SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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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 Sec. 240.14a-11(c) or Sec. 240.14a-12
UNIT CORPORATION
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] 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:
__________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
__________________________________________________________________________
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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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(4) Date Filed:
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Notes:
UNIT CORPORATION
______________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
______________________________
DATE: Wednesday, May 6, 1998
TIME: 11:00 a.m.
PLACE: Green Room, Ninth Floor
Bank of Oklahoma Tower
One Williams Center
Tulsa, Oklahoma 74172
TABLE OF CONTENTS
_________________
Page
----
Chairman's Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Notice of Annual Meeting of Stockholders . . . . . . . . . . . . . . . 2
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
. General Information. . . . . . . . . . . . . . . . . . . . . . 4
. Election of Directors - Item No. 1 . . . . . . . . . . . . . . 5
. Board Information. . . . . . . . . . . . . . . . . . . . . . . 8
. Executive Compensation . . . . . . . . . . . . . . . . . . . . 9
. Summary Compensation Table . . . . . . . . . . . . . . . 9
. Option/SAR Grants in 1997. . . . . . . . . . . . . . . .10
. Aggregate Option/SAR Exercises in
1997 and Option Values at
December 31, 1997. . . . . . . . . . . . . . . . . . .10
. Long Term Incentive Plan Awards. . . . . . . . . . . . .11
. Pension Plans. . . . . . . . . . . . . . . . . . . . . .11
. Change-In-Control Arrangements . . . . . . . . . . . . .11
. Report of Compensation Committee of
The Board of Directors on
Executive Compensation . . . . . . . . . . . . . . . .12
. Compensation Committee Interlocks
And Insider Participation . . . . . . . . . . . . . .14
. Voting Securities and Common Stock Ownership
of Directors and Management. . . . . . . . . . . . . . . . .14
. Stock Performance Graph. . . . . . . . . . . . . . . . . . . .15
. Ratification of Selection of Independent Accountants -
Item No. 2 . . . . . . . . . . . . . . . . . . . . . . . . .16
. Other Matters. . . . . . . . . . . . . . . . . . . . . . . . .17
. Certain Transactions Between the Company
and Its Officers, Directors, Nominees
for Directors and Their Associates . . . . . . . . . .17
. Voting Securities and Common Stock Ownership of
Certain Beneficial Owners. . . . . . . . . . . . . . .17
. Compliance with Section 16(a) of the
Exchange Act . . . . . . . . . . . . . . . . . . . . .18
. Matters Which May Come Before The Meeting. . . . . . . .18
. Submission of Stockholder Proposals. . . . . . . . . . .18
. Form 10-K Annual Report to the Securities and Exchange
Commission . . . . . . . . . . . . . . . . . . . . . .19
(i)
Dear Stockholder:
On behalf of the Board of Directors and management, I would like to invite
you to attend Unit Corporation's Annual Meeting of Stockholders to be held on
Wednesday, May 6, 1998 at 11:00 a.m., in the Green Room on the ninth floor of
the Bank of Oklahoma Tower, One Williams Center, Tulsa, Oklahoma.
By attending the meeting you will have an opportunity to hear a report on
the operations of the company and to meet our directors and officers.
Information about the meeting, including the various matters on which you,
as a stockholder, will act may be found in the attached Notice of Annual Meeting
of Stockholders and Proxy Statement.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. Please sign, date and return the
enclosed proxy in the envelope provided.
I look forward to your participation and thank you for your continued
support.
Sincerely,
/s/ King P. Kirchner
King P. Kirchner
1
UNIT CORPORATION
1000 Kensington Tower I
7130 South Lewis
Tulsa, Oklahoma 74136
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 6, 1998
TO THE STOCKHOLDERS OF UNIT CORPORATION:
The Annual Meeting of Stockholders of Unit Corporation, a Delaware
corporation (the "Company"), will be held in the Green Room on the ninth floor
of the Bank of Oklahoma Tower, One Williams Center, Tulsa, Oklahoma, on
Wednesday, May 6, 1998 at 11:00 a.m., local time. At the meeting you will be
asked to:
Item No. 1 Elect three Class II Directors, comprising the members of
the class of directors whose terms expire at this meeting, for a three-year
term expiring in 2001;
Item No. 2 Ratify the selection of Coopers & Lybrand L.L.P., Tulsa,
Oklahoma, as independent certified public accountants for the Company for
its fiscal year 1998;
and to transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
Only stockholders of record at the close of business on March 18, 1998, the
record date, are entitled to notice of and to vote at the meeting or any
adjournment(s) of the meeting. A complete list of such stockholders will be
open for examination by any stockholder for any purpose germane to the meeting
at the Company's office at 1000 Kensington Tower I, 7130 South Lewis, Tulsa,
Oklahoma 74136, for a period of ten days prior to the meeting.
