SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 ss. 240.14a-11(c) or ss. 240.14a-12
Offshore Energy Development Corporation
(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:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
OFFSHORE ENERGY DEVELOPMENT CORPORATION
1400 WOODLOCH FOREST DRIVE, SUITE 200
THE WOODLANDS, TEXAS 77380
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY MAY 29, 1997
Stockholders of Offshore Energy Development Corporation:
The 1997 Annual Meeting of Stockholders of Offshore Energy Development
Corporation (the "Company") will be held at The Woodlands Executive Conference
Center, 2301 North Millbend, The Woodlands, Texas, on Thursday, May 29, 1997,
beginning at 2:00 p.m. (local time), for the following purposes:
1. to elect two directors to serve on the Board of Directors
of the Company until the Company's 2000 Annual Meeting of Stockholders
and until their successors are duly elected and qualified;
2. to consider and act upon a proposal to ratify the
appointment of KPMG Peat Marwick LLP as the independent auditors of the
books and accounts of the Company for the year ending December 31,
1997; and
3. to transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 21, 1997, are
entitled to notice of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Regardless of whether
you plan to attend the meeting, you are urged to complete, date, and sign the
enclosed proxy and return it in the accompanying envelope at your earliest
convenience.
By order of the Board of Directors,
David B. Strassner
President
The Woodlands, Texas
April 25, 1997
YOUR VOTE IS IMPORTANT.
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE,
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE AT YOUR
EARLIEST CONVENIENCE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING. NO
ADDITIONAL POSTAGE IS NECESSARY IF THE PROXY IS MAILED IN THE UNITED STATES. THE
PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
<PAGE>
OFFSHORE ENERGY DEVELOPMENT CORPORATION
1400 WOODLOCH FOREST DRIVE, SUITE 200
THE WOODLANDS, TEXAS 77380
(281) 364-0033
APRIL 25, 1997
------------------------
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 29, 1997
------------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Offshore Energy Development
Corporation (the "Company") for use at the 1997 Annual Meeting of Stockholders
of the Company to be held at The Woodlands Executive Conference Center, 2301
North Millbend, The Woodlands, Texas, on Thursday, May 29, 1997, beginning at
2:00 p.m. (local time), and any adjournment thereof (the "Meeting") for the
purposes set forth in this Proxy Statement and the accompanying Notice of
Meeting. This Proxy Statement, the Notice of Meeting and the enclosed form of
proxy will first be sent to stockholders on or about April 28, 1997.
The Company was formed in July 1996 for the purpose of becoming a
holding Company for the operations of certain predecessor entities in a
reorganization that was completed in November 1996. Accordingly, in appropriate
contexts, references in this Proxy Statement to the "Company" include the
Company's predecessors.
PROXIES
If any proxy in the enclosed form is properly executed and is received
by the Company before or at the Meeting, the shares represented thereby will be
voted in accordance with the directions set forth therein. If no direction is
made, a proxy that is properly signed and received by the Company and which is
not revoked will be voted FOR the election of all nominees for director named
herein to serve on the Board of Directors until the Company's 2000 Annual
Meeting of Stockholders and until their successors are duly elected and
qualified and FOR the ratification of the appointment of KPMG Peat Marwick LLP
as the independent auditors of the books and accounts of the Company for the
year ending December 31, 1997. If any other matter, not known or determined at
the time of the solicitation of proxies, properly comes before the Meeting, the
proxies will be voted in accordance with the discretion of the person or persons
voting the proxies. A proxy may be revoked by written notice received by the
Secretary of the Company at any time before it is voted and will be deemed to be
revoked if the shares covered by the proxy are voted in person at the Meeting.
<PAGE>
VOTING SECURITIES
Stockholders of record at the close of business on April 21, 1997, are
entitled to notice of and to vote at the Meeting. As of April 21, 1997, the
outstanding voting securities of the Company consisted of 8,701,885 shares of
Common Stock. Each share of Common Stock is entitled to one vote on all matters
that may properly come before the Meeting.
QUORUM AND OTHER MATTERS
The presence at the Meeting, in person or represented by proxy, of the
holders of a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum. Shares of Common Stock represented by a properly signed and
returned proxy will be counted as present at the Meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting a
vote or abstaining. Shares of Common Stock held by nominees that are voted on at
least one matter coming before the Meeting also will be counted as present for
purposes of determining a quorum, even if the beneficial owner's discretion has
been withheld (a "non-vote") for voting on some or all other matters.
