SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ______)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss. 240.14a-12
FX Energy, Inc.
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(Name of Registrant as Specified In Its Charter)
n/a
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: __________________________________________
2) Form, Schedule, or Registration Statement No.: ___________________
3) Filing Party: ____________________________________________________
4) Date Filed: ______________________________________________________
FX ENERGY, INC.
April 20, 2001
Dear FX Energy Stockholder:
Our 2000 Annual Report and our Proxy Statement for the 2001 Annual
Stockholders' Meeting of FX Energy, Inc. are enclosed. At this meeting, we will
seek your support for the election of directors and for the approval of our 2000
Stock Option Plan.
These are important considerations for all stockholders. Therefore, the
Board of Directors urges you to review each of these proposals carefully. The
enclosed proxy statement discusses the intended benefits as well as possible
disadvantages of these proposals.
Your Board of Directors believes that the adoption of all of the
proposals is in the best interests of all stockholders.
Sincerely,
FX ENERGY, INC.
David N. Pierce
President
FX ENERGY, INC.
3006 HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UTAH 84106
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 2001
To the Stockholders of FX Energy, Inc.:
The 2001 Annual Stockholders' Meeting (the "Annual Meeting") of FX
Energy, Inc. (the "Company"), will be held in the Sawtooth Room, Little America
Hotel, 500 South Main Street, Salt Lake City, Utah, on June 5, 2001. The Annual
Meeting will convene at 10:00 a.m., local time, to consider and take action on
the following proposals:
(1) to elect three directors to serve until the expiration of
their respective terms and until their respective successors
are elected and qualified;
(2) to approve the FX Energy, Inc. 2000 Stock Option and Award
Plan; and
(3) to transact such other business as may properly come before
the Annual Meeting or any adjournment(s) thereof.
Only owners of record of the 17,680,235 shares of FX Energy's common
stock outstanding as of the close of business on April 13, 2001 (the "Record
Date") will be entitled to notice of and to vote at the Annual Meeting. Each
share of common stock is entitled to one vote.
Holders of at least a majority of the shares of common stock
outstanding on the Record Date must be represented at the meeting to constitute
a quorum for conducting business.
The attendance at and/or vote of each stockholder at the Annual Meeting
is important, and each stockholder is encouraged to attend.
FX ENERGY, INC.
By Order of the Board of Directors
Scott J. Duncan, Secretary
Salt Lake City, Utah
April 20, 2001
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IMPORTANT
Regardless of whether you plan to attend the meeting in person, please fill in,
sign, date and return the enclosed proxy promptly in the self-addressed, stamped
envelope provided. No postage is required if mailed in the United States.
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SPECIAL REQUEST
If your shares are held in the name of a brokerage firm, nominee or other
institution, only it can vote your shares. Please contact promptly the person
responsible for your account and give instructions for your shares to be voted.
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FX ENERGY, INC.
3006 HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UT 84106
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the management of FX Energy, Inc., to be voted at the
Annual Meeting to be held in the Sawtooth Room, Little America Hotel, 500 South
Main Street, Salt Lake City, Utah, on June 5, 2001, at 10 a.m., local time, or
at any adjournment thereof. The enclosed proxy, when properly executed and
returned in a timely manner, will be voted at the Annual Meeting in accordance
with the directions set forth thereon. If no instructions are indicated on the
enclosed proxy, the proxy will be voted as follows at the Annual Meeting:
(1) FOR the election of three nominees of management set forth
herein as directors of FX Energy to serve as directors until
the expiration of their respective terms and until their
successors are elected and qualified;
(2) FOR the approval of the FX Energy, Inc. 2000 Stock Option and
Award Plan; and
(3) IN accordance with the best judgment of the persons acting as
proxies on other matters presented for a vote.
The enclosed proxy, even though executed and returned to FX Energy, may
be revoked at any time before it is voted, either by giving a written notice,
mailed or delivered to the Secretary of FX Energy, by submitting a new proxy
bearing a later date, or by voting in person at the Annual Meeting. If the proxy
is returned to FX Energy without specific direction, the proxy will be voted in
accordance with the Board of Directors' recommendations as set forth above.
The entire expense of this proxy solicitation will be borne by FX
Energy. In addition to this solicitation, officers, directors and regular
employees of FX Energy, who will receive no extra compensation for such
services, may solicit proxies by mail, by telephone or in person. This proxy
statement and form of proxy were first mailed to stockholders on or about April
23, 2001.
Only holders of FX Energy's 17,680,235 shares of common stock, par
value $0.001, outstanding as of the close of business on April 13, 2001 (the
"Record Date"), will be entitled to vote at the Annual Meeting. Each share of
common stock is entitled to one vote. Holders of at least a majority of the
17,680,235 shares of common stock outstanding on the Record Date must be
represented at the Annual Meeting to constitute a quorum for conducting
business.
All properly executed and returned proxies as well as shares
represented in person at the meeting will be counted for purposes of determining
if a quorum is present, whether the proxies are instructed to abstain from
voting or consist of broker nonvotes. Under Nevada corporate law and FX Energy's
Articles of Incorporation and Bylaws, the election of directors requires the
vote of a plurality of the shares present at the Annual Meeting. Certain
specified matters are considered approved by the stockholders if approved by the
holders of a majority of the outstanding common stock at a meeting of the
stockholders at which a quorum is present. All other matters are considered
approved by the stockholders if approved by the holders of a majority of the
shares present at a meeting of the stockholders at which a quorum is present.
Therefore, abstentions and broker nonvotes will have the same legal effect as a
vote against matters other than the election of directors; abstentions and
broker nonvotes will not be counted for the election of directors.
Officers and directors holding an aggregate of 886,420 shares of common
stock, or approximately 4.0% of the outstanding shares, have indicated their
intent to vote in favor of all proposals.
ELECTION OF DIRECTORS
General
FX Energy's Articles of Incorporation provide that the Board of
Directors shall be divided into three classes, with each class as equal in
number as practicable. One class is to be elected each year for a three-year
term. At the Annual Meeting, three directors will be elected to serve three-year
terms.
Votes will be cast, pursuant to authority granted by the enclosed proxy
when properly executed and returned to FX Energy, for the election of the
nominees named below as directors of FX Energy, except as otherwise specified in
the proxy. In the event a nominee shall be unable to serve, votes will be cast,
pursuant to authority granted by the enclosed proxy, for such person as may be
designated by the Board of Directors. The officers of FX Energy are elected at
the Annual Meeting of the Board of Directors to hold office until their
respective successors are elected and qualified. The information concerning the
nominees and directors and their security holdings has been furnished by them to
FX Energy. Biographical information and business experience for the last five
years of each person nominated and for each director whose term of office will
continue after the Annual Meeting is discussed below. (See "Principal
Stockholders.")
Executive Officers, Directors and Nominees
The Board of Directors' nominees for election as directors of FX Energy
at the Annual Meeting are Thomas B. Lovejoy, Scott J. Duncan and Dennis B.
Goldstein. The following table sets forth the name, age, term of directorship,
and principal business experience of each executive officer and director of FX
Energy who has served in such position since FX Energy's last fiscal year:
David N. Pierce, age 55. President and Chairman of the Board of
Directors of FX Energy since 1992. For over three years prior to 1992,
Vice-President and a director of FX Energy's predecessor, Frontier Exploration
Company, co-founded with his brother, Andrew W. Pierce, in January 1989.
Executive capacities with privately held oil and gas companies since 1979. An
attorney with over 25 years of experience in natural resources, securities and
international business law. Graduate of Princeton University and Stanford Law
School. David N. Pierce's term expires in 2002.
Andrew W. Pierce, age 53. Vice-President, Chief Operating Officer and a
director of FX Energy since 1992. For over three years prior to 1992, President
and a director of FX Energy's predecessor, Frontier Exploration Company,
co-founded with his brother, David N. Pierce, in January 1989, which was
acquired by FX Energy in 1992. Over 25 years of experience in oil and gas
exploration, drilling, production and leasing experience, with primary
management and line responsibility for drilling and completion activities in the
western United States. Andrew W. Pierce's term expires in 2003.
