UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 Pursuant to (S)240.14a-12
OMEGA PROTEIN CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
Last update: 02/22/2002
[LOGO] OMEGA PROTEIN /TM/
May 2, 2003
To Our Stockholders:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders
of Omega Protein Corporation, to be held on Thursday, June 19, 2003, at 9:00
a.m., local time, at The Drake Hotel, 140 East Walton Place, Chicago, Illinois
60611. A notice of the meeting, proxy statement and form of proxy are enclosed
with this letter.
At the meeting, we will report on the progress of the Company, comment on
matters of interest and respond to your questions. A copy of the Company's
Annual Report to Stockholders for the fiscal year ended December 31, 2002
accompanies this mailing.
Stockholders can vote their shares by proxy by marking their votes on the
proxy/voting instructions card, or by attending the meeting in person.
It is important that your shares be represented at the meeting. Even if you
plan to attend the meeting, we hope that you will read the enclosed Proxy
Statement and the voting instructions on the enclosed proxy card and then vote
by completing, signing, dating and mailing the proxy card in the enclosed,
postage pre-paid envelope. You may vote your shares in person if you attend the
Annual Meeting, thereby canceling any proxy previously given. If your shares
are not registered in your own name and you would like to attend the meeting,
please ask the broker, trust, bank or other nominee that holds the shares to
provide you with evidence of your share ownership.
We appreciate your continued interest in the Company.
Sincerely,
/s/ Joseph L. von Rosenberg III
Joseph L. von Rosenberg III
President and Chief Executive Officer
[LOGO] OMEGA PROTEIN /TM/
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 19, 2003
TO THE STOCKHOLDERS OF OMEGA PROTEIN CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Omega
Protein Corporation (the "Company") will be held at The Drake Hotel, 140 East
Walton Place, Chicago, Illinois 60611 on Thursday, June 19, 2003 at 9:00 a.m.,
local time, for the following purposes:
1. To elect two Class II directors for a term of three years and until
their successors are duly elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
certified public accountants for the Company's fiscal year ending December 31,
2003; and
3. To transact such other business as may properly come before the meeting
or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on Tuesday, April
29, 2003 as the record date for determining the stockholders entitled to notice
of, and to vote at, the meeting and at any postponement or adjournment thereof.
A list of such stockholders will be available during normal business hours at
the offices of the Company for inspection at least ten days prior to the Annual
Meeting.
You are cordially invited to attend this meeting.
By order of the Board of Directors
/s/ John D. Held
JOHN D. HELD
Senior Vice President, General
Counsel and Secretary
Houston, Texas
May 2, 2003
OMEGA PROTEIN CORPORATION
1717 ST. JAMES PLACE
SUITE 550
HOUSTON, TEXAS 77056
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE 19, 2003
General Information
This statement (the "Proxy Statement") is being furnished in connection
with the solicitation of proxies by the Board of Directors of Omega Protein
Corporation ("Omega" or the "Company") for use at the Annual Meeting of
Stockholders of the Company to be held at The Drake Hotel, 140 East Walton
Place, Chicago, Illinois 60611 on Thursday, June 19, 2003 at 9:00 a.m., local
time, and at any postponement or adjournment thereof (the "Annual Meeting").
The Annual Meeting is being held for the purposes set forth in this Proxy
Statement. This Proxy Statement and the enclosed form of proxy (the "Proxy
Card") are first being mailed on or about May 2, 2003.
Proxy Card
The shares represented by any Proxy Card which is properly executed and
received by the Company prior to or at the Annual Meeting (each, a "Conforming
Proxy") will be voted in accordance with the specifications made thereon.
Conforming Proxies that are properly signed and returned but on which no
specifications have been made by the stockholder will be voted in favor of the
proposals described in the Proxy Statement. The Board of Directors is not aware
of any matters that are expected to come before the Annual Meeting other than
those described in the Proxy Statement. However, if any other matters are
properly brought before the Annual Meeting, the persons named in the Proxy Card
will vote the shares represented by each Conforming Proxy on those matters as
instructed by the Board of Directors, or in the absence of express instructions
from the Board of Directors, in accordance with their own best judgment. A
stockholder who has executed and delivered a Conforming Proxy may revoke that
Conforming Proxy at any time before it is voted by (i) executing a new proxy
with a later date and delivering the new proxy to the Secretary of the Company,
(ii) voting in person at the Annual Meeting, or (iii) giving record of written
notice of the revocation to the Secretary of the Company.
Quorum and Other Matters
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock is necessary and
sufficient to constitute a quorum. Shares of Common Stock represented by
Conforming Proxies will be counted as present at the Annual Meeting for
purposes of determining a quorum, without regard to whether the proxy is marked
as casting a vote or abstaining. Shares of Common Stock held by nominees that
are voted on at least one matter coming before the Annual Meeting will also be
counted as present for purposes of determining a quorum, even if the beneficial
owner's discretion has been withheld (a "broker non-vote") for voting on some
or all other matters.
Directors will be elected by a favorable vote of a plurality of the shares
of Common Stock present, in person or by proxy, at the Annual Meeting and
entitled to vote. Accordingly, abstentions and broker non-votes will not affect
the outcome of the election of directors.
All other matters to come before the Annual Meeting require the approval of
a majority of the shares of Common Stock present, in person or by proxy, at the
Annual Meeting and entitled to vote. Therefore, abstentions will have the same
effect as votes against the proposals on such matters. Broker non-votes,
however, will be deemed shares not present to vote on such matters, and
therefore will not count as votes for or against the proposals, and will not be
included in calculating the number of votes necessary for approval of such
matters.
Solicitation of Proxies
This solicitation of proxies is being made by the Board of Directors of the
Company and all expenses of this solicitation will be borne by the Company. The
Company expects to reimburse brokerage houses, banks and other fiduciaries for
reasonable expenses of forwarding proxy materials to beneficial owners.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The outstanding voting securities of the Company consist entirely of shares
of common stock, par value $.01 per share (the "Common Stock"). Each share of
Common Stock entitles its owner to one vote upon each matter to come before the
Annual Meeting. Only stockholders of record at the close of business on April
29, 2003 (the "Record Date") will be entitled to vote at the Annual Meeting and
at any postponement or adjournment thereof. At the close of business on such
date, the Company had outstanding 24,122,438 shares of Common Stock.
Security Ownership of Certain Beneficial Owners
To the Company's knowledge, the following persons are the only persons who
are beneficial owners of more than five percent of the Company's Common Stock
based on the number of shares outstanding on December 31, 2002:
Amount and
Nature of
Beneficial Percent of
Name and Address of Beneficial Owner Ownership(1) Class(1)
------------------------------------ ------------ ----------
Malcolm I. Glazer (2)(3)............... 14,515,200 60.5%
1482 Ocean Boulevard
Palm Beach, Florida 33480
Zapata Corporation (2)................. 14,501,000 60.5%
100 Meridian Centre, Suite 350
Rochester, New York 14618
State of Wisconsin Investment Board (4) 2,176,300 9.1%
P.O. Box 7842
Madison, Wisconsin 53707
Dimensional Fund Advisors, Inc. (5).... 1,603,200 6.7%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
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(1) For purposes of computing the percentage of outstanding shares held by each
person or group of persons named above, any security which such person or
persons has the right to acquire within 60 days after
2
December 31, 2002 is deemed to be outstanding, but is not deemed to be
outstanding in computing the percentage ownership of any other person.
(2) Based on an Annual Report on Form 10-K for the year ended December 31, 2002
and a Schedule TO-I Offer to Purchase dated November 20, 2002 ("Offer to
Purchase"), in each case filed with the SEC by Zapata Corporation
("Zapata"), Malcolm I. Glazer may be deemed to control the sole general and
limited partners of the Malcolm I. Glazer Family Limited Partnership and
beneficially owns 47.2% of outstanding common stock of Zapata. By virtue of
such ownership, the Glazer Partnership may be deemed to control Zapata and,
therefore, may be deemed to beneficially own the Common Stock of the
Company owned by Zapata. Mr. Malcolm I. Glazer disclaims beneficial
ownership of such Company shares.