The General Corporation Law of the State of Delaware (the "DGCL")
provides that directors will be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Accordingly, the two nominees for director
receiving the greatest number of votes of shares of Common Stock present in
person or represented by proxy at the meeting, although not necessarily a
majority of such shares, will be elected to serve as directors until the
Company's 2000 Annual Meeting of Stockholders. An abstention, a non-vote or a
withholding of authority to vote with respect to one or more nominees for
director will not have the effect of a vote against such nominee or nominees.
The DGCL provides that, unless otherwise provided in a corporation's
certificate of incorporation, approval of all other matters submitted to a vote
of stockholders at a meeting of stockholders requires the affirmative vote of a
majority of the outstanding shares present in person or represented by proxy at
the meeting and entitled to vote on such matters. Therefore, approval of the
proposal to ratify the appointment of KPMG Peat Marwick LLP as the independent
auditors of the Company for the year ending December 31, 1997 and any other
matter that comes before the Meeting, unless such other matter is one for which
a greater vote is specifically required by the Company's Certificate of
Incorporation, will require the affirmative vote of a majority of the shares of
Common Stock present in person or represented by proxy at the meeting. An
abstention, a non-vote or a withholding of authority to vote with respect to any
proposal to come before the meeting other than the election of directors will
have the effect of a vote against the proposal.
The Board of Directors is not aware of any matters that are expected to
come before the Meeting other than those referred to in this Proxy Statement. If
any other matter properly comes before the Meeting, the proxies will be voted in
accordance with the discretion of the person or persons voting the proxies.
Votes at the Meeting will be tabulated by an Inspector of Election
appointed by the Company.
2
<PAGE>
ELECTION OF DIRECTORS
ELECTION PROCEDURES; TERM OF OFFICE
The Company's Certificate of Incorporation provides for a Board of
Directors consisting of at least six and no more than nine persons divided into
three classes of two or three directors serving staggered three-year terms, with
one class of directors being elected at each of the Company's annual meetings of
stockholders. The Board of Directors has set the number of directors currently
constituting the entire board at six. Accordingly, each class of directors
comprises two persons. The term of office of the Class I Directors expires at
the Meeting, and the persons named as nominees for election in this Proxy
Statement are nominated for election to serve as Class I Directors until the
Company's 2000 Annual Meeting of Stockholders and until their successors are
duly elected and qualified. The terms of office of the Class II and Class III
Directors will expire at the Company's 1998 Annual Meeting of Stockholders and
1999 Annual Meeting of Stockholders, respectively.
The directors will be elected by the plurality of the votes of the
outstanding shares of Common Stock present in person or represented by proxy at
the Meeting. Unless the authority to vote for the election of directors is
withheld as to either or both of the nominees, all shares of Common Stock
represented by proxy will be voted FOR the election of the nominees. If the
authority to vote for the election of directors is withheld as to one but not
both of the nominees, all shares of Common Stock represented by any such proxy
will be voted FOR the election of the nominee as to whom such authority is not
withheld. If a nominee becomes unavailable to serve as a director for any reason
before the election, the shares represented by proxy will be voted for such
other person, if any, as may be designated by the Board of Directors. The Board
of Directors, however, has no reason to believe that any nominee will be
unavailable to serve as a director.
Any director vacancy occurring after the election may be filled only by
a majority of the remaining directors, even if less than a quorum of the Board
of Directors. A director elected to fill a vacancy will be elected for the
unexpired portion of the term of his predecessor in office.
NOMINEES FOR ELECTION
The following table sets forth certain information with respect to each
nominee for election as a director of the Company.
NAME AGE POSITIONS WITH COMPANY
David B. Strassner 39 President and Class I Director
R. Gamble Baldwin 74 Class I Director
David B. Strassner has served as President and a director of the
Company since its formation in January 1988. For two years prior to forming the
Company, Mr. Strassner was an independent explorationist specializing in the
Gulf of Mexico. For five years prior to that time, Mr. Strassner was a
geophysicist employed by Amoco Production Company. Mr. Strassner is a director
of Gulf Coast Bank and Trust, New Orleans, Louisiana, and God's World
Publications, Asheville, North Carolina. Mr. Strassner holds a B.S. degree in
Geology from the University of North Carolina at Chapel Hill.
3
<PAGE>
R. Gamble Baldwin has been a director of the Company since September
1992. Since November 1988, he has been the general partner of G.F.W. Energy,
L.P. ("GFW"), which serves as the general partner of Natural Gas Partners, L.P.
