SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Section 240.14a-11(c) or Section 240.14a-12
The Beard Company
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NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD
JUNE 7, 2001
AND PROXY STATEMENT
THE BEARD COMPANY
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
April 27, 2001
Dear Stockholders:
We invite you to attend the annual meeting of stockholders of The Beard
Company (the "Company") which will be held in Oklahoma City on Thursday, June 7,
2001. The matters to be considered at the meeting are described in the formal
notice and proxy statement on the following pages.
After completing the business of the meeting, including the election of two
directors and an amendment to The Beard Company Deferred Stock Compensation
Plan, we will discuss fiscal year 2000 activities and the current outlook for
the Company. There will be a period for questions and for discussion with your
directors and officers.
If you plan to be present, please notify the Secretary of the Company so
that the necessary arrangements can be made for your attendance. Regardless of
whether you plan to personally attend, it is important that your shares be
represented at this meeting. Please date, sign and return your proxy card in the
enclosed envelope at your earliest convenience.
W. M. BEARD HERB MEE, JR.
Chairman President
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, June 7, 2001
TO THE STOCKHOLDERS OF THE BEARD COMPANY:
You are hereby notified that the Annual Meeting of Stockholders of The
Beard Company (the "Company") will be held on June 7, 2001 at 10:00 a.m. in the
Executive Boardroom of the Holiday Inn Express & Suites, located at 2811 N. W.
Expressway, Oklahoma City, Oklahoma 73112, for the purpose of considering and
voting upon the following matters:
(1) The election of two (2) directors of the Company for three (3) year terms.
(2) Amendment to The Beard Company Deferred Stock Compensation Plan.
(3) The approval of the appointment of Cole & Reed, P.C. as independent
auditors of the Company for fiscal year 2001.
(4) Such other business as may properly come before the meeting or any
adjournment thereof.
The transfer books will not be closed, but only stockholders of record at
the close of business on April 13, 2001 will be entitled to notice of and to
vote at the meeting. A complete list of the stockholders entitled to vote at the
meeting shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for ten days prior to
the meeting, at the offices of the Company, Enterprise Plaza, Suite 320, 5600
North May Avenue, Oklahoma City, Oklahoma.
You are cordially invited to attend the meeting. Even if you plan to
attend, you are requested to date, sign and return the enclosed proxy at your
earliest convenience in the enclosed envelope. You may revoke your proxy at any
time prior to exercise.
By Order of the Board of Directors
REBECCA G. WITCHER
Rebecca G. Witcher
Secretary
Oklahoma City, Oklahoma
Dated April 27, 2001
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of The Beard Company
("Beard" or the "Company") in connection with the solicitation of proxies to be
used in voting at the Annual Meeting of Stockholders to be held June 7, 2001. It
is first being mailed to stockholders on or about April 27, 2001. THE ENCLOSED
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
A person giving the enclosed proxy has the power to revoke it by giving
notice to the Secretary in person, or by written notification actually received
by the Secretary, or by subsequently granting a later dated proxy relating to
the same shares, at any time prior to its being exercised.
The Company will bear the cost of soliciting proxies, including the charges
and expenses of brokerage firms and others for forwarding solicitation material
to beneficial owners of stock. It is possible that further solicitation of
proxies will be made by telephone or oral communication with some stockholders
of the Company following the original solicitation. All such further
solicitations will be made by regular employees of the Company who will not be
additionally compensated therefor, and the cost will be borne by the Company.
THE COMPANY'S ANNUAL REPORT ON SECURITIES AND EXCHANGE COMMISSION FORM 10-K
(THE "FORM 10-K") INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2000, IS INCLUDED HEREWITH.
VOTING SECURITIES OUTSTANDING
As of February 28, 2001, 1,828,845 shares of common stock and 27,838 shares
of preferred stock of the Company had been issued and were outstanding. Each
share of common stock is entitled to one vote on all matters presented at the
meeting. Each share of preferred stock is entitled to one vote for each full
share of common stock into which it would have been convertible had it been
convertible on the record date (3.84706875 shares). Accordingly, a total of
1,935,939 votes are entitled to be cast at the meeting, and the holders of the
preferred stock are entitled to cast 17.62% of such votes. Only holders of
common stock and preferred stock of record at the close of business on April 13,
2001, will be entitled to vote at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the name and address of each shareholder who
is known to the Company to own beneficially more than 5% of Beard's outstanding
common stock or preferred stock, the number of shares beneficially owned by each
and the percentage of outstanding common or preferred stock so owned as of
February 28, 2001. Unless otherwise noted, the person named has sole voting and
investment powers over the shares reflected opposite his name.
Number of Number of Combined
Preferred Common Common and
Shares and Shares and Preferred
Nature of Percent Nature of Percent of Voting
Name and Address Ownership of Class Ownership Class(8) Percentage(8)
- ---------------- --------- -------- --------- -------- -------------
John Hancock Financial
Services, Inc.
("Hancock")............ 27,838 100.00% 234,030(1)(2) 12.80%(2) 17.62%
57th Floor
200 Clarendon Street
Boston, Massachusetts 02117
Dimensional Fund
Advisors, Inc.......... None 0.00% 112,297(3) 6.14% 5.80%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
The Beard Group 401(k) Trust
c/o InvesTrust, N.A.,
Trustee................ None 0.00% 167,174(4) 9.14% 8.64%
6301 N. Western, Suite 210
Oklahoma City, OK 73118
W. M. Beard............ None 0.00% 651,115(5) 35.42% 33.47%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
Lu Beard............... None 0.00% 241,639(6) 13.21% 12.48%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
Herb Mee, Jr........... None 0.00% 294,372(7) 15.94% 15.06%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
- --------
(1) Shares are held by Hancock on behalf of itself and affiliated entities.
(2) Excludes the Beard preferred shares which will collectively become
convertible into 5.53% of the outstanding common stock (after conversion)
on January 1, 2003 to the extent not previously redeemed or converted.
(3) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 112,297 shares as of
December 31, 2000, all of which shares are held in portfolios of investment
companies, commingled group trusts and separate accounts (collectively, the
"Funds") which Dimensional serves as investment manager or investment
adviser. Dimensional possesses voting power and/or investment power over
all of such shares which are owned by the Funds. Dimensional disclaims
beneficial ownership of all such shares.
(4) Represents shares owned by The Beard Group 401(k) Trust (the "401(k)
Trust") at December 31, 2000 (latest information available). Shares held by
the 401(k) Trust are owned by the participating employees, each of whom has
sole voting and investment power over the shares held in his or her
account. Includes 61,001.78 and 92,550.68 shares held for the accounts of
Messrs. Beard and Mee, respectively.
(5) Includes 154,624 shares owned directly by Mr. Beard as to which he has sole
voting and investment power; 240,380 shares (or 13.14%) owned by the
William M. Beard and Lu Beard 1988 Charitable Unitrust (the "1988
Unitrust"), of which Mr. Beard and his wife, Lu Beard, serve as co-
trustees and share voting and investment power; 36,214 shares held by the
William M. Beard Irrevocable Trust "A," 51,324 shares held by the William
M. Beard Irrevocable Trust "B," and 62,661 shares held by the William M.
Beard Irrevocable Trust "C" (collectively, the "Beard Irrevocable Trusts")
of which Messrs. Beard and Herb Mee, Jr. are trustees and share voting and
investment power; 5,053 shares each held by the John Mason Beard II Trust
and by the Joseph G. Beard Trust as to which Mr. Beard is the trustee and
has sole voting and investment power; 2,442 shares held by the Rebecca
Banner Beard Lilly Living Trust as to which Mr. Beard is a co-trustee and
shares voting and investment power with his daughter; 61,001.78 shares held
by The Beard Group 401(k) Trust (the "401(k) Trust") for the account of Mr.
