SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section 240.14a-11(c) or Section
240.14a-12
TRITON ENERGY LIMITED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
TRITON ENERGY LIMITED
CALEDONIAN HOUSE, MARY STREET
P. O. BOX 1043
GEORGE TOWN
GRAND CAYMAN, CAYMAN ISLANDS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 1996
To the Shareholders of
TRITON ENERGY LIMITED
Notice is hereby given that the annual meeting of shareholders of Triton
Energy Limited (the "Company"), a Cayman Islands company, will be held at 10:00
a.m., Dallas time, on Tuesday, May 7, 1996, at the Royal Oaks Country Club, 7915
Greenville Avenue, Dallas, Texas 75231 for the following purposes:
(1) To elect three directors to serve until the third annual meeting of
shareholders to occur after the May 7, 1996 meeting, or until their
respective successors shall have been duly elected and qualified;
(2) To consider and vote upon a proposal to adopt the second amendment and
restatement of the Company's 1992 Stock Option Plan as described in the
accompanying Proxy Statement;
(3) To consider and vote upon a proposal to amend the Company's Amended and
Restated 1985 Restricted Stock Plan to increase by 50,000 shares the
number of the Company's Ordinary Shares available for issuance pursuant
to the plan;
(4) To consider and vote upon a proposal to approve the material terms of
the performance goals that will be used by the Compensation Committee of
the Board of Directors in determining annual bonuses for senior
management; and
(5) To consider and act upon such other matters as may properly come before
the meeting.
Only holders of record of Ordinary Shares at the close of business on March
29, 1996, are entitled to receive notice of and to vote at the meeting, or any
adjournment or adjournments thereof. The meeting may be adjourned from time to
time without notice other than announcement at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY TO THE COMPANY IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE
YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR AT DIFFERENT ADDRESSES, EACH
SUCH PROXY CARD SHOULD BE SIGNED AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES
WILL BE VOTED. THE PROXY CARD SHOULD BE SIGNED BY ALL REGISTERED HOLDERS EXACTLY
AS THE SHARES ARE REGISTERED.
This notice, the Annual Report to Shareholders, the Proxy Statement and the
proxy card that are enclosed herewith are sent to you by order of the Board of
Directors of the Company.
By Order of the Board of Directors
Robert B. Holland, III
SECRETARY
April 9, 1996
TRITON ENERGY LIMITED
CALEDONIAN HOUSE, MARY STREET
P. O. BOX 1043
GEORGE TOWN
GRAND CAYMAN, CAYMAN ISLANDS
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 1996
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished to the holders of Ordinary Shares, par
value $.01 per share ("Ordinary Shares"), of Triton Energy Limited (the
"Company"), a Cayman Islands company, in connection with the solicitation, by
order of the Board of Directors on behalf of the management of the Company, of
proxies to be voted at the annual meeting of shareholders of the Company to be
held on May 7, 1996 (the "Annual Meeting"), and at any and all adjournments
thereof, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting. The approximate date on which this Proxy
Statement, the Notice of Annual Meeting and the accompanying proxy card were
first sent or given to shareholders was April 10, 1996.
The purpose of the Annual Meeting is to consider and act upon (i) the
election of three directors to serve until the third annual meeting of
shareholders to occur after the Annual Meeting, or until their successors have
been duly elected and qualified; (ii) a proposal to adopt the Second Amended and
Restated 1992 Stock Option Plan (the "Option Plan"), which amended and restated
plan would increase the number of Ordinary Shares available for issuance under
the Option Plan from 3,700,000 shares to 4,700,000 shares and effect certain
other amendments; (iii) a proposal to amend the Company's Amended and Restated
1985 Restricted Stock Plan (the "Stock Plan") to increase by 50,000 shares the
number of Ordinary Shares available for issuance pursuant to the Stock Plan;
(iv) a proposal to approve the material terms of the performance goals that will
be used by the Compensation Committee of the Board of Directors in determining
annual bonuses for senior management; and (v) such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
Proxies in the accompanying form that are properly executed, returned to the
Company and not revoked will be voted at the Annual Meeting. Any shareholder has
the unconditional right to revoke his proxy at any time before it is voted.
Proxies may be revoked by duly executing a later dated proxy relating to the
shares being voted or by attending the Annual Meeting and voting by ballot in
person (attending the Annual Meeting without executing a ballot will not
constitute revocation of a proxy). A proxy in the accompanying form which is
properly executed, received by the Company and not revoked will be voted only as
specified in the proxy. Unless the shareholder specifies otherwise, a proxy in
the accompanying form which is properly executed, returned by a shareholder to
the Company and not revoked will be voted (i) FOR the election of the three
individuals who have been nominated by the Board of Directors to serve as
directors of the Company; (ii) FOR approval of the proposal to adopt the second
amended and restated Option Plan; (iii) FOR approval of the proposal to amend
the Stock Plan; (iv) FOR approval of the material terms of the performance
goals; and (v) at the discretion of the proxy holders with regard to any other
matters that may properly come before the Annual Meeting.
Management of the Company knows of no matters other than as described in the
accompanying Notice of Annual Meeting that are likely to be brought before the
Annual Meeting. However, if any other matters, not now known, properly come
before such meeting, the persons named in the enclosed proxy will vote the proxy
in accordance with their best judgment on such matters.
THE REORGANIZATION
On March 25, 1996, the merger of a subsidiary of the Company into Triton
Energy Corporation ("Triton Delaware") was effected and, as a result, each
outstanding share of Common Stock of Triton Delaware was converted into one
Ordinary Share of the Company and the Company continued the business of Triton
Delaware. Information in this Proxy Statement as of a date or with respect to a
period prior to March 25, 1996 relates to the Company's predecessor, Triton
Delaware. No Equity Units were issued in the merger because the holders of less
than 15% of the Common Stock of Triton Delaware elected to receive them.
VOTING AND PRINCIPAL SHAREHOLDERS
At March 29, 1996, the Record Date (herein so called) for the determination
of shareholders entitled to receive notice of and to vote at the Annual Meeting,
there were outstanding 35,926,275 Ordinary Shares held of record by
approximately 5,300 shareholders. Each Ordinary Share is entitled to one vote on
any matter to come before the Annual Meeting.
The presence, in person or by proxy, of the holders of at least a majority
of the Ordinary Shares entitled to vote as of the Record Date is necessary to
constitute a quorum at the Annual Meeting. Each Ordinary Share represented at
the Annual Meeting in person or by proxy will be counted toward a quorum.
Approval of the proposal to elect the three nominees to serve as directors
requires the affirmative vote of the holders of a plurality of the Ordinary
Shares represented at the Annual Meeting and entitled to vote thereon. Votes may
be cast in favor or withheld. Votes that are withheld will be excluded entirely
from the vote and will have no effect. The holders of Ordinary Shares have no
appraisal or similar rights with respect to any matter scheduled to be voted on
at the Annual Meeting.
Approval of the proposals to adopt the second amended and restated Option
Plan, amend the Stock Plan and approve the material terms of the performance
goals requires the favorable vote of the holders of a majority of the Ordinary
Shares present, or represented, and entitled to vote at the Annual Meeting.
Abstentions on such proposals may be specified and will have the same effect as
a vote against such proposals, whereas broker non-votes will have no effect on
the outcome of such proposals.
The following table sets forth information as of March 29, 1996, except as
noted below, regarding the beneficial ownership of the Company's Ordinary Shares
by each person known to the Company to own 5% or more of the outstanding
Ordinary Shares, each current director of the Company and each nominee for
director, the Company's Chief Executive Officer, each of the Company's four
other most highly compensated executive officers for the year ended December 31,
1995 and the directors and executive officers of the Company as a group. The
persons named in the table have sole voting and investment power with respect to
all capital shares owned by them, unless otherwise noted.
AMOUNT AND
NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
- -------------------------------------------------------------------------------------- ---------------- ------------
Oppenheimer Group, Inc. (2)........................................................... 4,636,534 12.9%
Dietche & Field Advisers, Inc. (3).................................................... 2,773,300 7.7
Lynch & Mayer, Inc. (4)............................................................... 2,276,500 6.3
Herbert L. Brewer..................................................................... 52,000 *
Ernest E. Cook........................................................................ 53,299 *
Sheldon R. Erikson.................................................................... -- --
Ray H. Eubank......................................................................... 62,481 *
Thomas G. Finck....................................................................... 389,987 1.1
Jesse E. Hendricks.................................................................... 45,135 *
Fitzgerald S. Hudson.................................................................. 164,990(5) *
John R. Huff.......................................................................... -- --
John P. Lewis......................................................................... 46,090 *
2
AMOUNT AND
NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
- -------------------------------------------------------------------------------------- ---------------- ------------
Michael E. McMahon.................................................................... 17,000 *
Wellslake D. Morse, Jr................................................................ 45,683 *
Edwin D. Williamson................................................................... 7,600 *
J. Otis Winters....................................................................... 15,000 *
Nick G. De'Ath........................................................................ 135,231 *
Robert B. Holland, III................................................................ 205,902 *
Peter Rugg............................................................................ 181,805 *
Al E. Turner.......................................................................... 43,399 *
All directors and executive officers as a group (18 persons,
including those individuals named above)............................................. 1,714,856 4.6
- ------------------------
* less than 1%
(1) Includes shares held by or for the benefit of wives and minor children of
directors and executive officers and entities in which directors or
executive officers hold a controlling interest, and includes the number of
shares indicated as follows that are issuable upon exercise of stock options
that are exercisable or exercisable within 60 days and/or Convertible
Subordinated Debentures that are convertible or convertible within 60 days:
Messrs. Brewer and Hudson, 30,000 shares; Messrs. Cook, Eubank, Hendricks,
Lewis and Morse, 45,000 shares; Mr. Finck, 381,250 shares; Messrs. McMahon
and Winters, 15,000 shares; Mr. Williamson, 5,000 shares; Mr. De'Ath,
135,000 shares; Mr. Holland, 198,750 shares; Mr. Rugg, 180,000 shares; Mr.
Turner, 42,998; and all directors and executive officers as a group,
1,497,540 shares. Certain directors and executive officers also own
securities issued by corporations in which the Company owns a minority
equity interest. Includes shares issuable upon exercise of options owned by
trusts established by certain executive officers for the benefit of their
family members as to which such executive officers disclaim beneficial
ownership.
(2) Based on a Schedule 13G filed with the Securities and Exchange Commission
dated February 1, 1996. The address of Oppenheimer Group, Inc. is
Oppenheimer Tower, World Financial Center, New York, New York 10281.
(3) Based on a Schedule 13G filed with the Securities and Exchange Commission
dated January 12, 1996. The address of Dietche & Field Advisers, Inc. is 437
Madison Avenue, New York, New York 10022.
(4) Based on a Schedule 13G filed with the Securities and Exchange Commission
dated February 1, 1996. The address of Lynch & Mayer, Inc. is 520 Madison
Avenue, New York, New York 10020.
(5) Includes 72,604 shares held by partnerships in which Mr. Hudson owns a 1%
interest and for which Mr. Hudson serves as general partner.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Articles of Association of the Company, directors of
the Company are divided into three classes, with the term of office of each
class being for three years. At the Annual Meeting it is proposed that the
nominees listed below be elected as members of the Board of Directors with terms
expiring in 1999. Each such director shall be elected to serve in such capacity
until the third annual meeting of shareholders to occur after the Annual Meeting
or until his respective successor is duly elected and qualified.
3
INFORMATION CONCERNING DIRECTORS
Information concerning the nominees proposed by the Board of Directors for
election as directors with terms expiring in 1999 along with information
concerning the present directors whose terms of office will continue after the
Annual Meeting, is set forth below.
In the event that any of the below-named nominees for director becomes
unable or unwilling to accept nomination or election, the person or persons
voting the proxy will vote for the election in his stead of such person as the
Board of Directors may recommend. Unless otherwise instructed on the proxy, the
proxy holders will vote the proxies received by them FOR the election of the
nominees shown below:
PRINCIPAL POSITIONS DIRECTOR
NAME AGE WITH THE COMPANY SINCE
- ---------------------------------------------- ----- ---------------------------------------------- -------------
NOMINEES
CLASS I
TERM EXPIRING 1999
Thomas G. Finck............................... 49 Chairman of the Board and Chief Executive
Officer 1992
Jesse E. Hendricks............................ 82 Director 1965
Michael E. McMahon............................ 48 Director 1993
DIRECTORS CONTINUING IN OFFICE
CLASS II
PRESENT TERM EXPIRES 1997
Ernest E. Cook................................ 70 Director 1978
Ray H. Eubank................................. 68 Director 1969
Wellslake D. Morse, Jr........................ 68 Director 1978
Edwin D. Williamson........................... 56 Director 1994
CLASS III
PRESENT TERM EXPIRES 1998
Sheldon R. Erikson............................ 54 Director 1995
Fitzgerald S. Hudson.......................... 71 Director 1992
John R. Huff.................................. 50 Director 1995
John P. Lewis................................. 59 Director 1987
Mr. Finck became a director, President and Chief Operating Officer of the
Company in August 1992. Effective January 1993, Mr. Finck became Chief Executive
Officer and effective May 1995 he assumed the additional position of Chairman of
the Board. From July 1991 to August 1992, Mr. Finck served as President and
Chief Executive Officer of American Energy Group, an independent oil and natural
gas exploration and production company. From May 1984 until June 1991, Mr. Finck
served as President and Chief Executive Officer of Ensign Oil & Gas Inc., a
private domestic oil and gas exploration company. Mr. Finck is the Chairman of
the Board of Crusader Limited, the Company's 49.9% owned affiliate, and its
subsidiary, Allied Queensland Coalfields, and a director of New Zealand
Petroleum Company Limited, a New Zealand corporation 33.7% owned by the Company.
Mr. Hendricks has been managing his personal investments for more than the
past five years.
Mr. McMahon became a Managing Director of Lehman Brothers in October 1994.