("NGP"). He is also a member/manager of the limited liability companies that are
the general partners of Natural Gas Partners II, L.P. ("NGP II"), Natural Gas
Partners III, L.P. ("NGP III") and Natural Gas Partners IV, L.P. ("NGP IV") and
is active in the management of these entities. NGP, NGP II, NGP III and NGP IV
are investment funds organized to make equity-related investments in the North
American oil and gas industry. From 1974 until November 1988, Mr. Baldwin was a
Managing Director of The First Boston Corporation, an investment banking firm,
specializing in all aspects of the natural gas business. Mr. Baldwin has been a
member of the International Advisory Board of Creditanstalt Bankverein, Vienna,
Austria, since 1982, and a director of Coflexip Stena Offshore, a provider of
industrial technology oilfield equipment and service, since 1993.
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's Class II and III directors, whose terms of office do not expire at the
Meeting, and the executive officers of the Company (other than Mr. Strassner):
NAME AGE POSITIONS WITH COMPANY
Douglas H. Kiesewetter 43 Executive Vice President, Chief Operating
Officer and Class II Director
R. Keith Anderson 42 Vice President and Class III Director
G. Alan Rafte 43 Class II Director
David R. Albin 37 Class III Director
Joseph L. Savoy, Jr. 45 Vice President -- Engineering
Matthew T. Bradshaw 31 Vice President and Treasurer
Douglas H. Kiesewetter has served as Executive Vice President, Chief
Operating Officer and a director of the Company since its formation in January
1988. From June 1984 through October 1987, Mr. Kiesewetter was an executive
officer of Cartrex Corporation, a high technology company in the computer media
business co-founded by Mr. Kiesewetter. Serving as Chief Financial Officer for
the first year, Mr. Kiesewetter thereafter served as President of the start-up
company. Mr. Kiesewetter also has served as Chairman (1979 to present) of
Christian Community Foundation, a charitable foundation founded by Mr.
Kiesewetter, and as President (1975 to present) of CSA Financial Services, Inc.,
an international consulting firm founded by Mr. Kiesewetter, initially
specializing in financial planning for closely-held businesses and high net
worth individuals and from 1987 to 1996 operating as an employee leasing company
from which the Company obtained its employees. Mr. Kiesewetter has a B.A. in
History from Emory University and an M.B.A. from North Texas State University.
R. Keith Anderson has served as Vice President and a director of the
Company since 1989. Prior to that time Mr. Anderson served as Vice President
(1988 to 1989) of Endevco, Inc. in charge of managing an independent marketing
division, and as President, Chief Executive Officer and a director (1987 to
1988) of Stellar Gas Company, an independent natural gas marketer founded by Mr.
Anderson. For two years
4
<PAGE>
prior to that, Mr. Anderson served as Business Manager of Hadson Gas Systems
Corporation, a start-up natural gas marketer. From 1979 to 1984, Mr. Anderson
served in various capacities for Texas Oil and Gas. Mr. Anderson holds a B.B.A.
from Texas Tech University and a J.D. from the Pepperdine University School of
Law.
G. Alan Rafte was elected to the Board of Directors of the Company in
July 1996. For more than the past five years, Mr. Rafte has been a partner in
the law firm of Bracewell & Patterson, L.L.P., specializing in energy law and
finance. Mr. Rafte holds a Bachelor of Arts degree from Syracuse University and
a J.D. from Emory Law School.
David R. Albin has been a director of the Company since September 1992.
Since November 1988, Mr. Albin has been a limited partner of GFW and has been
responsible for the management of NGP's portfolio. He is a member/manager of the
limited liability companies that are the general partners of NGP II, NGP III and
NGP IV. From December 1984 to November 1988, Mr. Albin was employed by Bass
Investment Limited Partnership, where he was also responsible for portfolio
management. Mr. Albin is also a director of Titan Exploration, Inc.
Joseph L. Savoy, Jr. has served the Company as Vice President --
Engineering since May 1994. Mr. Savoy began his career with Amoco Production
Company, where he worked in drilling, completions, operations, reservoir
engineering and construction. From March 1989 to May 1994, Mr. Savoy was Chief
Engineer for Operators and Consulting Services, Inc., a firm providing contract
consulting services to the oil and gas industry, where he was assigned in 1991
to work on the Company's account. Mr. Savoy has more than twenty years
experience in the oil and gas business and holds a B.S. degree in Petroleum
Engineering from the University of Southwestern Louisiana.
