SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Pioneer Natural Resources Company
(Name of Registrant as Specified in Its Charter)
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PIONEER NATURAL RESOURCES COMPANY
5205 N. O'Connor Boulevard
Suite 1400
Irving, Texas 75039
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Pioneer Natural Resources Company:
Notice is hereby given that the Annual Meeting of Stockholders of
Pioneer Natural Resources Company (the "Company") will be held in the Carrollton
Room at the Dallas Marriott Las Colinas Hotel, 223 West Las Colinas Blvd.,
Irving, Texas 75039, on Thursday, May 17, 2001, at 9:00 a.m. The Annual Meeting
is being held for the following purposes:
1. To elect two directors, each for a term of three years.
2. To ratify the selection of Ernst & Young LLP as the auditors of
the Company for the current year.
3. To transact such other business as may properly come before the
meeting.
These proposals are described in the accompanying proxy materials. You
will be able to vote at the Annual Meeting only if you are a stockholder of
record at the close of business on March 28, 2001.
YOUR VOTE IS IMPORTANT
Please date, sign, and return the enclosed Proxy promptly so that your
shares may be voted in accordance with your wishes and so we may have a quorum
at the Annual Meeting. Instead of returning the paper proxy, you may vote
through the Internet by accessing our transfer agent's website at
www.continentalstock.com. You will need the control numbers that are printed on
your personalized proxy card.
By Order of the Board of Directors
Mark L. Withrow, Secretary
Irving, Texas
April 9, 2001
2
PIONEER NATURAL RESOURCES COMPANY
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
PROXY STATEMENT
2001 ANNUAL MEETING OF STOCKHOLDERS
The board of directors of Pioneer Natural Resources Company (the "Board
of Directors") requests your Proxy for the Annual Meeting of Stockholders that
will be held at 9:00 a.m., on Thursday, May 17, 2001, in the Carrollton Room at
the Dallas Marriott Las Colinas Hotel, Irving, Texas 75039 (the "Annual
Meeting"). By granting the Proxy, you authorize the persons named on the Proxy
to represent you and vote your shares at the Annual Meeting. Those persons will
also be authorized to vote your shares to adjourn the meeting from time to time
and to vote your shares at any adjournments or postponements of the meeting.
You may grant your Proxy by signing, dating and returning the enclosed
paper proxy card. Instead of returning the paper proxy card, you may complete a
proxy card electronically through the Internet by accessing the website of the
Company's transfer agent at www.continentalstock.com. You will need the control
numbers that are printed on your personalized paper proxy card. See "Internet
Voting."
If you attend the Annual Meeting, you may vote in person. If you are not
present at the Annual Meeting, your shares may be voted only by a person to whom
you have given a proper proxy, such as the accompanying Proxy or the Internet
Proxy. You may revoke the Proxy in writing at any time before it is exercised at
the Annual Meeting by delivering to the Secretary of the Company a written
notice of the revocation, or by signing and delivering to the Secretary of the
Company a proxy with a later date or by submitting your vote electronically
through the Internet with a later date. Your attendance at the Annual Meeting
will not revoke the Proxy unless you give written notice of revocation to the
Secretary of the Company before the Proxy is exercised or unless you vote your
shares in person at the Annual Meeting.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy are first being sent or given to stockholders of the Company on or about
April 9, 2001.
QUORUM AND VOTING
Voting Stock. The Company has two outstanding classes of securities that
entitle holders to vote generally at meetings of the Company's stockholders:
common stock, par value $.01 per share; and Special Preferred Voting Stock, par
value $.01 per share. A single share of Special Preferred Voting Stock (the
"Voting Share") was issued to Montreal Trust Company of Canada (the "Trustee")
as trustee under a Voting and Exchange Trust Agreement for the benefit of
holders of exchangeable shares issued by the Company's wholly-owned subsidiary,
Pioneer Natural Resources Canada Inc., in connection with the Company's December
1997 acquisition of Chauvco Resources Ltd. The common stock and the Voting Share
vote together as a single class on all matters except when Delaware law requires
otherwise. Each share of common stock outstanding on the record date is entitled
to one vote. The Voting Share is entitled to one vote for each exchangeable
share outstanding on the record date. The Trustee is required to vote the Voting
Share in the manner that holders of exchangeable shares instruct, and to abstain
from voting in proportion to the exchangeable shares for which the Trustee does
not receive instructions. Accordingly, references to "stockholders" in this
Proxy Statement include holders of common stock, the Trustee, and holders of
exchangeable shares. The procedures for holders of exchangeable shares to
instruct the Trustee about voting at the Annual Meeting are explained in the
"Information Statement for Holders of Exchangeable Shares of Pioneer Natural
Resources Canada Inc." that is enclosed with this Proxy Statement only for
holders of exchangeable shares.
Record Date. The record date for stockholders entitled to notice of and
to vote at the Annual Meeting is the close of business on March 28, 2001. At the
record date, 96,299,025 shares of common stock and one Voting Share were
outstanding and entitled to be voted at the Annual Meeting. At the record date,
1,940,656 exchangeable shares were outstanding and entitled to give voting
instructions to the Trustee. Accordingly, 98,239,681 votes are eligible to be
cast at the Annual Meeting.
3
Quorum and Adjournments. The presence, in person or by proxy, of the
holders of a majority of the votes eligible to be cast at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting.
If a quorum is not present, the stockholders entitled to vote who are
present in person or by proxy at the Annual Meeting have the power to adjourn
the Annual Meeting from time to time, without notice other than an announcement
at the Annual Meeting, until a quorum is present. At any adjourned Annual
Meeting at which a quorum is present, any business may be transacted that might
have been transacted at the Annual Meeting as originally notified.
Vote Required. Directors will be elected by a plurality of the votes
present and entitled to be voted at the Annual Meeting. Ratification of the
selection of the Company's auditors will require the affirmative vote of the
holders of a majority of the shares present and voted at the Annual Meeting. An
automated system that the Company's transfer agent administers will tabulate the
votes. Brokers who hold shares in street name for customers are required to vote
shares in accordance with instructions received from the beneficial owners.
Brokers are permitted to vote on discretionary items if they have not received
instructions from the beneficial owners, but they are not permitted to vote (a
"broker non-vote") on non-discretionary items absent instructions from the
beneficial owner. Abstentions and broker non-votes will count in determining
whether a quorum is present at the Annual Meeting. Both abstentions and broker
non-votes will not have any effect on the outcome of voting on director
elections. For purposes of voting on the ratification of the selection of
auditors, abstentions will be included in the number of shares voting and will
have the effect of a vote against the proposal, and broker non-votes will not be
included in the number of shares voting and therefore will have no effect on the
outcome of the voting.
Default Voting. A Proxy that is properly completed and returned will be
voted at the Annual Meeting in accordance with the instructions on the Proxy. If
you properly complete and return a Proxy, but do not indicate any contrary
voting instructions, your shares will be voted as follows:
o FOR the election of the two persons named in this Proxy Statement
as the Board of Directors' nominees for election to the Board of
Directors.
o FOR the ratification of the selection of Ernst & Young LLP as
the Company's auditors.
If any other business properly comes before the stockholders for a vote at the
meeting, your shares will be voted in accordance with the discretion of the
holders of the Proxy. The Board of Directors knows of no matters, other than
those previously stated, to be presented for consideration at the Annual
Meeting.
ITEM ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated the following persons for election
as Class I directors of the Company with their terms to expire at the annual
meeting of stockholders in 2004 when their successors are elected and qualified:
R. Hartwell Gardner
James L. Houghton
Both of these nominees are currently serving as directors of the
Company. Their biographical information is contained in "Directors and Executive
Officers."
The Board of Directors has no reason to believe that either of its
nominees will be unable or unwilling to serve if elected. If a nominee becomes
unable or unwilling to accept nomination or election, either the number of the
Company's directors will be reduced or the persons acting under the Proxy will
vote for the election of a substitute nominee that the Board of Directors
recommends.
The Board of Directors recommends that stockholders vote FOR the
election of each of the nominees.
4
ITEM TWO
SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young LLP as the auditors of
the Company for 2001. Ernst & Young LLP audited the Company's financial
statements for 2000, 1999 and 1998. The 2000 audit was completed on January 29,
2001.
Audit Fees
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of the Company's annual financial statements and reports
on Forms 10-Q for 2000 were $420,000.
Financial Information Systems Design and Implementation Fees
No services were performed by, and no fees were incurred to, Ernst &
Young LLP in connection with financial information systems design and
implementation projects for 2000.
All Other Fees
The aggregate fees for all other services rendered by Ernst & Young LLP
for 2000 were $512,228, comprised of $68,395 for tax services, $332,960 for
internal audit services and $110,873 for other professional services.
The Company expects that representatives of Ernst & Young LLP will be
present at the Annual Meeting to respond to appropriate questions and to make a
statement if they desire to do so.
The report of Ernst & Young LLP on the Company's financial statements
for 2000, 1999 and 1998 did not contain an adverse opinion or a disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
In connection with the audits of the Company's financial statements for
2000, 1999 and 1998, there were no disagreements with Ernst & Young LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope or procedures which, if not resolved to the satisfaction of
such independent accountants, would have caused such independent accountants to
make reference to the matter in their report.
The Board of Directors recommends that stockholders vote FOR
ratification of the selection of Ernst & Young LLP.
DIRECTORS AND EXECUTIVE OFFICERS
After the Annual Meeting, assuming the stockholders elect the nominees
of the Board of Directors as set forth in "Item One - Election of Directors,"
the Board of Directors and executive officers of the Company will be:
Name Age Position
Scott D. Sheffield....... 48 Chairman of the Board, President and Chief
Executive Officer
Timothy L. Dove.......... 44 Executive Vice President and Chief Financial
Officer
Dennis E. Fagerstone..... 52 Executive Vice President
Mark L. Withrow.......... 53 Executive Vice President, General Counsel and
Secretary
Danny L. Kellum.......... 46 Executive Vice President - Domestic Operations
James R. Baroffio........ 69 Director
R. Hartwell Gardner...... 66 Director
James L. Houghton........ 70 Director
Jerry P. Jones........... 69 Director
Charles E. Ramsey, Jr.... 64 Director
Robert L. Stillwell...... 64 Director
5
The Company has classified its Board of Directors into three classes.
