SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
THE WISER OIL COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
THE WISER OIL COMPANY
8115 Preston Road, Suite 400
Dallas, Texas 75225
April 12, 2002
Dear Stockholder:
Your Board of Directors joins me in extending an invitation to attend the
2002 Annual Meeting of Stockholders which will be held on May 20, 2002 at 3:00
p.m., at the Hilton Dallas/Park Cities, 5954 Luther Lane, Dallas, Texas 75225.
The meeting will start promptly.
We sincerely hope you will be able to attend and participate in the
meeting. We will report on the Company's progress and respond to questions you
may have about the Company's business. There will also be important items that
are required to be acted upon by stockholders.
Whether or not you plan to attend, it is important that your shares be
represented and voted at the meeting, and, therefore, we urge you to complete,
sign, date and return the enclosed proxy card in the envelope provided for this
purpose.
Sincerely yours,
George K. Hickox, Jr.
Chairman and Chief Executive Officer
THE WISER OIL COMPANY
Dallas, Texas
NOTICE OF ANNUAL MEETING TO BE HELD MAY 20, 2002
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of The Wiser Oil Company (the "Company") will be held at the Hilton
Dallas/Park Cities, 5954 Luther Lane, Dallas, Texas 75225, on May 20, 2002, at
3:00 p.m., Central Daylight Saving Time, for the purpose of considering and
acting upon the following:
(1) Election of Directors: The election of three Directors each to
serve for a three-year term expiring in 2005;
(2) Other business: Such other business as may properly come before
the Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 29, 2002 will
be entitled to notice of, and to vote at, the Annual Meeting. A complete list of
such stockholders will be available for examination at the offices of the
Company in Dallas, Texas during normal business hours for a period of 10 days
prior to the meeting.
The Annual Report to Stockholders for the year ended December 31, 2001, in
which financial statements of the Company are included, was mailed with this
Proxy Statement to each stockholder of record at the close of business on March
29, 2002. The Annual Report does not form any part of the material for
solicitation of proxies.
You are urged to sign, date and return the enclosed proxy as promptly as
possible, whether or not you plan to attend the Annual Meeting in person. If you
attend the Annual Meeting, you may revoke your proxy and vote your shares in
person.
By Order of the Board of Directors,
A. Wayne Ritter
President
Dallas, Texas
April 12, 2002
THE WISER OIL COMPANY
8115 Preston Road, Suite 400
Dallas, Texas 75225
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 20, 2002
GENERAL INFORMATION
Solicitation and Revocability of Proxies
The accompanying proxy is solicited by the Board of Directors (the "Board")
of The Wiser Oil Company (the "Company") in connection with its Annual Meeting
of Stockholders and any adjournment thereof (the "Annual Meeting") to be held on
May 20, 2002 at 3:00 p.m. The approximate date on which this Proxy Statement and
the enclosed proxy are first being sent to stockholders is April 12, 2002.
If the accompanying proxy is duly executed and returned, the shares of
Common Stock and Preferred Stock of the Company represented thereby will be
voted in accordance with the Board of Directors' recommendations herein set
forth and, where a specification is made by the stockholder as provided therein,
will be voted in accordance with such specification. A proxy may be revoked by
the person executing it at any time before it has been exercised, but the
revocation of the proxy will not be effective until written notice thereof has
been given to Joyce M. Moore, Secretary, The Wiser Oil Company, 8115 Preston
Road, Suite 400, Dallas, TX 75225. If a stockholder attends the Annual Meeting,
the stockholder may revoke the proxy and vote in person.
Shares Outstanding and Voting Rights
As of March 29, 2002, 9,242,816 shares of the Company's common stock, par
value $0.01 per share (the "Common Stock") and 1,000,000 shares of the Company's
Series C Cumulative Convertible Preferred Stock, par value $10.00 per share (the
"Preferred Stock") were outstanding. The Common Stock and Preferred Stock
constitute the only classes of voting securities of the Company. Only
stockholders of record as of the close of business on March 29, 2002 (the
"Record Date"), are entitled to receive notice of, and to vote at, the Annual
Meeting. Holders of Common Stock are entitled to one vote for each share so
held. Holders of Preferred Stock are entitled to the number of votes equal to
the number of whole shares of Common Stock into which such holder's shares of
Preferred Stock would have been converted under the provisions of the
Certificate of Designations establishing the Preferred Stock (whether or not
such holder is then entitled to convert such shares under such provisions) at
the conversion price in effect on the Record Date. Under the Certificate of
Designations, any holder of the Preferred Stock may convert all or any portion
of the Preferred Stock held by such holder into a number of shares of Common
Stock computed by dividing (x) the total liquidation value (plus the aggregate
accrued but unpaid dividends, if any) represented by the shares of Preferred
Stock to be converted by (y) the conversion price then in effect. As of the
Record Date, the liquidation value per share of Preferred Stock is $25.00 and
the conversion price per share of Preferred Stock is $4.25. Therefore, the
1,000,000 shares of Preferred Stock outstanding as of the Record Date have an
aggregate of 5,882,352 votes in the election of directors.
Holders of Common Stock or Preferred Stock of the Company do not have
cumulative voting rights with respect to the election of Directors.
Required Affirmative Vote and Voting Procedures
The holders of a majority of the outstanding shares of Common Stock and
Preferred Stock, present in person or represented by proxy, are necessary to
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum.
1
With regard to "Proposal 1. Election of Directors", votes may be cast in
favor of or withheld from each nominee. Votes that are withheld will be excluded
entirely from the vote and will have no effect. In accordance with the Company's
bylaws and Delaware law, the nominees who receive a plurality of the votes cast
by stockholders present or represented by proxy at the Annual Meeting, up to the
number of Directors to be elected, will be elected as Directors of the Company.
Any abstentions or broker non-votes will have no effect on the election of
Directors. The Board of Directors recommends that stockholders vote FOR the
election of its nominees for director.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven directors. The
Company has a "staggered" Board, which means that the directors have been
classified, in respect to the time for which they hold office, by dividing them
into three classes, with one class of directors being elected each year for a
three-year term. At each annual meeting, the stockholders of the Company elect
directors of the class whose term expires at such annual meeting, to hold office
until the third succeeding annual meeting. Each director holds office for the
three-year term for which elected and until his or her successor is elected and
qualified or until his or her earlier resignation or removal. A class of three
directors is to be elected at the Annual Meeting to serve for three-year terms.
The Board of Directors has nominated Richard R. Schreiber, Lorne H. Larson and
George K. Hickox, Jr. for election to the Board to serve until the Annual
Meeting in 2005, and until their successors are duly elected and qualified. Each
is a current member of the Board whose term ends at this meeting.
Unless authority to do so is withheld, it is intended that the proxies
solicited by the Board of Directors will be voted for the nominees named. If any
of the nominees become unable to serve or for good cause will not serve, the
persons named as proxies in the accompanying proxy intend to vote for such
substitute nominees as the Board may propose, unless the Board adopts a
resolution reducing the number of Directors.
The Company has been advised by WIC, as herein defined (see "Beneficial
Ownership of Common Stock"), that WIC intends to vote all of its 90,909 shares
of Common Stock and all of the 5,858,823 shares of Common Stock underlying the
Preferred Stock owned by (i) itself, (ii) DS&P for which DS&P has appointed WIC
as its attorney-in-fact and proxy pursuant to a voting agreement by and between
WIC and DS&P, and (iii) Wiser Investors, L.P. for which WIC has sole voting
power as its general partner, for the nominees named or for such substitute
nominees as the Board may propose, unless the Board adopts a resolution reducing
the number of Directors. See "WIC and DS&P Voting Agreement" and the footnotes
to "Beneficial Ownership of Common Stock" herein.
Set forth below is certain information as of the Record Date, concerning
the three nominees for election at the Annual Meeting and the four Directors of
the Company whose terms will continue after the meeting, including information
with respect to the principal occupation or employment of each nominee or
Director during the past five years. Except as otherwise shown, each of the
nominees and Directors has held the positions shown for at least the past five
years.