Beard as to which he has sole voting and investment power; and 9,999 shares
held by B & M Limited, a general partnership, of which Mr. Beard is a
general partner and shares voting and investment power with Mr. Mee. Also
includes 9,375 shares subject to presently exercisable options. Excludes
1,259 shares owned by his wife as to which Mr. Beard disclaims beneficial
ownership.
(6) Represents 240,380 shares owned by the 1988 Unitrust, of which Mr. Beard
and Mrs. Beard serve as co-trustees and share voting and investment power.
Also includes 1,259 shares owned directly by Mrs. Beard as to which she has
sole voting and investment power.
(7) Includes 18,253 shares owned directly by Mr. Mee as to which he has sole
voting and investment power; 4,999 shares held by Mee Investments, Inc., as
to which Mr. Mee has sole voting and investment power; 9,999 shares held by
B & M Limited as to which Mr. Mee shares voting and investment power with
Mr. Beard but as to which Mr. Mee has no present economic interest; and
92,550.68 shares held by the 401(k) Trust for the account of Mr. Mee as to
which he has sole voting and investment power. Also includes 150,199 shares
held by the Beard Irrevocable Trusts as to which Mr. Mee is a co-trustee
and shares voting and investment power with Mr. Beard but as to which Mr.
Mee has no pecuniary interest and disclaims beneficial ownership. Also
includes 18,371 shares subject to presently exercisable options. Excludes
33 shares owned by his wife, Marlene W. Mee, as to which Mr. Mee disclaims
beneficial ownership.
(8) All percentages reflected above exclude 295,053 common shares held by the
Company as treasury stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the number of
shares of Beard common stock beneficially owned by each director and nominee,
the Chief Executive Officer ("CEO"), each named executive officer and by all
directors and executive officers as a group and the percentage of outstanding
common stock so owned as of February 28, 2001.
Amount and
Nature of
Beneficial Percent
Name and Address Ownership of Class(6)
---------------- --------- -----------
W. M. Beard................... 651,115(1) 35.42%
Herb Mee, Jr.................. 294,372(2) 15.94%
Michael E. Carr............... 21,482 1.17%
Ford C. Price................. 13,998(3) ---(6)
Allan R. Hallock.............. 1,875(4) ---(6)
Harlon E. Martin, Jr.......... 750 ---(6)
All directors and
executive officers as a group
(8 in number)................ 837,210(5) 44.80%
- ---------
(1) See footnote (5) to table "Security Ownership of Certain Beneficial
Owners."
(2) See footnote (7) to table "Security Ownership of Certain Beneficial
Owners."
(3) Includes 7,799 shares owned directly by Mr. Price and 2,449 shares held by
an IRA for the benefit of Mr. Price, as to all of which he has sole voting
and investment power, and 3,750 shares held by the FCP Trust as to which he
has shared voting and investment power.
(4) Represents shares held by an IRA for the benefit of Mr. Hallock, as to all
of which he has sole voting and investment power.
(5) Includes 430,440 shares as to which directors and executive officers have
sole voting and investment power and 406,770 shares as to which they share
voting and investment power with others.
(6) Reflects ownership of less than one (1) percent.
(7) See footnote (8) to table "Security Ownership of Certain Beneficial
Owners."
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's Certificate of Incorporation (the "Certificate") provides for
a Board of Directors of not more than nine nor less than three directors,
including one director elected by the preferred stockholders, as determined from
time to time by the Board. The Certificate also provides that the portion of the
Board of Directors which is elected by the Beard common stockholders shall be
divided into three classes as nearly equal in number as possible, with the term
of office of one class expiring each year.
At the meeting, two directors are to be elected by the common stockholders
for a three-year term expiring at the date of the Annual Meeting of Stockholders
in 2004. The terms of Messrs. Harlon E. Martin, Jr. and Herb Mee, Jr. expire
this year, and they will be the two nominees for terms expiring in 2004. The
Beard preferred stockholders filled the directorship vacancy which they were
entitled to fill in February 1994 by the election of Michael E. Carr, who will
continue to serve in such capacity until his successor has been elected.
It is the intention of the persons named in the accompanying form of Proxy
to vote Proxies for the election of the above-named nominees. Each nominee has
served continuously as director of the Company or of its predecessors since
first elected. In the event that any of the nominees should for some reason,
presently unknown, fail to stand for election, the resulting vacancy would be
filled at such time as the board finds a suitable candidate. The election of
directors at this meeting will be by plurality vote. The directors elected at
the Annual Meeting will serve for three-year terms and until their respective
successors are elected and qualified, in accordance with the provisions of the
Certificate and the Company's By-Laws.
Certain information with respect to the nominees for director and four
directors whose terms do not expire this year is as follows:
Nominees for Election for a Term of Three Years Expiring in 2004: Nominee (age),
year first became a Director of Beard or Beard Oil:
Harlon E. Martin, Jr. (53), 1997
Harlon E. Martin, Jr. was elected a director of Beard in October 1997 to
fill the directorship vacancy created by the death of W. R. Plugge. Mr. Martin
has served as the principal of H. E. Martin & Company, a Houston investment
banking firm, since its founding in 1990. He was a co- founder of GTM Securities
Corp. in 1985 and served as a principal of such firm until 1989. H. E. Martin &
Company is not a parent, subsidiary, or other affiliate of Beard.
Herb Mee, Jr. (72), 1974
Herb Mee, Jr. has served as Beard's President since October 1989 and as its
Chief Financial Officer since June 1993. He has served as President of Beard Oil
Company ("Beard Oil"), the predecessor to Beard, since its incorporation, and as
its Chief Financial Officer since June 1993. He has also served as a director of
Beard and Beard Oil since their incorporation. Mr. Mee served as President of
Woods Corporation, a New York Stock Exchange diversified holding company, from
1968 to 1972 and as its Chief Executive Officer from 1970 to 1972.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ABOVE
NOMINEES.
Director to Continue in Office with Term Expiring in 2002:
W. M. Beard (72), 1974
W.M. Beard has served Beard as its Chairman of the Board and Chief
Executive Officer since December 1992. He previously served as Beard's President
and Chief Executive Officer from the Company's incorporation in October 1974
until January 1985. He has served Beard Oil as its Chairman of the Board and
Chief Executive Officer since its incorporation. He has also served as a
director of Beard and Beard Oil since their incorporation. Mr. Beard has been
actively involved since 1952 in all management phases of Beard and Beard Oil
from their inception, and as a partner of their predecessor company.
Directors to Continue in Office with Terms Expiring in 2003:
Allan R. Hallock (71), 1986
Allan R. Hallock was elected a director of Beard in July 1993. He served as
a director of Beard Oil from December 1986 until October 1993. Mr. Hallock is
currently an independent consulting geologist. He served as Vice President and
Exploration Manager of Gemini Corporation from 1970 until December 1986.
Ford C. Price (63), 1988
Ford C. Price was elected a director of Beard in July 1993. He served as a
director of Beard Oil from June 1987 until October 1993. From 1961 until 1986
Mr. Price served in various capacities with The Economy Company, a
privately-held schoolbook publishing company, last serving as its Chairman of
the Board and Chief Executive Officer. Mr. Price is a private investor.
Director Elected to Represent the Class of Preferred Stockholders
Michael E. Carr (65), 1994
Michael E. Carr was elected in February 1994 by the preferred stockholders
to fill the directorship vacancy which they are entitled to fill. He served as
Senior Vice President of Beard Oil from December 1986 until October 1993. He
served as President of Sensor Oil & Gas, Inc. from October 1993 until August
1996. He presently serves as President of Mica Energy Corp. Mica Energy Corp is
not a parent, subsidiary, or other affiliate of Beard.
