<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BRIGHAM EXPLORATION COMPANY
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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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:
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<PAGE> 2
BRIGHAM EXPLORATION COMPANY
6300 BRIDGE POINT PARKWAY
BUILDING TWO, SUITE 500
AUSTIN, TEXAS 78730
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1998
To the Stockholders of
BRIGHAM EXPLORATION COMPANY:
Notice is hereby given that the annual meeting of stockholders of
Brigham Exploration Company, a Delaware corporation (the "Company"), will be
held on Friday, May 29, 1998, at 1:00 p.m., local time, at Barton Creek Resort
and Country Club, 8212 Barton Club Drive, Austin, Texas, for the following
purposes:
1. To elect seven directors to serve until the Annual Meeting of
Stockholders in 1999;
2. To approve the appointment of Price Waterhouse LLP as
independent auditors of the Company for the year ending
December 31, 1998; and
3. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on April 3, 1998
are entitled to notice of, and to vote at, the meeting or any adjournment(s)
thereof.
You are cordially invited and urged to attend the meeting, but if you
are unable to attend, please sign and date the enclosed proxy and return it
promptly in the enclosed self-addressed stamped envelope. A prompt response will
be appreciated. If you attend the meeting, you may vote in person, if you wish,
whether or not you have returned your proxy. In any event, a proxy may be
revoked at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
DAVID T. BRIGHAM
Secretary
April 17, 1998
Austin, Texas
<PAGE> 3
BRIGHAM EXPLORATION COMPANY
6300 BRIDGE POINT PARKWAY
BUILDING TWO, SUITE 500
AUSTIN, TEXAS 78730
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1998
SOLICITATION OF PROXIES
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is furnished to holders of Brigham Exploration
Company ("Brigham" or the "Company") common stock, $0.01 par value ("Common
Stock"), in connection with the solicitation of proxies on behalf of the Board
of Directors of the Company for use at the annual meeting of stockholders of
Brigham to be held on Friday, May 29, 1998, at 1:00 p.m., local time, at Barton
Creek Resort and Country Club, 8212 Barton Club Drive, Austin, Texas, and at any
adjournment(s) thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
Shares represented by a proxy in the form enclosed, duly signed, dated
and returned to the Company and not revoked, will be voted at the meeting in
accordance with the directions given, but in the absence of directions to the
contrary, such shares will be voted (i) for the election of the Board's nominees
for directors, (ii) for the appointment of Price Waterhouse LLP as independent
auditors of the Company for the year ending December 31, 1998, and (iii) in
accordance with the best judgment of the persons voting on any other proposals
that may come before the meeting. The Board of Directors knows of no other
matters, other than those stated in the foregoing notice, to be presented for
consideration at the meeting or any adjournment(s) thereof. If, however, any
other matters properly come before the meeting or any adjournment(s) thereof, it
is the intention of the persons named in the enclosed proxy to vote such proxy
in accordance with their judgment on any such matters. The persons named in the
enclosed proxy may also, if it is deemed to be advisable, vote such proxy to
adjourn the meeting from time to time.
Any stockholder executing and returning a proxy has the power to revoke
it at any time before it is voted by delivering to the Secretary of the Company,
6300 Bridge Point Parkway, Building Two, Suite 500, Austin, Texas 78730, a
written revocation thereof or by duly executing a proxy bearing a later date.
Any stockholder attending the annual meeting of stockholders may revoke his
proxy by notifying the Secretary at such meeting and voting in person if he
desires to do so. Attendance at the annual meeting will not by itself revoke a
proxy.
The approximate date on which this proxy statement and the form of proxy
are first sent to stockholders is April 17, 1998.
The cost of soliciting proxies will be borne by the Company. Solicitation
may be made, without additional compensation, by directors, officers and regular
employees of the Company in person or by mail, telephone or telegram. The
Company may also request banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the Common Stock held of record by such persons, and
Brigham will reimburse the forwarding expense. All costs of preparing, printing
and mailing the form of proxy and the material used in the solicitation thereof
will be borne by the Company.
SHARES OUTSTANDING AND VOTING RIGHTS
The close of business on April 3, 1998 is the record date for
determination of stockholders entitled to notice of and to vote at the meeting
or any adjournment(s) thereof. The only voting security of the Company
outstanding
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<PAGE> 4
is the Common Stock, each share of which entitles the holder thereof to one
vote. At the record date for the meeting, there were outstanding and entitled to
be voted 12,253,574 shares of Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information concerning (i) the only persons
known by the Company, based upon statements filed by such persons pursuant to
Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to own beneficially in excess of 5% of the Common Stock as of
April 3, 1998, and (ii) the shares of Common Stock beneficially owned, as of
April 3, 1998, by each director of the Company, each executive officer listed in
the Summary Compensation Table included elsewhere in this proxy statement, and
all directors and executive officers of the Company as a group. Except as
indicated, each individual has sole voting power and sole investment power over
all shares listed opposite his name.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)
------------------------------
NUMBER PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES OF CLASS
- -------------------------------------------------------------------------- ------------ --------------
<S> <C> <C>
Ben M. Brigham (2)........................................................ 3,719,342 30.35%
6300 Bridge Point Parkway, Bldg. 2, Suite 500
Austin, Texas 78730
Anne L. Brigham (2)....................................................... 3,719,342 30.35%
6300 Bridge Point Parkway, Bldg. 2, Suite 500
Austin, Texas 78730
General Atlantic Partners, L.L.C. (3)..................................... 2,807,143 22.91%
Three Pickwick Plaza
Greenwich, Connecticut 06830
Resource Investors Management Company (4)................................. 1,754,464 14.32%
600 Travis Street, Suite 6875
Houston, Texas 77002
R. Chaney & Co., Inc. (5)................................................. 635,000 5.18%
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
Craig M. Fleming (6)...................................................... 44,643 *
Jon L. Glass (7).......................................................... 67,964 *
David T. Brigham (8)...................................................... 45,643 *
A. Lance Langford......................................................... 1,000 *
Harold D. Carter ......................................................... 341,893 2.79%
Gary J. Milavec (9) ...................................................... -- --
Alexis M. Cranberg ....................................................... -- --
Stephen P. Reynolds (10).................................................. -- --
All directors and executive officers as a group (11 persons) (6)(7)(8)....