Thomas B. Lovejoy, age 64. Vice-chairman of the Board of Directors
since 1995, Chief Financial Officer since 1999 and consultant to FX Energy from
1995 to 1999. Between 1992 and 1999, principal of Lovejoy & Associates, Inc.,
Greenwich, Connecticut, which provided financial strategic advice respecting
private placements, mergers and acquisitions. From 1989 through 1992, Managing
Director and head of natural resource, utility and mining groups of Prudential
Securities, Inc., New York City. From 1980 through 1988, Managing Director and
head of the energy and natural resources group of Paine Webber, Inc. Since 1993,
director of Scaltech, Inc., Houston, Texas, a processor of petroleum refinery
oil waste. Graduate of Massachusetts Institute of Technology and Harvard
Business School. Thomas B. Lovejoy's term expires in 2001.
Jerzy B. Maciolek, age 50. Vice-President of International Exploration
and a director of FX Energy. Employed by FX Energy since September 1995.
Instrumental in FX Energy's exploration efforts in Poland. Member of the
advisory board of the Polish Oil and Gas Company. Prior to becoming a Company
employee, a private consultant for over five years, including consulting on
exploration projects in the western United States, the hydrocarbon potential of
Poland and Kazakhstan and developing applied integrated geophysical
interpretations over gold mines in Nevada, California and Mexico. Graduate of
the Mining and Metallurgy Academy in Krakow, Poland. Jerzy B. Maciolek's term
expires in 2003.
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Scott J. Duncan, age 52. Vice-President Investor Relations, Secretary
and a director of FX Energy. Financial consultant to FX Energy from its
inception through April 1993, when he became FX Energy's Treasurer until
December 1998. Prior to becoming a consultant with FX Energy, an executive and
director of several small businesses in Salt Lake City. Graduate of the
University of Utah School of Business. Scott J. Duncan's term expires in 2001.
Dennis L. Tatum, age 39. Vice-President, Treasurer and a director of FX
Energy. Joined FX Energy in March 1997 as controller prior to becoming Treasurer
in December 1998. From 1989 through 1997, employed by Zilkha Energy in Houston,
Texas, a private oil and gas firm with interests in the Gulf of Mexico. From
1983 through 1989, employed by private and publicly held gas firms in Texas with
domestic and international interests. Graduate of the University of Texas at
Tyler. CPA license from the state of Texas. Series 7 securities license 1994
through 1998. Dennis L. Tatum's term expires in 2002.
Peter L. Raven, age 62. Retired, President of American Ultramar. From
1957 through 1985, various positions with Ultramar, PLC, London, England, a
fully integrated oil and gas company, and its U.K. and American held
subsidiaries, including Chief Financial Officer of Ultramar PLC. From 1985
through 1988, Executive Vice-President, and from 1988 through 1992, President of
American Ultramar. Graduate of the Downside School in England, the Institute of
Chartered Accountants, and the Harvard Business School Advanced Management
Program. Peter L. Raven is a member of FX Energy's Audit Committee and
Compensation Committee. His term expires in 2002.
Jay W. Decker, age 49. President of Patina Oil & Gas Corporation, an
independent oil and gas company, Denver, Colorado, since March 1998, and a
director since May 1996. From September 1995 through March 1998, Executive
Vice-President and a director of Hugoton Energy Corporation, an independent oil
company, Denver, Colorado. Prior to 1995, various executive capacities with
several domestically based oil and gas companies. Graduate of the University of
Wyoming. Jay W. Decker is a member of FX Energy's Audit Committee and
Compensation Committee. His term expires in 2003.
Dennis B. Goldstein, age 55. Vice-President and corporate counsel,
Homestake Mining Company, a Walnut Creek, California based international gold
mining company, since 1976. Instrumental in Homestake's gold exploration
activities conducted in Poland during 1998 and 1999. Graduate of Brown
University, Stanford University Law School and the Executive Program of the
Stanford Graduate School of Business. Member of California Bar Association.
Dennis B. Goldstein is a member of FX Energy's Audit Committee and Compensation
Committee. His term expires in 2001.
Board of Directors Meetings and Committees
Board of Directors
The Board of Directors had four meetings during 2000 and one meeting to
date in 2001. The directors also discussed the business and affairs of FX Energy
informally on numerous occasions throughout the year and took several actions
through unanimous written consents in lieu of meetings. Jerzy B. Maciolek, a
director and Vice President of International Exploration of FX Energy, who is
responsible for FX Energy's day-to-day activities in Poland, consulted with the
members of the Board of Directors informally from time to time during 2000, but
did not attend any formal meeting.
Audit Committee
On November 2, 1999, the Board of Directors formally adopted a written
Audit Committee Charter, which is included in Appendix A of this report. The
Audit Committee of the Board of Directors is composed of three independent
directors appointed by the Board of Directors, Peter L. Raven, Jay W. Decker and
Dennis B. Goldstein. The Audit Committee recommends the selection of independent
auditors, approves the scope of audit and related fees, and reviews financial
reports, audit results, internal accounting procedures, related party
transactions, where appropriate, and programs to comply with applicable
requirements relating to financial accountability. The Audit Committee's
responsibilities also include the
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development of policies and procedures for compliance by FX Energy and its
officers and directors with applicable laws and regulations. The Audit Committee
met once during 2000 and has met once to date in 2001 in addition to several
informal telephone meetings throughout 2000 and early 2001 to review the results
of the audit of the 2000 financial statements of FX Energy by its independent
accountants and other related matters.
Compensation Committee
The Compensation Committee has the responsibility to review performance
of senior management, recommend compensation, and develop compensation
strategies and alternatives throughout FX Energy. The Compensation Committee met
once during 2000 and once to date during 2001 in addition to several informal
telephone meetings throughout 2000 and early 2001 to review FX Energy's
compensation programs and to consider and approve salaries, stock option grants
and bonus payments related to 2000 and 2001. The Compensation Committee of the
Board of Directors is composed of three independent directors appointed by the
Board of Directors, Peter L. Raven, Jay W. Decker and Dennis B. Goldstein.
Rights Redemption Committee
In connection with the adoption of a Stockholder Rights Plan, the Board
of Directors formed a Rights Redemption Committee during 1997 to perform certain
functions in accordance with such plan. The Rights Redemption Committee is
comprised of five directors appointed by the Board of Directors, David N.
Pierce, Andrew W. Pierce, Thomas B. Lovejoy, Peter L. Raven and Jay W. Decker.
The Rights Redemption Committee has not met.
Vote Required
Directors are elected by the affirmative vote of the holders of a
plurality of the shares of common stock voted at the Annual Meeting. Abstentions
and broker nonvotes will not be counted in the election of directors.
The Board of Directors recommends a vote "FOR" the election of the
nominees of management, Thomas B. Lovejoy, Scott J. Duncan and Dennis B.
Goldstein, as directors of FX Energy, to serve in such capacities until the
expiration of their term and until their successors are elected and qualified.
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Certain Relationships and Related Transactions
Unless otherwise indicated, the terms of the following transactions
between related parties were not determined as a result of arm's-length
negotiations.
Consulting Agreement
FX Energy has engaged Dennis B. Goldstein to provide special legal
services from time to time, not to exceed an aggregate of $60,000 per year.
Officer Option Exercises and Loans to Officers
On February 17, 1998, two of FX Energy's officers exercised options to
purchase 300,000 shares of FX Energy's common stock at $1.50 per share that were
scheduled to expire on May 6, 1998. The officers paid for the cost of exercising
the options by utilizing a contractual bonus of $100,000 each issued to them
during 1997 and signing a full recourse note payable to FX Energy for $125,000
each with interest accrued at 7.7%. On April 10, 1998, in consideration of the
agreement of the two officers to not sell FX Energy's common stock in market
transactions, FX Energy agreed to advance the officers, on a nonrecourse basis,
additional funds to cover their tax liabilities and other considerations. As of
December 31, 1999, the officers had been advanced a total amount of $1,838,000.
The carrying value of the notes receivable from officers was $773,000 as of
December 28, 2000, including principal of $1,838,000 and accrued interest of
$339,000, which was reduced by an impairment allowance of $1,404,000 based on
the market value of 233,340 shares of FX Energy's common stock held as
collateral. On December 28, 2000, the officers surrendered the collateralized
shares to FX Energy in return for the cancellation of the notes receivable from
officers, and FX Energy recorded 233,340 shares of treasury stock at a cost of
$773,000.
