<PAGE>
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-11(c) or (S) 240.14a-12
MARKWEST HYDROCARBON, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[MARKWEST LOGO]
April 19, 1999
Dear Fellow Stockholder:
This year's Annual Meeting of Stockholders will be held at the Company's
headquarters, 155 Inverness Drive West, Suite 200, Englewood, Colorado 80112-
5000, on May 13, 1999, at 10:00 a.m., MDT. You are cordially invited to attend.
The matters to be considered at the meeting are described in the attached Proxy
Statement and Notice of Annual Meeting of Stockholders. The Company's Board of
Directors recommends the following actions: (a) the election of management's
two nominees to serve as class III directors and (b) the ratification of the
selection of PricewaterhouseCoopers LLP as the Company's independent accountants
for the fiscal year ending December 31, 1999.
To be certain that your shares are voted at the Annual Meeting, whether or
not you plan to attend in person, you should sign, date and return the enclosed
proxy as soon as possible. Your vote is important.
At the Annual Meeting, I will review the Company's activities during the
past year and its plans for the future. An opportunity will be provided for
questions by the stockholders. I hope you will be able to join us.
Sincerely,
/s/ John M. Fox
John M. Fox
Chairman of the Board,
President and Chief
Executive Officer
<PAGE>
MARKWEST HYDROCARBON, INC.
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
to be held on May 13, 1999
TO THE STOCKHOLDERS OF MARKWEST HYDROCARBON, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of MarkWest
Hydrocarbon, Inc. (the "Company"), will be held at 10:00 a.m., MDT, on May 13,
1999, at the Company's headquarters, 155 Inverness Drive West, Suite 200,
Englewood, Colorado 80112-5000, for the following purposes:
1. To elect two class III directors to hold office for a three-year term
expiring at the Annual Meeting of Stockholders occurring in 2002 or
until the election and qualification of their respective successors.
2. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 5, 1999, as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting. Only stockholders of record as of the close of business
on such date are entitled to notice of and to vote at the meeting.
We encourage you to take part in the affairs of your Company either in
person or by executing and returning the enclosed proxy.
By Order of the Board of Directors,
/s/ G. Tywoniuk
Gerald A. Tywoniuk
Secretary
Dated: April 19, 1999
STOCKHOLDERS UNABLE TO ATTEND THIS MEETING ARE URGED TO DATE AND SIGN THE
ENCLOSED PROXY AND TO RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
MARKWEST HYDROCARBON, INC.
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
to be held on May 13, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of MarkWest Hydrocarbon, Inc. (the "Company"),
for use at the Annual Meeting of Stockholders of the Company to be held on May
13, 1999, at 10:00 a.m. at the Company's headquarters, 155 Inverness Drive West,
Suite 200, Englewood, Colorado 80112-5000, and at any adjournment thereof. A
stockholder giving the enclosed proxy may revoke it at any time before the vote
is cast at the Annual Meeting by delivery to the Secretary of the Company of a
written notice of termination of the proxy's authority or a duly executed proxy
or ballot bearing a later date. Shares represented by a proxy will be voted in
the manner directed by a stockholder. If no direction is made, the proxy will
be voted for the election of the nominees for class III directors named in this
Proxy Statement and for the other proposals set forth in this Proxy Statement.
This Proxy Statement and the accompanying form of proxy are being sent or given
to stockholders beginning on or before April 19, 1999, together with the
Company's 1998 Annual Report to Stockholders.
Only stockholders of record at the close of business on April 5, 1999, are
entitled to notice of and to vote at the meeting or at any adjournment thereof.
As of such date, there were 8,531,206 shares of Common Stock of the Company
issued and 8,490,385 shares outstanding. Each share is entitled to one vote.
Cumulative voting is not permitted. Shares voted as abstentions on any matter
(or a "withhold vote for" as to a director) will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum at the meeting and as unvoted, although present and entitled to vote, for
purposes of determining the approval of each matter as to which the stockholder
has abstained. If a broker submits a proxy that indicates the broker does not
have discretionary authority as to certain shares to vote on one or more
matters, those shares will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum at the meeting, but
will not be considered as entitled to vote with respect to such matters. The
Company's by-laws provide that the holders of not less than a majority of the
shares entitled to vote at any meeting of stockholders, present in person or
represented by proxy, shall constitute a quorum.
The Board of Directors knows of no matters other than those that are
described in this Proxy Statement that may be brought before the meeting.
However, if any other matters are properly brought before the meeting, persons
named in the enclosed proxy or their substitutes will vote in accordance with
their best judgment on such matters.
All expenses in connection with the solicitation of proxies will be paid by
the Company. In addition to solicitation by mail, officers, directors and
regular employees of the Company who will receive no extra compensation for
their services, may solicit proxies by telephone, facsimile or personal calls.
The Company's principal executive offices are located at 155 Inverness
Drive West, Suite 200, Englewood, Colorado 80112-5000.
1
<PAGE>
ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction of
its Board of Directors, which is currently comprised of five members. The Board
of Directors is divided into three classes and the members of each class are
elected to serve a three-year term, with the terms of office of each class
ending in successive years.
The term of the class III directors expires at the Annual Meeting to be
held May 13, 1999, and two class III directors will be elected at the Annual
Meeting to hold office until the Annual Meeting to be held in the year 2002 or
until their respective successors are elected and qualified. John M. Fox and
David R. Whitney are the incumbent class III directors. Mr. Fox is being
nominated for election at the Annual Meeting. Mr. Whitney is not standing for
reelection. Mr. Donald D. Wolf is also being nominated for election at the
Annual Meeting. The persons named as proxies in the enclosed form of proxy will
vote the proxies received by them for the election of Messrs. Fox and Wolf
unless otherwise directed. Messrs. Fox and Wolf have indicated a willingness to
serve, but in case either is not a candidate at the Annual Meeting, which is
not presently anticipated, the persons named as proxies in the enclosed form of
proxy may vote for a substitute nominee at their discretion. The terms of the
incumbent class I and class II directors expire at the 2000 and 2001 Annual
Meetings, respectively. Dr. Norman H. Foster, a class I director since June
1996, passed away in January 1999.