4,220,485 34.44%
</TABLE>
- -----------------
* Represents less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or disposition power with respect to
securities.
(2) Includes 1,831,414 shares owned by Ben M. Brigham and 1,831,410 shares
owned by Anne L. Brigham, who are husband and wife; 28,272 shares owned by
Ben M. Brigham and Anne L. Brigham as Trustees under Brigham Parental
Trust I; 28,246 shares owned by Ben M. Brigham and Anne L. Brigham as
Trustees under Brigham Parental Trust II; and 1,000 shares held by David
T. Brigham, as custodian for Elizabeth R. Brigham under the Texas Uniform
Transfers to Minors Act.
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<PAGE> 5
(3) Includes 2,679,418 shares held by General Atlantic Partners III, L.P.
("GAP III"); and 127,725 shares held by GAP-Brigham Partners, L.P.
("GAP-Brigham"). Stephen P. Reynolds is the general partner and a limited
partner in GAP-Brigham and is President of GAP III Investors, Inc., the
general partner of GAP III.
(4) Includes 612,308 shares held by RIMCO Partners, L.P. II, 307,031 shares
held by RIMCO Partners, L.P. III and 835,125 shares held by RIMCO
Partners, L.P. IV (collectively, the "RIMCO Partnerships"). Resource
Investors Management Company ("RIMCO") is the general partner of each of
the RIMCO Partnerships. The general partner of RIMCO is RIMCO Associates,
Inc.
(5) Includes 610,000 shares held by R. Chaney & Partners III L.P. ("Fund III")
and 25,000 shares held by R. Chaney & Partners IV L.P. ("Fund IV"). R.
Chaney & Partners, Inc. ("Partners") is the sole general partner of Fund
III, and R. Chaney Investments, Inc. ("Investments") is the sole general
partner of Fund IV. Mr. Robert H. Chaney is the sole shareholder of
Partners and Investments.
(6) Includes 44,643 shares of restricted stock, which vest as follows: 30% in
July 1997, 30% in July 1998 and 40% in July 1999.
(7) Includes 66,964 shares of restricted stock, which vest as follows: 16.67%
in February 1997, 28.33% in July 1997, 28.33% in July 1998 and 26.67% in
July 1999.
(8) Includes 44,643 shares of restricted stock, which vest as follows: 30% in
July 1997, 30% in July 1998 and 40% in July 1999, and 1,000 shares gifted
by Ben M. Brigham and Anne L. Brigham.
(9) Gary J. Milavec is a Senior Vice President of RIMCO, the general partner
of each of the RIMCO Partnerships, and is a Vice President of RIMCO
Associates, Inc., the general partner of RIMCO. As such, Mr. Milavec may
be deemed to share voting and investment power with respect to the 612,308
shares held by RIMCO Partners, L.P. II, the 307,031 shares held by RIMCO
Partners, L.P. III and the 835,125 shares held by RIMCO Partners, L.P. IV.
Mr. Milavec disclaims beneficial ownership of shares beneficially owned by
RIMCO and the RIMCO Partnerships.
(10) Stephen P. Reynolds is the general partner and a limited partner in
GAP-Brigham and is President of GAP III Investors, Inc., the general
partner of GAP III. As such, Mr. Reynolds may be deemed to share voting
and investment power with respect to the 2,679,418 shares held by GAP III
and the 127,725 shares held by GAP-Brigham. Mr. Reynolds disclaims
beneficial ownership of shares owned by GAP III and GAP-Brigham except to
the extent of his pecuniary interest therein.
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<PAGE> 6
PROPOSAL 1.
ELECTION OF DIRECTORS
The business and affairs of the Company are managed by and under the
direction of the Board of Directors, which exercises all corporate powers of the
Company and establishes broad corporate policies.
The Company's Board of Directors formed standing audit and compensation
committees on February 26, 1997, which are composed of Harold D. Carter, Alexis
M. Cranberg and Gary J. Milavec. The Audit Committee's primary responsibilities
are to (i) recommend the Company's independent auditors to the Board of
Directors, (ii) review with the Company's auditors the plan and scope of the
auditor's annual audit, the results thereof and the auditors' fees, (iii) review
the Company's financial statements and (iv) take such other action as it deems
appropriate as to the accuracy and completeness of financial records of the
Company and financial information gathering, reporting policies and procedures
of the Company. The Compensation Committee exercises the power of the Board of
Directors in connection with all matters relating to compensation of executive
officers, employee benefit plans and the administration of the Company's stock
option programs.
