U.S. ENERGY CORP.
Minerals Plaza, Glen L. Larsen Building
877 North 8th West
Riverton, Wyoming 82501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on Wednesday, November 29, 1995
TO THE SHAREHOLDERS OF U.S. ENERGY CORP:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of U.S.
Energy Corp., a Wyoming corporation (the "Company"), will be held at the
Company's executive offices, 877 North 8th West, Riverton, Wyoming 82501
on Wednesday, November 29, 1995, at 11:00 a.m., local time, or at any
adjournments thereof (the "Meeting"), for the purpose of acting upon:
1. The election of two directors to serve until the third
succeeding annual meeting of shareholders, and until their
successors have been duly elected or appointed and qualified;
2. Such other business as may properly come before such meeting.
Only shareholders of record at the close of business on Tuesday,
October 3, 1995, will be entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. The Company's transfer books will
not be closed for the Meeting.
A list of shareholders entitled to vote at the Meeting will be
available for inspection by any record shareholder at the Company's
principal executive offices in Riverton, Wyoming. The inspection period
begins two days after the date this Notice is given and ends at the
conclusion of the Meeting.
By Order of the Board of Directors
MAX T. EVANS, Secretary
Please date, sign and return your Proxy so that your shares may be
voted as you wish, and to assure quorum. The prompt return of your
signed Proxy, regardless of the number of shares you hold, will aid the
Company in reducing the expense of additional Proxy solicitation. The
giving of such Proxy does not affect your right to vote in person should
you attend the Meeting.
YOUR VOTE IS IMPORTANT
Dated: October 18, 1995
<PAGE>
U.S. ENERGY CORP.
Minerals Plaza, Glen L. Larsen Building
877 North 8th West
Riverton, Wyoming 82501
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, NOVEMBER 29, 1995
The enclosed Proxy is solicited on behalf of the Board of Directors
(the "Board") of U.S. Energy Corp. (the "Company") for use at the Annual
Meeting of Shareholders to be held at 11:00 a.m. local time on November
29, 1995 (the "Meeting"). It is expected that the Notice of Meeting,
Proxy Statement and Proxy will be mailed to record shareholders on or
before October 31, 1995.
REVOCABILITY OF PROXY
The Proxy may be revoked at any time, to the extent it has not been
exercised, by: (i) written revocation; (ii) executing a later-dated
Proxy and delivering it to the Company; (iii) requesting (in writing)
a return of the Proxy; or (iv) the shareholder voting in person at the
Meeting.
VOTING OF PROXY
If the enclosed Proxy is executed and returned, it will be voted as
indicated by the shareholder on the proposals. Unless otherwise
instructed to the contrary in the Proxy, the appointees named in the
Proxy will:
1. VOTE FOR the two management nominees to the Board; and
2. VOTE in accordance with their best judgment on any other matters
that may properly come before the Meeting.
As of the date of the Notice of Meeting and Proxy Statement, the
management of the Company has no knowledge of other matters that may be
brought before the Meeting.
<PAGE>
SOLICITATION
The costs of preparing, assembling and mailing the Notices of Meeting,
Proxy Statements, Proxies, and solicitations of the Proxies and
miscellaneous costs with respect to the same, will be paid by the
Company. The solicitation is to be made by use of the mails. The
Company may also use the services of its directors, officers and
employees to solicit Proxies, personally or by telephone and telegraph,
at no additional salary or compensation. The Board does not expect to
use specially engaged employees or paid solicitors, although it reserves
the right to do so.
The Company intends to request banks, brokerage houses and other such
custodians, nominees and fiduciaries to forward copies of the Proxy
Materials to those persons for whom they hold shares and request
authority for the execution of the Proxies. The Company will reimburse
the nominee holders for reasonable out-of-pocket expenses incurred by
them in so doing.
VOTING SECURITIES
Only holders of record of shares of the Company's $.01 par value
common stock (the "Common Stock"), at the close of business on Tuesday,
October 3, 1995, will be entitled to vote at the Meeting. On the record
date, the Company had 6,343,465 shares of Common Stock outstanding and
entitled to vote. The Company has no other class of voting securities
outstanding. Each share of Common Stock is entitled to one vote, in
person or by proxy, on all matters other than the election of directors,
with respect to which cumulative voting is provided. Cumulative voting
generally allows each holder of shares of Common Stock to multiply the
number of shares owned by the number of directors being elected, and to
distribute the resulting number of votes among nominees in any
proportion that the holder chooses.
A majority of the issued and outstanding shares of Common Stock,
represented in person or by Proxy, constitutes a quorum at any
shareholders' meeting.
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following is a list of all record holders who, as of September 21, 1995
beneficially owned more than five percent of the outstanding shares of Common
Stock, as reported in filings with the Securities Exchange Commission (the
"SEC") or as otherwise known to the Company. Except as otherwise noted, each
holder exercises the sole voting and dispositive powers over the shares
listed opposite the holder's name. It should be noted that voting and
dispositive powers over certain shares are shared by two or more of the
listed holders. Such securities are reported opposite each holder having a
shared interest therein. See "Certain Other Transactions".