Prior to joining Lehman Brothers, Mr. McMahon had been a partner in Aeneas
Group, Inc., a subsidiary of Harvard Management Company, Inc., since January
1993. Harvard Management Company, Inc. is a private investment company
responsible for managing the endowment fund of Harvard University. Mr. McMahon
was primarily responsible for the fund's energy and commodities investments.
From
4
1989 through 1992 Mr. McMahon was a Managing Director of Salomon Brothers, Inc.,
responsible for investment banking activities with energy and chemical companies
worldwide. Mr. McMahon is a director of Tejas Power Corporation and Cairn Energy
USA, Inc.
Mr. Cook has been an independent oil and gas consultant and independent oil
operator for more than the past five years. Mr. Cook is a director of
Input/Output, Inc. and Marine & Mercantile Securities plc.
Mr. Eubank has been a professional consulting engineer and independent oil
operator for more than the past five years.
Mr. Morse has been managing his personal investments for more than the past
five years.
Mr. Williamson has been a partner in the law firm of Sullivan & Cromwell
since January 1, 1971, except from September 1990 to January 1993 when he served
as the legal adviser of the United States Department of State.
Mr. Erikson has served as President and Chief Executive Officer of Cooper
Cameron Corporation, a petroleum and industrial equipment company, since January
1995 and has served as a director of such corporation since March 1995. Mr.
Erikson was the Chairman of the Board from 1988 and President and Chief
Executive Officer from 1987 to 1995 of The Western Company of North America, an
oil and gas service company. Mr. Erikson is also a director of Bettis
Corporation.
Mr. Hudson's principal occupation since 1991 has been his position as
general partner of Hudson Group Partners, a family investment partnership. From
1990 to 1991 Mr. Hudson was Chairman of the construction division of Willis
Corroon, an insurance brokerage firm.
Mr. Huff has served as President and Chief Executive Officer of Oceaneering
International, Inc., a company providing engineering and intervention services
primarily for underwater operations, since August 1986. Mr. Huff has served as
Chairman of Oceaneering International, Inc. since 1990. Mr. Huff is also a
director of BJ Services and Production Operators.
Mr. Lewis has been Managing Partner of Lewis Partners, a private investment
company engaged in mergers and acquisitions, primarily involving manufacturing
and distribution companies, for more than the past five years.
As far as is known to the Company, no family relationships exist between the
directors and the nominees for director of the Company, or between the directors
or nominees for director and the officers of the Company.
MEETINGS OF DIRECTORS AND COMMITTEES
During the year ended December 31, 1995, the Board of Directors held six
meetings. Each current director attended no less than 75% of these meetings and
of the meetings of the committees of the Board of Directors on which he served.
The Board of Directors has an Executive Committee, which has the authority,
subject to restrictions imposed by Cayman Islands law and the Company's Articles
of Association, to act for the Board of Directors. Messrs. Finck (Chairman),
Erikson, Hendricks, Hudson, and Lewis currently are members of the Executive
Committee. The Executive Committee did not meet during the year ended December
31, 1995.
The Board of Directors has an Audit Committee, whose functions include the
selection of the independent auditors, along with the review in conjunction with
the independent auditors of the plans and scope of the audit engagement. The
committee also reviews with the independent auditors the results of their
examination, approves the fee charged by the independent auditors and reviews
the Company's internal controls. Messrs. Lewis (Chairman), Cook, Eubank,
Hendricks and Morse currently are members of the Audit Committee. The Audit
Committee held five meetings during the year ended December 31, 1995.
5
The Board of Directors has a Compensation Committee, which reviews and
recommends the compensation to be paid to employees and reviews, interprets and
helps administer the various existing stock option, restricted stock and
convertible debenture plans of the Company. Messrs. Huff (Chairman), Erikson,
McMahon, Morse and Winters currently are members of the Compensation Committee.
The Compensation Committee held four meetings during the year ended December 31,
1995.
The Board of Directors has a Nominating Committee, which is authorized by
the Board of Directors to recommend nominees for election to the Board of
Directors and nominees to fill additional directorships that may be created and
to fill vacancies that may exist on the Board of Directors. The Nominating
Committee will consider nominees recommended by shareholders. Recommendations by
shareholders should be submitted to the Secretary of the Company and should
identify the nominee by name and provide detailed background information and
comply with the other requirements of the Company's Articles of Association.
Messrs. Hudson (Chairman), Huff, McMahon and Williamson currently are members of
the Nominating Committee. The Nominating Committee held one meeting during the
year ended December 31, 1995.
PROPOSAL NO. 2
APPROVAL OF SECOND AMENDED AND RESTATED OPTION PLAN
GENERAL
A copy of the Option Plan, as proposed to be amended and restated, is
attached to this Proxy Statement as Appendix A. The following is a brief summary
of certain provisions of the Option Plan and is qualified in its entirety by
reference to the full text of the Option Plan.
CURRENT PROVISIONS OF OPTION PLAN. The Company adopted the Option Plan
effective September 19, 1991 and the Company's shareholders approved the first
amendment and restatement of the Option Plan at the Company's Annual Meeting
held in 1993. Under the Option Plan, options to purchase up to 3,700,000
Ordinary Shares may be granted to employees, advisors and directors of the
Company and its subsidiaries, including the chief executive officer and the
other executive officers of the Company. The Option Plan requires that the
purchase price per share under each option be not less than 100% of the fair
market value of the Ordinary Shares on the date of grant and that the option
period shall expire not more than ten years from the date the option is granted.
Options granted under the Option Plan, other than directors' automatically
granted options, generally become exercisable one year following the date of
grant with respect to 25% of the Ordinary Shares covered thereby and vest 25%
per year thereafter; provided that all unexercised options will become
immediately exercisable upon a change of control. The Option Plan limits the
number of shares that can be acquired by any individual upon exercise of options
granted under the Option Plan to one-half of the total number of shares issuable
under the plan. The Option Plan permits the exercise of options by the delivery
of Ordinary Shares previously owned by the optionee in lieu of or in addition to
cash. At the election of the Compensation Committee, which administers the
Option Plan, options granted thereunder may be treated as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to compliance with the conditions specified therein. On or
about November 15 each year non-employee directors are automatically granted
options under the Option Plan to purchase 15,000 Ordinary Shares at the fair
market value thereof at the time of grant. At March 29, 1996, in addition to
non-employee directors, the Company had approximately 250 employees, all of whom
were eligible to participate in the Option Plan, and there were outstanding
options to purchase 3,098,027 Ordinary Shares under the plan. At March 29, 1996,
308,375 options were available for grant under the Option Plan. The closing
price of the Company's Ordinary Shares on the New York Stock Exchange Composite
Tape on March 29, 1996 was $55.75.
AMENDMENTS. The Board of Directors of the Company has unanimously approved
the adoption of the second amended and restated Option Plan, the primary
amendments being (i) to increase the number of Ordinary Shares that may be
issued upon the exercise of options granted under the Option
6
Plan from 3,700,000 shares to 4,700,000 shares; (ii) expressly to prohibit the
committee from repricing options or otherwise substituting new options for
previously granted options at a lower exercise price without shareholder
approval; (iii) to provide that in the event a non-employee director is elected
to the Board of Directors other than at an annual meeting, such director will
automatically be granted an option to purchase 15,000 Ordinary Shares at the
fair market value thereof at the time of grant; (iv) to change the date of the
automatic grant of options to non-employee directors from November 15 of each
year to May 15 of each year; (v) to make the rules governing the exercisability
of non-employee directors' automatic options following termination of service
consistent with those governing other nonqualified options; and (vi) to increase
the Company's flexibility under the Option Plan by providing that (a) the
Compensation Committee may consist of not fewer than two members; (b) with
respect to participants whose transactions in the Company's equity securities
are not subject to potential liability under Section 16 of the Securities
Exchange Act of 1934, as amended ("Section 16 Liability"), generally all
employees other than executive officers and directors, the restrictions
currently imposed by the Option Plan requiring a minimum six-month holding
period and limiting transferability to, or for the benefit of, family members
for no consideration need not apply, and with respect to participants whose
transactions are subject to Section 16 Liability, generally directors and
executive officers ("Insiders"), such restrictions need not apply to the extent
Section 16 or the regulations thereunder are amended so as to remove or limit
such restrictions; (c) with respect to participants who are not Insiders, the
plan may be amended in any manner, and the terms of any options outstanding or
granted under the Option Plan may be modified, by the Board of Directors without
shareholder approval (except with respect to repricing as provided above), and
with respect to Insiders, the plan may be amended and outstanding options may be
modified by the Board of Directors without shareholder approval to the extent
Section 16 or the regulations thereunder are amended to remove or limit such
restrictions (except with respect to repricing as provided above). Upon their
election in 1995 to fill vacancies on the Board of Directors, each of Messrs.
Erikson and Huff was granted an option to purchase 15,000 Ordinary Shares as an
automatic grant, conditioned on approval of the second amendment and restatement
of the Option Plan. Members of the Company's management and Board of Directors
have indicated that they will vote all shares held by them in favor of the
second amendment and restatement of the Option Plan and believe approval would
be in the best interests of the Company and its shareholders.
The Board of Directors believes that the continued success of the Company
depends upon its ability to attract and retain highly qualified and competent
employees, directors and advisors and that options under the Option Plan enhance
that ability and provide motivation to the recipients of the options to advance
the interests of the Company and its shareholders. The Board of Directors
believes that it is necessary and advisable to increase the number of Ordinary
Shares that may be issued upon exercise of options granted under the Option Plan
at this time because there are only an aggregate of 317,165 options available
for grant under the Option Plan or the Company's other stock option plans. The
Board of Directors believes that the other amendments are desirable because they
would increase the flexibility of the Compensation Committee in administering
the Option Plan and add features that may make options more attractive to
employees, directors and advisors, thereby increasing the effectiveness of the
Option Plan.
A vote in favor of Proposal No. 2 will be deemed approval of (i) the
specific terms of the Option Plan, as amended and restated, (ii) the class of
employees to which options may be granted (including the chief executive officer
and the other executive officers of the Company), (iii) the formula by which the
exercise price is determined (as described above) and (iv) the limitation on the
number of shares any individual may acquire over the ten year term of the plan
(as described above).
SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OPTION PLAN
INCENTIVE STOCK OPTIONS. No taxable income is realized by a participant and
no tax deduction is available to the Company upon either the grant or exercise
of an incentive stock option. If a participant holds the shares acquired upon
the exercise of an incentive stock option for more than one year after the
issuance of the shares upon exercise of the incentive stock option and more than
two years
7
after the date of the grant of the incentive stock option ("holding period"),
the difference between the exercise price and the amount realized upon the sale
of the shares will be treated as a long-term capital gain or loss and no
deduction will be available to the Company. If the shares are transferred before
the expiration of the holding period, the participant will realize ordinary
income and the Company will be entitled to a deduction on the portion of the
gain, if any, equal to the difference between the incentive stock option
exercise price and the fair market value of the shares on the date of exercise
or, if less, the difference between the amount realized on the disposition and
the adjusted basis of the shares. Any further gain or loss will be taxable as a
long-term or short-term capital gain or loss depending upon the holding period
before disposition. Certain special rules apply if an incentive stock option is
exercised by tendering stock.
The difference between the incentive stock option exercise price and the
fair market value, at the time of exercise, of the Ordinary Shares acquired upon
the exercise of an incentive stock option may give rise to alternative minimum
taxable income subject to an alternative minimum tax. Special rules also may
apply in certain cases where there are subsequent sales of shares in
disqualifying dispositions and to determine the basis of the shares for purposes
of computing alternative minimum taxable income on a subsequent sale of the
shares.
NONQUALIFIED OPTIONS. No taxable income generally is realized by the
participant upon the grant of a nonqualified stock option, and no deduction
generally is then available to the Company. Upon exercise of a nonqualified
stock option, the excess of the fair market value of the shares on the date of
exercise over the exercise price will be taxable to the participant as ordinary
income and will be deductible by the Company. The tax basis of shares acquired
by the participant will be the fair market value on the date of exercise. When a
participant disposes of shares acquired upon exercise of a nonqualified stock
option, any amount realized in excess of the fair market value of the shares on
the date of exercise generally will be treated as a capital gain and will be
long-term or short-term, depending on the holding period of the shares. The
holding period commences upon exercise of the nonqualified stock option. If the
amount received is less than such fair market value, the loss will be treated as
a long-term or short-term capital loss depending on the holding period of the
shares. The exercise of a nonqualified stock option will not trigger the
alternative minimum tax consequences applicable to incentive stock options.
8
ISSUANCES OF OPTIONS UNDER THE OPTION PLAN
The following table sets forth certain information regarding options that
have been granted under the Option Plan to the persons or groups indicated since
the plan's inception through March 29, 1996.
NUMBER OF SHARES AVERAGE
SUBJECT TO EXERCISE
NAME OR GROUP OPTIONS PRICE
- -------------------------------------------------------------------------------- ----------------- -------------
Ernest E. Cook.................................................................. 75,000 $ 40.43
Sheldon R. Erikson.............................................................. 30,000 42.38
Ray H. Eubank................................................................... 75,000 40.43
Thomas G. Finck................................................................. 475,000 37.63
Jesse E. Hendricks.............................................................. 75,000 40.43
Fitzgerald S. Hudson............................................................ 60,000 40.03
John R. Huff.................................................................... 30,000 42.38
John P. Lewis................................................................... 75,000 40.43
Michael E. McMahon.............................................................. 45,000 40.17
Wellslake D. Morse, Jr.......................................................... 75,000 40.43
Edwin D. Williamson............................................................. 30,000 44.13
Nick G. De'Ath.................................................................. 195,000 38.94
Robert B. Holland, III.......................................................... 285,000 37.12
Peter Rugg...................................................................... 234,792 39.10
Al E. Turner.................................................................... 80,000 42.69
All current executive officers as a group....................................... 1,465,344 37.79
All current directors who are not executive officers as a group................. 675,000 40.66
All employees, including current officers and executive officers, as a group.... 3,018,800 37.76
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE STOCK PLAN
GENERAL
CURRENT PROVISIONS OF THE STOCK PLAN. The Company adopted the Stock Plan
effective August 21, 1984 and the Company's shareholders approved the amendment
and restatement of the Stock Plan at the Company's Annual Meeting in 1993. The
Stock Plan offers two types of compensation -- the purchase of Ordinary Shares
through payroll deductions (the "Share Purchase feature") and the grant of
Ordinary Shares subject to certain restrictions on transfer (the "Restricted
Share feature"). At March 29, 1996, approximately 250 persons were eligible to
participate in the Stock Plan, and 9,327 Ordinary Shares were available for
issuance under the plan.