Nominees for Election as Directors for Three-Year Term Expiring in 2005
Director Principal Occupation
Name Since Age and other Directorships
- ---- ----- --- -----------------------
Richard R. Schreiber 2000 46 Partner of Dimeling Schreiber &
Park ("DS&P"), a private equity
firm focused on restructuring and
recapitalization transactions.Prior
to 1982, was an industrial real
estate broker and later joined
Coldwell Banker in the same
capacity. Active in negotiating,
purchasing and structuring of the
acquisition financing of DS&P's
investments. Presently Chairman of
the Board of Director New Piper
Aircraft, Inc. and director of
several other privately held
companies.
2
Lorne H. Larson 1995 66 Independent consultant since December
1999; Chairman of ProGas Limited, a
Calgary, Alberta, Canada-based company
involved in natural gas marketing, June
1998-November 1999; President and Chief
Executive Officer of ProGas Limited,
January 1986 to May 1998; and Director
of The CGU Insurance Company of Canada,
a property and casualty insurance
company, since April 1994.
George K. Hickox, Jr. 2000 43 Chairman of the Board and Chief
Executive Officer of the Company, since
May 26, 2000; Chairman of the Board and
Chief Executive Officer of The Wiser Oil
Company of Canada since August 2000.
Since 1991, has been a principal in
Heller Hickox & Co., a private equity
investment firm. Presently a director of
NATCO Group, Inc., a publicly traded
NYSE company, and an officer and
director of several privately held
companies. In early 1980's, worked for
Texas Oil & Gas Corporation and
InterFirst Bank Houston N.A.;
thereafter, was Vice President at
Copeland, Wickersham & Wiley where he
focused on restructuring transactions
and mergers and acquisitions.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE THREE
NOMINEES NAMED ABOVE. Proxies solicited by the Board of Directors will
be voted in favor of approval of the Nominees unless stockholders specify
otherwise.
Directors Whose Terms Expire in 2004
Director Principal Occupation
Name Since Age and other Directorships
- ---- ----- --- -----------------------
A. W. Schenck, III 1986 58 Managing Director, Novantas, a financial
services consulting firm since February
2002. President, Chief Executive Officer
and Director of Tradenable, a financial
service company, August 2000 - August
2001; Chairman, Chief Executive Officer
and Director of Fleet Mortgage Group, a
mortgage company, December 1997 - August
2000. Held various executive positions
with Great Western Financial Corp., a
thrift savings company, August 1995 -
August 1997. Held various executive
positions with PNC Financial
Corporation, a national banking company,
May 1969 - August 1995.
Eric D. Long 2001 43 Chief Executive Officer, President and
Director of USA Compression, a lease,
service and packaging natural gas
compressor company, August 1998 -
Present; Investments and forming USA
Compression, 1996-1998; Vice President
of Business Development and Director of
Global Compression Services, Inc., a
lease, service and package natural gas
compressor company, 1993 - 1996; Held a
variety of senior officer level
operating positions with Hanover Energy,
Inc., an energy investment company, 1987
- 1992.
3
Directors Whose Terms Expire in 2003
Director Principal Occupation
Name Since Age and other Directorships
- ---- ----- --- -----------------------
C. Frayer Kimball, III 1972 67 Owner and Vice President of Petroleum
Engineers, Inc., Lafayette, Louisiana, a
consulting engineering firm; Owner and
Vice President of Triumph Energy, Inc.,
a producer of oil and gas.
Scott W. Smith 2000 44 Principal of Sabine Energy Company, LLC,
a private equity firm focused on
investment opportunities in the energy
business, March 1998 - Present, Manager
of Land and Marketing for O'Sullivan Oil
and Gas, December 1996 to February 1998;
Land Manager for Triad Energy
Corporation, December 1989 to November
1996.
Board of Directors and its Committees
The Board of Directors has an Audit Committee, an Executive Committee, and
a Compensation Committee, but does not have a Nominating Committee. The Board of
Directors held five meetings in 2001. Five of the seven Directors, Messrs.
Hickox, Kimball, Larson, Schreiber and Smith, attended all meetings of the Board
and Committees of which they are members during the period they served on such.
Mr. Long was elected a Director on May 21, 2001 and attended all meetings of the
Board and Committees, thereafter. Mr. Schenck attended four Board meetings and
one Committee meeting.
Audit Committee. During 2001, the Audit Committee consisted of Messrs.
Larson, Long, and Schreiber (the "Audit Committee"). The Audit Committee
reviewed reports and recommendations of the Company's independent auditors as
well as the scope of their review and their compensation, and also met with
representatives of management as appropriate. During 2001, the Audit Committee
held six meetings. See "Audit Committee Report" herein.
Compensation Committee. During 2001, the Compensation Committee consisted
of Messrs. Kimball, Long and Schenck. The Compensation Committee reviewed and
recommended to the Board of Directors the remuneration of the executive officers
of the Company and administered the Company's 1991 Stock Incentive Plan, 1997
Share Appreciation Rights Plan, 1991 Non-Employee Directors' Stock Option Plan
and Equity Compensation Plan for Non-Employee Directors. During 2001, the
Compensation Committee held two meetings. See "Compensation Committee Report"
contained herein.
Executive Committee. The Company has an Executive Committee of the Board
created pursuant to terms of the Stockholder Agreement. See "Certain
Transactions -- The Management Agreement between the Company and WIC." George K.
Hickox, Jr., Scott W. Smith, Richard R. Schreiber and C. Frayer Kimball, III are
members of the Executive Committee. A. Wayne Ritter serves as an advisory member
of the Executive Committee. The Executive Committee has and exercises all powers
and authority of the Board in management of the business and affairs of the
Company on matters which by law do not need whole Board approval. In addition,
Executive Committee approval is required to approve operating or capital
expenditures exceeding $1,000,000 per transaction, unless such expenditures were
specifically approved by the Board as part of the Annual Budget. Whole Board
approval is required to approve (i) any operating or capital expenditure or
series of related expenditures exceeding $2,500,000, unless such expenditure or
expenditures were specifically approved by the Board as a part of the Annual
Budget, (ii) the nomination of members for election to the Board, (iii) the
filling of vacancies of the Board, the Executive Committee or other Board
committees, and (iv) transactions between the Company, on the one hand, and any
Purchaser, as herein defined, or any affiliate of any Purchaser, on the other
hand. No meetings were held by the Executive Committee during 2001. See "The
Transaction With Wiser Investment Company" contained herein.
Compensation Committee Interlocks and Insider Participation. None of the
executive officers of the Company has served on the board of directors or on the
compensation committee of any other entity, any of whose officers served on the
Board of Directors or Compensation Committee of the Company.
4
EXECUTIVE OFFICERS
The following is a list of the names and ages of all the executive officers
of the Company, indicating all positions and offices with the Company held by
each such person and each such person's principal occupation or employment
duringthe past five years. The executive officers of the Company are elected
each year by the Board of Directors at its first meeting following the Annual
Meeting of Stockholders to serve during the ensuing year and until their
respective successors are elected and qualified. Pursuant to the Management
Agreement, as further discussed herein, WIC caused Mr. Hickox to serve as the
Chief Executive Officer of the Company and to enter into an employment agreement
with the Company. See "Employment Agreements" and "Changes in Company
Management" herein. None of the other persons listed has served or is serving as
an officer as a result of any arrangement or understanding between him and any
other person pursuant to which he was selected as an officer.
Positions and Offices Held and Principal
Name Age Occupation or Employment During Past Five Years
- ---- --- -----------------------------------------------
George K. Hickox, Jr. 43 Chairman of the Board and Chief Executive
Officer of the Company, since May 26, 2000;
Chairman of the Board and Chief Executive
Officer of The Wiser Oil Company of Canada since
August 2000. Since 1991, has been a principal in
Heller Hickox & Co., a private equity investment
firm. Presently a director of NATCO Group, Inc.,
a publicly traded NYSE company, and an officer
and director of several privately held
companies. In early 1980's, worked for Texas Oil
& Gas Corporation and InterFirst Bank Houston
N.A.; thereafter, was Vice President at
Copeland, Wickersham & Wiley where he focused on
restructuring transactions and mergers and
acquisitions.
A. Wayne Ritter 61 President of the Company since May 26, 2000;
President and Director of The Wiser Oil Company
of Canada since August 2000; Vice President,
Acquisitions and Production of the Company,
August 1993 - May 2000; Vice President in Charge
of Acquisitions of the Company, September 1991 -
August 1993.