(3) Includes 14,200 shares of Company Common Stock subject to options held by
Malcolm I. Glazer exercisable on December 31, 2002 or within 60 days
thereafter. These options terminated without being exercised on April 5,
2003.
(4) Based on a Schedule 13G/A dated February 14, 2003 filed with the SEC by the
State of Wisconsin Investment Board.
(5) Based on a Schedule 13G/A dated February 3, 2003 filed with the SEC by
Dimensional Fund Advisors Inc.
Security Ownership of Directors and Executive Officers
The following table sets forth the number of shares of Common Stock of the
Company and common stock of Zapata beneficially owned as of December 31, 2002
by each of the Company's directors and executive officers, including each of
the Named Executive Officers set forth in the Summary Compensation Table, and
by all directors, executive officers and Named Executive Officers as a group.
Unless otherwise noted, each of the named persons and members of the group has
sole voting and investment power with respect to the shares shown.
Shares of the Percent of the Shares of % of
Company's Company's Zapata Zapata
Common Common Common Common
Name of Beneficial Owner Stock(1) Stock(2) Stock Stock
------------------------ ------------- -------------- --------- ------
Joseph L. von Rosenberg III................................... 1,367,700 5.4% 10 *
Robert W. Stockton............................................ 1,056,000 4.2% 0 --
Avram A. Glazer............................................... 568,200(3) 2.3% 19,159(4) *
John D. Held.................................................. 216,666 * 0 --
Michael E. Wilson............................................. 177,666 * 0 --
Bernard H. White (5).......................................... 176,766 * 0 --
J. Scott Herbert.............................................. 106,716 * 0 --
Albert A. Riley............................................... 66,666 * 0 --
Clark A. Haner................................................ 46,666 * 0 --
Thomas R. Wittmann............................................ 23,000 * 0 --
Kenneth Robichau.............................................. 12,500 * 310 *
Steven Shelton................................................ 4,000 * 0 --
James Mitchell................................................ 4,000 * 0 --
Gary L. Allee................................................. 102,600 * 0 --
William E. M. Lands........................................... 74,515(6) * 0 --
Paul M. Kearns................................................ 24,200 * 0 --
Darcie S. Glazer.............................................. 0(7) * 13,459(8) *
All directors, executive officers and Named Executive Officers
as a group, including those persons named above (17 total).. 4,027,861 14.4% 32,938 *
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* Represents ownership of less than 1.0%.
(1) Includes 1,348,200; 1,050,000; 568,200; 216,666; 176,666; 176,666; 106,666;
66,666; 46,666; 23,000; 7,500; 4,000; 4,000; 44,200; 44,200, 24,200, 0 and
3,907,496 shares of Omega's Common Stock subject to
3
options exercisable on December 31, 2002 or within 60 days thereafter held
by Messrs. von Rosenberg, Stockton, A. Glazer, Held, Wilson, White, Herbert,
Riley, Haner, Wittmann, Robichau, Shelton, Mitchell, Allee, Lands, Kearns,
Ms. D. Glazer and all directors, executive officers and Named Executive
Officers as a group, including those persons named in the above table,
respectively.
(2) For purposes of computing the percentage of outstanding shares held by each
person or group of persons named above, any security which such person or
persons has the right to acquire within 60 days after December 31, 2002 is
deemed to be outstanding, but is not deemed to be outstanding in computing
the percentage ownership of any other person.
(3) Does not include 14,501,000 shares that are held by the Malcolm I. Glazer
Family Limited Partnership or Zapata, with respect to which Avram A. Glazer
disclaims any beneficial ownership.
(4) Includes 15,459 shares of Zapata common stock subject to stock options held
by Avram A. Glazer, based on Zapata's Offer to Purchase.
(5) Mr. White's employment with the Company terminated in March 2003.
(6) Includes 2,300 shares of Company Common Stock owned by a trust established
for the benefit of Dr. Lands' grandchildren. Dr. Lands disclaims beneficial
ownership of such shares.
(7) Does not include 14,501,000 shares of Company Common Stock that are held by
the Malcolm I. Glazer Family Limited Partnership or Zapata, with respect to
which Darcie S. Glazer disclaims any beneficial ownership.
(8) Includes 13,459 shares of Zapata common stock subject to options held by
Darcie S. Glazer, based on Zapata's Offer to Purchase.
Because Zapata holds more than a majority of the Company's outstanding
Common Stock, Zapata has the power to approve matters submitted for
consideration at the Annual Meeting without regard to the votes of the other
stockholders. The Company understands that Zapata intends to vote for the
election of the proposed Nominees for the Board of Directors and for the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors. There are no agreements between the Company and Zapata
with respect to the election of directors or the officers of the Company or
with respect to other matters that may come before the Annual Meeting.
Changes in Control
As stated in Zapata's Offer to Purchase, Zapata is considering an
appropriate transaction or strategy involving the Company to increase Zapata's
stockholder value. Zapata stated that such a transaction could include
increasing Zapata's ownership position in the Company or in the alternative
pursuing a possible sale, merger or other significant strategic transaction
involving the Company.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the Board of Directors into
three classes designated as Class I, Class II and Class III. Each class of
directors is elected to serve a three-year term. The Board presently consists
of six directors, two in Class I, two in Class II and two in Class III, whose
terms expire at the 2005, 2003 and 2004 Annual Meetings, respectively, and
until their successors are duly elected and qualified.
The Class II directors are Avram A. Glazer and Darcie S. Glazer, and their
term expires at the 2003 Annual Meeting, or as soon thereafter as their
successors are elected and qualified. Each of Avram A. Glazer and Darcie S.
Glazer has been nominated by the Board of Directors to be elected by
4
the holders of the Common Stock to serve an additional three-year term as a
Class II Director. Each of Avram A. Glazer and Darcie S. Glazer has consented
to be named in this Proxy Statement and to serve as a director if elected.
The Company's Articles of Incorporation provide that the Board of Directors
shall consist of no more non-U.S. citizens than a minority of the number
necessary to constitute a quorum of the Board of Directors. Each of the
Company's directors is a citizen of the United States except for Mr. Kearns who
is a citizen of the United Kingdom.
Proxies representing shares of Common Stock held on the Record Date that
are returned duly executed will be voted, unless otherwise specified, in favor
of the nominees for Class II directors named below. The nominees have consented
to serve if elected, but should either nominee be unavailable to serve (which
event is not anticipated) the persons named in the proxy intend to vote for
such substitute nominee or nominees as the Board of Directors may recommend.
Vote Required. Each nominee shall be elected by a plurality of the votes
cast in the election by the holders of the Common Stock represented and
entitled to vote at the Annual Meeting, assuming the existence of a quorum.
Class II Directors--To Serve A Three-Year Term Expiring at the 2006 Annual
Stockholders Meeting
AVRAM A. GLAZER, age 41, has been Chairman of the Board of the Company
since January 1998. He also has served as Chairman of the Board of Zapata since
March 2002, and as President and Chief Executive Officer of Zapata since 1995.
For more than the past five years, he has been employed by, and has worked on
behalf of, Malcolm I. Glazer and a number of entities owned and controlled by
Malcolm I. Glazer, including First Allied Corporation. Mr. Glazer served as
Vice President of First Allied Corporation from 1985 through 1995. He also
serves as a director, President and Chief Executive Officer of Zap.Com
Corporation (which until December 2000, was an internet advertising and
e-commerce network company). Avram A. Glazer is the brother of Darcie S. Glazer
and the son of Malcolm I. Glazer.
DARCIE S. GLAZER, age 34, has been a director of the Company since April
2002. For more than the past five years, she has been employed by, and has
worked on behalf of, Malcolm I. Glazer and a number of entities owned and
controlled by Malcolm I. Glazer, including First Allied Corporation. Ms. Glazer
serves as the Executive Vice President of First Allied Corporation. Ms. Glazer
served as an investment analyst for Zapata from 1996 to February 2001. Darcie
S. Glazer is the sister of Avram A. Glazer and the daughter of Malcolm I.
Glazer.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH CLASS II NOMINEE AS A
DIRECTOR.