Information regarding the directors and a nominee for director of the
Company is set forth below:
Expiration
Name Age of Term
---- --- -------
John M. Fox 59 1999
Donald D. Wolf 55 Nominee for director
Arthur J. Denney 50 2000
Brian T. O'Neill 51 2001
Barry W. Spector /1/ 47 2001
/1/ Member of the Compensation Committee and Audit Committee of the Board
of Directors. Messrs. Whitney and Foster also served as members of the
Compensation Committee and Audit Committee during the past year.
John M. Fox has been MarkWest's President and Chief Executive Officer and a
member of the Board of Directors since its inception in April 1988. Mr. Fox was
a founder of Western Gas Resources, Inc., a company listed on the New York Stock
Exchange, and was its Executive Vice President and Chief Operating Officer from
1972 to 1986. Mr. Fox holds a bachelor's degree in engineering from the United
States Air Force Academy and a master of business administration degree from the
University of Denver. Mr. Fox is also a director of Maverick Tube Company, a
publicly held company.
Donald D. Wolf is a nominee for a class III director. Mr. Wolf has a
diversified 33-year career in the oil and gas industry. He held positions with
Sun Oil Co. and Bow Valley Exploration in Canada before moving to Denver in
1974, where he was employed by Tesoro Petroleum and Southland Royalty Co. In
1977 he cofounded Terra Marine Energy Co., which was sold in 1980 to Southport
Exploration. In 1981 Mr. Wolf founded General Atlantic Energy Co., where he was
chairman and chief executive officer when it merged with UMC Petroleum in 1994.
Mr. Wolf resigned from UMC in May 1996 as president and chief operating officer
and joined Westport Oil and Gas Company, Inc., as chairman and chief executive
officer. Mr. Wolf holds a bachelor's degree in business administration from
Greenville College.
Arthur J. Denney has been the Company's Senior Vice President of
Engineering and Project Development since January 1997 and a member of the Board
of Directors since June 1996. Prior to that, Mr. Denney served as the Company's
Vice President of Engineering and Business Development since January 1990. Mr.
Denney has more than 24 years of experience in gas gathering, gas processing and
natural gas liquids (NGL) businesses. From 1987 to 1990, Mr. Denney served as
Manager of Business Development for Lair Petroleum, Inc. From 1974 to 1987, Mr.
Denney was employed by Enron Gas Processing Co. in a variety of positions,
including seven years as its Rocky Mountain Regional Manager for Business
Development. Mr. Denney holds a bachelor's degree in mechanical engineering and
a master of business administration degree from the University of Nebraska.
2
<PAGE>
Brian T. O'Neill has been MarkWest's Senior Vice President and Chief
Operating Officer and a member of the Board of Directors since its inception in
April 1988. Mr. O'Neill has 23 years of experience in NGLs and natural gas
marketing and served as a Marketing Manager for Western Gas Resources, Inc.,
specializing in gas acquisition and sales, new business development and NGL
marketing from 1982 to 1987. Mr. O'Neill holds a bachelor's degree in
advertising and psychology from the University of Florida and a master's degree
in international marketing and finance from the American Graduate School of
International Management.
Barry W. Spector has been a member of the Board of Directors of the Company
since September 1995. Mr. Spector has practiced law as a sole practitioner
since 1979. Mr. Spector's practice emphasizes oil and gas law, with a
particular emphasis in natural gas contracts, marketing and property
acquisitions, and divestitures. Mr. Spector holds a bachelor's degree in
biology and a juris doctorate from the University of Denver.
The affirmative vote of a majority of the shares of Common Stock
represented at the meeting is required for the election of Messrs. Fox and Wolf.
The Board of Directors recommends a vote FOR the election of Messrs. Fox and
Wolf.
Meetings of the Board of Directors and Certain Committees
During the fiscal year ended December 31, 1998, the Board of Directors met
four times. All of the directors attended all meetings of the Board of
Directors and meetings of the committees on which they served. The Board of
Directors and its committees also act from time to time by written consent in
lieu of meetings.
The Board of Directors of the Company has standing Audit and Compensation
Committees, which have a current membership as indicated above. The Board of
Directors has no standing Nominating Committee.
The Compensation Committee makes recommendations to the Board concerning
salaries and incentive compensation for the Company's officers and employees and
administers the Company's 1996 Stock Incentive Plan (the "Stock Incentive Plan")
and the Company's 1996 Incentive Compensation Plan (the "Incentive Compensation
Plan"). During fiscal 1998, the Compensation Committee held two meetings.
The Audit Committee aids management in the establishment and supervision of
the Company's financial controls, evaluates the scope of the annual audit,
reviews audit results, consults with management and the Company's independent
accountants prior to the presentation of financial statements to stockholders,
and as appropriate, initiates inquiries into aspects of the Company's financial
affairs. During fiscal 1998, the Audit Committee held two meetings.
EXECUTIVE OFFICERS
Name Age Position
---- --- --------
John M. Fox 59 President, Chief Executive Officer
Brian T. O'Neill 51 Senior Vice President, Chief Operating Officer
Arthur J. Denney 50 Senior Vice President of Engineering and Project
Development
Robert F. Garvin 59 Vice President of Exploration
Randy S. Nickerson 37 Vice President and General Manager, Appalachia
Business Unit
Gerald A. Tywoniuk 37 Vice President of Finance, Chief Financial
Officer, Secretary
See the biographical information on Messrs. Fox, O'Neill and Denney under
"Election of Directors."
Robert F. Garvin joined MarkWest in 1995 as Manager, Exploration. Mr.