Robert J. Kerian 46 Vice President of Exploration of the Company
since September 2001; Exploration Manager of the
Company, December 1998 - August 2001; Senior
Staff Geophysicist of the Company, November 1996
- November 1998. Held various staff and
supervisory positions as an exploration
geophysicist with Enserch Exploration, an oil
and gas exploration and production company, July
1984 - November 1998.
Richard S. Davis 48 Vice President of Finance of the Company since
July 2000; Vice President of Finance of The
Wiser Oil Company of Canada since August 2000;
Controller of the Company, February 1997 - June
2000. Controller of Gemini Exploration Company,
an oil and gas exploration and production
company, August 1994 - February 1997.
W. B. Phillips 50 Vice President of Land of the Company since
September 2001; Manager of Land of the Company,
January 1991 -August 2001.
Matthew A. Eagleston 42 Vice President of Production of the Company
since September 2001; Manager of Operations and
Engineering of the Company, August 2000 - August
2001; Project Engineer of the Company, September
1995 - August 2001.
5
SECTION 16(a) COMPLIANCE
BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than 10 percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission (the "Commission") and the
New York Stock Exchange (the "NYSE") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Such persons are required by the Commission regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the Company
and written representations that no other reports were required, all Section
16(a) filing requirements applicable to its directors, officers and more than 10
percent beneficial owners were complied with during the year ended December 31,
2001, with the exception of three Form 4s and three transactions that were not
timely reported for Mr. Ritter, President of the Company.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company in 1999, 2000 and 2001 to the Named Officers.
SUMMARY COMPENSATION TABLE
Long Term
---------
Compensation
------------
Annual Compensation Awards
------------------- ------
Number of
Salary Securities
------- Other Annual Underlying All Other
Name and Principal Position Year ($) Bonus ($) Compensation Options/SARs (#) Compensation
- --------------------------- ---- --- --------- ------------ ---------------- ------------
George K. Hickox, Jr. 2001 $ 1 -0- $24,455 (2) -0- $ -0-
Chairman, and Chief Executive 2000 1 -0- 10,547 (9) -0- -0-
Officer after May 26, 2000 (1)
A. Wayne Ritter 2001 183,000 300 (3) -0- 9,510 (7)
President after May 26, 2000 2000 183,000 500 (10) -0- 6,933 (8)
1999 183,000 -0- 50,000 5,844
Robert J. Kerian 2001 117,000 20,300 (4) -0- 6,210 (7)
Vice President of Exploration
After September 1, 2001 (4)
Richard S. Davis 2001 116,504 300 (3) -0- 6,185 (7)
Vice President of Finance 2000 107,853 17,833 (11) -0- 1,972 (8)
After May 26, 2000
W. B. Phillips 2001 109,103 9,392 (5) -0- 5,815 (7)
Vice President of Land
After September 1, 2001 (5)
A. Matthew Eagleston 2001 98,105 300 (6) -0- 5,261 (7)
Vice President of Production
After September 1, 2001 (6)
(1) See 2001 Compensation for Chief Executive Officer.
6
(2) Consists of the following pursuant to Mr. Hickox's employment agreement
with the Company - $24,455 representing the amount paid by the Company to
provide Mr. Hickox with alternative housing in Dallas, Texas. Mr. Hickox
has the use of a company owned vehicle when in Dallas. See "Employment
Agreements" herein.
(3) Messrs. Ritter and Davis received a $300 Christmas bonus.
(4) Mr. Kerian was elected Vice President of Exploration on September 1, 2001.
Mr. Kerian received a performance bonus of $20,000 and a $300 Christmas
bonus.
(5) Mr. Phillips was elected Vice President of Land on September 1, 2001. Mr.
Phillips received a performance bonus of $9,092 and a $300 Christmas bonus.
(6) Mr. Eagleston was elected Vice President of Production on September 1,
2001. Mr. Eagleston received a $300 Christmas bonus.
(7) Consists of (a) matching contributions by the Company in 2001 to the
accounts of Mr. Ritter $3,519, Mr. Kerian $5,850, Mr.Davis $5,825, Mr.
Phillips $5,455 and Mr. Eagleston $4,905 under the Company's Savings Plan
and (b) matching contributions by the Company in 2001 to the account of Mr.
Ritter $5,631 under the Company's non-qualified Restoration Plan and (c)
the dollar value of life insurance premiums paid by the Company in 2001 for
the benefit of Mr. Ritter $360, Mr. Kerian $360, Mr. Davis $360, Mr.
Phillips $360 and Mr. Eagleston $356.
(8) Consists of (a) matching contributions by the Company in 2000 to the
accounts of Mr. Ritter $2,112, and Mr. Davis $1,584 under the Company's
Savings Plan and (b) matching contributions by the Company in 2000 to the
account of Mr. Ritter $4,223 under the Company's non-qualified Restoration
Plan and (c) the dollar value of life insurance premiums paid by the
Company in 2000 for the benefit of Mr. Ritter $598 and Mr. Davis $388.
(9) The amount paid by the Company from June 2000 through December 2000 to
provide Mr. Hickox with alternative housing in Dallas, Texas was $10,547.
(10) Mr. Ritter received a $500 Christmas bonus.
(11) Mr. Davis was elected Vice President of Finance on July 6, 2000. Mr. Davis
received a retention bonus of $17,333 prior to being elected Vice President
and received a $500 Christmas bonus.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information concerning the grant of stock
options during 2001 to the Named Officers.
Individual Grants (1)
--------------------
% of Total
Number of Options Grant
Securities Granted to Date
Underlying Employees Exercise or Present
Options/SARS In Fiscal Base Prince Expiration Value ($)
Name Granted Year (2) ($/Sh) Date (3)
- ---- ------------ -------- ----------- ---------- ---------
George K. Hickox, Jr. -0- -0- -0- -0- $ -0-
A. Wayne Ritter 75,000 25.00% 7.0000 2/25/2006 180,990
75,000 25.00% 8.3500 5/25/2011 326,775
Robert J. Kerian 20,000 6.67% 6.5750 2/25/2011 67,038
Richard S. Davis 20,000 6.67% 6.5750 2/25/2011 67,038
Matt A. Eagleston 20,000 6.67% 6.5750 2/25/2011 67,038
(1) All grants to Named Officers during fiscal year 2001 were granted under
either the Company's 1991 Stock Incentive Plan or the Company's 1997 Share
Appreciation Rights Plan (" SARs"). SARs granted on February 26, 2001
became exercisable on July 31, 2001. Options granted on February 26, 2001
become exercisable in increments of 50% percent on January 1, 2002 and 50%
on January 1, 2003. Options granted on May 26, 2001 became exercisable in
increments of 50% on July 26, 2001 and 50% on December 26, 2001. All option
grants have ten-year terms and were granted with an exercise price equal to
the fair market value of the Company's Common Stock on date of grant. All
SARs have five-year terms, while each were granted with an exercise price
less than the fair market value of the Company's Common Stock on the date
of grant.
7
(2) During 2001, the Company issued 75,000 SARs and 225,000 options to
employees. The percentages listed for each grant were calculated by
dividing each grant by the total of all SARs and options granted in 2001.
(3) These amounts represent the value of grants based upon the Black-Scholes
option pricing model. The valuation assumes exercise at the end of the
ten-year option term or five-year SAR term and the following data:
Grant Dates
-------------
SARs
2/26/01 2/26/01 5/26/01
-------- ------- -------
Risk free interest rate 5.04% 5.04% 5.40%
Dividend yield -0- -0- -0-
Volatility (three-year weekly close) 27.74% 7.74% 27.74%
Time to exercise 10 Years 5 Years 10 Years
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
The following table provides information, with respect to each Named
Officer, concerning unexercised options/SARs held as of the end of the fiscal
year ended December 31, 2001.