All duly submitted and unrevoked proxies will be voted for the nominees
for directors selected by the Board of Directors, except where authorization so
to vote is withheld. If any nominee(s) should become unavailable for election
for any presently unforeseen reason, the persons designated as proxies will have
full discretion to cast votes for another person(s) designated by the Board. The
seven nominees of the Board of Directors of the Company are named below. Each of
the nominees has consented to serve as a director if elected. Set forth below is
certain information with respect to the nominees, including information as to
each nominee's age as of April 17, 1998, position with the Company, business
experience during the past five years and directorships of publicly held
companies.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES LISTED BELOW.
Ben M."Bud" Brigham, age 38, has served as Chief Executive Officer,
President and Chairman of the Board of the Company since founding the Company in
1990. From 1984 to 1990, Mr. Brigham served as an exploration geophysicist with
Rosewood Resources, an independent oil and gas exploration and production
company. Mr. Brigham began his career in Houston as a seismic data processing
geophysicist for Western Geophysical, a provider of 3-D seismic services, after
earning his B.S. in Geophysics from the University of Texas.
Anne L. Brigham, age 36, has served as Executive Vice President and a
Director of the Company since its inception in 1990 and served as Corporate
Secretary from 1990 to February 1998. Before joining the Company full-time in
1991, Ms. Brigham practiced law in the oil and gas and real estate sections of
Thompson & Knight, P.C. Ms. Brigham worked as a geologist for Hunt Petroleum
Corporation, an independent oil and gas exploration and production company, for
over two years before attending law school. Ms. Brigham holds a B.S. in Geology
from the University of Texas and a J.D. from Southern Methodist University.
Jon L. Glass, age 42, joined the Company in 1992 and has served as Vice
President - Exploration since 1994 and a Director of the Company since 1995.
From 1984 to 1992, Mr. Glass served in various capacities with Santa Fe
Minerals, an oil and gas exploration company, in a variety of staff and
managerial positions mainly focused on Santa Fe Minerals' exploration activities
in the midcontinent and Gulf of Mexico (onshore and offshore). During this time,
Mr. Glass also assisted in the development of exploration and acquisition
opportunities for Santa Fe Minerals in Canada and South America. Mr. Glass'
early geological experience includes three years with Mid-America Pipeline
Company and two years with Texaco USA, serving mainly as a midcontinent
exploration geologist. Mr. Glass holds a B.S. and an M.S. in Geology from
Oklahoma State University and an M.B.A. from the University of Tulsa.
Harold D. Carter, age 59, has served as a Director of and consultant to
the Company since 1992. Mr. Carter has more than 30 years experience in the oil
and gas industry and has been an independent consultant since 1990. Prior to
consulting, Mr. Carter served as Executive Vice President of Pacific Enterprises
Oil Company
4
<PAGE> 7
(USA). Before that, Mr. Carter was associated for 20 years with Sabine
Corporation, ultimately serving as President and Chief Operating Officer from
1986 to 1989. Mr. Carter consults for Endowment Advisors, Inc. with respect to
its EEP Partnerships and Associated Energy Managers, Inc. with respect to its
Energy Income Fund, L.P. and is a director of Abraxas Petroleum Corporation. Mr.
Carter has a B.B.A. in Petroleum Land Management from the University of Texas
and has completed the Program for Management Development at the Harvard
University Business School.
Alexis M. Cranberg, age 42, has served as a Director of the Company
since 1992. Mr. Cranberg is President of Aspect Management Corporation, an oil
and gas exploration and investment company. In addition, Mr. Cranberg is a
Director for Westport Oil and Gas Company, Inc. and a past Director of General
Atlantic Resources, Inc. and United Meridian Corporation. Mr. Cranberg is a
nominee for Director of Frontier Natural Gas Corp. He holds a B.S. in Petroleum
Engineering from the University of Texas and an M.B.A. from Stanford University.
Gary J. Milavec, age 36, has served as a Director of the Company since
1995. Mr. Milavec is a Senior Vice President of RIMCO, a full service investment
management firm specializing in the energy industry. Prior to joining RIMCO in
1990, Mr. Milavec spent two years in the corporate finance department of
Rauscher Pierce Refsnes, Inc. and three years as a geological engineer with
Shell Western E&P, Inc. He also serves as a director of Universal Seismic
Associates, Inc. and Texoil, Inc. Mr. Milavec holds B.S. in Geology from the
University of Rochester, an M.S. in Geology from the University of Oklahoma and
an M.B.A. from the University of Houston.
Stephen P. Reynolds, age 46, has served as a Director of the Company
since 1996. Mr. Reynolds is a managing member of General Atlantic Partners, LLC
("GAP LLC") and has been with GAP LLC or its predecessor entities since April
1980. Mr. Reynolds is also President of GAP III Investors, Inc., the general
partner of General Atlantic Partners III, L.P., and is a general partner and
limited partner of GAP-Brigham Partners, L.P. Mr. Reynolds is on the board of
directors of Solo Serve Corporation, a publicly traded off-price soft goods
retail company, and Computer Learning Centers, Inc., a publicly traded company
providing technology related training. Mr. Reynolds is a nominee for Director of
SS&C Technologies, Inc. Mr. Reynolds holds a B.A. in Economics from Amherst
College and a Masters degree in Accounting from New York University.