Matthew T. Bradshaw joined the Company in 1993 and serves as Vice
President and Treasurer. Prior to joining the Company, he worked as an energy
banker from 1990 to 1992 with Hibernia Bank and from 1992 to 1993 with First
National Bank of Commerce, each in New Orleans, Louisiana. Mr. Bradshaw has a
B.S. degree from Auburn University and an M.B.A. from Baylor University.
The Company's executive officers are elected by and serve at the
discretion of the Board of Directors.
OPERATION OF BOARD OF DIRECTORS
The Company was formed in July 1996 for the purpose of reorganizing the
Company's predecessors. This reorganization was completed in November 1996,
contemporaneously with the Company's initial public offering. Accordingly,
although the Board of Directors took certain action by unanimous written consent
in connection with the Company's organization, the reorganization and the
initial public offering, the Board did not hold any formal meetings during 1996.
In August 1996, the Board of Directors established an Audit Committee and a
Compensation Committee to facilitate the performance of certain of its
functions. The Board of Directors has not established a nominating committee.
The Audit Committee currently consists of Messrs. Baldwin and Rafte,
neither of whom is an employee of the Company. The Audit Committee reviews the
general scope of the audit conducted by the Company's independent auditors, the
fees charged therefor and matters relating to the Company's internal control
systems. In performing its functions, the Audit Committee meets separately with
representatives of the Company's independent auditors and with representatives
of senior management. The Audit Committee conducted no meetings during 1996.
5
<PAGE>
The Compensation Committee currently consists of Messrs. Albin and
Rafte, neither of whom is an employee of the Company. The Compensation Committee
administers the Company's 1996 Stock Awards Plan and in this capacity is
responsible for making all option grants and awards to the Company's officers
and other employees. In addition, the Compensation Committee is responsible for
making recommendations to the Board of Directors with respect to the
compensation of the Company's President and other executive officers and is
responsible for the establishment of policies relating to various compensation
and employee benefit matters for the Company. The Compensation Committee held
one meeting during 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning
the compensation paid by the Company for the fiscal years ended December 31,
1996 and 1995 to its President and the other executive officers of the Company
whose salary and bonus received from the Company for services rendered during
such years exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
SECURITIES
UNDERLINING
NAME AND PRINCIPAL ANNUAL COMPENSATION STOCK ALL OTHER
POSITION YEAR SALARY($) BONUS($) OTHER($) OPTIONS (#) COMPENSATION
-------- ---- --------- -------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
David B. Strassner........... 1996 $ 139,423 $ -- $ -- 120,000 $ --
President (chief executive 1995 125,000 -- -- -- --
officer)
Douglas H. Kiesewetter....... 1996 $ 139,423 $ -- $ -- 120,000 $ --
Executive Vice President 1995 125,000 -- -- -- --
and Chief Operating
Officer
R. Keith Anderson............ 1996 $ 139,423 $ -- $ -- 120,000 $ --
Vice President 1995 125,000 -- -- -- --
Joseph L. Savoy, Jr.......... 1996 $ 118,808 $ -- $ -- 40,000* $ --
Vice President 1995 112,000 -- -- -- --
</TABLE>
- ------------
*In addition, in connection with the Company's reorganization completed
in November 1996, Mr. Savoy received options to purchase 121,180 shares of
Common Stock in exchange for previously granted options to purchase securities
of one of the Company's predecessors.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information concerning options to
purchase Common Stock granted during the fiscal year ended December 31, 1996 to
the four executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES PRICE EXPIRATION OPTION TERM
NAME GRANTED (#) IN 1996 ($/SHARE) DATE 5% 10%
- ---------------- --------------- --------------- --------- ---- -----------------------
<S> <C> <C> <C> <C> <C> <C>
David B.
Strassner....... 120,000 22.22% $12.00 11/01/06 $ 905,760 $2,295,000
Douglas H.
Kiesewetter..... 120,000 22.22 12.00 11/01/06 905,760 2,295,000
R. Keith
Anderson........ 120,000 22.22 12.00 11/01/06 905,760 2,295,000
Joseph L.