Directors in each class are elected to serve for three-year terms and until
their successors are elected and qualified. Each year, the directors of one
class stand for re-election as their terms of office expire. Messrs. Gardner and
Houghton are designated as Class I directors, and their terms of office expire
at the Annual Meeting. Messrs. Baroffio, Sheffield and Stillwell are designated
as Class II directors, and their terms of office expire at the annual meeting of
stockholders in 2002. Messrs. Jones and Ramsey are designated as Class III
directors, and their terms of office expire in 2003.
Executive officers serve at the discretion of the Board of Directors.
Set forth below is biographical information about each of the Company's
directors and executive officers named above.
Scott D. Sheffield. Mr. Sheffield, a distinguished graduate of the
University of Texas with a Bachelor of Science degree in Petroleum Engineering,
has been the Chairman of the Board of Directors since August 1999 and the
President and Chief Executive Officer of the Company since August 1997. He was
the President and a director of Parker & Parsley Petroleum Company since May
1990 and was the Chairman of the Board of Directors and Chief Executive Officer
of Parker & Parsley since October 1990. Mr. Sheffield was the sole director of
Parker & Parsley from May 1990 until October 1990. Mr. Sheffield joined Parker &
Parsley Development Company ("PPDC"), a predecessor of Parker & Parsley, as a
petroleum engineer in 1979. Mr. Sheffield served as Vice President - Engineering
of PPDC from September 1981 until April 1985, when he was elected President and
a director. In March 1989, Mr. Sheffield was elected Chairman of the Board of
Directors and Chief Executive Officer of PPDC. Before joining PPDC's
predecessor, Mr. Sheffield was employed as a production and reservoir engineer
for Amoco Production Company.
Timothy L. Dove. Mr. Dove was elected Executive Vice President and Chief
Financial Officer in February 2000. Prior to that, Mr. Dove held the position of
Executive Vice President - Business Development since August 1997. Mr. Dove
joined Parker & Parsley in May 1994 as Vice President - International and was
promoted to Senior Vice President - Business Development in October 1996, in
which position he served until August 1997. Before joining Parker & Parsley, Mr.
Dove was employed with Diamond Shamrock Corp., and its successor, Maxus Energy
Corp., in various capacities in international exploration and production,
marketing, refining, and planning and development. Mr. Dove earned a Bachelor of
Science degree in Mechanical Engineering from Massachusetts Institute of
Technology in 1979 and received his M.B.A. in 1981 from the University of
Chicago.
Dennis E. Fagerstone. Mr. Fagerstone, a graduate of the Colorado School
of Mines with a B.S. in Petroleum Engineering, became an Executive Vice
President of the Company in August 1997. Mr. Fagerstone served as Executive Vice
President and Chief Operating Officer of Mesa from March 1997 until August 1997.
Mr. Fagerstone served as Senior Vice President and Chief Operating Officer of
Mesa from October 1996 to February 1997, as Vice President - Exploration and
Production of Mesa from May 1991 to October 1996 and as Vice President -
Operations of Mesa from June 1988 until May 1991.
Mark L. Withrow. Mr. Withrow, a graduate of Abilene Christian University
with a Bachelor of Science degree in Accounting and Texas Tech University with a
Juris Doctorate degree, has been the Executive Vice President, General Counsel
and Secretary of the Company since August 1997. He served as Vice President -
General Counsel of Parker & Parsley from February 1991 until January 1995, and
served as Senior Vice President, General Counsel of Parker & Parsley from
January 1995 until August 1997. He was Parker & Parsley's Secretary from August
1992 until August 1997. Mr. Withrow joined PPDC in January 1991. Before joining
PPDC, Mr. Withrow was the managing partner of the law firm of Turpin, Smith,
Dyer, Saxe & MacDonald, Midland, Texas.
Danny Kellum. Mr. Kellum, who received a Bachelor of Science degree in
Petroleum Engineering from Texas Tech University in 1979, was elected Executive
Vice President - Domestic Operations in May 2000. From January 2000 until May
2000, Mr. Kellum served as Vice President - Domestic Operations. Mr. Kellum
served as Vice President - Permian Division from August 1997 until December
1999. From 1989 until 1994 he served as Spraberry District Manager and as Vice
President of the Spraberry and Permian Division for Parker & Parsley until
August of 1997. Mr. Kellum joined Parker & Parsley as an operations engineer in
1981 after a brief career with Mobil Oil Corporation.
6
James R. Baroffio. Dr. Baroffio received a B.A. in Geology at the
College of Wooster, Ohio, an M.S. in Geology at Ohio State University, and a
Ph.D. in Geology at the University of Illinois. Before becoming a director of
the Company in December 1997, Dr. Baroffio enjoyed a long career with Standard
Oil Company of California, the predecessor of Chevron Corporation where he
served as President, Chevron Research and Technology Center from 1980 to 1985
and eventually retired as President of Chevron Canada Resources in 1994. Dr.
Baroffio was a member of the Board of Directors of the Rocky Mountain Oil & Gas
Association, and Chairman of the U.S. National Committee of the World Petroleum
Congress. His community leadership positions included membership on the Board of
Directors of Glenbow Museum and the Nature Conservancy of Canada, as well as
serving as President of the Alberta Nature Conservancy.
R. Hartwell Gardner. Mr. Gardner became a director of the Company in
August 1997. He served as a director of Parker & Parsley from November 1995
until August 1997. Mr. Gardner graduated from Colgate University with a Bachelor
of Arts degree in Economics and then earned an M.B.A. from Harvard University.
Until October 1, 1995, Mr. Gardner was the Treasurer of Mobil Oil Corporation
and Mobil Corporation from 1974 and 1976, respectively. Mr. Gardner is a member
of the Financial Executives Institute of which he served as Chairman in
1986/1987 and is a Director and Chairman of the Investment Committee of Oil
Investment Corporation Ltd. and Oil Casualty Investment Corporation Ltd.,
Pembroke, Bermuda.
James L. Houghton. Mr. Houghton is a Certified Public Accountant and a
graduate of Kansas University with a Bachelor of Science degree in Accounting,
as well as a Bachelor of Laws degree. Mr. Houghton has served as a director of
the Company since August 1997, and as a director of Parker & Parsley from
October 1991 until August 1997. Until October 1, 1991, Mr. Houghton was the lead
oil and gas tax specialist for the accounting firm of Ernst & Young, was a
member of Ernst & Young's National Energy Group, and had served as its Southwest
Regional Director of Tax. Mr. Houghton is a member of the American Institute of
Certified Public Accountants, a member of the Oklahoma Society of Certified
Public Accountants and a former Chairman of its Federal and Oklahoma Taxation
Committee, and past President of the Oklahoma Institute on Taxation. He has also
served as a Director for the Independent Petroleum Association of America and as
a member of its Tax Committee.
Jerry P. Jones. Mr. Jones earned a Bachelor of Science degree from West
Texas State College in 1953 and a Bachelor of Laws degree from the University of
Texas School of Law in 1959. Mr. Jones has served as a director of the Company
since August 1997, and as a director of Parker & Parsley from May 1991 until
August 1997. Mr. Jones was an attorney with the law firm of Thompson & Knight,
L.L.P., Dallas, Texas, since September 1959 and was a shareholder in that firm
until January 1998, when he retired and became of counsel to the firm. Mr. Jones
specialized in civil litigation, especially in the area of energy disputes.
Charles E. Ramsey, Jr. Mr. Ramsey is a graduate of the Colorado School
of Mines with a Petroleum Engineering degree and a graduate of the Smaller
Company Management program at the Harvard Graduate School of Business
Administration. Mr. Ramsey has served as a director of the Company since August
1997. Mr. Ramsey served as a director of Parker & Parsley from October 1991
until August 1997. Since October 1991, he has operated an independent management
and financial consulting firm. From June 1958 until June 1986, Mr. Ramsey held
various engineering and management positions in the oil and gas industry and,
for six years before October 1991, was a Senior Vice President in the Corporate
Finance Department of Dean Witter Reynolds Inc. (Dallas, Texas office). His
industry experience includes 12 years of senior management experience with May
Petroleum Inc. in the positions of President, Chief Executive Officer and
Executive Vice President. Mr. Ramsey is also a former director of MBank Dallas,
the Dallas Petroleum Club and Lear Petroleum Corporation.
Robert L. Stillwell. Mr. Stillwell, a graduate of the University of
Texas with a B.B.A. and the University of Texas School of Law with a J.D., has
served as a director of the Company since August 1997. He served as a director
of Mesa from January 1992 until August 1997, as a member of the Advisory
Committee of Mesa, L.P., a predecessor of Mesa, from December 1985 until
December 1991, and as a director of Mesa in its original corporate form from
1968 until January 1987. Mr. Stillwell is a partner in the law firm of Baker &
Botts, L.L.P., Houston, Texas.
7
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors of the Company held five meetings during 2000. No
director attended fewer than 75% of the total number of meetings of the Board of
Directors. No director attended fewer than 75% of the total number of meetings
of all committees of the Board of Directors on which that director served.
The Board of Directors has two standing committees: the Audit Committee
and the Compensation Committee. The Board of Directors does not have a
Nominating Committee.
Information regarding the functions performed by the Audit Committee and
its membership is set forth in the "Audit Committee Report" and the "Audit
Committee Charter" included in this Proxy Statement. The Audit Committee held
four meetings during 2000.