Garvin has been the Company's Vice President of Exploration since April 1996.
From 1988 to 1995, Mr. Garvin was Manager, Exploration, for an affiliate of the
Company. Mr. Garvin has more than 31 years of oil and gas industry experience.
During his career, Mr. Garvin has been employed as a geologist by Phillips
Petroleum Company, Duncan Oil Properties, Excel Energy Corporation, Ecological
Engineering Systems and has been a self-employed geologist. Mr. Garvin holds a
bachelor's degree in geology from Westminster College and a master's degree in
geology from the University of Utah.
3
<PAGE>
Randy S. Nickerson joined MarkWest in 1995 as Manager, New Projects. He
served as General Manager of the Michigan Business Unit until 1997 and now
serves as a Vice President and the General Manager of the Appalachia Business
Unit. From 1984 to 1990, Mr. Nickerson worked for Chevron USA and Meridian Oil
Inc. in various process and project engineering positions. From 1990 to 1995,
Mr. Nickerson was a Senior Project Manager and Regional Engineering Manager for
Western Gas Resources, Inc. Mr. Nickerson holds a bachelor's degree in chemical
engineering from Colorado State University.
Gerald A. Tywoniuk was appointed Vice President of Finance and Chief
Financial Officer in April 1997. Mr. Tywoniuk is a Canadian Chartered
Accountant with seventeen years of experience in accounting, planning,
information systems, finance and management. From August 1993 to March 1997,
Mr. Tywoniuk was Controller and Vice President--Controller of Echo Bay Mines
Ltd. ("Echo Bay"), a gold mining, exploration and development company. From
September 1985 to July 1993, he held a variety of corporate and mine site roles
with Echo Bay. Prior to September 1985, Mr. Tywoniuk was employed with two
public accounting firms, including KPMG Peat Marwick. Mr. Tywoniuk holds a
bachelor of commerce degree in accounting and finance from the University of
Alberta.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)"), requires executive officers and directors and persons who beneficially
own more than ten percent (10%) of the Company's Common Stock to file initial
reports of ownership on Form 3 and reports of changes in ownership on Forms 4
and 5 with the Securities and Exchange Commission ("SEC"). Executive officers,
directors, and greater than ten percent (10%) beneficial owners are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
that they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers, directors and
holders of 10% or more of the Company's Common Stock, Mr. John M. Fox,
President, Chief Executive Officer and a director of the Company, inadvertently
failed to file a Form 4 with the SEC indicating a gift of 115,000 shares of the
Company's Common Stock by MWHC, Inc., an entity controlled by Mr. Fox, to a
private charitable foundation in August 1998.
The Company is not aware of any other failure to file a Section 16(a) form
with the SEC or any transaction that was not reported on a timely basis which
was required to be so reported. The Company believes that its executive
officers, directors and 10% beneficial owners complied with all other applicable
Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation earned for
fiscal years 1998, 1997 and 1996 by the Company's Chief Executive Officer and
the four other highest paid officers ("Named Executive Officers").
4
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------------------------
Securities
Underlying All Other
Fiscal Salary Bonus Options Compensation
Name and Principal Positions Year ($)/1/ ($)/2/ (#)/3/ ($)/4/
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John M. Fox........................................... 1998 $160,408 $ -- 5,029 $10,427
President and Chief Executive Officer 1997 152,371 27,965 -- 12,936
1996 148,223 75,417 13,000 15,324
Brian T. O'Neill...................................... 1998 160,408 -- 24,056 10,427
Senior Vice President and Chief Operating Officer 1997 155,359 27,965 9,643 13,683
1996 150,834 75,417 13,000 15,611
Arthur J. Denney...................................... 1998 147,902 -- 31,716 9,614
Senior Vice President of Engineering and Project 1997 143,247 25,784 15,601 12,534
Management 1996 134,075 67,037 13,000 14,381
Gerald A. Tywoniuk.................................... 1998 133,633 -- 44,571 8,816
Vice President of Finance, Chief Financial Officer 1997/5/ 98,643 17,777 26,611 9,976
and Secretary 1996/5/ N/A N/A N/A N/A
Randy S. Nickerson.................................... 1998 113,575 -- 35,304 7,382
Vice President and General Manager, Appalachia 1997 103,650 12,869 19,183 9,710
Business Unit 1996 82,703 28,928 9,725 6,616
</TABLE>
- ------------------------------
/1/ Represents actual salary earned in each respective fiscal year.
/2/ Represents actual bonus earned in each respective fiscal year.
/3/ 1998 options include options repriced on October 1, 1998. Includes options
granted in August 1998 that were subsequently canceled in the October 1998
repricing as follows: Mr. O'Neill--3,692; Mr. Denney--4,739; Mr. Tywoniuk-
-5,827; and Mr. Nickerson--5,280. See Option Grants Table in Fiscal 1998
and Ten-Year Option Repricing Table for specific details regarding
repriced options.
/4/ Represents actual Company contributions under the Company's 401(k) Savings
and Profit Sharing Plan.
/5/ Mr. Tywoniuk joined the Company and was appointed Vice President of
Finance and Chief Financial Officer in April 1997; thus, compensation
amounts are not provided for 1996.
Option Grants. The following table summarizes options granted during
fiscal year 1998 to the Named Executive Officers.