Mr. Carr will serve as a director of the Company until his successor has
been elected and has qualified in such office or until such time as all of the
preferred stock has been converted or redeemed.
There is no family relationship between any of the directors or executive
officers of the Company.
Committees of the Board of Directors
The Company has standing Audit and Compensation Committees. Mr. Price
serves as chairman and Messrs. Hallock, Martin and Carr serve as members of the
Audit Committee which met three times in 2000. Mr. Hallock serves as chairman
and Messrs. Martin, Price and Carr serve as members of the Compensation
Committee which met once in 2000. During 2000, the Board of Directors met eight
times. All of the directors attended more than 75% of the aggregate of all
meetings of the Board of Directors and committees on which they served during
2000.
The principal functions of the Company's Audit Committee are set forth in
its formal written charter, a copy of which was attached as Exhibit "A" to the
Proxy Statement for the Company's 2000 Special Meeting. In addition to the
responsibilities enumerated therein, the Audit Committee shall: (1) at least
annually cause an audit to be made of the Company and its consolidated
subsidiaries by auditors responsible only to the Committee and the Board; (2)
examine the reports and consult with the outside audit firm employed by the
Company or any of its subsidiaries; (3) report on a regular basis to the Board
of Directors concerning all matters under its jurisdiction; and (4) coordinate
its functions with the Compensation Committee, and any other committees, when
necessary.
The principal functions of the Company's Compensation Committee are: (1) to
review the objectives, structure, cost and administration of the Company's major
compensation and benefit policies and programs; (2) to review and make
recommendations concerning remuneration arrangements for senior management,
including the specific relationship of corporate performance to executive
compensation; (3) to review the Company's performance versus the CEO's
compensation and establish measures of the Company's performance upon which the
CEO's compensation is based; and (4) to administer the Company's compensation,
benefit and incentive plans.
The Company does not have a Nominating Committee; the Board of Directors
has nominated the directors to stand for election at the annual meeting. Each of
the persons nominated presently serves as a director.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee (the "Committee") is appointed by the Board of
Directors and operates pursuant to a written charter that was adopted by the
Board on June 14, 2000. The Audit Committee Charter was attached as Exhibit A to
the Proxy Statement for the Company's 2000 Special Meeting.
The Committee reviews fees paid by the Company to its independent auditor.
For the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2000, and the reviews of the financial statements included in
the Company's Forms 10-Q for the second and third quarters of that year the
Company paid the following fees to Cole & Reed, P.C.:
Financial Information Systems
Audit Fees Design and Implementation Fees All Other Fees
---------- ------------------------------ --------------
$35,000(A) $ -0- $3,125
- ----------
(A) Includes $10,000 for services rendered in 2000 and $25,000 for services
rendered in 2001.
The financial statements included in the Company's Form 10-Q for the
quarter ended March 31, 2000 were reviewed by KPMG LLP. The Company paid KPMG
LLP fees of $6,500 for such review.
In fulfilling its duties for the 2000 fiscal year, the Committee has done
each of the following:
o reviewed the Company's audited financial statements for 2000 and discussed
the financial statements with the Company's management;
o discussed with Cole & Reed, P.C. the matters required to be discussed with
the auditor by the Auditing Standards Board Statement on Auditing Standards
No. 61 (Codification of Statements on Auditing Standards, AU380) as may be
modified or supplemented;
o received written disclosure from Cole & Reed, P.C. about any relationships
between Cole & Reed, P.C. and the Company which the auditor believes may
affect its independence;
o received a confirmation letter from Cole & Reed, P.C. that the auditor is
independent of the Company; and
o discussed Cole & Reed, P.C.'s independence with the auditor.
Based on the review and discussions above, the Committee recommended to the
Board that the audited financial statements for 2000 be included in the
Company's 10-K filed with the Securities and Exchange Commission.
All of the members of the Audit Committee are independent under the
definitions of the rules as defined in Rule 4200(a)(15) of the NASD's listing
standards.
The Committee has considered the services rendered by the Company's
principal accountant for the most recent fiscal year as described above and has
concluded that the provision of such services is compatible with maintaining the
principal accountant's independence.
Ford C. Price, Chairman
Allan R. Hallock
Harlon E. Martin, Jr.
Michael E. Carr
EXECUTIVE OFFICERS
Certain information concerning the executive officers of the Company is set
forth below:
In addition to W. M. Beard, the Company's Chairman and Chief Executive
Officer, and Herb Mee, Jr., the Company's President and Chief Financial Officer,
the following are considered to be executive officers of the Company:
Jack A. Martine, age 51, was elected as Controller, Chief Accounting
Officer and Tax Manager of Beard in October 1996. Mr. Martine served as tax
manager for Beard from June 1989 until October 1993 at which time he joined
Sensor Oil & Gas, Inc. in a similar capacity. Mr. Martine is a certified public
accountant. Sensor Oil & Gas, Inc. is not a parent, subsidiary, or other
affiliate of Beard.
Rebecca G. Witcher, age 41, has served as Corporate Secretary of the
Company and Beard Oil since October 1993, and has served as Treasurer of such
companies since July 1997.
All executive officers serve at the pleasure of the Board of Directors.
Significant Employees
Philip R. Jamison, age 62, has served as President of Beard Technologies,
Inc. ("BTI") since August 1994. Mr. Jamison has been associated with the coal
industry since 1960, working in various positions. From 1972 to 1977 he served
as Vice President Operations for International Carbon and Minerals and as
President and CEO of all its coal producing subsidiaries. From 1979 to 1988 he
served as CEO of four small companies which were engaged in the production and
sale of coal. From 1993 to 1995 he served as a consultant to Energy
International, Inc. ("EI") in its development of BTI's patented mulled coal
technology and installed and operated the process at an Alabama coal preparation
plant in connection with EI's performance of a contract for the Department of
Energy.
Riza E. Murteza, age 71, has served as President and Chief Executive
Officer of Beard Sino-American Resources Co., Inc. since November 1998. He was
appointed Senior Advisor to the United Nations Development Project for China,
residing in China for one year (1996-1997), assisting large Chinese enterprises
move to a market economy. Prior to that he served as General Manager and Project
Manager for two large projects in Indonesia and a large project in the Soviet
Union for periods totaling nine years, and as a consultant to a number of other
companies during the interim periods.
Marc A. Messner, age 39, has served as President and Chief Executive
Officer of starpay.com, inc. since April 1999. He has also served as Vice
President - Corporate Development of Beard since August 1998. Mr. Messner is the
inventor of starpay's proprietary payment system technology. From 1993 to 1998
he served as President of Horizontal Drilling Technologies, Inc., a company he
founded in 1993 which was acquired by Beard in 1996.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities (collectively
"reporting persons"), to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Reporting persons are required by
the SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, based solely on a review of Forms 3, 4 and 5
furnished to the Company and information received from each reporting person
which includes written representations that no reports were required during the
fiscal year ended December 31, 2000, all Section 16(a) filing requirements
applicable to its reporting persons were complied with.