2
The Company's Proxy Statement and Annual Report are submitted herewith.
By Order of the Board of Directors,
/s/ Mark E. Schell
Mark E. Schell
Secretary and
General Counsel
Tulsa, Oklahoma
March 25, 1998
PLEASE VOTE - YOUR VOTE IS IMPORTANT
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO DATE,
SIGN AND PROMPTLY RETURN YOUR ENCLOSED PROXY SO THAT YOUR SHARES MAY
BE VOTED IN ACCORDANCE WITH YOUR WISH AND IN ORDER THAT THE PRESENCE OF
A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR
RIGHT TO TIMELY REVOKE IT LATER OR VOTE YOUR SHARES IN PERSON IN THE
EVENT YOU SHOULD ATTEND THE MEETING.
3
UNIT CORPORATION
1000 Kensington Tower I
7130 South Lewis
Tulsa, Oklahoma 74136
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1998
GENERAL INFORMATION
Annual Meeting: May 6, 1998 Green Room, Ninth Floor
11:00 a.m. Bank of Oklahoma Tower
One Williams Center
Tulsa, Oklahoma
Record Date: Close of business on March 18, 1998. On the record date we
had 25,546,665 shares outstanding. If you were a
stockholder at that time, you may vote at the meeting.
Agenda: . Elect 3 directors (Item No. 1 on the Proxy card).
. Ratify the selection of Coopers & Lybrand L.L.P. as our
independent certified public accountant for 1998 (Item
No. 2 on the Proxy card).
. Any other business which may properly come before the
meeting.
Proxy Solicitation: The expense of this proxy solicitation, including the costs
of preparing and mailing this statement and proxy card,
will be paid by the Company. Proxies are being solicited
by the directors, officers and other employees of the
Company at no additional compensation. In addition, we
have retained Regan & Associates, New York, New York, to
assist us at a cost of $3,500 plus their expenses. We will
reimburse banks, brokerage houses and other custodians,
nominees and fiduciaries for reasonable expenses they incur
in sending these proxy materials to you.
First Mailing Date: This proxy statement is being mailed to you and the other
stockholders on or about March 25, 1998.
Votes Per Share: Each share is entitled to one vote. You may not cumulate
votes.
4
Voting Proxies: Unless you tell us on the proxy card to vote differently,
we will vote signed returned proxies FOR the board's
nominees (Item No. 1) and FOR the ratification of the
selection of independent public accountants (Item No. 2).
The board or proxy holders will use their discretion on
other matters. If a nominee cannot or will not serve as a
director, the board or proxy holders will vote for a person
whom they believe is qualified to be elected.
Votes Required: Under the provisions of the Delaware General Corporation
law and the Company's By-laws, a majority of the
outstanding shares, present in person or represented by
proxy, shall constitute a quorum for purposes of the
meeting. Abstentions and broker non-votes will be counted
for purposes of determining a quorum. In all matters other
than the election of directors, the affirmative vote of the
majority of shares present in person or represented by
proxy at the meeting and entitled to vote on the subject
matter shall be the act of the stockholders. Abstentions
are treated as votes against a proposal and broker non-
votes have no effect on the vote. Directors shall be
elected by a plurality of the votes present in person or
represented by proxy at the meeting and entitled to vote on
the election of directors.
Revoking
Your Proxy: You may revoke your proxy at any time before it is voted at
the meeting by:
. Delivering a signed, written revocation letter, dated
after the proxy, to Mark E. Schell, Secretary, at our
Tulsa address noted above; or
. Delivering a signed proxy, dated later than the prior
one, to ChaseMellon Shareholder Services, L.L.C.,
Overpeck Centre, 85 Challenger Road, Ridgefield Park,
NJ 07660; or
. Attend the annual meeting and vote in person or by
proxy. Attendance alone will not revoke your proxy.
ELECTION OF DIRECTORS
ITEM NO. 1 ON THE PROXY CARD
The board is composed of eight members and is divided into three classes
with each director serving for a three-year term. At each annual meeting, the
term of one class expires. The term of service for those directors serving in
Class II expire at this meeting.
5
BOARD NOMINEES:
- ---------------
Terms expiring . Earle Lamborn Mr. Lamborn has been actively involved
at this annual Age 63 in the oil field for over 45 years,
meeting Director since 1979 joining the Company's predecessor in
(Class II) 1952 prior to its becoming a publicly-
held corporation. He was elected Vice
President, Drilling in 1973 and to his
current position as Senior Vice
President, Drilling and director in
1979.
. William B. Morgan Mr. Morgan was elected a director of
Age 54 the Company in February 1988. Mr.
