SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Pioneer Natural Resources 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 O-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:
--------------------------------------------------------------
(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>
PIONEER NATURAL RESOURCES COMPANY
5205 N. O'Connor Boulevard
Suite 1400
Irving, Texas 75039
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Pioneer Natural Resources Company:
Notice is hereby given that the Annual Meeting of Stockholders of
Pioneer Natural Resources Company (the "Company") will be held in the Miro Room
at the Wyndham Anatole Hotel, 2201 Stemmons Freeway, Dallas, Texas 75207, on
Thursday, May 18, 2000, at 9:00 a.m. The Annual Meeting is being held for the
following purposes:
1. To elect two directors, each for a term of three years.
2. To ratify the selection of Ernst & Young LLP as the auditors of
the Company for the current year.
3. To transact such other business as may properly come before the
meeting.
These proposals are described in the accompanying proxy materials. You
will be able to vote at the Annual Meeting only if you are a stockholder of
record at the close of business on April 3, 2000.
YOUR VOTE IS IMPORTANT
Please date, sign, and return the enclosed Proxy promptly so that your
shares may be voted in accordance with your wishes and so we may have a quorum
at the Annual Meeting. Instead of returning the paper proxy, you may vote
through the Internet by accessing our transfer agent's website at
www.continentalstock.com. You will need the control numbers that are printed on
your personalized proxy card.
You are cordially invited to attend the meeting. We request that you
indicate whether you will attend in the space provided on the enclosed form of
Proxy or via the Internet.
By Order of the Board of Directors
Mark L. Withrow, Secretary
Irving, Texas
April 10, 2000
<PAGE>
PIONEER NATURAL RESOURCES COMPANY
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
The board of directors of Pioneer Natural Resources Company (the "Board
of Directors") requests your Proxy for the Annual Meeting of Stockholders that
will be held at 9:00 a.m., on Thursday, May 18, 2000, in the Miro Room at the
Wyndham Anatole Hotel, Dallas, Texas 75207 (the "Annual Meeting"). By granting
the Proxy, you authorize the persons named on the Proxy to represent you and
vote your shares at the Annual Meeting. Those persons will also be authorized to
vote your shares to adjourn the meeting from time to time and to vote your
shares at any adjournments or postponements of the meeting.
You may grant your Proxy by signing, dating and returning the enclosed
paper proxy card. Instead of returning the paper proxy card, you may complete a
proxy card electronically through the Internet by accessing the website of the
Company's transfer agent at www.continentalstock.com. You will need the control
numbers that are printed on your personalized paper proxy card. See "Internet
Voting."
If you attend the Annual Meeting, you may vote in person. If you are
not present at the Annual Meeting, your shares may be voted only by a person to
whom you have given a proper proxy, such as the accompanying Proxy or the
Internet Proxy. You may revoke the Proxy in writing at any time before it is
exercised at the Annual Meeting by delivering to the Secretary of the Company a
written notice of the revocation, or by signing and delivering to the Secretary
of the Company a proxy with a later date or by submitting your vote
electronically through the Internet with a later date. Your attendance at the
Annual Meeting will not revoke the Proxy unless you give written notice of
revocation to the Secretary of the Company before the Proxy is exercised or
unless you vote your shares in person at the Annual Meeting.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy are first being sent or given to stockholders of the Company on or about
April 10, 2000.