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
Total
Name and address Voting Rights Dispositive Rights Beneficial Percent
of beneficial owner Sole Shared Sole Shared Ownership of Class(1)
<S> <C> <C> <C> <C> <C> <C>
John L. Larsen(2) 593,332 1,064,427 521,536 1,319,919 1,889,355 28.2%
201 Hill Street
Riverton, WY 82501
Max T. Evans(3) 119,577 676,259 93,589 931,751 1,038,090 16.2%
1410 Smith Road
Riverton, WY 82501
Daniel P. Svilar(4) 142,171 544,826 103,963 544,826 686,997 10.7%
357 Indiana Street
Hudson, WY 82515
Michael D. Zwickl(5) 58,069 510,359 58,069 510,359 568,428 9.0%
137 North Beech Street
Casper, WY 82601
Kathleen R. Martin(6) -0- 510,359 -0- 510,359 510,359 8.0%
309 North Broadway
Riverton, WY 82501
Crested Corp. 510,359 510,359 510,359 -0- 510,359 8.0%
877 North 8th West
Riverton, WY 82501
Harold F. Herron(7) 99,176 555,649 96,351 811,141 905,392 13.9%
3425 Riverside Road
Riverton, WY 82501
U.S. Energy Corp. ESOP(8)165,900 -0- 421,392 -0- 421,392 6.6%
877 North 8th West
Riverton, WY 82501
</TABLE>
(1) Percent of class is computed by dividing the number of
shares beneficially owned plus any options held by the reporting
person, by the number of shares outstanding plus the shares
underlying options held by that person.
(2) Mr. Larsen exercises sole voting powers over 242,936
directly owned shares, 106,000 held in joint tenancy with his wife,
20,400 shares subject to forfeiture, 200,100 shares underlying
options and 23,896 shares held in the U.S. Energy Corp. Employee
Stock Ownership Plan ("ESOP") account established for his benefit.
The directly owned shares include 27,500 shares gifted to his wife,
that have remained in Mr. Larsen's name. Shares over which shared
voting rights are exercised consist of 898,527 shares held by
corporations of which Mr. Larsen is a director, and 165,900 shares
held by the ESOP, which have not been allocated to accounts
established for specific beneficiaries. The shares held by
corporations of which Mr. Larsen is a director consist of 510,359
shares held by Crested Corp. ("Crested"), 225,556 shares held
directly by The Brunton Company ("Brunton"), 150,000 shares
underlying options held by Brunton and 12,612 shares held by Ruby
Mining Company ("Ruby"). Mr. Larsen shares voting powers over the
unallocated ESOP shares in his capacity as an ESOP Trustee. Shares
over which sole dispositive rights are exercised consist of
directly owned shares, joint tenancy shares and options, less the
27,500 shares gifted, but not transferred, to his wife. Shares for
which shared dispositive powers are held consist of the 421,392
shares held by the ESOP, the shares held by Crested, Brunton, and
Ruby, and the Brunton option shares. The shares shown as
beneficially owned by Mr. Larsen do not include 42,350 shares owned
directly by his wife, who exercises the sole investment and voting
powers over those shares.
(3) Shares over which Mr. Evans exercises sole voting powers
consist of 36,389 directly owned shares which are held in joint
tenancy with his wife, 12,750 shares subject to forfeiture, 57,200
shares underlying options and 13,238 shares held in the ESOP
account established for his benefit. Shares for which Mr. Evans
holds sole dispositive powers are comprised of his directly held
shares and the shares underlying his options. Shares over which
Mr. Evans exercises shared voting rights consist of those held by
Crested and the unallocated ESOP shares. He exercises shared
dispositive rights over the shares held by Crested and the ESOP.
Mr. Evans shares voting and dispositive power over Crested's shares
with the remaining directors of that company, and he shares voting
powers over unallocated ESOP shares with the other ESOP Trustees.
(4) Mr. Svilar exercises sole voting powers over 29,263
directly owned shares, 7,700 shares held in joint tenancy with his
wife, 1,000 shares held as custodian for his minor child under the
Wyoming Uniform Transfers to Minors Act (the Minor's shares),
18,360 shares subject to forfeiture, 66,000 shares underlying
options and 19,848 shares held in the ESOP account established for
his benefit. He holds sole dispositive power over his directly
held shares, joint tenancy shares, Minor's shares and the shares
underlying his options. The shares over which he exercises shared
voting and dispositive rights consist of 12,200 shares held jointly
with a family member, and the 510,359 shares held by Crested, over
which he exercises shared investment and voting powers as a Crested
director, and 22,267 shares held by a nonaffiliated company of
which Mr. Svilar is a partner.
(5) Mr. Zwickl exercises sole voting and dispositive powers
over 4,444 directly held shares and 53,625 shares held by two (2)
limited partnerships. He is the sole officer and director of the
corporate general partner of those partnerships. As a director of
Crested, Mr. Zwickl exercises shared voting and dispositive powers
over the 510,359 shares held by Crested.
(6) Consists of shares held by Crested over which shared voting
and dispositive powers are exercised with the other Crested
directors.
(7) Mr. Herron exercises sole voting powers over 71,251
directly owned shares, 12,000 shares held for his minor children
under the Wyoming Uniform Transfers to Minors Act (the Minor's
shares), 11,000 shares underlying options and 4,925 shares held in
the ESOP account established for his benefit. Sole dispositive
powers are exercised over the directly held shares, the Minor's
shares and the shares underlying options. Mr. Herron exercises
shared voting rights over 225,556 shares held by Brunton, 150,000
shares underlying options held by Brunton, 12,612 shares held by
Ruby, 1,581 shares held by Northwest Gold, Inc. ("NWG") and the
165,900 unallocated ESOP shares. Shared dispositive rights are
exercised over the shares held by the ESOP, and the shares held by
Brunton, Ruby and NWG. Mr. Herron exercises shared dispositive and
voting powers over the shares held by Brunton, Ruby and NWG as a
director of those companies. He exercises shared voting powers
over unallocated ESOP shares in his capacity as an ESOP Trustee.
The shares shown as beneficially owned by Mr. Herron do not include
6,030 shares owned directly by his wife who exercises the sole
voting and dispositive powers over those shares.
(8) The ESOP holds 421,392 shares, 165,900 of which have not
been allocated to accounts of individual plan beneficiaries. The
Trustees exercise the voting rights over the unallocated shares.
Plan participants exercise voting rights over allocated shares.
ELECTION OF DIRECTORS
The Company's directors have been divided into three classes,
each consisting of two persons. Directors are elected until the
third succeeding annual meeting and until their successors have
been duly elected or appointed and qualified or until death,
resignation or removal. The terms of two directors, Harold F.