Stock Option Extensions
On August 4, 2000, FX Energy extended the term of options and warrants
to purchase 678,000 shares of the Company's common stock that were to expire
during 2000 for a period of two years, with a one-year vesting period. In
accordance with FIN 44 "Accounting for Certain Transactions Involving Stock
Compensation," FX Energy incurred deferred compensation cost of $1.6 million,
including $1.0 million covering the intrinsic value applicable to 500,000
options held by executives, $166,000 covering the intrinsic value applicable to
78,000 options held by nonexecutive employees, and $378,000 covering the fair
market value calculated using the Black-Scholes model for 100,000 warrants held
by a consultant, to be amortized to expense over the one-year vesting period.
On April 5, 2001, FX Energy extended the term of options to purchase
125,000 shares of the Company's common stock that were to expire during 2001 for
a period of two years, with a one-year vesting period. FX Energy incurred
deferred compensation cost of $218,750, including $175,000 covering the
intrinsic value applicable to 100,000 options held by an executive and $43,750
covering the intrinsic value applicable to 25,000 options held by an
nonexecutive employee, to be amortized to expense over the one-year vesting
period.
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Principal Stockholders
The following table sets forth, as of the Record Date, the name and
shareholdings of each person who owns of record, or was known by FX Energy to
own beneficially, 5% or more of the common stock currently outstanding; the name
and shareholdings of each director; and the shareholdings of all executive
officers and directors as a group. Unless otherwise indicated, all shares
consist of common stock, and all such shares are owned beneficially and of
record by the named person or group. Options include only vested amounts;
unvested options are excluded:
Principal Stockholders, Officers and Directors
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Nature of Ownership Percentage of Ownership(2)
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Common Common
Beneficial Owner Stock Options Total(1) Stock Options(3) Total
- ------------------------------ ----------------------------------------------------- ---------- -----------
David N. Pierce(4).......... 70,550 665,000 735,550 0.3% 2.9% 3.2%
Andrew W. Pierce............ 65,103 660,001 725,104 0.3 2.9 3.2
Thomas B. Lovejoy(5)........ 527,367 260,001 787,368 2.4 1.2 3.5
Jerzy B. Maciolek........... -- 310,001 310,001 0.0 1.4 1.4
Scott L. Duncan(6).......... 175,500 150,001 325,501 0.8 0.7 1.5
Dennis L. Tatum............. 2,500 95,201 97,701 0.0 0.4 0.4
Peter L. Raven.............. 40,000 19,334 59,334 0.2 0.1 0.3
Jay W. Decker............... -- 19,334 19,334 0.0 0.1 0.1
Dennis B. Goldstein(7)...... 5,400 5,334 10,734 0.0 0.0 0.0
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All executive officers and
directors as a group
(nine persons)............. 886,420 2,184,207 3,070,627 4.0% 8.9% 12.9%
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(1) Except as otherwise noted, shares are owned beneficially and of record and
such record stockholder has sole voting, investment and dispositive power.
(2) Calculations of total percentages of ownership outstanding for each
individual assumes the exercise of currently vested options held by that
individual to which the percentage relates. Percentages calculated for
totals of all executive officers and directors as a group assume the
exercise of all vested options held by the indicated group.
(3) These vested options give the holders the right to acquire shares of common
stock at prices ranging from $1.50 to $10.25 per share with various
expiration dates ranging from August 2001 to December 2007.
(4) Includes 50,000 shares held by David N. Pierce as custodian for minor
children. Mr. Pierce is deemed to hold or share voting and dispositive
power over all of such shares. Excludes 14,000 shares held by Mr. Pierce's
wife, Mary Phillips, and 2,000 shares held by Mary Phillips as custodian
for minor children, of which Mr. Pierce disclaims beneficial ownership.
(5) Includes 41,000 shares held in trust for the benefit of Thomas B. Lovejoy's
children, 104,500 shares held in Mr. Lovejoy's IRA account, 10,000 shares
held by Mr. Lovejoy's spouse's IRA account, 200,000 shares held by Lovejoy
& Associates, Inc. (of which Mr. Lovejoy is sole owner), and 17,500 shares
owned by Lovejoy & Associates Profit Sharing Plan. Mr. Lovejoy is deemed to
hold dispositive power over all of such shares.
(6) Includes 118,500 shares held by Scott J. Duncan jointly with his wife,
Cathy H. Duncan; 6,500 shares held solely by Cathy H. Duncan; and 50,500
shares held by Cathy Duncan as custodian for minor children. Mr. Duncan is
deemed to hold or share voting and dispositive power over all of such
shares.
(7) Includes 400 shares held by Dennis B. Goldstein as custodian for a minor
child. Mr. Goldstein is deemed to hold or share voting and dispositive
power over all of such shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires FX Energy's directors and executive officers, and persons who own more
than 10% of a registered class of FX Energy's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of equity securities of FX Energy. Officers, directors
and greater than 10% stockholders are required to furnish FX Energy with copies
of all Section 16(a) forms they file.
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to FX Energy during or respecting its last fiscal year ended December
31, 2000, no person who, at any time during the
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most recent fiscal year, was a director, officer, beneficial owner of more than
10% of any class of equity securities of FX Energy, or any other person known to
be subject to Section 16 of the Exchange Act failed to file, on a timely basis,
reports required by Section 16(a) of the Exchange Act, except that one report
filed by David N. Pierce on January 9, 2001, omitted the previously reported
indirect ownership of 2,000 shares held of record by his spouse for the benefit
of minor children, but with respect to which he disclaims beneficial ownership.
Executive Compensation
Summary Compensation
The following table sets forth, for the last three fiscal years of FX
Energy, the annual and long-term compensation earned by, awarded to, or paid to
the person who was Chief Executive Officer of FX Energy and each of the five
other highest compensated executive officers of FX Energy as of the end of the
last fiscal year (the "Named Executive Officers"):
Long-Term Compensation
Annual Compensation Awards Payouts
--------------------------------- --------------------- -----------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities All
Restricted Underlying Other
Year Other Annual Stock Options/ LTIP Compen-
Name and Principal Ended Salary Bonus Compensation Award(s) SARs Payouts sation
Position Dec. 31 ($)(1) ($)(2) ($) ($) (no.) (3) ($) ($)(4)
- ------------------------------ ----------- ---------------------------------------------- -----------------
David N. Pierce 2000 $218,568 $ 152,600 $ -- -- 60,000 -- $10,000
President 1999 197,466 242,983 -- -- 60,000 -- 7,409
(CEO) 1998 185,600 185,760 100,000(5) -- 60,000 -- --
Andrew W. Pierce 2000 $162,655 $ 97,800 $ -- -- 50,000 -- $10,000
Vice-President 1999 146,951 151,307 -- -- 50,000 -- 9,228
(COO) 1998 134,400 115,200 100,000(5) -- 50,000 -- --
Thomas B. Lovejoy 2000 $162,655 $ 89,650 $ -- -- 50,000 -- $10,000
Vice-Chairman 1999 146,951 151,307 --(6) -- 50,000 -- 5,878
(CFO) 1998 -- -- --(6) -- 50,000 -- --
Jerzy B. Maciolek 2000 $162,655 $ 97,800 $100,000(7) -- 50,000 -- $10,000
Vice-President 1999 146,951 151,307 100,000(7) -- 50,000 -- 7,149
Exploration 1998 134,400 115,200 100,000(7) -- 50,000 -- --
Scott L. Duncan 2000 $127,075 $ 31,750 $ -- -- 50,000 -- $ 8,866
Vice-President 1999 114,806 118,209 -- -- 50,000 -- 7,325
Secretary 1998 105,000 90,000 -- -- 50,000 -- --
Dennis L. Tatum 2000 $127,075 $ 31,750 $ -- -- 50,000 -- $ 8,866
Vice-President 1999 108,139 118,209 -- -- 50,000 -- 3,647
Treasurer 1998 88,000 60,000 -- -- 50,000 -- --
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(1) All 2000 salary amounts include an accrued 7.5% raise effective January 1,
2000, based on each individual's annual salary in effect as of December 31,
1999, as approved by the Board of Directors on November 1, 1999. The 7.5%
raise effective January 1, 2000, had not been paid as of the date of this
proxy statement.