CONTINUING DIRECTORS
Biographical and other information with respect to all members of the Board
of Directors whose current terms will continue after the Annual Meeting is set
forth below:
Class I Nominees--Current Term Expires at the 2005 Annual Stockholders Meeting
GARY L. ALLEE, age 58, has been a director of the Company since May 1998.
Dr. Allee is professor of Swine Nutrition at the University of Missouri. Dr.
Allee has served as President and as a
5
member of the Board of Directors of the Midwest Section of the American Society
of Animal Science. He has B.S. and M.S. degrees in Animal Husbandry and Swine
Nutrition from the University of Missouri and a Ph.D. in Nutritional Sciences
from the University of Illinois.
WILLIAM E. M. LANDS, age 72, has been a director of the Company since May
1998. In February 2002, Dr. Lands retired as Senior Scientific Advisor to the
Director of the National Institute on Alcohol Abuse and Alcoholism, a position
he assumed after serving as head of the Department of Biological Chemistry at
the University of Illinois Medical Center. Dr. Lands has a B.S. degree in
Chemistry from the University of Michigan and a Ph.D. in Biological Chemistry
from the University of Illinois.
Class III Directors--Current Term Expires at the 2004 Annual Stockholders
Meeting
JOSEPH L. VON ROSENBERG III, age 44, has been President and Chief Executive
Officer and a director of the Company since July 1997. Mr. von Rosenberg also
served from November 1995 until April 1998 as Executive Vice President of
Zapata which, at that time, was a holding company with interests in marine
protein operations, natural gas transmission and oil and gas.
PAUL M. KEARNS, age 39, has been a director of the Company since June 2001.
Mr. Kearns is a director of Prentis, Donegan & Partners, Ltd., a London-based
insurance brokerage firm which he co-founded in 1993. Mr. Kearns has more than
19 years of experience in the global risk management and insurance industries.
Mr. Kearns is a citizen of the United Kingdom.
Recent Litigation
The Company, the Company's directors and the Company's majority
stockholder, Zapata, were named as defendants in a lawsuit instituted on March
10, 2003 in the District Court of Clark County, Nevada. The plaintiff, Robert
Strougo, alleges that he is a Company stockholder and brought the action
individually and as a putative class action on behalf of all Company
stockholders. No class period has been identified. Plaintiff claimed that the
individual defendants and Zapata breached their fiduciary duties to the
Company's stockholders by not properly considering an alleged offer sent via
e-mail to Zapata by Hollingsworth, Rothwell & Roxford ("HRR").
The complaint alleges that the alleged offer was to acquire all of Zapata's
shares and all of the Company's shares, in each case for $45.00 per share.
However, the Company is not aware of any communications by HRR to the Company
or any of its directors or any offer for the purchase of Company shares.
Plaintiff alleges that Zapata and the individual defendants breached their
duties to the Company's stockholders by rejecting the purported offer and that
the Company's stockholders have been damaged by being prevented from receiving
a fair price for their stock. Plaintiff seeks an order directing the defendants
to carry out their fiduciary duties to the Company's stockholders, to refrain
from breaching their duties, and awarding plaintiff unspecified compensatory
damages and costs and expenses incurred in the action.
The Company is not aware of any basis on which it or its directors could be
liable for not responding to an offer which they never received, and which
appears to be directed to Zapata. The Company believes that the claims are
without merit and intends to vigorously oppose the lawsuit.
Board of Directors and Board Committees
The Company's Board of Directors has six directors and has established the
Audit and Compensation Committees as its standing committees. In addition, the
Board has established a
6
Scientific Committee. The Board of Directors does not have a nominating
committee or executive committee or any committees performing similar functions.
During 2002, the Board of Directors met three times, the Audit Committee
met four times, the Compensation Committee met two times and took action by
written consent on one occasion, and the Scientific Committee did not meet.
Each director, except for Avram A. Glazer and Darcie S. Glazer, during the
period for which he or she has been a director in 2002, attended at least 75%
of the aggregate of the total number of meetings of the Board of Directors and
the total number of meetings held by all committees of the Board on which such
director served.
Audit Committee. The Audit Committee consists of Dr. Allee (Chairman), Dr.
Lands and Mr. Kearns, each of whom the Board of Directors has determined to be
"independent" as defined in the NYSE listing standards. The Audit Committee
reviews the adequacy of the Company's internal control systems and financial
reporting procedures, reviews the general scope of the annual audit and reviews
and monitors the performance of non-audit services by the Company's independent
public accountants. The Audit Committee also meets with the independent
auditors and with appropriate financial personnel of the Company regarding
these matters. The Audit Committee also appoints the Company's independent
auditors. The independent auditors may periodically meet alone with the Audit
Committee and have unrestricted access to the Audit Committee.
In February 2003, the Audit Committee and the Board of Directors approved a
new Charter for the Audit Committee. The new Audit Committee Charter is
attached to this Proxy Statement as Exhibit A.
Compensation Committee. The Compensation Committee consists of Mr. Kearns
(Chairman) and Dr. Allee. The Compensation Committee determines the
compensation (both salary and performance incentive compensation) to be paid to
the Chief Executive Officer and certain other officers of the Company, and
makes grants of long-term incentive awards.
Scientific Committee. The Scientific Committee consists of Dr. Lands
(Chairman) and Dr. Allee. The Scientific Committee keeps the Board of Directors
and Company management apprised of scientific matters and developments that are
relevant to the Company's industry.
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the executive
officers of the Company as of the date of this Proxy Statement. All officers of
the Company serve at the pleasure of the Company's Board of Directors until
their successors are elected and qualified.
Name Age Position
- ---- --- --------
Joseph L. von Rosenberg III 44 President, Chief Executive Officer and Director
Robert W. Stockton......... 52 Executive Vice President and Chief Financial
Officer
John D. Held............... 40 Senior Vice President, General Counsel and
Secretary
Michael E. Wilson.......... 52 Vice President--Marine Operations and President
of Omega Shipyard, Inc.
Thomas R. Wittmann......... 53 Vice President--Operations
Kenneth Robichau........... 50 Vice President--Tax and Director of Internal
Audit
J. Scott Herbert........... 37 Vice President--Agriproducts
Albert A. Riley............ 54 Vice President--Refined Oils
Clark A. Haner............. 46 Vice President--Administration and Controller
7
JOSEPH L. VON ROSENBERG. See "--Class III Directors--Current Term Expires
at the 2004 Annual Stockholders Meeting" above.
ROBERT W. STOCKTON has served as Executive Vice President and Chief
Financial Officer of the Company since July 1997. He has also served as
Secretary of the Company from January 2000 to September 2002.
JOHN D. HELD has served as the Company's General Counsel since March 2000,
as Vice President of the Company from April 2002 to September 2002, and as
Senior Vice President and Secretary since September 2002. Mr. Held also served
as a consultant to the Company from December 1999 to February 2000. From March
1996 until October 1999, Mr. Held was Senior Vice President, General Counsel
and Secretary of American Residential Services, Inc., a then publicly traded
residential and commercial heating, air conditioning, plumbing and electrical
services company. Prior thereto, Mr. Held practiced with a large law firm in
Houston, Texas.
MICHAEL E. WILSON is President of the Company's wholly-owned subsidiary,
Omega Shipyard, Inc., a position he has held since June 1997. Since July 1998,
he has also served as the Company's Vice President--Marine Operations and,
prior thereto, served as the Company's Coordinator of Marine Engineering and
Maintenance. Mr. Wilson joined the Company in 1985 and served in various
operating capacities until 1996.
THOMAS R. WITTMANN has served as Vice President--Operations since October
2002. Prior thereto, Mr. Wittmann served as the General Manager of the
Company's Abbeville, Louisiana facility since 1997 and served in various other
Company positions since 1985.