Compensation of Executive Officers
The table on the next page sets forth sets forth the compensation paid or
accrued during each of the last three fiscal years by the Company and its
subsidiaries to the Company's Chief Executive Officer and each of the Company's
other most highly compensated executive officers (hereafter referred to as the
named executive officers), whose aggregate salary and bonus exceeded $100,000,
for any of the fiscal years ended December 31, 2000, 1999 and 1998:
SUMMARY COMPENSATION TABLE
Long Term
Compensation
------------
Annual Compensation Awards Payouts
------------------- ------ -------
Securities
Underlying All Other
Name and Options/ LTIP Compen-
Principal Salary(A) Bonus(B) SAR's Payouts sation(C)
Position Year ($) ($) (#) ($) ($)
-------- ---- --- --- --- --- ---
W.M. Beard 2000 118,250(D) -0-(D) -0- 16,100(D) 5,913(D)
Chairman & CEO 1999 122,375(D) 2,300 -0- 9,625(D) 6,234(D)
1998 99,000(D) -0-(D) -0- 35,250(D) 5,503(D)
Herb Mee, Jr. 2000 132,000 -0-(E) -0- 1,350(E) 6,600(E)
President & CFO 1999 132,000 1,300 -0- -0- 6,665
1998 132,000 1,250 -0- -0- 7,288
- -----------
(A) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred pursuant to the Company's
401(k) Plan at the election of those officers. Amounts shown exclude cash
compensation earned but deferred pursuant to the Company's Deferred Stock
Compensation Plan.
(B) Bonus for length of service with Beard or Beard Oil.
(C) Consists of the Company's contribution to the Company's 401(k) Plan.
(D) In 2000 Mr. Beard deferred one-half ($13,750) of his salary for 2-1/2
months and all ($2,350) of his length of service bonus for the year; in
1999 Mr. Beard deferred one- fourth ($9,625) of his salary for 3-1/2
months; in 1998 Mr. Beard deferred one-fourth ($33,000) of his salary and
all ($2,250) of his length of service bonus for the year pursuant to the
Company's Deferred Stock Compensation Plan.
(E) In 2000 Mr. Mee deferred all ($1,350) of his length of service bonus for
the year pursuant to the Company's Deferred Stock Compensation Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during the Company's last
fiscal year and unexercised options held as of the end of the last fiscal year:
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---- --------------- ------------ ------------- -------------
W.M. Beard -0- $ -0- 9,375/-0- $-0-/-0-
Herb Mee, Jr. -0- $ -0- 18,371/-0- $-0-/-0-
Compensation of Directors
Mr. Carr received compensation of $9,303 for services rendered during 2000
as a director of Beard. Messrs. Hallock, Martin and Price received $7,500,
$8,000 and $8,000, respectively, of deferred fees under the Company's Deferred
Stock Compensation Plan (the "Plan"). Under the Plan, the electing officers and
directors can defer fees and compensation until termination of service or
termination of the Plan, at which time the accounts will be settled by
distribution of a number of shares of the Company's common stock equal to the
number of Units credited under the Plan. A Unit is equal to the amount deferred
divided by the fair market value of a share of common stock on the date of
deferral. Currently, the non-management directors each receive $500 per month
for their services, and also receive the following fees for directors' meetings
which they attend: annual and 1-1/2 day meetings -- $750; regular meeting --
$500; telephone meeting -- $100 to $300 depending upon length of meeting. The
non-management directors also receive a small year-end bonus depending upon
their length of service as directors of Beard and Beard Oil. Accordingly,
Messrs. Hallock, Martin, Price, and Carr received $600, $150, $600 and $300,
respectively, in 2000. All of the directors except Mr. Carr deferred such
bonuses pursuant to the Plan. Beard also provides health and accident insurance
benefits for its non-management directors who are not otherwise covered. Messrs.
Hallock and Price received $139 and $3,396, respectively, of such compensation
during the year. None of the directors received additional compensation in 2000
for their committee participation.
The four eligible non-management directors (Hallock, Martin, Price and
Carr) were each granted 3,750(A) phantom stock units (the "Units") under the
Company's 1994 Phantom Stock Units Plan on November 1, 1994.(B) Mr. Carr was
awarded 3,750(A) Units when he became eligible on February 22, 1995.(B) All of
these awards were based on an award price of $2.667(A) per share and vested over
a five year period at the rate of 20% per year. Messrs. Hallock, Martin, Price
and Carr were each granted 3,750(A) Units on October 23, 1997 at an award price
of $6.667(A) per share, the market value of the stock on such date. The 1997
awards vest over a four year period at the rate of 25% per year. Each
participant has the option of receiving payment for his award: (i) as it vests;
(ii) at the conclusion of the award period; or (iii) 50% as it vests, with the
other 50% deferred to the conclusion of the award period. Payments are based
upon appreciation in the market value of the Company's common stock during the
appropriate time interval selected. Mr. Carr received a cash payment of $1,123
in 2000 for 750 Units which vested on February 22, 2000, $1,987 in 1999 for 750
Units which vested on February 22, 1999, $3,046 in 1998 for 750 Units which
vested on February 22, 1998 and $3,808 in 1997 for 2,000 Units which vested on
February 22, 1997.(A) Messrs. Hallock and Price received $8,630 each in 2000 for
5,000 Units which vested on November 1, 1999.(A)
- -------------
(A) All Units and per share prices have been adjusted to reflect the 3-for-4
reverse stock split effected in September 2000.
(B) The market value on November 1, 1994 was $2.50 per share; on February 22,
1995 it was $2.333 per share.
Compensation Committee Interlocks and Insider Participation
Michael E. Carr, who has been elected by the preferred shareholders to
serve as their representative on the Board of Directors, was elected to serve as
a member of the Compensation Committee on April 26, 1994. Mr. Carr served as
Senior Vice President of Beard Oil from December 1986 until October 1993.
RELATED PARTY TRANSACTIONS
In April 2000, William M. Beard and Lu Beard, as trustees of the William M.
Beard and Lu Beard 1988 Charitable Unitrust (the "Trustees") agreed to provide a
$1 million revolving line of credit to the Company. The Trustees agreed to make
a 15-month loan at 10% interest to the Company subject to the terms of a
promissory note dated April 3, 2000 and a letter loan agreement of corresponding
date. On September 1, 2000 the letter loan agreement was amended to reduce the
revolver to $700,000 and a renewal note in such amount extended the maturity to
February 28, 2002. On October 20, 2000, the Trustees agreed to loan an
additional $800,000, also at 10% interest, with a maturity of April 1, 2002. As
of December 31, 2000, $1,036,000 had been advanced under the two notes.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors (the
"Board") establishes the general compensation policies of the Company. The
Committee meets once each year to establish specific compensation levels for the
chairman/chief executive officer ("CEO") and the president/chief financial
officer ("CFO") and to review the executive officers' compensation generally.
(The compensation for executive officers other than the CEO and CFO is actually
determined by the CEO and CFO).
The Committee's goal in setting executive compensation is to motivate,
reward and retain management talent who support the Company's goals of
increasing shareholder value. This goal is to provide competitive levels of
compensation that relate to the Company's long-term performance goals and
objectives, reward outstanding corporate performance and recognize individual
initiative and achievement. The Committee endeavors to achieve these objectives
through a combination of base salary, cash bonuses and stock options.
The Committee believes that the total compensation of its CEO, CFO and
other executive officers should be tied to the Company's success in achieving
long-term growth in earnings, cash flow and stock price per share. The Committee
also believes that the total cash compensation of such officers should, to the
extent possible, be similar to the total cash compensation of similarly situated
executives of peer group public companies. To date neither the Company nor the
Committee has been able to establish a peer group which they feel is comparable
enough in size, financial structure and diversity of operations to establish a
valid comparison.
No executive officer's compensation for 2000 exceeded the $1 million
deduction limit under Section 162(m) of the Internal Revenue Code, as amended,
and the same result is anticipated for 2001. The Committee does not anticipate
that any executive officer's compensation would approach the threshold level in
the foreseeable future.
Base Salaries. No salary increases have been granted to the Company's top
two executive officers since September of 1990. Because of the poor financial
results in 1998, 1999 and 2000, no changes in base salary are currently under
consideration for any of the executive officers. The Chairman elected to defer
one-half of his salary effective October 16, 2000.
