo.
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.
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EXECUTIVE AND OTHER OFFICERS
Set forth below are the executive officers of the Company as of year end 1997
along with the age as of March 1, 1998 and office held by each officer.
Mr. James R. Gibbs (53) is President and Chief Executive Officer. Information
about Mr. Gibbs is included on page five with the information on nominees for
the Board.
Ms. Julie H. Edwards (39) 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, convenience store and diversified company.
Mr. S. Clark Johnson (52) 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. Jon D. Galvin (43 ) 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 (48) is Vice President-Safety and Environmental Affairs
and has held that position with the Company since November 1993. He holds a
similar position with the refining subsidiaries. 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.
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 KPMG Peat Marwick and formerly
employed by Towers Perrin 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 which 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.
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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 KPMG Peat Marwick and which companies are included in
the Peer Group Index in the graph on page 16. 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.
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 joined the Company in 1982
and has served in a number of executive positions. Up to one half 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 a meaningful bonus
award in early 1998 based on 1997 results. 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 as well as two others whose
positions were eliminated during 1997 for services rendered in all capacities to
the Company and its subsidiaries in the years 1995 through 1997.
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 1997 415,000 415,000 0 0 242,800 0 64,820 (2)
President and Chief 1996 415,000 0 0 0 125,000 0 54,389
Executive Officer 1995 415,000 0 0 0 244,200 0 77,970
S. Clark Johnson 1997 265,000 185,500 0 0 28,000 0 40,541 (3)
Senior Vice President- 1996 255,000 0 0 0 68,000 0 32,025
Refining Operations 1995 255,000 0 0 0 72,500 0 42,386
Julie H. Edwards 1997 210,000 147,000 0 0 23,000 0 23,866 (4)
Senior Vice President-Finance 1996 195,000 0 0 0 94,000 0 20,635
& Chief Financial Officer 1995 195,000 0 0 0 62,500 0 24,150
Jon D. Galvin 1997 163,264 79,000 0 0 37,200 0 18,019 (5)
Vice President-Controller 1996 157,743 0 0 0 38,800 0 17,500
1995 156,894 0 0 0 16,800 0 17,545
Gerald B. Faudel 1997 100,000 40,000 0 0 7,000 0 8,212 (6)
Vice President-Safety & 1996 96,000 0 0 0 25,600 0 6,973
Environmental Affairs 1995 96,000 0 0 0 20,700 0 12,850
Robert D. Jones (9) 1997 84,667 0 0 0 0 0 810,259 (7)
Senior Vice President- 1996 183,900 0 0 0 99,000 0 17,278
Canadian Oil & Gas Ops. 1995 175,900 0 0 0 58,000 0 15,802
Joel M. Mann (9) 1997 63,339 0 0 0 6,800 0 586,952 (8)
Vice President-Controller 1996 131,900 0 0 0 60,300 0 10,617
1995 111,300 0 0 0 37,500 0 10,706
(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.
- 12 -
(2) Mr. Gibbs' Other Compensation includes $17,138 of Company contribution to
his retirement/savings plan account, $41,098 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$6,584 of life insurance premiums paid by the Company.
(3) Mr. Johnson's Other Compensation includes $17,138 of Company contribution to
his retirement/savings plan account, $20,097 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$3,306 of life insurance premiums paid by the Company.
(4) Ms. Edwards' Other Compensation includes $17,138 of Company contribution to
her retirement/savings plan account, $4,962 of Company contribution to her
retirement/savings plan account through a deferred compensation program and
$1,766 of life insurance premiums paid by the Company.
(5) Mr. Galvin's Other Compensation includes $16,638 of Company contribution to
his retirement/savings plan account and $1,381 of life insurance premiums
paid by the Company.
(6) Mr. Faudel's Other Compensation includes $7,038 of Company contribution to
his retirement/savings plan account and $1,174 of life insurance premiums
paid by the Company.
(7) Mr. Jones' Other Compensation includes $7,620 of Company contribution to his
retirement/savings plan account and $696 of life insurance premiums paid by
the Company. In connection with the termination of his employment in June
1997, Mr. Jones received a payment of $801,943.
(8) Mr. Mann's Other Compensation includes $5,701 of Company contribution to his
retirement/savings plan account and $275 of life insurance premiums paid by
the Company. In connection with the termination of his employment in June
1997, Mr. Mann received a payment of $580,976.
(9) Mr. Jones and Mr. Mann are Canadians who worked in the Company's Calgary
office. Due to sale of the Canadian subsidiary, Messrs. Jones and Mann's
positions were eliminated in June 1997. Their compensation amounts are
reported in U.S. currency, at the exchange rates in effect as of December 31
of each year reported.
- 13 -
Stock Options
The Company currently maintains three stock option plans in which employees
are eligible to participate, pursuant to which options to purchase shares of
Common Stock are outstanding or available for future grants. The purpose of the
stock option plans is to advance the best interest of the Company by providing
those persons who have substantial responsibility for the management and growth
of the Company with additional incentive by increasing their proprietary
interest in the success of the Company.