QUORUM AND VOTING
Voting Stock. The Company has two outstanding classes of securities
that entitle holders to vote generally at meetings of the Company's
stockholders: common stock, par value $.01 per share; and Special Preferred
Voting Stock, par value $.01 per share. A single share (the "Voting Share") of
Special Preferred Voting Stock was issued to Montreal Trust Company of Canada
(the "Trustee") as trustee under a Voting and Exchange Trust Agreement for the
benefit of holders of exchangeable shares issued by the Company's wholly- owned
subsidiary, Pioneer Natural Resources Canada Inc., in connection with the
Company's December 1997 acquisition of Chauvco Resources Ltd. The common stock
and the Voting Share vote together as a single class on all matters except when
Delaware law requires otherwise. Each share of common stock outstanding on the
record date is entitled to one vote. The Voting Share is entitled to one vote
for each exchangeable share outstanding on the record date. The Trustee is
required to vote the Voting Share in the manner that holders of exchangeable
shares instruct, and to abstain from voting in proportion to the exchangeable
shares for which the Trustee does not receive instructions. Accordingly,
references to "stockholders" in this Proxy Statement include holders of common
stock, the Trustee, and holders of exchangeable shares. The procedures for
holders of exchangeable shares to instruct the Trustee about voting at the
Annual Meeting are explained in the "Information Statement for Holders of
Exchangeable Shares of Pioneer Natural Resources Canada Inc." that is enclosed
with this Proxy Statement only for holders of exchangeable shares.
Record Date. The record date for stockholders entitled to notice of and
to vote at the Annual Meeting is the close of business on April 3, 2000. At the
record date, 96,269,736 shares of common stock and one Voting Share were
outstanding and entitled to be voted at the Annual Meeting. At the record date,
3,568,562 exchangeable shares were outstanding and entitled to give voting
instructions to the Trustee. Accordingly, 99,838,298 votes are eligible to be
cast at the Annual Meeting.
<PAGE>
Quorum and Adjournments. The presence, in person or by proxy, of the
holders of a majority of the votes eligible to be cast at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting.
If a quorum is not present, the stockholders entitled to vote who are
present in person or by proxy at the Annual Meeting have the power to adjourn
the Annual Meeting from time to time, without notice other than an announcement
at the Annual Meeting, until a quorum is present. At any adjourned Annual
Meeting at which a quorum is present, any business may be transacted that might
have been transacted at the Annual Meeting as originally notified.
Vote Required. Directors will be elected by a plurality of the votes
present and entitled to be voted at the Annual Meeting. Ratification of the
selection of the Company's auditors will require the affirmative vote of the
holders of a majority of the shares present and entitled to be voted at the
Annual Meeting. An automated system that the Company's transfer agent
administers will tabulate the votes. Brokers who hold shares in street name for
customers are required to vote shares in accordance with instructions received
from the beneficial owners. Brokers are permitted to vote on discretionary items
if they have not received instructions from the beneficial owners, but they are
not permitted to vote (a "broker non-vote") on non-discretionary items absent
instructions from the beneficial owner. Abstentions and broker non-votes will
count in determining whether a quorum is present at the Annual Meeting. Both
abstentions and broker non-votes will not have any effect on the outcome of
voting on director elections. For purposes of voting on the ratification of the
selection of auditors, abstentions will be included in the number of shares
voting and will have the effect of a vote against the proposal, and broker
non-votes will not be included in the number of shares voting and therefore will
have no effect on the outcome of the voting.
Default Voting. A Proxy that is properly completed and returned will be
voted at the Annual Meeting in accordance with the instructions on the Proxy. If
you properly complete and return a Proxy, but do not indicate any contrary
voting instructions, your shares will be voted as follows:
o FOR the election of the two persons named in this Proxy Statement
as the Board of Directors' nominees for election to the Board of
Directors.
o FOR the ratification of the selection of Ernst & Young LLP as the
Company's auditors.
If any other business properly comes before the stockholders for a vote at the
meeting, your shares will be voted in accordance with the discretion of the
holders of the Proxy. The Board of Directors knows of no matters, other than
those previously stated, to be presented for consideration at the Annual
Meeting.
ITEM ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated the following persons for election
as Class III directors of the Company with their terms to expire at the annual
meeting of stockholders in 2003 when their successors are elected and qualified:
Jerry P. Jones
Charles E. Ramsey, Jr.
Both of these nominees are currently serving as directors of the
Company. Their biographical information is contained in "Directors and Executive
Officers."
The Board of Directors has no reason to believe that either of its
nominees will be unable or unwilling to serve if elected. If a nominee becomes
unable or unwilling to accept nomination or election, either the number of the
Company's directors will be reduced or the persons acting under the Proxy will
vote for the election of a substitute nominee that the Board of Directors
recommends.