The Compensation Committee periodically reviews the compensation,
employee benefit plans and fringe benefits paid to or provided for executive
officers of the Company and approves the annual salaries, bonuses and stock
option awards of the Company's executive officers. The members of the
Compensation Committee are Messrs. Ramsey (Chairman), Baroffio and Stillwell. A
subcommittee of Messrs. Ramsey and Baroffio administer the Long-Term Incentive
Plan. The Compensation Committee held four meetings during 2000. See
"Compensation Committee Report on Executive Compensation" included in this Proxy
Statement for additional information.
MANAGEMENT COMPENSATION
Compensation of Directors
Each non-employee director receives an annual retainer fee of $50,000 if
the director serves on a committee and $40,000 if he does not. In addition, each
non-employee director is reimbursed for travel expenses to attend meetings of
the Board of Directors or its committees and an additional $2,500 for services
as chairman of a committee. No additional fees are paid for attendance at board
or committee meetings. Executive officers of the Company do not receive
additional compensation for serving on the Board of Directors.
Under the Company's Long-Term Incentive Plan (the "Plan"), non-employee
directors are eligible to receive awards in the form of non-qualified stock
options, stock appreciation rights, restricted stock, or performance units. The
Company can use these awards instead of cash to pay its non-employee directors
all or part of their annual retainer fees. The Board of Directors determines the
form (or combination of forms) of consideration each year, based on the economic
and other circumstances at the time and based on its view of which awards will
best align the interests of the stockholders and the directors.
For the year following the Company's 2000 annual stockholders' meeting,
the Board of Directors determined to use non-qualified stock options to pay all
of the non-employee directors' annual fees. The number of shares subject to
stock options granted to each non-employee director was determined by dividing
the director's annual retainer fee by the value of an option for one share on
May 17, 2000 (the last closing sale price before the date of the award). The
fair-market value of each option was calculated using the Black-Scholes method
based on assumptions provided by the Company's executive compensation consulting
firm. These options vest 25% each quarter with the first vesting date on August
31, 2000.
On May 18, 2000, each non-employee director received the following
awards of stock options to compensate him for his annual retainer fee (each
stock option awarded has an exercise price of $13.50): Messrs. Baroffio,
Gardner, Jones and Stillwell each received options for 7,912 shares and Messrs.
Houghton and Ramsey each received options for 8,307 shares.
For the year following the Company's 2001 annual meeting, Directors can
make an irrevocable election to receive their annual fees 100% in cash,
restricted stock or stock options or they can split the fee equally between any
two of those three choices, with such election to be exercised on or before May
17, 2001.
8
Compensation of Executive Officers
The compensation paid to the Company's executive officers generally
consists of base salaries, annual bonuses, awards under the Long-Term Incentive
Plan, contributions to the Company's 401(k) retirement plan, and miscellaneous
perquisites. The following table summarizes the total compensation for 2000,
1999 and 1998 awarded to, earned by or paid to the following persons:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
---------------------------------------- Compensation
Awards
------------
Shares
Name and Other Annual Underlying All Other
Principal Position Year Salary (a) Bonus (b) Compensation (c) Options Compensation (d)
- ------------------------ ---- ---------- --------- ---------------- ------------ -------------
Scott D. Sheffield (e) 2000 $638,000 $626,350 $ 18,051 120,000 $ 83,422
President and 1999 480,000 270,000 14,427 90,000 69,378
Chief Executive Officer 1998 600,000 216,000 16,734 90,000 123,252
Dennis E. Fagerstone 2000 $290,000 $174,000 $ 9,295 46,000 $ 46,558
Executive Vice President 1999 247,500 92,812 8,478 35,000 40,564
1998 275,000 92,812 8,076 35,000 37,757
Mark L. Withrow (e) 2000 $290,000 $174,000 $ 5,577 46,000 $ 46,104
Executive Vice President 1999 225,000 84,376 4,327 35,000 38,855
and General Counsel 1998 250,000 84,376 60,882 35,000 61,178
Timothy L. Dove 2000 $290,000 $174,000 $ 4,611 46,000 $ 45,546
Executive Vice President 1999 225,000 197,580 4,611 35,000 38,394
and Chief Financial Officer 1998 250,000 84,375 4,618 35,000 57,713
Danny L. Kellum (e) 2000 $240,000 $144,000 $ 2,923 46,000 $ 43,157
Executive Vice President 1999 192,500 63,000 15,835 25,000 35,250
Domestic Operations 1998 180,000 63,000 218,314 20,000 48,326
(a) Mr. Sheffield voluntarily reduced his 1999 salary 20%, and the other named
executive officers voluntarily reduced their salaries 10% during 1999.
(b) Represents the amount awarded under the Company's annual bonus program and
forgiveness of a Company loan to Mr. Dove for $113,204 in 1999.
(c) This column includes (i) relocation and housing cost of living adjustments
related to moving the corporate headquarters from Midland, Texas to Irving,
Texas as follows: payment for 1999 - Mr. Kellum $12,539; payment for 1998 -
Mr. Withrow $42,290 and Mr. Kellum $132,839; (ii) tax gross-up payments for
relocation and cost of living adjustment: payment for 1999 - Mr. Kellum
$471; payment for 1998 - Mr. Withrow $12,044 and Mr. Kellum $82,172.
Amounts not shown represent miscellaneous perquisites.
(d) For 2000 this column includes (i) contributions to qualified retirement
plans for Messrs. Sheffield, Fagerstone, Withrow, Dove and Kellum of
$16,220, $17,000, $16,546, $16,546, and $16,612 respectively; (ii)
contributions to the Company's non-qualified deferred compensation
retirement plan for Messrs. Sheffield, Fagerstone, Withrow, Dove and Kellum
of $65,027, $29,558, $29,558, $29,000 and $24,000 respectively; (iii) a
$1,330 premium with respect to a term life insurance policy for the benefit
of Mr. Sheffield; and (iv) reimbursement for financial counseling services
for Messrs. Sheffield and Kellum for $2,175 and $2,545 respectively.
(e) See "Management Compensation - Compensation of Executive Officers -
Employee Investment Partnerships" for information about Parker &
Parsley-sponsored employee investment partnerships in which Messrs.
Sheffield, Withrow and Kellum invested their own funds.
Long-Term Incentive Plan. The Plan provides for employee and
non-employee director awards in the form of stock options, stock appreciation
rights, restricted stock, and performance units. The maximum number of shares of
common stock that may be issued under the Plan is equal to 10% of the total
number of shares of common stock equivalents outstanding from time to time minus
the total number of shares of stock subject to outstanding awards on the date of
calculation under any other stock-based plan for employees or directors of the
Company and its subsidiaries. The Plan had 3,766,520 shares available for
additional awards at December 31, 2000.
No stock appreciation rights, restricted stock or performance units are
outstanding under the Plan.
9
The following table sets forth information about stock option grants
made during 2000 to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
----------------------------------------------------
Number of % of Total
Securities Options Granted Exercise or
Underlying to Employees Base Price Expiration Grant Date
Options Granted In Fiscal Year Per Share (c) Date Value (d)
--------------- --------------- ---------------- ------------- ----------
Mr. Sheffield.......... 60,000 (a) 4.17% $ 7.875 2/15/06-07-08 $ 238,200
60,000 (b) 4.17% 12.50 8/16/06-07-08 378,000
Mr. Fagerstone......... 23,000 (a) 1.6% 7.875 2/15/06-07-08 91,310
23,000 (b) 1.6% 12.50 8/16/06-07-08 144,900
Mr. Withrow............ 23,000 (a) 1.6% 7.875 2/15/06-07-08 91,310
23,000 (b) 1.6% 12.50 8/16/06-07-08 144,900
Mr. Dove............... 23,000 (a) 1.6% 7.875 2/15/06-07-08 91,310
23,000 (b) 1.6% 12.50 8/16/06-07-08 144,900
Mr. Kellum............. 23,000 (a) 1.6% 7.875 2/15/06-07-08 91,300
23,000 (b) 1.6% 12.50 8/16/06-07-08 144,900
(a) These options were granted on February 15, 2000, vest at the rate of
one-third each year, commencing on the first anniversary of the grant date,
and have a term of five years from the date of vesting. The Compensation
Committee retains discretion, subject to plan limits, to modify the terms
of the options. In the event of a change in control of the Company as
defined in the Plan, the options will immediately become fully vested and
exercisable in full.
(b) These options were granted on August 16, 2000, vest at the rate of
one-third each year commencing on the first anniversary of the grant date,
and have a term of five years from the date of vesting. The Compensation
Committee retains discretion, subject to plan limits, to modify the terms
of the options. In the event of a change in control of the Company as
defined in the Plan, the options will immediately become fully vested and
exercisable in full.
(c) The exercise price per share is equal to the closing price of the common
stock on the New York Stock Exchange composite tape on the day before the
date of grant.
(d) The estimated grant date value of shares in footnotes (a) and (b) is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the value
of the options include the following:
o An interest rate of 5.72% for footnote (a) and 5.71% for
footnote (b), which represents the interest rate on a U. S.
Treasury security with a maturity date corresponding to the
expected option term.
o Volatility of 50% for footnote (a) and (b) calculated using the
lesser of (1) daily stock prices for the 120-day period prior to
the grant date, or (2) 50%.
No other adjustments were made to the model for non-transferability or risk
of forfeiture. The ultimate values of the options will depend on the future
market price of the common stock, which cannot be forecast with reasonable
accuracy. The actual value, if any, an optionee will realize upon exercise
of an option will depend on the excess of the market value of the common
stock over the exercise price on the date the option is exercised.