KENNETH ROBICHAU has served as Vice President--Tax since September 1998 (in
a part-time capacity until September 2002) and as Director of Internal Audit
since September 2002. From March 1998 until September 1998, Mr. Robichau also
worked in a part-time capacity as a tax consultant for the Company. Prior to
March 1998, Mr. Robichau served as Vice President--Tax and Treasurer of Zapata.
J. SCOTT HERBERT has served as Vice President--Agriproducts of the Company
since September 2002. Prior thereto, Mr. Herbert served as Vice President--Feed
Ingredient Marketing of the Company's principal subsidiary, Omega Protein,
Inc., since March 1998, and as Director of Fish Meal Sales and in various other
sales capacities with the Company since 1992.
ALBERT A. RILEY has served as Vice President--Refined Oils of the Company
since September 2002. Prior thereto, Mr. Riley served as Vice
President--Refined Oils of the Company's principal subsidiary, Omega Protein,
Inc., since May 2000 and as Business Development Manager--Industrial Oils of
Omega Protein, Inc. from September 1999 to April 2000. From July 1999 to
September 1999, Mr. Riley served as a consultant to the Company. Prior thereto,
Mr. Riley was a financial planner with Lincoln Financial.
CLARK A. HANER has served as Vice President--Administration and Controller
of the Company since December 1999. From September 1997 to December 1999, Mr.
Haner served as the Company's Controller and Assistant Treasurer and prior
thereto, served as the Company's Accounting Manager. Mr. Haner joined the
Company in September 1995.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation paid in 2002 and the two
prior fiscal years to the Company's Chief Executive Officer and its other four
most highly compensated executive officers with annual 2002 compensation in
excess of $100,000, as well as two other employees who would otherwise be
included in the five most highly compensated employees but for the fact that
they are not executive officers (collectively, the "Named Executive Officers").
Annual Compensation
--------------------------------------------------------------------------
Stock
Option
Fiscal Other Annual Awards All Other
Name and Principal Position Year Salary Bonus Compensation(1) (# of options) Compensation(2)
- --------------------------- ------ -------- -------- --------------- -------------- ---------------
Joseph L. von Rosenberg III.... 2000 $290,000 0 -- 945,000 $7,100
President and Chief 2001 $290,000 0 -- 0 $ 300
Executive Officer 2002 $380,000 $325,000 -- 0 $8,300
Robert W. Stockton............. 2000 $202,917 0 -- 810,000 $7,247
Executive Vice President and 2001 $205,000 0 -- 0 $ 690
Chief Financial Officer 2002 $245,000 $175,000 -- 0 $8,690
John D. Held................... 2000 $118,750(3) 0 -- 325,000 $4,899
Senior Vice President, General 2001 $150,000 0 -- 0 $ 189
Counsel and Secretary 2002 $210,000 $125,000 -- 0 $8,300
Michael E. Wilson.............. 2000 $120,000 0 -- 25,000 $5,064
Vice President--Marine 2001 $120,000 0 -- 75,000 $ 359
Operations and President 2002 $130,000 $ 30,000 -- 0 $6,852
of Omega Shipyard, Inc.
J. Scott Herbert............... 2000 $ 89,250 0 -- 24,000 $3,781
Vice President--Agriproducts 2001 $103,000 $ 26,085 -- 76,000 $ 112
2002 $110,000 $ 37,815 -- 0 $6,145
Steven Shelton................. 2000 $ 58,089 $ 81,439 -- 0 $4,268
Captain, F/V Timbalier Bay 2001 $ 63,095 $ 65,692 -- 0 0
2002 $ 77,621 $ 83,401 -- 0 $ 249
James Mitchell................. 2000 $ 55,631 $ 70,582 -- 0 5,049
Captain, F/V Terrebone Bay 2001 $ 58,235 $ 61,398 -- 0 0
2002 $ 70,621 $ 83,262 -- 0 5,168
- --------
(1) Amounts exclude perquisites and other personal benefits that did not exceed
the lesser of $50,000 or 10% of the total annual salary and bonus reported
for each Named Executive Officer.
(2) The reported amounts represent (i) insurance premiums paid by the Company
on the Named Executive Officer's behalf, and (ii) Company matching
contributions to the Named Executive Officer's Company 401(k) plan account.
In 2002, these amounts for insurance premiums and Company matching 401(k)
contributions were, respectively, for Mr. von Rosenberg: $300 and $8,000;
for Mr. Stockton: $690 and $8,000; for Mr. Held: $300 and $8,000; for Mr.
Wilson: $400 and $6,452; for Mr. Herbert: $124 and $6,021; for Mr. Shelton:
$249 and $0; and for Mr. Mitchell: $179 and $4,989
(3) Reflects partial year due to date of hire in March 2000.
9
Option Grants In Last Fiscal Year
No stock option grants were made to any Named Executive Officer in 2002.
Aggregated Option Exercises and Fiscal Year-End Option Values
The following table shows the stock option exercises by the Named Executive
Officers during 2002. In addition, this table includes the number of
exercisable and unexercisable stock options on the Company's Common Stock held
by each of the Named Executive Officers as of December 31, 2002. The Company
has never granted any stock appreciation rights or restricted stock awards.
None of the persons named below hold any stock options relating to Zapata's
common stock.
Number of Securities Value of Unexercised
Underlying In-the-Money(1)
Shares Value Unexercised Options Options at
Acquired Realized at December 31, 2002 December 31, 2002
Name On Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------- -------------------------
Joseph L. von Rosenberg III 0 0 630,000/315,000 $1,266,300/633,150
Robert W. Stockton......... 0 0 540,000/270,000 $ 867,000/433,500
John D. Held............... 0 0 216,666/108,334 $ 279,501/139,749
Michael E. Wilson.......... 0 0 41,666/58,334 $ 65,000/118,750
J. Scott Herbert........... 0 0 41,333/58,667 $ 65,466/120,134
Steven Shelton............. 0 0 4,000/0 $ 1,800/0
James Mitchell............. 0 0 4,000/0 $ 1,800/0
- --------
(1) "In-the-Money" options are stock options which had an exercise price less
than the closing market price of the Common Stock at December 31, 2002,
which was $3.95 as reported by the New York Stock Exchange.
Equity Compensation Plan Information
The following table shows equity compensation plan information as of
December 31, 2002:
(a) (b) (c)
Number of
Securities
Number of Remaining
Securities to Weighted- Available for
be Issued upon average Future Issuance
Exercise of Exercise Under Equity
Outstanding Price of Compensation
Options, Outstanding Plans (Excluding
Warrants Options, Securities Reflected
and Rights Warrants in Column(a))
Plan Category (in thousands) and Rights (in thousands)
------------- -------------- ----------- --------------------
Equity compensation plans approved by security holders.... 5,470 $6.38 522
Equity compensation plans not approved by security holders 0 N/A 0
----- ----- ---
Total..................................................... 5,470 $6.38 522
Employment and Severance Agreements
Messrs. von Rosenberg and Stockton each has an Employment Agreement with
the Company pursuant to which the Company has agreed to provide for base
salaries that are subject to review at least annually, provided that they may
not be decreased without the executive's consent. The employment agreements
provide for a severance payment equal to 2.99 times the executive's annual base
salary in the event of a termination of employment (i) by the executive for
Good Reason (as defined in the respective employment agreement), (ii) by the
Company without Cause (as defined in the respective employment agreement), or
(iii) following any Change in Control of the Company (as defined in the
respective employment agreement). The agreements provide for rolling three year
terms.
10
Mr. Held has a Change of Control and Severance Agreement with the Company
pursuant to which Mr. Held is entitled to receive a severance payment in the
event of termination of his employment other than for Cause (as defined in the
Agreement). Prior to a Change in Control of the Company (as defined in the
Agreement), the severance payment is equal to the continuation of the
executive's annual base salary for an 18-month period after termination. After
a Change of Control of the Company, the severance payment is equal to 2.99
times the executive's annual base salary and most recent cash bonus, if any.