The Board of Directors recommends that stockholders vote FOR the
election of each of the nominees.
2
<PAGE>
ITEM TWO
SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young LLP as the auditors
of the Company for 2000. Ernst & Young LLP audited the Company's financial
statements for 1999 and 1998. The 1999 audit was completed on January 24, 2000.
The Company expects that representatives of Ernst & Young LLP will be present at
the Annual Meeting to respond to appropriate questions and to make a statement
if they desire to do so.
The report of Ernst & Young LLP on the Company's financial statements
for 1999 and 1998 did not contain an adverse opinion or a disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope, or accounting
principles.
In connection with the audits of the Company's financial statements for
1999 and 1998, there were no disagreements with Ernst & Young LLP on any matters
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures which, if not resolved to the satisfaction of such
independent accountants, would have caused such independent accountants to make
reference to the matter in their report.
The Board of Directors recommends that stockholders vote FOR
ratification of the selection of Ernst & Young LLP.
DIRECTORS AND EXECUTIVE OFFICERS
After the Annual Meeting, assuming the stockholders elect the nominees
of the Board of Directors as set forth in "Item One-Election of Directors," the
Board of Directors and executive officers of the Company will be:
Name Age Position
Scott D. Sheffield....... 47 Chairman of the Board, President and Chief
Executive Officer
Timothy L. Dove.......... 43 Executive Vice President and Chief Financial
Officer
Dennis E. Fagerstone..... 51 Executive Vice President
Mark L. Withrow.......... 52 Executive Vice President, General Counsel and
Secretary
Danny L. Kellum.......... 45 Vice President - Domestic Operations
James R. Baroffio........ 68 Director
R. Hartwell Gardner...... 65 Director
James L. Houghton........ 69 Director
Jerry P. Jones........... 68 Director
Charles E. Ramsey, Jr.... 63 Director
Robert L. Stillwell...... 63 Director
The Company has classified its Board of Directors into three classes.
Directors in each class are elected to serve for three-year terms and until
their successors are elected and qualified. Each year, the directors of one
class stand for re-election as their terms of office expire. Messrs. Jones,
Ramsey and Richard E. Rainwater (who is not standing for re-election) are
designated as Class III directors, and their terms of office expire at the
Annual Meeting. Messrs. Gardner and Houghton are designated as Class I
directors, and their terms of office expire at the annual meeting of
stockholders in 2001. Messrs. Baroffio, Sheffield and Stillwell are designated
as Class II directors, and their terms of office expire at the annual meeting of
stockholders in 2002. Since the last annual meeting of stockholders, three
directors of the Company, I. Jon Brumley, Kenneth A. Hersh and Philip B. Smith,
voluntarily resigned as directors of the Company. None of these resignations was
the result of a disagreement with the Company on any matter relating to the
Company's operations, policies or practices. Mr. Rainwater has notified the
Board of his intention not to stand for re-election to the Board due to his
decision to retire effective May 17, 2000. Mr. Brumley resigned to devote his
3
<PAGE>
full time and attention to his position as President and CEO of Encore
Acquisition Partners, a new independent exploration and production company
founded in 1998. Mr. Hersh and Mr. Smith resigned following the Prize
transaction. See "Certain Relationships and Related Transactions."
Executive officers serve at the discretion of the Board of Directors.
Set forth below is biographical information about each of the Company's
directors and executive officers named above.
Scott D. Sheffield. Mr. Sheffield, a distinguished graduate of the
University of Texas with a Bachelor of Science degree in Petroleum Engineering,
has been the President and Chief Executive Officer of the Company since August
1997, and assumed the position of Chairman of the Board in August 1999. He was
the President and a director of Parker & Parsley since May 1990 and was the
Chairman of the Board and Chief Executive Officer of Parker & Parsley since
October 1990. Mr. Sheffield was the sole director of Parker & Parsley from May
1990 until October 1990. Mr. Sheffield joined Parker & Parsley Development
Company ("PPDC"), a predecessor of Parker & Parsley, as a petroleum engineer in
1979. Mr. Sheffield served as Vice President - Engineering of PPDC from
September 1981 until April 1985, when he was elected President and a director.