The following table sets forth, for each named executive officer,
information concerning the exercise of stock options during 2000, and the value
of unexercised stock options as of December 31, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money
Shares Options at Fiscal Year End Options at Fiscal Year End
Acquired on Value -------------------------- ------------------------------
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable (a)
----------- -------- ----------- ------------- ----------- -----------------
Mr. Sheffield............. 15,000 $209,062 125,000 97,000 $194,531 $929,531
Mr. Fagerstone............ 5,834 36,098 149,999 75,165 151,308 716,618
Mr. Withrow............... 5,000 70,937 91,835 75,165 162,880 716,618
Mr. Dove.................. 5,834 49,224 99,001 75,165 151,309 716,618
Mr. Kellum................ 3,334 27,297 51,667 65,999 98,544 620,946
(a) Amounts were calculated by multiplying the number of unexercised options
by $19.6875, which was the closing sale price of the common stock on
December 29, 2000, and subtracting the aggregate exercise price.
10
Retirement Plan. The Company provides a non-qualified deferred
compensation retirement plan for officers and key employees of the Company. Each
participant is allowed to contribute up to 25% of base salary. The Company
provides a matching contribution of 100% of the participant's contribution
limited to the first 10% of the officer's base salary (or 8% of the key
employee's base salary). The Company matching contribution vests immediately.
Employee Investment Partnerships. From 1987 through 1991, Parker &
Parsley formed employee partnership programs in which Messrs. Sheffield,
Withrow, and Kellum participated. In 1992 and 1993 Messrs. Sheffield, Withrow
and Kellum participated in Direct Investment Partnerships formed to invest in
all wells drilled by Parker & Parsley during those years (except in certain
circumstances where its participation would impose additional costs to Parker &
Parsley). As of December 31, 2000, the aggregate contributions that have been
made to the employee partnerships and the Direct Investment Partnerships by
Messrs. Sheffield, Withrow and Kellum and the aggregate distributions that have
been received by them from those partnerships were as follows: Mr. Sheffield
contributed $734,955 and received $1,287,280 ($141,550 of which was received
during 2000); Mr. Withrow contributed $142,625 and received $170,593 ($19,156 of
which was received during 2000); and Mr. Kellum contributed $141,709 and
received $193,339 ($20,563 of which was received during 2000). During December
2000, the Company acquired 13 of the employee partnerships by merger with
Pioneer Natural Resources USA, Inc. ("Pioneer USA"), a wholly-owned subsidiary
of the Company. Additionally, during November 2000, the Company exercised its
right under the Direct Investment Partnership agreements to purchase each
partner's interest in their respective Direct Investment Partnership. More
information about these transactions can be found below in "Certain
Relationships and Related Transactions."
Severance Agreements. The Company enters into severance agreements with
its officers. Salaries and bonuses are set by the Compensation Committee
independent of these agreements. The Compensation Committee can increase or
reduce base salaries at its discretion.
Either the Company or the officer may terminate the officer's employment
under the severance agreement at any time. The Company must pay the officer an
amount equal to one year's base salary if the officer's employment is terminated
because of death, disability, or normal retirement. The Company must pay the
officer an amount equal to one year's base salary and continue health insurance
for the officer's family for one year if the Company terminates the officer's
employment without cause or if the officer terminates employment for good
reason, which is when reductions in the officer's base annual salary exceed
specified limits or when the officer's responsibilities have been significantly
reduced. If within one year after a change in control of the Company, the
Company terminates the officer without cause, or if the officer terminates
employment for good reason, the Company must pay the officer an amount equal to
2.99 times the sum of the officer's base salary plus target bonus for the year
and continue health insurance for the officer's family for one year. If the
officer terminates employment with the Company without reason between six months
and one year after a change in control, or at any time within one year after a
change in control if the officer is required to move, then the Company must pay
the officer one year's base salary and continue health insurance for the
officer's family for one year. Officers are also entitled to additional payments
for certain tax liabilities that may apply to severance payments following a
change in control.
Indemnification Agreements. The Company has entered into indemnification
agreements with each of its directors and officers, including the named
executive officers. Those agreements require the Company to indemnify the
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law and to advance expenses in connection with certain claims
against directors and officers. The Company expects to enter into similar
agreements with persons selected to be directors and officers in the future.
Each indemnification agreement also provides that, upon a potential change in
control of the Company and if the indemnified director or officer so requests,
the Company will create a trust for the benefit of the indemnified director or
officer in an amount sufficient to satisfy payment of all liabilities and suits
against which the Company has indemnified the director or officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Robert L. Stillwell is a member of the Compensation Committee and is
a partner of Baker & Botts, L.L.P., which provided limited legal services to the
Company during 2000. The dollar amount of fees that the Company paid to Baker &
Botts, L.L.P. during the most recent fiscal year of that law firm did not exceed
5% of that firm's gross revenues. Mr. Stillwell does not serve on the
sub-committee of the Compensation Committee that administers the Company's
Long-Term Incentive Plan.
11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
submits the following report with respect to the executive compensation program
of the Company.
Compensation Principles and Philosophy
The overriding responsibility of the Committee is to maintain the
Company's executive compensation program so that it attracts and retains a
capable and highly motivated senior management team and aligns the compensation
of the Company's executives with the Company's strategic business plan to
increase stockholder value. During 2000, the Committee retained an executive
compensation consulting firm (Hewitt Associates) to assist and advise it in its
efforts to establish and administer fair and competitive compensation and
incentive policies. These policies emphasize variable compensation, structure
the annual bonus and long-term incentive awards to be a significant portion of
an executive's total compensation and result in total compensation that is
reflective of Company performance. Stock option awards will continue to be
emphasized as part of each executive's compensation package to align stockholder
and executive interests. Other critical elements of the Company's compensation
and incentive policies provide for:
o Base salaries at median levels compared to industry survey
information and peer group proxy analysis.
o Annual target bonus levels at or slightly above median levels
compared to industry survey information and peer group proxy
statement analysis.
o Long-term incentive award levels that are above median levels
compared to industry survey information and peer group proxy
statement analysis.
o Significant stock ownership by the Directors and the CEO.
To support the commitment to significant stock ownership, the Company's
current stock ownership guidelines are as follows:
o Non-employee directors - stock value equal to at least three times
each director's annual retainer fee
o Chairman of the Board and Chief Executive Officer - stock value
equal to at least five times base salary.
In determining compliance with these guidelines, the Committee considers
its expectations of the long term value of the Company's stock, the current
trading levels and stock-based compensation that the directors and CEO hold. Mr.
Sheffield and all Directors are in compliance with the ownership guidelines.
The Omnibus Budget Reconciliation Act of 1993 placed restrictions on the
deductibility of executive compensation paid by public companies. Under the
restrictions that were effective in 1994, the Company is not able to deduct
compensation paid to any of the named executive officers in excess of $1,000,000
unless the compensation meets the definition of "performance based compensation"
in the legislation. Non-deductibility could result in additional tax costs to
the Company. While the Committee cannot assess with certainty how the Company's
compensation program will ultimately be affected by this law, the Committee
generally tries to preserve the deductibility of all executive compensation if
it can do so without interfering with the Company's ability to attract and
retain capable and highly motivated senior management.
Elements of Compensation
The elements of the compensation program the Committee administers for
executive officers, including the Chief Executive Officer, consist of base
salaries, annual bonuses, awards made under the Company's Long-Term Incentive
Plan, contributions to the Company's 401(k) retirement plan, contributions to
the Company's deferred compensation retirement plan, and miscellaneous
perquisites. Base salaries, annual bonuses and long-term incentives are
discussed separately below; however, the Committee considers the aggregate
remuneration of executives when evaluating the executive compensation program.
12
Base Salaries. An executive's base salary is viewed as a fixed component
of total compensation that should be competitive with companies of similar size
and business to the Company. The Committee has targeted base salaries at the
median level for companies of similar size and business to the Company. The
Committee evaluates the base salaries of the Company's executive officers on the
basis of competitive base salary survey data provided by its consultant and
consideration of each officer's duties and responsibilities. The Committee views
the named executives below the CEO level as a team with diverse duties but with
similar authority and responsibility. Hewitt Associates historically has
provided base salary survey data on the majority of the Company's peer group
companies, a group of independent exploration and production companies with
similar asset, revenue and capital investment profiles as the Company. While the
peer group provided by Hewitt Associates includes some of the members of the Dow
Jones Oil- Secondary Index reflected in the performance graph set forth below
under "Company Performance," it does not include all of the companies in that
peer group and includes other companies with which the Company competes. The
Committee determines the base salary for all named executives, including Mr.
Sheffield, using the same methodology.
The 2000 base salaries for the named executive officers as a group,
including Mr. Sheffield, were identified by Hewitt Associates as being at
approximately the 50th percentile level. In establishing the base salaries for
the named executive officers effective January 1, 2001, the Committee elected to
not commission Hewitt to complete the salary survey but applied a conservative
percentage increase of 3% to their 2000 base salary levels. One named executive
also received a promotional base salary increase. Mr. Sheffield's base salary
was increased by 3% to $668,000, which the Committee believes is at or slightly
below the 50th percentile. The Committee believes the other named executive
officer's base salaries are close to the 50th percentile. The Committee has
retained Hewitt Associates to survey the Company's peer group and report current
compensation market data so that 2002 salary adjustments will be based on
surveyed market conditions.
Annual Bonuses. Each year the Committee establishes a target bonus for
each executive based on the target bonus median levels of executives in similar
positions at peer group companies. To maintain internal equity, the level of
responsibility, scope and complexity of the executive's position are considered.
The normal range of awards for the annual incentive bonus plan is between 50%
and 150% of target. The Committee believes the target bonus levels for Mr.
Sheffield and the other named executives for 2000 are slightly below the peer
group's median levels. Hewitt Associates will advise the Committee during 2001
of appropriate target bonus levels to achieve the Company's goal of establishing
target bonus levels that are at or slightly above the median of the Company's
peer group. In awarding 2000 bonuses, the Company reviewed the following
criteria that are important to the success of the Company's business plan.
o Growth of Cash Flow per Share
o Operating Cost per BOE
o Debt/Book
o Reserve Replacement
o Growth of Net Value per Share
o Finding & Development Cost per BOE
o Production Growth
o Debt/BOE
In determining the named executive officers' annual bonus awards, the
Committee also evaluated the Company's stock performance in relation to its peer
group. The Committee did not employ a formula, specific targets or predetermined
weighting of the above financial or operational performance criteria. The
Committee also evaluates Company performance in light of oil and gas industry
fundamentals and assesses how effectively management adapts to changing industry
conditions and opportunities during the year. The Committee observes and
evaluates the individual performance of executive officers through the year and
discusses the performance of these key executives with Mr. Sheffield.