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Options/SARs at FY-End Options/SARs at FY-End
On Value (#)(1) ($)(2)
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --- --- ----------- ------------- ----------- -------------
George K. Hickox, Jr. -0- $ -0- -0- -0- $ -0- $ -0-
A. Wayne Ritter (3) -0- -0- 212,500 -0- 17,500 -0-
Robert J. Kerian -0- -0- 15,000 10,000 1,750 -0-
Richard S. Davis -0- -0- 15,000 10,000 1,750 -0-
W. B. Phillips -0- -0- 7,500 -0- 1,750 -0-
Matthew A. Eagleston -0- -0- 15,000 10,000 1,750 -0-
(1) Represents the number of shares of the Company's Common Stock underlying
the options and SARs held by the Named Officer.
(2) The closing price for the Company's Common Stock as reported by the NYSE on
December 31, 2001 was $5.35. Value is calculated on the basis of the
difference between $5.35 and the option/SAR exercise price of an
"in-the-money" option/SAR multiplied by the number of shares of Common
Stock underlying the option/SAR.
(3) Pursuant to the terms of a Letter Agreement between the Company and Mr.
Ritter dated February 27, 2001, Mr. Ritter surrendered 217,500 high priced
options to the Company (5,000 shares from a 1992 grant at an exercise price
of approximately $14.00 per share; 10,000 from a 1992 grant at an exercise
price of approximately $15.06 per share; 30,000 shares from a 1994 grant at
an exercise price of approximately $18.13 per share; 142,500 from 1996
grants at an exercise price of approximately $14.88 per share and 30,000
from a 1997 grant at an exercise price of approximately $19.69 per share).
8
Pension Benefits
Each Named Officer is covered by the Company's Retirement Income Plan
("Qualified Plan"), a non-contributory defined benefit pension plan under which
retirement benefits are provided to substantially all non-union employees of the
Company. Prior to January 1, 1999, the Qualified Plan provided a monthly benefit
upon retirement based on the employee's average monthly earnings (computed
generally on the basis of the participant's average monthly earnings for the 60
highest paid consecutive months during the 120 consecutive months immediately
preceding the employee's termination date) and years of service.
Effective as of December 31, 1998, the Qualified Plan was amended to
"freeze" benefits so that no additional benefits would accrue under the
Qualified Plan for anyone after December 31, 1998. The amendment did not reduce
the benefits accrued under the Qualified Plan on or before December 31, 1998, or
affect the amount of any benefit payments then being made pursuant to the
Qualified Plan.
In 2001, the Qualified Plan was amended to allow accruals under a cash
balance formula for service after September 30, 2000. Under this formula, a
hypothetical account balance is determined for each participant. Each quarter,
this account is credited with 1.50% interest on the balance at the beginning of
the quarter, plus 3% of the employee's basic compensation for the quarter. Upon
retirement, the Qualified Plan will provide a monthly income that is the
actuarial equivalent of the hypothetical account balance at the time of
termination, but in no events less than the frozen accrued benefit that would
have been paid before the 2001 amendment. In lieu of a monthly income,
participant may instead receive a lump sum payment of the actuarial value of
benefits payable from the Qualified Plan.
Certain executives of the Company also participate in the Company's
Retirement Restoration Plan (the "Retirement Restoration Plan"). The Retirement
Restoration Plan is a nonqualified deferred compensation plan. The participants
in the plan are the Chief Executive Officer and any other employee of the
Company (i) who is a participant in the Retirement Plan, (ii) whose annual
salary is at least $150,000, and (iii) who has been designated by the Chief
Executive Officer to participate in the plan. For 2001, Mr. Ritter was the only
Named Executive Officer who was a participant in the Retirement Restoration
Plan.
In order to comply with the tax qualification requirements of the Internal
Revenue Code of 1986, as amended (the "Code"), the maximum annual retirement
benefit that may be accrued and that the Company can fund, and the maximum
compensation that may be used in determining future benefit accruals, under the
Retirement Plan are subject to certain limitations. The Retirement Restoration
Plan provides for the payment of benefits equal to the amount by which (i) the
value of the benefits that would have been payable to a participant under the
Qualified Plan if such benefits were not limited by such maximum compensation
and maximum benefit limitations, exceeds (ii) the value of the benefits actually
payable under the Qualified Plan.
Benefits under the Retirement Restoration Plan normally are paid
concurrently with the payment of benefits under the Qualified Plan. However, if
a participant's employment terminates (other than by reason of death, retirement
or disability) within two years following a Change of Control (as defined in the
Retirement Restoration Plan), the value of such participant's Retirement
Restoration Plan benefits will be distributed to such participant in a single
lump sum within 60 days following such termination of employment. Retirement
Restoration Plan benefits are payable from the general assets of the Company.
Based upon the actuarial assumptions presently being used to fund the
Qualified Plan and assuming continued employment to age 65, the estimated
combined annual retirement benefits payable under the Qualified Plan and the
Retirement Restoration Plan in the form of a single life annuity commencing at
age 65 would be $23,265 per year for Mr. Ritter, $13,872 per year for Mr. Davis,
$15,110 per year for Mr. Kerian, $19,340 for Mr. Phillips, $18,463 for Mr.
Eagleston and less than $5 per year for Mr. Hickox.
9
Directors' Compensation
Directors who are not employees of the Company receive an Annual Retainer
of $16,000, which is payable in quarterly installments of $4,000 each, with the
first payment being made in May of each year, and $1,000 for each meeting of the
Board of Directors or any Committee of the Board attended. Each Chairman of a
Committee of the Board receives an additional annual fee of $1,000. Directors
who are employees of the Company or a subsidiary do not receive a retainer or
fee for serving on the Board or Committees, for attending meetings of the Board
or Committees or for serving as Chairman of a Committee.
In 1996, the Company adopted The Wiser Oil Company Equity Compensation Plan
for Non-Employee Directors (the "Equity Plan"), which allows non-employee
Directors to make irrevocable elections prior to the beginning of each plan year
to receive their Annual Retainers (i) all in cash, (ii) all in Phantom Shares or
(iii) 50% in cash and 50% in Phantom Shares, and to defer payment of taxes on
the equity portion to a subsequent date. A "Phantom Share" is an unsecured,
unfunded and nontransferable right to receive from the Company one share of
Common Stock, which right will automatically be exercised upon the earlier to
occur of (i) the termination of the holder's service as a Director for any
reason or (ii) a "Change in Control" of the Company, as defined in the Equity
Plan. Non-employee Directors have no right to convert Phantom Shares into Common
Stock prior to such time. The number of Phantom Shares that may be acquired by a
non-employee Director on any Annual Retainer payment date is determined by
dividing the amount of the Annual Retainer, or portion thereof, that the
Director has elected to receive in Phantom Shares by the fair market value of a
share of Common Stock on the payment date of the Annual Retainer, rounded
downward to the nearest whole number. Phantom Shares are fully vested upon
issuance. Holders of Phantom Shares receive payments of cash or other property
equivalent to dividends paid on outstanding shares of Common Stock, but have no
voting or other rights of stockholders with respect to the Phantom Shares. A
maximum of 25,000 shares of Common Stock may be issued upon the conversion of
Phantom Shares under the Equity Plan. For 2001, all Directors elected to receive
their $16,000 Annual Retainer in cash.
A Change of Control of the Company, as defined in the Equity Plan occurred
upon the closing of the transaction with Wiser Investment Company on May 26,
2000. Effective May 26, 2000, all outstanding Phantom Shares fully vested.
Common Stock certificates were issued as follows: 7,913 shares of the Company's
stock to Mr. Larson, 7,913 shares of the Company's stock to Mr. Mosle and 7,312
shares of the Company's stock to Mr. Schenck. This plan has a balance of 1,862
Phantom Shares.
The 1991 Non-Employee Directors' Stock Option Plan as amended, (the
"Directors' Plan") is intended to enhance the mutuality of interests between the
Directors and stockholders of the Company and to assist the Company in
attracting and retaining able Directors. Under the Directors' Plan, on the first
business day following each Annual Meeting of Stockholders, each Director who is
not an employee of the Company or a subsidiary is granted a nonstatutory stock
option to purchase 1,500 shares of Common Stock at an option price equal to the
fair market value of the Common Stock on the date the option is granted. The
Directors' Plan also provides for the grant of an option to purchase 5,000
shares of Common Stock to each newly elected non-employee Director upon such
person's initial election to the Board.