5
<PAGE>
Option Grants in Fiscal 1998
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Number of Percent of Stock Price Appreciation
Securities Total Options for Option Term
Underlying Granted to ----------------------------------
Options Employees in Exercise Price Expiration
Name Granted Fiscal 1998 ($/Share) Date 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John M. Fox 5,029 1.34 $ 10.50 12/10/08 $ 33,208 $ 84,157
Brian T. O'Neill 3,692 /1/ 0.99 14.88 08/03/08 34,550 87,555
and................. 9,643 /2/ 2.58 10.75 12/11/07 58,685 145,342
and................. 3,692 /2/ 0.99 10.75 08/03/08 24,461 61,707
and................. 7,029 1.88 10.50 12/10/08 46,415 117,625
Arthur J. Denney 4,739 /1/ 1.27 14.88 08/03/08 44,347 112,385
and................. 15,601 /2/ 4.17 10.75 12/11/07 94,945 235,142
and................. 4,739 /2/ 1.27 10.75 08/03/08 31,397 79,206
and................. 6,637 1.77 10.50 12/10/08 43,827 111,066
Gerald A. Tywoniuk 5,827 /1/ 1.56 14.88 08/03/08 54,529 138,187
and................. 15,000 /2/ 4.01 10.75 04/08/07 60,369 138,866
and................. 11,611 /2/ 3.10 10.75 12/11/07 70,622 175,004
and................. 5,827 /2/ 1.56 10.75 08/03/08 38,606 97,391
and................. 6,306 1.69 10.50 12/10/08 41,641 105,526
Randy S. Nickerson 5,280 /1/ 1.41 14.88 08/03/08 49,409 125,215
and................. 9,000 /2/ 2.41 10.75 06/01/07 50,913 124,228
and................. 10,183 /2/ 2.72 10.75 12/11/07 61,972 153,481
and................. 5,280 /2/ 1.41 10.75 08/03/08 34,982 88,248
and................. 5,561 1.49 10.50 12/10/08 36,721 93,059
</TABLE>
- ------------------------------------------------
/1/ These options were subsequently canceled in connection with the October 1,
1998, repricing.
/2/ Represents number of option shares repriced on October 1, 1998.
Option Values. The following table summarizes the value of the options
held at the end of fiscal year 1998 by the Named Executive Officers. None of
the Named Executive Officers exercised any options during fiscal year 1998.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at End of Fiscal 1998 (#) End of Fiscal 1998 ($) /1/
-------------------------------------------------------------------------
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John M. Fox 0 $ -- 12,355 12,829 $ 14,382 $ --
Brian T. O'Neill 0 -- 17,032 28,067 19,905 3,682
Arthur J. Denney 0 -- 17,274 34,188 17,996 5,089
Gerald A. Tywoniuk 0 -- 5,323 33,421 -- --
Randy S. Nickerson 0 -- 8,843 32,766 4,598 5,642
</TABLE>
- -----------------------
/1/ Value based on the difference between the closing price of the Company's
Common Stock as reported by the Nasdaq National Market on December 31, 1998,
and the option exercise price per share multiplied by the number of shares
subject to the option.
Option Repricings. The following table summarizes options repriced on
October 1, 1998, for the named executive officers. Explanation and basis of
options repricing is provided in the Compensation Committee Report on Executive
Compensation.
6
<PAGE>
Ten-Year Option Repricings
<TABLE>
<CAPTION>
Securities Length of
Underlying Exercise Price of Original Option
Number of Market Price of Option at Time Term Remaining
Options Stock at Time of of New Exercise at Date of
Name Date Repriced (#) Repricing ($) Repricing ($) Price ($) Repricing
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brian T. O'Neill 10/1/98 9,643 $10.75 $19.25 $10.75 9.2 Years
and............... 10/1/98 3,692 10.75 14.88 10.75 9.8 Years
Arthur J. Denney 10/1/98 15,601 10.75 19.25 10.75 9.2 Years
and............... 10/1/98 4,739 10.75 14.88 10.75 9.8 Years
Gerald A. Tywoniuk 10/1/98 15,000 10.75 13.50 10.75 8.5 Years
and............... 10/1/98 11,611 10.75 19.25 10.75 9.2 Years
and............... 10/1/98 5,827 10.75 14.88 10.75 9.8 Years
Randy S. Nickerson 10/1/98 9,000 10.75 14.50 10.75 8.7 Years
and............... 10/1/98 10,183 10.75 19.25 10.75 9.2 Years
and............... 10/1/98 5,280 10.75 14.88 10.75 9.8 Years
</TABLE>
In addition to annual salary, executive officers of the Company also
receive compensation pursuant to the Stock Incentive Plan, the Incentive
Compensation Plan and the 401(k) Savings and Profit Sharing Plan. See
discussion of the Stock Incentive Plan under "Compensation Vehicles--Stock
Option Program." See discussion of the 401(k) Savings and Profit Sharing Plan
under "Compensation Vehicles--Savings Plan; Benefits."
The Incentive Compensation Plan provides for cash incentive awards to
executives and employees of the Company in varying amounts and is administered
by the Compensation Committee of the Company's Board of Directors. The
Incentive Compensation Plan was effective as of January 1, 1996. The Incentive
Compensation Plan lists five tiers for determining eligibility: Tier One
includes all executive level employees; Tier Two includes all management level
employees; Tier Three includes all mid-level exempt employees; Tier Four
includes all lower-level exempt employees; and Tier Five includes certain
nonexempt employees. An incentive award is based upon the financial performance
of the Company compared to corporate goals for the year in question. Incentive
payments under the Incentive Compensation Plan are paid periodically throughout
the year. The purpose of the Incentive Compensation Plan is to reward and
provide incentives for executives and employees of the Company by providing them
with an opportunity to acquire cash rewards, thereby increasing their personal
interest in the Company's continued success and progress.
For fiscal year 1998, the Company made profit sharing payments under the
401(k) Savings and Profit Sharing Plan of approximately $136,000. There were no
incentive compensation payments under the Incentive Compensation Plan for fiscal
year 1998.
Compensation of Directors
Directors who are employees of the Company receive no compensation, as
such, for services as members of the Board. All directors who are not employees
of the Company receive an attendance fee of $1,500 for each board meeting or
committee meeting attended in person by that director and $500 for each board
meeting or committee meeting in which such director participates by telephone.