For 2000, the Committee awarded Mr. Sheffield and the other named
executives cash bonuses above the target bonus levels. Specific Company
performance which resulted in bonus payouts above target for 2000 included:
o Stock price increase of 120%
o Base operating costs of $2.72 per BOE
o Finding costs of $4.66 per BOE
o Reserve replacement of 167%
13
o Return on equity 18.1%
o General & administrative cost of $.76 per BOE
o Debt reduction of $167,000,000
Long-term Incentives. A significant portion of the named executive
officers' total compensation is comprised of long-term incentive awards, which
are intended to align executive management's interests in long-term growth and
success more closely with the interests of the Company's stockholders. The
Committee has determined that annual stock option awards should be the primary
method to award long-term incentives. To provide an averaging effect for the
stock option exercise prices, the Committee has elected to make semiannual stock
option awards of approximately 50% of annual grant levels.
The number of options granted to Mr. Sheffield in 2000 was determined by
a comparison of option grants made to the CEO's of peer group companies. The
other named executive officers were reviewed as a team. The level of options
awarded to each named executive was determined by comparing awards granted to
peer company executives holding similar positions, and their individual award
levels were averaged to determine the actual grants. The award levels were not
influenced by the stock holdings of the executives. The Company has historically
held to the philosophy of awarding long-term incentives that are above market
averages. For 2000, Mr. Sheffield was awarded 120,000 stock options. The
Committee believes this award level placed Mr. Sheffield at approximately the
50th percentile for long- term incentive awards for chief executive officers
among the survey group.
In December 1998, the Company received information that an investment
fund group had acquired beneficial ownership of more than 20% of the common
stock. Pursuant to the provisions of the Plan, if a third party acquires 20% or
more of the common stock, certain change in control provisions are triggered. In
December 1998, the Committee determined that a change in control had occurred
under the provisions of the Plan, effective September 30, 1998. Consequently,
all stock option awards granted under the Plan from inception in August 1997
through September 30, 1998, were immediately vested, and the restrictions on
restricted stock awards were removed. The Plan has been amended to increase the
third party ownership to 40% to trigger the change in control provisions.
In summary, the Company believes a significant portion of executive
compensation should be variable and performance-based so that an executive's
total compensation is linked to the performance of the individual, the Company
and its stock price. The majority of the named executive officers' total
compensation is variable, at-risk compensation. This structure allows the
Company to administer overall compensation that rises or falls based on the
Company's performance and to maintain a balance between the Company's short-term
and long-term objectives.
Compensation Committee of
the Board of Directors
Charles E. Ramsey, Jr., Chairman
James R. Baroffio
Robert L. Stillwell
AUDIT COMMITTEE REPORT
The Audit Committee's purpose is to assist the Board of Directors in its
oversight of the Company's internal controls, financial statements and the audit
process. The Board of Directors, in its business judgment, has determined that
all members of the committee are independent as required under the listing
standards of the New York Stock Exchange. The committee operates pursuant to a
charter adopted by the Board of Directors. A copy of the current charter is
attached to this Proxy Statement as Annex A.
Management is responsible for the preparation, presentation and
integrity of the Company's financial statements, accounting and financial
reporting principles, and internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
independent auditors, Ernst & Young LLP, are responsible for performing an
independent audit of the consolidated financial statements in accordance with
generally accepted auditing standards.
14
In performing its oversight role, the Audit Committee has considered and
discussed the audited financial statements with management and the independent
auditors. The committee has also discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as currently in effect. The committee has
received the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as currently in effect. The committee has
also considered whether the performance of other non-audit services by the
independent auditors is compatible with maintaining the auditor's independence
and has discussed with the auditors the auditors' independence.
Based on the reports and discussions described in this Report, and
subject to the limitations on the roles and responsibilities of the committee
referred to below and in the charter, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Annual Report on Form 10-K for the fiscal year ended December 31, 2000, for
filing with the Securities and Exchange Commission. The committee and the board
have also recommended the selection of the Company's independent auditors.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting for the Company and are not experts in
auditor independence standards. Members of the committee rely without
independent verification on the information provided to them and on the
representations made by management and the independent auditors. Accordingly,
the Audit Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions referred to
above do not assure that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards, that
the financial statements are presented in accordance with generally accepted
accounting principles, or that Ernst & Young LLP is in fact independent.
Audit Committee of the Board of Directors
James L. Houghton, Chairman
R. Hartwell Gardner
Jerry P. Jones
15
COMPANY PERFORMANCE
The following graph and chart compare the Company's cumulative total
stockholder return on common stock during the period from December 31, 1995 to
December 31, 2000, with cumulative total stockholder return during the same
period for the DJ Oil-Secondary Group and the Standard and Poor's 500 Index as
prescribed by SEC rules. The Company's cumulative total stockholder return for
the period from December 31, 1995 to December 31, 2000 consists of Parker &
Parsley's operating results prior to August 8, 1997 and the Company's operating
results beginning August 8, 1997. The graph and chart show the value, at
December 31 in each of 1996, 1997, 1998, 1999 and 2000 of $100 invested at
December 31, 1995, and assume the reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
AMONG PIONEER NATURAL RESOURCES COMPANY, THE STANDARD & POOR'S 500 INDEX
AND THE DOW JONES OIL - SECONDARY INDEX
Pioneer
Natural Dow Jones Standard
Measurement Resources Oil & Poor's
(Fiscal Year Covered) Company Secondary 500
--------------------- --------- --------- --------
1995 100 100 100
1996 168 127 123
1997 133 126 164
1998 40 87 211
1999 41 100 255
2000 91 160 232
* Assumes $100 invested on December 31, 1995 in stock or index. Including
reinvestment of dividends. Fiscal year ending December 31.
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Pioneer Natural Resources Company 100 168 133 40 41 91
Standard & Poor's 500 100 123 164 211 255 232
Dow Jones Oil - Secondary 100 127 126 87 100 160
16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of common stock as of March 28, 2001, by (a) each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares of common stock, (b) each director and nominee for director of the
Company, (c) each executive officer of the Company, and (d) all directors and
executive officers as a group.
Number of Percentage
Name of Person or Identity of Group Shares Of Class (1)
----------------------------------- ---------- ------------
Southeastern Asset Management, Inc. (2).......... 26,212,032 26.7%
Longleaf Partners Fund
O. Mason Hawkins
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
Richard E. Rainwater (3) (4)
777 Main Street, Suite 2700
Fort Worth, Texas 76102......................... 5,769,985 5.9%
Scott D. Sheffield (4), (5)...................... 316,437 *
Timothy L. Dove (4), (6)......................... 209,461 *
Dennis E. Fagerstone (4)......................... 256,071 *
Danny L. Kellum (4), (7)......................... 130,202 *
Mark L. Withrow (4), (8)......................... 228,643 *
James R. Baroffio (4)............................ 58,849 *
R. Hartwell Gardner (4).......................... 60,585 *
James L. Houghton (4), (9)....................... 61,361 *
Jerry P. Jones (4)............................... 56,648 *
Charles E. Ramsey, Jr. (4)....................... 56,000 *
Robert L. Stillwell (4), (10).................... 58,245 *
All directors and executive officers as a
group (11 persons) (11)........................ 1,492,502 1.5%
* Does not exceed 1%.
(1) Based on 98,239,681 shares of common stock consisting of 96,299,025
outstanding shares of common stock and 1,940,656 outstanding exchangeable
shares that are exchangeable for the same number of shares of common stock.
(2) The Schedule 13G/A filed with the SEC on February 9, 2001, which is a joint
statement on Schedule 13G/A filed by Southeastern Asset Management, Inc.
("Southeastern"), Longleaf Partners Fund ("Longleaf") and O. Mason Hawkins
("Hawkins"), states that the statement is being filed by Southeastern as a
registered investment adviser, and that all of the securities covered by
the statement are owned legally by Southeastern's investment advisory
clients and none are owned directly or indirectly by Southeastern. The
Schedule 13G/A further states that the statement is also being filed by
Hawkins, Chairman of the Board and C.E.O. of Southeastern, in the event he
could be deemed to be a controlling person of that firm as the result of
his official positions with or ownership of its voting securities. The
existence of such control is expressly disclaimed. Hawkins does not own
directly or indirectly any securities covered by the Schedule 13G/A for his
own account.
17
(3) Includes 109,324 shares owned directly by Rainwater, Inc., of which Mr.
Rainwater is the sole shareholder, and 300,852 shares (of which Mr.
Rainwater disclaims beneficial ownership) owned by Mr. Rainwater's spouse.
(4) Includes the following number of shares subject to stock options that were
exercisable at or within 60 days after March 28, 2001: Mr. Rainwater,
18,147; Mr. Sheffield, 142,500; Mr. Dove, 178,166; Mr. Fagerstone, 225,164;
Mr. Kellum, 117,666; Mr. Withrow, 167,000; Mr. Baroffio, 48,096; Mr.
Gardner, 48,096; Mr. Houghton, 49,000; Mr. Jones, 41,096; Mr. Ramsey,
49,000; and Mr. Stillwell, 48,096.
(5) Includes 100 shares held by a minor child of Mr. Sheffield, 5,000 shares
held in Mr. Sheffield's investment retirement account and 10,895 shares
held in Mr. Sheffield's 401(k) account.
(6) Includes 370 shares held in Mr. Dove's 401(k) account.
(7) Includes 516 shares held in Mr. Kellum's 401(k) account.