(2) As of the date of this proxy statement, none of the 2000 bonuses had been
paid. All 1999 bonuses were approved by FX Energy's Board of Directors on
November 1, 1999. On February 15, 2000, 25% of the approved 1999 bonus was
paid. The remaining 75% of the approved 1999 bonus had not been paid as of
the date of this proxy statement.
(3) Includes stock options only.
(4) Includes FX Energy's employer contributions under FX Energy's 401(k) plan.
No material benefits are payable on retirement under this plan, which was
initiated in mid-1999.
(5) During 1998, David N. Pierce and Andrew W. Pierce each applied a $100,000
bonus, which was awarded to them during 1997, against their exercise of
stock options for 150,000 shares each. (See "Certain Relationships and
Related Transactions.")
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(6) Excludes $60,000, $200,000 and $120,000 paid during 1999, 1998 and 1997,
respectively, to Lovejoy & Associates, a consulting firm owned by Mr.
Lovejoy, prior to Mr. Lovejoy becoming FX Energy's chief financial officer
during 1999.
(7) During 1998, 1999 and 2000, Jerzy B. Maciolek was awarded a $100,000
contractual bonus each year to be used against future stock option
exercises or payable in cash in the event his employment with FX Energy is
terminated in accordance with his employment contract. There is no such
provision in Mr. Maciolek's employment contract for 2001. As of December
31, 2000, FX Energy had accrued a contractual bonus of $300,000, as Mr.
Maciolek had not used the contractual bonus.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information respecting all individual
grants of options and stock appreciation rights ("SARs") made during the last
completed fiscal year to the Named Executive Officers of FX Energy:
Individual Grants
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(a) (b) (c)(1) (d) (e)
Percent of Potential Realizable
Number of Total Options/ Value at Assumed Rates
Securities SARs Granted Exercise of Share Price
Underlying to Employees or Base Appreciation for Option
Options/SARs During Price Expiration Term ($)
Name Granted (#) Fiscal Year ($/share) Date 5% 10%
- ------------------------ --------------- -------------- ---------- ---------- ------------ ------------
David N. Pierce........ 60,000 12.5% $4.0625 10/18/07 $99,231 $231,250
Andrew W. Pierce....... 50,000 10.5 4.0625 10/18/07 82,692 192,708
Thomas B. Lovejoy...... 50,000 10.5 4.0625 10/18/07 82,692 192,708
Jerzy B. Maciolek...... 50,000 10.5 4.0625 10/18/07 82,692 192,708
Scott J. Duncan........ 50,000 10.5 4.0625 10/18/07 82,692 192,708
Dennis L. Tatum........ 50,000 10.5 4.0625 10/18/07 82,692 192,708
- ----------------------
(1) Includes stock options granted during 2000 only. Excludes stock options
expiring during 2000 that were extended for a period of two years with a
one year vesting period on August 2, 2000.
Aggregate Option/SAR Exercises in Last Fiscal Year and Year-end Option/SAR
Values
The following table sets forth information respecting the exercise of
options and SARs during the last completed fiscal year by the Named Executive
Officers and the fiscal year-end values of unexercised options and SARs:
(a) (b) (c) (d) (e)
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options/SARs at Fiscal In-the-Money Options/SARs
on Value Year-End (#) at Fiscal Year-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable(1) Unexercisable(2)
------------------------ ----------- ----------- ------------------------- ---------------------------
David N. Pierce....... -- -- 665,000 / 220,000(3) $ 281,250 / $56,250
Andrew W. Pierce...... -- -- 660,001 / 149,999(4) 281,250 / 28,125
Thomas B. Lovejoy..... -- -- 360,001 / 249,999(5) 112,500 / 84,375
Jerzy B. Maciolek..... -- -- 310,001 / 249,999(6) -- / 309,375
Scott J. Duncan....... -- -- 150,001 / 149,999(7) -- / 28,125
Dennis L. Tatum....... -- -- 95,201 / 99,999(8) -- / --
- ----------------------
(1) Includes stock options only.
(2) Based on the closing sales price for the common stock of $3.5625 on
December 31, 2000.
(3) Consists of options to purchase common stock as follows: 50,000 shares at
$8.875 per share expiring on November 5, 2001; 100,000 shares at $3.00 per
share exercisable on August 3, 2001, and expiring on August 3, 2002;
500,000 shares at $3.00 per share expiring on June 9, 2004; 55,000 shares
at $6.625 per share expiring on December 1, 2004; 60,000 shares at $8.625
per share exercisable in installments of 20,000 shares beginning on
November 10, 1999, and expiring on November 10, 2005; 60,000 shares at
8
$5.75 per share exercisable in installments of 20,000 shares beginning on
November 1, 2000, and expiring on November 1, 2006; and 60,000 shares at
$4.0625 per share exercisable in installments of 20,000 shares beginning on
October 18, 2001, and expiring on October 18, 2007.
(4) Consists of options to purchase common stock as follows: 65,000 shares at
$8.875 per share expiring on November 5, 2001; 50,000 shares at $3.00 per
share exercisable on August 3, 2001, and expiring on August 3, 2002;
500,000 shares at $3.00 per share expiring on June 9, 2004; 45,000 shares
at $6.625 per share expiring on December 1, 2004; 50,000 shares at $8.625
per share exercisable in installments of 20,000 shares beginning on
November 10, 1999, and expiring on November 10, 2005; 50,000 shares at
$5.75 per share exercisable in installments of 20,000 shares beginning on
November 1, 2000, and expiring on November 1, 2006; and 50,000 shares at
$4.0625 per share exercisable in installments of 20,000 shares beginning on
October 18, 2001, and expiring on October 18, 2007.
(5) Consists of options to purchase common stock as follows: 100,000 shares at
$3.00 per share expiring on August 3, 2001 (on April 5, 2001, the
expiration date of such options was extended to April 9, 2003); 65,000
shares at $8.875 per share expiring on November 5, 2001; 100,000 shares at
$3.00 per share expiring on August 3, 2002; 150,000 shares at $3.00 per
share exercisable on August 3, 2001 and expiring on August 3, 2002; 45,000
shares at $6.625 per share expiring on December 1, 2004; 50,000 shares at
$8.625 per share exercisable in installments of 20,000 shares beginning on
November 10, 1999, and expiring on November 10, 2005; 50,000 shares at
$5.75 per share exercisable in installments of 20,000 shares beginning on
November 1, 2000, and expiring on November 1, 2006; and 50,000 shares at
$4.0625 per share exercisable in installments of 20,000 shares beginning on
October 18, 2001, and expiring on October 18, 2007.
(6) Consists of options to purchase common stock as follows: 65,000 shares at
$8.875 per share expiring on November 5, 2001; 150,000 shares at $1.50 per
share expiring on August 3, 2002; 50,000 shares at $8.25 per share expiring
on May 12, 2004; 100,000 shares at $7.25 expiring on July 18, 2004; 45,000
shares at $6.625 per share expiring on December 1, 2004; 50,000 shares at
$8.625 per share exercisable in installments of 20,000 shares beginning on
November 10, 1999, and expiring on November 10, 2005; 50,000 shares at
$5.75 per share exercisable in installments of 20,000 shares beginning on
November 1, 2000, and expiring on November 1, 2006; and 50,000 shares at
$4.0625 per share exercisable in installments of 20,000 shares beginning on
October 18, 2001, and expiring on October 18, 2007.
(7) Consists of options to purchase common stock as follows: 55,000 shares at
$8.875 per share expiring on November 5, 2001; 50,000 shares at $3.00 per
share exercisable on August 3, 2001 and expiring on August 3, 2002; 45,000
shares at $6.625 per share expiring on December 1, 2004; 50,000 shares at
$8.625 per share exercisable in installments of 20,000 shares beginning on
November 10, 1999, and expiring on November 10, 2005; 50,000 shares at
$5.75 per share exercisable in installments of 20,000 shares beginning on
November 1, 2000, and expiring on November 1, 2006; and 50,000 shares at
$4.0625 per share exercisable in installments of 20,000 shares beginning on
October 18, 2001, and expiring on October 18, 2007.