COMPENSATION OF DIRECTORS
Fees and Expenses; Other Arrangements. Directors who are also employees
of the Company are not separately compensated for serving on the Board of
Directors. Directors who are not employees of the Company receive $5,000 per
year and $500 per meeting for their services as directors. In addition, the
Company reimburses Directors for the expenses incurred in connection with
attending meetings of the Board of Directors and its committees.
Pursuant to a consulting agreement with Harold D. Carter that expired
May 1, 1997, the Company paid Mr. Carter $6,000 per month through June 1996 and
then $7,200 per month for the remainder of the term of the agreement to spend
approximately 50% of his working time performing such consulting and advisory
services regarding the operations of the Company as the Company requested,
including service on the management committee of the Company's predecessor
partnership. Pursuant to a subsequent consulting agreement that expires December
31, 1998, Mr. Carter continues to serve as a consultant to the Company and is
currently being compensated $7,200 per month for such services and is reimbursed
by the Company for his out-of-pocket expenses. In addition, pursuant to the
terms of Mr. Carter's consulting agreement, the Company pays Associated Energy
Managers, Inc. $1,000 per month to offset a portion of Mr. Carter's office
overhead expenses and provide the Company with limited use of part of Mr.
Carter's office space for purposes of conducting business while employees of the
Company are in Dallas, Texas.
Alexis M. Cranberg and Stephen P. Reynolds served on the management
committee of the Company's predecessor partnership pursuant to the terms of an
agreement with General Atlantic, and Gary J. Milavec served on the committee
pursuant to the terms of an agreement with RIMCO. The Company is not obligated
to nominate any of the three to serve as a Director of the Company in the
future.
5
<PAGE> 8
Director Stock Options. The Company's stockholders have approved the
1997 Director Stock Option Plan, pursuant to which each newly elected
nonemployee director shall be granted an option to purchase 1,000 shares of
Common Stock and each nonemployee director will receive an option to purchase
500 shares of Common Stock on December 31 of each year. The options under the
plan are granted at fair market value on the grant date and become exercisable,
subject to certain conditions, in five equal annual installments on the first
five anniversaries of the grant date. The options terminate ten years from the
grant date, unless terminated sooner. 25,000 shares of Common Stock have been
authorized and reserved for issuance pursuant to the plan. Options to purchase
2,000 shares of Common Stock have been granted in 1998 to the Company's four
nonemployee directors pursuant to the 1997 Directors Stock Option Plan.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires directors and officers of the
Company, and persons who own more than 10 percent of the Common Stock, to file
with the SEC initial reports of ownership and reports of changes in ownership of
the Common Stock. Directors, officers and more than 10 percent stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on a review of
the copies of such reports furnished to the Company and written representations
that no other reports were required, during the year ended December 31, 1997,
all Section 16(a) filing requirements applicable to its directors, officers and
more than 10 percent beneficial owners were met.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation
The following table sets forth certain summary information concerning the
compensation paid or awarded to the Chief Executive Officer of the Company and
the only other executive officers of the Company who earned in excess of
$100,000 in 1997 (the "named executive officers") for the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- ---------------------------
SHARES ALL OTHER
NAME AND RESTRICTED UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) STOCK AWARDS OPTIONS SATION($)(2)
------------------ ---- --------- ----------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ben M. Brigham............................... 1997 258,725 30,600 -- -- 6,236
Chief Executive Officer, President and 1996 144,000 15,000 -- -- 4,817
Chairman of the Board
Jon L. Glass................................. 1997 127,301 43,268 66,964 208,333 --
Vice President - Exploration 1996 109,782 9,225 -- -- --
Craig M. Fleming............................. 1997 122,272 44,971 44,643 69,444 --
Chief Financial Officer 1996 102,919 8,063 -- -- --
David T. Brigham............................. 1997 108,895 32,712 44,643 69,444 --
Vice President - Land and Administration, 1996 94,874 10,505 -- -- --
Corporate Secretary
A. Lance Langford............................ 1997 110,044 40,537 -- 52,085 --
Vice President - Operations 1996 94,090 7,261 -- -- --
</TABLE>
- ----------------
(1) Includes the following moving allowances granted in 1997 to employees
in connection with the Company's relocation of its corporate
headquarters from Dallas, Texas, to Austin, Texas: Ben M. Brigham -
$30,600; Jon L. Glass - $12,076; Craig M. Fleming - $23,654; David T.
Brigham - $17,529; and A. Lance Langford - $20,949.
(2) Consists of premiums paid by the Company under life and disability
insurance plans of $2,612 and $3,624, respectively, in 1997, and $1,404
and $3,413, respectively, in 1996.
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<PAGE> 9
Option Grants
The following table contains information about stock option grants to
the named executive officers in 1997:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
-------------------------------------------------- ---------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ------------------------- ------------ ----------- --------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ben M. Brigham........... -- -- -- -- -- -- --
Jon L. Glass............. 208,333 32.3 5.00 7/1/04 2,005,205 3,142,265 4,619,508
Craig M. Fleming......... 69,444 10.8 5.00 7/1/04 668,399 1,047,417 1,539,828
David T. Brigham......... 69,444 10.8 5.00 7/1/04 668,399 1,047,417 1,539,828
A. Lance Langford........ 52,085 8.1 5.00 7/1/04 501,318 785,593 1,154,916
</TABLE>
- ----------------
(1) Amounts represent hypothetical gains that could be achieved for the
options if they are exercised at the end of the option term. Those
gains are based on assumed rates of stock price appreciation of 0%, 5%
and 10% compounded annually from February 27, 1997, the date such
options had been granted, through the expiration date. For the option
term ending July 1, 2004, based on the closing price on The Nasdaq
Stock Market(sm) of the Common Stock of $14.63 on December 31, 1997, a
share of the Common Stock would have a value on July 1, 2004 of
approximately $20.08 at an assumed appreciation rate of 5% and
approximately $27.17 at an assumed appreciation rate of 10%.