Mr. Herbert has a Change of Control Agreement with the Company pursuant to
which Mr. Herbert is entitled to a severance payment in the event of both a
Change of Control of the Company (as defined in the agreement) and a
termination other than for Cause (as defined in the agreement) within a two
year period after a Change of Control. The severance payment is equal to one
times the executive's annual base salary in effect prior to the termination of
employment.
Mr. Shelton and Mr. Mitchell each has an Employment Agreement with the
Company which is similar in form to the employment agreement for all captains
of the Company's fishing vessels. The agreement's term is from January 1, 2002
to December 31, 2002. The agreement provides for a base salary, and bonuses
based on individual vessel fish catch, aggregate team fish catch, and years of
service with the Company, as well as discretionary bonuses. The agreement does
not provide for any severance payments based on termination of employment.
Retirement Plans
The Company maintains a defined benefit plan for its employees (the
"Pension Plan"). The table below shows the estimated annual benefits payable on
retirement under the Pension Plan to persons in the specified compensation and
years of service classifications. The retirement benefits shown are based on
the following assumptions: retirement at age 65, payments of a single-life
annuity to the employee (although a participant can select other methods of
calculating benefits) to be received under the Company's Pension Plan using
current average Social Security wage base amounts, and not subject to any
deduction for Social Security or other offset amounts. The retirement benefits
listed include both Salary and Bonus as set forth in the Summary Compensation
Table. A participant's benefit is based on the average monthly earnings for the
consecutive five year period during which the participant had his or her
highest level of earnings. With certain exceptions, the Internal Revenue Code
of 1986, as amended (the "Code"), restricts to an aggregate amount of $135,000
(subject to cost of living adjustments) the annual pension that may be paid by
an employer from a plan which is qualified under the Code. The Code also limits
the covered compensation that may be used to determine benefits to $170,000
(subject to cost of living adjustments).
Pension Plan Table
Years of Service
---------------------------------------
Covered Compensation(1) 15 20 25 30 35
----------------------- ------- ------- ------- ------- -------
$120,000............. $16,730 $22,307 $27,883 $33,460 $39,037
$130,000............. $18,380 $24,507 $30,333 $36,760 $42,887
$140,000............. $20,030 $26,707 $33,383 $40,060 $46,737
$150,000............. $21,680 $28,907 $36,133 $43,360 $50,587
$160,000............. $23,330 $31,107 $38,883 $46,660 $54,437
$170,000 and higher.. $24,980 $33,307 $41,633 $49,960 $58,287
- --------
(1) Represents the highest average annual earnings during five consecutive
calendar years of service.
11
As of December 31, 2002, the approximate years of credited service (rounded
to the nearest whole year) under the Pension Plan for the Named Executive
Officers were as follows: Mr. von Rosenberg--8, Mr. Stockton--5, Mr. Held--2,
Mr. Wilson--16, Mr. Herbert--10, Mr. Shelton--18 and Mr. Mitchell--17.
In 2002, the Company's Pension Plan was frozen so that existing employees,
including all of the above Named Executive Officers, would no longer accrue
years of service and new employees would not be eligible to participate in the
Pension Plan.
12
COMPENSATION OF DIRECTORS
Directors who are employees of the Company are not paid any fees or
additional compensation for services rendered as members of the Board of
Directors or any committee thereof. Directors who are not employees of the
Company or Zapata ("Non-Employee Directors") receive an annual retainer fee of
$20,000 that is paid in four equal quarterly installments. Members of the Audit
and Compensation committees receive an annual retainer fee of $2,500 (prior to
July 1, 2002, $2,000) that is paid in four equal quarterly installments for
each committee on which they serve. Effective July 1, 2002, each Non-Employee
Director also receives a fee of $2,000 for each Board meeting attended, either
in person or telephonically, and a fee of $1,000 for each Audit Committee or
Compensation Committee meeting attended, either in person or telephonically.
Effective February 1, 2003, members of the Scientific Committee receive an
annual retainer fee of $1,000 that is paid in four quarterly installments and
do not receive any meeting fees. (Prior to February 1, 2003, the Scientific
Committee members received $500 for each day of service related to Scientific
Committee activities.)
Pursuant to the Company's 2000 Long-Term Incentive Plan (the "Plan"), upon
joining the Board, each Non-Employee Director, other than the initial Chairman
of the Board, is granted options to purchase 14,200 shares of Common Stock at
fair market value on the date of grant. Pursuant to such Plan, the initial
Chairman of the Board, upon being elected, received options to purchase 568,200
shares of Common Stock at fair market value on the date of the grant ($12.75
per share). All options granted to directors under the Plan vest six months and
one day after the date of grant.
The Plan also allows Non-Employee Directors to elect to take all or a
portion of their annual retainer fees and meeting and per diem fees in Common
Stock in lieu of cash. On or before the last day of each calendar quarter
(each, an "Election Date"), a Non-Employee Director may elect to receive a
percentage (the "Elected Percentage") of such fees during the quarterly period
immediately following such Election Date (the "Service Period") in shares of
Common Stock. The number of shares to be received will be determined on the
first business day of the month immediately following the completion of the
Service Period by multiplying the amount of the director's fees for such
Service Period by his Elected Percentage and dividing that result by the Fair
Market Value per share on such date. In 2002, Dr. Allee and Dr. Lands elected
to take 100% of their annual retainer fees, meeting fees and per diem fees for
all 2002 Service Periods in Common Stock in lieu of cash. As a result of such
elections, Dr. Allee received 7,727 shares of Common Stock in lieu of $29,500
and Dr. Lands received 6,885 shares of Common stock in lieu of $26,250.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION FOR THE YEAR 2002
The Compensation Committee of the Board of Directors (the "Committee") is
composed of Paul M. Kearns (Chairman) and Dr. Gary L. Allee. The Committee
determines the compensation (both salary and performance incentive
compensation) to be paid to the Chief Executive Officer (the "CEO") and certain
other officers of the Company and makes grants of long-term incentive awards.
The goal of the Company's executive compensation program is to attract, retain
and encourage the development of highly-qualified and experienced executives
who are key to the success of the Company. In addition, the equity-based
compensation portion of the program is intended to align the interests of these
executives with the interests of the Company's stockholders.
13
The key elements of the Company's executive compensation program are base
salary, annual performance incentive awards and long-term incentive awards. The
Committee's policies with respect to each of these three components are
discussed below.
Base Salary. The Committee reviews and establishes the base salaries of
the CEO and certain other officers on an annual basis. In establishing base
salaries, the Committee considers the importance of the particular executive
position and the skills required for that position, the individual's
qualifications and experience, as well as the Committee's own subjective
assessment of the individual's performance. The Committee may also consider
generally prevailing market rates for similarly based positions and does so
with a compensation philosophy that executive base salary compensation should
generally be between the 50/th/ and 75/th/ percentile of the market base salary
for the respective position. The Committee does not use any mechanical
formulations or weighting of any of the factors it considers.
Performance Incentive Awards. The Committee reviews performance incentives
(generally in the form of cash bonuses) for the CEO and certain other officers
on an annual basis. These incentives generally are determined at the
Committee's discretion, taking into account Company performance, the importance
of the position, and the Committee's subjective assessment of the executive's
performance. The Committee also takes into account the CEO's evaluation of the
performance of other officers. The Committee does not use any mechanical
formulations or weighting of any of the factors it considers.
Long-Term Incentive Awards. In an effort to align the long-term interests
of the Company's management and stockholders, the Committee may make awards
under the Company's 2000 Long-Term Incentive Plan. Under the Long-Term
Incentive Plan, the Committee may award non-qualified or incentive stock
options, stock appreciation rights, restricted stock or cash awards. The
Committee believes that the Long-Term Incentive Plan enables the Company to
attract and retain highly-qualified and experienced managers and other key
personnel. Under the Long-Term Incentive Plan, the Committee is responsible for
establishing who receives awards, the terms of the awards, and the requisite
conditions and the size of awards. In making its determinations, the Committee
considers the CEO's recommendations regarding awards, the person's position and
level of responsibility, the Committee's subjective assessment of the
individual's performance, as well as the amount of awards previously made to
that person. The Committee awarded stock options to three officers in 2002.