Cash Bonuses. All employees of the Company receive a small year-end bonus
depending upon their length of service as employees of Beard or Beard Oil.
Because of the overall financial results, no other cash bonuses have been paid
to executive officers during the last three fiscal years.
Beard Group 401(k) Plan. One of the investment options available under the
Company's 401(k) Plan (the "401(k) Plan") is the option for each participant to
invest all or part of his investment account in Company common stock ("The Beard
Company Stock Fund Investment Option"). Because the trustee of this portion of
the 401(k) Plan was having difficulty purchasing sufficient shares of such stock
in the open market, the 401(k) Plan was amended in September of 1995 to permit
the trustee to purchase authorized shares of Beard common stock directly from
the Company, and the Company reserved 112,500(A) shares of its authorized but
unissued common stock for such purpose. The Committee felt that this step was
extremely important because it enabled key management members to significantly
increase their ownership in the Company, further aligning their interests with
those of the shareholders. Since the amendment was approved, the trustee has
purchased 66,225(A) shares from the Company, with more than 75% of such shares
being purchased for the accounts of present executive officers of the Company.
- -----------------
(A) Adjusted to reflect the 3-for-4 reverse stock split effected in September
2000.
Stock Options. The Committee desires to reward long-term strategic
management practices and enhancement of shareholder value through the award of
stock options. The Committee believes that stock options encourage increased
performance by the Company's key employees by providing incentive to employees
to elevate the long-term value of the Company's common stock, thus aligning the
interests of the Company's employees with the interests of its shareholders.
Additionally, stock options build stock ownership and provide employees with a
long-term focus.
The Committee and the Board have placed particular emphasis upon stock
options in structuring the compensation package for senior management, in the
belief that the interests of senior management and the Company's shareholders
should be as closely aligned as possible.
CEO Compensation
W. M. Beard has been Chairman and CEO of the Company and its predecessors
since 1974. Mr. Beard's 2000 base salary was $132,000, and has not increased
since 1990. He receives, along with all other Beard employees, a small year-end
bonus based on length of service with Beard or Beard Oil. The 1994 stock option
grant of 50,000 shares to Mr. Beard reflected the Committee's desire to provide
significant incentives which link long-term executive compensation to long-term
growth in equity for all shareholders, as described above. The award also
reflected Mr. Beard's position and level of responsibility within the Company,
the Committee's qualitative analysis of his performance in managing the Company,
and the importance of the role he plays in determining the Company's strategic
direction. Based on the Company's profitability, the granting of any additional
stock options to Mr. Beard or other key management members was not considered by
the Committee in 2000. A significant portion of the Company's outstanding
options were exercised in 1998, including 75% of his outstanding option by Mr.
Beard. The Committee may consider the awarding of additional options to key
management members, including Mr. Beard, in 2001 and subsequent years. Any such
grants will depend upon the Company's profitability, the outlook for its various
businesses and the Committee's determination of the need to provide additional
incentives to management.
COMPENSATION COMMITTEE
Allan R. Hallock, Chairman
Harlon E. Martin, Jr.
Ford C. Price
Michael E. Carr
STOCK PERFORMANCE
The following performance graph compares The Beard Company's cumulative
total stockholder return on its common stock against the cumulative total return
of the NASDAQ Market Index and the SIC Code Index of the Bituminous Coal,
Surface Mining Industry compiled by Media General Financial Services for the
period from December 31, 1995 through December 31, 2000. The performance graph
assumes that the value of the investment in The Beard Company stock and each
index was $100 on December 31, 1995 and that any dividends were reinvested. The
Beard Company has never paid dividends on its common stock.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THE BEARD COMPANY,
NASDAQ MARKET INDEX AND SIC CODE INDEX
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
THE BEARD COMPANY 100 135.29 247.06 152.94 88.24 16.47
SIC CODE INDEX 100 146.60 119.44 74.05 52.86 100.88
NASDAQ MARKET INDEX 100 124.27 152 214.39 378.12 237.66
ASSUMES $100 INVESTED ON JAN. 1, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2000
December December December December December December
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
The Beard Company 100.00 135.29 247.06 152.94 88.24 16.47
Bituminous Coal,
Surface Mining
Industry Index 100.00 146.60 119.44 74.05 52.86 100.88
NASDAQ Market Index 100.00 124.27 152.00 214.39 378.12 237.66
The Industry Index chosen consists of the following companies: American
Southwest Holdings, Arch Coal, Inc., Consol Energy, Inc., Headwaters Inc.,
Westmoreland Coal Co. and Yanzhou Coal Mining Co.
AMENDMENT TO THE BEARD COMPANY
DEFERRED STOCK COMPENSATION PLAN
(Proposal No. 2)
At the 1996 Annual Meeting of Shareholders held on June 3, 1996, the
shareholders authorized The Beard Company Deferred Stock Compensation Plan (the
"Plan") which first became effective November 1, 1995. The Plan is intended to
advance the interests of the Company and its shareholders by providing a means
to attract and retain highly-qualified persons to serve as Officers and
Directors and to promote ownership by Officers and Directors of a greater
proprietary interest in the Company, thereby aligning such interests more
closely with the interests of shareholders of the Company.
A copy of the Plan, as proposed to be amended, is attached to this Proxy
Statement as Exhibit A and the description contained herein is qualified in its
entirety by reference to the complete text of the Plan. Capitalized terms used
below not otherwise defined herein shall have the meaning ascribed to them in
the Plan.
Upon the recommendation of management, the Board of Directors of the
Company voted on April 21, 1999, subject to stockholder approval, to amend the
Plan effective January 1, 1999, to increase the number of shares of common stock
authorized for issuance thereunder from 50,000 to 100,000; to delete the six
month notice required to change an election and provide for 30 day notice prior
to the next payment date; and to delete reference to Rules under Section 16b-3
of the Exchange Act that no longer apply. All of these changes were approved by
the stockholders on July 21, 1999. As a result of the 3-for-4 reverse stock
split approved by the stockholders on September 1, 2000, the number of shares of
common stock authorized for issuance, as provided in Article X of the Plan, was
effectively reduced to 75,000, and the individual Participants' Stock Unit
Accounts were adjusted to reflect the split.
Upon the recommendation of management, the Board of Directors of the
Company voted on October 25, 2000, subject to stockholder approval, to amend the
Plan effective October 1, 2000, to increase the number of shares of common stock
authorized for issuance thereunder from 75,000 (as adjusted for the
aforementioned reverse split) to 200,000.
As of December 31, 2000, the Compensation and Fees which had been credited
to the individual Participants' Stock Unit Accounts, after adjusting for the
3-for-4 reverse stock split, and which will ultimately be converted into Beard
common stock, totaled 105,241 Units, including 62,201, 2,898, 14,906, 9,855 and
15,381 Units, respectively, for Messrs. Beard, Mee, Hallock, Martin and Price.
Management does not believe the remaining shares are sufficient to meet the
Company's needs. The Board concurs with management's recommendation, and
believes that the proposed increase in the number of shares available for
issuance under the Plan will enable the Company to continue its policy of
attracting and retaining highly-qualified persons to serve as Officers and
Directors by promoting ownership of a greater proprietary interest in the
Company.