Option Exercises and Year-End Option Values
The following table provides information about the number of shares
issued upon option exercises by the named executive officers during 1997, and
the corresponding value realized by the named executive officers. The table also
provides information about the number and value of options that were held by the
named executive officers at December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
ACQUIRED ON VALUE --------------------- ---------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ben M. Brigham ..... -- -- -- -- -- --
Jon L. Glass ....... -- -- -- 208,333 -- 2,005,205
Craig M. Fleming ... -- -- -- 69,444 -- 668,399
David T. Brigham ... -- -- -- 69,444 -- 668,399
A. Lance Langford .. -- -- -- 52,085 -- 501,318
</TABLE>
7
<PAGE> 10
BOARD REPORT ON EXECUTIVE COMPENSATION POLICY
The Company's executive compensation policy is designed to attract,
motivate, reward and retain the key executive talent necessary to achieve the
Company's business objectives and contribute to the long-term success of the
Company. In order to meet these goals, the Company's compensation policy for its
executive officers focuses primarily on determining appropriate salary levels
and providing long-term stock-based incentives. To a lesser extent, the
Company's compensation policy also contemplates performance-based cash bonuses.
The Company's compensation principles for the Chief Executive Officer are
identical to those of the Company's other executive officers.
Cash Compensation. In determining its recommendations for adjustments
to officers' base salaries for fiscal 1997, the Company focused primarily on the
scope of each officer's responsibilities, each officer's contributions to the
Company's success in moving toward its long-term goals during the fiscal year,
the completion of the Company's initial public offering of common stock, the
accomplishment of goals set by the officer and approved by the Board for that
year, the Company's assessment of the quality of services rendered by the
officer, comparison with compensation for officers of comparable companies and
an appraisal of the Company's financial position. In certain situations, the
Company may also pay cash bonuses, the amount of which will be determined based
on the contribution of the officer and the benefit to the Company of the
transaction or development.
Equity Compensation. The grant of stock options to executive officers
constitutes an important element of long-term compensation for the executive
officers. The grant of stock options increases management's equity ownership in
the Company with the goal of ensuring that the interests of management remain
closely aligned with those of the Company's stockholders. The Board believes
that stock options in the Company provide a direct link between executive
compensation and stockholder value. By attaching vesting requirements, stock
options also create an incentive for executive officers to remain with the
Company for the long term.
Chief Executive Officer Compensation. As indicated above, the factors
and criteria upon which the compensation of Ben M. Brigham, the Chief Executive
Officer, is based are identical to the criteria used in evaluating the
compensation packages of the other executive officers of the Company. The Chief
Executive Officer's individual contributions to the Company included his
leadership role in establishing and retaining a strong management team,
developing and implementing the Company's business plans and attracting
investment capital to the Company. In addition, the Company reviewed
compensation levels of chief executive officers at comparable companies in the
Company's industry.
Harold D. Carter
Alexis M. Cranberg
Gary J. Milavec
SECTION 162(M) OF THE INTERNAL REVENUE CODE.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
limits (to $1 million per covered executive) the deductibility for federal
income tax purposes of annual compensation paid to a company's chief executive
officer and each of its other four most highly compensated executive officers.
All options granted under the Company's existing plans will qualify for an
exemption from the application of Section 162(m) of the Code, thereby preserving
the deductibility for federal income tax purposes of compensation that may be
attributable to the exercise of such options.
EMPLOYMENT AGREEMENTS
The Company employs Ben M. Brigham under an employment agreement (the
"Employment Agreement") as Chief Executive Officer and President of the Company
for a five year term that began in February 1997. The Employment Agreement
contains rollover provisions so that at all times the term of the Employment
Agreement shall be not less than three years. The agreement provides for an
annual salary of $275,000, which the Board of Directors may further increase
from time to time. Mr. Brigham is also entitled to an annual cash bonus, not to
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exceed 75% of his then current salary, determined based on criteria established
by the Board of Directors. Under the Employment Agreement, Mr. Brigham is
entitled to participate in any employee benefit programs that the Company
provides to its executive officers. The only employee benefit programs that the
Company offers to its officers and employees are group insurance coverage and
participation in the Company's 401(k) Retirement Plan, the 1997 Incentive Plan
and the Incentive Bonus Plan. If Mr. Brigham terminates his employment for good
reason, which includes a material reduction of Mr. Brigham's position without
cause or his written consent, breach of a material provision of the Employment
Agreement or improper notice of termination, or if the Company terminates Mr.
Brigham without cause, the Company must pay Mr. Brigham a sum equal to the
amount of his annual base salary that he would have received during the
remainder of his employment term plus the average of his annual bonuses received
in the preceding two years times the number of years in the remainder of his
employment term. Mr. Brigham's agreement also contains a three-year non-compete
and confidentiality clause with standard terms.