CEO Compensation. The Committee's basis for compensation of the CEO is
derived from the same considerations discussed above. In determining Mr. von
Rosenberg's base salary for 2002, the Committee also considered executive
compensation survey materials from an independent executive compensation
consulting firm. The Committee increased Mr. von Rosenberg's base salary for
2002 from $290,000 to $380,000. This base salary was within the third quartile
(50% to 75%) for the CEO position for similarly situated companies. The
Committee believes that the base salary level established for Mr. von Rosenberg
reflects his expertise in the Company's industry and recognizes his continuing
leadership of the Company.
The Committee awarded Mr. von Rosenberg a performance bonus award in 2002
of $325,000. The Committee granted this award to acknowledge Mr. von
Rosenberg's contribution to significant Company operational and sales strategy
objectives achieved since 1999.
The Committee made no grants of stock option awards or any other form of
equity compensation or long-term incentive award to Mr. von Rosenberg in 2002.
14
Section 162(m) of the Internal Revenue Code of 1986 places a limit of
$1,000,000 per person on the amount of compensation that may be deducted by the
Company in any one fiscal year with respect to the CEO and each of the other
four most highly compensated individuals who are executive officers as of the
end of the fiscal year. This deduction limitation, however, does not apply to
certain "performance based" compensation. The Committee intends that the
Company's compensation plans should qualify for full deductibility in
accordance with Section 162(m).
Respectfully submitted,
Paul M. Kearns (Chairman)
Dr. Gary L. Allee
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During 2002, the Compensation Committee consisted of Mr. Kearns (Chairman)
and Dr. Allee. Neither Mr. Kearns nor Dr. Allee had any relationships or
transactions with the Company or its subsidiaries required to be disclosed
pursuant to Item 402(j) of Regulation S-K under the Exchange Act of 1934.
DIRECTOR INDEPENDENCE
The Board of Directors has determined that all members of the Board of
Directors, other than Joseph L. von Rosenberg, Avram Glazer, and Darcie Glazer,
are "independent" with the meaning of the proposed rules of the New York Stock
Exchange ("NYSE").
The Board of Directors determines whether each Director is independent
based upon all relevant facts and circumstances appropriate for consideration
in the judgment of the Board. In the context of this review, the Board has
applied the proposed NYSE standards which state that a director is independent
if the Board of Directors affirmatively determines that the director has no
material relationship with the company (either directly or as a partner,
stockholder or officer of an organization that has a relationship with the
Company) and in addition does not have a relationship listed in the NYSE
proposals as creating a presumption of non-dependence.
In making its determination that a director does not have a material
relationship with the Company, the Board of Directors recognized that, in the
ordinary course of business, there may be commercial relationships between the
Company and an organization which employs a Company director. The Board of
Directors has determined that a commercial relationship in the ordinary course
of business in which a Company director is an executive officer of another
company that does business with the Company will not be considered to be a
material relationship that would impair that director's independence if:
. The payment by the Company to the other company is less than $500,000 in
any Company fiscal year, and
. The Company director receives less than 2% of the other company's
revenues as compensation from that entity in that same Company fiscal
year.
15
STOCK PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
stockholder return on its Common Stock with the cumulative total return on (i)
the Russell 2000 Index, and (ii) a peer group stock index (the "Peer Group
Index") which consists of three publicly traded companies in the same industry
or line-of-business as the Company. The companies that comprise the Peer Group
Index are Archer Daniels Midland Company, ConAgra, Inc., and Tyson Foods, Inc.
The cumulative total return computations set forth in the Performance Graph
assume the investment of $100 in the Company's Common Stock, the Russell 2000
Index, and the Peer Group Index on April 2, 1998, the date of the Company's
initial public offering of its Common Stock.
[CHART]
COMPARISON OF TWELVE MONTH CUMULATIVE TOTAL RETURN*
AMONG OMEGA PROTEIN CORPORATION, THE RUSSELL 2000 INDEX
AND PEER GROUP
Omega Protein Peer Group Russell 2000
Corporation Index Index
4/3/1998 100.00 100.00 100.00
12/31/1998 56.06 67.22 88.31
12/31/1999 17.30 22.93 105.62
12/31/2000 8.30 11.41 101.06
12/31/2001 16.89 22.48 102.09
12/31/2002 21.87 28.99 80.06
4/2/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
------ -------- -------- -------- -------- --------
Omega Protein Corporation 100.00 56.06 17.30 8.30 16.89 21.87
Peer Group............... 100.00 67.22 22.93 11.41 22.48 28.99
Russell 2000............. 100.00 88.31 105.62 101.06 102.09 80.06
- --------
* $100 INVESTED ON April 2, 1998 INCLUDING REINVESTMENT OF DIVIDENDS
The Performance Graph and related description shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference and shall not otherwise
be deemed filed with the Securities and Exchange Commission.
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Company's initial public offering in April 1998 (the "Initial
Public Offering"), Zapata advanced funds to the Company from time to time.
During fiscal year 1997, Zapata forgave the repayment of $41.9 million of
intercompany indebtedness owed to Zapata by the Company and the Company
recorded this amount as contributed capital. After forgiving such indebtedness,
Zapata advanced $28.1 million to the Company to meet the cash requirements for
certain acquisitions and $5.2 million, primarily for payment of the Company's
income taxes. As of December 31, 1997, Zapata had no outstanding guarantees of
Company indebtedness and the Company owed Zapata approximately $33.3 million of
intercompany debt. The intercompany balance attributable to the acquisition
financing discussed above accrued interest at a rate equal to Zapata's cost of
funds, which was approximately 8.5%; the balance of the Company's indebtedness
to Zapata did not bear any interest. Pursuant to the Separation Agreement
described below, the Company utilized a portion of the net proceeds from the
Initial Public Offering to repay all of the $33.3 million it owed to Zapata.
Prior to the Initial Public Offering, Zapata provided the Company with
certain administrative services, including treasury and tax services, which
were billed at their approximate costs to Zapata. The costs of these services
were directly charged and/or allocated based on the estimated percentage of
time that employees spent working on the other party's matters as a percentage
of total time worked.
In connection with the Initial Public Offering, the Company and Zapata
entered into a number of agreements for the purpose of defining their
continuing relationship. These agreements were negotiated in the context of a
parent-subsidiary relationship and, therefore, were not the result of
arms-length negotiations.
Separation Agreement. The Separation Agreement served as the master
agreement for the Company's separation from Zapata. Pursuant to the Separation
Agreement, the Company and Zapata entered into a Sublease Agreement,
Registration Rights Agreement, Tax Indemnity Agreement and Administrative
Services Agreement. The Separation Agreement also required the Company to repay
the $33.3 million of intercompany indebtedness owed by the Company to Zapata
contemporaneously with the consummation of the Initial Public Offering.
The Separation Agreement also prohibits Zapata from engaging in the
harvesting of menhaden or the production or marketing of fish meal, fish oil or
fish solubles anywhere in the United States for a period of five years from the
date of the Separation Agreement, which period ended in April 2003. Under the
Separation Agreement, Zapata and the Company and its subsidiaries agreed to
indemnify each other with respect to any future losses that might arise from
the Initial Public Offering as a result of any untrue statement or alleged
untrue statement in any Initial Public Offering document or the omission or
alleged omission to state a material fact in any Initial Public Offering
document (i) in the Company's case, except to the extent such statement was
based on information provided by Zapata and (ii) in Zapata's case, only to the
extent such statement was based on information supplied by Zapata.