In March 1989, Mr. Sheffield was elected Chairman of the Board and Chief
Executive Officer of PPDC. Before joining PPDC's predecessor, Mr. Sheffield was
employed as a production and reservoir engineer for Amoco Production Company.
Timothy L. Dove. Mr. Dove became Executive Vice President - Business
Development of the Company in August 1997, and was elected Executive Vice
President and Chief Financial Officer in February 2000. Mr. Dove joined Parker &
Parsley in May 1994 as Vice President - International and was promoted to Senior
Vice President - Business Development in October 1996, in which position he
served until August 1997. Before joining Parker & Parsley, Mr. Dove was employed
with Diamond Shamrock Corp., and its successor, Maxus Energy Corp., in various
capacities in international exploration and production, marketing, refining, and
planning and development. Mr. Dove earned a Bachelor of Science degree in
Mechanical Engineering from Massachusetts Institute of Technology in 1979 and
received his M.B.A. in 1981 from the University of Chicago.
Dennis E. Fagerstone. Mr. Fagerstone, a graduate of the Colorado School
of Mines with a B.S. in Petroleum Engineering, became an Executive Vice
President of the Company in August 1997. Mr. Fagerstone served as Executive Vice
President and Chief Operating Officer of Mesa from March 1997 until August 1997.
Mr. Fagerstone served as Senior Vice President and Chief Operating Officer of
Mesa from October 1996 to February 1997, as Vice President - Exploration and
Production of Mesa from May 1991 to October 1996 and as Vice President -
Operations of Mesa from June 1988 until May 1991.
Mark L. Withrow. Mr. Withrow, a graduate of Abilene Christian
University with a Bachelor of Science degree in Accounting and Texas Tech
University with a Juris Doctorate degree, has been the Executive Vice President,
General Counsel and Secretary of the Company since August 1997. He served as
Vice President - General Counsel of Parker & Parsley from February 1991 until
January 1995, and served as Senior Vice President, General Counsel of Parker &
Parsley from January 1995 until August 1997. He was Parker & Parsley's Secretary
from August 1992 until August 1997. Mr. Withrow joined PPDC in January 1991.
Before joining PPDC, Mr. Withrow was the managing partner of the law firm of
Turpin, Smith, Dyer, Saxe & MacDonald, Midland, Texas.
Danny L. Kellum. Mr. Kellum, who received a Bachelor of Science degree
in Petroleum Engineering from Texas Tech University in 1979, has served the
Company as Vice President - Domestic Operations since August 1999. From November
1998 until August 1999, Mr. Kellum served as Vice President - Domestic
Operations of Pioneer's subsidiary, Pioneer Natural Resources USA, Inc., and
from August 1997 until November 1998, he served as Vice President of that
company's Permian Division. He served as Spraberry District Manager from 1989
until 1994 and as Vice President of the Spraberry and Permian Divisions for
Parker & Parsley until August of 1997. He joined Parker & Parsley in 1981 in the
capacity of Operations Engineer after a brief career with Mobil Oil Corporation.
James R. Baroffio. Dr. Baroffio received a B.A. in Geology at the
College of Wooster, Ohio, an M.S. in Geology at Ohio State University, and a
Ph.D. in Geology at the U niversity of Illinois. Before becoming a director of
4
<PAGE>
the Company in December 1997, Dr. Baroffio enjoyed a long career with Standard
Oil Company of California, the predecessor of Chevron Corporation where he
served as President, Chevron Research and Technology Center from 1980 to 1985
and eventually retired as President of Chevron Canada Resources in 1994. Dr.
Baroffio was a member of the Board of Directors of the Rocky Mountain Oil & Gas
Association, and Chairman of the U.S. National Committee of the World Petroleum
Congress. His community leadership positions included membership on the Board of
Directors of Glenbow Museum and the Nature Conservancy of Canada, as well as
serving as President of the Alberta Nature Conservancy.