SHARE PURCHASE. Under the Share Purchase feature of the Stock Plan,
eligible employees are able to purchase Ordinary Shares through payroll
deductions. This is accomplished through semi-annual offerings of options to
purchase Ordinary Shares (each an "Offering") from January 1 to June 30 and July
1 to December 31 of each year (each an "Offering Period"). Generally, any person
who has been an employee of the Company or any subsidiary of the Company for a
specified period of time prior to the commencement date of an Offering is
eligible to participate in the Share Purchase feature during that Offering
Period provided that no employee may participate under the Share Purchase
feature if (i) such employee's rights to purchase shares under all employee
share purchase plans (within the meaning of Section 423 of the Code) of the
Company and any parent or subsidiary of the Company would accrue at a rate that
exceeds $25,000 of fair market value of the shares (determined as of the grant
date) for each calendar year in which such option is outstanding at any time or
(ii) the employee will own, after grant of the option, shares possessing 5% or
more of the total combined voting power or value of all classes of shares of the
Company or of any parent or subsidiary of the Company.
9
Under the Share Purchase feature, eligible employees may purchase Ordinary
Shares under their options by authorizing a payroll deduction of up to 15% of
either their "base" or "gross" compensation (as defined in the Stock Plan) to be
withheld by the Company. The restrictions on transfer described below do not
apply to any shares purchased under the Share Purchase feature. The purchase
price for the Ordinary Shares will be 85% of the lesser of (a) the market value
of the shares as of the commencement date of the Offering or (b) the market
value of the shares as of the last day of the Offering. The "market value" means
the closing price of the Ordinary Shares on the New York Stock Exchange. As of
March 29, 1996, 38,703 Ordinary Shares had been issued pursuant to the Share
Purchase feature of the Stock Plan.
RESTRICTED SHARES. Under the Restricted Share feature of the Stock Plan,
Ordinary Shares ("Restricted Shares") may be granted to employees (including
directors who are also employees) of the Company and its subsidiaries. Each
grant of Restricted Shares under the Stock Plan confers upon the recipient the
right to receive a specified number of Restricted Shares in accordance with the
terms and conditions of each individual's written agreement entered into with
the Company. The Stock Plan is administered by the Compensation Committee.
Any Restricted Shares granted will be restricted with respect to the sale,
transfer or other disposition, assignment, pledge or other hypothecation thereof
for a period of four years from the date of grant. Restrictions lapse with
respect to one-third of the shares annually, beginning on the second anniversary
date of the effective date of issuance. In the event of an employee's death or
retirement, the restrictions on the stock lapse. In the event of an employee's
termination of employment for any reason other than death or retirement, the
Committee may, in its sole discretion, waive the restrictions on the stock with
respect to any or all of the Restricted Shares if the Committee determines such
waiver to be in the best interest of the Company. As of March 29, 1996, 1,970
Ordinary Shares had been issued under the Restricted Share feature of the Stock
Plan.
AMENDMENT. The Board of Directors of the Company has unanimously approved
the adoption of an amendment to the Stock Plan to increase the number of
Ordinary Shares issuable under the Stock Plan by 50,000 shares and recommends
that the shareholders vote for approval of the amendment. The Company expects
that substantially all of such shares would be issuable through the Share
Purchase feature of the Stock Plan.
SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK PLAN
PURCHASES OF ORDINARY SHARES PURSUANT TO SHARE PURCHASE FEATURE. For
federal income tax purposes, an employee's right to participate in an Offering
is considered an option to purchase Ordinary Shares. As provided in Section 423
of the Code, the participant will not recognize taxable income on the grant of
the options or the purchase of shares, even though the shares are purchased at
less than their current fair market value. If a participant sells or otherwise
disposes of the shares within two years after the date of the granting of the
option pursuant to an Offering applicable to such shares or within one year
after the shares were transferred to him under the Stock Plan, the disposition
will be considered to be a disqualifying disposition and the participant
generally must recognize ordinary income equal to the excess of the fair market
value of the shares on their date of purchase over their actual purchase price.
The Company is entitled to a deduction for this amount in the case of a
disqualifying disposition, subject to any limitations as a result of Section
162(m) of the Code. If the participant sells or otherwise disposes of the shares
more than two years after the date of the granting of the option pursuant to an
Offering applicable to such shares and after one year from the date of the
transfer of the shares to him pursuant to the Stock Plan, the ordinary income
the participant must report will be the lesser of the amount, if any, by which
the fair market value of the shares on the date of Offering exceeds the
participant's actual purchase price or the excess, if any, of the fair market
value of the shares at the time of the disposition over the participant's actual
purchase price. The Company is not entitled to a tax deduction for this amount.
10
The basis of any shares purchased pursuant to the Share Purchase feature of
the Stock Plan is the actual purchase price of the shares increased by the
amount of compensation income recognized by the participant. Any further gain or
loss from a disposition of the shares will be taxable as long-term or short-term
capital gain or loss depending upon the holding period before disposition. For
shares held for more than one year, the participant will realize long-term
capital gain or loss upon disposition. Certain special rules apply if a
participant dies while owning shares acquired under the Stock Plan.
GRANTS OF RESTRICTED SHARES. Unless a participant otherwise elects to be
taxed upon receipt of Restricted Shares under the Stock Plan, he must include in
his taxable income the difference between the fair market value of the shares
and the amount paid, if any, for the shares, as of the first date the
participant's interest in the shares is no longer subject to a substantial risk
of forfeiture or such shares become transferable. The Company is entitled to a
deduction for the amount so included in the participant's taxable income,
subject to any limitation resulting from Section 162(m) of the Code. A
participant's rights in Restricted Shares are subject to a substantial risk of
forfeiture if the rights to full enjoyment of the shares are conditioned,
directly or indirectly, upon the future performance of substantial services by
the participant. Where Restricted Shares are subject to a substantial risk of
forfeiture, the participant can elect to report the difference between the fair
market value of the shares on the date of receipt and the amount paid, if any,
for the shares as ordinary income in the year of receipt. To be effective, the
election must be filed with the Internal Revenue Service within 30 days after
the date the shares are transferred to the participant. The amount of taxable
gain arising from a participant's sale of Restricted Shares acquired pursuant to
the Stock Plan is equal to the excess of the amount realized on such sale over
the sum of the amount paid, if any, for the stock and the compensation element
included by the participant in taxable income. For shares held for more than one
year, the participant will realize long-term capital gain or loss upon
disposition.
ISSUANCES UNDER THE STOCK PLAN
SHARE PURCHASE. The following table sets forth certain information
regarding purchases of Ordinary Shares under the Stock Plan by the persons or
groups indicated since the plan's inception through March 29, 1996.
NUMBER OF SHARES
NAME OR GROUP (1) PURCHASED
- -------------------------------------------------------------------------------------- -----------------
Thomas G. Finck....................................................................... 1,659
Nick G. De'Ath........................................................................ 231
Robert B. Holland, III................................................................ 1,659
Peter Rugg............................................................................ 1,640
Al E. Turner.......................................................................... 748
All executive officers as a group..................................................... 6,685
All employees, including current officers and executive officers, as a group.......... 38,703
- ------------------------
(1) Non-employee directors are not eligible to purchase shares under the Share
Purchase feature of the Stock Plan.
RESTRICTED STOCK. Since the Restricted Stock Plan's inception, no grants of
Restricted Stock have been made to any director or executive officer of the
Company, and an aggregate of 1,970 shares of Restricted Stock have been granted
under the plan to employees of the Company.
PROPOSAL NO. 4
APPROVAL OF PERFORMANCE GOALS
Prior to year-end 1995 the Compensation Committee had considered the
establishment of objective goals as a basis for its executive compensation
recommendations, but until early 1996 had concluded that a subjective assessment
of management's performance was more appropriate given the nature of the
Company's exploration business, the status of the Company's major assets
(including its
11
Colombian and Malaysia-Thailand interests), and the influence on the Company's
results of operations and stock price of factors deemed largely beyond
management's control. After year-end 1995, however, the Compensation Committee
reconsidered the establishment of more objective goals as a basis for senior
executive compensation in light of the Company's progress in achieving
profitability and other corporate goals. As a result, the Committee decided that
it would henceforth establish annual guidelines for senior executive
compensation giving greater weight to the Company's share price performance
compared to that of other companies in a peer group selected by the Committee
(see "Stock Performance Chart" below) than to any other factor.
Under the policies and procedures adopted by the Committee, the Committee
(or a subcommittee consisting solely of two or more "outside directors" within
the meaning of Section 162(m) of the Code) will, within 90 days after the
commencement of each fiscal year, establish various performance goals for the
then current year utilizing the following criteria ("Operating Criteria"):
- Actual to planned performance;
- Increases in proved and probable reserves and success in achieving
significant new discoveries;
- Increases in operating cash flow;
- Improvements in capitalization and financing costs;
- Increases in production; and
- Successful implementation and operation of expense control measures.
Within the same 90 day period the Committee (or an appropriate subcommittee)
will determine the relative weight to be given achievement of various Operating
Criteria and to the stock market performance of the Company's Ordinary Shares
compared to the average performance of the shares of the companies in the
selected peer group for the fiscal year in question. The Operating Criteria and
share price performance objectives will be considered the "Performance Goals"
for the year.
As soon as practicable after each year end the Committee (or an appropriate
subcommittee) will review the Company's and management's performance in
achieving the pre-determined Performance Goals for the then ended fiscal year in
determining senior management (i.e., the Chief Executive Officer and the Senior
and Executive Vice Presidents who directly report to the Chief Executive
Officer) annual bonuses and base salary adjustments. If the maximum Performance
Goals are achieved, which the Committee would consider "outstanding", bonuses
equal to 100% of the then ended fiscal year's base salary will be awarded to the
Chief Executive Officer and 75% of the then ended fiscal year's base salary will
be awarded to senior executives who report to the Chief Executive Officer,
provided that no bonus awarded to any individual executive officer under these
procedures will exceed $1 million. The Committee would award smaller bonuses if
the Performance Goals were achieved to a lesser extent. The Committee retains
the discretion it now has, and is proposed to have, under the Option Plan to
award stock options to eligible recipients, including senior management. See
"Proposal No. 2 -- Approval of Second Amended and Restated Option Plan." In
considering annual stock option grants to senior management, however, the
Committee intends to consider management performance using similar criteria
applied over a longer period.
The Board of Directors of the Company has unanimously approved the above
changes in senior management compensation policy and recommends that the
shareholders vote for approval of the material terms of the "Performance Goals".
12
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during or with respect to the years ended December 31, 1995 and 1994, and
the fiscal year ended May 31, 1994, to the Company's Chief Executive Officer and
each of the Company's four other most highly compensated executive officers who
were executive officers at December 31, 1995, based on salary and bonus earned
during the year ended December 31, 1995. The Company changed its fiscal year end
from May 31 to December 31, commencing January 1, 1995.
LONG TERM COMPENSATION
------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------------
------------------------------------------------------------ RESTRICTED OPTIONS/
NAME AND FISCAL OTHER ANNUAL STOCK SARS
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION(S) AWARD(S)($) (#)(1)
- ---------------------------- ----------- ----------- ----------- --------------------- ----------------- -----------
Thomas G. Finck............. 1995 590,000 590,000 -- -- 100,000
Chairman of the Board 1994(2) 566,667 300,000 -- -- 75,000
and Chief Executive 1994 520,833 225,000 -- -- 150,000
Officer
Nick G. De'Ath.............. 1995 276,042 210,000 -- -- 50,000
Senior Vice President, 1994(2) 212,500 150,000 -- -- 50,000
Exploration 1994 190,000 -- -- -- 75,000
Robert B. Holland, III...... 1995 350,000 225,000 -- -- 60,000
Senior Vice President, 1994(2) 329,167 150,000 -- -- 50,000
General Counsel and 1994 314,583 150,000 -- -- 100,000
Secretary
Peter Rugg.................. 1995 325,000 250,000 -- -- 60,000
Senior Vice President and 1994(2) 304,167 150,000 -- -- 50,000
Chief Financial Officer 1994 279,167 100,000 -- -- 100,000
Al E. Turner................ 1995 254,167 185,000 -- -- 40,000
Senior Vice President, 1994(2) 205,000 50,000 -- -- 40,000
Operations 1994(3) 53,000 -- -- -- 20,000
PAYOUTS
-------------
LTIP ALL OTHER
NAME AND PAYOUTS COMPENSATION
PRINCIPAL POSITION (#) ($)
- ---------------------------- ------------- -------------------
Thomas G. Finck............. -- --
Chairman of the Board -- --
and Chief Executive -- --
Officer
Nick G. De'Ath.............. -- --
Senior Vice President, -- --
Exploration -- --
Robert B. Holland, III...... -- --
Senior Vice President, -- --
General Counsel and -- --
Secretary
Peter Rugg.................. -- --
Senior Vice President and -- --
Chief Financial Officer
Al E. Turner................ -- --
Senior Vice President, -- --
Operations -- --
- ------------------------------
(1) Options to acquire Ordinary Shares. Options reported for 1995 were granted
in February 1996 for performance during 1995. Does not include Debentures
purchased by the named executive officers under the 1986 Convertible
Debenture Plan. See "Debenture Purchase."