Sublease Agreement. Pursuant to the Sublease, the Company subleases from
Zapata its principal corporate offices in Houston, Texas. The annual rent paid
by the Company in 2002 under this Sublease was $109,435. The Company believes
that this sublease cost is equal to or lower than market rate.
Registration Rights Agreement. Under the Registration Rights Agreement,
the Company granted to Zapata certain rights (the "Registration Rights") with
respect to the registration under the Securities
17
Act of 1933, as amended (the "Securities Act"), of shares of Common Stock owned
by Zapata at the closing of the Initial Public Offering (the "Registrable
Securities"). Pursuant to the Registration Rights Agreement, Zapata may require
the Company, not more than once in any 365-day period commencing on the first
anniversary of the closing of the Initial Public Offering and on not more than
three occasions after Zapata no longer owns a majority of the voting power of
the outstanding capital stock of the Company, to file a registration statement
under the Securities Act covering the registration of the Registrable
Securities, including in connection with an offering by Zapata of its
securities that are exchangeable for the Registrable Securities (the "Demand
Registration Rights"). Zapata's Demand Registration Rights are subject to
certain limitations, including that any such registration cover a number of
Registrable Securities having a fair market value of at least $50 million at
the time of the request for registration and that the Company may be able to
temporarily defer a demand registration to the extent it conflicts with another
public offering of securities by the Company or would require the Company to
disclose certain material non-public information. Zapata will also be able to
require the Company to include Registrable Securities owned by Zapata in a
registration by the Company of its securities (the "Piggyback Registration
Rights"), subject to certain conditions, including the ability of the
underwriters for the offering to limit or exclude Registrable Securities
therefrom.
The Company and Zapata will share equally the out-of-pocket fees and
expenses of the Company associated with a demand registration and Zapata will
pay its pro rata share of underwriting discounts, commissions and related
expenses (the "Selling Expenses"). The Company will pay all expenses associated
with a piggyback registration, except that Zapata will pay its pro rata share
of the Selling Expenses. The Registration Rights Agreement contains certain
indemnification and contribution provisions (i) by Zapata for the benefit of
the Company and related persons, as well as any potential underwriter and (ii)
by the Company for the benefit of Zapata and related persons, as well as any
potential underwriter. Zapata's Demand Registration Rights will terminate on
the date that Zapata owns, on a fully converted or exercised basis with respect
to such securities held by Zapata, Registrable Securities representing less
than 10% of the then issued and outstanding voting stock of the Company.
Zapata's Piggyback Registration Rights will terminate at such time as it is
able to sell all of its Registrable Securities pursuant to Rule 144 under the
Securities Act within a three month period. Zapata also may transfer its
Registration Rights to any transferee from it of Registrable Securities that
represent, on a fully converted or exercised basis with respect to the
Registrable Securities transferred, at least 20% of the then issued and
outstanding voting stock of the Company at the time of transfer; provided,
however, that any such transferee will be limited to (i) two demand
registrations if the transfer conveys less than a majority but more than 30% of
the then issued and outstanding voting stock of the Company and (ii) one demand
registration if the transfer conveys 30% or less of the then issued and
outstanding voting stock of the Company.
Tax Indemnity Agreement. Prior to the Initial Public Offering, the Company
was a member of Zapata's affiliated group and filed its tax returns on a
consolidated basis with such group. As a result of the Initial Public Offering,
the Company is no longer a member of the Zapata affiliated group. The Tax
Indemnity Agreement defines the respective rights and obligations of the
Company and Zapata relating to federal, state and other taxes for periods
before and after the Initial Public Offering. Pursuant to the Tax Indemnity
Agreement, Zapata is responsible for paying all federal income taxes relating
to taxable periods ending before and including the date on which the Company is
no longer a member of Zapata's affiliated group. Under the Tax Indemnity
Agreement, the Company is responsible for all taxes of the Company with respect
to taxable periods beginning after the date on which the Company was no longer
a member of Zapata's affiliated group. The Company is entitled to any refunds
(or reductions in tax liability) attributable to any carry back of the
Company's post-Initial Public Offering tax attributes
18
(i.e., net operating losses) realized by the Company after it was no longer a
member of Zapata's affiliated group. Any other refunds arising from the
reduction in tax liability involving the Zapata affiliated group while the
Company was a member of such group, including but not limited to, taxable
periods ending before or including such date (with the exception of any refunds
arising from a reduction in tax liability attributable to the Company), belong
to Zapata.
Administrative Services Agreements. Under the Administrative Services
Agreement, the Company is required to provide Zapata with administrative
services upon reasonable request of Zapata. Zapata pays the Company for these
services at the Company's estimated cost of providing these services. This
agreement continues until Zapata terminates it on five days advance written
notice or the Company terminates it after Zapata fails to cure a breach of the
agreement within thirty days after the Company provides written notice to
Zapata of the breach. Zapata paid $14,500 to the Company under this agreement
in 2002.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than
ten percent of the Company's Common Stock, to file reports of their beneficial
ownership (Forms 3, 4, and 5, and any amendment thereto) with the Securities
and Exchange Commission and the New York Stock Exchange. Executive officers,
directors, and greater-than-ten percent holders are required to furnish the
Company with copies of the forms that they file.
To the Company's knowledge, all filings applicable to its executive
officers, directors, greater-than-ten percent beneficial owners and other
persons subject to Section 16 of the Exchange Act were timely filed in 2002.
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected the firm of
PricewaterhouseCoopers LLP, which firm (or its predecessors) has served as the
independent auditor for the past five fiscal years, to conduct an audit, in
accordance with generally accepted auditing standards, of the Company's
financial statements for the fiscal year ending December 31, 2003. The Board of
Directors of the Company has concurred with this selection by the Audit
Committee. The Company expects representatives of PricewaterhouseCoopers LLP to
be present at the Annual Meeting to respond to appropriate questions and to
make a statement, if they so desire. This selection is being submitted for
ratification at the meeting.
Fees. PricewaterhouseCoopers LLP billed the Company the following fees for
the fiscal year ended December 31, 2002:
Audit Fees. Audit fees billed to the Company by PricewaterhouseCoopers LLP
during the Company's 2002 fiscal year for audit of the Company's annual
financial statements and review of those financial statements included in the
Company's quarterly reports on Form 10-Q totaled $143,601.
19
Financial Information Systems Design and Implementation Fees. The Company
did not engage PricewaterhouseCoopers LLP to provide advice to the Company
regarding financial information systems design and implementation during the
fiscal year ended December 31, 2002.
All Other Fees. Fees billed to the Company by PricewaterhouseCoopers LLP
during the Company's 2002 fiscal year for all other non-audit services rendered
to the Company, including tax-related services totaled $104,936.
All PricewaterhouseCoopers LLP non-audit services were reviewed with the
Audit Committee, which concluded that the provision of such services by
PricewaterhouseCoopers was compatible with maintenance of that firm's
independence in the conduct of its audited functions.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed of three
independent directors and operates under a written charter adopted by the Audit
Committee and the Board of Directors. The full text of the Audit Committee's
charter is attached to this Proxy Statement as Exhibit A.
In connection with the December 31, 2002 financial statements of the
Company, the Audit Committee: (i) reviewed and discussed the audited financial
statements with management, (ii) discussed with the independent auditors the
matters required by Statement on Auditing Standards No. 90, (iii) received the
written disclosures and letter from the independent auditors required by
Independence Standards Board Standard No. 1 and discussed with the independent
auditor the independent auditor's independence, and (iv) considered the
compatibility of any non-audit services provided by the independent auditor
with the auditor's independence. Based upon these reviews and discussions, the
Audit Committee has recommended to the Board of Directors that the Company's
audited financial statements be included in the Securities and Exchange
Commission Annual Report on Form 10-K for the fiscal year ended December 31,
2002.
AUDIT COMMITTEE
Gary L. Allee (Chairman)
Paul M. Kearns
William Lands
The Audit Committee Report shall not be deemed incorporated by reference by
any general statement incorporating by reference the Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and it shall not otherwise be deemed filed with the
Securities and Exchange Commission.