Herron and David W. Brenman, will expire at the Meeting, and they
have been nominated for re-election. The current directors of the
Company are:
<PAGE>
Meeting
at which
Name, age and Other positions Director term will
designation with the Company since expire
John L. Larsen (64) Chairman, CEO and 1966 1997
(continuing director) President (c)(d)(e) Annual Meeting
Max T. Evans (71) Secretary 1978 1997
(continuing director) (a)(c)(e) Annual Meeting
Harold F. Herron (42) Vice President 1989 1995
(nominee) (b)(c)(e) Annual Meeting
David W. Brenman (39) (b)(d) 1989 1995
(nominee) Annual Meeting
Don C. Anderson (68) (c) 1990 1996
(continuing director) Annual Meeting
Nick Bebout (44) (a)(b)(d) 1989 1996
(continuing director) Annual Meeting
(a) Member of the nominating committee.
(b) Member of the compensation/stock option committee.
(c) Member of the executive committee.
(d) Member of the audit committee.
(e) ESOP trustee.
As noted under "Voting Securities", cumulative voting is allowed in
the election of directors. The two directors receiving the greatest
number of votes cast at a duly convened meeting will be elected. The
proxy holders named in the Proxies do not currently intend to cumulate
the votes of Proxies received by them, but reserve the right to
cumulatively vote such shares for the management appointees, in such
manner as they elect.
Executive officers of the Company are elected by the Board at annual
directors' meetings, which follow each Annual Shareholders' Meeting, to
serve until the officer's successor has been duly elected and qualified,
or until death, resignation or removal by the Board.
Family Relationships.
Harold F. Herron, a director and vice-president, is the son-in-law of
John L. Larsen, a principal shareholder, director and CEO. Nick Bebout,
a director, is a nephew of Daniel P. Svilar, a principal shareholder and
General Counsel. There are no other family relationships among the
executive officers or directors of the Company.
<PAGE>
Business Experience and Other Directorships of Directors and Nominees.
John L. Larsen has been principally employed as an officer and
director of the Company and Crested for more than the past five years.
He is a director of the Company's subsidiary, Ruby. Crested, Ruby and
Centurion, have registered equity securities under the Securities
Exchange Act of 1934 (the "Exchange Act").
Max T. Evans has been principally employed as an officer and chief
geologist of the Company and Crested for more than the past five years.
He is president and a director of Crested. Mr. Evans received B.S. and M.S.
degrees in geology from Brigham Young University.
Harold F. Herron has been the Company's Vice-President since January
1989. From 1976, Mr. Herron has been an employee of Brunton, a
manufacturer and/or marketer of compasses, binoculars and knives, which
is a wholly owned Company subsidiary. Initially, he was Brunton's sales
manager, and since 1987 he has been its president. Mr. Herron is a
director of Ruby and NWG, which have registered equity securities under
the Exchange Act. Mr. Herron received an M.B.A. degree from the
University of Wyoming after receiving a B.S. degree in Business
Administration from the University of Nebraska at Omaha.
David W. Brenman has been a director of the Company since January
1989. Since September 1988, Mr. Brenman has been a self-employed
financial consultant. In that capacity, Mr. Brenman has assisted the
Company and Crested in negotiating certain financing arrangements. From
February 1987 through September 1988, Mr. Brenman was a vice-president
of project financing for Lloyd's International Corp., a wholly-owned
subsidiary of Lloyd's Bank, PLC. From October 1984 through February
1987, Mr. Brenman was president, and continues to be a director of
Cogenco International, Inc., a company engaged in the electric
cogeneration industry, which has registered equity securities under the
Exchange Act. Mr. Brenman has an L.L.M. degree in taxation from New
York University and a J.D. degree from the University of Denver.
Don C. Anderson has been a Company director since May 1990. From
January 1990 until mid-fiscal 1993, Mr. Anderson was a geologist for the
Company. Mr. Anderson was Manager of Exploration and Development for
Pathfinder Mines Corporation, a major domestic uranium mining and
milling corporation, from 1976 until his retirement in 1988.
Previously, he was Mine Manager for Pathfinder's predecessor, Utah
International, Inc., from 1965 to 1976. He received a B. S. degree in
geology from Brigham Young University.
<PAGE>
Nick Bebout has been director and president of NUCOR, Inc. ("NUCOR"),
a privately-held corporation that provides exploration and development
drilling services to the mineral and oil and gas industries, since 1987.
Prior to that time, Mr. Bebout was vice-president of NUCOR from 1984.
Mr. Bebout is also president and a director of S.W. Financial Corp.
("SWF"), a corporation which is evaluating potential acquisitions or
business combinations with other entities, but has no other current
operations. SWF is currently subject to certain periodic reporting
requirements under Section 15(d) of the Exchange Act. Mr. Bebout is
also an officer, director and owner of other privately-held entities
involved in the resources industry.
SECURITY OWNERSHIP OF NOMINEES AND DIRECTORS
The following table sets forth, as of September 21, 1995, the shares
of Common Stock, and the $.001 par value common stock of the Company's
52%-owned subsidiary, Crested, held by each director and nominee, and by
all officers and directors as a group. Unless otherwise noted, the
listed record holder exercises sole voting and dispositive powers over
the shares reported as beneficially owned. It should be noted that
voting and dispositive powers for certain shares are shared by two or
more of the listed holders. Such shares are reported opposite each
holder having a shared interest therein, but are only included once in
the shareholdings of the group presented in the table.