In February 1997, the Directors' Plan was amended to provide for, in
addition to the annual and initial option grants described above, a one-time
grant on the date of the 1997 Annual Meeting of Stockholders to each
non-employee Director serving on that date of an option to purchase, at an
exercise price equal to the fair market value of the Common Stock on the date of
grant, a number of shares of Common Stock equal to 5,000 less the number of
shares covered by all options previously granted to such Directors under the
Directors Plan. All options granted under the Directors' Plan become exercisable
six months from the date of grant and expire ten years from the date of grant.
The Directors' Plan provides that, upon termination of service as a Director for
any reason other than removal for cause, all outstanding options previously
granted to the non-employee Director under the Directors' Plan will become
immediately exercisable in full and will remain exercisable until the earlier to
occur of the original expiration date of the option or three years from the date
of termination of service, provided that if a Director voluntarily retires or
resigns the post-termination of service exercise period may not exceed the
duration of such Director's period of service as a Director of the Company. The
Directors' Plan also provides that, upon removal of a Director for cause, all
unvested options will immediately terminate and all unexpired vested options
will be exercisable for a period of 90 days after removal.
10
In February 2001, the Directors' Plan was amended to increase total number
of options that may be issued under this plan to 100,000 shares of Common Stock
and extended the duration of the Plan to June 30, 2006. Pursuant to the terms of
the Directors' Plan, on May 22, 2001, options to purchase 1,500 shares of Common
Stock at an exercise price of $9.2750 per share were granted to Messrs. Kimball,
Larson, Schenck , Schreiber and Smith. Mr. Long, a newly elected non-employee
Director, received 5,000 shares of Common Stock at an exercise price of $9.2750
upon his initial election to the Board.
Employment Agreements
George K. Hickox Jr. entered into an employment agreement with the Company
effective May 26, 2000. The employment of Mr. Hickox is for a two-year period
commencing on the date of the agreement, unless extended by mutual agreement of
the parties or terminated in accordance with the terms thereof. During the
employment term, Mr. Hickox will serve as Chief Executive Officer and (to the
extent elected or appointed as a director of the Company) Chairman of the Board
of the Company, accountable only to the Board. The Employment Agreement requires
that Mr. Hickox devote a substantial majority of his time and attention to the
business affairs of the Company. The Company acknowledges that Mr. Hickox has
outside business interests and has agreed he may devote a portion of his time
and attention to such business interests provided they do not materially
interfere with the performance of his duties under the Employment Agreement.
During the employment term, the Company will pay Mr. Hickox for his services a
base salary at the rate of $1.00 per year, provided that such base salary may be
adjusted from time to time by the Board at its discretion. In addition to base
salary, Mr. Hickox will be entitled to participate in all employee benefit plans
and programs provided by the Company to its executive officers generally,
subject to terms, conditions and administration of such plans and programs.
However, Mr. Hickox has agreed that, unless otherwise determined by the Board,
he will not be entitled to receive any stock options, restricted stock or other
similar stock-based awards under the Company's stock incentive plans. The
Employment Agreement also contains provisions regarding the Company furnishing
an automobile and housing for Mr. Hickox's use in Dallas, and the reimbursement
by the Company of certain of his travel expenses. The Board may terminate Mr.
Hickox's employment for cause, and Mr. Hickox has the right to terminate his
employment, at any time, by providing at least 30 days prior written notice.
A. Wayne Ritter entered into a new employment agreement with the Company
effective December 18, 2001. This agreement supercedes all current employment
agreements between Mr. Ritter and the Company hereto, which shall be of no
further force or effect. The new employment agreement provides for Mr. Ritter to
serve as President of the Company through the close of business on December 18,
2002, unless such term is extended by agreement of the parties for an annual
salary not less than his current salary level The agreement also provides that
Mr. Ritter will be covered by such employee benefit plans as are applicable to
executive employees of the Company.
The Company or Mr. Ritter may terminate his employment agreement at any
time for any reason upon providing the other party with forty-five (45) days
written notice of such termination. Upon such termination, the Company shall pay
Mr. Ritter (or, in the event of his death, to his estate), within 30 days
following such termination, a severance payment amount in cash equal to his
annual base salary at the time of his termination of employment. The Company
shall also pay, within thirty (30) days following such termination: (i) an
amount in cash equal to the sum of his base salary at the time of his
termination of employment times three, (ii) the amount equal to the premium cost
or other amount paid by the Company during the one-year period preceding his
termination of employment to provide him with life, health, and disability
insurance benefits and (iii) the use of an automobile for such year.
Upon any termination of any employment agreement, Mr. Ritter is bound by
the terms of his agreement with respect to the guarding of certain confidential
information of the Company and its subsidiaries and an agreement not to solicit
employees of the Company and its subsidiaries for a period of two (2) years.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised of three non-employee directors of
the Company and is responsible for establishing and evaluating the Company's
executive compensation policy and strategy.
Committee and Philosophy. The Committee's responsibilities include: (i)
reviewing the design and competitiveness of the Company's compensation and
benefits programs, (ii) establishing the compensation program for the Chief
Executive Officer; (iii) reviewing and approving recommendations made by the
Chief Executive Officer
11
regarding the compensation program for other executive officers, (iv) approving
changes to the base salary and incentive or bonus payments to the Chief
Executive Officer and other executives and (v) administering the Company's
stock option plan and SAR plan. The Committee's objectives are:
o To provide compensation comparable to similar companies in the oil and gas
industry enabling the Company to attract, retain, motivate and reward its
executive officers. These elements are critical to the Company's long-term
growth and success.
o To align the interests of executives with the long-term interests of
stockholders through stock option awards whose value over time depends upon
the market value of the Company's common shares.
o To motivate and retain key senior officers to achieve strategic business
initiatives and reward them for their achievements.
o To work closely with the Chief Executive Officer to assure that the
compensation program supports management's objectives for the Company
The goals of the Compensation Committee are to ensure that the compensation
provided to the Company's executive officers is consistent with the Company's
annual and long-term performance objectives, reward superior performance, while
at the same time providing a means for motivating and retaining key executives
with exceptional leadership abilities. The Company's policy is to pay executive
officers a base salary with performance rewarded by cash incentive bonuses,
stock options and/or share appreciation rights (SARs) after a review of all
indices of performance. The executive compensation program is founded upon the
same guidelines as used for all other employees of the Company.
Each position including executive positions is reviewed on an annual
basis. All positions are compared on the basis of job descriptions to similar
positions in compensation/benefits surveys of a peer group of comparable
companies within the energy industry. The Committee reviews industry standards,
increases in cost of living and the Company's goals to approximate the median of
competitive practices with respect to base salaries.
Base Salary. Each year, the Compensation Committee recommends base salaries
at levels within the competitive market range of comparable companies. Other
factors taken into consideration in establishing base salaries are
responsibilities delegated to the executive, length of service, individual
performance and internal equity considerations.
Annual Incentive Compensation Plan. Bonuses are based on the overall
performance of the Company relative to expectations and on individual overall
contributions to 2001 results. Operating cash flow, reserve replacement and
increases in reserve values are primary performance measures providing the basis
for determination of the amounts of incentive awards. Performance measures and
goals are reevaluated annually, and in making an award, the Committee may
reflect other relevant performance results as identified in the following
paragraph.
Due to the effect of uncontrollable factors in the oil and gas industry,
such as oil and gas prices, an evaluation of Company performance based on only
one or two measures may not provide a complete analysis of overall Company
performance. The Committee annually reviews other important indicators of
performance, such as earnings per share, return of invested capital, reserve
growth, lease operating expenses, finding costs, and administrative expenses.
Based on the results of these assessments and an evaluation by the Committee of
individual executive performance, the Committee may adjust awards to reflect
individual performance.
Stock Option Plan. Stock ownership is an important component for ensuring
that executives' interests are aligned with shareholders. In an effort to
facilitate stock ownership for executives, the Company provides stock options
and SARs primarily as long-term incentive reward vehicles. The Committee
considers a number of factors in determining stock option and SAR awards,
including the Company's success in achieving annual and strategic goals,
assessment of executive contributions to the Company and the expected future
role and contribution of the executive to the overall success of the Company.