Vote Required. The affirmative vote of the holders of a majority of the
shares of Common Stock present in person or represented by proxy at the meeting
and entitled to vote is required for such ratification. If not ratified, the
Audit Committee will reconsider the selection of the independent auditors
although it will not be required to select different independent auditors for
the Company.
20
THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE EACH RECOMMENDS THAT
STOCKHOLDERS VOTE FOR RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS FOR THE COMPANY.
OTHER MATTERS
The Board of Directors is not presently aware of any matters to be
presented at the Annual Meeting other than the election of directors, and the
ratification of PricewaterhouseCoopers LLP as the Company's independent
auditors. If, however, other matters are properly brought before the Annual
Meeting, the enclosed proxy gives discretionary authority to the persons named
therein to act in accordance with their best judgment on such matters.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Pursuant to the Company's Bylaws, stockholder proposals to be presented at
the fiscal year 2004 Annual Meeting of Stockholders of the Company must be
received by the Company by no later than 90 days before the date of the 2004
Annual Meeting of Stockholders. If such timely notice of a stockholder proposal
is not given, then the proposal may not be brought at the 2004 Annual Meeting
of Stockholders. If such timely notice is given but is not accompanied by a
written statement to the extent required by applicable securities laws, then
the Company may exercise discretionary voting authority over proxies with
respect to such proposal if presented at the Company's 2004 Annual Meeting.
Under applicable securities laws, stockholder proposals must be received by
the Company no later than 120 days prior to May 2, 2004 to be considered for
inclusion in the Company's proxy statement relating to the 2004 Annual Meeting
or, if the Company changes the date of the 2004 Annual Meeting by more than 30
days from the date of the 2003 Annual Meeting, then stockholder proposals must
be received by the Company a reasonable time before the Company begins to print
and mail its proxy statement for the 2004 Annual Meeting.
Stockholder proposals must be mailed to Omega Protein Corporation, to the
attention of the Secretary, 1717 St. James Place, Suite 550, Houston, Texas
77056.
THE COMPANY WILL FURNISH WITHOUT CHARGE COPIES OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002, INCLUDING THE
FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, TO INTERESTED
SECURITY HOLDERS ON REQUEST. THE COMPANY WILL ALSO FURNISH TO ANY SUCH PERSON
ON REQUEST ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING SUCH REPORT UPON
PAYMENT OF REASONABLE FEES RELATING TO THE COMPANY FURNISHING SUCH EXHIBITS.
REQUESTS FOR COPIES SHOULD BE DIRECTED TO JOHN D. HELD, SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY, OMEGA PROTEIN CORPORATION, 1717 ST. JAMES PLACE,
SUITE 550, HOUSTON, TEXAS 77056.
21
ANNUAL REPORT
The Company's Annual Report to Stockholders containing audited financial
statements for 2002 is being mailed with this Proxy Statement to all
stockholders of record.
By the order of the Board of Directors
/s/ John D. Held
JOHN D. HELD
Senior Vice President, General
Counsel and Secretary
Houston, Texas
May 2, 2003
22
EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE
of
OMEGA PROTEIN CORPORATION
(1) The Audit Committee's purpose is to:
(A) assist Board of Directors oversight of:
(1) the integrity of the Company's financial statements;
(2) the Company's compliance with legal and regulatory requirements,
(3) the independent auditors' qualifications and independence, and
(4) the performance of the Company's internal audit function and
independent auditors; and
(B) prepare the report that the Securities and Exchange Commission rules
require be included in the Company's annual proxy statement.
(2) The duties and responsibilities of the Audit Committee are to:
(A) retain and terminate the Company's independent auditors (subject, if
applicable, to stockholder ratification) and determine the compensation
of the independent auditors. The Audit Committee should approve in
advance the terms of engagement of the independent auditors, including
audit services (which may include comfort letters) and otherwise
permissible, non-audit services. The Audit Committee hereby delegates
to the Chairman of the Audit Committee the authority to approve such
audit or non-audit services if the Chairman's pre-approval is presented
to the full Audit Committee at a scheduled meeting.
(B) at least annually, obtain and review a report by the independent
auditors describing: the firm's internal quality-control procedures;
any material issues raised by the most recent internal quality-control
review, or peer review, of the firm, or by any inquiry or investigation
by governmental or professional authorities, within the preceding five
years, respecting one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues; and (to assess
the auditors' independence) all relationships between the independent
auditors and the Company;
(C) discuss the Company's annual audited financial statements and quarterly
financial statements with management and the independent auditors,
including the Company's disclosures under "Managements' Discussion and
Analysis of Financial Condition and Results of Operations";
(D) discuss the Company's earnings press releases, as well as financial
information and earnings guidance provided to analysts and rating
agencies;
(E) conduct any investigation appropriate to fulfilling its
responsibilities. The Audit Committee has direct access to the
independent auditors as well as anyone in the Company. The Audit
Committee has the authority to retain, at the Company's expense,
special legal, accounting, or other consultants or experts it deems
necessary in the performance of its duties and to determine funding for
such advisors;
A-1
(F) discuss policies with respect to risk assessment and risk management;
(G) meet separately, periodically, with management, with internal auditors
(or other personnel responsible for the internal audit function) and
with independent auditors;
(H) review with the independent auditors any audit problems or difficulties
and management's response;
(I) determine that the business practices and conduct of employees and
other representatives of the Company comply with the policies and
procedures of the Company;
(J) set clear hiring policies for employees or former employees of the
independent auditors; and
(K) report regularly to the Board of Directors.
(3) The Audit Committee should evaluate its performance annually.
(4) The Audit Committee should establish the duties and responsibilities of the
Company's internal audit department.
(5) Audit Committee members shall meet the requirements of applicable
securities laws and the New York Stock Exchange. The Audit Committee shall
be comprised of directors as determined by the Board of Directors, each of
whom shall be independent nonexecutive directors, free from any
relationship that would interfere with the exercise of his or her
independent judgment.
Approved by the Audit Committee on February 24, 2003.
A-2
OMEGA PROTEIN CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF OMEGA PROTEIN CORPORATION
The undersigned acknowledges receipt of the Omega Protein Corporation
Notice of Annual Meeting and Proxy Statement and hereby appoints Joseph L. von
Rosenberg III, John D. Held and Robert W. Stockton, and each of them
individually, as proxies with full power of substitution, to vote all shares of
Common Stock of Omega Protein Corporation that the undersigned is entitled to
vote at the Annual Meeting of Stockholders thereof to be held on June 19, 2003,
or at any adjournment or postponement thereof, as follows:
Any executed proxy which does not designate a vote shall be deemed to grant
authority for any item not designated.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
OMEGA PROTEIN CORPORATION
June 19, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible
*Please detach and mail in the envelope provided.*
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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1. ELECTION OF DIRECTORS to hold office until the 2006 Annual Meeting and
until his or her successor is elected and qualified
NOMINEES
[ ] FOR ALL NOMINEES Avram A. Glazer
Darcie S. Glazer
[ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(and while in the name of
that nominee below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and write the nominee name(s) below.
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FOR AGAINST ABSTAIN
2. APPOINTMENT OF PRICEWATERHOUSECOOPERS [ ] [ ] [ ]
LLP AS AUDITORS FOR THE COMPANY
ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED, WILL
BE VOTED "FOR" PROPOSAL 1 (ALL NOMINEES), "FOR" PROPOSAL 2 AND IN ACCORDANCE
WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER
BUSINESS PROPERLY BROUGHT BEFORE THE MEETING.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO A VOTE THEREON.
Please complete, sign and promptly mail this proxy in the enclosed envelope.
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To change the address on your account, please check the box at right [ ]
and indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be
submitted via this method.
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Please check the following box if you plan to attend [ ]
the annual meeting of stockholders in person.
Signature of Stockholder Date
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Signature of Stockholder Date
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Note: This proxy must be signed exactly as the name appears hereon. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.