<TABLE>
<CAPTION>
Company Common Stock Crested Common Stock
Amount and Percent Amount and Percent
Nature of of Nature of of
Beneficial Ownership Class(1) Beneficial Ownership Class(1)
<S> <C> <C> <C> <C>
John L. Larsen 1,889,355(2) 28.2% 5,814,182(6)(7)(8) 55.4%
Max T. Evans 1,038,090(2) 16.2% 5,439,533(6) 53.3%
Harold F. Herron 905,392(2) 13.9% 5,821,114(6)(7)(8) 55.4%
Don C. Anderson 26,100(3) * 5,300,297(6) 52.0%
Nick Bebout 23,283(4) * 5,300,297(6) 52.0%
David W. Brenman 7,750(5) * 5,300,297(6) 52.0%
All officers and
directors as a group
(eight persons) 2,362,574(6) 34.5% 6,200,369(7)(8)(9) 59.0%
* Less than one percent
</TABLE>
(1) Percent of class is computed by dividing the number of
shares beneficially owned plus any options held by the reporting
person or group, by the number of shares outstanding plus the
shares underlying the options held by that person or group.
<PAGE>
(2) See footnotes for this person to the table presented under
the heading "Principal Holders of Voting Securities".
(3) Includes 7,100 directly held shares and 19,000 shares
subject to forfeiture. Mr. Anderson exercises sole voting rights
with respect to the 26,100 shares, and sole dispositive rights over
the directly held shares.
(4) Consists of 7,400 shares held directly, 50 shares held in
joint tenancy with his wife, 2,000 shares subject to forfeiture and
13,833 shares held by a privately held company of which Mr. Bebout
is an officer, director and principal shareholder. Mr. Bebout
exercises shared investment and voting powers with respect to the
shares held by the private company. He exercises sole voting and
investment powers over the directly held shares and joint tenancy
shares.
(5) Consists of 5,750 shares held directly and 2,000 shares
subject to forfeiture. Mr. Brenman exercises sole voting powers
over the 7,750 shares and sole dispositive powers over the 5,750
directly held shares.
(6) Consists of 1,072,870 shares over which the group members
exercise sole voting rights, including 364,000 shares underlying
options and 77,146 shares allocated to ESOP accounts established
for the benefit of group members. The listed shares include
883,574 shares over which group members exercise sole dispositive
rights. Shared voting and dispositive rights are exercised with
respect to 1,114,308 and 1,219,800 shares, respectively. The
listed shares include shares held by officers who are not
directors.
(7) Includes 5,300,297 Crested shares held by the Company, with
respect to which shared voting and dispositive powers are exercised
as a director.
(8) Includes 53,885 Crested shares held by Ruby, with respect
to which shared voting and dispositive powers are exercised as a
Ruby director.
(9) Includes 160,000 Crested shares held by Brunton and 300,000
shares underlying options held by Brunton, with respect to which
shared voting and dispositive powers are exercised as a Brunton
director.
<PAGE>
Each director beneficially holds the 2,400,000, 2,040,000 and
260,000,000 shares of Ruby, NWG, and Four Nines Gold, Inc. ("FNG")
common stock, respectively, held by the Company. They exercise
shared voting and dispositive powers over those shares as Company
directors. Those shares represent 26.7%, 7.6%, and 51.9% of the
outstanding shares of Ruby, NWG, and FNG, respectively. John L.
Larsen beneficially holds 272,500,000 shares of FNG common stock
(54.4% of the outstanding shares), which includes 255,000,000
shares held by the Company, 5,000,000 held by USECC Joint Venture
and 5,000,000 shares held by Crested, over which Mr. Larsen shares
voting and dispositive powers with the remaining directors of the
Company and Crested. Harold F. Herron beneficially holds
2,400,500, 2,597,500, and 265,000,000 shares of the common stock of
Ruby, NWG, and FNG, respectively, representing 26.7%, 9.7%, and
52.9%, respectively, of those classes of stock. One of the
Company's executive officers beneficially owns 14,000,000 shares of
the common stock of FNG (4,000,000 shares directly in joint tenancy
with other family members), representing 2.8% of that class. None
of the other directors or officers directly hold any other shares
of stock of Ruby, NWG or FNG. All executive officers and directors
of the Company as a group (8 persons) hold 2,400,500, 2,597,500,
and 281,500,000 shares of the stock of Ruby, NWG, and FNG,
representing 26.7%, 9.7%, 60.0% and 56.2% of the outstanding shares
of those companies, respectively.
The Company has reviewed Forms 3, 4 and 5 reports concerning
ownership of Common Stock in the Company, which have been filed
with the SEC under Section 16(a) of the Exchange Act, and received
written representations from the filing persons. Based solely upon
review of the reports and representations, Crested Corp. and
Messrs. Larsen, Evans, Svilar, Anderson, Herron and Lorimer each
had one late filing. The Company believes no other director,
executive officer, beneficial owner of more than ten percent of the
Common Stock, or other person subject to the statutory filing
obligations, failed to file such reports on a timely basis during
fiscal 1995.
EXECUTIVE COMPENSATION
Under a Management Agreement dated August 1, 1981, the Company
and Crested share certain general and administrative expenses,
including compensation of the officers and directors of the
companies (but excluding directors' fees) which have been paid
through the USECC Joint Venture ("USECC"). Substantially all the
work efforts of the officers of the Company and Crested are devoted
to the business of both the Company and Crested.
All USECC personnel are Company employees, in order to utilize
the Company's ESOP as an employee benefit mechanism. The Company
charges USECC for the direct and indirect costs of its employees
for time spent on USECC matters, and USECC charges one-half of that
amount to each of Crested and the Company.