R. Hartwell Gardner. Mr. Gardner became a director of the Company in
August 1997. He served as a director of Parker & Parsley from November 1995
until August 1997. Mr. Gardner graduated from Colgate University with a Bachelor
of Arts degree in Economics and then earned an M.B.A. from Harvard University.
Until October 1, 1995, Mr. Gardner was the Treasurer of Mobil Oil Corporation
and Mobil Corporation from 1974 and 1976, respectively. Mr. Gardner is a member
of the Financial Executives Institute of which he served as Chairman in
1986/1987 and is a Director of Oil Investment Corporation Ltd. and Oil Casualty
Investment Corporation Ltd., Pembroke, Bermuda.
James L. Houghton. Mr. Houghton is a Certified Public Accountant and a
graduate of Kansas University with a Bachelor of Science degree in Accounting,
as well as a Bachelor of Laws degree. Mr. Houghton has served as a director of
the Company since August 1997, and as a director of Parker & Parsley from
October 1991 until August 1997. Until October 1, 1991, Mr. Houghton was the lead
oil and gas tax specialist for the accounting firm of Ernst & Young, was a
member of Ernst & Young's National Energy Group, and had served as its Southwest
Regional Director of Tax. Mr. Houghton is a member of the American Institute of
Certified Public Accountants, a member of the Oklahoma Society of Certified
Public Accountants and a former Chairman of its Federal and Oklahoma Taxation
Committee, and past President of the Oklahoma Institute on Taxation. He has also
served as a Director for the Independent Petroleum Association of America and as
a member of its Tax Committee.
Jerry P. Jones. Mr. Jones earned a Bachelor of Science degree from West
Texas State College in 1953 and a Bachelor of Laws degree from the University of
Texas School of Law in 1959. Mr. Jones has served as a director of the Company
since August 1997, and as a director of Parker & Parsley from May 1991 until
August 1997. Mr. Jones has been an attorney with the law firm of Thompson &
Knight, L.L.P., Dallas, Texas, since September 1959 and was a shareholder in
that firm until January 1998, when he retired and became of counsel to the firm.
Mr. Jones specialized in civil litigation, especially in the area of energy
disputes.
Charles E. Ramsey, Jr. Mr. Ramsey is a graduate of the Colorado School
of Mines with a Petroleum Engineering degree and a graduate of the Smaller
Company Management program at the Harvard Graduate School of Business
Administration. Mr. Ramsey has served as a director of the Company since August
1997. Mr. Ramsey served as a director of Parker & Parsley from October 1991
until August 1997. Since October 1991, he has operated an independent management
and financial consulting firm. From June 1958 until June 1986, Mr. Ramsey held
various engineering and management positions in the oil and gas industry and,
for six years before October 1991, was a Senior Vice President in the Corporate
Finance Department of Dean Witter Reynolds Inc. (Dallas, Texas office). His
industry experience includes 12 years of senior management experience in the
positions of President, Chief Executive Officer and Executive Vice President of
May Petroleum Inc. Mr. Ramsey is also a former director of MBank Dallas, the
Dallas Petroleum Club and Lear Petroleum Corporation.
Robert L. Stillwell. Mr. Stillwell, a graduate of the University of
Texas with a B.B.A. and the University of Texas School of Law with a J.D., has
served as a director of the Company since August 1997. He served as a director
of Mesa from January 1992 until August 1997, as a member of the Advisory
Committee of Mesa, L.P., a predecessor of Mesa, from December 1985 until
December 1991, and as a director of Mesa in its original corporate form from
1968 until January 1987. Mr. Stillwell is a partner in the law firm of Baker &
Botts, L.L.P., Houston, Texas.
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors of the Company held ten meetings during 1999. No
director attended fewer than 75% of the total number of meetings of the Board of
Directors. No director attended fewer than 75% of the total number of meetings
of all committees of the Board of Directors on which that director served.
5
<PAGE>
The Board of Directors has two standing committees: the "Audit
Committee" and the "Compensation Committee."