(8) Consists of options to purchase common stock as follows: 10,000 shares at
$7.25 per share expiring on September 12, 2004; 35,200 shares at $6.625 per
share expiring on December 1, 2004; 50,000 shares at $8.625 per share
exercisable in installments of 20,000 shares beginning on November 10, 1999
and expiring on November 10, 2005; 50,000 shares at $5.75 per share
exercisable in installments of 20,000 shares beginning on November 1, 2000,
and expiring on November 1, 2006; and 50,000 shares at $4.0625 per share
exercisable in installments of 20,000 shares beginning on October 18, 2001,
and expiring on October 18, 2007.
Directors' Compensation
FX Energy reimburses its directors for costs incurred by them in
attending meetings of the Board of Directors and its committees. FX Energy does
not pay any separate compensation to employees who serve on the Board of
Directors.
During 2000, FX Energy's outside directors, Peter L. Raven, Jay W.
Decker and Dennis B. Goldstein, were paid cash fees of $18,000 each and granted
options to purchase 10,000 shares of FX Energy's common stock each at an
exercise price of $4.0625 per share. The exercise price for each of the
foregoing options was equal to the market price of the common stock as of the
date of grant. Effective July 1, 2000, FX Energy's outside director fees were
increased to $20,000 per year by the Board of Directors. In light of the
Company's cash position at the end of 2000, the outside director fees continue
to be paid at the rate of $18,000 per year until the Company obtains additional
funding. The unpaid increase was accrued for in FX Energy's financial statements
dated December 31, 2000. In addition to the above amounts, Dennis B. Goldstein
was paid a cash fee of $2,100 for special legal services.
Employment Agreements, Termination of Employment, and Change in Control
FX Energy has entered into executive employment agreements with each of
the Named Executive Officers, except for Thomas B. Lovejoy. Each employment
agreement is for a three-year term and is automatically extended for an
additional year on the anniversary date of such agreement. The agreements
provided for annual salaries during 2000 of $218,568 for David N. Pierce,
$162,655 for Andrew W. Pierce, $162,655 for Jerzy B. Maciolek; $127,075 for
Scott J. Duncan, and $127,075 for Dennis L. Tatum. In addition, the Named
Executive Officers may receive such bonuses or incentive compensation as the
Board of Directors or Compensation Committee may deem appropriate. Each
agreement provides that the Board of Directors or Compensation Committee may
increase the base salary under the agreements at the
9
beginning of each year, with such increases to be at least 7.5% for David N.
Pierce, Andrew W. Pierce and Scott J. Duncan. Each executive officer is entitled
under his respective employment agreement to certain continuation of
compensation in the event the agreement is terminated upon death or disability
or FX Energy terminates the agreement other than for cause.
In addition to the foregoing terms, Mr. Maciolek's employment agreement
provides for an annual bonus of $100,000 payable in cash, stock or options, as
may be determined by the Board of Directors or the Compensation Committee, based
on the progress of projects on which Mr. Maciolek is primarily engaged. On each
of May 12, 1999, 2000 and 2001, Mr. Maciolek was entitled to receive a $100,000
contractual bonus that may be applied against the exercise of his options to
purchase common stock. There is no contractual bonus provision in Mr. Maciolek's
employment agreement for 2001.
Each executive employment agreement provides that, on the occurrence of
a change of control event, the employee may terminate the agreement. In the
event of such termination, the employee is entitled to a termination payment
equal to 150% of his annual salary (100% in the cases of Jerzy B. Maciolek and
Dennis L. Tatum), and the value of previously granted employee benefits.
Additionally, FX Energy is required to maintain certain benefits and, in the
case of David N. Pierce, Andrew W. Pierce and Scott J. Duncan, repurchase
outstanding options. Options held by Jerzy B. Maciolek and Dennis L. Tatum will
immediately vest on such termination. For purposes of the foregoing, a change of
control shall exist on any of the following events: (i) the sale by FX Energy of
all or substantially all of its assets; (ii) a transaction or series of
transactions resulting in a single person or group of persons under common
control owning 25% of the outstanding common stock; (iii) a change in the
composition of the Board of Directors so that more than 50% of the directors are
persons neither nominated nor elected by the Board of Directors or any
authorized committee; (iv) the decision by FX Energy to terminate its business
and liquidate its assets; or (v) a merger or consolidation of FX Energy in which
FX Energy's existing stockholders own less than 50% of the outstanding voting
shares of the surviving entity.
Options Granted to Officers, Directors, Employees and Consultants
FX Energy currently has outstanding options to purchase an aggregate of
4,312,417 shares that have been granted to officers, directors, employees and
consultants of FX Energy. Of such options, 1,693,234 contain vesting limitations
contingent on continuing association with FX Energy. These options are
exercisable at prices ranging between $1.50 and $10.25 per share. Options issued
to executive officers and directors contain terms providing that in the event of
a change in control of FX Energy and at the election of the optionee, the
unexercised options will be canceled, and FX Energy will pay to the optionee an
amount equal to the number of unexercised options multiplied by the amount by
which the fair market value of the common stock as of the date preceding the
change of control event exceeds the option exercise price. The grants of options
to officers and directors were not the result of arm's-length negotiations.
10
Report of the Compensation Committee
General
Under the supervision of the Compensation Committee, FX Energy has
developed and implemented compensation policies, plans and programs that seek to
enhance FX Energy's ability to recruit and retain qualified executive and other
personnel, including incentive bonuses and stock option and award programs that
create long-term incentive for executive management and key employees by
enabling them to acquire an equity stake in FX Energy.
FX Energy's basic compensation practices consist of salary, bonus and
stock options. In developing and implementing compensation policies and
procedures, the Compensation Committee's objectives are to provide rewards for
the long-term value of individual contribution and performance to FX Energy,
provide rewards that are both recurring and nonrecurring and both financial and
nonfinancial, provide for fairness and consistency, pay competitively, conduct
an effective performance review process, and meet all legal requirements.
The functions of the Compensation Committee are to:
o review and recommend to the Board of Directors the amount and
manner of compensation of the Chief Executive Officer for
final determination by the Board of Directors;
o consider the recommendations of the Chief Executive Officer
respecting the amount and manner of compensation of the other
executive officers and recommend to the Board of Directors the
amount and manner of compensation for such executive officers
for final determination by the Board of Directors;
o consult with the Chief Executive Officer respecting the amount
and manner of compensation for other executive level
personnel;
o counsel the Chief Executive Officer in personnel matters,
management organization and long-range management succession
or planning;
o support an employment environment of equal opportunity without
regard to discrimination on the basis of age, race, religion,
sex or national origin;
o prepare for inclusion in FX Energy's proxy or information
statement for its annual stockholders' meeting disclosure of
the Compensation Committee's compensation policies applicable
to executive officers, including the specific relationship of
corporate performance to executive compensation; and
o develop and administer FX Energy's stock option and stock
award plans for executive officers and other employees.
The Compensation Committee met in November 1999, October 2000 and
February 2001 to consider base salaries for 2000, year-end option awards for
2000, bonuses for 2000, and base salaries for 2001. The committee discussed with
management in detail the performance of the Company and its executive officers,
the Company's upcoming capital requirements, discretionary expenditures and
alternative sources of capital.
2000 Compensation Review for Executives and Employees other than the Chief
Executive Officer
The Compensation Committee recommended and the Board of Directors
approved the 2000 year-end raise and 2000 bonus for all executive officers other
than the Chief Executive Officer by reference to an informal overview of
compensation at similar companies, adjusted as the Compensation Committee deemed
appropriate for variations in geographic location, size, emphasis on exploration
as compared to the level of production and reserves, and profitability. Because
of the foregoing variations, the group of similar firms reviewed by the
Compensation Committee for this purpose did not include all of the firms
included in the significantly larger peer group whose stock performance is
reflected in the Performance Graph -
11
Comparison of Five-Year Cumulative Total Returns included within this document.
In reviewing the performance of the Company and its executives, the Compensation
Committee considered the extent to which the Company and its executives had
accomplished objectives for the Company developed by discussion between the
Compensation Committee and management, the extent to which the Company's
successes and failures in meeting objectives was or was not reasonably within
the control or responsibility of FX Energy's management, and the recommendations
of management. In respect to the 2000 bonuses, the Compensation Committee
emphasized FX Energy's continued progress towards discovering, developing and
marketing gas reserves in Poland, acquiring additional oil and gas assets in
Poland, the individual performance of each executive, and in general, expanding
FX Energy's strategic alliances and industry position. Based upon its
discussions with management and the ongoing activities of FX Energy, the
Compensation Committee recommended and the Board of Directors approved the 2000
base salary and 2000 bonuses as shown in the "Executive Compensation" table
included within this proxy statement.