12
Performance Bonuses. The competitive factors and marketplace, as discussed
above determine base salary for officers. Mr. Kerian was elected Vice President
of Exploration on September 1, 2001. He received a $20,000 performance bonus in
2001. Mr. Phillips was elected Vice President of Land on September 1, 2001. He
received a $9,092 performance bonus. There were no salary increases or other
incentive bonuses granted by the Committee to officers for 2001.
Policy Regarding Tax Deductibility of Executive Compensation. Section
162(m) of the Code generally limits (to $1 million per covered executive) the
deductibility for federal income tax purposes of annual compensation paid to a
Company's chief executive officer and each of its other four most highly
compensated executive officers. The $1 million deduction limit does not apply,
however, to "performance-based compensation" as that term is defined in Section
162(m) of the Code and the regulations promulgated thereunder. The Compensation
Committee does not presently anticipate that the compensation of any executive
officer will exceed the cap on deductibility imposed by Section 162(m) of the
Code during fiscal 2001. The Company will continue to analyze its executive
compensation practices and plans on an ongoing basis with respect to Section
162(m) of the Code. The Committee believes that this provision of the tax law is
unlikely to have any impact upon the Company in the near future.
2001 Compensation for the Chief Executive Office. George K. Hickox Jr.
entered into an employment agreement with the Company effective May 26, 2000.
During the employment term, the Company will pay Mr. Hickox for his services a
base salary at the rate of $1.00 per year, provided that such base salary may be
adjusted from time to time by the Board at its discretion. In addition to base
salary, Mr. Hickox will be entitled to participate in all employee benefit plans
and programs provided by the Company to its executive officers generally,
subject to terms, conditions and administration of such plans and programs.
However, Mr. Hickox has agreed that, unless otherwise determined by the Board,
he will not be entitled to receive stock options, restricted stock or other
similar stock-based awards under the Company's stock incentive plans. See
"Employment Agreements" herein.
Mr. Hickox's salary was not adjusted in 2001.
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate goals and shareholder interest. As performance goals are met or
exceeded, resulting in increased value to shareholders, executives are rewarded
commensurately. This balanced executive compensation program provides a
competitive and motivational compensation package to the executive officer team
necessary to continue to produce the results the Company strives to achieve.
By the Compensation Committee:
A. W. Schenck, III, Chairman
C. Frayer Kimball, III
Eric D. Long
AUDIT COMMITTEE REPORT
As members of the Audit Committee of the Board of Directors, we are
responsible for helping to ensure the reliability of the Company's financial
statements and overseeing the Company's financial process on behalf of the Board
of Directors. The Audit Committee is responsible for, among other things,
reviewing with the auditors the plan and scope of the audit, fee schedules,
monitoring the adequacy of reporting and internal controls, and meeting
periodically with independent auditors with and without management present.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. In keeping with
these goals, the Board of Directors has a written charter that is reviewed
annually for the Audit Committee. In accordance with the rules of the NYSE, all
of the members of the Audit Committee are independent.
Review and Discussions
The Audit Committee has reviewed and discussed the audited financial
statements for the fiscal year ended December 31, 2001 with management. It has
also discussed with the independent auditors the matters required to be
discussed by Statement of Auditing Standards No. 61. In addition, the Audit
Committee has received and discussed with the auditors the matters required by
Independence Standards Board Statement No. 1 (Independence Discussions with
Audit Committees) and has discussed with the independent accountants their
independence.
13
In an effort to maintain the accountant's independence, the Audit Committee
has considered whether Arthur Andersen LLP's rendering of non-audit services is
compatible with maintaining its independence. We have concluded that the
rendering of both types of services does not result in a conflict.
Fees paid to the Independent Public Accountant for the Fiscal Year 2001
Audit Fees. The Company paid Arthur Andersen LLP $210,000 during the fiscal
year ended December 31, 2001 for the audit, Forms 10-Q and Form 10-K review.
Tax Fees. The Company paid Arthur Andersen LLP $50,025 during the fiscal
year ended December 31, 2001 for the federal tax returns and other tax filings.
Financial Information Systems Design and Implementation Fees. Arthur
Andersen LLP did not render any services related to financial information
systems design and implementation for the fiscal year ended December 31, 2001.
All Other Fees. The aggregate fees billed for services rendered by Arthur
Andersen LLP during the fiscal year ended December 31, 2001, other than the
services covered above, were $6,750 for tax consulting.
Recommendation to Include Audited Financial Statements in Annual Report
Based upon its review of the report of the independent accountants and its
discussions with management and the independent accountants, the Committee
recommended that the Board of Directors include the audited financial statements
along with management's discussion in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001 for filing with the Commission.
The Audit Committee
Lorne H. Larson, Chairman
Eric D. Long
Richard R. Schreiber
(This portion of the page left blank intentionally)
14
The following graph compares yearly percentage change in the cumulative
total return on the Company's Common Stock during the five fiscal years ended
December 31, 2001, with the cumulative total return of the Broad Market Index,
which is an index of companies on the S&P 500 Index, and an index of peer
companies selected by the Company.
Stock Performance Graph
[LINE GRAPH APPEARS HERE]
December 31
1996 1997 1998 1999 2000 2001
The Wiser Oil Company $100 $ 72.04 $ 11.03 $ 12.97 $ 27.24 $ 27.76
Peer Group Index 100 91.70 48.50 63.72 132.05 102.64
Broad Market Index 100 133.36 171.47 207.56 188.66 166.24
Companies in the peer group are as follows: Equity Oil Company; Forest Oil
Corporation; Plains Resources, Incorporated; Swift Energy Company; and Tom
Brown, Inc. The Stock Performance Graph and calculations were provided to the
Company by Media General Financial Services. The graph and calculations assume
$100 invested at the closing sale price on December 31, 1996, and reinvestment
of dividends.
Certain Relationships and Related Transactions
The Subscription Agreement with Wiser Investors, L.P. and A. Wayne Ritter.
On June 1, 2001, WIC assigned its rights to purchase 396,000 shares of the
Company's Preferred Stock, as herein defined (see "The Transaction with Wiser
Investment Company") to Wiser Investors, L.P., a Delaware limited partnership
and assigned its right to purchase 4,000 shares of the Preferred Stock to A.
Wayne Ritter (the "Investors/Ritter Purchase Transactions"). WIC, as both the
general partner and a limited partner of Investors and Messrs. Hickox, Chairman
of the Board and Chief Executive Officer of the Company and Smith, a Director of
the Company, as managers of WIC, has an interest in the Investors/Ritter
Purchase Transaction.
The Management Agreement between the Company and WIC. The Company and WIC
entered into a Management Agreement on May 26, 2000 (the "Management Agreement,"
included as one of the Purchase Transactions herein defined). Pursuant to the
Management Agreement, WIC filled the vacancies on the Board created by the
resignations of Andrew J. Shoup, Jr., Howard Hamilton and John W. Cushing III
with three designees, Messers. Smith, Schreiber and Hickox (each a "Designee").
Under the terms of the Stockholder Agreement dated May 26, 2000 by and between
the Company, WIC and DS&P (the "Stockholder Agreement", included as one of the
"Purchase Transactions" as described under "The Transaction with Wiser
Investment Company"), each Designee shall serve until the annual meeting of the
Company's stockholders at which the term of the class to which such Designee has
been appointed expires, and until his respective successor is elected and
qualified or until his earlier death, resignation or removal from office.
15
Equipment Purchases from NATCO Group, Inc. During 2001, the Company
purchased oil field equipment from NATCO Group, Inc., a Delaware corporation,
for approximately $82,000. Mr. Hickox, Chairman of the Board and Chief Executive
Officer of the Company, is a stockholder and a director of NATCO Group, Inc.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of March 1, 2002, unless otherwise
indicated, the beneficial ownership of Common Stock by: (i) the only persons
known by the Company to beneficially own in excess of 5% of the outstanding
Common Stock; (ii) each director of the Company; (iii) the Chief Executive
Officer and each of the other three most highly compensated executive officers
of the Company for the year ended December 31, 2001; and (iv) all of the
directors and executive officers of the Company as a group. Except as otherwise
indicated, each of the persons named has sole voting and investment power with
respect to the shares of Common Stock beneficially owned by that person.