<PAGE>
The following table sets forth the compensation paid to the
USE Chief Executive Officer, and those of the four most highly
compensated USE executive officers who were paid more than $100,000
cash in any of the three fiscal years ended May 31, 1995. The
table includes compensation paid such persons by Crested and
Brunton for such persons' services to such subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John L. Larsen 1995 $144,023 $2,751 -- $9,000(1) -0- -- $13,361
CEO 1994 148,239 7,028 -- 9,600(1) -0- -- 14,394
President 1993 164,968 4,016 -- 7,200(1) 100,000(2) -- 16,718
Daniel P. Svilar 1995 112,615 2,076 -- 8,100(1) -0- -- 11,008
Asst. Secretary 1994 112,753 64,984 -- 8,640(1) -0- -- 17,300
1993 108,000 2,991 -- 6,480(3) -0- -- 12,862
Harold F. Herron 1995 117,238 2,033 -- -- -0- -- 6,626
Vice President 1994 105,983 18,268 -- -- -0- -- 9,743
1993 99,469 12,617 -- -- -0- -- 3,626
R. Scott Lorimer 1995 112,403 2,098 -- 5,681(1) -0- -- 10,989
Treasurer 1994 92,799 43,461 -- 6,181(1) -0- -- 13,260
1993 92,799 2,196 -- 4,548(1) -0- -- 9,400
(1) Bonus shares equal to 20% of original bonus shares issued
FY 1990, multiplied by $4.00 in 1994 and $3.00 in 1993, the closing
bid price on issue dates. These shares are subject to forfeiture
on termination of employment, except for retirement, death or
disability.
(2) 10-year non-qualified option at $2.00 per share.
(3) 10-year non-qualified option at $2.90 per share.
(4) Dollar values for ESOP contributions and 401K matching
contributions.
<PAGE>
Executive Compensation Plans and Employment Agreements
To provide incentive to Mr. Larsen for his efforts in having
GMMV develop a producing mine as soon as possible, in fiscal 1993
the USE Board adopted a long-term incentive arrangement under which
Mr. Larsen is to be paid a non-recurring $1,000,000 cash bonus,
provided that the Nuexco Exchange Value of uranium oxide
concentrates has been maintained at $25.00 per pound for six
consecutive months, and provided further that USE has received
cumulative cash distributions of at least $10,000,000 from GMMV as
a producing property. It is not expected that this cash bonus will
become payable in fiscal 1995.
The Company has adopted a plan to pay the estates of Messrs.
Larsen, Evans and Svilar amounts equivalent to the salaries they
are receiving at the time of their death, for a period of one year
after death, and reduced amounts for up to five years thereafter.
The amounts to be paid in such subsequent years have not yet been
established, but would be established by the Boards of the Company
and Crested.
Mr. Svilar has an employment agreement with the Company and
Crested, which provides for an annual salary in excess of $100,000,
with the condition that Mr. Svilar pay an unspecified amount of
expenses incurred by him on behalf of the Company and its
affiliates. In the event Mr. Svilar's employment is involuntarily
terminated, he is to receive an amount equal to the salary he was
being paid at termination, for a two year period. If he should
voluntarily terminate his employment, the Company and Crested will
pay him that salary for nine months thereafter. The foregoing is
in addition to Mr. Svilar's Executive Severance and Non-Compete
Agreement with the Company (see below).
In fiscal 1992, the Company signed Executive Severance and
Non-Compete Agreements with Messrs. Larsen, Evans, Svilar and
Lorimer, providing for payment to such person upon termination of
his employment with the Company, occurring within three years after
a change in control of the Company, of an amount equal to (i)
severance pay in an amount equal to three times the average annual
compensation over the prior five taxable years ending before change
in control, (ii) legal fees and expenses incurred by such persons
as a result of termination, and (iii) the difference between market
value of securities issuable on exercise of vested options to
purchase securities in USE, and the options' exercise price. These
Agreements also provide that for the three years following
termination, the terminated individual will not compete with USE in
most of the western United States in regards to exploration and
development activities for uranium, molybdenum, silver or gold.
For such non-compete covenant, such person will be paid monthly
over a three year period an agreed amount for the value of such
covenants (depending on the individual, ranging from $66,667 up to
$86,667). These Agreements are intended to benefit the Company's
shareholders, by enabling such persons to negotiate with a hostile
takeover offeror and assist the Board concerning the fairness of a
takeover, without the distraction of possible tenure insecurity
following a change in control. As of this Proxy Statement date,
the Company is unaware of any proposed hostile takeover.
The Company and Crested provide all of their employees with
certain forms of insurance coverage, including life and health
insurance. The health insurance plan does not discriminate in
favor of executive employees; life insurance of $50,000 is provided
to each member of upper management (which includes all persons in
the compensation table), $25,000 of such coverage is provided to
middle-management employees, and $15,000 of such coverage is
provided to other employees.
Employee Stock Ownership Plan ("ESOP"). An ESOP has been
adopted to encourage ownership of the Common Stock by employees,
and to provide a source of retirement income to them. Because the
persons performing duties for the Company are employees of USE,
they benefit from the ESOP and the other compensation plans of USE,
as described below. The ESOP is a combination stock bonus plan and
money purchase pension plan. It is expected that the ESOP will
continue to invest primarily in the Common Stock. Messrs. Larsen,
Herron and Evans are the trustees of the ESOP.
Contributions to the stock bonus plan portion of the ESOP are
discretionary and are limited to a maximum of 15% of the covered
employees' compensation for each year ended May 31. Contributions
to the money purchase portion of the ESOP are mandatory (fixed at
ten percent of the compensation of covered employees for each
year), are not dependent upon profits or the presence of
accumulated earnings, and may be made in cash or shares of Company
Common Stock.
The Company made a contribution of 37,204 shares to the ESOP
for fiscal 1995, all of which were contributed under the money
purchase pension plan. At the time the shares were contributed,
the market price was $5.375 per share, for a total contribution
valued at $199,971.50 which has been funded by the Company.
Crested and the Company are each responsible for one-half of that
amount (i.e., $99,985.75), and Crested currently owes its one-half
to the Company.
Employees are eligible to participate in the ESOP on the first
day of the plan year (June 1) following completion of one year of
service in which at least 1,000 hours are credited. Each
employee's participation in the ESOP continues until the ESOP's
anniversary date coinciding with or next following termination of
service by reason of retirement, disability or death. In these
cases, the participant will share in the allocation of USE's
contributions for the ESOP year in which the retirement, death or
disability occurs, and will have a fully-vested interest in
allocations to the participant's account.