In light of the Company's cash position at the end of 2000, the
committee recommended to the Board of Directors that increases be accrued and
that base salaries continue to be paid in 2001 at the same level as 1999 until
the Company obtained additional funding. The Compensation Committee established
the 2000 bonuses on February 13, 2001, and at that time similarly recommended
that such bonuses not be paid until the Company obtained additional funding.
Both of the Compensation Committee's recommendations were approved and
implemented by the Board of Directors. See notes 1 and 2 to the table included
under "Executive Compensation." Accordingly, all unpaid salary increases and
unpaid bonus amounts have been accrued for in FX Energy's financial statements
dated December 31, 2000.
The Compensation Committee intends that stock options serve as a
significant component of the Company's total compensation package in order to
retain employees and to focus their efforts on enhancing stockholder value.
Management proposed, the Compensation Committee recommended and the Board of
Directors approved the year 2000 stock option awards for executives (other than
the Chief Executive Officer whose stock options are discussed below) at the same
level as 1999. On October 18, 2000, acting on recommendation of the Compensation
Committee, the Board of Directors approved grants to 41 individuals, including
37 employees, one consultant and three outside directors, to purchase a total of
501,750 shares at a price of $4.0625 per share, the closing price of FX Energy's
common stock on such date. Included in this number are options to purchase
310,000 shares granted to executive officers, as described above. All options
granted will vest in three equal increments, commencing on the first anniversary
of grant, with a seven-year exercise period.
2000 Chief Executive Officer Compensation Review
The Compensation Committee recommended and the Board of Directors
approved 2000 year-end raise and 2000 bonus of the Chief Executive Officer by
reference to the informal overview of similar companies, adjusted as the
Compensation Committee deemed appropriate for variations in geographic location,
size, emphasis on exploration as compared to the level of production and
reserves, and profitability. Because of the foregoing variations, the group of
similar firms reviewed by the Compensation Committee did not include all of the
firms included in the peer group whose stock performance is reflected in the
Performance Graph - Comparison of Five-Year Cumulative Total Returns included
within this document. In consideration of the same factors referred to above in
the discussion of other executive salaries as they pertain to the Chief
Executive Officer, the Compensation Committee recommended and the Board of
Directors approved the 2000 base salary and 2000 bonus for the Chief Executive
Officer as shown in the "Executive Compensation" table included within this
proxy statement.
The 2000 bonus for the Chief Executive Officer was awarded on the same
basis as applied to other executives, except that objectives against which
performance was measured also included continuing the development of FX Energy's
relationships with the government of Poland and FX Energy's strategic partners,
FX Energy's progress towards discovering, developing and marketing gas reserves
in Poland, acquiring additional oil and gas assets in Poland, and expanding FX
Energy's strategic alliances and industry position generally. Efforts to obtain
additional funding, conceiving and implementing programs to achieve growth,
maintaining compliance with regulatory requirements, achieving within the
stockholder and the broader business community a high regard for the integrity
of FX Energy and its management, were
12
also considered, without any specific weight assigned to any specific factors.
The Compensation Committee also weighed accomplishments and progress against
various delays and impediments encountered and considered the degree to which
material events and factors were or were not within the control of the Chief
Executive Officer. Due to the nature of the Company's business, the Compensation
Committee did not establish objective criteria in the determination of
compensation for the Chief Executive Officer.
In light of the Company's cash position at the end of 2000, the
committee recommended to the of Directors that the Chief Executive Officer's
salary continue to be paid in 2001 at the same level as 1999 until the Company
obtained additional funding. The Compensation Committee established the Chief
Executive Officer's 2000 bonus on February 13, 2001, and at that time similarly
recommended that such bonus not be paid until the Company obtained additional
funding. Both of the Compensation Committee's recommendations were approved and
implemented by the Board of Directors. See notes 1 and 2 to the table included
under "Executive Compensation." Accordingly, the unpaid salary increase and
unpaid bonus amounts have been accrued for FX Energy's financial statements
dated December 31, 2000.
The Compensation Committee intends that stock options serve as a
significant component of the Chief Executive Officer's total compensation
package in order to retain his efforts on behalf of the Company and to focus his
efforts on enhancing stockholder value. On October 18, 2000, upon the
recommendation of the Compensation Committee, the Board of Directors awarded the
Chief Executive Officer options to purchase 60,000 shares of common stock at a
price of $4.0625 per share, the closing price of FX Energy's common stock on
such date. The options granted will vest in three equal increments, commencing
on the first anniversary of grant, with a seven-year exercise period.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a present or former officer
of FX Energy or any subsidiary. There are no other interlocks. No member the
Compensation Committee, his family, or his affiliate was a party to any material
transactions with FX Energy or any subsidiary since the beginning of the last
completed fiscal year. No executive officer of FX Energy serves as an executive
officer, director, or member of a Compensation Committee of any other entity, an
executive officer or director of which is a member of the Compensation Committee
of FX Energy.
The foregoing report has been furnished by: Dennis B. Goldstein
Jay W. Decker
Peter L. Raven
13
Audit Committee Report
The Audit Committee oversees the financial reporting process for FX
Energy on behalf of the Board of Directors. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the annual financial statements
included in the annual report and filed with the Securities and Exchange
Commission. The Audit Committee also reviewed the unaudited financial statements
filed with the Company's quarterly reports on Form 10-Q.
In accordance with Statements of Accounting Standards No. 61, 89 and 90
discussions were held with management and the independent auditors regarding the
acceptability and the quality of the accounting principles used in the financial
statements. These discussions included the clarity of the disclosures made
therein, the underlying estimates and assumptions used in the financial
reporting, and the reasonableness of the significant judgments and management
decisions made in developing the financial statements. In addition, the Audit
Committee has discussed with the independent auditors their independence from FX
Energy and its management, including the matters in the written disclosures
required by Independence Standards Board Standard No. 1.
The Audit Committee has also met and discussed issues related to the
overall scope and objectives of the audits conducted, the internal controls used
by FX Energy, and the selection of FX Energy's independent auditors with FX
Energy management and its independent auditors.
Pursuant to the reviews and discussions described above, 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 SEC.
The foregoing report has been furnished by: Dennis B. Goldstein
Jay W. Decker
Peter L. Raven
14
Five-Year Performance Comparison Graph
The following graph provides an indicator of cumulative total
stockholder returns for FX Energy as compared with the total returns index for
the Nasdaq Stock Market (U.S. companies) and an industry peer group for the past
five years. The industry peer group selected by FX Energy is comprised of
companies in the United States whose stock is traded on Nasdaq and which are
included in Standard Industrial Code 131, or SIC 131, entitled "Crude Petroleum
and Natural Gas." For the five-year period shown on the graph, the total number
of industry peer group distinct issues is 101 and the total active issues on
December 29, 2000, was 42. The industry peer group comprised of firms in SIC 131
is different than the group of firms the Compensation Committee used for
comparison purposes in determining executive compensation. The Compensation
Committee selected firms from SIC 131 that were similar to FX Energy in terms of
geographic location and size, with emphasis on exploration as compared to the
level of production and reserves, and profitability. For purposes of comparing
five-year cumulative total stockholder returns, FX Energy believes that it is
appropriate to provide five-year cumulative total stockholder returns data for
the industry peer group based on a broader industrial classification code group
involving a larger number of firms.
Comparison of Five-Year Cumulative Total Returns
The plot points for the above graph are detailed in the following
table:
12/1995 12/1996 12/1997 12/1998 12/1999 12/2000
---------- --------- ---------- -------------------- ----------
FX Energy......................................100.00 450.00 325.00 506.25 268.75 178.15
Nasdaq stock market total return index.........100.00 123.14 150.70 212.51 323.73 237.62
Industry peer group (SIC 1310 - 1319)..........100.00 140.93 137.74 67.11 69.19 143.31
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are weighted on a daily basis, using the market capitalization
of the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. FX Energy began trading on the Nasdaq market in June 1996; from January
1995 until June 1996, FX Energy traded on the Electronic Bulletin Board
under the symbol FOEX.