Savoy, Jr....... 40,000* 7.41 12.00 11/01/06 301,920 765,000
</TABLE>
- ------------
*In addition, in connection with the Company's reorganization completed
in November 1996, Mr. Savoy received options to purchase 121,180 shares of
Common Stock in exchange for previously granted options to purchase securities
of one of the Company's predecessors. Such options are exercisable for $3.61 per
share and expire on May 1, 2004.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides certain information concerning exercises
of options to purchase Common Stock during the fiscal year ended December 31,
1996 by the four executive officers named in the Summary Compensation Table and
the value of such officers' unexercised options at December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------- ---------------- ------------ ----------------------------- ---------------------------
<S> <C> <C> <C> <C>
David B. Strassner........ -- -- -- /120,000 $ -- /390,000
Douglas H. Kiesewetter.... -- -- -- /120,000 -- /390,000
R. Keith Anderson......... -- -- -- /120,000 -- /390,000
Joseph L. Savoy, Jr....... -- -- 72,708/88,472 846,321/694,214
</TABLE>
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COMPENSATION OF INDEPENDENT DIRECTORS
The Company did not pay any compensation to its independent directors
during the year ended December 31, 1996. Beginning in 1997, the Company will pay
its independent directors an annual fee of $15,000. The amounts payable to
Messrs. Albin and Baldwin will be paid to NGP pursuant to a Financial Advisory
Services Agreement. See "Certain Transactions." The Company also reimburses its
independent directors for their reasonable travel expenses in attending
meetings.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION(a)
This report is provided by the Compensation Committee of the Board of
Directors (the "Committee") to assist stockholders in understanding the
Committee's objectives and procedures in establishing the compensation of the
Company's Chief Executive Officer and other senior executives.
The Committee, consisting of two of the non-employee Directors, is
responsible for establishing and administering the Company's executive
compensation program. The Committee met once in 1996.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that compensation of the Company's key
executives should:
o link rewards to business results and stockholder
returns;
o encourage creation of stockholder value and
achievement of strategic objectives;
o provide total compensation opportunity that is
competitive with independent energy companies taking
into account relative company size and performance as
well as individual experience, responsibility and
performance;
o maintain an appropriate balance between base salary
and incentive opportunity, with more compensation at
risk at the higher salary levels; and
o attract and retain high caliber personnel on a
long-term basis.
One of the Committee members is an active energy investor with a broad
portfolio of companies similar to the Company. The other Committee member is an
energy industry legal advisor with extensive experience. They rely on this
expertise and experience to evaluate competitive compensation issues.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
The Company's existing executive compensation program consists of three
elements: base pay, short-term incentives and long-term incentives. For senior
executives, the Company believes that cash compensation should be adequate to
ensure comfortable personal operating income but that the principal performance
incentive should be aligned with stockholder interests through stock ownership
and options. In light of this objective, the Company has attempted to establish
competitive base pay levels but has paid cash bonuses based on annual
performance only once in its history (in 1994 when an extraordinary asset sale
- --------
(a) Notwithstanding Securities and Exchange Commission ("SEC") filings
by the Company that have incorporated or may incorporate by reference other SEC
filings (including this proxy statement) in their entirety, the Board
Compensation Committee Report on Executive Compensation shall not be
incorporated by reference into such filings and shall not be deemed to be
"filed" with the SEC except as specifically provided otherwise or to the extent
required by Item 402 of Regulation S-K.
8
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had occurred). It is not anticipated that annual bonuses will comprise more than
20% of cash compensation in the near term future.
In 1996, the base salary of the three top executives (Messrs.
Strassner, Kiesewetter, and Anderson) was raised by $50,000 each. This was a 40%
increase on their prior base pay level, reflecting the fact that it had been
over four years since their last pay increase and that the Company had just
consummated a successful public stock offering. The three key individuals
receive identical compensation insofar as the disparity in their positions is
adequately recognized in their varying stock ownerships in the Company. Mr.
Savoy's increase of just over 10% was less because he had been receiving regular
pay increases during his entire tenure at the Company.
Each of the three senior managers received a grant of 120,000 common
shares in non-qualified stock options in November 1996 under the Company's 1996
Stock Awards Plan, which the Committee administers. These options were awarded
at $12 per share, the market price on the date of grant. They vest evenly over
five years and have a ten-year term. This represented a grant of less than 1.3%
of the fully diluted stock outstanding to each executive and was viewed as an
appropriate additional incentive to build stockholder value. Mr. Savoy was
granted non-qualified options to purchase 40,000 common shares on the same day
in November 1996 on identical terms and conditions to the other key executives.
In addition, in connection with the Company's reorganization completed in
November 1996, Mr. Savoy received options to purchase 121,180 shares of common
stock in exchange for previously granted options to purchase securities of one
of the Company's predecessors.