All directors are reimbursed for out-of-pocket expenses incurred while attending
board and committee meetings. In addition, pursuant to the Company's 1996 Non-
Employee Director Stock Option Plan (the "Non-Employee Director Plan"), as
amended in June 1997, each non-employee director (a) received options to
purchase 1,000 shares of Common Stock at the time of approval of the Non-
Employee Director Plan by the Board of Directors in July 1996 and (b) receives
options to purchase an additional 500 shares of Common Stock on the day after
each annual meeting of the Company's stockholders. The Non-Employee Director
Plan currently provides for the initial grant of options to purchase 1,000
shares of Common Stock to each newly appointed non-employee director upon the
date on which such person becomes a director of the Company. Directors who are
also employees of the Company do not receive any additional stock incentive
compensation for serving on the Board of Directors. On October 1, 1998, 1,500
options granted in June 1997 to non-employee directors and 1,500 options granted
in May 1998 to non-employee directors were canceled and repriced at $10.75 per
share.
7
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of two
non-employee directors. The Committee is responsible for developing and
approving the Company's executive compensation policies. In addition, the
Compensation Committee determines on an annual basis the compensation to be paid
to the Chief Executive Officer and to each of the other executive officers of
the Company. The Compensation Committee has available to it an outside
compensation consultant and access to independent compensation data for other
companies. The overall objectives of the Company's executive compensation
program are to provide compensation that will attract and retain superior talent
and reward performance.
Compensation Philosophy
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract, retain
and reward executive officers whose contributions are critical to the long-term
success of the Company. The Company's executive compensation program provides an
overall level of compensation opportunity that is competitive with a broad group
of natural resources companies and a smaller group of energy-related service
companies comparable in size to the Company. Actual compensation levels may be
greater than competitive levels in surveyed companies based upon annual and
long-term Company performance, as well as individual performance. The
Compensation Committee uses its discretion to set executive compensation at
levels warranted in its judgment by the Company's or an individual executive
officer's circumstances. The Company applies a consistent philosophy to
compensation for all employees, including senior management. This philosophy is
based on the premise that the achievements of the Company result from the
coordinated efforts of all individuals working toward common objectives. The
Company strives to achieve those objectives through teamwork that is focused on
meeting the expectations of customers and stockholders. Executive officers are
rewarded based upon corporate performance and individual performance. Corporate
performance is evaluated by reviewing the extent to which strategic and business
plan goals are met, including such factors as profitability, performance
relative to competitors and consummation of strategic acquisitions. Individual
performance is evaluated by reviewing organizational and management development
progress against set objectives and the degree to which teamwork and Company
values are fostered.
Compensation Vehicles
The Company has had a successful history of using a simple total
compensation program that consists of cash-and equity-based compensation. The
components of the Company's compensation program for its executive officers
include base salary, performance-based cash bonuses, and long-term incentive
compensation in the form of stock options and restricted stock awards.
Base Salary
The Chief Executive Officer makes annual recommendations regarding the base
salaries of the executive officers (other than the Chief Executive Officer) to
the Compensation Committee. Base salaries for the executive officers are
intended to be based on the average of fixed compensation levels for comparable
management personnel employed by peer companies of a similar size to the
Company. In general, 1998 base salaries reflected a 3.25% increase over salary
levels from the prior year. In making base salary recommendations, the Chief
Executive Officer also takes into account individual experience and performance
and specific issues particular to the Company. The Compensation Committee
generally approves the Chief Executive Officer's recommendations with respect to
base salaries for other executive officers.
Performance-Based Cash Bonuses
Under the Incentive Compensation Plan, bonuses are awarded only if the
Company achieves or exceeds certain corporate performance objectives relating to
net income as determined by the Board of Directors during the last quarter of
the prior year. The size of the fund available for such bonuses increases in
relation to the extent to which such objectives are exceeded. The Committee
allocates the fund among the executive officers based on a percentage of the
executive's salary ranging from approximately 0% to 70% and all other non-union
employees depending on the net income goals as established at the beginning of
the year. If the base performance criteria are
8
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met, each executive officer is entitled to a base bonus amount equal to that
percentage of the executive officer's base salary. A similar approach is used
for all other non-union personnel at differing percentage levels.
No bonus was payable for 1998 performance, given the loss experienced by
the Company--results which fell short of corporate performance targets.
Stock Option Program
Stock options and restricted stock awards are granted to executive officers
under the Stock Incentive Plan. The objectives of the Stock Incentive Plan are
to align executive and stockholder long-term interests by creating a strong and
direct link between executive pay and stockholder return, and to enable
executives to develop and maintain a significant long-term ownership position in
the Company's Common Stock.
The Stock Incentive Plan authorizes the Board of Directors or a committee
of non-employee directors to grant stock options, restricted stock and other
types of awards to executive officers. To date, the only type of awards granted
to executive officers under the Stock Incentive Plan have been stock options.
All stock options currently outstanding were granted at an option price at least
equal to the fair market value of the Company's Common Stock on the date of
grant, generally have ten-year terms and generally become exercisable in
installments over a five-year period.
Stock options may be granted upon commencement of employment based on the
recommendation of the Chief Executive Officer. In determining whether to
recommend additional option grants to an executive officer, the Chief Executive
Officer typically considers the individual's performance and any planned change
in functional responsibility. Neither the profitability of the Company nor the
market value of its stock are considered in setting the amount of executive
officer stock option grants. The stock option position of executive officers is
reviewed on an annual basis. The Company's policy is to not grant stock options
annually, but to review each individual's stock option position, at which point
the Compensation Committee may or may not grant additional options in its
discretion. The determination of whether or not additional options will be
granted is based on a number of factors, including Company performance,
individual performance and levels of options granted at the competitive median
for the Company's peer group.