The Audit Committee makes recommendations to the Board of Directors for
selecting the Company's independent auditors, considers the independence of
auditors before engaging them, reviews with auditors their reports, discusses
internal accounting procedures and financial controls with the Company's
management and auditors, and may initiate and supervise any special
investigations it deems necessary. The members of the Audit Committee are
Messrs. Houghton (Chairman), Gardner and Jones. The Audit Committee held four
meetings during 1999.
The Compensation Committee periodically reviews the compensation,
employee benefit plans and fringe benefits paid to or provided for executive
officers of the Company and approves the annual salaries and bonuses of the
Company's executive officers. The members of the Compensation Committee are
Messrs. Ramsey (Chairman), Baroffio and Stillwell. A subcommittee of Messrs.
Ramsey and Baroffio administer the Long-Term Incentive Plan. The Compensation
Committee held five meetings during 1999.
MANAGEMENT COMPENSATION
The Company began operations upon completion of the merger of Parker &
Parsley and Mesa on August 7, 1997. Information about management compensation
for periods before that date refers to compensation that either of the
predecessor companies paid.
Compensation of Directors
Each non-employee director receives an annual retainer fee of $50,000
if the director serves on a committee and $40,000 if he does not. In addition,
each non-employee director is reimbursed for travel expenses to attend meetings
of the Board of Directors or its committees and an additional $2,500 for
services as chairman of a committee. No additional fees are paid for attendance
at board or committee meetings. Executive officers of the Company do not receive
additional compensation for serving on the Board of Directors.
Under the Company's Long-Term Incentive Plan (the "Plan"), non-employee
directors are eligible to receive awards in the form of non-qualified stock
options, stock appreciation rights, restricted stock, or performance units. The
Company uses these awards instead of cash to pay its non-employee directors
their annual retainer fees. The Board of Directors determines the form (or
combination of forms) of consideration each year, based on the economic and
other circumstances at the time and based on its view of which awards will best
align the interests of the stockholders and the directors.
In order for the Directors to participate in the Company's cost
reduction program and to tie 100% of their compensation to the Company's stock
performance, the Board of Directors determined to use non-qualified stock
options to pay all of the non-employee directors' annual fees for the year
following the Company's 1999 annual stockholders' meeting. The number of shares
subject to stock options granted to each non-employee director was determined by
dividing the director's annual retainer fee by the value of an option for one
share on May 28, 1999 (the last business day of the month in which the Company's
1999 annual stockholders' meeting was held). The options have a fair-market
value exercise price, and the value of each option was calculated using the
Black-Scholes method based on assumptions provided by the Company's executive
compensation consulting firm. These options vest 25% each quarter with the first
vesting date on August 31, 1999.
On May 28, 1999, each non-employee director received the following
awards of stock options to compensate him for his annual retainer fee (each
stock option awarded has an exercise price of $10.875): Messrs. Baroffio,
Gardner, Jones and Stillwell each received options for 10,184 shares; Messrs.
Brumley, Houghton and Ramsey each received options for 10,693 shares; and Mr.
Rainwater received an option for 8,147 shares. Mr. Brumley subsequently retired
as a director of the Company effective August 31, 1999, and forfeited stock
options to purchase 8,019 shares.
Effective November 18, 1999, each non-employee director received an
award of 30,000 non-qualified stock options at an exercise price of $10.25. One
third of these options vest on May 17, 2000, one third vest on May 17, 2001 and
the remaining one third vest May 17, 2002. The foregoing stock option awards are
6
<PAGE>
not regular, annual awards but were granted to bring the directors' compensation
package to a level competitive with the director compensation of the Company's
peer group used for establishing executive compensation.