15
APPROVAL OF 2000 STOCK OPTION AND AWARD PLAN
General
On November 1, 2000, the Board of Directors of FX Energy approved the
terms of the 2000 Stock Option and Award Plan (the "2000 Plan"). In order for
certain 2000 Plan provisions relating to incentive stock options to be
effective, it must be approved by the stockholders of FX Energy and is being
submitted for such approval pursuant to this proxy statement.
Plan Summary
The Board of Directors of FX Energy believes that it is important that
senior management as well as other employees and individuals who contribute to
the success of FX Energy have a stake in the enterprise as stockholders.
Consistent with this belief, the award of stock options has been and will
continue to be an important element of their compensation program. The Board of
Directors and the stockholders previously approved and adopted the 1995 Stock
Option and Award Plan, the 1996 Stock Option and Award Plan, the 1997 Stock
Option and Award Plan, the 1998 Stock Option and Award Plan and the 1999 Stock
Option and Award Plan. Through December 31, 2000, options to purchase an
aggregate of 2,474,917 shares had been granted under such plans, leaving 25,083
shares available under such plans. As the award of stock options is an important
element of FX Energy's compensation program, the Board of Directors believes
that another plan should be adopted.
The 2000 Plan is intended to (a) attract competent directors, executive
personnel and other employees, (b) ensure the retention of the services of
existing directors, executive personnel and employees, and (c) provide
incentives to all of such personnel to devote the utmost effort and skill to the
advancement and betterment of FX Energy by permitting them to participate in
ownership and thereby permitting them to share in increases in the value which
they help produce.
The 2000 Plan is to be administered either by the Board of Directors or
by the appropriate committee to be appointed from time to time by such Board of
Directors. Currently, the Compensation Committee recommends actions respecting
the 2000 Plan to the Board of Directors. Awards granted under the 2000 Plan may
be incentive stock options ("ISOs") as defined in the Internal Revenue Code,
appreciation rights, options that do not qualify as ISOs, or stock bonus awards
that are awarded to employees, officers and directors, who, in the opinion of
the board or the committee, have contributed or are expected to contribute
materially to the success of FX Energy. In addition, at the discretion of the
Board of Directors or the committee, options or bonus stock may be granted to
individuals who are not employees, officers or directors but contribute to the
success of FX Energy.
The exercise price of options granted under the 2000 Plan is to be
determined by the Board of directors or the committee at the time of grant and,
in the case of ISOs, may not be less than 100% of the fair market value of such
capital stock on the date the option is granted (110% of the fair market value
in the case of 10% stockholders). Options granted under the 2000 Plan shall
expire not later than 10 years after the date of grant (five years in the case
of ISOs granted to 10% stockholders). The option price may be paid by cash or,
at the discretion of FX Energy's Board of Directors or committee, by delivery of
shares of common stock of FX Energy already owned by the optionee (valued at
their fair market value at the date of exercise), a fully secured promissory
note, or a combination thereof.
All of the employees, officers and directors of FX Energy are eligible
to participate under the 2000 Plan. A maximum of 600,000 shares are available
for grant under the 2000 Plan. The identification of individuals entitled to
receive awards, the terms of the awards, and the number of shares subject to
individual awards are determined by the Board of Directors or the committee, in
their sole discretion; provided, however, that in no event may the aggregate
fair market value of shares for which an ISO is first exercisable in any
calendar year by any eligible employee exceed $100,000.
The aggregate number of shares with respect to which options or stock
awards may be granted under the 2000 Plan, the number of shares covered by each
outstanding option, and the purchase price per
16
share shall be adjusted for any increase or decrease in the number of issued
shares resulting from a recapitalization, reorganization, merger, consolidation,
exchange of shares, stock dividend, stock split, reverse stock split, or other
subdivision or consolidation of shares. In the case of an ISO, the ratio of the
option price immediately after the change to the fair market value of the stock
subject to the option immediately after the corporation transaction must not be
more favorable to the optionee on a share by share basis than the ratio of the
old option price to the fair market value of the stock subject to the option
immediately before such transaction. All such adjustments shall be made by the
board or the committee, whose good faith determination shall be binding absent
manifest error.
The Board of Directors or the committee may from time to time alter,
amend, suspend or discontinue the 2000 Plan with respect to any shares as to
which options or stock awards have not been granted. However, no such alteration
or amendment (unless approved by the stockholders) shall (a) increase (except
adjustment for an event of dilution) the maximum number of shares for which
options or stock awards may be granted under the 2000 Plan either in the
aggregate or to any eligible employee; (b) reduce (except adjustment for an
event of dilution) the minimum option prices which may be established under the
2000 Plan; (c) extend the period or periods during which options may be granted
or exercised; (d) materially modify the requirements as to eligibility for
participation in the 2000 Plan; (e) change the provisions relating to events of
dilution; or (f) materially increase the benefits accruing to the eligible
participants under the 2000 Plan.
Certain Tax Matters
A participant to whom a nonqualified option is granted will not realize
income at the time of the grant. Upon exercise of the option, the excess of the
fair market value of the stock on the date of exercise over the exercise price
will be taxable to the optionee as ordinary income. The tax basis to the
optionee for the stock acquired is the exercise price plus the amount recognized
as income. FX Energy will be entitled to a deduction equal to the amount of the
ordinary income realized by the optionee in the taxable year, which includes the
end of the optionee's taxable year in which he realizes the ordinary income.
When shares acquired pursuant to the exercise of the option are disposed of, the
holder will realize additional capital gain or loss equal to the difference
between the sales proceeds and his or her tax basis in the stock.
If a participant to whom an option is granted exercises such option by
payment of the exercise price in whole or in part with previously owned shares,
the optionee will not realize income with respect to the number of shares
received on exercise which equals the number of shares delivered by the
optionee. The optionee's basis for the delivered shares will carry over to the
option shares received. With regard to the number of nonqualified option shares
received that exceed the number of shares delivered, the optionee will realize
ordinary income at the time of exercise; the optionee's tax basis in these
additional option shares will equal the amount of ordinary income realized plus
the amount of any cash paid.
Recipients of ISOs will not be required to recognize income at the time
of the grant of the options or at the time of exercise of the options as long as
the stock received on exercise is held for at least two years from the date of
the grant of the ISOs or one year from the date of exercise (although the
difference between the fair market value of the stock and the exercise price
paid at the time of exercise must be taken into account for alternative minimum
tax purposes). If the stock received upon exercise of an ISO is disposed of
prior to the expiration of either of such periods, the optionee will be required
to recognize as ordinary income the amount by which the fair market value of the
stock received at the time of exercise exceeds the exercise price of the ISOs.
Under the 2000 Plan, stock appreciation rights ("SARs") can be granted
at the time an option is granted with respect to all or a portion of the shares
subject to the related option. SARs can only be exercised to the extent the
related option is exercisable and cannot be exercised for the six-month period
following the date of grant, except in the event of death or disability of the
optionee. The exercise of any portion of either the related option or the tandem
SARs will cause a corresponding reduction in the number of shares remaining
subject to the option or the tandem SARs, thus maintaining a balance between
outstanding options and SARs. SARs permit the holder to receive an amount (in
cash, shares, or a combination of cash and shares, as determined by the Board of
Directors at the time of grant) equal to the
17
number of SARs exercised multiplied by the excess of the fair market value of
the shares on the exercise date over the exercise price of the related options.
Under the terms of the 2000 Plan, the Board of Directors or the
committee may also grant stock awards which may, at the discretion of such Board
of Directors or committee, be subject to forfeiture under certain conditions.
Recipients of stock awards will realize ordinary income at the time of the lapse
of any forfeiture provisions equal to the fair market value of the shares less
any amount paid in connection with the issuance (the Board of Directors or the
committee can require the payment of par value at the time of the grant). FX
Energy will realize a corresponding compensation deduction. The holder will have
a basis in the shares acquired equal to any amount paid on exercise plus the
amount of any ordinary income recognized by the holder. On sale of the shares,
the holder will have a capital gain or loss equal to the sale proceeds minus his
or her basis in the shares.