(2) Information is for the twelve month period ended December 31, 1994.
Accordingly, information presented for the fiscal year ended December 31,
1994 overlaps (with respect to the five-month period from January 1, 1994
through May 31, 1994) with the information presented for the fiscal year
ended May 31, 1994.
(3) Mr. Turner joined the Company in March 1994.
OPTION GRANTS WITH RESPECT TO 1995
The following table provides information regarding options granted to the
named executive officers in February 1996 relating to performance during the
year ended December 31, 1995. No options were granted to the named executive
officers during 1995.
POTENTIAL REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL RATES
------------------------------------------------------------ OF STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR OPTION
SECURITIES OPTIONS/SARS TERM(1)
UNDERLYING GRANTED TO EXERCISE OR -----------------------------------
OPTIONS/SARS EMPLOYEES IN BASE PRICE 0%
GRANTED(#)(2) FISCAL YEAR(3) ($/SH)(4) EXPIRATION DATE -- 5%($) 10%($)
------------- --------------- ----------- --------------- ---------- ----------
Thomas G. Finck............. 100,000 14.6% $ 54.25 Feb. 8, 2006 -- 3,411,753 8,646,053
Nick G. De'Ath.............. 50,000 7.3% $ 54.25 Feb. 8, 2006 -- 1,705,877 4,323,027
Robert B. Holland, III...... 60,000 8.7% $ 54.25 Feb. 8, 2006 -- 2,047,052 5,187,632
Peter Rugg.................. 60,000 8.7% $ 54.25 Feb. 8, 2006 -- 2,047,052 5,187,632
Al E. Turner................ 40,000 5.8% $ 54.25 Feb. 8, 2006 -- 1,364,701 3,458,421
- --------------------------
(1) The potential realizable value portion of the table illustrates value that
might be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
13
appreciation on the Company's Ordinary Shares from the date of grant to the
expiration date. These numbers do not take into account provisions of
certain options providing for termination of the option following
termination of employment, limited transferability or vesting over periods
of up to four years.
(2) Options to acquire Ordinary Shares. Options become exercisable with respect
to 25% of the shares covered thereby on each anniversary of the date of
grant. In the event of a change of control of the Company, however, any
unexercisable portion of the options will become immediately exercisable.
(3) Options are calculated as a percentage of the sum of all options granted in
February 1996 to executive officers relating to 1995 performance and all
other options granted in 1995.
(4) The exercise price is equal to the closing price of the Ordinary Shares as
of the date of grant as reported on the New York Stock Exchange Composite
Tape. The exercise price may be paid in Ordinary Shares owned by the
executive officer, in cash, or in any other form of valid consideration or a
combination of any of the foregoing, as determined by the Compensation
Committee in its discretion.
OPTION EXERCISES DURING 1995 AND OPTION VALUES
The following table provides information related to options exercised by the
named executive officers during the year ended December 31, 1995 and the number
and value of options held at year end, as well as the options granted in
February 1996 relating to 1995 performance.
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/
OPTIONS/SARS SARS AT
SHARES AT FY-END (#) FY-END($)(1)
ACQUIRED ON VALUE -------------------------- -----------
EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE
----------------- --------------- ----------- ------------- -----------
Thomas G. Finck.......................... -- -- 281,250 293,750 $6,696,094
Nick G. De'Ath........................... -- -- 60,000 135,000 1,417,500
Robert B. Holland, III................... -- -- 100,000 185,000 2,490,625
Peter Rugg............................... -- -- 87,500 172,500 1,945,312
Al E. Turner............................. -- -- 9,998 70,002 262,448
UNEXERCISABLE
-------------
Thomas G. Finck.......................... $ 5,007,031
Nick G. De'Ath........................... 2,176,875
Robert B. Holland, III................... 3,281,250
Peter Rugg............................... 2,735,938
Al E. Turner............................. 912,553
- ------------------------
(1) Value at fiscal year end is calculated based on the difference between the
option or SAR exercise price (including the February 1996 options) and the
closing market price of the Ordinary Shares at December 30, 1995 multiplied
by the number of shares to which the option relates. On December 30, 1995,
the closing price as reported by the New York Stock Exchange Composite Tape
was $57.375.
PENSION PLAN TABLE
The following table lists estimated annual benefits payable upon retirement
under the Company's Retirement Income Plan ("Retirement Plan"), including
amounts attributable to the Company's Supplemental Executive Retirement Plan
("SERP"), to participants with varying average earnings levels and years of
service.
YEARS OF CREDITED SERVICE
---------------------------------------------------------------
REMUNERATION 10 15 20 25 30
- -------------------------------------- ----------- ----------- ----------- ----------- -----------
$200,000.............................. $ 87,008 $ 88,006 $ 88,004 $ 90,001 $ 90,999
250,000.............................. 112,008 113,006 114,004 115,001 115,999
300,000.............................. 137,008 138,006 139,004 140,001 140,999
350,000.............................. 162,008 163,006 164,004 165,001 165,999
400,000.............................. 187,008 188,006 189,004 190,001 190,999
450,000.............................. 212,008 213,006 214,004 215,001 215,999
500,000.............................. 237,008 238,006 239,004 240,001 240,999
550,000.............................. 262,008 263,006 264,004 265,001 265,999
600,000.............................. 287,008 288,006 289,004 290,001 290,999
650,000.............................. 312,008 313,006 314,004 315,001 315,999
Payments made under the Retirement Plan and SERP are based on years of
service and annual earnings. Salary and wages are included in the calculation of
average earnings, but bonuses, overtime, severance pay, overrides, royalties and
fringe benefits are excluded.
14
Under the Retirement Plan, the benefit which a participant is entitled to
receive at his normal retirement date (age 65) is equal to .8% of his average
monthly compensation multiplied by his years of service, not to exceed 30 years
plus .65% of his excess average monthly compensation multiplied by his years of
service, not to exceed 30 years. The Retirement Plan also provides an optional
early retirement benefit under which a participant may qualify for a reduced
pension after the attainment of age 55 and the completion of five years of
service. Such benefit is further reduced if distribution commences prior to the
participant's normal retirement date.
The SERP provides supplemental retirement benefits to selected employees.
The benefit levels under the SERP upon normal or early retirement are based on
the participant's final average compensation at retirement reduced by the
participant's accrued benefit under the Retirement Plan and further reduced by
the participant's primary Social Security benefits. The normal retirement
benefit is 50% of average compensation less 100% of anticipated social security
less the Retirement Plan benefit (converted to the joint and 50% contingent
option if the participant is married) multiplied by the accrual percentage. The
accrual percentage is 10% for each completed year up to 100%. A participant's
right to receive a benefit is forfeited in the event a participant's employment
is terminated for cause. A participant accrues his retirement benefit over a
ten-year period. In the event of a change in control, the participant will
become fully accrued in the SERP benefit, the benefit will be distributed as a
lump sum, and the participant will receive an additional payment as a "gross-up"
to cover tax liabilities such that the net lump sum benefit is retained by the
participant. A change of control is considered to have occurred based on the
following: (i) the consummation of a merger or consolidation of the Company,
where the Company is not the surviving corporation, or the sale or other
transfer of all or substantially all of the Company's assets, (ii) the
shareholders of the Company approve a plan of liquidation of the Company, (iii)
any person or group becomes, without the prior approval of the Board of
Directors, a beneficial owner (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of securities of the Company representing 25%
or more of the Company's then outstanding securities having the right to vote in
the election of directors, or (iv) during any period of two consecutive years,
individuals who, at the beginning of such period constituted the entire Board,
cease for any reason (other than death) to constitute a majority of the
directors of the Company, unless the nomination for election of each new
director was approved by a vote of at least two-thirds of the directors then
still in office.
The SERP generally provides that a participant may elect to receive benefits
under the SERP in equal monthly installments over a period of 15 years. The
Company has purchased life insurance to fund the Company's obligations to
participants.
For the year ended December 31, 1995, the remuneration included in the
computation of annual earnings under the Retirement Plan and the SERP for each
of the executive officers named in the Summary Compensation Table was as
follows: Thomas G. Finck, $590,000; Nick G. De'Ath, $300,000; Robert B. Holland,
III, $350,000; Peter Rugg, $325,000; and Al E. Turner, $275,000. The years of
credited service under the Retirement Plan and the SERP for each of those
individuals was as follows: Thomas G. Finck, 3; Nick G. De'Ath, 2; Robert B.
Holland, III, 3; Peter Rugg, 2; and Al E. Turner, 2.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
GENERAL. The Compensation Committee of the Board of Directors of the
Company is composed of non-employee directors. The Compensation Committee, as
part of its review and consideration of executive compensation, takes into
account, among other things, the following goals:
- Provision of incentives and rewards that will attract and
retain highly qualified and productive people;
- Motivation of employees to high levels of performance;
- Differentiation of individual pay based on performance;
15
- Ensuring external competitiveness and internal equity; and
- Alignment of Company, employee and shareholder interests.
The principal components of executive compensation are base pay,
discretionary bonus, and long-term incentives in the form of stock options and
convertible debentures. Executive compensation also includes various benefit and
retirement programs. Each element has a somewhat different purpose and all of
the determinations of the Compensation Committee regarding the appropriate form
and level of executive compensation, including the compensation of the Chief
Executive Officer, ultimately have been judgments based on the Compensation
Committee's ongoing assessment and understanding of the oil and gas business and
the Company's relative position in that business, and the Company and the
Company's executive officers. After year-end 1995, the Committee determined that
a more objective and systematic method for determining senior executive
compensation was appropriate for future periods. See "Proposal No. 4 -- Approval
of Performance Goals."
Since August 1992, the Company has recruited successors to most of its
senior management. In doing so, the Company negotiated separate compensation
packages, the principal components of which were base salaries and stock
options, with its current Chief Executive Officer, its Senior Vice Presidents
(including its Chief Financial Officer, General Counsel and heads of exploration
and operations), and several Vice Presidents. Those individuals' compensation
packages were determined by negotiations based on what the Compensation
Committee and the entire Board of Directors determined to be reasonable and
necessary to attract and properly incentivize highly qualified senior
executives. In exercising its judgment with respect to the amount of salary
increases and bonuses to be paid to executive officers during 1995, the
Compensation Committee noted in particular the significant improvement in the
Company's share price during 1995, and the progress that had been achieved by
the new senior management team in meeting various corporate objectives,
including progress in negotiating agreements relating to the Malaysia-Thailand
Joint Development Area, raising capital to finance the Company's substantial
capital expenditures, restructuring the Company's assets and operations,
disposing of non-core assets, resolving various contingencies, and enhancing the
Company's reputation. The achievement of any one of these objectives was not,
however, given greater weight than any other in determining salary and bonus
amounts. The primary factor considered by the Compensation Committee in
determining individual salary and bonus levels was the level of the position of
each executive officer.
The Compensation Committee believes that an emphasis on equity compensation
is in the best interests of the Company's shareholders because it more closely
aligns management and shareholder interests and maximizes the availability of
cash for significant capital expenditures such as those contemplated for
development of the Company's properties. At the same time, the Committee expects
that individual members of management will from time to time dispose of portions
of their equity positions. During 1995, the Committee granted options to various
employees based on their performance, but did not grant options or approve
salary increases or bonuses for senior management until after its review of 1995
performance and consideration of future senior executive compensation policy
(except for a portion of 1995 bonuses paid to Messrs. De'Ath and Turner). In
early 1996, the Committee applied the criteria it intends to apply in the future
in determining senior management salary adjustments, bonuses and stock option
grants resulting from 1995 performance. See "Proposal No. 4 -- Approval of
Performance Goals." In determining how to allocate stock option grants among
senior management, including the Chief Executive Officer, the Compensation
Committee considered primarily the recipient's prior receipt of options. As
noted above, in all cases, the Compensation Committee's specific decisions
regarding individual option grants were ultimately based on the Compensation
Committee's subjective judgments.
CHIEF EXECUTIVE OFFICER'S 1995 COMPENSATION. The Compensation Committee
determines the compensation of Thomas G. Finck, the Company's Chief Executive
Officer and President, and is responsible for making all decisions with regard
to his compensation. During 1992, Mr. Finck joined the Company as President and
Chief Operating Officer. Mr. Finck's initial base compensation, the
16
opportunity for an incentive bonus in the discretion of the Compensation
Committee and a stock option grant of 250,000 shares, was a package that
resulted from negotiations with Mr. Finck, and was designed to induce Mr. Finck
to join the Company and to align a significant portion of his potential
compensation to shareholder interests. The Company also guaranteed $1.3 million
in indebtedness incurred by Mr. Finck to finance the construction of his primary
residence, which guarantee was released in 1996.
Since 1992, Mr. Finck's salary has been increased, and he has been awarded
bonuses and stock options and permitted to purchase convertible debentures, from
time to time as his responsibilities have expanded and the Committee determined
that his performance warranted. In considering external competitiveness as part
of determining Mr. Finck's compensation, the Compensation Committee reviewed,
among other things, executive compensation of other companies, including those
listed under "Stock Performance Chart" taking into account perceived differences
in the circumstances between the Company and those companies. Recommendations
were examined in light of this information, but, because of perceived
differences between the circumstances of these and other companies and those of
the Company, the Committee did not engage in a company-by-company comparison of
each element of compensation or corporate performance and there was no special
attempt to set compensation in any particular relationship to such information.
The Committee increased Mr. Finck's salary and paid him a bonus and awarded him
stock options in early 1996 based on its evaluation of his performance as
described above.
COMPENSATION COMMITTEE MEMBERS. This report is submitted by the members of
the Compensation Committee of the Board of Directors who served as such during
1995:
John R. Huff, Chairman
Sheldon R. Erikson Wellslake D. Morse, Jr.