(8) Includes 17,266 shares held in Mr. Withrow's 401(k) account.
(9) Includes 10,361 shares held by two trusts of which Mr. Houghton is a
trustee and over which shares he has sole voting and investment power and
2,000 shares held in Mr. Houghton's investment retirement account.
(10) Includes 758 shares held by Mr. Stillwell's wife.
(11) Includes 1,113,880 shares of common stock subject to stock options that
were exercisable at or within 60 days after March 28, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The executive officers and directors of the Company are required to file
reports with the SEC, and with the various Canadian provincial securities
commissions (the "Canadian Commissions"), disclosing the amount and nature of
their beneficial ownership in common stock, as well as changes in that
ownership. Pursuant to applicable Canadian policies, the executive officers and
directors of the Company are exempted from filing reports with the Canadian
Commissions, provided that they timely file all reports required to be filed
with the SEC.
Based solely on its review of reports and written representations that
the Company has received, the Company believes that all required reports were
filed on time for 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, through its wholly-owned subsidiaries, has in the past
sponsored certain affiliated partnerships, including 44 drilling partnerships,
three public income partnerships and 13 affiliate employee partnerships, all of
which were formed primarily for the purpose of drilling and completing wells or
acquiring producing properties. In 1992, the Company discontinued sponsoring
public and private oil and gas development drilling partnerships, income
partnerships and affiliated employee partnerships.
In December 2000, the Company received the approval of the partners of
13 employee partnerships to merge with Pioneer USA for a purchase price of $2.0
million. Of the total purchase price, $317,055 was paid to current Company
employees, of which amount $138,899, $22,886 and $48,972 were paid to Mr.
Sheffield, Mr. Withrow and Mr. Kellum, respectively. Additionally, during 2000
the Company purchased all of the direct oil and gas interests held by Mr.
Sheffield for $195,133.
During each of 1994, 1993 and 1992, the Company formed a Direct
Investment Partnership for the purpose of permitting selected key employees to
invest directly, on an unpromoted basis, in wells that the Company drilled. The
partners in the Direct Investment Partnerships formed in 1994, 1993 and 1992
paid and received approximately .337%, 1.5375% and 1.865%, respectively, of the
costs and revenues attributable to the Company's interest in the wells in which
each such Direct Investment Partnership participates. The Company discontinued
the formation of Direct Investment Partnerships in 1995.
In November 2000, the Company exercised its right under the Direct
Investment Partnership agreements to purchase each partner's interest in their
respective Direct Investment Partnership. The Company paid $4.3 million to
complete the purchases. Current employees of the Company were partners in the
Direct Investment Partnerships and received $886,512 of the proceeds from the
purchases, of which amount $416,364, $117,578 and $77,204 were paid to Mr.
Sheffield, Mr. Withrow and Mr. Kellum, respectively.
18
The Company, through a wholly-owned subsidiary, serves as operator of
properties in which it and its affiliated partnerships have an interest.
Accordingly, the Company receives producing well overhead, drilling well
overhead and other fees related to the operation of the properties. The
affiliated partnerships also reimburse the Company for their allocated share of
general and administrative charges.
On June 29, 1999, the Company completed the sale of certain United
States oil and gas producing properties, gas plants and other assets primarily
located in the Gulf Coast, Mid Continent and Permian Basin to Prize Energy Corp.
("Prize"). The sale of these assets was initiated through an auction process.
The Board of Directors of Prize includes Mr. Philip P. Smith, its Chief
Executive Officer, Mr. Kenneth A. Hersh, and Mr. Lon C. Kile, its President
and Chief Operating Officer. Mr. Hersh, through his association with Natural Gas
Partners V, L.P., owned or controlled approximately 88% of Prize. Messrs. Smith
and Kile owned or controlled approximately 10.5% and .5% of Prize respectively.
Because Mr. Smith and Mr. Hersh were members of the Board of Directors of the
Company and Mr. Kile was an Executive Vice President of the Company prior to
initiating the auction process, supervision of the sale process was placed under
the direction of a special independent committee (comprised of outside directors
unrelated to Prize) of the Company's Board of Directors. The independent
committee reviewed and considered all offers presented to the Company for the
purchase of the assets acquired by Prize. The Prize offer was approved by the
special independent committee as being the best offer presented. Following
approval of the Prize offer by the special independent committee, Messrs. Smith,
Hersh and Kile resigned their positions with the Company.
In accordance with the terms of the Prize purchase and sale agreement,
the Company received net sales proceeds of $245.0 million, comprised of $215.0
million of cash and 2,307.693 shares of six percent convertible preferred stock
("Prize Preferred") having a liquidation preference and fair value of $30.0
million. Prior to February 9, 2000, Prize was a closely held, non-public entity
and the fair market value of the Prize Preferred was not readily determinable.
On February 9, 2000, the common stock of Prize ("Prize Common") began to
publicly trade on the American Stock Exchange. At that time, the Company's Prize
Preferred was exchanged for 3,984,197 shares of Prize Series A 6% Convertible
Preferred Stock ("Prize Senior A Preferred"). On March 31, 2000, the Company and
Prize converted the Company's 3,984,197 shares of Prize A Preferred to 3,984,197
shares of Prize Common, received cash in lieu of 33,964 shares of preferred
in-kind dividends and the Company sold to Prize 1,346,482 shares of the Prize
Common for a combined cash total of $18.6 million. During 2000, the Company sold
an additional 2,024,500 shares of Prize Common in the open market for $41.1
million. The Company recognized aggregate net gains from the dispositions of the
Prize Common of $34.3 million during 2000. The fair market value of the
Company's remaining investment in 613,215 shares of Prize Common as of December
31, 2000 was $12.7 million.
STOCKHOLDER PROPOSALS
Any stockholder of the Company who desires to submit a proposal for
action at the Company's annual meeting of stockholders for 2002 and wishes to
have such proposal (a "Rule 14a-8 Proposal") included in the Company's proxy
materials, must submit the Rule 14a-8 Proposal to the Company at its principal
executive offices no later than December 7, 2001, unless the Company notifies
the stockholders otherwise. Only those Rule 14a-8 Proposals that are timely
received by the Company and proper for stockholder action (and otherwise proper)
will be included in the Company's proxy materials.
Any stockholder of the Company who desires to submit a proposal for
action at the annual meeting of stockholders in 2002, but does not wish to have
such proposal (a "Non-Rule 14a-8 Proposal") included in the Company's proxy
materials, must submit such Non-Rule 14a-8 Proposal to the Company at its
principal executive offices no later than February 20, 2002, unless the Company
notifies the stockholders otherwise. If a Non-Rule 14a-8 Proposal is not
received by the Company on or before February 20, 2002, then the Company intends
to exercise its discretionary voting authority with respect to such Non-Rule
14a-8 Proposal. "Discretionary voting authority" is the ability to vote proxies
that stockholders have executed and returned to the Company, on matters not
specifically reflected in the Company's proxy materials, and on which
stockholders have not had an opportunity to vote by proxy.
Stockholders desiring to propose action at the annual meeting of
stockholders must also comply with Article Ninth of the Amended and Restated
Certificate of Incorporation of the Company. Under Article Ninth, a stockholder
must submit to the Company, no later than 60 days before the annual meeting or
ten days after the first public notice
19
of the annual meeting is sent to stockholders, a written notice setting forth
(i) the nature of the proposal with particularity, including the written text of
the proposal, (ii) the stockholder's name, address and other personal
information, together with the number of shares of each class and series of
stock held by the stockholder, (iii) any interest of the stockholder in the
proposed business, (iv) the name of any persons nominated to be elected or
reelected as a director by the stockholder, and (v) with respect to each such
nominee, the nominee's name, address and other personal information, the number
of share of each class and series of stock of the Company held by such nominee,
all information required to be disclosed pursuant to Regulation 14A of the
Securities and Exchange Act of 1934, and a notarized letter containing such
nominee's acceptance of the nomination, stating his or her intention to serve as
director if elected, and consenting to be named as a nominee in any proxy
statement relating to such election. The person presiding at the annual meeting
will determine whether business is properly brought before the meeting and will
not permit the consideration of any business not properly brought before the
meeting.
Written requests for inclusion of any stockholder proposal should be
addressed to Corporate Secretary, Pioneer Natural Resources Company, 1400
Williams Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039. The
Company suggests that any such proposal be sent by certified mail, return
receipt requested.
The Board of Directors will consider any nominee recommended by
stockholders for election at the annual meeting of stockholders to be held in
2002 if that nomination is submitted in writing, not later than January 11,
2002, to Corporate Secretary, Pioneer Natural Resources Company, 1400 Williams
Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039. Each submission
must include a statement of the qualifications of the nominee, a notarized
consent signed by the nominee evidencing a willingness to serve as a director,
if elected, and a commitment by the nominee to meet personally with members of
the Board of Directors.
SOLICITATION OF PROXIES
Solicitation of Proxies may be made by mail, personal interview,
telephone or telegraph by officers, directors and regular employees of the
Company. The Company may also request banking institutions, brokerage firms,
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the common stock that those companies or persons hold of
record, and the Company will reimburse the forwarding expenses. In addition, the
Company has retained D.F. King & Co., Inc. to assist in solicitation for a fee
estimated not to exceed $7,500. The Company will bear all costs of solicitation.
STOCKHOLDER LIST
In accordance with the Delaware General Corporation Law, the Company
will maintain at its corporate offices in Irving, Texas, a list of the
stockholders entitled to vote at the Annual Meeting. The list will be open to
the examination of any stockholder, for purposes germane to the Annual Meeting,
during ordinary business hours for 10 days before the Annual Meeting.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 2000, is being mailed to stockholders concurrently with this Proxy
Statement and does not form part of the proxy solicitation material.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, as filed with the SEC, will be sent to any stockholder
without charge upon written request addressed to Investor Relations, Pioneer
Natural Resources Company, 1400 Williams Square West, 5205 North O'Connor
Boulevard, Irving, Texas 75039, or oral request to telephone number (972)
969-3583. The Annual Report on Form 10-K is also available at the SEC's web site
in its EDGAR database (www.sec.gov).