Vote Required
Adoption of the 2000 Plan requires the approval of a majority of the
shares present, in person or represented by proxy, and entitled to vote at the
Annual Meeting. Abstentions and broker nonvotes will have the same legal effect
as a vote against the approval of the 2000 Plan.
The Board of Directors recommends a vote "FOR" the approval of the 2000
Plan. It is intended that, in the absence of contrary specifications, votes will
be cast pursuant to the enclosed proxies for the approval of the 2000 Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
Selection of Auditors
The selection of FX Energy's auditors will not be submitted to the
stockholders for their approval in the absence of a requirement to do so. It is
anticipated that representatives of PricewaterhouseCoopers LLP will be present
at the Annual Meeting and will be provided the opportunity to make a statement,
if they desire to do so, and be available to respond to appropriate questions.
Audit Fees
The aggregate fees billed by PricewaterhouseCoopers, LLP for
professional services rendered for the audit of FX Energy's annual financial
statements for the fiscal year ended December 31, 2000, and for the reviews of
the financial statements included in FX Energy's quarterly reports on Form 10-Q
for that fiscal year were $59,325.
Financial Information Systems Design and Implementation Fees
There were no services performed by PricewaterhouseCoopers, LLP for
professional services rendered for information technology services relating to
FX Energy's financial information systems design and implementation for the
fiscal year ended December 31, 2000.
All Other Fees
The aggregate fees billed by PricewaterhouseCoopers, LLP for services
rendered to FX Energy, other than the services described above under "Audit
Fees" and "Financial Information Systems Design and Implementation Fees," for
the fiscal year ended December 31, 2000, were $56,298. The Audit Committee has
considered whether the provision of the services rendered for financial
information systems design and implementation and other nonaudit matters is
compatible with maintaining PricewaterhouseCoopers LLPs' independence and
concluded that their independence was not impaired by performing such work for
the Company.
18
STOCKHOLDER PROPOSALS
No proposals have been submitted by stockholders of FX Energy for
consideration at the Annual Meeting. It is anticipated that the next annual
meeting of stockholders will be held during May 2002. Stockholders may present
proposals for inclusion in the proxy statement to be mailed in connection with
the 2002 Annual Meeting of Stockholders of FX Energy, provided such proposals
are received by FX Energy no later than December 24, 2001, and are otherwise in
compliance with applicable laws and regulations and the governing provisions of
the Articles of Incorporation and Bylaws of FX Energy.
OTHER MATTERS
Management does not know of any business other than that referred to
herein that may be considered at the Annual Meeting. If any other matters should
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies held by them in
accordance with their best judgment.
In order to assure the presence of the necessary quorum and to vote on
the matters to come before the Annual Meeting, please indicate your choices on
the enclosed proxy and date, sign and return it promptly in the envelope
provided. The signing of a proxy by no means prevents your attending the
meeting.
By Order of the Board of Directors
FX ENERGY, INC.
Scott J. Duncan, Secretary
Salt Lake City, Utah
April 20, 2001
19
APPENDIX A
FX ENERGY, INC.
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 provided by the Company 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 monitor the
Company's financial reporting process and internal control
system;
o review and appraise the audit efforts of the Company's
independent accountants and accounting department;
o provide an open avenue of communication among the independent
accountants, financial and senior management, the accounting
department, and the Board of Directors; and
o 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
determined by the board, each of whom shall be an independent director, 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 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. Committee members may
enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Company or an outside consultant.
The members of the committee shall be elected by the board at the
annual organizational meeting of the board or until their successors shall be
duly elected and qualified. Unless a chair is elected by the full board, 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 two times annually or more frequently
as circumstances dictate. As part of its job to foster open communication, the
committee should meet at least annually with management, the director of the
accounting 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 or at least
its chair should meet with the independent accountants and management quarterly
to review the Company's financials consistent with Section IV.4 below).
A-1
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this charter periodically, at least
annually, as conditions dictate.
2. Review the organization's annual financial statements and any
reports or other financial information submitted to any governmental body or the
public, including any certification, report, opinion, or review rendered by the
independent accountants.
3. Review the regular internal reports to management prepared by
the accounting department and management's response.
4. Review with financial management and the independent
accountants the 10-Q prior to its filing or prior to the release of earnings.
The chair of the committee may represent the entire committee for purposes of
this review.
Independent Accountants
5. Recommend to the Board of Directors 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 shall obtain a written representation from the
accountants disclosing any significant relationships the accountants have with
the Company to determine the accountants' independence.
6. Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants when circumstances
warrant.
7. Periodically consult with the independent accountants out of
the presence of management about internal controls and the fullness and accuracy
of the organization's financial statements.
Financial Reporting Processes
8. In consultation with the independent accountants and the
accounting department, review the integrity of the organization's financial
reporting processes, both internal and external.
9. Consider the independent accountants' judgments about the
quality and appropriateness of the Company's accounting principles as applied in
its financial reporting.
10. 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 accounting department.
Process Improvement
11. Establish regular and separate systems of reporting to the
Audit Committee by each of management, the independent accountants and the
accounting department regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
appropriateness of such judgments.
12. Following completion of the annual audit, review separately
with each of management the independent accountants and the accounting
department any significant difficulties encountered during the course of the
audit, including any restrictions on the scope of work or access to information.
A-2
13. Review any significant disagreement among management and the
independent accountants or the accounting department in connection with the
preparation of the financial statements.
14. Review with the independent accountants, the accounting
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 decided by the committee.)
Ethical and Legal Compliance
15. Establish, review and update periodically a Code of Ethical
Conduct and ensure that management has established a system to enforce this
code.
16. Review management's monitoring of the Company's compliance
with the organization's Ethical Code, and ensure that management has the proper
review system in place to ensure that Company's financial statements, reports
and other financial information disseminated to governmental organizations, and
the public satisfy legal requirements.
17. Review activities, organizational structure, and
qualifications of the accounting department.
18. Review, with the organization's counsel, legal compliance
matters including corporate securities trading policies.
19. Review, with the organization's counsel, any legal matter that
could have a significant impact on the organization's financial statements.
20. Perform any other activities consistent with this charter, the
Company's Bylaws and governing law, as the committee or the board deems
necessary or appropriate.
A-3
PROXY
FX ENERGY, INC.
Annual Meeting of the Stockholders of (This Proxy is Solicited on Behalf
FX Energy, Inc. on June 5, 2001 of the Board of Directors)
The undersigned hereby appoints David N. Pierce and Scott J. Duncan
proxies, with full power of substitution, to vote the shares of common stock of
FX ENERGY, INC. (the "Company"), which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company ("Annual Meeting") to be held
at Little America Hotel, 500 South Main, Salt Lake City, Utah, on June 5, 2001,
at 10:00 a.m., local time, or any adjournment(s) thereof, such proxies being
directed to vote as specified below. If no instructions are specified, such
proxy will be voted "FOR" each proposal.
To vote in accordance with the Board of Directors' recommendations,
sign below. The "FOR" boxes may, but need not, be checked. To vote against any
of the recommendations, check the appropriate box marked "AGAINST" below. To
withhold authority for the proxies to vote for any of the recommendations, check
the appropriate box(es) marked "WITHHOLD AUTHORITY" below.
The Board of Directors recommends votes "FOR" the following proposals,
each of which has been proposed by the Board of Directors:
1. To elect each of the following nominees to serve as a director
for a term expiring at the 2004 Annual Meeting of the
Stockholders of the Company and until a successor is elected
and qualified. To withhold your vote for any individual
nominee, strike a line through such nominee's name.
Thomas B. Lovejoy Scott J. Duncan Dennis B. Goldstein
2. To approve the FX Energy, Inc. 2000 Stock Option and Award
Plan.
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
3. To transact such other business as may properly come before
the Annual Meeting or any adjournment (s) thereof.
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
Please print your name and sign exactly as your name appears in the records of
the Company. When shares are held by joint tenants, both should sign.
Dated: _______________________________
______________________________________ _______________________________
Signature Signature (if held jointly)
______________________________________ _______________________________
Print Name Print Name
PLEASE MARK, SIGN, DATE, AND
RETURN THIS PROXY TO: FX ENERGY, INC.
3006 HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UTAH 84106