Each of the other named executive officers of the Company, except A. Lance
Langford, is a party to a confidentiality and noncompete agreement contained in
agreements relating to the officers' restricted stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's compensation committee during the last ten months of the
past fiscal year consisted of Messrs. Carter, Cranberg and Milavec and all
determinations concerning executive compensation for such period for the
Company's executive officers were made by the compensation committee. The
compensation committee members abstained from participation in compensation
determinations concerning their own compensation. None of the executive officers
of the Company has served on the board of directors or on the compensation
committee of any other entity, any of whose officers served on the Board of
Directors of the Company.
CERTAIN TRANSACTIONS
In connection with the land work necessary prior to and during 3-D seismic
acquisitions, the Company engages Brigham Land Management ("BLM"), an
independent company owned and managed by Vincent M. Brigham, a brother of Ben M.
Brigham, who is the Company's Chief Executive Officer, President and Chairman of
the Board, and David T. Brigham, who is a Vice President of the Company. BLM
specializes in conducting the field land work necessary prior to and during 3-D
seismic acquisitions. BLM has regional expertise in the Anadarko Basin and the
Texas Panhandle, and, to a lesser extent, West Texas. BLM performs these
services for the Company using BLM's employees and independent contractors. BLM
performs approximately one-third of the Company's work in the Anadarko Basin. In
1995, 1996 and 1997, the Company paid BLM approximately $382,000, $596,000 and
$837,000, respectively. Other participants in the Company's 3-D seismic projects
reimbursed the Company for a portion of these amounts. Based on its experience
with other firms in the area, the Company believes that BLM's charges are at or
below those of other firms.
In 1994, the Company, through its subsidiary Quest Resources, L.L.C.,
formed Venture Acquisitions, L.P. ("Venture") with affiliates of RIMCO, a holder
of in excess of 5% of the Common Stock, to provide the Company with the capital
to acquire interests in certain potential drilling locations, producing
properties and 3-D seismic projects. The RIMCO affiliates have contributed $5.2
million to Venture, and the Company has contributed $286,138. Until the first
payout under the Venture limited partnership agreement, the Company's share of
all capital costs is 5%, and the Company's share of revenues and related
production expenses and costs is 10%. Between the first and second payout
levels, the Company's share of capital costs and revenues and related production
expenses and costs is 25% and thereafter increases to 50%. Venture acquired from
the Company an interest in (i) a 3-D project for approximately $75,000 in 1995,
and (ii) two 3-D delineated potential drilling locations and 3-D seismic data
for approximately $83,000 in 1996. The Company billed Venture approximately
$14,924 in 1995, $16,500 in 1996 and $56,658 in 1997 for its proportionate share
of exploration and overhead costs. Because RIMCO was not an affiliate of the
Company when the Venture partnership was formed, the Company believes that the
terms of the Venture partnership are no less favorable than could be obtained
from an unaffiliated third party. Gary J. Milavec, a director of the Company and
member of the Company's compensation committee, is employed by RIMCO.
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In November 1994, the Company, certain RIMCO affiliates and other
unrelated industry participants entered into a geophysical exploration agreement
creating an area of mutual interest in its Esperson Dome Project in Liberty and
Harris counties, Texas. The Company financed its participation in this project
by assigning its interest, and obligation to bear costs, to Vaquero Gas Company,
Inc. ("Vaquero"), a RIMCO affiliate, subject to a 5% net profits overriding
royalty interest and the right to receive up to 50% of Vaquero's interest on the
occurrence of certain payouts. The Company also retained responsibility for
managing the 3-D seismic data acquisition and interpretation of the data after
it had been acquired. During 1995, 1996 and 1997, the Company received
approximately $25,000, $123,000 and $50,000, respectively, from the RIMCO
affiliates, including Vaquero, for workstation time and geoscientists' time in
interpreting the 3-D seismic data that were acquired. Because RIMCO was not an
affiliate of the Company when the project was initiated and the interest to
Vaquero was transferred, the Company believes that the terms of the arrangement
are no less favorable than could be obtained from an unaffiliated third party.
In January 1997, the Company, RIMCO and Tigre Energy Corporation ("Tigre")
entered into an agreement under which the Company had been initially assigned an
undivided 25% interest (subject to a proportionately reduced 3% overriding
royalty interest) in a project ("Tigre Point") located in Vermillion Parish,
Louisiana in return for paying certain costs of acquiring 3-D seismic and land
within the project area. The Company acquired an additional 12.5% working
interest from RIMCO and an additional 37.5% working interest from Tigre in parts
of the project under the same terms as the initial 25% interest. The Company
believes that the arrangements with RIMCO affiliates relating to Tigre Point are
on terms no less favorable than could be obtained from an unaffiliated third
party, because RIMCO and Tigre, an unaffiliated third party, are participants in
the project on substantially similar terms.
The Company and an affiliate of Universal Seismic Associates, Inc.