<PAGE>
An employee's participation in the ESOP does not cease upon
termination of employment. If the employment of a participant in
the ESOP is terminated for reasons other than disability, death, or
retirement (unless the employee receives a lump sum distribution
upon the termination of employment), participation continues
following the termination, until five consecutive one-year breaks
in service have been incurred. An employee is deemed to have
incurred a one-year break in service during any year in which 500
or fewer hours of service are completed.
Employee interests in the ESOP are earned pursuant to a seven
year vesting schedule. Upon completion of three years of service
for the Company, the employee is vested as to 20% of the employee's
account in the ESOP, and thereafter at the rate of 20% per year.
Any portion of an employee's ESOP account which is not vested is
forfeited upon termination of employment for any reason, other than
retirement, disability, or death.
The 37,204 shares issued to the ESOP for fiscal 1995 included
2,276 shares allocated to John L. Larsen's account, 1,422 shares
allocated to Max T. Evans' account, 582 shares allocated to Harold
F. Herron's account, 2,048 shares allocated to Daniel P. Svilar's
account, and 2,045 shares allocated to R. Scott Lorimer's account,
for a total of 8,958 shares allocated 8,373 to accounts for all
executive officers as a group (five persons). Shares forfeited by
terminated employees who were not fully vested were reallocated to
plan participants and included 159, 100, 40, 143 and 143 shares to
the accounts of Messrs. Larsen, Evans, Herron, Svilar and Lorimer,
respectively. The accounts of the executive officers are fully
vested, as they have all been employed by the Company and USECC for
more than the past seven years. Allocations of shares for fiscal
1996 have not been made with respect to any participant in the
ESOP.
The maximum loan outstanding during fiscal 1993 under a loan
arrangement between the Company and the ESOP, was $1,014,300 at May
31, 1994 for loans made in fiscal 1992 and 1991. Interest owed by
the ESOP was not booked by the Company. Crested pays one-half of
the amounts contributed to the ESOP by USE. Because the loans are
expected to be repaid by contributions to the ESOP, Crested may be
considered to indirectly owe one-half of the loan amounts to USE.
Stock Option Plan. The Company has a combined incentive stock
option/non-qualified stock option plan, reserving an aggregate of
550,000 shares of Common Stock for issuance upon exercise of
options granted thereunder. Awards under the plan are made by a
committee of two or more persons selected by the Board (presently
Messrs. Herron, Bebout and Brenman). The committee establishes the
exercise periods and exercise prices for options granted under the
plan. Total grants to officers and directors as a group may not
exceed 275,000 shares.
<PAGE>
Options expire no later than ten years from the date of grant,
and upon termination of employment, except in cases of death,
disability or retirement. Subject to the ten year maximum period,
upon the death, retirement or permanent and total disability of an
optionee, options are exercisable for three months (in case of
retirement or disability) or one year (in case of death) after such
event. In fiscal 1994, conditions relating to periods of Company
service before vesting of stock purchased on exercise of the non-
qualified options were removed.
For fiscal 1995, no qualified or non-qualified options were
granted.
The following table shows unexercised options, how much
thereof were exercisable, and the dollar values for in-the-money
options, at May 31, 1995.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End($)
Shares Vaule
Acquired on Realized Exercisable/ Exercisable
Name Exercise (#) ($) Unexercisable Unexercisable
John L. Larsen, -0- -0- 100,000 $388,000(1)
CEO, President exercisable exercisable and
unexercised
100,100 $248,248(2)
exercisable exercisable and
unexercised
Max T. Evans, -0- -0- 57,200 $141,856(2)
Secretary exercisable exercisable and
unexercised
Harold F. Herron, -0- -0- 11,000 $27,280(2)
Vice President exercisable exercisable and
unexercised
Daniel P. Svilar -0- -0- 66,000 $163,680(2)
Asst. Secretary exercisable exercisable and
unexercised
R. Scott Lorimer -0- -0- 29,700 $73,656(2)
Treasurer exercisable exercisable and
unexercised
<PAGE>
(1) Equal to $5.38 closing bid on last trading day in FY
1995, less $2.00 per share option exercise price, multiplied by all
shares exercisable.
(2) Equal to $5.38 closing bid on last trading day in FY
1995, less $2.90 per share option exercise price, multiplied by all
shares exercisable.
Restricted Stock Plans. The Company and Crested have issued
stock bonuses to various executive officers and directors of the
Company and others. These shares are subject to forfeiture to the
issuer by the grantee if employment terminates otherwise than for
death, retirement or disability. If the required service is
completed, the risk of forfeiture lapses and the shares become the
unrestricted property of the holder. Messrs. Larsen, Evans,
Svilar, Lorimer and all executive officers as a group (four
persons) received 20,400, 12,750, 18,360, 12,240 and 63,750 shares
of Common Stock, respectively, under this restricted stock plan
through fiscal 1995. Additional bonuses of 20% of the original
shares (7,500) will be issued annually through fiscal 1997. The
expenses relating to these stock issuances are shared equally by
the Company and Crested.
Subsidiary Plans. During the year ended May 31, 1991, Brunton
adopted a salary deduction plan intended to qualify as a deferred
compensation plan under Internal Revenue Code Section 401(k).
Harold F. Herron and John L. Larsen are the only Company officers
who are able to participate in this retirement plan. The fiscal
1994 acquisition of Brunton by the Company has not affected the
Brunton 401(k) plan.
Other than as set forth above, neither the Company nor any of
its subsidiaries have any pension, stock option, bonus, share
appreciation, rights or other plans pursuant to which they
compensate the executive officers and directors of the Company.