OPTION GRANTS IN 1997
Individual Grants
- --------------------------------------------------------------------
Percent of Potential Realizable
Total Value at Assumed
Number of Options Annual Rates of Stock
Options Granted to Exercise Price Appreciation for
Granted(1) Employees Price Expiration Option Term(2)
----------------------
Name (#) in 1997 ($/sh) Date 5% 10%
- ---- ---------- ---------- -------- ---------- --------- ---------
James R. Gibbs. . . . 182,800 24.6 3.375 2/25/02 170,452 376,654
60,000 8.1 7.8125 11/19/02 129,507 286,177
S. Clark Johnson. . . 28,000 3.8 7.8125 11/19/02 60,437 133,549
Julie H. Edwards. . . 23,000 3.1 7.8125 11/19/02 49,644 109,701
Jon D. Galvin . . . . 25,200 3.4 3.375 2/25/02 23,498 51,924
12,000 1.6 7.8125 11/19/02 25,901 57,235
Gerald B. Faudel . . 7,000 0.9 7.8125 11/19/02 15,109 33,387
Joel M. Mann . . . . 6,800 0.9 3.375 2/25/02 6,341 14,011
(1) 50,000 of Mr. Gibbs' options which expire on 2/25/02 were 100% exercisable
on their grant date (2/26/97). All 6,800 of Mr. Mann's options were 100%
exercisable on their grant date (2/26/97). All other options listed in the
above table are exercisable according to the following schedule: first year
- 20%, second year - 40%, third year- 70%, third anniversary and thereafter
until expiration - 100%.
(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.
- 14 -
AGGREGATE OPTION EXERCISES IN 1997
AND OPTION VALUES AT DECEMBER 31, 1997
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-the-Money Options at
Exercise Realized Options at Dec. 31, 1997 Dec. 31, 1997($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- ----------- -------- ------------------------- ----------------------------
James R. Gibbs . . . 75,000 210,750 443,100/208,900 1,765,661/722,489
S. Clark Johnson . . 25,000 62,500 119,350/74,150 454,626/229,066
Julie H. Edwards . . 0 0 141,350/67,150 574,683/218,253
Jon D. Galvin. . . . 0 0 22,960/53,040 97,985/205,215
Gerald B. Faudel . . 9,700 32,786 34,290/19,010 141,841/59,771
Robert D. Jones. . . 154,600 241,765 0/0 0/0
Joel M. Mann . . . . 106,580 248,811 0/0 0/0
(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, 1997 as $7.9375 based on the closing sale price on
December 31, 1997.
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
share (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, 1996 and again in 1997, each of
five non-employee directors received 500 shares of common stock. As of March 1,
1998, 52,500 shares of common stock remain in the Company's Treasury.
Employment Agreements
In April 1995, the Company entered into employment agreements with Mr. Gibbs,
Ms. Edwards and Mr. Johnson. Similar agreements were also made with Mr. Jones
and Mr. Mann, both of whom left the company when the sale of the Canadian
subsidiary was completed in June 1997. 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 (50% for Mr. Gibbs and 35% for Ms. Edwards and Mr. Johnson) in effect
during the three year term. In the event of 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.
- 15 -
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.
Akin, Gump, Strauss, Hauer & Feld, L.L.P., a law firm of which Mr. Bech was a
partner until October 1997, is retained by the Company as its counsel for
certain U.S. legal matters.
Comparison of 5 Year Cumulative Total Return of
the Company, Peer Group Indices and Broad Market Index
REFINING PEER PRIOR PEER
WAINOCO OIL CO. GROUP S & P 500 GROUP
--------------- -------------- ------------ ----------
1992 100 100 100 100
1993 106.90 113.11 107.06 119.15
1994 131.03 107.91 105.41 124.87
1995 89.66 112.89 141.36 137.33
1996 86.21 133.62 170.01 182.60
1997 218.97 182.73 222.72 185.09
Assumes $100 invested December 31, 1992 in the Company's Common Stock, a peer
group of independent refining companies (the "Refining Peer Group") which
includes Ashland Inc., Crown Central Petroleum, Giant Industries, Holly
Corporation, Sun Company and Tosco Corporation, and the S & P 500 Index. The
company's peer group has changed from prior years due to the sale in 1997 of its
Canadian oil and gas operations and focus solely on refining operations
thereafter. The "Prior Peer Group" was the Standard Industrial Classification
(SIC) code of Crude Petroleum and Natural Gas Companies (approximately 185
companies).
- 16 -
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 1997, 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 under item 404 of Regulation S-K.
During 1997 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, 1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were complied
with.
SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the next Annual Meeting of
Shareholders must be in writing and received at the Company's principal
executive offices by the Secretary no later than November 27, 1998 in order
to be included in the next year's proxy statement.
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,
JULIE H. EDWARDS
Senior Vice President-Finance &
Chief Financial Officer
Secretary
March 27, 1998
Houston, Texas
PROXY
WAINOCO 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 Wainoco Oil Corporation to be held
in the Churchill Room of the Omni Houston Hotel, Four Riverway, Houston, Texas,
on Monday, April 27, 1998 at 9:00 a.m., Houston 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 Date and Sign on Reverse Side.
WAINOCO OIL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
FOR ALL
1. WITH RESPECT TO THE ELECTION OF DIRECTORS-- FOR WITHHELD EXCEPT
Nominees: James R. Gibbs; Douglas Y. Bech; / / / / / /
Paul B. Loyd, Jr.; James S. Palmer;
Derek A. Price; and Carl W. Schafer.
2. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Arthur Andersen LLP as auditors for / / / / / /
the year ending December 31, 1998.
3. Proposal to approve and adopt an Amendment FOR AGAINST ABSTAIN
of the Company's Restated Articles of / / / / / /
Incorporation to change the name of the
Company to "Frontier Oil Corporation".
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
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 accordance with the instruc-
tions given hereof, but IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES OF THE BOARD OF DIRECTORS AND FOR THE PROPOSALS
SET FORTH IN (2) AND (3).
Dated: _________________________________________________________, 1998
Signature(s) ___________________________________________________________________
________________________________________________________________________________
(Please sign as your name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. If the appoin-
tor is a corporation, this instrument must be under the corporate seal or under
the hand of an officer or attorney so authorized.)
Shareholders are Urged to Complete, Sign and Return this Proxy Promptly.