Compensation of Executive Officers
The compensation paid to the Company's executive officers generally
consists of base salaries, annual bonuses, awards under the Long-Term Incentive
Plan, contributions to the Company's 401(k) retirement plan, and miscellaneous
perquisites. The following table summarizes the total compensation for 1999,
1998, and 1997 awarded to, earned by or paid to the following persons:
SUMMARY COMPENSATION TABLE
<TABLE>
Long-Term Compensation
Awards
Annual Compensation -----------------------
--------------------------------------- Value of Shares
Name and Other Annual Restricted Underlying All Other
Principal Position Year Salary (a) Bonus (b) Compensation (c) Stock (d) Options Compensation (a)
- ------------------ ---- ---------- --------- ---------------- ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Scott D. Sheffield (f) 1999 $ 480,000 $ 270,000 $ 14,427 $ - 90,000 $69,378
President and 1998 600,000 216,000 16,734 - 90,000 123,252
Chief Executive Officer 1997 518,875 360,000 838,075 2,234,625 90,000 105,996
Dennis E. Fagerstone 1999 247,500 92,812 8,478 - 35,000 40,564
Executive Vice President 1998 275,000 92,812 8,076 - 35,000 37,757
1997 259,387 123,750 61,985 871,125 35,000 27,149
Mark L. Withrow (f) 1999 225,000 84,376 4,327 - 35,000 38,855
Executive Vice President 1998 250,000 84,376 60,882 - 35,000 61,178
and General Counsel 1997 228,000 112,500 382,020 871,125 35,000 51,835
Timothy L. Dove 1999 225,000 197,580 4,611 - 35,000 38,394
Executive Vice President 1998 250,000 84,375 4,618 - 35,000 57,713
Business Development 1997 221,750 112,500 484,227 871,125 35,000 39,258
M. Garrett Smith (g) 1999 225,000 84,376 8,418 - 35,000 39,362
Executive Vice President 1998 250,000 84,376 7,457 - 35,000 36,559
and Chief Financial Officer 1997 214,000 105,750 44,386 871,125 35,000 15,812
</TABLE>
(a) Mr. Sheffield voluntarily reduced his 1999 salary 20%, and the other named
executive officers' salaries were voluntarily reduced 10% during 1999.
(b) Represents the amount awarded under the Company's annual bonus program and
forgiveness of a Company loan to Mr. Dove for $113,204 in 1999. The 1999
and 1998 annual bonus awards were paid fully in cash. The 1997 annual bonus
was paid one-half in cash and one-half in restricted common stock as
follows:
Restricted Stock Award
----------------------
Number Value
Year Cash Award of Shares of Shares
---- ---------- --------- ---------
Mr. Sheffield............. 1997 $ 179,993 8,045 $180,007
Mr. Fagerstone............ 1997 61,883 2,765 61,867
Mr. Withrow............... 1997 56,249 2,514 56,251
Mr. Dove.................. 1997 56,249 2,514 56,251
Mr. Smith................. 1997 52,878 2,363 52,872
Subject to accelerated lapse in certain circumstances, the ownership of the
stock vests after one year and transfer restrictions lapse on one- third of
the shares on each of the first, second and third anniversaries of the date
of grant. The number of shares of restricted stock awarded as annual
bonuses was calculated using the last closing sale price of the common
stock before the date of the award ($22.375). Ownership of the restricted
stock awarded for 1997 vested on September 30, 1998, due to the triggering
of a vesting acceleration clause contained in the Long-Term Incentive Plan.
(c) This column includes (i) gross-up payments for taxes in connection with the
receipt of restricted stock awarded in 1997 pursuant to the annual bonus
plan as follows: Mr. Sheffield $118,805; Mr. Fagerstone $40,832; Mr.
Withrow $37,125; Mr. Dove $37,125; and Mr. Smith $34,896; (ii) relocation
and housing cost of living adjustment related to moving corporate
headquarters from Midland, Texas to Irving, Texas as follows: payment for
1998 - Mr. Withrow $42,290; payments for 1997 - Mr. Sheffield $432,856; Mr.
Withrow $204,000; and Mr. Dove $290,737; (iii) tax gross-up payments for
relocation and cost of living adjustment: payment for 1998 - Mr. Withrow
$12,044; payments for 1997 - Mr. Sheffield $283,781; Mr. Withrow $133,742;
and Mr. Dove $190,458; (iv) and a 1997 payment to Mr. Fagerstone of
$21,153. Amounts not shown represent miscellaneous perquisites.