Michael E. McMahon J. Otis Winters
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Ordinary Shares during the five years
ended December 31, 1995 with the cumulative total return on (i) the S&P 500
Index and (ii) the peer group of the nine companies selected by the Compensation
Committee as discussed in Proposal No. 4. The chart also presents the
performance of the eleven-company peer group selected by the Company in
connection with its 1995 Annual Meeting Proxy Statement. As discussed in
Proposal No. 4, the Compensation Committee has selected a peer group consisting
of businesses engaged in oil and gas exploration and development in connection
with certain compensation comparisons, and the Company believes it is more
appropriate to use that peer group for stock performance comparison purposes.
The comparison assumes $100 was invested on December 31, 1990 in the Company's
Ordinary Shares and in each of the foregoing indices and assumes reinvestment of
dividends.
The returns of each issuer in the foregoing groups have been weighted
according to the respective issuer's stock market capitalization as of the
beginning of each period.
17
DEC-90 DEC-91 DEC-92 DEC-93 DEC-94 DEC-95
Triton Energy $100 $534 $540 $482 $544 $918
S&P 500-Registered Trademark- $100 $130 $140 $155 $157 $215
Custom Composite Index
(9 Stocks) $100 $86 $93 $114 $104 $125
Custom Composite Index
(11 Stocks) $100 $79 $69 $71 $70 $79
The nine-Stock Custom Composite Index selected by the Compensation Committee
consists of Anadarko Petroleum Corporation, Apache Corp., Enron Oil and Gas
Corporation, Louisiana Land & Exploration, Mesa Petroleum Corporation, Oryx
Energy Company, Santa Fe Energy Resources Inc., Seagull Energy Corporation and
Union Texas Petroleum Holdings Inc. The eleven-Stock Custom Composite Index used
in connection with the 1995 Annual Meeting Proxy Statement consists of Apache
Corp., Enterprise Oil PLC, Lasmo PLC, Louisiana Land & Exploration, Murphy Oil
Corp., Oryx Energy Company, Pogo Producing Company, Ranger Oil Ltd., Santa Fe
Energy Resources Inc. and Union Texas Petroleum Holdings Inc.
EMPLOYMENT AGREEMENTS
All executive officers of the Company have executed Employment Agreements
with the Company. Among other provisions, these agreements provide that, in
consideration for remaining in the employ of the Company, each such executive
officer is entitled, subject to certain conditions, to receive certain benefits
in the event of a change of control of the Company. If an officer of the Company
is terminated for a reason other than (a) his death, disability or retirement,
(b) for cause, or (c) his voluntary termination other than for good reason, such
officer would be entitled to receive from the Company a lump sum severance
payment equal to the sum of the following amounts: (i) the officer's full base
salary through his date of termination at the rate then in effect; (ii) an
amount equal to three times the sum of (x) the highest of the officer's annual
base salary in any of the three preceding years, (y) the highest of the
aggregate bonuses received by the executive officer in any of the preceding
three years and (z) the highest of the contributions made by the Company on the
executive officer's behalf in respect of the Company's 401(k) plans in any of
the three preceding years; (iii) certain relocation and
18
indemnity payments, along with all legal fees and expenses incurred by the
officer as a result of the termination; and (iv) in the event the executive
officer is subject to the excise tax imposed by Section 4999 of the Code, as a
result of the change of control, an additional "gross-up" amount such that,
after payment of such excise tax and any other taxes on such additional amount,
the officer would be entitled to a net amount equal to the amounts set forth in
the agreement. In addition, in the event of a change of control, the executive
officer would have the right to require the Company to purchase his options and
Debentures at a price equal to the number of shares underlying such options and
Debentures times the difference between the highest price paid in connection
with the change of control and the exercise price or conversion price of such
options and Debentures. Also, unless the executive officer is terminated for
cause, the Company must maintain in effect for the continued benefit of the
executive officer for a two-year period after the date of termination, all
benefit plans and programs or arrangements (or similar plans and programs or
arrangements) in which the executive officer was entitled to participate
immediately prior to the date of termination.
DIRECTORS' COMPENSATION
CASH REMUNERATION. During the year ended December 31, 1995 each director
who was not also an officer or employee of the Company was entitled to receive
$20,000 annually, plus $1,000 (or, $2,000 in the case of the committee chairmen)
for each board or committee meeting attended. Members of the Board of Directors
are also reimbursed for travel expenses to meetings of the Board of Directors
and its committees.
RETIREMENT PLAN FOR DIRECTORS. The Company has adopted a retirement plan
for Directors to provide certain benefits to outside directors of the Company.
In order to be entitled to receive any benefits under the retirement plan for
Directors, a director must have served as an "outside director" for an aggregate
of not less than five complete years or, if a director has served less than an
aggregate of five complete years as an "outside director," (i) have had his
service on the board as an "outside director" terminated due to death or
disability or (ii) have a change of control of the Company occur while he was a
director. An "outside director" is defined in the retirement plan as a director
who is not a full or part-time employee of the Company or who, other than as a
director, does not act, directly or indirectly, for the Company under any
consulting contract or agreement for the provision of services which provides
for compensation in excess of $60,000 during any fiscal year.
Benefits under the Retirement Plan for Directors are payable quarterly and
commence at the beginning of the Company's fiscal quarter next following the
later of the date on which a director (i) attains age 65 or (ii) retires from
the Board of Directors; provided that if a director retires from the board due
to his death or disability, the payments to such director or his estate will
commence at the beginning of the Company's fiscal quarter next following the
date of such director's death or retirement, as the case may be. The payment of
benefits continue for a period equal to the lesser of (i) the number of years
and parts thereof, rounded upwards to the nearest six months, during which such
director served as an outside director or (ii) ten years. The Company may elect
in its discretion to pay a retired director, with the consent of such director
or his estate, a lump sum.
Under the Retirement Plan for Directors, the total benefits payable to a
director for each year that he receives benefits thereunder are equal to the
greater of (i) the annual stipend payable to such director effective for the
fiscal year of the Company in which he retires or (ii) the annual stipend
payable to such director for the Company's fiscal year prior to the fiscal year
in which he retires.
STOCK OPTION GRANTS. Pursuant to the Option Plan, on November 15 of each
year, non-employee directors automatically receive grants of nonqualified stock
options to purchase 15,000 shares of Ordinary Shares. The options become
exercisable at the rate of 33-1/3% per year on each anniversary of the date of
grant and terminate on the tenth anniversary of the date of grant. The exercise
price of the options is equal to fair market value of the Ordinary Shares on the
date of grant. Each of Messrs. Brewer, Cook, Erikson, Eubank, Hendricks, Hudson,
Huff, Lewis, McMahon, Morse, Williamson and Winters on November 15, 1995
received options to purchase 15,000 Ordinary Shares at an exercise price of
$52.00. In addition, Messrs. Erikson and Huff were each granted an option to
19
purchase 15,000 Ordinary Shares at an exercise price of $32.75. Each such grant
was made as an automatic grant in connection with his initial election to fill
vacancies on the Board in 1995 and were conditioned on the approval of the
second amendment and restatement of the Option Plan.
STOCK APPRECIATION RIGHTS PLAN. Effective November 12, 1987, the Company
adopted the 1988 Stock Appreciation Rights Plan (the "SAR Plan"). Under the SAR
Plan, Stock Appreciation Rights ("SARs") equivalent in the aggregate of up to
200,000 Ordinary Shares, subject to adjustment as provided below, may be granted
from time to time to non-employee directors of the Company. Presently, there are
twelve directors eligible to participate in the SAR Plan. The SAR Plan is
administered by the Board of Directors; however, the Board of Directors may in
its discretion at any time delegate such administrative authority to a committee
of the Board of Directors comprised of disinterested directors. The Board of
Directors has no current intention to grant any additional SARs under the SAR
Plan.
An SAR, upon exercise, will allow the holder thereof to receive in cash the
difference between the SAR's Price and the fair market value of the Ordinary
Shares covered by the SAR on the date of exercise. The "SAR's Price" is
established by the Board of Directors at the time the SARs are granted, at a
price not less than the fair market value (and in no event less than the par
value) of the Ordinary Shares covered by such SARs on the date of grant. Subject
to the conditions described below, SARs granted under the SAR Plan generally
become exercisable after one year following the date of grant with respect to
50% of the Ordinary Shares covered thereby. The remaining 50% increment becomes
exercisable two years from the date of grant. The form of SAR Agreement also
provides that in the event of a change of control all SARs shall automatically
be accelerated and exercisable in full.
The period during which an SAR may be exercised is specified in the Stock
Appreciation Rights Agreement (the "SAR Agreement") with respect to each SAR
granted. In any event, such period shall terminate at the earliest of (i) the
expiration of 10 years from the date on which such SARs were granted, (ii) the
expiration of three months from the date on which the holder terminates his or
her membership on the Board of Directors except by reason of death or
disability, or (iii) the expiration of 12 months after the holder's membership
on the Board of Directors is terminated by reason of such holder's death or
disability. During the year ended December 31, 1995, none of the Company's
current directors exercised SARs.
OTHER. From January 1, 1993, when he ceased to serve as Chief Executive
Officer of the Company, until September 11, 1995, when he retired from the
Board, William I. Lee received a monthly consulting fee of $15,000. Mr. Lee was
retained as a consultant for a one year period beginning on the date of his
retirement, for which he was paid $180,000.
CERTAIN TRANSACTIONS
Lewis Partners, of which Mr. Lewis is the Managing Partner and holds a 30%
profits interest, acted as advisor to Crusader Limited, a publicly traded
Australian company 49.9% owned by the Company, in connection with the sale of
Crusader's Irish coal briquetting operations in 1995 for which Lewis Partners
received a fee of 175,000 Irish pounds.
DEBENTURE PURCHASE
In May 1995, executive officers of the Company purchased from the Company
under the Company's Convertible Debenture Plan an aggregate of $8,550,000
principal amount of Debentures convertible into Ordinary Shares at the
conversion price of $42.75 per share, the market value of the Ordinary Shares at
the date of purchase. The consideration for the Debentures given by each
executive officer was a personal promissory note payable to the Company in the
original principal amount of $1,710,000, the principal amount of the Debentures
purchased. As a result of such purchases and prior
20
purchases of Debentures under the plan, the executive officers were indebted to
the Company in the amounts set forth below. The notes bear interest at the rate
of prime (the interest rate payable by the Company under the Debentures) plus
1/8% per annum.
PRINCIPAL AMOUNT
OF
NAME POSITION INDEBTEDNESS
- -------------------------- ----------------------------------------------------------------- ------------------
Thomas G. Finck Chairman of the Board and Chief Executive Officer $ 3,217,500
Nick G. De'Ath Senior Vice President, Exploration 2,463,750
Robert B. Holland, III Senior Vice President, General Counsel and Secretary 2,715,000
Peter Rugg Senior Vice President and Chief Financial Officer 2,715,000
A. E. Turner, III Senior Vice President, Operations 2,463,750
John P. Tatum Executive Vice President, Operations 1,256,250
INDEPENDENT AUDITORS
The Board of Directors has selected Price Waterhouse LLP as independent
auditors to examine the Company's accounts for the year ending December 31,
1996. Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and to be available to respond to appropriate questions.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive 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 and the New York Stock Exchange. Such persons are required
by Securities and Exchange Commission 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 the year ended December 31, 1995, or written representations from
certain reporting persons, the Company believes that 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 have been complied with
except that William I. Lee, who retired from the Board of Directors in 1995,
filed one Form 4 late relating to one transaction.
SHAREHOLDER PROPOSALS
Any shareholder who desires to present proposals to the Company's 1997
Annual Meeting of Shareholders and to have such proposals set forth in the proxy
statement mailed in conjunction with such Annual Meeting must submit such
proposals to the Company no later than December 11, 1996. Any shareholder may
submit any such proposal to Triton Energy Limited, Attention: Robert B. Holland,
III, Esq., Senior Vice President, General Counsel and Secretary, 6688 North
Central Expressway, Suite 1400, Dallas, Texas 75206. All shareholder proposals
must comply with Rule 14a-8 promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
The Annual Report to Shareholders for the period ended December 31, 1995,
which includes financial statements, is enclosed herewith. The Annual Report
does not form a part of this Proxy Statement or the materials for the
solicitation of proxies to be voted at the Annual Meeting.
A COPY OF THE ANNUAL REPORT ON FORM 10-K OF TRITON ENERGY CORPORATION FOR
THE PERIOD ENDED DECEMBER 31, 1995, INCLUDING FINANCIAL STATEMENTS AND
21
SCHEDULES BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO CHARGE TO EACH
PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A WRITTEN OR ORAL
REQUEST OF SUCH PERSON ADDRESSED TO TRITON ENERGY LIMITED, ATTN: INVESTOR
RELATIONS, 6688 NORTH CENTRAL EXPRESSWAY, SUITE 1400, DALLAS, TEXAS 75206
(TELEPHONE (214) 691-5200). THE COMPANY WILL ALSO FURNISH SUCH ANNUAL REPORT ON
FORM 10-K TO ANY "BENEFICIAL OWNER" OF SUCH SECURITIES AT NO CHARGE UPON RECEIPT
OF A WRITTEN REQUEST, ADDRESSED TO INVESTOR RELATIONS, AND CONTAINING A GOOD
FAITH REPRESENTATION THAT, AT THE RECORD DATE, SUCH PERSON WAS A BENEFICIAL
OWNER OF SECURITIES OF THE COMPANY ENTITLED TO VOTE AT THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 7, 1996. COPIES OF ANY EXHIBIT TO THE FORM 10-K WILL
BE FURNISHED UPON THE PAYMENT OF A $.15 PER PAGE FEE.
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expenses of preparing, printing and mailing the
proxy and the materials used in the solicitation thereof will be borne by the
Company.
Georgeson & Co., Inc. has been retained by the Company to aid in the
solicitation of proxies, for a fee of $12,000 and the reimbursement of
out-of-pocket expenses. Proxies may also be solicited by personal interview,
telephone and telegram by directors, officers and employees of the Company who
will not receive additional compensation for such services. Arrangements also
may be made with brokerage houses and other custodians, nominees and fiduciaries
for the forwarding of solicitation materials to the beneficial owners of
Ordinary Shares held by such persons, and the Company will reimburse them for
reasonable expenses incurred by them in connection therewith.