Over the past year, there has been a significant decline in the Company's
stock price, primarily as a result of declining crude oil prices (which impacts
prices of the Company's liquids products such as propane and butanes). In
recognition of the need to retain valuable employees in a year in which no cash
bonuses were paid, in October 1998 the Compensation Committee canceled 220,255
stock options issued in 1997 and early 1998, with option prices ranging from
$14.88 to $22.00, and issued 220,255 new options with an option price of $10.75
per share, the then-current market price.
Savings Plan; Benefits
The Company makes a matching contribution under the Company's 401(k)
Savings and Profit Sharing Plan. The Company may also make a discretionary
profit sharing payment annually to executives and other employees under this
plan based upon the financial performance of the Company compared to corporate
goals for the year in question. In addition, the Company provides medical and
other miscellaneous benefits to executive officers that are generally available
to Company employees. The amount of perquisites did not exceed 10% of total
annual salary and bonus for any executive officer during the fiscal year 1998.
Non-Competition, Non-Solicitation and Confidentiality Agreement and
Severance Plan
The Company has entered into Non-Competition, Non-Solicitation and
Confidentiality Agreements (the "Non-Competition Agreements") with certain key
employees, including the Named Executive Officers. As a result of signing the
Non-Competition Agreements, key employees are eligible for the 1997 Severance
Plan (the "Severance Plan"). The Severance Plan provides for payment of
benefits in the event that (i) the employee terminates his or her employment for
"good reason" (as defined), (ii) the employee's employment is terminated
"without cause" (as defined), (iii) the employee's employment is terminated by
reason of death or disability or (iv) the employee voluntarily resigns. In the
case of (i), (ii) and (iii) above, the employee shall be entitled to receive
base salary and
9
<PAGE>
continued medical benefits for a period ranging from six months to twenty-four
months, depending upon the employee's status at the time of the termination. In
the case of (iv) above, the employee shall be entitled to receive base salary
for a period ranging from one month to six months and continued medical benefits
for a period ranging from one month to six months. In either case, the aggregate
amount of benefits paid to an employee shall in no event exceed twice the
employee's annual compensation during the year immediately preceding the
termination.
Chief Executive Officer Compensation
Base Salary
The base salary of the Chief Executive Officer is established by and is
subject to adjustment by the Compensation Committee. Factors taken into
consideration in the determination of the Chief Executive Officer's base salary
include the base salaries for chief executive officers of the Company's peer
group, historical compensation practices at the Company and the general
experience of the Compensation Committee members in dealing with compensation
matters at other service-related energy companies.
Bonuses and Stock Option Awards
Mr. Fox received no bonus during fiscal year 1998 under the Incentive
Compensation Plan. During fiscal year 1998, Mr. Fox declined the opportunity to
receive any stock options at the mid-year grant date and received 5,029 options
at the year-end grant date. Mr. Fox did not have options to be canceled in
October 1998, nor did he receive any new options at that date. Mr. Fox has
not been granted any restricted stock under the Stock Incentive Plan to date.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction for compensation in excess of $1 million paid to the Company's Chief
Executive Officer and certain other highly compensated executive officers.
Qualifying "performance-based" compensation will not be subject to the deduction
limit if certain requirements are met. The Company anticipates that incentive-
based compensation paid in excess of $1 million will be deductible under Section
162(m). The Compensation Committee believes, however, that there may be
circumstances in which the Company's interests are best served by providing
compensation that is not fully deductible under Section 162(m) and reserves the
ability to exercise discretion to authorize such compensation.
Compensation Committee
Barry W. Spector
David R. Whitney
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Common Stock for the period from October 9, 1996 (the date the
Company's Common Stock became publicly traded), through December 31, 1998, with
the cumulative total return on the Amex Composite Index, Nasdaq Composite Index,
and an index of peer companies constructed by the Company. The American Stock
Exchange began trading shares of MarkWest Hydrocarbon, Inc., under the ticker
symbol NRG on February 22, 1999. The Company's stock formerly traded on the
Nasdaq National Market under the ticker symbol MWHX. Included in the peer group
are Aquila Gas Pipeline Corporation; KN Energy, Inc.; Western Gas Resources,
Inc.; Dynegy, Inc; and Midcoast Energy Resources, Inc. Continental Natural Gas,
Inc., has been omitted from the peer group in 1998 because it was sold during
1998. Each company in the peer group is publicly traded and generates a
significant portion of its total revenue from the gathering, processing and
marketing of NGLs.
[PERFORMANCE GRAPH]
Total Return Analysis
10/9/1996 12/31/1996 12/31/1997 12/31/1998
- -------------------------------------------------------------------------------
MarkWest Hydrocarbon $ 100.00 $ 147.62 $ 209.53 $ 85.72
- -------------------------------------------------------------------------------
Peer Group $ 100.00 $ 134.28 $ 139.89 $ 92.63
- -------------------------------------------------------------------------------
Nasdaq Composite $ 100.00 $ 104.34 $ 127.45 $ 178.68
- -------------------------------------------------------------------------------
Amex Composite $ 100.00 $ 99.41 $ 120.36 $ 122.45
- -------------------------------------------------------------------------------
Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data from
Bloomberg Financial Markets.
11
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 26, 1998, (i) by each
person (or group of affiliated persons) who is known by the Company to own
beneficially more than five percent (5%) of the Company's Common Stock, (ii) by
each of the Named Executive Officers, (iii) by each of the Company's directors
and nominees for directors, and (iv) by all directors and executive officers as
a group. The Company believes that the persons and entities named in the table
have sole voting and investing power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws, where
applicable.