The Plan enables Officers and Directors of the Company to defer
Compensation and Fees in cash and to elect payments of such Compensation and
Fees in Beard common stock. All Officers and Directors are automatically
entitled to participate in the Plan. There are currently nine individuals
eligible for the Plan. Directors may elect to defer a minimum of 25% of their
Compensation and Fees or a greater amount in 25% increments and Officers may
elect to defer a minimum of 10% of Compensation and Fees or a greater amount in
5% increments. All Compensation and/or Fees deferred under the Plan will be
credited to the individual Participant's Stock Unit Account and will then be
converted into Beard common stock by dividing the amount of Compensation and
Fees deferred by the Fair Market Value of one Share of common stock as of the
date the Compensation or Fees would have otherwise been paid. Once a person
ceases to be an Officer or Director, their participation in the Plan
automatically terminates. The Plan complies with the requirements of Rule 16b-3
of the Exchange Act. Following shareholder approval, a maximum of 200,000 Shares
of Beard common stock may be issued under the Plan.
The Shares received by the Participant in lieu of Compensation and Fees
will be maintained in each Participant's Stock Unit Account until (i) the
Participant ceases to be an Officer or Director, for any reason, or (ii)
termination of the Plan upon the earlier of the following events: (a) no Shares
remain available under the Plan, (b) June 30, 2006, or (c) action of the Board
of Directors terminating the Plan. Upon any of these events, the Shares of
common stock in each Participant's Stock Unit Account will be distributed. The
Participants will not have shareholder rights with respect to these Shares until
this distribution.
The Plan may be amended or terminated without shareholder vote or consent
of the Participants, unless required by Federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the
Shares are listed or quoted. If a vote is required it will be taken at the next
shareholders' meeting after such amendment or modification.
The Plan is administered by the Compensation Committee (the "Committee"),
which is composed of not less than two members of the Board of Directors. No
Participant shall make any determination relating solely or primarily to his or
her own Shares or Stock Unit Account. The Committee makes all determinations
necessary to administer the Plan, but each Participant solely has the right and
authority to make an election to defer Compensation and Fees pursuant to the
Plan.
The approval and adoption of this proposed amendment requires the
affirmative vote by a majority of the Company's outstanding common and preferred
stock present in person or represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
BEARD COMPANY DEFERRED STOCK COMPENSATION PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER FROM 75,000 TO 200,000.
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal No. 3)
Cole & Reed, P.C., Independent Certified Public Accountants, were selected
to be the independent auditors of the Company for 2000, and management
recommends that they be selected to be the independent auditors of the Company
for 2001. Although not formally required, stockholders' approval of such
appointment is requested. To the knowledge of management, such accountants do
not have any direct, or material indirect, financial interest in the Company and
its subsidiaries, nor have they had any connection during the past three (3)
years with the Company or any of its subsidiaries in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.
Representatives of Cole & Reed, P.C., are expected to be present at the
meeting. They will have the opportunity to make a statement if they so desire
and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
APPOINTMENT OF COLE & REED, P.C.
In the event the appointment of Cole & Reed, P.C. should not be approved by
the stockholders, the Board of Directors will make another appointment, to be
effective at the earliest feasible time.
VOTE REQUIRED
The holders of shares entitled to cast a majority of the votes, present in
person or by proxy, constitute a quorum for the transaction of business at the
meeting. The affirmative vote of holders of the Company's stock entitled to cast
a majority of the votes represented at the annual meeting will be required for
the approval of (1) the amendment to The Beard Company Deferred Stock
Compensation Plan and (2) the appointment of Cole & Reed, P.C., as independent
auditors of the Company for 2001. The election of directors shall be by a
plurality of the vote of the shares present in person or represented by proxy at
the meeting and entitled to vote on the election of directors.
The office of the Company's Secretary appoints an inspector of election to
tabulate all votes and to certify the results of all matters voted upon at the
annual meeting. Neither the corporate law of the State of Oklahoma, the state in
which the Company is incorporated, nor the Company's Certificate of
Incorporation or By-Laws have any specific provisions regarding the treatment of
abstentions and broker non-votes. It is the Company's policy to count
abstentions or broker non-votes for purposes of determining the presence of a
quorum at the meeting; to treat abstentions as votes not cast but to treat them
as shares represented at the meeting for determining results on actions
requiring a majority vote; and to consider neither abstentions or broker
non-votes in determining results of plurality votes.
STOCKHOLDER PROPOSALS
The Board of Directors anticipates that next year's annual meeting will be
held during the first week of June 2002. Any proposals of stockholders intended
to be presented at the 2002 Annual Meeting of Stockholders must be received by
the Company not later than February 4, 2002 in order for the proposals to be
included in the proxy statement and proxy card relating to such meeting. For any
other proposal that a shareholder wishes to have considered at the 2002 annual
meeting, the Company must receive written notice of such proposal not later than
April 9, 2002. Proposals that are not received by this date will be considered
untimely. In addition, proposals must comply with the Company's bylaws and the
rules and regulations of the Securities and Exchange Commission. It is suggested
that proponents submit their proposals by certified mail, return receipt
requested. No stockholder proposals were received for inclusion in this Proxy
Statement.
OTHER MATTERS
Management knows of no other matters to be brought before the Annual
Meeting of Stockholders; however, if any additional matters are properly brought
before the meeting, the persons named in the enclosed proxy will vote the
proxies in their discretion in the manner they believe to be in the best
interest of the Company.
The accompanying form of proxy has been prepared at the direction of the
Company, of which you are a stockholder, and is sent to you at the request of
the Board of Directors. The proxies named herein have been designated by your
Board of Directors.
Management urges you, even if you presently plan to attend the meeting in
person, to execute the enclosed proxy and mail it as indicated immediately. If a
proxy is properly signed and is not revoked by the shareholder, the shares it
represents will be voted according to the instructions of the shareholder;
provided, however, if no specific instructions are given, the shares will be
voted as recommended by the Board of Directors. A shareholder may revoke his or
her proxy any time before it is voted at the meeting. A shareholder who attends
the meeting and wishes to vote in person may revoke his or her proxy at the
meeting. Otherwise, a shareholder must advise the secretary of the Company in
writing of revocation of his or her proxy.
THE BEARD COMPANY
By Order of the Board of Directors
REBECCA G. WITCHER
Rebecca G. Witcher
Secretary
Oklahoma City, Oklahoma
April 27, 2001
Exhibit A
AMENDMENT NO. TWO
TO
THE BEARD COMPANY
DEFERRED STOCK COMPENSATION PLAN
Adopted: June 3, 1996
Amended: June 7, 2001
AMENDMENT NO. TWO
TO
THE BEARD COMPANY
DEFERRED STOCK COMPENSATION PLAN
Page
ARTICLE I Purpose and Effective Date 1
ARTICLE II Definitions 1
ARTICLE III Shares Available Under the Plan 3
ARTICLE IV Administration 3
ARTICLE V Eligibility 3
ARTICLE VI Deferral Elections In Lieu of Cash Payments 3
ARTICLE VII Settlement of Stock Units 5
ARTICLE VIII Unfunded Status 5
ARTICLE IX Designation of Beneficiary 5
ARTICLE X Adjustment Provisions 6
ARTICLE XI Compliance with Rule 16b-3 6
ARTICLE XII General Provisions 6
AMENDMENT NO. TWO
TO
THE BEARD COMPANY
DEFERRED STOCK COMPENSATION PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The Beard Company Deferred Stock Compensation Plan, as
amended, (the "Plan") is intended to advance the interests of the Company and
its shareholders by providing a means to attract and retain highly-qualified
persons to serve as Officers and Directors and to promote ownership by Officers
and Directors of a greater proprietary interest in the Company, thereby aligning
such interests more closely with the interests of shareholders of the Company.