COMPENSATION COMMITTEE
David R. Albin, Chairman
G. Alan Rafte
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total
stockholder return on the Company's Common Stock for the period from November 1,
1996, when the Common Stock was first listed on the Nasdaq National Market, to
December 31, 1996, with the cumulative total return of the S&P Oil Composite
Index and the Nasdaq Composite Index for the same period. Dividend reinvestment
has been assumed. The Performance Graph assumes $100 invested on November 1,
1996 in the Company's Common Stock, the S&P Oil Composite Index and the Nasdaq
Composite Index.
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[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
Nov. 1, 1996 Nov. 30, 1996 Dec. 31, 1996
The Company $100 $122.15 $117.31
S&P Oil Composite Index $100 $105.92 $106.71
Nasdaq Composite Index $100 $105.81 $105.71
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CERTAIN TRANSACTIONS
Historically, all of the Company's employees were provided by CSA
Financial Services, Inc. ("CSA"). CSA is wholly owned by Douglas H. Kiesewetter,
Executive Vice President, Chief Operating Officer and a director of the Company.
The employees were provided to the Company by CSA at cost. The Company made
payments to CSA aggregating $1,304,107 during 1996. The Company believes that
its arrangement with CSA was on terms no less favorable than could be obtained
from an unaffiliated third party. This arrangement was terminated on December
31, 1996.
The Company and NGP are parties to a Financial Advisory Services
Agreement effective as of April 1, 1996 pursuant to which the Company has
engaged NGP to serve as financial advisor with respect to the public offering
process. The agreement expires on earlier of (i) the dissolution of OEDC
Partners, L.P., a subsidiary of the Company and (ii) the later of (y) the date
that representatives of NGP no longer serve on the board of directors of the
Company, and (z) the second anniversary of the closing date of the first
issuance of securities by the Company in a public offering. In consideration of
its services NGP receives an annual fee of $15,000 for each representative of
NGP that serves on the Board of Directors of the Company (currently two), and an
annual fee of $30,000 commencing as of the date of consummation of the first
public issuance of securities by the Company and continuing for a two-year
period. Consequently, assuming that the Financial Advisory Services Agreement
does not terminate and NGP continues to have two representatives on the Board of
Directors, during the two-year period beginning November 6, 1996 (the date of
the consummation of the Company's initial public offering), NGP will be paid
$60,000 per year.
During 1996, the Company made preference unit payments of $911,087 to
NGP in respect of the Preference Units in OEDC Partners, L.P. held by NGP. In
November 1996, the Company redeemed all of the outstanding Preference Units with
$12,000,000 of the net proceeds of the Company's initial public offering.
The Company has entered into a Registration Rights Agreement with NGP
(including certain affiliates) and Messrs. Strassner, Kiesewetter and Anderson.
Pursuant to the Registration Rights Agreement, on three separate occasions
commencing on the first anniversary of the effective date of the Company's
initial registration statement under the securities laws, the holders of at
least 35% of the shares of Common Stock held by NGP (including certain
affiliates) and Messrs. Strassner, Kiesewetter and Anderson may require the
Company to register shares held by them under applicable securities laws
provided that the shares to be registered have an estimated aggregate offering
price to the public of at least $3,000,000. However, if after two such
registrations, NGP continues to own shares of Common Stock, NGP may require the
Company to effect the third such registration regardless of its percentage
ownership. The Registration Rights Agreement also provides that NGP and Messrs.
Strassner, Kiesewetter and Anderson (and, for two years after the effective date
of the Company's initial registration statement under the securities laws,
certain other stockholders) have "piggyback" registration rights pursuant to
which such persons may include shares of Common Stock held by them in certain
registrations initiated by the Company; provided, that in an underwritten
registered offering, if the underwriters determine that the number of shares
requested to be included in the registration exceeds the number that the
underwriters believe can be sold, the Company will be given first priority and
the persons requesting piggyback registration will be allowed to include shares
pro rata based on the number of shares each such person requested to be
included. The Registration Rights Agreement provides for customary indemnity by
the Company in favor of persons including shares in a registration pursuant to
the Registration Rights Agreement, and by such persons in favor of the Company,
with respect to information to be included in the relevant registration
statement.