Beneficial Ownership As of February 26, 1999
<TABLE>
<CAPTION>
Percent of
Options Exercisable Total
Shareholder Number of Shares Within 60 Days Total Shares /1/
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MWHC Holding, Inc. /2/ 3,691,086 -- 3,691,086 42.8%
FMR Corporation /3/ 703,100 -- 703,100 8.1
Skyline Asset Management /4/ 548,600 -- 548,600 6.4
John M. Fox /5/ 4,037,324 12,355 4,049,679 46.9
Donald D. Wolf 4,000 -- 4,000 *
Brian T. O'Neill /6/ 436,857 17,032 453,889 5.3
Arthur J. Denney /7/ 57,525 17,274 74,799 *
David R. Whitney /8/ 200,375 1,167 201,542 2.4
Barry W. Spector 6,699 1,167 7,866 *
Gerald A. Tywoniuk 8,552 8,323 16,875 *
Randy S. Nickerson 9,799 8,843 18,642 *
All directors and executive
officers as a group 4,769,846 72,090 4,841,936 56.1
</TABLE>
- --------------------------
* Less than 1.0%
/1/ All percentages have been determined at February 26, 1999, in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). For purposes of this table, a person or group of persons is
deemed to have "beneficial ownership" of any shares of Common Stock that
such person or group has the right to acquire within sixty days after
February 26, 1999. For purposes of computing the percentage of outstanding
shares of Common Stock held by each person or group of persons named above,
any security which such person or group has the right to acquire within
sixty days after February 26, 1999, is deemed to be outstanding for the
purpose of computing the percentage ownership of such person or group. At
February 26, 1999, a total of 8,531,206 shares of Common Stock were issued
and 8,476,636 shares were outstanding. Options to acquire a total of 155,986
shares of Common Stock were exercisable within sixty days.
/2/ MWHC Holding, Inc., is an entity controlled by John M. Fox.
/3/ Information is based solely on a Schedule 13G filed with the Securities and
Exchange Commission by FMR Corp. ("FMR") with respect to shares held as of
December 31, 1998. The Schedule 13G indicates that Fidelity Management &
Research Company, a registered investment adviser and a wholly owned
subsidiary of FMR, beneficially owns 399,700 shares; and Fidelity Management
Trust Company, a bank and a wholly owned subsidiary of FMR, owns 303,400
shares. According to the Schedule 13G, FMR has sole voting power with
respect to 303,400 shares and sole dispositive power with respect to 703,100
shares.
/4/ Information is based solely on a Schedule 13G filed with the Securities and
Exchange Commission by Skyline Asset Management, L.P. ("Skyline"), with
respect to shares held as of December 31, 1998. The Schedule 13G indicates
that Skyline has shared voting and dispositive power with respect to 548,600
shares.
/5/ Includes an aggregate of 171,902 shares held in the Brent A. Crabtree Trust,
the Brian T. Crabtree Trust and the Carrie L. Crabtree Trust (the "Crabtree
Trusts"), for which Mr. Fox is the Trustee. Also includes 115,000 shares
held by The MaggieGeorge Foundation, for which Mr. Fox and certain family
members are directors. Also includes all shares owned directly by MWHC
Holding, Inc., an entity controlled by Mr. Fox. As a result of Mr. Fox's
control of MWHC Holding, Inc.,
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<PAGE>
Mr. Fox may be deemed to have an indirect pecuniary interest (within the
meaning of Rule 16a-1 under the Exchange Act) in an indeterminate portion of
the shares beneficially owned by MWHC Holding, Inc. Mr. Fox disclaims
"beneficial ownership" of these shares within the meaning of Rule 13d-3
under the Exchange Act and also disclaims beneficial ownership of the shares
held in the Crabtree Trusts and by The MaggieGeorge Foundation.
/6/ Includes all shares owned directly by Erin Investments, Inc., an entity
controlled by Mr. O'Neill. As a result of Mr. O'Neill's control of Erin
Investments, Inc., Mr. O'Neill may be deemed to have an indirect pecuniary
interest (within the meaning of Rule 16a-1 under the Exchange Act) in an
indeterminate portion of the shares beneficially owned by Erin Investments,
Inc. Mr. O'Neill disclaims "beneficial ownership" of these shares within the
meaning of Rule 13d-3 under the Exchange Act.
/7/ Includes 400 shares held by Mr. Denney as custodian for his two minor
children.
/8/ All of the shares indicated as owned by Mr. Whitney are owned by certain
limited partnerships whose general partner is RIMCO and are included because
Mr. Whitney is a Managing Director of RIMCO. As such, Mr. Whitney may be
deemed to have an indirect pecuniary interest (within the meaning of Rule
16a-1 under the Exchange Act) in an indeterminate portion of the shares
within the meaning of Rule 13d-3 under the Exchange Act. Mr. Whitney
disclaims "beneficial ownership" of these shares within the meaning of Rule
13d-3 under the Exchange Act. Mr. Whitney's term expires at the Annual
Meeting to be held May 13, 1999, and he is not standing for reelection.
CERTAIN TRANSACTIONS
Investments with Affiliate
The Company, through its wholly owned subsidiary, MarkWest Resources, Inc.
("MarkWest Resources"), holds a 49% undivided interest in several exploration
and production assets ("E&P Assets'') owned jointly with MAK-J Energy Partners
Ltd. ("MAK-J"), which owns a 51% undivided interest in such properties. The
general partner of MAK-J is a corporation owned and controlled by John M. Fox,
President and Chief Executive Officer of the Company. The properties are held
pursuant to joint venture agreements entered into between MarkWest Resources and
MAK-J. MarkWest Resources is the operator under such agreements. As the
operator, MarkWest Resources is obligated to provide certain engineering,
administrative and accounting services to the joint ventures. The joint venture
agreements provide for a monthly fee payable to MarkWest Resources for all such
expenses. Conflicts of interest may arise regarding these oil and gas
activities, including decisions regarding expenses and capital expenditures and
the timing of the development and exploitation of the properties. Management
nevertheless believes that the terms of the Company's co-investments with MAK-J
are as favorable to the Company as could have been obtained from unaffiliated
third parties. As of December 31, 1998, MarkWest had invested $10.5 million in
E&P assets owned jointly with MAK-J. At December 31, 1998, MarkWest had
receivables due from MAK-J for approximately $0 and payables due to MAK-J for
approximately $488,000.