Director since 1988 Morgan has been Executive Vice President
and General Counsel of St. John Health
System, Inc., Tulsa, Oklahoma, since
March 1, 1995 and, since October 1,
1996, the President of its principal for
profit subsidiary Utica Services, Inc.
Before that, he was a Partner in the law
firm of Doerner, Saunders, Daniel &
Anderson, Tulsa, Oklahoma for over 20
years.
. John H. Williams Mr. Williams was elected a director
Age 79 of the Company in December 1988. Prior
Director since 1988 to retiring on December 31, 1978, he was
Chairman of the Board and Chief
Executive Officer of The Williams
Companies, Inc. Mr. Williams also serves
as a Director of Apco Argentina, Inc.,
Westwood Corporation, and Willbros
Group, Inc.
The Board of Directors urges you to vote for these nominees.
CONTINUING DIRECTORS:
- ---------------------
Terms expiring . King P. Kirchner Mr. Kirchner, a co-founder of the
at 1999 annual Age 70 Company, has been the Chairman of the
meeting Director since 1963 Board and a director since 1963
(Class III) and was President until November 1983.
Mr. Kirchner is a Registered
Professional Engineer within the State
of Oklahoma, having received degrees in
Mechanical Engineering from Oklahoma
State University and in Petroleum
Engineering from the University of
Oklahoma.
. Don Cook Mr. Cook has served as a director of
Age 73 the Company since the Company's
Director since 1963 inception. He is a Certified Public
Accountant and was a partner in the
accounting firm of Finley & Cook,
Shawnee, Oklahoma from 1950 until 1987,
when he retired.
6
. J. Michael Adcock Mr. Adcock was elected a director of the
Age 49 Company in December 1997. He is
Director since 1997 currently the Chairman of the Board of
Ameribank and President and Chief
Executive Officer of American National
Bank and Trust Company of Shawnee,
Oklahoma, and Chairman of AmeriTrust
Corporation, Tulsa, Oklahoma. Prior to
holding these positions, he was engaged
in the private practice of law from
January 1, 1994 through March 1, 1996
and from March 1, 1996 until November 1,
1997 he served as General Counsel for
Ameribank Corporation. Mr. Adcock was
also a director of Grant Geophysical,
Inc., from June 1994 until September
1997 when he resigned. Grant
Geophysical, Inc., filed a petition
under Chapter 11 of the Federal
Bankruptcy Code in October, 1996.
Terms expiring . John G. Nikkel Mr. Nikkel joined the Company in 1983 as
at 2000 annual Age 63 its President and a director. From 1976
meeting Director since 1983 until January 1982 when he co-founded
(Class I) Nike Exploration Company, Mr. Nikkel was
an officer and director of Cotton
Petroleum Corporation, serving as the
President of the Company from 1979 until
his departure. Prior to joining Cotton,
Mr. Nikkel was employed by Amoco
Production Company for 18 years, last
serving as Division Geologist for
Amoco's Denver Division. Mr. Nikkel
presently serves as President and a
Director of Nike Exploration Company.
Mr. Nikkel received a Bachelor of
Science degree in Geology and
Mathematics from Texas Christian
University.
. John S. Zink Mr. Zink was elected a director of the
Age 69 Company in May 1982. For over 5 years,
Director since 1982 he has been a principle in several
privately held companies engaged in the
businesses of designing and
manufacturing equipment used in the
petroleum industry, construction and
heating and air conditioning services
and installation. He holds a Bachelor
of Science degree in Mechanical
Engineering from Oklahoma State
University. He is also a director of
Matrix Service Company, Tulsa, Oklahoma.
7
BOARD INFORMATION
Board Meetings: The board held 7 meetings during 1997. No director attended
fewer than 75% of the board meetings and the meetings of
committees on which he served during the year.
Committees of The Board of Directors has standing Audit and Compensation
the Board: committees. The membership of each of these committees is
determined from time to time by the board. Only directors who
are not officers of the Company serve on the
committees.
. The Audit Committee. This committee met 3 times during
1997. Members: John S. Zink, William B. Morgan and Don
Cook. This committee appoints the independent auditors
subject to ratification by the board, meets with the
independent auditors to review the scope and results
of the audit of the Company's financial statements and
consults with the Company's personnel to determine the
adequacy of internal accounting controls.
. The Compensation Committee. This committee met 2 times
during 1997. Members: John S. Zink, John H. Williams
and Don Cook. This committee determines the salaries
payable to the Company's officers and authorizes grants
of stock options.
Director Annual Fee. We pay non-employee directors fees of $15,000
Compensation: each per year payable in four installments. Committee members
are paid fees of $2,000 for each committee they serve on.
Meeting Fees. We pay non-employee directors a fee of:
. $750 for each board meeting attended;
. $500 for each committee meeting attended.