11
<PAGE>
G. Alan Rafte, a director of the Company, is a partner in Bracewell &
Patterson, L.L.P., a law firm retained by the Company during 1996 and 1997.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership, as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, of Common Stock as of April 25, 1997, by each person known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock, each director and nominee for director of the Company, each
executive officer of the Company and all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ----------------------------------------------------- -------------------- ------------
<S> <C> <C>
David B. Strassner................................... 748,828 (1) 8.61%
1400 Woodloch Forest Drive, Suite 200
The Woodlands, Texas 77380
Douglas H. Kiesewetter............................... 557,806 (2) 6.41%
1400 Woodloch Forest Drive, Suite 200
The Woodlands, Texas 77380
R. Keith Anderson.................................... 308,036 (3) 3.54%
1400 Woodloch Forest Drive, Suite 200
The Woodlands, Texas 77380
Joseph L. Savoy, Jr.................................. 96,944 (4) 1.10%
1400 Woodloch Forest Drive, Suite 200
The Woodlands, Texas 77380
Matthew T. Bradshaw.................................. 46,506 (5) *
1400 Woodloch Forest Drive, Suite 200
The Woodlands, Texas 77380
David R. Albin....................................... 52,596 (6) *
100 North Guadalupe Street, Suite 205
Santa Fe, New Mexico 87501
R. Gamble Baldwin.................................... 2,244,501 (7) 25.79%
500 West Putnam Ave.
Greenwich, Connecticut 06830
G. Alan Rafte....................................... 0 0%
711 Louisiana Street, Suite 2900
Houston, Texas 77002
All Executive Officers
and Directors as a Group
(eight persons).................................... 4,055,217 45.88%
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ----------------------------------------------------- -------------------- ------------
<S> <C> <C>
Natural Gas Partners, L.P............................ 2,209,460 25.39%
500 West Putnam Ave.
Greenwich, Connecticut 06830
G.F.W. Energy, L.P...................................
500 West Putnam Ave.
Greenwich, Connecticut 06830 2,209,460 (8) 25.39%
</TABLE>
- ----------------------
* Less than one percent.
(1) Includes (i) 100 shares held by Mr. Strassner, (ii) 655,768 shares
held in trust by Mr. Strassner and his spouse for their benefit and (iii) 92,960
shares held by Mr. Strassner's spouse as custodian for their minor children.
(2) Includes (i) 495,594 shares held in trust by Mr. Kiesewetter and
his spouse for their benefit, (ii) 33,200 shares held by Mr. Kiesewetter's
spouse as trustee for their minor children, (iii) 6,327 shares held by Mr.
Kiesewetter as trustee for the benefit of his sister, and (iv) 22,685 shares
held by Mr. Kiesewetter as trustee for the benefit of his mother.
(3) Includes (i) 275,130 shares held by Mr. Anderson, (ii) 21,248
shares held by Mr. Anderson's spouse as custodian for their minor children,
(iii) 3,886 shares held by Mr. Anderson as trustee for the benefit of his
grandmother, (iv) 3,886 shares held by Mr. Anderson as trustee for the benefit
of his father, and 3,886 shares held by Mr. Anderson as trustee for the benefit
of his mother.
(4) Includes (i) 72,708 shares issuable upon the exercise of options
that are presently exercisable and (ii) 24,236 shares issuable upon the exercise
of options that will become exercisable within 60 days.
(5) Includes (i) 6,666 shares held by Mr. Bradshaw and (ii) 39,840
shares issuable upon the exercise of options that are presently exercisable.
(6) Includes (i) 26,298 shares held by Mr. Albin and (ii) 26,298 shares
held in trust for the benefit of Mr. Albin.
(7) Includes (i) 35,041 shares held by Mr. Baldwin and (ii) 2,209,460
shares held by Natural Gas Partners, L.P., over which Mr. Baldwin exercises sole
voting and investment power as the sole general partner of the sole general
partner of Natural Gas Partners, L.P.
(8) All of such shares are held by Natural Gas Partners, L.P., of which
G.F.W. Energy, L.P. is the general partner.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of the outstanding Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten-percent stockholders are required by regulation to furnish the
Company with copies of all Section 16(a) forms they file.
13
<PAGE>
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, during the year ended December 31, 1996,
all Section 16(a) reporting requirements applicable to the Company's officers,
directors and greater than ten-percent stockholders were complied with except
that Mr. Savoy was late in filing his initial report of beneficial ownership on
Form 3, and each of Messrs. Strassner, Albin and Baldwin filed one late report
with respect to one transaction.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP as the
independent auditors of the books and accounts of the Company for the year
ending December 31, 1997. At the Meeting, the stockholders will be asked to
consider and act upon a proposal to ratify the appointment of KPMG Peat Marwick
LLP. The ratification of such appointment will require the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock entitled to
vote and present in person or represented by proxy at the Meeting.