All information contained in the Proxy Statement relating to the occupations
and security holdings of directors and executive officers of the Company is
based upon information received from the individual directors and executive
officers.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE ADDRESSED TO THE COMPANY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD
WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
Robert B. Holland, III
SECRETARY
Dallas, Texas
April 9, 1996
22
APPENDIX A
TRITON ENERGY LIMITED
SECOND AMENDED AND RESTATED
1992 STOCK OPTION PLAN
This Plan amends and restates the 1992 Stock Option Plan, initially adopted
by Triton Energy Corporation in November 1992, as amended and restated by Triton
Energy Corporation in November 1993, and as assumed by the Company in connection
with the merger of a subsidiary of the Company with and into Triton Energy
Corporation in March 1996. Capitalized terms used herein are defined in Article
I.
To the extent permitted under Rule 16b-3 and any applicable law or
regulation, the amendments effected hereby shall apply to all outstanding Stock
Options previously granted under the Plan; provided that, to the extent that any
such amendment to any previously granted Stock Option would have an Adverse
Consequence for a Participant, such amendment shall not so apply unless
specifically consented to by the Participant.
The Plan, as amended and restated, shall be effective as of April 9, 1996,
subject to shareholder approval of the amendments effected hereby, except as
provided herein and except for Discretionary Amendments which do not require
shareholder approval.
PURPOSE
The purpose of the Plan is to help the Company and its Subsidiaries attract
and retain Employees, Directors and Advisors and to provide such persons with a
proprietary interest in the Company through the granting of Incentive Stock
Options and Nonqualified Stock Options which will:
(a) increase the interest of the Employees, Directors and Advisors in
the Company's welfare;
(b) furnish an incentive to the Employees, Directors and Advisors to
continue their services for the Company or its Subsidiaries; and
(c) provide a means through which the Company or its Subsidiaries may
attract able persons to enter its employ or serve as Directors or Advisors.
With respect to Reporting Participants, the Plan and transactions under the
Plan (except as otherwise contemplated hereby) are intended to comply with all
applicable conditions of Rule 16b-3. To the extent that any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
ARTICLE I
DEFINITIONS
For the purpose of this Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
1.1 "Adverse Consequence" means (i) the loss of qualification of a Stock
Option held by a Reporting Participant for special treatment under Rule 16b-3 or
the commencement of a new holding period under such rule or (ii) the
disqualification of an Incentive Stock Option for treatment as such under the
Code.
1.2 "Advisor" means any person performing services for the Company or any
Subsidiary of the Company, with or without compensation, to whom the Company
chooses to grant Stock Options in
A-1
accordance with the Plan, provided that BONA FIDE services must be rendered by
such person and such services shall not be rendered in connection with the offer
or sale of securities in a capital-raising transaction.
1.3 "Board" means the Board of Directors of the Company as constituted from
time to time.
1.4 "Cause" means an act or acts involving a felony, fraud, willful
misconduct, the commission of any act that causes or reasonably may be expected
to cause substantial injury to the Company, or other good cause. The term "other
good cause" shall include, but shall not be limited to, habitual impertinence, a
pattern of conduct that tends to hold the Company up to ridicule in the
community, conduct disloyal to the Company, conviction of any crime of moral
turpitude, and substantial dependence, as judged by the Committee, on alcohol or
any controlled substance. To the extent that a Participant is a party to a
written employment agreement with the Company or any Subsidiary that contains a
provision setting forth consequences for termination for cause and a definition
of cause, such definition shall control with respect to Stock Options.
1.5 "Change in Control" means the occurrence of any of the following events:
(i) there shall be consummated (x) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which the Company's Ordinary Shares would be converted into cash, securities or
other property, other than a merger of the Company in which the holders of the
Company's Ordinary Shares immediately prior to the merger would represent at
least a majority of the common stock or ordinary shares of the surviving
corporation immediately after the merger, or (y) any sale, lease, exchange or
other transfer (excluding transfer by way of pledge or hypothecation), in one
transaction or a series of related transactions, of all, or substantially all,
of the assets of the Company, (ii) the shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company, (iii) any
"person" (as such term is defined in Section 3(a)(9) or Section 13(d)(3) under
the 1934 Act) or any "group" (as such term is used in Rule 13d-5 promulgated
under the 1934 Act), other than the Company or any successor of the Company or
any Subsidiary or any employee benefit plan of the Company or any Subsidiary
(including such plan's trustee), becomes, without the prior approval of the
Board, a beneficial owner for purposes of Rule 13d-3 promulgated under the 1934
Act, directly or indirectly, of securities of the Company representing 25.0% or
more of the Company's then outstanding securities having the right to vote in
the election of Directors of the Company, or (iv) during any period of two
consecutive years, individuals who, at the beginning of such period constituted
the entire Board, cease for any reason (other than death) to constitute a
majority of the Directors of the Company, unless the election, or the nomination
for election, by the Company's shareholders, of each new Director of the Company
was approved by a vote of at least two-thirds of the Directors of the Company
then still in office who were Directors of the Company at the beginning of the
period.
1.6 "Code" means the Internal Revenue Code of 1986, as amended.
1.7 "Committee" means the committees appointed or designated by the Board in
accordance with Section 2.1 of the Plan.
1.8 "Company" means Triton Energy Limited, a Cayman Islands company.
1.9 "controlled substance" means a drug, immediate precursor, or other
substance listed in Schedules I-V of the Federal Comprehensive Drug Abuse
Prevention and Control Act of 1970, as amended.
1.10 "Date of Grant" means the effective date on which a Stock Option is
awarded to an Employee, Director or Advisor as set forth in the Stock Option
Agreement.
1.11 "Director" means a member of the Board.
A-2
1.12 "Disability" of a Participant shall be deemed to occur whenever a
Participant is rendered unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuing period of not less than 12 months.
1.13 "Discretionary Amendment" means any amendment to the Plan that does
not require shareholder approval.
1.14 "Employee" means an employee of the Company or of any Subsidiary.
1.15 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.16 "Fair Market Value" of an Ordinary Share means (i) the closing price
per share on the principal stock exchange on which the Ordinary Shares are
traded, or (ii) the mean between the closing or average (as the case may be) bid
and asked prices per Ordinary Share on the over-the-counter market, whichever is
applicable.
1.17 "Incentive Stock Option" means an option to purchase Ordinary Shares
granted to a Participant and which is intended to be treated as an "incentive
stock option" under Section 422 of the Code.
1.18 "1934 Act" means the Securities Exchange Act of 1934, as amended.
1.19 "Non-discretionary Stock Option" means a Nonqualified Stock Option
granted to a Non-Employee Director under Article IV.
1.20 "Non-Employee Director" means a Director of the Company who is not an
Officer or Employee.
1.21 "Nonqualified Stock Option" means any Stock Option that does not
qualify as an Incentive Stock Option.
1.22 "Officer" means an officer of the Company or any Subsidiary.
1.23 "Ordinary Shares" means the Ordinary Shares, par value $.01 per share,
of the Company or in the event that the outstanding Ordinary Shares are
hereafter changed into or exchanged for shares or other securities of the
Company or another issuer, such other shares or securities.
1.24 "Participant" means any Employee, Director or Advisor who is, or who
is proposed to be, a recipient of a Stock Option.
1.25 "Plan" means this Triton Energy Limited Second Amended and Restated
1992 Stock Option Plan, as amended from time to time.
1.26 "Reporting Participant" means a Participant whose transactions in the
equity securities of the Company give rise to potential liability under Section
16(b) of the 1934 Act.
1.27 "Retirement" of a Participant shall be deemed to be retirement after
reaching (i) age 65 or (ii) age 55 and having completed at least 10 years of
service with the Company.
1.28 "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, as
amended from time to time, or any successor provision.
1.29 "Section 162(m)" means Section 162(m) of the Code and the regulations
promulgated thereunder from time to time.
1.30 "Section 162(m) Exception" means the exception under Section 162(m)
for "qualified performance-based compensation."
1.31 "Stock Options" means any and all Incentive Stock Options and
Nonqualified Stock Options granted pursuant to the Plan.
A-3
1.32 "Stock Option Agreement" means an agreement between the Company and a
Participant with respect to one or more of the Stock Options.
1.33 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of the Stock
Option, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain, and
"Subsidiaries" means more than one of any such corporations.
ARTICLE II
ADMINISTRATION; ELIGIBILITY
2.1 ADMINISTRATION. The Plan shall be administered by a committee
appointed by the Board, consisting of at least two Directors; provided that, (i)
with respect to any Stock Option that is granted to a Reporting Participant,
such committee shall consist of at least such number of Directors as are
required from time to time by Rule 16b-3, and each such committee member shall
qualify as a "disinterested person" under Rule 16b-3; and (ii) with respect to
any Stock Option that is also intended to satisfy the requirements of the
Section 162(m) Exception, such committee shall consist of at least such number
of Directors as are required from time to time to satisfy the Section 162(m)
Exception, and each such committee member shall qualify as an "outside director"
within the meaning of Section 162(m). Any member of the committee may be removed
at any time, with or without cause, by resolution of the Board. Any vacancy
occurring in the membership of the committee may be filled by appointment by the
Board.
The Committee shall select one of its members to act as its Chairman, and
shall make such rules and regulations for its operation as it deems appropriate.
A majority of the Committee shall constitute a quorum and the act of a majority
of the members of the Committee present at a meeting at which a quorum is
present shall be the act of the Committee. Subject to the terms hereof, the
Committee shall have complete discretion and authority to (i) designate from
time to time the persons to whom Stock Options will be granted, (ii) interpret
the Plan, (iii) prescribe, amend, and rescind any rules and regulations
necessary or appropriate for the administration of the Plan, to determine the
terms, details and provisions of each Stock Option Agreement, (iv) modify or
amend any Stock Option Agreement or waive any conditions or restrictions
applicable to any Stock Option or the exercise thereof, and (v) make such other
determinations and, subject to the terms of the Plan, take such other action as
it deems necessary or advisable; provided that, without the approval of
shareholders (by vote or consent of shareholders representing a majority of the
shares present at a meeting and entitled to vote), the Committee shall not amend
or modify any outstanding Stock Option to decrease the exercise price thereof.
In this regard, the Committee shall consider and give appropriate weight to
input from representatives of management of the Company regarding the
contributions or potential contributions to the Company of certain of the
Participants or potential Participants. Except as provided below, any
interpretation, determination, or other action made or taken by the Committee
shall be final, binding, and conclusive on all interested parties, including the
Company and all Participants.
With respect to restrictions ("mandated restrictions") in the Plan that are
based on the requirements of Rule 16b-3, Section 422 of the Code, the Section
162(m) Exception, the rules of any exchange upon which the Company's securities
are listed, or any other applicable law, rule or restriction, to the extent that
any such mandated restrictions are no longer applicable, the Committee shall
have the discretion and authority to grant Stock Options that are not subject to
such mandated restrictions and/or to waive any such mandated restrictions with
respect to outstanding Stock Options.
2.2 ELIGIBILITY. Any Employee (including an Employee who is also a
Director or an Officer), Director (subject to the limits provided herein) and
Advisor whose judgment, initiative, and efforts contributed or may be expected
to contribute to the successful performance of the Company is eligible to
participate in the Plan; provided that only Employees shall be eligible to
receive Incentive Stock
A-4
Options. The Committee's determinations under the Plan (including without
limitation determinations of which persons, if any, are to receive Stock
Options, the form, amount and timing of such Stock Options, the terms and
provisions of such Stock Options and the agreements evidencing same) need not be
uniform and may be made by it selectively among Employees, Directors and/or
Advisors who receive, or are eligible to receive, Stock Options under the Plan.
ARTICLE III
SHARES SUBJECT TO PLAN
The Committee may not grant Stock Options under the Plan for more than
4,700,000 shares of Common Stock of the Company (as may be adjusted in
accordance with Article XI or XII hereof), and no Participant shall be eligible
to receive more than 50% of such shares. Shares to be distributed and sold may
be made available from either authorized but unissued Ordinary Shares or
Ordinary Shares held by the Company in its treasury. Shares that by reason of
the expiration or unexercised termination of a Stock Option are no longer
subject to purchase may be reofferred under the Plan.
ARTICLE IV
NON-EMPLOYEE DIRECTORS' AUTOMATIC STOCK OPTIONS
4.1 ELIGIBILITY. Only Non-Employee Directors of the Company shall be
eligible to receive grants of the Stock Options provided under this Article IV.
4.2 GRANT OF STOCK OPTIONS. Throughout the term of this Plan, on May 15 of
each year, and, effective March 1, 1995, if a person is first appointed or
elected as a Non-Employee Director other than at an annual meeting of
shareholders of the Company then on the date of such appointment or election,
the Committee shall grant to each Non-Employee Director of the Company a
Nonqualified Stock Option to purchase 15,000 Ordinary Shares. The grant of Stock
Options under this Article IV shall be evidenced by Stock Option Agreements
setting forth the total number of shares subject to the Stock Option, the option
exercise price, the term of the Stock Option and such other terms and provisions
as are consistent with the Plan.
4.3 OPTION EXERCISE PRICE. The exercise price for a Stock Option granted
under this Article IV shall be equal to 100% of the Fair Market Value of an
Ordinary Share on the Date of Grant. Notwithstanding anything to the contrary in
this Section 4.3, the exercise price of each Stock Option granted pursuant to
this Article IV shall not be less than the par value of an Ordinary Share.
4.4 OPTION PERIOD. The option period for each Stock Option granted under
this Article IV will terminate ten years from the Date of Grant. No Stock Option
granted under this Article IV may be exercised at any time after its term.