Director Each non-employee director automatically receives an option to
Stock Options: purchase 2,500 shares of the Company's common stock on the
first business day following each annual meeting of
stockholders. The option price is the fair market value of
the Company's common stock on such date. Payment may be made
in cash or in shares of Company common stock that have been
held by the director for at least one year. No stock option
may be exercised during the first six months of its term
except in the case of death. Each option extends for 10 years
from the date of grant.
8
In 1997 stock options were granted for an aggregate of 12,500
shares at $8.9375 per share. During 1997 options covering
7,500 shares were exercised leaving an aggregate of 60,000
shares subject to currently outstanding options.
EXECUTIVE COMPENSATION
Summary The following table provides information about the
Compensation Table: compensation of the Chief Executive Officer and each of the
other four most highly compensated executive officers of
the Company for services in all capacities to the Company
and its subsidiaries in 1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation<F1> Awards Payouts
----------------------------- ---------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted Securities
and Compen- Stock Underlying LTIP All Other
Principal Salary Bonus sation Award(s) options/ Payout Compensation
Position(s) Year ($) ($) ($)<F2> ($) SARs (#) ($) ($)<F3>
- --------------- ---- ------- -------- ------- ----------- ----------- -------- ------------
King P. Kirchner 1997 220,000 0 0 0 0 0 9,286
Chairman and CEO 1996 200,000 0 0 0 0 0 7,500
1995 200,000 0 0 0 0 0 4,485
John G. Nikkel 1997 230,000 35,000 7,210 0 0 0 9,456
President and COO 1996 210,000 168,333<F4> 7,669 0 30,000 0 7,500
1995 210,000 61,666 6,391 0 0 0 4,485
Earle Lamborn 1997 130,000 43,333 3,767 0 0 0 8,602
Sr. Vice President - 1996 115,000 33,333 1,440 0 10,000 0 7,359
Drilling 1995 115,000 25,000 2,718 0 0 0 4,186
Philip M. Keeley 1997 165,000 25,000 7,434 0 0 0 6,200
Sr. Vice President - 1996 155,000 110,000<F4> 1,440 0 10,000 0 5,812
Exploration & 1995 155,000 28,800 8,056 0 0 0 4,485
Produciton
Larry D. Pinkston 1997 117,500 27,000 0 0 0 0 6,859
V. P., CFO 1996 110,000 19,667 0 0 7,500 0 5,323
and Treasurer 1995 105,000 17,000 0 0 0 0 3,033
<FN>
<F1> Compensation deferred at the election of an executive is included in the
year earned.
<F2> The amount listed under the Other Annual Compensation column represents
the dollar value associated with the use of a Company vehicle by the
named executive officer.
9
<F3> "All Other Compensation" represents the Company's matching contributions
to the Company 401(k) thrift plan for the named executive officer.
<F4> The amounts indicated reflect the acceleration of the payment of bonuses
awarded to Mr. Nikkel and Mr. Keeley in 1995 and 1996. These awards are
generally paid out in three annual installments. The amounts shown
reflect the payment of the third installment of the 1995 bonus,
otherwise due January 1997, and the second and third installments of the
1996 bonus awards, otherwise due January 1997 and January 1988,
respectively. These bonus awards were accelerated at the discretion of
the Compensation Committee and used by the named executive officer to
pay the exercise price of certain stock options exercised in fiscal
1996.
</FN>
Option/SAR None of the named executive officers of the Company
Grants in 1997: received stock options or stock appreciation rights during
1997.
Aggregate Option/SAR The following table provides information regarding the
Exercises in 1997 stock options exercised by the named executive officers in
and Option Values 1997 as well as the value of the stock options held by
at December 31, 1997: such executives at year end measured in terms of the fair
market value of the Company's common stock on December 31,
1997. The Company has never granted any stock
appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
(a) (b) (c) (d) (e)
Number of
Securities Value of
Shares Underlying Unexercised
Acquired Value Unexercised In-the-Money
on Exercise Realized Options/SARs at Options/SARs at
Name (#) ($)<F1> FY-End (#) FY-End ($)<F2>
- ---------------- ----------- -------- -------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
King P. Kirchner N/A N/A N/A N/A N/A N/A
John G. Nikkel 10,040 74,615 117,460 37,500 779,821 109,219
Earle Lamborn N/A N/A 59,000 13,500 396,038 42,969
Philip M. Keeley 8,000 50,790 51,000 13,500 338,498 42,969
Larry D. Pinkston N/A N/A 32,000 10,500 211,675 34,781
<FN>
<F1> Value realized equals fair market value of the stock on date of
exercise, less the exercise price, times the number of shares
acquired.