Name of Beneficial Owner Shares Beneficially Owned
- ------------------------
Directors and Executive Officers(1): Number Percent
- ------------------------------------ ------ -------
George K. Hickox, Jr. 25,800 (2)(3)(16) *
Scott W. Smith 9,300 (2)(5)(16) *
Eric D. Long 6,000 (6) *
A. W. Schenck, III 23,852 (7) *
Lorne H. Larson 19,413 (7) *
C. Frayer Kimball, III 19,083 (4)(9) *
Richard R. Schreiber 1,500 (5)(10)(17) *
A. Wayne Ritter 248,953 (8)(13) 2.63%
Richard S. Davis 17,000 (4)(12) *
Robert J. Kerian 20,000 (12) *
W.B. Phillips 10,875 (11) *
Matthew A. Eagleston 16,500 (4)(12) *
All Directors and executive officers 418,276 (14) 4.46%
As a group (12 persons named above)
Holders of 5% or More Not Named Above:
- --------------------------------------
Dimensional Fund Advisors Inc. 782,475 (15) 8.46%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Wiser Investment Company, LLC 1,656,054 (16) 24.96%
1629 Locust Street
Philadelphia, PA 19103
Dimeling, Schreiber and Park 2,908,330 (17) 24.34%
1629 Locust Street, 3rd Floor
Philadelphia, PA 19103
Wiser Investors, LP 2,371,320 (18) 20.49%
1629 Locust Street
Philadelphia, PA 19103
* Represents less than 1% of outstanding Common Stock.
16
(1) The business address of each director and executive officer of the Company
is c/o The Wiser Oil Company, 8115 Preston Road, Suite 400, Dallas, Texas
75225.
(2) Mr. George K. Hickox, Jr. and Mr. Scott W. Smith, as managers of WIC, have
shared voting power over 5,770,172 shares of Common Stock and have shared
dispositive power over 3,044,290 shares of Common Stock.
(3) Mr. Hickox has shared voting and dispositive power over 25,800 shares owned
by his wife, as to which Mr. Hickox disclaims beneficial ownership.
(4) Includes shares owned by spouses and children (Mr. Kimball, 455 shares; Mr.
Davis, 1,000 shares; Mr. Eagleston, 1,000 shares; and all directors and
executive officers as a group, 28,255 shares), as to which, in each case,
the directors and executive officers disclaim beneficial ownership.
(5) Includes, for each such person, 1,500 shares covered by presently
exercisable stock options under the 1991 Non-Employee Directors' Stock
Option Plan.
(6) Includes, for each such person, 5,000 shares covered by presently
exercisable stock options under the 1991 Non-Employee Directors' Stock
Option Plan.
(7) Includes, for each such person, 10,500 shares covered by presently
exercisable stock options under the 1991 Non-Employee Directors' Stock
Option Plan.
(8) Includes 212,500 shares covered by presently exercisable stock options
under the 1991 Non-Employee Directors' Stock Option Plan.
(9) Includes 9,750 shares covered by presently exercisable stock options under
the 1991 Non-Employee Directors' Stock Option Plan.
(10) Mr. Richard R. Schreiber, as a partner of DS&P, has shared voting and
dispositive power over 2,908,330 shares of Common Stock.
(11) Includes 7,500 shares covered by presently exercisable stock options under
the 1991 Stock Incentive Pl
(12) Includes 15,000 shares covered by presently exercisable stock options under
the 1991 Stock Incentive Plan.
(13) Mr. Ritter is deemed to have beneficial ownership of 23,529 shares of
Common Stock upon conversion of his Preferred Stock.He has sole power to
dispose or direct the disposition of the 23,529 shares of Common Stock
underlying the Preferred Stock and the 424 shares of Common Stock issued as
dividends on the Preferred Stock in 2001.
(14) Includes an aggregate of 303,750 shares covered by presently exercisable
stock options held by directors and executive officers.
(15) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 782,475 shares of the
Company's Common Stock as of December 31, 2001, all of which shares are
held in portfolios of four investment companies for which Dimensional
serves as an investment advisor, and certain other investment vehicles
including commingled group trusts, for which Dimensional serves as an
investment manager. In its capacity as investment advisor and investment
manager, Dimensional possesses both voting and investment power over these
shares. Dimensional disclaims beneficial ownership of all such shares. The
foregoing information was obtained from Dimensional and from a Schedule 13G
dated January 30, 2002 filed by Dimensional with the Commission.
(16) Wiser Investment Company, LLC ("WIC") is deemed to have beneficial
ownership of 1,656,054 shares of Common Stock upon conversion of its
Preferred Stock and Warrants. WIC has sole voting power and dispositive
power with respect to (i) 823,529 shares of Common Stock underlying its
Preferred Stock, (ii) the 445,030 shares of Common Stock underlying the
warrants it purchased in 2000, (iii) the 296,686 shares of Common Stock
underlying the warrants it purchased in 2001, (iv) and the 90,809 shares of
Common Stock issued as paid-in-kind dividends on its Preferred Stock in
2000 and 2001. In 2001, WIC transferred to DS&P Preferred Stock,
convertible into 235,294 shares of Common Stock, that were purchased for
DS&P by WIC in May 2000. Pursuant to the Voting Agreement between WIC and
DS&P, WIC has shared voting power with respect to 2,705,882 shares of
Common Stock underlying the Preferred Shares purchased by DS&P. WIC, as the
general partner of Wiser Investors, L.P., has the sole power to vote or to
direct the vote and has the sole power to dispose or direct the disposition
of the 2,329,411 shares of Common Stock underlying Wiser Investor L.P.'s
Preferred Stock and the 41,909 shares of Common Stock issued as
paid-in-kind dividends on Wiser Investor L.P.'s Preferred Stock in 2001,
subject to the terms of the Stockholder Agreement acknowledged by Wiser
Investors, L.P Mr. Hickox, Mr. Smith and Mr. Douglas P. Heller, as managers
of WIC, are deemed to have a beneficial ownership in the shares deemed to
be beneficially owned by WIC.
(17) DS&P is deemed to have beneficial ownership of 2,705,882 shares of Common
Stock upon conversion of its Preferred Stock. DS&P has appointed WIC as its
attorney-in-fact and proxy to vote these shares but has retained the right
to vote them in its sole discretion with respect to the merger,
consolidation, reorganization,
17
bankruptcy, liquidation, recapitalization or sale of substantially all of
the assets of the Company. In 2001, WIC transferred to DS&P Preferred
Stock, convertible into 235,294 shares of Common Stock, that were purchased
for DS&P by WIC in May 2000. DS&P has the sole power to vote or direct the
vote of the 202,448 shares of Common Stock issued as paid-in-kind dividends
on its Preferred Stock in 2000 and 2001. DS&P has the sole power to dispose
or direct the disposition of the 2,705,882 shares of Common Stock
underlying its Preferred Stock and the 202,448 shares of Common Stock
issued as paid-in-kind dividends. Mr. Schreiber, Mr. William R. Dimeling
and Mr. Steven G. Park, as partners of DS&P, have shared voting and
dispositive power over the 2,908,330 shares of Common Stock deemed to be
beneficially owned by DS&P.
(18) Wiser Investors, L.P. ("Investors"), a Delaware limited partnership, has
the sole power to vote or to direct the vote and has the sole power to
dispose or direct the disposition of the 2,329,411 shares of Common Stock
upon conversion of its Preferred Stock and the 41,909 shares of Common
Stock issued as paid-in-kind dividends on its Preferred Stock in 2001. WIC,
as the general partner of Investors, has the sole voting power and
dispositive power with respect to the shares beneficially owned by
Investors (as described above in footnote 17).