4.5 PAYMENT. Full payment for shares purchased upon exercise of a Stock
Option granted under this Article IV shall be made either in (i) cash, (ii) by
certified or cashier's check, (iii) if permitted by the Committee, by Ordinary
Shares, (iv) if permitted by the Committee, and if permitted under applicable
law, by cash or certified or cashier's check for the par value of the shares
plus a promissory note for the balance of the purchase price, which note shall
provide for full personal liability of the maker and shall contain such other
terms and provisions as the Committee may determine, including without
limitation the right to repay the note partially or wholly with Ordinary Shares,
or (v) by delivery of a copy of irrevocable instructions from the Participant to
a broker or dealer, reasonably acceptable to the Company, to sell certain of the
shares purchased upon exercise of the Stock Option or to pledge them as
collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price. If any portion of the
purchase price or a note given at the time of exercise is paid in Ordinary
Shares, those shares shall be valued at the then Fair Market Value.
A-5
4.6 EXERCISE OF STOCK OPTION. Except only as specifically provided
elsewhere in this Plan, each Stock Option granted under this Article IV shall be
exercisable in the following cumulative installments:
FIRST INSTALLMENT. Up to 33 1/3% of the total optioned shares at any
time after one (1) year following the Date of Grant.
SECOND INSTALLMENT. Up to an additional 33 1/3% of the total optioned
shares at any time after two (2) years following the Date of Grant.
THIRD INSTALLMENT. Up to an additional 33 1/3% of the total optioned
shares at any time after three (3) years following the Date of Grant.
If an installment covers a fractional share, such installment will be
rounded off to the next highest share, except for the final installment, which
will be for the balance of the total optioned shares. No Stock Option granted
under the Plan may be exercised at any time after ten years from the Date of
Grant.
Stock Options may not be exercised, nor may shares be issued under a Stock
Option (i) until the Plan has been approved by the shareholders of the Company,
if necessary to comply with Rule 16b-3 promulgated under the 1934 Act or with
the applicable rules or regulations of any stock exchange or inter-dealer
quotation system on which the Common Stock is listed or quoted or (ii) if any
necessary listing of the shares on a stock exchange or any registration under
state or federal securities laws required under the circumstances has not been
accomplished.
ARTICLE V
EMPLOYEES' AND ADVISORS' STOCK OPTIONS
5.1 ELIGIBILITY. The Committee shall, from time to time, select the
particular Employees (including any Employee who is also a Director or Officer)
and Advisors to whom the Stock Options provided under this Article V are to be
granted.
5.2 GRANT OF STOCK OPTIONS. All grants of Stock Options under this Article
V shall be awarded by the Committee at such times and for such amounts as the
Committee may determine. In the discretion of the Committee, any grant to an
Employee may be in the form of an Incentive Stock Option. The grant of Stock
Options shall be evidenced by Stock Option Agreements setting forth the total
number of shares subject to each Stock Option, the option exercise price, the
term of the Stock Option, and such other terms and provisions as are consistent
with the Plan.
5.3 OPTION EXERCISE PRICE. The exercise price for a Stock Option granted
under this Article V shall be determined by the Committee and shall be an amount
not less than 100% of the Fair Market Value per Ordinary Share on the Date of
Grant. Notwithstanding anything to the contrary in this Section 5.3, the
exercise price of each Stock Option granted under the Plan shall not be less
than the par value per share of an Ordinary Share.
5.4 OPTION PERIOD. The option period for each Stock Option granted under
this Article V will begin and terminate on the respective dates specified by the
Committee but may not terminate later than ten years from the Date of Grant. No
Stock Option granted under the Plan may be exercised at any time after its term.
The Committee may provide that Stock Options granted under this Article V may be
exercised in installments and upon such terms, conditions and restrictions as it
may determine.
5.5 PAYMENT. Full payment for shares purchased upon exercise of a Stock
Option shall be made in (i) cash, (ii) by certified or cashier's check, (iii) if
permitted by the Committee, by Ordinary Shares, (iv) if permitted by the
Committee, and if permitted under applicable law, by cash or certified or
cashier's check for the par value of the shares plus a promissory note for the
balance of the purchase price, which note shall provide for full personal
liability of the maker and shall contain such other
A-6
terms and provisions as the Committee may determine, including without
limitation the right to repay the note partially or wholly with Ordinary Shares,
or (v) by delivery of a copy of irrevocable instructions from the Participant to
a broker or dealer, reasonably acceptable to the Company, to sell certain of the
shares purchased upon exercise of the Stock Option or to pledge them as
collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price. If any portion of the
purchase price or a note given at the time of exercise is paid in Ordinary
Shares, those shares shall be valued at the then Fair Market Value.
5.6 EXERCISE OF STOCK OPTION. Stock Options granted under the Plan may be
exercised during the option period, at such times and in such amounts, in
accordance with the terms and conditions and subject to such restrictions as are
set forth herein and in the applicable Stock Option Agreements. Except as
otherwise contained herein, Stock Options may not be exercised, nor may shares
be issued under a Stock Option (i) until the Plan has been approved by the
shareholders of the Company, if necessary to comply with Rule 16b-3 or with the
applicable rules or regulations of any stock exchange or inter-dealer quotation
system on which the Ordinary Shares are listed or quoted or (ii) if any
necessary listing of the shares on a stock exchange or any registration under
state or federal securities laws required under the circumstances has not been
accomplished.
Subject to the provisions of Section 2.1, the foregoing paragraph and unless
the Committee determines otherwise, the Stock Options granted hereunder shall be
exercisable in the following cumulative installments:
FIRST INSTALLMENT. Up to 25% of the total optioned shares at any time
after one (1) year following the Date of Grant.
SECOND INSTALLMENT. Up to an additional 25% of the total optioned
shares at any time after two (2) years following the Date of Grant.
THIRD INSTALLMENT. Up to an additional 25% of the total optioned shares
at any time after three (3) years following the Date of Grant.
FOURTH INSTALLMENT. Up to an additional 25% of the total optioned
shares at any time after four (4) years following the Date of Grant.
Notwithstanding the foregoing, the Committee shall have the right to
accelerate the time at which any Stock Option granted under this Article V shall
become exercisable. If an installment covers a fractional share, such
installment will be rounded off to the next highest share, except the final
installment, which will be for the balance of the total optioned shares. No
Stock Option granted under the Plan may be exercised at any time after ten years
from the Date of Grant.
Subject to such administrative regulations as the Committee may from time to
time adopt, a Stock Option will be deemed exercised for purposes of the Plan
when (i) written notice of exercise has been received by the Company (which
notice shall set forth the number of Ordinary Shares with respect to which the
Stock Option is to be exercised and the date of exercise thereof) and (ii)
payment of the Option Exercise Price is received by the Company in accordance
with Section 5.5 above; provided that, with respect to a cashless exercise of
any Stock Option (in accordance with clause (v) of Section 5.5 above), such
Stock Option will be deemed exercised for purposes of the Plan on the date of
sale of the Ordinary Shares received upon exercise.
ARTICLE VI
LIMITATIONS ON INCENTIVE STOCK OPTIONS
Notwithstanding the terms of Article V hereof, the following provisions of
this Article VI shall apply to all Incentive Stock Options granted under the
Plan.
6.1 STOCK OWNERSHIP LIMITATION. In the case of an Incentive Stock Option,
the Stock Option Agreement shall include provisions that may be necessary to
assure that the option is an incentive
A-7
stock option under the Code. No Incentive Stock Option may be granted to an
Employee who owns more than 10% of the total combined voting power of all
classes of shares of the Company or its Subsidiaries. This limitation will not
apply if the option price is at least 110% of the fair market value of the
Ordinary Shares on the Date of Grant and the option is not exercisable more than
five years from the Date of Grant.
6.2 OPTION PERIOD. Notwithstanding the provisions of Sections 4.4 and 5.4
hereof, if an Employee owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than 10% of the combined voting power
of all classes of shares of the Company (or any Subsidiary) and an Incentive
Stock Option is granted to such Employee, the term of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no
more than five years from the Date of Grant.
6.3 LIMITATION ON EXERCISE OF INCENTIVE STOCK OPTIONS. To the extent
required by the Code for incentive stock options, the exercise of Incentive
Stock Options granted under the Plan shall be subject to the $100,000 calendar
year limit as set forth in Section 422(d) of the Code.
6.4 LIMITATION ON INCENTIVE STOCK OPTION CHARACTERIZATION. To the extent
that any Stock Option fails to qualify as an Incentive Stock Option, such Stock
Option will be considered a Nonqualified Stock Option.
ARTICLE VII
TERMINATION OF EMPLOYMENT OR SERVICE
In the event a Participant who is an Employee of the Company or any
Subsidiary shall cease to be employed by the Company or a Subsidiary, or a
Participant who is a Director or Advisor, shall cease to serve as a Director or
Advisor, for any reason other than death, retirement, Disability or for cause,
(i) the Committee shall have the ability to accelerate the vesting of the
Participant's Stock Option (other than a Non-discretionary Stock Option) in its
sole discretion, and (ii) such Participant's Stock Option shall be exercisable
(to the extent exercisable on the date of termination of employment or service
as a Director or Advisor, or, if the Committee, in its discretion, has
accelerated the vesting of such Stock Option, to the extent exercisable
following such acceleration) (a) if such Stock Option is an Incentive Stock
Option, at any time within three months after the date of termination of
employment, unless by its terms the Stock Option expires earlier; or (b) if such
Stock Option is a Nonqualified Stock Option, at any time within one year after
the date of termination of employment or service as a Director or Advisor,
unless by its terms the Stock Option expires earlier or unless the Committee
agrees, in its sole discretion (except with respect to Non-discretionary Stock
Options), to further extend the term of such Nonqualified Stock Option; provided
that the term of any such Nonqualified Stock Option shall not be extended beyond
its initial term. In addition, a Participant's Stock Option may be exercised as
follows in the event such Participant ceases to serve as an Employee, Director
or Advisor due to death, disability, retirement or for cause:
(a) DEATH. Except as otherwise limited by the Committee at the time of
the grant of a Stock Option, if a Participant dies while employed by the
Company or a Subsidiary, or while serving as a Director or Advisor, or
within three months after ceasing to be an Employee, Director or Advisor,
his Stock Option shall become fully exercisable on the date of his death and
shall expire 12 months thereafter, unless by its terms it expires sooner or
the Committee agrees, in its sole discretion, to further extend the term of
such Stock Option (other than an Incentive Stock Option); provided that the
term of any such Stock Option shall not be extended beyond its initial term.
During such period, the Stock Option may be fully exercised, to the extent
that it remains unexercised on the date of death, by the Participant's
personal representative or by the distributees to whom the Participant's
rights under the Stock Option shall pass by will or by the laws of descent
and distribution.
A-8
(b) RETIREMENT. If a Participant ceases to be employed by the Company
or a Subsidiary, or ceases to serve as a Director or Advisor, as a result of
retirement, (i) the Committee shall have the ability to accelerate the
vesting of the Participant's Stock Option (other than a Non-discretionary
Stock Option, which shall automatically be accelerated) in its sole
discretion, and (ii) the Participant's Stock Option shall be exercisable (to
the extent exercisable on the effective date of such retirement or, if the
vesting of such Stock Option has been accelerated, to the extent exercisable
following such acceleration) (a) if such Stock Option is an Incentive Stock
Option, at any time three months after the effective date of such
retirement, unless by its terms the Stock Option expires earlier, and (b) if
such Stock Option is a Nonqualified Stock Option, at any time within one
year after the effective date of such retirement, unless by its terms the
Stock Option expires sooner or the Committee agrees, in its sole discretion
(except with respect to Non-discretionary Stock Options), to further extend
the term of such Nonqualified Stock Option; provided that the term of any
such Nonqualified Stock Option shall not be extended beyond its initial
term.
(c) DISABILITY. If a Participant ceases to be employed by the Company
or a Subsidiary, or ceases to serve as a Director or Advisor, as a result of
Disability, the Participant's Stock Option shall become fully exercisable
and shall expire 12 months thereafter, unless by its terms it expires sooner
or, unless the Committee agrees, in its sole discretion, to extend the term
of such Stock Option (other than an Incentive Stock Option or
Non-discretionary Stock Option); provided that the term of any Stock Option
shall not be extended beyond its initial term.
(d) CAUSE. If a Participant ceases to be employed by the Company or a
Subsidiary, or ceases to serve as a Director or Advisor, because the
Participant is terminated for Cause, the Participant's Stock Option shall
automatically expire unless the Committee otherwise agrees in its sole
discretion.
ARTICLE VIII
AMENDMENT OR DISCONTINUANCE
The Plan may be amended or discontinued by the Board, or, if the Board has
specifically delegated this authority to the Committee, by the Committee,
without the approval of the shareholders or Participants; provided that no
amendment shall be made without approval of the shareholders of the Company if
such approval is required under the Code, Rule 16b-3, the requirements of any
exchange upon which the Company's securities are listed, or any other applicable
law or regulation. In addition, no termination or amendment of the Plan may,
without the consent of the Participant to whom any Stock Option has theretofore
been granted, adversely affect the rights of such Participant with respect to
such Stock Option. The Board may not amend the provisions of Article IV more
than once during any six month period unless to comply with changes in the Code
or ERISA, or any rules or regulations promulgated thereunder. In addition,
notwithstanding the foregoing, neither the Board nor the Committee may
substitute new Stock Options for previously granted Stock Options where such new
Stock Options would have a lower exercise price than such previously granted
Stock Options unless the shareholders of the Company approve such substitution.
ARTICLE IX
EFFECT OF THE PLAN
Neither the adoption of this Plan nor any action of the Board or the
Committee shall be deemed to give any Officer or Employee any right to be
granted a Stock Option to purchase or receive Ordinary Shares of the Company or
any other rights except as may be evidenced by a Stock Option Agreement, or any
amendment thereto, duly authorized by the Committee and executed on behalf of
the Company and then only to the extent and upon the terms and conditions
expressly set forth therein.