10
<F2> The value of unexercised in-the-money options at year end assumes a fair
market value for the Company's Common Stock of $9.5625, the average of
the high and low prices of the Company's Common Stock on the New York
Stock Exchange on December 31, 1997. Value is calculated on the basis
of the difference between the option exercise price and $9.5625
multiplied by the number of shares of Common Stock underlying the
options.
</FN>
Long Term Incentive
Plan Awards: The Company does not currently have any Long Term Incentive
Plans.
Pension Plans: The Company does not currently have any Pension Plans.
Change-In-Control Stock Option Plan. The Company's stock option plan
Arrangements: contains a provision vesting all stock options in the event
of a "change of control" of the Company. A "change-in-
control" is deemed to have occurred at such time as any
person (as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934, as amended), other
than the Company or an Exempt Person, is or becomes the
beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company's then
outstanding securities. An Exempt Person is generally
defined to be any person (or estate or trust of such
person) who, on the date of the plan, owned securities of
the Company representing more than 20% of the combined
voting power of the Company's then outstanding securities,
and any spouse, parent or issue of such person.
Separation Benefit Plan. On December 20, 1996, effective
as of January 1, 1997, the board adopted the Separation
Benefit Plan of Unit Corporation and Participating
Subsidiaries (the "Plan"). The Plan is generally
applicable to all full time salaried employees of the
Company and its two principal subsidiaries, excluding any
employees who are also directors of the Company, who
have been with their employer for at least one year.
Subject to all of the terms of the Plan, any eligible
employee whose employment is terminated by his or her
employer is entitled to receive a separation benefit in an
amount calculated by dividing such eligible employee's
annual base salary in effect immediately prior to such
employee's separation by 52 to determine a weekly
separation benefit amount. The number of weekly separation
benefit payments then payable to such employee is
calculated based on the employee's years of service in
accordance with a schedule set forth in the Plan.
Employees who voluntarily leave their employment are not
entitled to receive a separation benefit unless they have
completed at least 20 years of service. Any eligible
employee who has completed 20 years of service or more
is vested in his or her separation benefit, subject to
fulfilling the other requirements of the Plan. Separation
benefit payments are limited to a maximum of 104 weekly
11
payments. The Plan also provides that, unless otherwise
provided by the Company's Board of Directors prior to a
"change-in-control" of the Company, as defined in the Plan,
all eligible employees shall be vested in their separation
benefit as of the date of such "change-in-control" based on
their years of service. As a precondition to receiving the
separation benefits, employees must sign a separation
agreement waiving any claims the employee may have against
the Company or its subsidiaries.
Senior Management Separation Benefit Plan. On October 28,
1997, the board adopted the Separation Benefit Plan for
Senior Management. This plan is similar in terms of the
benefits and requirements described above for the
Separation Benefit Plan, with the exception that the
Compensation Committee determines who will participate in
this plan. In addition, the committee is given the
authority to increase (up to a maximum of 104) the number
of weekly separation benefit payments a participant would
otherwise be entitled to receive under the plan if the
participant is involuntarily terminated. Currently only
Messrs. Kirchner, Lamborn and Nikkel are participants in
this plan.
Report of the Compensation Committee of the
Board of Directors on Executive Compensation
- --------------------------------------------
The disclosure contained in this section of the Proxy Statement should not
be incorporated by reference into any prior filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934 that incorporated
future filings or portions thereof (including this proxy statement or the
"Executive Compensation" section of this proxy statement), except to the extent
that the Company specifically incorporates this information by reference.
The Compensation Committee is responsible for setting and overseeing the
compensation of the Company's executive officers. The committee is composed
entirely of independent outside directors. There are no interlocking
relationships between any executive officers of the Company and any entity whose
directors or executive officers serve on the committee. The members of the
committee are John S. Zink, Don Cook and John H. Williams.
Objectives and Considerations - The objectives of the committee in
determining executive compensation are to retain and reward qualified
individuals serving as executive officers of the Company. To achieve these
objectives, the committee relies primarily on salary, annual bonuses (awardable
either in stock or cash) and awards under the Company's stock option plan. In
making its decisions, the committee takes into account the conditions within the
Company's industry, the Company's income and cash flow and the attainment of any
designated business objectives. Individual performances are also reviewed,
taking into account the individual's responsibilities, experience and potential,
his or her period of service and current salary and the individual's
compensation level as compared to similar positions at other companies. The
committee's evaluation of these considerations is, for the most part, subjective
and, to date, it has not established any specific written compensation plans or
formulas pursuant to which the executive officers' annual compensation is
determined.