The Transaction with Wiser Investment Company
On March 10, 2000, the Company entered into an Amended and Restated Stock
Purchase Agreement (the "Stock Purchase Agreement") and an Amended and Restated
Warrant Purchase Agreement (the "Warrant Purchase Agreement") with Wiser
Investment Company, LLC, a Delaware limited liability corporation, ("WIC"). The
closing of the transactions contemplated by the Stock Purchase Agreement and the
Warrant Purchase Agreement (the "Purchase Transactions") (the "Closing")
occurred on May 26, 2000 (the "Closing Date"). Under the Stock Purchase
Agreement and the Warrant Purchase Agreement, the Company issued, as a new
issuance, and sold to WIC and Dimeling, Schreiber and Park, a Pennsylvania
partnership ("DS&P" and together with WIC, the "Purchaser") 600,000 shares of 7%
Series C Cumulative Convertible Preferred Stock, par value $10.00 per share, of
the Company (the "Preferred Stock") for $15 million, and Warrants to purchase
445,030 shares of Common Stock, par value $.01 per share, of the Company (the
"Common Stock") for $8,900.59.
On June 1, 2001, WIC assigned its rights, under the Stock Purchase
Agreement, to purchase 400,000 additional shares of Preferred Stock to Wiser
Investors, L.P. and A. Wayne Ritter, as described above. See "Certain
Relationships and Related Transactions."
The Company also entered into an employment agreement with George K.
Hickox, Jr., a Management Agreement with WIC and a Stockholder Agreement with
the Purchaser, as discussed herein. These agreements provide for, among other
things, changes in the management of the Company as described under "Changes in
Company Management" herein.
WIC and DS&P Voting Agreement
Pursuant to the Voting Agreement by and between WIC and DS&P dated May 26,
2000 (the "Voting Agreement"), DS&P irrevocably appointed WIC as its
attorney-in-fact and proxy to vote on all matters, other than certain excluded
matters, in such a manner as WIC, in its sole discretion, deems proper. DS&P
retained the power to vote in its sole discretion with respect to the merger,
consolidation, reorganization, bankruptcy, liquidation, recapitalization or sale
of substantially all of the Company's assets. For so long as DS&P holds at least
350,000 shares of Preferred Stock, DS&P is entitled to nominate one Designee to
serve on the Board of Directors of the Issuer; provided however, that DS&P has
no rights to nominate a Designee for so long as Mr. Hickox serves on the Board
of Directors of the Company. WIC has agreed, upon written notice, to effect
DSP's demand registration rights pursuant to the Stockholders Agreement. The
Voting Agreement may be terminated on the earliest of (i) mutual consent, (ii)
the date on which WIC reduces its ownership in the Company by more than 50% of
WIC's initial investment, or (iii) five years from the date of such agreement.
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CHANGE IN PUBLIC ACCOUNTANTS
On April 3, 2002, the Board of Directors of the Company, after careful
consideration and based upon the recommendation of its Audit Committee,
dismissed its current independent public accountant, Arthur Andersen LLP. This
dismissal followed the Board's decision to seek proposals from other independent
auditors to audit the Company's consolidated financial statements for its fiscal
year ended December 31, 2002.
On April 3, 2002, the Board of Directors, based on the recommendation
of the Audit Committee, retained Ernst & Young LLP as its independent auditors
with respect to the audit of the Company's consolidated financial statements for
its fiscal year ended December 31, 2002.
During the Company's two most recent fiscal years ended December 31,
2001, and during the subsequent interim period preceding the replacement of
Arthur Andersen LLP, there was no disagreement between the Company and Arthur
Andersen LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
Arthur Andersen LLP's satisfaction, would have caused Arthur Andersen LLP to
make reference to the subject matter of the disagreement in connection with its
reports. The audit reports of Arthur Andersen LLP on the consolidated financial
statements of the Company as of and for the last two fiscal years ended December
31, 2001 did not contain any adverse opinion or disclaimer of opinion, nor were
these opinions qualified or modified as to uncertainty, audit scope or
accounting principles.
During the Company's two most recent fiscal years ended December 31,
2001, and during the subsequent interim period preceding the replacement of
Arthur Andersen LLP, the Company has not consulted with Ernst & Young regarding
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements.
The Company has requested that Arthur Andersen LLP furnish it a letter
addressed to the Securities and Exchange Commission stating whether it agreed
with the above statements. A copy of that letter will be filed pursuant to a
Current Report on Form 8-K upon its receipt.
Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting. The representatives will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions addressed to them.
EXPENSES OF SOLICITATION
The costs and expenses of preparing and mailing this proxy material
will be borne by the Company. In addition to the solicitation of proxies by
mail, the officers and regular employees of the Company (who will receive no
special compensation therefor) may solicit proxies by telephone, telegraph or
personal interview. The Company will request brokerage houses and other nominees
or fiduciaries to forward copies of its proxy material to beneficial owners of
stock held in their names, and the Company will reimburse them for reasonable
out-of-pocket expenses incurred in doing so.
STOCKHOLDERS' PROPOSALS
It is contemplated that the 2003 annual meeting of stockholders of the
Company will take place May 19, 2003. Stockholders' proposals will be eligible
for consideration for inclusion in the proxy statement for the 2003 annual
meeting pursuant to Rule 14a-8 under the 1934 Act, as amended, if such proposals
are submitted in writing and received by the Company before the close of
business on December 11, 2002. Such proposals must also meet the other
requirements of the rules of the Commission relating to stockholders' proposals.
Proposals and nominations should be addressed to the President of the Company,
A. Wayne Ritter, 8115 Preston Road, Suite 400, Dallas, Texas 75225.
19
OTHER MATTERS
The Board of Directors does not intend to bring any other matters
before the Annual Meeting and does not know of any matter that anyone else
proposes to present for action at the Annual Meeting. However, if any other
matters properly come before the Annual Meeting, the persons named in the
accompanying proxy, or their duly constituted substitutes acting at the Annual
Meeting, will be deemed to be authorized to vote or otherwise act thereon in
accordance with their judgment.
By Order of the Board of Directors
A. Wayne Ritter
President
Dallas, Texas
April 12, 2002
A copy of the Company's Form 10-K Annual Report for the fiscal year
ended December 31, 2001, as filed with the Securities and Exchange Commission,
is available without charge to each person whose proxy is solicited hereby upon
written request directed to Joyce M. Moore, The Wiser Oil Company, 8115 Preston
Road, Suite 400, Dallas, Texas 75225.
20
(Mellon will print in their format)
THE WISER OIL COMPANY
Annual Meeting of Stockholders This Proxy is Solicited
To Be Held May 20, 2002 on Behalf of the Board of Directors
The undersigned stockholder of The Wiser Oil Company (the "Company")
hereby constitutes and appoints A. Wayne Ritter, Gary Patterson and Mark A.
Kirk, and each of them acting individually, as the attorneys and proxies of the
undersigned, with full power of substitution, to attend the Annual Meeting of
Stockholders of the Company to be held Monday, May 20, 2002, at 3:00 p.m., at
the Hilton Dallas/ParkCities, 5954 Luther Lane, Dallas, Texas, and any
adjournment thereof, and if then personally present to vote thereat all the
shares of common stock of the Company held of record by the undersigned on March
29, 2002 as follows, and in the discretion of the proxies on all other matters
properly coming before the meeting or any adjournment thereof.
(1) In the election of Directors for a term of three years expiring in 2005:
( ) FOR all nominees listed ( ) WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
to the contrary below) listed below
George K. Hickox, Jr., Lorne H. Larson and Richard R. Schreiber
INSTRUCTION: To withhold authority to vote for any individual
nominee(s) write the name(s) of such nominee(s)
on the line provided below:
(2) To transact such other business as may properly come before the meeting.
Please complete, date and sign this Proxy Card on the reverse side and return it
promptly in the enclosed business reply envelope.
The shares represented by this proxy will be voted as directed herein,
or, if no direction is given, FOR the election of the nominees proposed by the
Board of Directors. A vote for the election of the nominees listed on the
reverse side includes discretionary authority to vote for a substitute if any of
the nominees listed becomes unable to serve or for good cause will not serve.
The proxies will vote in their sole discretion upon such other business as may
properly come before the meeting.
The undersigned hereby revokes all previous proxies for such Annual
Meeting, hereby acknowledges receipt of the Notice of such Annual Meeting and
the Proxy Statement furnished therewith, and hereby ratifies all that the said
attorneys and proxies may do by virtue hereof.
Date: ,2002
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Please sign exactly as name(s) appear(s) hereon. When
signing as attorney, executor, administrator, trustee,
guardian, or other fiduciary, please give your full title
as such. For joint accounts, each joint owner should sign.
If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.