Other than as set forth above, no executive officer received other
compensation in any form which, with respect to any individual
named in the Cash Compensation Table, exceeded ten percent of the
compensation reported for that person, nor did all executive
officers as a group receive other compensation in any form which
exceeded ten percent of the compensation reported for the group.
Directors' Fees and Other Compensation
The Company pays non-employee directors a fee of $150 per
meeting attended. All directors are reimbursed for expenses
incurred with attending meetings.
Prior to fiscal 1992, the Board authorized the Executive
Committee to make loans to members of the Board, or to guarantee
their obligations in amounts of up to $50,000, if such loans or
surety arrangements would benefit the Company. Any loans or surety
arrangements for directors which are in excess of $50,000 will
require Board rather than Executive Committee approval. The
Company loaned $25,000 to David W. Brenman under this plan prior to
fiscal 1991. The loan to Mr. Brenman bears interest at the prime
rate of the Chase Manhattan Bank and was due September 1, 1994, but
has been extended to September 1, 1995 by Board vote (Mr.Brenman
abstaining). The loan was provided as partial consideration for
Mr. Brenman's representation of the Company to the financial
community in New York City. The loan to Mr. Brenman originally was
approved by the executive committee.
Pursuant to shareholder approval of the 1992 Stock
Compensation Plan for Outside Directors at the 1992 Annual Meeting,
in fiscal 1993 the Board issued 5,000 shares of Common Stock each
to outside directors Brenman, Anderson and Bebout, which shares
vest 1,000 shares to each on the 1992 Annual Meeting date and each
succeeding four Annual Meetings through 1996.
COMMITTEES AND MEETING ATTENDANCE
During the fiscal year ended May 31, 1995, there were eight
Board meetings and three Executive Committee meetings. Each
current member of the Board attended at least 75% of the combined
Board meetings and meetings of committees on which the director
serves. From time to time, the Board acts by unanimous written
consent pursuant to Wyoming law. Such actions are counted as
meetings for purposes of disclosure under this paragraph.
The Board has established an Executive Committee to act in
place of the Board between meetings of the Board. Under Wyoming
law and the Company's Articles of Incorporation, the Executive
Committee has full power of the Board to take action on such
matters as it elects. The Executive Committee had three meetings
in fiscal 1995.
An Audit Committee has also been established by the Board.
The Audit Committee had one meeting in fiscal 1995. Members of the
Audit Committee have also met informally at various times during
the year. The Audit Committee reviews the Company's financial
statements and accounting controls, and contacts the independent
public accountants as necessary to ensure that adequate accounting
controls are in place and that proper records are being kept. The
Audit Committee also reviews the audit fees of the independent
public accountants.
The Compensation Committee reviews, approves and makes
recommendations on the Company's compensation policies, practices
and procedures. During the year ended May 31, 1995, the members of
the Compensation Committee discussed compensation matters on an
individual basis without formal meetings.
A Management Cost Apportionment Committee has been established
by the Board in 1995, the purpose of which is to review the
apportionment of costs between various USE subsidiaries. John L.
Larsen, Scott Lorimer and Max Evans are members of this Committee.
<PAGE>
The Board of Directors has a Nominating Committee, which did
not meet during the most recently completed year. The Nominating
Committee will consider nominees recommended by security holders
for consideration as potential nominees. Anyone wishing to submit
a potential nominee for consideration as a management nominee for
the 1996 Annual Meeting must provide the nominee's name to the
Nominating Committee not later than June 9, 1996, together with a
completed questionnaire, the form of which will be supplied by the
Company on request.
CERTAIN OTHER TRANSACTIONS
Transactions with Sheep Mountain Partners ("SMP"). In fiscal
1989, the Company and Crested through USECC sold a one-half
interest in the Sheep Mountain properties to Cycle Resource
Investment Corporation ("CRIC"), a wholly-owned subsidiary of
Nukem, Inc., and thereafter USECC and CRIC contributed their 50%
interests in the properties to a new Colorado partnership, SMP,
which was organized to further develop and mine the uranium claims,
market uranium and acquire additional uranium sales contracts. Due
to disputes (in arbitration proceedings at Proxy Statement date)
with CRIC and Nukem, necessary mine maintenance has been funded by
USECC alone without reimbursement from SMP. For fiscal 1995, the
Company and Crested spent an additional $878,500 on SMP property
maintenance, none of which has been reimbursed by SMP. At May 31,
1995, accumulated SMP property maintenance costs and fees owed the
Company and Crested were $4,521,600 (;which amount includes
$135,500 for market purchase of uranium oxide for contract delivery
in 1993).
Transactions with Directors. Three of the Company's
directors, Messrs. Larsen, Evans and Herron, are trustees of the
ESOP. In that capacity they have an obligation to act in the best
interests of the ESOP participants. This duty may conflict with
their obligations as directors of the Company in times of adverse
market conditions for the Common Stock, or in the event of a tender
offer or other significant transaction.
In general, the ESOP trustees exercise dispositive powers over
shares held by the ESOP, and exercise voting powers with respect to
ESOP shares that have not been allocated to a participant's
account. In addition, the Department of Labor has taken the
position that in certain circumstances ESOP trustees may not rely
solely upon voting or dispositive decisions expressed by plan
participants, and must investigate whether those expressions
represent the desires of the participants, and are in their best
interests.
Harold F. Herron, son-in-law of John L. Larsen, has been
living in and caring for a house owned by the Company until such
time as the property was sold. In fiscal 1995, Mr. Herron
purchased the house for $260,000, the appraised value of the
property, and was reimbursed by the Company for leasehold
improvements totaling $22,800.
<PAGE>
Other Information. The Company has adopted a stock repurchase
plan under which it may purchase up to 275,000 shares of its Common
Stock. These shares would be purchased in part to provide a source
of shares for issuance upon the exercise of various outstanding
options.