12
Base Salary - The Company does not currently have an employment agreement
with any of its executive officers. In determining the base salaries for the
executive officers for 1997 the committee relied primarily on its evaluation of
the compensation being paid to individuals holding comparable positions in the
industry. In doing so, the committee relied, to a large extent, on the results
of the Peat Marwick Oil and Gas Corporation Survey 1996 Report which surveyed
the compensation and benefit programs of ninety-three oil and gas related
companies, one of which was the Company. It was the committee's objective to
set the executives' base salary at approximately the competitive mid-range
reflected in the survey. Within this range, the Committee then made any
adjustments based on individual performance evaluations. Taking these factors
into consideration, the committee, with the exception of Mr. Kirchner's salary
which is discussed below, decided to increase the 1997 salaries of each of the
named executive officers by the following percentage: John G. Nikkel 9.5%; Earle
Lamborn 13%; Philip M. Keeley 6.5% and Larry Pinkston 6.8%.
Bonuses - Executive officers are eligible to earn annual bonuses either in
cash or in stock. Stock bonuses are awarded pursuant to the Company's bonus
plan approved by the Company's stockholders on May 1, 1985 and amended on May 3,
1995. The amount and type of any bonuses awarded to executive officers is
determined solely at the subjective discretion of the committee. The committee
does not base its decisions on predetermined formulas, choosing instead to rely
on its evaluation of the various considerations set forth above. In addition,
when appropriate, bonuses are awarded to recognize short-term individual
performance.
Stock Options - The stock options granted under the Company's stock option
plan, approved by the Company's stockholders on May 2, 1984 and amended on May
3, 1989 and May 3, 1995, provide an incentive for executive officers to maximize
long-term stockholder value. Historically, although not required, stock option
grants are made at 100% of the market price on the date of grant and are
exercisable in annual 20% increments after one year and have a ten year life.
The number of options that are granted to an executive officer are based on the
individual's performance and level of responsibility. Option awards will vary
in size based on position level (more senior managers receive a higher
multiple). Stock options are granted to the executive officers at the discretion
of the committee. The committee's decisions with respect to awarding stock
options are generally made late each year thus allowing the committee to
evaluate the Company's annual results as part of its decision making process.
As noted earlier, no stock options were granted to the Company's executive
officers during 1997.
Chief Executive Officer - Mr. Kirchner's salary and bonus are determined by
the committee substantially in accordance with the policies described above
relating to all executive officers of the Company. Based on its review, the
committee determined to raise Mr. Kirchner's salary for 1997 by 10%.
1993 OBRA - Executive Compensation Tax Deductibility - Beginning in 1995,
the Internal Revenue Code, Section 162(m), limits the Company's ability to
deduct, for federal income tax purposes, certain compensation in excess of $1
million per year paid to individual officers named in the Summary Compensation
Table. Based on the amount of compensation paid to each of the named officers
in fiscal 1997, it does not appear that Section 162(m) will have a significant
impact on the Company in the near term. However, the committee will continue to
monitor whether its executive compensation plans should be amended to meet the
deductibility requirements of the tax law.
13
Members of the Compensation Committee:
John S. Zink
Don Cook
John H. Williams
Compensation During 1997, the Compensation Committee members were
Committee responsible for determining executive compensation,
Interlocks and Insider including decisions relating to stock option grants to
Participation: executive officers. None of the executive officers of
the Company is a member of that committee.
VOTING SECURITIES AND COMMON STOCK OWNERSHIP
OF DIRECTORS AND MANAGEMENT
The following shows, as of March 18, 1998, the shares of the Company's
common stock owned by each nominee for election as a director, each continuing
director, the Company's Chief Executive Officer, each of the Company's four
other most highly compensated executive officers for 1997 and the directors and
executive officers of the Company as a group.
Name of Beneficial Owner Aggregate Number of Percent of Outstanding
Beneficially Common Stock(1)
Owned Shares
- -------------------------- ----------------------- ----------------------
King P. Kirchner 1,225,300 (2)(3) 4.78
Don Cook 20,638 (4) *
Earle Lamborn 306,497 (2)(3)(6) 1.19
William B. Morgan 17,500 (4) *
John G. Nikkel 374,492 (2)(3)(6)(7) 1.45
John H. Williams 16,000 (4) *
John S. Zink 56,000 (4) *
J. Michael Adcock 1,193,873 (5) 4.67
Philip M. Keeley 213,341 (2)(6)(7) *
Larry D. Pinkston 131,836 (2)(3)(6) *
All Directors and Officers
as a Group (11 individuals) 3,616,965 (2)-(7) 13.97
* Less than 1%
(1) The number of shares includes the shares presently issued and outstanding
plus the number of shares which any owner has the right to acquire within
60 days after March 18, 1998. For purposes of calculating the percent of
the common stock outstanding held by each owner, the total number of shares
excludes the shares which all other persons have the right to acquire
within 60 days after March 18, 1998, pursuant to the exercise of
outstanding stock options.