1.2 Effective Date. This Plan first became effective November 1, 1995 and
was approved by the shareholders of the Company by the affirmative vote of a
majority of Shares of the Company present, or represented, and entitled to vote
on the subject matter, at the 1996 Annual Meeting of Shareholders of the
Company. The Plan was amended by an affirmative vote of a majority of Shares of
the Company present, or represented, and entitled to vote on the subject matter,
at the 1999 Annual Meeting of Shareholders of the Company. The Plan, as amended,
shall become effective on October 1, 2000, subject to the approval of the
shareholders of the Company by the affirmative vote of a majority of the Shares
of the Company present, or represented, and entitled to vote on the subject
matter, at the 2001 Annual Meeting of Shareholders of the Company.
ARTICLE II
DEFINITIONS
The following terms shall be defined as set forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Compensation" means all or part of the cash remuneration payable to an
Officer in his or her capacity as an Officer.
2.3 "Committee" means the Compensation Committee of the Board.
2.4 "Company" means The Beard Company, an Oklahoma corporation, or any
successor thereto.
2.5 "Deferral Date" means the date Fees or Compensa tion would otherwise
have been paid to the Participant.
2.6 "Director" means any individual who is a member of the Board.
2.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.
2.8 "Fair Market Value" means the "Market Price" as defined in the
Certificate of Designations for the Company's outstanding Series A Convertible
Preferred Stock (the "Certificate"); provided, however, that in the event that
Fair Market Value is less than the "Conversion Price" as defined in the
Certificate, then the Fair Market Value shall be the average of (i) the last
sale of such security on any day there are sales of such securities on the OTC
Bulletin Board(R), or (ii) if there have been no sales on the OTC Bulletin
Board(R) on any day, the best asked price at the end of such day, in each such
case averaged over a period of 21 days consisting of the day as of which "Market
Price" is being determined and the 20 consecutive business days prior to such
day.
2.9 "Fees" means all or part of any retainer and/or fees payable to a
Director in his or her capacity as a Director.
2.10 "Officer" means any person so designated by the Board.
2.11 "Participant" means a Director or Officer who defers Fees or
Compensation under Article VI of this Plan.
2.12 "Reconciliation Events" means certain events which cause the amount of
Fees or Compensation actually paid during a period to differ from the amount of
Fees credited pursuant to Section 6.4, including, but not limited to, the
following: an increase or decrease in Fees paid, additional meetings held,
missed attendance at certain meetings, newly elected directors and Terminations
of Service.
2.13 "Secretary" means the Corporate Secretary or any Assistant Corporate
Secretary of The Beard Company.
2.14 "Shares" means shares of the common stock of The Beard Company, par
value $.001333 per share, or of any successor corporation or other legal entity
adopting this Plan.
2.15 "Stock Units" means the credits to a Participant's Stock Unit Account
under Article VI of this Plan, each of which represents the right to receive one
Share upon settlement of the Stock Unit Account.
2.16 "Stock Unit Account" means the bookkeeping account established by the
Company pursuant to Section 6.4.
2.17 "Termination Date" means the date the Plan terminates pursuant to
Section 12.8.
2.18 "Termination of Service" means termination of service as a Director or
Officer in any of the following circum stances:
(a) Where the Participant voluntarily resigns or retires;
(b) Where a Director is not re-elected (or elected in the case of an
appointed Director) to the Board by the shareholders, or an Officer is not
re-elected as an Officer by the Board; or
(c) Where the Participant dies.
ARTICLE III
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Article X, the maximum number of
Shares that may be distributed in settlement of Stock Unit Accounts under this
Plan shall not exceed 200,000 (after giving effect to the 3-for-4 reverse stock
split effected September 20, 2000). Such Shares may include authorized but
unissued Shares or treasury Shares.
ARTICLE IV
ADMINISTRATION
4.1 This Plan shall be administered by the Board's Compensation Committee,
or such other committee or individual as may be designated by the Board.
Notwithstanding the foregoing, no Director who is a Participant under this Plan
shall participate in any determination relating solely or primarily to his or
her own Shares, Stock Units or Stock Unit Account.
4.2 It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments or
otherwise as it deems necessary or appropriate.
4.3 The Committee shall have the authority to make all determinations it
deems necessary or advisable for administering this Plan, subject to the
limitations in Section 4.1 and other explicit provisions of this Plan.
ARTICLE V
ELIGIBILITY
Each Director and Officer of the Company shall be eligible to defer Fees
and Compensation under Article VI of this Plan.
ARTICLE VI
DEFERRAL ELECTIONS IN LIEU OF CASH PAYMENTS
6.1 General Rule. Each Director or Officer may, in lieu of receipt of Fees
or Compensation, defer such Fees or Compensation in accordance with this Article
VI.
6.2 Timing of Election. Each eligible Director or Officer who wishes to
defer Fees or Compensation under this Plan must make an irrevocable written
election at least six (6) months prior to the beginning of the date on which the
Fees or Compensa tion would otherwise be paid; provided, however, that with
respect to (a) any election made by a newly-elected or appointed Director or
Officer ("New Participant Elections") and (b) elections made prior to
shareholder approval for the Plan as provided in Section 1.2 hereof ("Initial
Elections"), the following special rules shall apply: (i) with respect to any
New Participant Elections, the Company shall hold such deferred Fees or
Compensation (without interest) and credit them pursuant to Section 6.4 on or as
of the date which follows by six months such deferral election and (ii) with
respect to any Initial Elections, such elections shall be effective for any Fees
or Compensation paid on the date the election was made and the Company shall
hold such deferred Fees or Compensation (without interest) and credit them
pursuant to Section 6.4 on or as of the date on which the shareholders of the
Company approve the Plan in accordance with Section 1.2; provided, however, the
Fair Market Value used to determine the number of Stock Units to be credited
shall be the Fair Market Value as of the date the election was made. An election
by a Director or an Officer shall be deemed to be continuing and therefore
applicable to Fees or Compensation to be paid in periods unless the Director or
Officer revokes or changes such election by filing a new election form thirty
(30) days prior to the next payment date for Fees or Compensation.
6.3 Form of Election. An election shall be made in a manner satisfactory to
the Secretary. Generally, an election shall be made by completing and filing the
specified election form with the Secretary of the Company within the period
described in Section 6.2. At minimum, the form shall require the Director or
Officer to specify the following:
(a) a percentage (for Directors in 25% incre ments, and for Officers
not less than 10% and in 5% increments thereafter), not to exceed an
aggregate of 100% of the Fees or Compensation to be deferred under this
Plan; and
(b) the manner of settlement in accordance with Section 7.2.
6.4 Establishment of Stock Unit Account. The Company will establish a Stock
Unit Account for each Participant. All Fees or Compensation deferred pursuant to
this Article VI shall be credited to the Participant's Stock Unit Account as of
the Deferral Date and converted to Stock Units as follows: The number of Stock
Units shall equal the deferred Fees or Compensation divided by the Fair Market
Value of a Share on the Deferral Date, with fractional units calculated to three
(3) decimal places.
6.5 Credit of Dividend Equivalents. As of each dividend payment date with
respect to Shares, each Participant shall have credited to his or her Stock Unit
Account an additional number of Stock Units equal to: the per-share cash
dividend payable with respect to a Share on such dividend payment date
multiplied by the number of Stock Units held in the Stock Unit Account as of the
close of business on the record date for such dividend divided by the Fair
Market Value of a Share on such dividend payment date. If dividends are paid on
Shares in a form other than cash, then such dividends shall be notionally
converted to cash, if their value is readily determinable, and credited in a
manner consistent with the foregoing and, if their value is not readily
determinable, shall be credited "in kind" to the Participant's Stock Unit
Account.