Mr. Fox has agreed that as long as he is an officer or director of the
Company and for two years thereafter, he will not, directly or indirectly,
participate in any future oil and gas exploration or production activities with
the Company except and to the extent that the Company's independent and
disinterested directors deem it advisable and in the best interests of the
Company to include one or more additional participants, which participants may
include entities controlled by Mr. Fox. Additionally, Mr. Fox has agreed that as
long as he is an officer or director of the Company and for two years
thereafter, he will not, directly or indirectly participate in any future oil
and gas exploration or production activity that may be in competition with
exploration or production activities of the Company except and to the extent
that Mr. Fox has first offered the Company the opportunity to participate in
that activity and the Company's independent and disinterested directors deem it
advisable and in the best interests of the Company not to participate in that
activity.
Other Relationships
Donald D. Wolf, nominee for director, is Chairman and Chief Executive
Officer of Westport Oil and Gas Company Inc., which is a party to certain 1997
contracts with indirect subsidiaries of MarkWest for transportation, treating
and processing services in western Michigan. No services were performed in the
last fiscal year pursuant to these contracts. The terms of these contracts were
negotiated on an arm's length basis.
13
<PAGE>
Legal Fees Paid to Director
Barry W. Spector, a director of the Company, periodically provides legal
services to the Company. During 1998, the Company paid Mr. Spector legal fees
of approximately $59,000 in return for such services. Fees incurred during 1998
exceeded five percent of Mr. Spector's gross revenues during fiscal year 1998.
Related Party Indebtedness
MarkWest Hydrocarbon Partners, Ltd. ("MarkWest Partnership"), predecessor
to MarkWest Hydrocarbon, Inc., periodically extended offers to partners and
employees to purchase initial or additional interests in MarkWest Partnership.
Such partners and/or employees provided MarkWest Partnership with promissory
notes as part of the purchase price for such interests. According to the terms
of such promissory notes, interest accrued at 7% and payments were required for
the greater of accrued interest or distributions made by MarkWest Partnership to
partners in excess of the partner's income tax liability. As part of MarkWest
Partnership's reorganization (the "Reorganization") immediately prior to the
Company's initial public offering in October 1996, the remaining indebtedness
under such promissory notes was replaced by promissory notes owed to the
Company. The notes owed to the Company accrue interest at 7%, payable annually,
and require full payment of principal and outstanding interest on the third
anniversary of the effective date of the Reorganization. An aggregate of
$164,000 principal amount of such notes was outstanding as of December 31, 1998.
Future Transactions
The terms of any future transactions between the Company and its directors,
officers, principal stockholders or other affiliates, or the decision to
participate or not participate in transactions offered by the Company's
directors, officers, principal stockholders or other affiliates will be approved
by a majority of the Company's independent and disinterested directors. The
Company's Board of Directors will use such procedures in evaluating their terms
as are appropriate considering the fiduciary duties of the Board of Directors
under Delaware law. In any such review the Board may use outside experts or
consultants including independent legal counsel, secure appraisals or other
market comparisons, refer to generally available statistics or prices or take
such other actions as are appropriate under the circumstances. Although such
procedures are intended to ensure that transactions with affiliates will be on
an arm's length basis, no assurance can be given that such procedures will
produce such result.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the
Company's independent accountants for the year ending December 31, 1999, and
recommends that the stockholders ratify that appointment.
PricewaterhouseCoopers LLP has no relationship with the Company other than that
arising from its engagement as independent accountants. Representatives of
PricewaterhouseCoopers LLP will be present at the 1999 Annual Meeting. They
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from stockholders. The
affirmative vote of a majority of the outstanding shares of the Company's Common
Stock represented at the 1999 Annual Meeting is required to ratify this
appointment.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a stockholder to be presented at the year 2000 annual
meeting must be received at the Company's principal executive offices at 155
Inverness Drive West, Suite 200, Englewood, Colorado 80112-5000, no later than
December 17, 1999.
By Order of the Board of Directors,
/s/ Gerald A. Tywoniuk
Gerald A. Tywoniuk
Secretary
Dated: April 19, 1999
14
<PAGE>
PROXY THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
MARKWEST HYDROCARBON, INC.
155 Inverness Drive West, Suite 200
Englewood, Colorado 80112-5000
The undersigned, having duly received the Notice of Annual Meeting and
Proxy Statement dated April 19, 1999, appoints Gerald A. Tywoniuk and Brian T.
O'Neill proxies (each with the power to act alone and with the power of
substitution and revocation), to represent the undersigned and to vote, as
designated below, all shares of Common Stock of Markwest Hydrocarbon, Inc.
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of Markwest Hydrocarbon, Inc. to be held on May 13, 1999 at the Company's
headquarters, 155 Inverness Drive West, Suite 200, Englewood, CO 80112-5000 at
10:00 a.m., M.D.T., and any adjournment thereof. Each of the matters set forth
below has been proposed by the Company.
1. ELECTION OF CLASS III DIRECTORS
[_] FOR John M. Fox [_] WITHHOLD AUTHORITY to vote for John M. Fox
[_] FOR Donald D. Wolf [_] WITHHOLD AUTHORITY to vote for Donald D. Wolf
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS
[_] FOR the ratification of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999
[_] WITHHOLD AUTHORITY to vote for the ratification of PricewaterhouseCoopers
LLP as the Company's independent accountants for the fiscal year ending
December 31, 1999
<PAGE>
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy
will be voted FOR all of the above items.
Please sign exactly as your name appears hereon. Jointly owned shares will
be voted as directed if one owner signs unless another owner instructs to the
contrary, in which case the shares will not be voted. If signing in a
representative capacity, please indicate title and authority.
------------------------
Signature
----------------------, 1999
Date
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ADDRESSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.