14
(2) Includes shares of Common Stock held under the Company's 401(k) thrift plan
as of December 31, 1997, the latest valuation available at the time this
proxy statement was prepared, for the account of: King P. Kirchner, 8,552;
Earle Lamborn, 10,282; John G. Nikkel, 28,896; Philip M. Keeley, 29,565;
Larry D. Pinkston, 14,095; and directors and officers as a group, 101,076.
(3) Of the shares listed as being beneficially owned, the following individuals
disclaim any beneficial interest in shares held by spouses or for the
benefit of family members: King P. Kirchner, 28,828; John G. Nikkel
76,000; Earle Lamborn, 199,460; and Larry D. Pinkston, 2,000.
(4) Includes unexercised stock options under the Company's Non-Employee
Directors' Stock Option Plan to each of the following which may be
exercised at the discretion of the holder: Don Cook, 15,000; William B.
Morgan, 7,500; John H. Williams, 15,000; John S. Zink, 15,000; all non-
Employee Directors, including the estate of Mr. Don Bodard a former
director, as a group, 60,000.
(5) Of the shares listed as being beneficially owned, 1,178,148 shares are
owned by a trust of which Mr. Adcock is one of three trustees.
(6) Includes unexercised stock options under the Company's stock option plan to
each of the following which may be exercised within 60 days at the
discretion of the holder: Earle Lamborn, 59,000; John G. Nikkel 117,460;
Philip M. Keeley, 51,000; Larry D. Pinkston, 32,000; and directors and
officers as a group, 291,460.
(7) Includes 7,149 shares and 2,862 shares beneficially owned by Mr. Nikkel and
Mr. Keeley, respectively, held by a private company over which Mr. Nikkel
and Mr. Keeley share voting and investment power.
STOCK PERFORMANCE GRAPH
The graph and the related disclosure contained in this section of the Proxy
Statement should not be incorporated by reference into any prior filings by the
Company under the Securities Act of 1933 or the Securities Exchange Act of 1934
that incorporated future filings or portions thereof (including this proxy
statement or the "Executive Compensation" section of this proxy statement),
except to the extent that the Company specifically incorporates this information
by reference.
The following graph reflects a comparison of the cumulative total return
(change in stock price plus reinvested dividends, assuming $100 invested on
December 31, 1992) of the Company's common stock from December 31, 1992 through
December 31,1997 with the Standard & Poor's 500 Composite Index and the S&P
Oil - Integrated Domestic Index. The comparisons in this table are required by
the Securities and Exchange Commission and, therefore, are not intended to
forecast or be indicative of possible future performance of the Company's stock.
15
(GRAPH)
Dollar Value of $100 Investment at December 31,
----------------------------------------------------------
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
The Company $ 100.00 $ 157.14 $ 171.43 $ 271.43 $ 564.29 $ 550.00
S&P 500 $ 100.00 $ 110.08 $ 111.53 $ 153.45 $ 188.68 $ 251.63
S&P Oil-Integ. $ 100.00 $ 105.36 $ 110.55 $ 125.86 $ 159.17 $ 189.38
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
ITEM NO. 2 ON THE PROXY CARD
The board has unanimously selected Coopers & Lybrand L.L.P. as the
independent certified public accountants for the Company for its 1998 fiscal
year. The board is asking the stockholders to ratify and approve this action.
A representative of Coopers & Lybrand L.L.P., who will attend the annual
meeting, will have the opportunity to make a statement if he or she desires to
do so and will be available to answer appropriate questions.
16
Although such ratification is not required by law, the board believes that
stockholders should be given the opportunity to express their views on this
matter. Failure to ratify such selection is not binding on the board of
directors.
The Board of Directors deems Item No. 2 to be in the best interest of the
Company and its stockholders and recommends a vote "For" approval, which vote
shall also act to ratify the selection of Coopers & Lybrand, L.L.P.
OTHER MATTERS
Certain Transactions Between the Company and its
Officers, Directors, Nominees for Directors and Their Associates
- ----------------------------------------------------------------
Since 1984 one of the subsidiaries of the Company, or its predecessor, has
formed employee limited partnerships for investment by certain of the employees
and directors of the Company and its subsidiaries. The limited partnerships
participate with Unit Petroleum Company, a subsidiary of the Company, in its
exploration and production operations. Since January 1, 1997, Mr. John G.
Nikkel, a director and the President of the Company, invested $80,000 in the
Unit 1997 Employee Oil and Gas Limited Partnership and $72,000 in the Unit 1998
Employee Oil and Gas Limited Partnership. In addition, Nike Exploration
Company, which is owned 71.4% by Mr. Nikkel, invested $80,000 in the 1997
program and $100,000 in the 1998 program.