6.6 Reconciliations. The Company shall record all Reconciliation Events
and, as soon as reasonably practicable after the end of each calendar quarter or
after a Termination of Service, make appropriate adjustments to each
Participant's Stock Unit Account to reflect such Reconciliation Events;
provided, however, the Fair Market Value used to determine such adjustments
shall be the same Fair Market Value used to determine the number of Stock Units
credited to such Participant's Stock Unit Account.
ARTICLE VII
SETTLEMENT OF STOCK UNITS
7.1 Settlement of Account. The Company will settle a Participant's Stock
Unit Account in the manner described in Section 7.2 as soon as administratively
feasible following the earlier of (i) notification of such Participant's
Termination of Service or (ii) the Termination Date.
7.2 Payment Options. An election filed under Article VI shall specify
whether the Participant's Stock Unit Account is to be settled by delivering to
the Participant (or his or her beneficiary) the number of Shares equal to the
number of whole Stock Units then credited to the Participant's Stock Unit
Accounts, in (a) a lump sum, or (b) substantially equal annual installments over
a period not to exceed ten (10) years. If, upon lump sum distribution or final
distribution of an installment, less than one whole Stock Unit is credited to a
Participant's Stock Unit Account, cash will be paid in lieu of fractional shares
on the date of such distribution.
7.3 Continuation of Dividend Equivalents. If payment of Stock Units is
deferred and paid in installments, the Participant's Stock Unit Account shall
continue to be credited with dividend equivalents as provided in Section 6.5.
7.4 In Kind Dividends. If any "in kind" dividends were credited to the
Participant's Stock Unit Account under Section 6.5, such dividends shall be
payable to the Participant in full on the date of the first distribution of
Shares under Section 7.2.
ARTICLE VIII
UNFUNDED STATUS
The interest of each Participant in any Fees or Compensation deferred under
this Plan (and any Stock Units or Stock Unit Account relating thereto) shall be
that of a general creditor of the Company. Stock Unit Accounts, and Stock Units
(and, if any, "in kind" dividends) credited thereto, shall at all times be
maintained by the Company as bookkeeping entries evidencing unfunded and
unsecured general obligations of the Company.
ARTICLE IX
DESIGNATION OF BENEFICIARY
Each Participant may designate, on a form provided by the Committee, one or
more beneficiaries to receive the Shares described in Section 7.2 in the event
of such Participant's death. The Company may rely upon the beneficiary
designation last filed with the Committee, provided that such form was executed
by the Participant or his or her legal representative and filed with the
Committee prior to the Participant's death.
ARTICLE X
ADJUSTMENT PROVISIONS
In the event any recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase, exchange of shares or other securities of the
Company, stock split or reverse split, or similar corporate transaction or event
affects Shares such that an adjustment is determined by the Board or Committee
to be appropriate to prevent dilution or enlargement of Participants' rights
under this Plan, then the Board or Committee will, in a manner that is
proportionate to the change to the Shares and is otherwise equitable, adjust the
number or kind of Shares to be delivered upon settlement of Stock Unit Accounts
under Article VII.
ARTICLE XI
COMPLIANCE WITH RULE 16b-3
Subject to Section 6.2, it is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 under the
Exchange Act in connection with the deferral of Fees and Compensation.
ARTICLE XII
GENERAL PROVISIONS
12.1 No Right to Continue as an Officer or Director. Nothing contained in
this Plan will confer upon any Participant any right to continue to serve as an
Officer or Director.
12.2 No Shareholder Rights Conferred. Nothing contained in this Plan will
confer upon any Participant any rights of a shareholder of the Company unless
and until Shares are in fact issued or transferred to such Participant in
accordance with Article VII.
12.3 Change to the Plan. The Board may amend, alter, suspend, discontinue,
extend, or terminate the Plan without the consent of shareholders or
Participants, except that any such action will be subject to the approval of the
Company's share holders at the next annual meeting of shareholders having a
record date after the date such action was taken if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, or if the Board determines in its discretion to seek such shareholder
approval; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
with respect to any Stock Units credited to his or her Stock Unit Account.
12.4 Consideration; Agreements. The consideration for Shares issued or
delivered in lieu of payment of Fees or Compensa tion will be the service of the
Officer or Director during the period to which the Fees or Compensation paid in
the form of Shares related.
12.5 Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver Shares in connection with this Plan in a
transaction subject to the registration requirements of the Securities Act of
1933, as amended, or any other federal or state securities law, any requirement
under any listing agreement between the Company and any national securities
exchange or automated quotation system or any other laws, regulations, or
contractual obligations of the Company, until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been complied with
in full. Certificates representing Shares delivered under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations, and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.
12.6 Limitations on Transferability. Stock Units and any other right under
the Plan that may constitute a "derivative security" as generally defined in
Rule 16a-1(c) under the Exchange Act will not be transferable by a Participant
except by will or the laws of descent and distribution (or to a designated
beneficiary in the event of a Participant's death); provided, however, that such
rights may be transferred to one or more trusts or other beneficiaries during
the lifetime of the Participant in connection with the Participant's estate
planning, but only if and to the extent then permitted under Rule 16b-3 and
consistent with the registration of the offer and sale of Shares on Form S-8 or
a successor registration form of the Securities and Exchange Commission. Stock
Units and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims of
creditors.
12.7 Governing Law. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the laws of the
State of Oklahoma, without giving effect to principles of conflicts of laws, and
applicable federal law.
12.8 Plan Termination. Unless earlier terminated by action of the Board or
Executive Committee of the Board, the Plan will remain in effect until the
earlier of (i) such time as no Shares remain available for delivery under the
Plan and the Company has no further rights or obligations under the Plan or (ii)
June 30, 2006.
PROXY
THE BEARD COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR STOCKHOLDERS MEETING ON JUNE 7, 2001
The undersigned stockholder of The Beard Company, an Oklahoma corporation,
hereby appoints W. M. Beard and Herb Mee, Jr. or either of them, with full power
of substitution, as true and lawful agents and proxies to represent the
undersigned and vote all shares of stock of The Beard Company owned by the
undersigned in all matters coming before the 2001 Annual Meeting of Stockholders
(or any adjournment thereof) of The Beard Company to be held in the Executive
Boardroom of the Holiday Inn Express & Suites, located at 2811 N. W. Expressway,
Oklahoma City, Oklahoma 73112, on Thursday, June 7, 2001 at 10:00 a.m. local
time. The Board of Directors recommends a vote "FOR" the following matters, all
as more specifically set forth in the Proxy Statement:
1. Election of Directors.
[ ] FOR the nominees listed below
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below:
Harlon E. Martin, Jr. - three year term expiring in 2004
Herb Mee, Jr. - three year term expiring in 2004
2. Approval of the Amendment to The Beard Company Deferred Stock Compensation
Plan, a copy of which is attached to the accompanying Proxy Statement as
Exhibit A.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of Appointment of Cole & Reed, P.C. as independent certified
public accountants for fiscal 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote with respect to any
other matters that may come before the Meeting or any adjournment thereof,
including matters incident to its conduct.
I/WE RESERVE THE RIGHT TO REVOKE THE PROXY AT ANY TIME BEFORE THE EXERCISE
THEREOF. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
SPECIFIED ABOVE BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS ARE
NOT GIVEN, THIS PROXY WILL BE VOTED "FOR" ITEMS 2 AND 3 AND "FOR" THE ELECTION
OF THE DIRECTORS NOMINATED.
Dated__________________________, 2001
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(Signature)
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(Signature if held jointly)
Please sign exactly as your name
appears on your stock certificate
indicating your official position or
representative capacity if
applicable; if shares are held
jointly, each owner should sign.
IMPORTANT: PLEASE SIGN, DATE AND
RETURN THIS PROXY BEFORE THE DATE
OF THE ANNUAL MEETING IN THE
ENCLOSED ENVELOPE.