("USA"), a public company of which RIMCO affiliates beneficially own
approximately 31% of the outstanding common stock, have entered into a
geophysical exploration agreement covering an area of mutual interest on the
Gulf Coast. Under the terms of the agreement, USA conducted a 3-D seismic
program established by the Company and USA and processed the data acquired under
the program at cost, and the Company will interpret the resulting seismic data
for the benefit of the Company and USA at no charge to USA. Subject to a party's
electing not to participate in an acquired interest, the Company and USA will
each own an undivided 50% interest in all land interests acquired within the
area of mutual interest. Through December 31, 1997, the Company had incurred
$209,314 of costs under those arrangements. Based on its experience in acquiring
3-D seismic data, the Company believes that it has acquired 3-D seismic data
under this agreement on terms, and that the arrangement is on terms, no less
favorable than could be obtained from an unaffiliated third party.
In 1993 and 1994 the Company issued to RIMCO 10% Notes in principal
amounts of $3.0 million and $4.9 million, respectively. In 1995 the Company
issued RIMCO additional 10% Notes in a principal amount of $2.6 million, and in
the same year, issued RIMCO 5% Notes in a principal amount of $16.0 million,
$10.5 million of which was used to repay all the outstanding 10% Notes. The 5%
Notes were exchanged for 1,754,464 shares of Common Stock in the exchange of
partnership interests in the Company's predecessor partnership for Common Stock
of the Company prior to the Company's initial public offering. In 1995, 1996 and
1997, the Company paid RIMCO $631,989, $809,332 and $363,367, respectively, in
interest payments on the 5% Notes and the 10% Notes. In 1995, 1996 and 1997, the
Company distributed to RIMCO $102,107, $82,097 and $48,150, respectively for
RIMCO's overriding royalty interest in certain natural gas and oil properties.
Pursuant to a consulting agreement with Harold D. Carter that expired May
1, 1997, the Company paid Mr. Carter $6,000 per month through June 1996 and
$7,200 per month for the remainder of the term of the agreement to spend
approximately 50% of his working time performing such consulting and advisory
services regarding the operations of the Company as the Company requested,
including service on the management committee of the Company's predecessor
partnership. Pursuant to this agreement, Mr. Carter received $72,000 in 1995,
$79,200 in 1996 and $86,580 in 1997. Additional disbursements totaling
approximately $13,000 were made by the Company to Mr. Carter during 1997 for the
reimbursement of certain expenses. Pursuant to the terms of a subsequent
consulting agreement, the Company will continue to utilize Mr. Carter's
consulting services through December 31, 1998 and pay Mr. Carter $7,200 per
month for those services and reimburse Mr. Carter for certain out-of-pocket
expenses and during the term of the agreement. In addition, pursuant to the
terms of Mr. Carter's
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consulting agreement, the Company pays Associated Energy Managers, Inc. $1,000
per month to offset a portion of Mr. Carter's office overhead expenses and
provide the Company with limited use of part of Mr. Carter's office space for
purposes of conducting business while employees of the Company are in Dallas,
Texas.
In 1995, 1996 and 1997, the Company paid $35,000, $110,000 and $18,000 to
Aspect and affiliates of Alexis M. Cranberg, a director of the Company, to
acquire interests in a project in Grady County, Oklahoma and a project in
Hardeman and Wilbarger counties, Texas and Jackson County, Oklahoma. Based on
its experience in the industry, the Company believes that these transactions are
on terms no less favorable than could be obtained from an unaffiliated third
party. The Company billed Aspect and other affiliates of Alexis M. Cranberg
$13,000 in 1995 and $68,000 in 1996 for its proportionate share of the costs
related to the projects.
The Company has entered into a Registration Rights Agreement with General
Atlantic Partners III, L.P., GAP-Brigham Partners, L.P., RIMCO Partners, L.P.
II, RIMCO Partners, L.P. III and RIMCO Partners, L.P. IV, Ben M. Brigham, Anne
L. Brigham, Harold D. Carter, Craig M. Fleming, David T. Brigham and Jon L.
Glass. Pursuant to the Registration Rights Agreement, Anne and Ben Brigham,
acting together, the RIMCO entities, acting together, and the General Atlantic
entities, acting together, each may separately require the Company to register
securities, on one occasion, if the shares to be registered have an estimated
aggregate offering price to the public of at least $3.0 million. One additional
registration is allowed if any registrable securities requested to be included
in a previous registration statement have not been disposed of in accordance
with that previous registration. The Registration Rights Agreement also provides
"piggyback" registration rights for all registrations of registrable securities
for the Company or another security holder. In an underwritten offering,
however, the Company may exclude all or a portion of the securities being
registered pursuant to "piggyback" registration rights if the managing
underwriter determines that including those securities would raise a substantial
doubt about whether the proposed offering could be consummated. The Registration
Rights Agreement contains customary indemnity by the Company in favor of persons
selling securities in a registration governed by the Registration Rights
Agreement, and by those persons in favor of the Company, relating to the
information included in or omitted from the Registration Statement.
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<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Common Stock with the cumulative total return of (i) the Media General
Industry Group Index No. 353, "Oil, Natural Gas Exploration" ("MG E&P Group
Index") and (ii) the Nasdaq Market Index from the first day of trading of the
Common Stock, May 9, 1997, through December 31, 1997. The graph assumes that the
value of an investment in the Common Stock and each index was $100 at May 9,
1997 and that any dividends were reinvested. Numerical values used for the
month-end plot points in the graph are set forth in the table under the graph.