Only a single copy of this Proxy Statement is being delivered to
multiple stockholders sharing a common address unless the Company receives
contrary instructions from stockholders sharing a common address. Upon written
or oral request to the Company's Investor Relations department at the address or
telephone number provided above, the Company will deliver promptly a separate
copy of the Proxy Statement to a stockholder at a shared address to which a
single copy of this Proxy Statement was delivered. By written or oral request to
the same address, (i) a stockholder may direct a notification to the Company
that the stockholder wishes to receive a separate annual report or proxy
20
statement in the future, or (ii) stockholders who share an address and who are
receiving delivery of multiple copies of the Company's annual reports or proxy
statements can request delivery of only a single copy of these documents to
their shared address.
INTERNET VOTING
For shares of stock that are registered in your name, you have the
opportunity to vote through the Internet using a program provided by the
Company's transfer agent, Continental Stock Transfer & Trust Company. Votes
submitted electronically through the Internet under this program must be
received by 5:00 p.m., New York time, on Wednesday, May 16, 2001. The giving of
such a proxy will not affect your right to vote in person should you decide to
attend the Annual Meeting. The Company has been advised by counsel that the
Internet voting procedures that have been made available through Continental are
consistent with the requirements of applicable law.
To vote through the Internet, please access Continental Stock Transfer &
Trust Company at www.continentalstock.com. Select "ContinentaLink Proxy Voting"
on the screen. At the next screen, you will need to enter the Company Number,
Proxy Number and Account Number that are printed on your personalized proxy
card.
The Internet voting procedures are designed to authenticate stockholder
identities, to allow stockholders to give their voting instructions, and to
confirm that stockholders' instructions have been recorded properly.
Stockholders voting through the Internet should remember that the stockholder
must bear costs associated with electronic access, such as usage charges from
Internet access providers and telephone companies.
******
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN, AND
RETURN THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE OR TO VOTE
THROUGH THE INTERNET.
By Order of the Board of Directors
Mark L. Withrow
Secretary
Irving, Texas
April 9, 2001
21
Annex A
Audit Committee Charter
22
PIONEER NATURAL RESOURCES COMPANY
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information the Company provides to any
governmental body or the public; the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Company's auditing, accounting and financial
reporting processes generally. Consistent with this function, the Audit
Committee should encourage continuous improvement of, and should foster
adherence to, the Company's policies, procedures and practices at all levels.
The Audit Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to oversee the
Company's financial reporting process and internal control system.
o Review and appraise the independence of the Company's external
auditors and ensure receipt from them of the written disclosures
and letter required by Independence Standard Board Standard No. 1.
o Select, review and appraise the audit efforts of the Company's
independent accountants and internal auditing department
(reference to internal auditors or the internal audit department
in this Charter shall include both internal audit activities and
functions conducted by employees of the Company or by outside
auditors appointed for such purposes); and, where appropriate,
replace the independent accountants or internal audit department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal
auditing department, and the Board, always emphasizing that the
independent accountants are ultimately accountable to the Audit
Committee and the Board.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II COMPOSITION
The Audit Committee shall be comprised of three or more directors as the
Board determines, each of whom shall be independent directors and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Audit Committee shall also meet the independence and experience
requirements of the New York Stock Exchange. All members of the Committee shall
have a working familiarity with basic finance and accounting practices, and at
least one member of the Committee shall have accounting or related financial
management expertise.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until the next annual
meeting of the Board, or until their successors shall be duly elected and
qualified. Unless the Board designates a Chair of the Committee, the members of
the Committee may designate a Chair by majority vote of the full Committee
membership.
III MEETINGS
The Committee shall meet at least four times annually, or more
frequently as circumstances warrant. As part of its job to foster open
communication, the Committee should meet at least annually with management, the
director of the internal auditing department, and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believe should be discussed privately. In addition, the Committee
23
or at least its Chair should meet with the independent accountants and
management quarterly to review the Company's financials consistent with IV.4
below.
IV RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Review
- ------
1. Review and (if appropriate) update this Charter periodically, but at
least annually, as circumstances warrant.
2. Review the Company's quarterly and annual financial statements with
financial management and the independent accountants prior to its filing
or prior to the release of earnings, including any certification report,
opinion, or review rendered by the independent accountants. The Chair of
the Committee may represent the entire Committee for purposes of this
review.
3. Review the regular internal reports to management prepared by the
internal auditing department and management's response.
4. Management, with the concurrence of the Audit Committee, shall appoint,
terminate or replace a director of internal audit or, at the discretion
of the Board, select and contract with outside auditors to perform the
function of an internal audit department. The director of internal audit
or any outside auditors serving as internal auditors shall report
directly to the Audit Committee, and the Audit Committee shall direct
the scope of their duties and activities in accordance with this
Charter.
5. Discuss with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
Independent Accountants
- -----------------------
6. Recommend to the Board the selection of the independent accountants,
considering independence and effectiveness, and approve the fees and
other compensation to be paid to the independent accountants. On an
annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Company to evaluate the effect of those relationships on the
accountants' independence.
7. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
8. Periodically consult with the independent accountants out of the
presence of management about internal controls and the completeness and
accuracy of the organization's financial statements.
Financial Reporting Processes
- -----------------------------
9. In consultation with the independent accountants and the internal
auditors, review the integrity of the Company's financial reporting
processes, both internal and external.
10. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
11. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing
department.
24
Process Improvement
- -------------------
12. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and the
internal auditors regarding any significant judgments made in
management's preparation of the financial statements and the view of
each as to appropriateness of such judgments.
13. Following completion of the annual audit, review separately with each of
management, the independent accountants and the internal auditing
department any significant difficulties encountered during the course of
the audit.
14. Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
15. Review with the independent accountants, the internal auditing
department and management the extent to which changes or improvements in
financial or accounting practices, as approved by the Audit Committee,
have been implemented. (This review should be conducted at an
appropriate time subsequent to implementation of changes or
improvements, as the Committee decides.)
Ethical and Legal Compliance
- ----------------------------
16. Establish, review and update periodically Standards of Business Conduct
and evaluate whether management has established systems to enforce these
standards.
17. Review management's monitoring of the Company's compliance programs and
evaluate whether management has the proper review systems in place to
ensure that the Company's financial statements, reports and other
financial information disseminated to governmental organizations and the
public satisfy legal requirements.
18. Review activities, organizational structure, and qualifications of the
internal audit function.
19. Review with the Company's in-house or outside legal counsel any legal
matter that could have a significant effect on the Company's financial
statements.
20. Prepare the report required by rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
Perform any other activities consistent with this Charter, the Company's
Certificate of Incorporation and Bylaws, the rules of the New York Stock
Exchange applicable to its listed companies, and governing law as the Committee
or the Board deems necessary or appropriate.
V AUTHORITY AND LIMITATIONS
The Audit Committee shall have the authority to take all actions it
deems advisable to fulfill its responsibilities and duties. The Audit Committee
shall have the authority to retain special legal counsel, accounting experts, or
other consultants to advise the Committee, which may be the same as or different
from the Company's primary legal counsel, accounting experts and other
consultants. The Audit Committee may require any officer or employee of the
Company or any of its subsidiaries, the Company's outside legal counsel, and the
Company's external auditors to meet with the Committee or any member of the
Committee.
While the Audit Committee has the responsibilities and powers set forth
in this Charter and management and the independent accountant for the Company
are ultimately accountable to the Board of Directors and the Audit Committee, it
is not the duty of the Audit Committee to plan or conduct audits or to determine
that the Company's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. This is the
responsibility of management. It is also not the duty of the Audit Committee to
initiate and conduct investigations, to resolve disagreements between management
and the independent auditor, or to insure compliance with laws, regulations,
Standards of Business Conduct, or compliance with compliance policies.
25
Information Statement for Holders of Exchangeable Shares
of
Pioneer Natural Resources Canada Inc.
The enclosed Proxy Statement and related materials pertaining to Pioneer
Natural Resources Company ("Pioneer") have been provided to all holders of
Exchangeable Shares of Pioneer Natural Resources Canada Inc. ("Pioneer Canada")
for the purposes of Pioneer's annual meeting of stockholders (the "Annual
Meeting") to be held on May 17, 2001 at 9:00 a.m. (Dallas, Texas time), in the
Carrollton Room at the Dallas Marriott Las Colinas Hotel, 223 West Las Colinas
Blvd., Irving, Texas 75039. As a holder of Exchangeable Shares, you are entitled
to dividend and other rights designed to be equivalent to the attributes of the
Common Stock of Pioneer, including the right, through a Voting and Exchange
Trust Agreement (the "Voting Agreement"), to attend and to vote at the Annual
Meeting. Given the attributes of the Exchangeable Shares, you will not receive a
Notice, Information Circular or Proxy for an annual meeting of shareholders of
Pioneer Canada, nor will a meeting of holders of Exchangeable Shares be held.
Exercise of Voting Rights
Pursuant to the Voting Agreement, Computershare Trust Company of Canada
(the "Trustee") holds one share of special preferred voting stock of Pioneer
(the "Voting Share") for the benefit of the holders (other than Pioneer and its
subsidiaries) of the Exchangeable Shares. The Voting Share carries a number of
votes, exercisable at any meeting at which Pioneer stockholders are entitled to
vote (including the Annual Meeting), equal to the number of outstanding
Exchangeable Shares (other than shares held by Pioneer and its subsidiaries).
You are entitled to instruct the Trustee to exercise one of the votes attached
to the Voting Share for each Exchangeable Share you hold, or to grant to
Pioneer's management a proxy to exercise such votes in accordance with the
enclosed Proxy Statement. Alternatively, you may instruct the Trustee to grant
to you or your designee a proxy to attend the Annual Meeting and personally
exercise your voting rights. For this purpose, the Trustee has furnished (or
caused Pioneer to furnish) the enclosed Proxy Statement and certain related
materials to you as a holder of Exchangeable Shares.