J. Michael Adcock, a director of the Company, is the Chairman of the Board
of Directors of Ameribank, the parent company of American National Bank and
Trust Company of Shawnee, in Shawnee, Oklahoma ("American National"). American
National is a participating bank in the Company's bank credit agreements.
American National's participation is governed by the terms and conditions of an
intercreditor agreement executed by and between all of the participating banks.
With respect to their review and approval of any material transactions
between the Company and any related party, including, if applicable, those
discussed above, the board considers the terms which are or would be available
to the Company in similar transactions with non-affiliated parties dealing at
arm's-length.
Voting Securities and Common Stock
Ownership of Certain Beneficial Owners
- --------------------------------------
The following table shows, as of December 31, 1997, the only person we know
to be the beneficial owner of more than 5% of our common stock. This
information is based on a Schedule 13G, dated February 12, 1998, filed by this
person with the Securities and Exchange Commission ("SEC"). If you wish, you
may obtain a copy of this report from the SEC.
17
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Class
- ----------------------- ----------------------- ----------
Neuberger&Berman, LLC 1,306,800 5.12%
605 Third Avenue
New York, NY 10158-3698
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers and persons who own more than 10% of a
registered class of the Company's equity securities to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange. Such persons are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1997, or written representations from certain reporting
persons, the Company believes that it has complied with all filing requirements
applicable to its directors, officers and persons who own more than 10% of a
registered class of the Company's equity securities were complied with, with the
exception that a Form 3 was inadvertently filed one day late on behalf of Mr.
Michael J. Adcock.
Matters Which May Come Before the Meeting
- -----------------------------------------
The Board of Directors does not intend to bring any other matters before
the meeting, nor does the Company know of any matters which other persons intend
to bring before the meeting. However, should other matters not mentioned in
this proxy statement properly come before the meeting, the persons named in the
accompanying proxy card will vote thereon in accordance with their best
judgment.
Submission of Stockholder Proposals
- -----------------------------------
Under the rules of the Securities and Exchange Commission now in effect, in
order to be considered for inclusion in the Company's proxy statement relating
to the 1999 Annual Meeting of Stockholders, a stockholder proposal must be
received by the Company at its principal offices, 1000 Kensington Tower I,
7130 South Lewis, Tulsa, Oklahoma 74136, addressed to the Secretary of the
Company, on or before November 25, 1998.
18
Form 10-K Annual Report to the
Securities and Exchange Commission
- ----------------------------------
COPIES OF THE ANNUAL REPORT (FORM 10-K) OF THE COMPANY FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MAY
BE OBTAINED WITHOUT CHARGE BY WRITING TO: MARK E. SCHELL, SECRETARY, UNIT
CORPORATION, P. O. BOX 702500, TULSA, OKLAHOMA 74170.
PLEASE SIGN, DATE AND RETURN YOUR PROXY TO ASSURE THAT ALL OF YOUR
SHARES WILL BE VOTED.
19
UNIT CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1998
THIS PROXY IS SOLICITED ON BEHALF OF UNIT CORPORATION'S BOARD OF DIRECTORS
P The undersigned hereby appoints King P. Kirchner and Mark E. Schell, and
each of them, proxies for the undersigned, with full power of
R substitution, to vote all shares of Unit Corporation Common Stock which
the undersigned may be entitled to vote at the Annual Meeting of
O Stockholders of Unit Corporation, Tulsa, Oklahoma, on Wednesday, May 6,
1998 at 11:00 A.M., or at any adjournment thereof, upon the matters set
X forth on the reverse side and described in the accompanying Proxy
Statement and upon such other business as may properly come before the
Y meeting or any adjournment thereof.
Please mark this proxy as indicated on the reverse side to vote on
any item. If you wish to vote in accordance with the Board of Directors'
recommendation, please sign the reverse side; no boxes need to be
checked.
________________________________________________________________________________
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued, and to be marked, dated & signed on reverse side)
Please mark
your votes ( )
this way
The Board of Directors recommends a vote FOR Items 1 and 2.
WITHHELD
FOR FOR ALL FOR AGAINST ABSTAIN
Item 1 -ELECTION OF ( ) ( ) Item 2 - APPROVAL OF ( ) ( ) ( )
DIRECTORS AUDITORS
Nominees:
Earle Lamborn
William B. Morgan
John H. Williams
WITHHELD FOR: (Write that nominee's name
in the space provided below).
________________________________________
PLEASE MARK THIS BOX IF YOU
PLAN TO ATTEND THE MEETING ( )
COMMENTS/ADDRESS CHANGE
Please mark this box if you have
written comments/address change
on the reverse side. ( )
Receipt is hereby acknowledged of the
Unit Corporation Notice of Meeting and
Proxy Statement.
Signature(s)_______________________________ Date: ____________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.