Representatives of KPMG Peat Marwick LLP will be present at the Meeting, will be
given an opportunity to make a statement (if they desire to do so) and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY SUCH APPOINTMENT.
EXPENSES OF SOLICITATION
The cost of soliciting proxies on behalf of the Board of Directors will
be borne by the Company. Solicitations of proxies will be made by the Company
through the mail and may also be made in person or by telephone. Directors and
employees of the Company may be utilized in connection with such solicitations.
The Company also will request brokers and nominees to forward soliciting
materials to the beneficial owners of the Common Stock held of record by such
persons and will reimburse them for their reasonable forwarding expenses.
DATE OF SUBMISSION OF STOCKHOLDER PROPOSALS
For stockholder proposals to be included in the Company's proxy
statement and proxy relating to the Company's 1998 Annual Meeting of
Stockholders, such proposals must be received by the Company at its principal
executive offices not later than December 29, 1997.
OTHER MATTERS
The Board of Directors does not intend to bring any other matter before
the Meeting. Additionally, no stockholder of the Company has complied with the
advance notice provisions contained in the Company's bylaws, which preclude the
bringing of matters before a meeting of stockholders unless such provisions are
complied with. Accordingly, no other matter is expected to be brought before the
Meeting. However, if any other matter does properly come before the Meeting, the
proxies will be voted in accordance with the discretion of the person or persons
voting the proxies.
14
<PAGE>
You are cordially invited to attend the Meeting. Regardless of whether
you plan to attend the Meeting, you are urged to complete, date, sign and return
the enclosed proxy in the accompanying envelope at your earliest convenience.
By order of the Board of Directors,
David B. Strassner
President
15
<PAGE>
PROXY
OFFSHORE ENERGY DEVELOPMENT CORPORATION
1997 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON THURSDAY, MAY 29, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The 1997 Annual Meeting of Stockholders of Offshore Energy Development
Corporation (the "Company") will be held at The Woodlands Executive Conference
Center, 2301 North Millbend, The Woodlands, Texas, on Thursday, May 29, 1997,
beginning at 2:00 p.m. (local time). The undersigned hereby acknowledges receipt
of the related Notice and Proxy Statement dated April 25, 1997 accompanying this
proxy.
The undersigned hereby appoints David B. Strassner and Douglas H.
Kiesewetter, and each of them, attorneys and agents, with full power of
substitution, to vote as proxy all shares of Common Stock, par value $0.01 per
share, of the Company owned of record by the undersigned and otherwise to act on
behalf of the undersigned at the 1997 Annual Meeting of Stockholders and any
adjournment thereof in accordance with the directions set forth herein and with
discretionary authority with respect to such other matters, not known or
determined at the time of the solicitation of this proxy, as may properly come
before such meeting or any adjournment thereof.
This proxy is solicited on behalf of the Board of Directors of the
Company and will be voted FOR the following proposals unless otherwise
indicated.
1. ELECTION OF DIRECTORS to serve until the 2000 Annual Meeting of
Stockholders and until their successors are duly elected and qualified.
/ / FOR all nominees listed below (except as otherwise
indicated*)
/ / WITHHOLD AUTHORITY for all nominees listed below
* Instruction: To withhold authority to vote for any
nominee, draw a line through the name of the nominee
in the list below.
David B. Strassner R. Gamble Baldwin
<PAGE>
2. RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the
independent auditors of the books and accounts of the Company for the year
ending December 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
This proxy is solicited by the Board of Directors and will be voted in
accordance with the undersigned's directions set forth herein. If no direction
is made, this proxy will be voted FOR the election of all nominees for director
named herein to serve on the Board of Directors until the 2000 Annual Meeting of
Stockholders and until their successors are duly elected and qualified and FOR
the ratification of the appointment of KPMG Peat Marwick LLP as the independent
auditors of the books and accounts of the Company for the year ending December
31, 1997.
Please sign your name exactly as it appears below. If shares are held
jointly, all joint owners should sign. If shares are held by a corporation,
please sign the full corporate name by the president or any other authorized
corporate officer. If shares are held by a partnership, please sign the full
partnership name by an authorized person. If you are signing as attorney,
executor, administrator, trustee or guardian, please set forth your full title
as such.
__________________________________
__________________________________
Signature(s) of Shareholder(s)
Date: ________________, 1997