A-9
ARTICLE X
TERM
The Plan shall be submitted to the Company's shareholders for their
approval; however, Stock Options may be granted under the Plan prior to the time
of shareholder approval. Unless sooner terminated by action of the Board, the
Plan will terminate on the 15th day of September, 2003. Stock Options under the
Plan may not be granted after that date, but Stock Options granted before that
date will continue to be effective in accordance with their terms and
conditions.
ARTICLE XI
CAPITAL ADJUSTMENTS
If at any time while the Plan is in effect or unexercised Stock Options are
outstanding there shall be any increase or decrease in the number of issued and
outstanding Ordinary Shares through the declaration of a share dividend or
through any recapitalization resulting in a stock split, combination, or
exchange of Ordinary Shares, then and in such event:
(i) An appropriate adjustment shall be made in the maximum number of
Ordinary Shares then subject to being awarded under grants pursuant to the
Plan, to the end that the same proportion of the Company's issued and
outstanding Ordinary Shares shall continue to be subject to being so
awarded;
(ii) An appropriate adjustment shall be made in the number of Ordinary
Shares subject to being awarded to each Non-Employee Director of the Company
under Article IV, to the end that the same proportion of the Company's
issued and outstanding Ordinary Shares shall continue to be subject to being
so awarded; and
(iii) Appropriate adjustments shall be made in the number of Ordinary
Shares and the exercise price per share thereof then subject to purchase
pursuant to each such Stock Option previously granted and unexercised, to
the end that the same proportion of the Company's issued and outstanding
Ordinary Shares in each instance shall remain subject to purchase at the
same aggregate exercise price.
Any fractional shares resulting from any adjustment made pursuant to this
Article XI shall be rounded to the nearest whole share for the purposes of such
adjustment. Except as otherwise expressly provided herein, the issuance by the
Company of shares of any class, or securities convertible into shares of any
class, either in connection with direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number of
or exercise price of Ordinary Shares then subject to outstanding Stock Options
granted under the Plan.
ARTICLE XII
RECAPITALIZATION, MERGER AND CONSOLIDATION
(a) The existence of this Plan and Stock Options granted hereunder shall
not affect in any way the right or power of the Company or its shareholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger, share exchange or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference shares ranking
prior to or otherwise affecting the Ordinary Shares or the rights thereof
(or any rights, options or warrants to purchase same), or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether of
a similar character or otherwise.
A-10
(b) Subject to any required action by the shareholders, if the Company
shall be the surviving or resulting corporation in any merger, share
exchange or consolidation, any outstanding Stock Option granted hereunder
shall pertain to and apply to the securities or rights (including cash,
property or assets) to which a holder of the number of Ordinary Shares
subject to the Stock Option would have been entitled.
(c) In the event of any merger, share exchange or consolidation pursuant
to which the Company is not the surviving or resulting corporation, there
shall be substituted for each Ordinary Share subject to the unexercised
portions of such outstanding Stock Option that number of shares of each
class of shares or other securities or that amount of cash, property or
assets of the surviving or consolidated company which were distributed or
distributable to the shareholders of the Company in respect of each Ordinary
Share held by them, such outstanding Stock Options to be thereafter
exercisable for such shares, securities, cash or property in accordance with
their terms. Notwithstanding the foregoing, however, all such Stock Options
may be cancelled by the Board as of the effective date of any such
reorganization, merger or consolidation, or of any proposed sale of
substantially all of the assets of the Company, or of any dissolution or
liquidation of the Company, by giving notice to each holder thereof or his
personal representative of its intention to do so and by permitting the
purchase during the thirty (30) day period next preceding such effective
date of any or all of the shares subject to such outstanding Stock Options,
whether or not vested in accordance with their original terms.
(d) In the event of a Change in Control of the Company, then,
notwithstanding any other provision in the Plan to the contrary, all
unmatured installments of Stock Options outstanding shall thereupon
automatically be accelerated and exercisable in full.
(e) In case the Company shall, at any time while any Stock Option under
this Plan shall be in force and remain unexpired, (i) sell all or
substantially all of its property, or (ii) dissolve, liquidate, or wind up
its affairs, then each Participant may thereafter receive upon exercise
thereof (in lieu of each Ordinary Share which such Participant would have
been entitled to receive) the same kind and amount of any securities or
assets as may be issuable, distributable or payable upon any such sale,
dissolution, liquidation, or winding up with respect to each Ordinary Share.
In the event that the Company shall, at any time prior to the expiration of
any Stock Option make any partial distribution of its assets in the nature
of a partial liquidation, whether payable in cash or in kind (but excluding
the distribution of a cash dividend payable out of retained earnings or
earned surplus and designated as such), then in such event the exercise
prices then in effect with respect to each option shall be reduced, as of
the payment date of such distribution, in proportion to the percentage
reduction in the tangible book value of the Ordinary Shares (determined in
accordance with generally accepted accounting principles) resulting by
reason of such distribution; provided, that in no event shall any adjustment
of exercise prices in accordance with the terms of the Plan result in any
exercise prices being reduced below the par value per Ordinary Share.
(f) Upon the occurrence of each event requiring an adjustment of the
exercise price and/or the number of shares purchasable pursuant to Stock
Options granted pursuant to the terms of this Plan, the Committee shall mail
forthwith to each Participant a copy of its computation of such adjustment
which shall be conclusive and shall be binding upon each such Participant.
ARTICLE XIII
OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS
GRANTED BY OTHER CORPORATIONS
Stock Options may be granted under the Plan from time to time in
substitution for stock options held by employees of a corporation who become or
are about to become Employees of the Company or a Subsidiary as the result of a
merger or consolidation of the employing corporation with the Company or a
Subsidiary, the acquisition by either of the foregoing of stock of the employing
corporation as the
A-11
result of which it becomes a Subsidiary or a sale of substantially all of the
assets of the employing corporation. The terms and conditions of the substitute
options so granted may vary from the terms and conditions set forth in this Plan
to such extent as the Committee at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the options in substitution
for which they are granted.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 TRANSFERABILITY OF STOCK OPTIONS.
(a) INCENTIVE STOCK OPTIONS. Incentive Stock Options may not be
transferred or assigned other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the Participant only by
the Participant or the Participant's legally authorized representative, and each
Stock Option Agreement in respect of an Incentive Stock Option shall so provide.
The designation by a Participant of a beneficiary will not constitute a transfer
of the Stock Option. The Company may waive or modify any limitation contained in
this Section 14.1 that is not required for compliance with Section 422 of the
Code.
(b) NONQUALIFIED STOCK OPTIONS.
(1) PARTICIPANTS OTHER THAN REPORTING PARTICIPANTS. With respect to
Nonqualified Stock Options granted hereunder to any Participant who is not a
Reporting Participant, the Committee may, in its sole discretion, provide in
any Stock Option Agreement (or in an amendment to any existing Stock Option
Agreement) such provisions regarding transferability of the Nonqualified
Stock Options as the Committee, in its sole discretion, deems appropriate.
(2) REPORTING PARTICIPANTS. Except as may be specified by the
Committee in accordance with the following paragraph, a Nonqualified Stock
Option granted to a Reporting Participant may not be transferred or assigned
other than by will or the laws of descent and distribution or pursuant to
the terms of a qualified domestic relations order, as defined by the Code or
Title I of ERISA, or the rules thereunder. The designation by a Reporting
Participant of a beneficiary will not constitute a transfer of the Stock
Option.
The Committee may, in its sole discretion, provide in any Stock Option
Agreement (or in an amendment to any existing Stock Option Agreement) that
Nonqualified Stock Options granted hereunder to a Reporting Participant may
be transferred to members of the Reporting Participant's immediate family,
trusts for the benefit of such immediate family members and partnerships in
which such immediate family members are the only partners, provided that
there cannot be any consideration for the transfer. The Committee may waive
or modify any limitation contained in this Section 14.1(b)(2) that is not
required for compliance with Rule 16b-3.
14.2 INVESTMENT INTENT. The Company may require that there be presented to
and filed with it by any Participant(s) under the Plan, such evidence as it may
deem necessary to establish that the Stock Options granted or the Ordinary
Shares to be purchased or transferred are being acquired for investment and not
with a view to their distribution.
14.3 NO RIGHT TO CONTINUE EMPLOYMENT. Nothing in the Plan or the grant of
any Stock Option confers upon any Employee the right to continue in the employ
of the Company or interferes with or restricts in any way the right of the
Company to discharge any Employee at any time (subject to any contract rights of
such Employee).
14.4 SHAREHOLDERS' RIGHTS. The holder of a Stock Option shall have none of
the rights or privileges of a shareholder except with respect to shares which
have been actually issued.
14.5 TAX WITHHOLDING.
A-12
(a) Whenever Ordinary Shares are to be issued in satisfaction of a Stock
Option granted hereunder, the Company shall have the right to require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state, local or other withholding tax requirements (whether so required to
secure for the Company an otherwise available tax deduction or otherwise)
prior to the delivery of any certificate or certificates for such shares.
(b) When a Participant is required to pay to the Company an amount
required to be withheld under applicable tax laws in connection with a Stock
Option, such payment may be made (i) in cash, (ii) by check, (iii) if
permitted by the Committee, by delivery to the Company of Ordinary Shares
already owned by the Participant having a Fair Market Value on the date the
amount of tax to be withheld is to be determined (the "Tax Date") equal to
the amount required to be withheld, (iv) through the withholding by the
Company ("Company Withholding") of a portion of the Ordinary Shares acquired
upon the exercise of the Stock Options (provided that, with respect to any
Stock Option held by a Reporting Participant, at least six months has
elapsed between the Date of Grant of such Stock Option and the exercise
involving tax withholding) having a Fair Market Value on the Tax Date equal
to the amount required to be withheld, or (v) in any other form of valid
consideration, as permitted by the Committee in its discretion; provided
that a Reporting Participant shall not be permitted to satisfy his or her
withholding obligation through Company Withholding unless required to do so
by the Committee, in its sole discretion. The Committee may waive or modify
any limitation contained in this Section that is not required for compliance
with Rule 16b-3.
(c) As a condition to the issuance of Ordinary Shares covered by any
Incentive Stock Option, the party exercising such Stock Option shall give a
written representation to the Company, which is satisfactory in form and
substance to its counsel and upon which the Company may reasonably rely,
that he or she will report to the Company any disposition of such shares
prior to the expiration of the holding periods specified by Section
422(a)(1) of the Code. If and to the extent that the realization of income
in such a disposition imposes upon the Company federal, state, local or
other withholding tax requirements, or any such withholding is required to
secure for the Company an otherwise available tax deduction, the Company
shall have the right to require that the recipient remit to the Company an
amount sufficient to satisfy those requirements; and the Company may require
as a condition to the issuance of Ordinary Shares covered by an Incentive
Stock Option that the party exercising such Stock Option give a satisfactory
written representation promising to make such a remittance.
14.6 INDEMNIFICATION OF BOARD AND COMMITTEE. No member of the Board or the
Committee, nor any Officer or Employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board or the Committee and each and any Officer or
Employee of the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
14.7 GOVERNMENT REGULATIONS. Notwithstanding any of the provisions hereof,
or of any written agreements evidencing Stock Options granted hereunder, the
obligation of the Company to sell and deliver shares shall be subject to all
applicable laws, rules and regulations and to such approvals by any government
agencies or national securities exchanges as may be required. The Participant
shall agree not to exercise any Stock Option, and the Company shall not be
obligated to issue any shares, if the exercise thereof or if the issuance of
shares shall constitute a violation by the Participant or the Company of any
provision of any law or regulation of any governmental authority.
A-13
TRITON ENERGY LIMITED
PROXY-ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Thomas G. Finck and Robert B. Holland, III,
each with power to act without the other and with full power of substitution,
as Proxies to represent and to vote, as designated on the reverse side, all
shares of Triton Energy Limited owned by the undersigned, at the Annual
Meeting of Shareholders to be held at the Royal Oaks Country Club, 7915
Greenville Avenue, Dallas, Texas 75231 on Tuesday, May 7, 1996, 10:00 a.m.,
local time, upon such business as may properly come before the meeting or any
adjournment including the following as set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED (i) FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR, (ii) FOR
THE APPROVAL OF THE PROPOSAL TO ADOPT THE SECOND AMENDED AND RESTATED 1992
STOCK OPTION PLAN, (iv) FOR APPROVAL OF THE PROPOSAL TO APPROVE THE MATERIAL
TERMS OF THE PERFORMANCE GOALS AND (v) AT THE DISCRETION OF THE PROXY HOLDERS
WITH REGARD TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF, AS SUCH PROPOSALS ARE MORE FULLY DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT (THE "PROXY STATEMENT")
(Continued, and to be signed and dated on reverse side)
/X/ PLEASE MARK
YOUR VOTES AS
IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
____________________
ORDINARY
1. Election as Directors of the
nominees listed below
(except as indicated to the
contrary below).
FOR WITHHELD
/ / / /
Nominees: Thomas G. Finck, Jesse E. Hendricks
and Michael E. McMahon
/ /
______________________________________
For all nominees except as noted above
2. Adoption of the second amended and restated 1992 Stock
Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Amendment of the amended and restated 1985 Restricted
Stock Plan to increase by 50,000 shares the number of shares
available for issuance pursuant to the plan.
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of the material terms of the performance goals as
described in the Proxy Statement.
FOR AGAINST ABSTAIN
/ / / / / /
5. In their discretion on any other matter that may properly come
before the meeting or any adjournment thereof.
Please date, sign exactly as shown hereon and mail promptly this proxy
in the enclosed envelope. When there is more than one owner, each
should sign. When signing as an attorney, administrator, executor,
guardian or trustee, please add your title as such. If executed by a
corporation or trustee, the proxy should be signed by a duly authorized
officer. If executed by a partnership, please sign in the partnership
name by an authorized person.
Signature __________________________________ Date _______________________
Signature __________________________________ Date _______________________
This proxy may be revoked prior to the
exercise of the powers conferred by the proxy.