Three of John L. Larsen's sons are employed by the Company (as
manager of USECC's commercial operations, uranium marketing
manager, and as chief pilot, respectively). Mr. Larsen's brother
is employed by USE as drilling superintendent. Collectively, the
four individuals received $247,763.51 in compensation for those
services during the fiscal year ended May 31, 1995. That expense
was shared by the Company and Crested, in accordance with the
compensation arrangements for all employees.
In April 1995, Canyon Homesteads, Inc. ("CHI", a subsidiary of
Plateau Resources Ltd.) entered into an agreement with First-N-Last
LLC ("FNL", a Utah limited liability company), to develop and
operate certain assets in Utah near the Ticaboo townsite. Under
the agreement, CHI contributed to FNL an operating service station
and boat storage operation, and Arrowstar Investments, Inc.
("Arrowstar", the other member of FNL) will contribute up to
$150,000 cash. Arrowstar will contribute up to another $50,000 as
needed. Arrowstar is a private, Larsen family investment company.
The purpose of FNL is to remodel the contributed assets, build a
convenience store and gift shop, and operate the upgraded facility.
Profit are allocated 90 percent to Arrowstar until recovery of its
cash investment, then 75 percent to Arrowstar until it has received
$215,000 cash (including investment), and 50 percent to FNL and 50
percent to CHI thereafter. Although FNL is not an arms-length
transaction, Plateau (and *SE, as its sole shareholder approved the
arrangement because neither Plateau or USE had (nor could they
acquire on favorable terms) the funds required to upgrade the
facility.
In June 1995, USECC signed a six year option to acquire from
Arrowstar a 7,2090 square foot hangar at the Riverton Regional
Airport. The option purchase price is $110,000. Arrowstar
acquired the property for the prior owner. Final purchase price
will be determined by an appraisal.
CERTAIN INDEBTEDNESS
Transactions Involving USECC. The Company and Crested conduct
the bulk of their activities through their equally-owned joint
venture, USECC. From time to time the Company and Crested advance
funds to or make payments on behalf of USECC in furtherance of
their joint activities. These advances and payments create
intercompany debt between the Company and Crested. The party
extending funds is subsequently reimbursed by the other venturer.
The Company had a note receivable of $4,163,315 from Crested at May
31, 1994. The largest aggregate debt of Crested to the Company
during fiscal 1994 was $3,792,800.
<PAGE>
Debt Associated with USE's ESOP. During the year ended May 31,
1994, the Company made a contribution of 37,204 shares of Common
Stock to the ESOP. Because Crested engages the Company's employees
to discharge substantially all of its functions, these
contributions benefitted Crested. As a result, Crested owes the
Company $100,079 for one-half of the Company's contribution to the
ESOP. Regular and substantial contributions by the Company to the
ESOP are required to maintain the ESOP in effect. In fiscal 1993
the Company contributed 46,591 shares of Common Stock to the ESOP,
for one-half of which Crested owes the Company $87,360.
Loans to Three Directors. In fiscal 1992 the Company loaned
Mr. Evans $24,200 against his promissory note due April 30,1993 and
bearing annual interest at ten percent. This loan is secured with
7,500 of Mr. Evans' shares of Common Stock. Also in fiscal 1992,
the Company loaned Mr. John L. Larsen $147,000 and further agreed
to consolidation of such new loan with outstanding indebtedness of
$99,008 owed the Company by members of his immediate family (total
debt $246,008), against Mr. Larsen's promissory note for the total
amount due April 30, 1993 and bearing annual interest at ten
percent. The Board approved these transactions to obtain a higher
interest rate of return on the funds compared to commercial rates,
and to avoid having the USE stock prices depressed from such
persons selling their shares to meet personal obligations. The
loan maturities were extended to October 30, 1994. At
May 31, 1995, the Larsen family indebtedness totaled $496,830 (of
which $348,130 was secured by 120,600 shares of the Company's
Common Stock); the family's indebtedness was $432,200 at May 31,
1994 (of which $322,800 was secured by 120,600 shares of the
Company's Common Stock). The preceding amounts do not include the
loan to Mr. Herron, see below.
In fiscal 1995, the Company made a five year non-recourse loan
in the amount of $112,170 to Harold F. Herron. The loan is secured
by 30,000 shares of the Company's Common Stock, bears interest at
a rate of 7% and is payable at maturity. The Board approved the
loan to obtain a higher interest rate of return on the funds
compared to commercial rates, and to avoid having the USE stock
prices depressed from such persons selling their shares to meet
personal obligations. See Transactions with Directors above.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board has selected Arthur Andersen LLP as independent
public accountant for the year ending May 31, 1995. A
representative of Arthur Andersen LLP may be present at the Meeting
and if present, will be available to respond to appropriate
questions, and will be provided the opportunity to make a statement
at the Meeting.
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS
A copy of the 1995 Annual Report to Shareholders, including
financial statements, has been forwarded to all record shareholders
entitled to vote at the Meeting. If any recipient of this Proxy
Statement has not received a copy of that Annual Report, please
notify Max T. Evans, 877 North 8th West, Riverton, WY 82501,
telephone (307) 856-9271, and the Company will send a copy.
SHAREHOLDERS' PROPOSALS
The next Annual Meeting of Shareholders is expected to be held
in November of 1996. Shareholder proposals to be presented at the
next Annual Meeting of Shareholders must be received in writing by
the Company at its offices in Riverton, Wyoming, addressed to the
President, no later than June 9, 1996.
OTHER MATTERS
The Board does not know of any other matters which may
properly come before the Meeting. However, if any other matters
properly come before the Meeting, it is the intention of the
appointees named in the enclosed form of Proxy to vote said Proxy
in accordance with their best judgment on such matters.
Your cooperation in giving these matters your immediate
attention, and in returning your Proxy promptly, will be
appreciated.
By Order of the Board of
Directors
U.S. ENERGY CORP.
s/ Max T. Evans
_________________________
MAX T. EVANS, Secretary
Dated: October 18, 1995
</TABLE>