To instruct the Trustee as to how you want to exercise your voting
rights, you must complete, sign, date and return the enclosed form of direction
(the "Direction") to the Trustee by no later than 12:00 p.m. noon (Calgary time)
on May 15, 2001 (the "Due Time"). If the Trustee does not receive your fully
completed Direction by the Due Time, your voting rights will not be exercised.
You may revoke or amend your instructions to the Trustee (as indicated in your
Direction) at any time up to and including the Due Time by delivering to the
Trustee a written notice of revocation or by completing, signing and delivering
to the Trustee a new Direction bearing a later date. You may also revoke or
amend your instructions in person at the Annual Meeting prior to 9:00 a.m.
(Dallas, Texas time) on May 17, 2001, by submitting a written amendment or
revocation of your instructions and presenting satisfactory identification to
the Trustee's representatives at the Annual Meeting. In either case, your
instructions of the later date will be binding on the Trustee.
General
Pioneer Canada and certain of the insiders thereof have been exempted
from certain disclosure and insider trading obligations prescribed by otherwise
applicable Canadian securities legislation pursuant to discretionary orders
granted by each of the provincial securities commissions in Canada. Pursuant to
such orders, Pioneer Canada is not required to prepare and file annual proxy and
related documentation, quarterly reports, certain material change reports or an
annual information form, provided that Pioneer prepares and files United States
continuous disclosure documentation in Canada which is equivalent to such
disclosure and which is set forth in the Multijurisdictional Disclosure System
adopted by the Canadian Securities Administrators.
# # #
Please complete, sign and date the enclosed Direction and return it to
the Trustee in the enclosed envelope by no later than 12:00 p.m. noon (Calgary
time) on May 15, 2001.
26
DIRECTION GIVEN BY HOLDERS OF EXCHANGEABLE
SHARES OF PIONEER NATURAL RESOURCES CANADA INC.
FOR THE MAY 17, 2001 ANNUAL MEETING OF STOCKHOLDERS OF
PIONEER NATURAL RESOURCES COMPANY
The undersigned acknowledges receipt of the Notice and Proxy Statement in
connection with the annual meeting (the "Meeting") of stockholders of Pioneer
Natural Resources Company to be held on May 17, 2001 at 9:00 a.m. (Dallas, Texas
time) at the Dallas Marriott Las Colinas Hotel, 223 West Las Colinas Blvd.,
Irving, Texas 75039. The undersigned hereby instructs and directs Computershare
Trust Company of Canada (the "Trustee"), pursuant to the provisions of the
Voting and Exchange Trust Agreement dated December 18, 1997 among Pioneer,
Pioneer Natural Resources Canada Inc. ("Pioneer Canada") and the Trustee, as
follows:
* * * *
(Please note: If no direction is made and you sign below the Trustee is hereby
authorized and directed to vote for items 1 and 2 listed under Alternative A
below, and as to any other matters that may properly come before the Meeting in
its discretion.)
* * * *
(Please select one of A, B or C, and sign and date on the reverse side)
A. [ ] Exercise or cause to be exercised, whether by proxy given by the
Trustee to a representative of Pioneer or otherwise, the
undersigned's voting rights at the Meeting, or any postponement
or adjournment thereof, as follows:
1. To elect R. Hartwell Gardner and James L. Houghton as Class I
Directors of Pioneer. If any such nominees should be unavailable,
the Trustee may vote for substitute nominee(s) at its discretion:
[ ] FOR all nominees listed [ ] TO WITHHOLD authority to
above (except as marked vote for all nominees
to the contrary) listed above
[ ] WITHHOLD AUTHORITY for the following nominee(s) only:
----------------------------------------------------
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the
Meeting or any postponement or adjournment thereof.
B. [ ] Deliver a proxy card to the undersigned at the Meeting, with
respect to all Exchangeable Shares of Pioneer Canada held of
record by the undersigned on the record date for the Meeting (and
not subsequently disposed of) so that the undersigned may
exercise personally the undersigned's voting rights at the
Meeting, or any postponement or adjournment thereof.
C. [ ] Deliver a proxy card to _________________________________ at
_____________________________________________, as the designee of
the undersigned to attend and act for and on behalf of the
undersigned at the Meeting with respect to all Exchangeable
Shares of Pioneer Canada held of record by the undersigned on the
record date for the Meeting (and not subsequently disposed of)
with all the powers that the undersigned would possess if
personally present and acting thereat including the power to
exercise the undersigned's voting rights at the Meeting, or any
postponement or adjournment thereof.
27
* * * *
Please sign exactly as your name appears on your Exchangeable Share
certificate(s) and return this form in the enclosed envelope. When signing as
executor, administrator, attorney, trustee, guardian or custodian, or for a
corporation, please give the full title as such. If the Exchangeable Shares are
held in a joint account, each joint owner must sign.
Signature:____________________________ Date:____________________________
Print Name:___________________________
Signature:____________________________ Date:____________________________
Print Name:___________________________
28
PROXY BY MAIL Please mark your votes like this [ X ]
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS. TO BE VALID, THIS PROXY MUST BE SIGNED.
The Board of Directors recommends a vote FOR Items 1 and 2.
ITEM 1 - ELECTION OF DIRECTORS
Nominees: WITHHELD
FOR FOR ALL
01 R. Hartwell Gardner [ ] [ ]
02 James L. Houghton [ ] [ ]
WITHHELD FOR: (Write that nominee's name in the space provided below.)
- ---------------------------------------------
ITEM 2 - RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 3 - IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.
IF YOU WISH TO VOTE ELECTRONICALLY PLEASE READ THE INSTRUCTIONS BELOW
COMPANY NUMBER:
PROXY NUMBER:
ACCOUNT NUMBER:
Signature ______________________ Signature ______________________ Date _______
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
VOTE BY INTERNET
PIONEER NATURAL RESOURCES COMPANY
- - You can now vote your shares electronically through the Internet.
- - This eliminates the need to return the proxy card.
- - Your electronic vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed, dated and returned the proxy
card.
TO VOTE YOUR PROXY BY MAIL
Mark, sign and date your proxy card above, detach it and return it in the
postage-paid envelope provided.
29
TO VOTE YOUR PROXY BY INTERNET
www.continentalstock.com
Have your proxy card in hand when you access the above website. You will be
prompted to enter the company number, proxy number and account number to create
an electronic ballot. Follow the prompts to vote your shares.
PLEASE DO NOT RETURN THE ABOVE CARD IF VOTED
ELECTRONICALLY
SECURITY CODE:
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PIONEER NATURAL RESOURCES COMPANY
The undersigned hereby appoints Scott D. Sheffield and Mark L. Withrow as
proxies, with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of stock of Pioneer Natural Resources Company standing in the
name of the undersigned with all powers which the undersigned would possess if
present at the Annual Meeting of Stockholders of the Company to be held May 17,
2001 or any adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
Access to Pioneer shareholder account information and
other shareholder services are now available on the
Internet!
Visit Continental Stock Transfer's website at
www.continentalstock.com
for their new Internet Shareholder Service -
ContinentaLink
Through this new service, shareholders can select a Personal Identification
Number or "PIN" to secure access to personal shareholder records. With a PIN,
shareholders can change addresses, receive electronic forms, and view account
transaction history and dividend history.
To access this new service, visit the website listed above. From the home page,
select ContinentaLink Full Service. From there, you can either Test Drive the
service (choose "Test Drive" button) or you can Sign-Up (choose "Sign-Up"
button). If you choose to sign-up, enter your taxpayer identification number or
social security number as your ID Number. Your personal Security Code can be
found on the reverse side of this card in the bottom left corner. Enter any four
alphanumeric characters you would like to use for your PIN. Re-enter the same
PIN in the PIN Verification field. Your PIN will be activated overnight, and you
will be able to access your shareholder records the following day.
30
Please fold and detach card at perforation before mailing
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Pioneer Natural Resources USA, Inc. 401(k) Plan
TO: THE VANGUARD GROUP, TRUSTEE FOR THE EMPLOYER MATCHING CONTRIBUTION
(STOCK ACCOUNT) OF THE PIONEER NATURAL RESOURCES USA, INC 401(k) PLAN.
In connection with the proxy materials I received relating to the Annual Meeting
of Shareholders of Pioneer Natural Resources Company to be held on Thursday, May
17, 2001, I direct you to execute a proxy as indicated below with respect to all
shares of common stock of Pioneer Natural Resources Company to which I have the
right to give voting directions under the Employer Matching Contribution (Stock
Account) of the Pioneer Natural Resources USA, Inc. 401(k) plan. I understand
you will hold these directions strictly confidential.
Date ________________, 2001
SHARES Please mark, sign
(exactly as name
appears at left,
date and mail this
card promptly in
the postage paid
return envelope
provided.
-------------------------------
Signature
THIS PARTICIPANTS' DIRECTION IS
CONTINUED ON THE BACK OF THIS
CARD.
Please fold and detach card at perforation before mailing
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PROXY BY MAIL
Please mark your boxes like this [ X ]
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF PIONEER NATURAL RESOURCES COMPANY.
TO BE VALID, THIS PROXY MUST BE SIGNED
The Board of Directors recommends a vote FOR Items 1 and 2.
ITEM 1 - ELECTION OF DIRECTORS
Nominees: WITHHELD
FOR FOR ALL
01 R. Hartwell Gardner [ ] [ ]
02 James L. Houghton [ ] [ ]
WITHHELD FOR: (Write that nominee's name in the space
provided below.)
- ---------------------------------------------
ITEM 2 - RATIFICATION OF SELECTION OF FOR AGAINST ABSTAIN
INDEPENDENT ACCOUNTANTS [ ] [ ] [ ]
ITEM 3 - IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.
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