COMPARISON OF CUMULATIVE TOTAL RETURN FOR BRIGHAM EXPLORATION COMPANY,
NASDAQ MARKET INDEX AND MG E&P GROUP INDEX
[GRAPH]
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<CAPTION>
5/9/97 5/30/97 6/30/97 7/31/97 8/29/97 9/30/97 10/31/97 11/28/97 12/31/97
------ ------- ------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Brigham Exploration Company 100.00 85.93 99.26 106.67 127.41 164.44 194.07 185.19 173.33
Nasdaq Market Index 100.00 111.24 114.62 126.67 126.20 133.77 127.05 127.59 125.48
MG E&P Group Index 100.00 110.75 106.87 110.35 113.43 125.34 119.45 110.94 110.22
</TABLE>
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PROPOSAL 2.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, and recommends the approval of the
appointment of, Price Waterhouse LLP, who have been the Company's auditors since
1992, as independent auditors for the year ending December 31, 1998.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting and will be given the opportunity to make a statement, if they desire to
do so, and to respond to appropriate questions.
Unless stockholders specify otherwise in the proxy, proxies solicited by
the Board of Directors will be voted by the persons named in the proxy at the
Annual Meeting to ratify the selection of Price Waterhouse LLP as the Company's
auditors for 1998. The affirmative vote of a majority of the votes cast at the
Annual Meeting will be required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP.
OTHER MATTERS
The Board of Directors of the Company does not intend to present any other
matters at the meeting and knows of no other matters which will be presented.
However, if any other matters come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote in accordance with their
judgment on such matters.
STOCKHOLDER PROPOSALS
It is contemplated that the 1999 annual meeting of stockholders of the
Company will take place during the fourth week of May 1999. Stockholder
proposals for inclusion in the Company's proxy materials for the 1999 annual
meeting of stockholders must be received at the Company's principal executive
office in Austin, Texas, addressed to the Secretary of the Company, not less
than 60 days prior to such meeting; provided that if the 1999 annual meeting of
stockholders is changed by more than 30 days from the presently contemplated
date, proposals must be so received a reasonable time in advance of the meeting.
FORM 10-K ANNUAL REPORT
The Company will provide without charge to each person from whom a proxy
is solicited by this proxy statement, upon the written request of any such
person, a copy of the Company's annual report on Form 10-K, including the
financial statements and the schedules thereto, required to be filed with the
Securities and Exchange Commission pursuant to Section 13(a)-1 under the 1934
Act for the Company's most recent fiscal year. Requests should be directed to
Investor Relations, Brigham Exploration Company, 6300 Bridge Point Parkway,
Building Two, Suite 500, Austin, Texas 78730.
By Order of the Board of Directors
David T. Brigham
Secretary
April 17, 1998
Austin, Texas
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BRIGHAM EXPLORATION COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
The undersigned hereby appoints Ben M. Brigham and David T. Brigham, or
any of them, each with full power of substitution, to represent the undersigned
at the Annual Meeting of Stockholders of Brigham Exploration Company to be held
at 1:00 p.m. C.S.T. on May 29, 1998, at Barton Creek Resort and Country Club,
8212 Barton Club Drive, Austin, Texas, and at any adjournments or postponements
thereof, and to vote the number of shares the undersigned would be entitled to
vote if personally present at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF ALL
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS AND FOR PROPOSAL 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BRIGHAM
EXPLORATION COMPANY. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION AND FOR
PROPOSAL 2. IN THEIR DIRECTION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF TO THE EXTENT AUTHORIZED BY RULE 14a-4(c) PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION AND BY APPLICABLE STATE LAWS (INCLUDING MATTERS THAT
THE PROXY HOLDERS DO NOT KNOW, A REASONABLE TIME BEFORE THIS SOLICITATION, ARE
TO BE PRESENTED).
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
<PAGE> 17
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BRIGHAM EXPLORATION COMPANY
MAY 29, 1998
o PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED o
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK YOUR
VOTES AS INDICATED
[X] IN THIS EXAMPLE.
FOR WITHHOLD
all nominees listed AUTHORITY
(except as indicated to vote for all
to the contrary) nominees listed
1. ELECTION OF NOMINEES: Ben M. Brigham 2. RATIFICATION OF PRICE WATER- FOR AGAINST ABSTAIN
DIRECTORS. [ ] [ ] Anne L. Brigham HOUSE LLP AS THE COMPANY'S
Harold D. Carter AUDITORS FOR THE FISCAL YEAR [ ] [ ] [ ]
(INSTRUCTIONS: To withhold authority to Alexis M. Cranberg ENDING DECEMBER 31, 1998.
vote for any individual nominee, write the Jon L. Glass
nominee's name on the space provided below.) Gary J. Milavec 3. The transaction of such other business as may
Stephen P. Reynolds properly come before the meeting or any
- -------------------------------------------- adjournments or postponements of the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, YOU ARE URGED TO COMPLETE, DATE, SIGN
AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT
THE MEETING.
Signature Dated: 1998
--------------------------------------------------- ---------------------------------- -------------------,
SIGNATURE (IF HELD JOINTLY)
NOTE: Please sign exactly as your name(s) appear(s) on your stock certificate. If shares of stock stand of record in the names of
two or more persons or in the name of husband and wife, whether as joint tenants or otherwise, both or all such persons
should sign the proxy. If shares of stock are held of record by a corporation, the proxy should be executed by the president
or vice president and the secretary or assistant secretary. Executors, administrators or other fiduciaries who execute the
above proxy for a stockholder should give their full title. Please date the proxy.
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