7
<PAGE>
(d) The restricted stock awarded in 1997 represents grants on August 8, 1997 of
59,000 shares of common stock to Mr. Sheffield and 23,000 shares of common
stock to each of Messrs. Fagerstone, Withrow, Dove and Smith with vesting
restrictions that were to lapse one-half on August 8, 2000, and one-half on
August 8, 2001. Messrs. Sheffield, Fagerstone, Withrow, Dove and Smith's
restricted stock fully vested on September 30, 1998 due to the triggering
of a vesting acceleration clause contained in the Plan. The values of the
awards were calculated using the closing sale price of the common stock of
$37.875 on August 7, 1997. Because all vesting restrictions on all
restricted stock heretofore awarded to each executive officer have lapsed
(either by their terms or through acceleration upon the happening of
certain events) no executive officer held any shares of restricted stock on
December 31, 1999.
(e) For 1999 this column includes (i) contributions to qualified retirement
plans for Messrs. Sheffield, Fagerstone, Withrow, Dove and Smith of
$16,000, $15,814, $15,922, $15,894, and $15,922 respectively; (ii)
contributions to the Company's non-qualified deferred compensation
retirement plan for Messrs. Sheffield, Fagerstone, Withrow, Dove and Smith
of $48,923, $24,750, $22,933, $22,500, and $22,933 respectively; (iii) a
$1,330 premium with respect to a term life insurance policy for the benefit
of Mr. Sheffield; (iv) reimbursement for financial counseling services for
Messrs. Sheffield and Smith for $3,125 and $507 respectively.
(f) See "Management Compensation - Compensation of Executive Officers -
Employee Investment Partnerships" for information about Parker &
Parsley-sponsored employee investment partnerships in which Mr. Sheffield
and Mr. Withrow invested their own funds.
(g) Mr. Smith resigned from the Company effective February 1, 2000.
Long-Term Incentive Plan. The Plan provides for employee and non-employee
director awards in the form of stock options, stock appreciation rights,
restricted stock, and performance units payable in stock or cash. The maximum
number of shares of common stock that may be issued under the Plan is equal to
10% of the total number of shares of common stock outstanding from time to time
minus the total number of shares of stock subject to outstanding awards on the
date of calculation under any other stock-based plan for employees or directors
of the Company and its subsidiaries. The Plan had 4,275,311 shares available for
additional awards at December 31, 1999.
Information about restricted stock awards made under the Plan is set forth
in the Summary Compensation Table. No performance units or stock appreciation
rights have been awarded under the Plan.
The following table sets forth information about stock option grants made
during 1999 to the named executive officers.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
Individual Grants
-----------------------------------------------
Number of % of Total
Securities Options Granted Exercise or
Underlying to Employees Base Price Expiration Grant Date
Name Options Granted in Fiscal Year Per Share (c) Date Value (d)
- -------------------- --------------- --------------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Mr. Sheffield....... 45,000 (a) 2.27% $ 5.81 2/24/05-06-07 $ 147,150
45,000 (b) 2.27% 12.44 8/23/05-06-07 314,100
Mr. Fagerstone...... 17,500 (a) 0.88% 5.81 2/24/05-06-07 57,225
17,500 (b) 0.88% 12.44 8/23/05-06-07 122,150
Mr. Withrow......... 17,500 (a) 0.88% 5.81 2/24/05-06-07 57,225
17,500 (b) 0.88% 12.44 8/23/05-06-07 122,150
Mr. Dove............ 17,500 (a) 0.88% 5.81 2/24/05-06-07 57,225
17,500 (b) 0.88% 12.44 8/23/05-06-07 122,150
Mr. Smith........... 17,500 (a) 0.88% 5.81 2/24/05-06-07 57,225
17,500 (b) 0.88% 12.44 8/23/05-06-07 122,150
</TABLE>
(a) These options were granted on February 24, 1999, vest at the rate of
one-third each year, commencing on the first anniversary of the grant
date, and have a term of five years from the date of vesting. The
Compensation Committee retains discretion, subject to plan limits, to
modify the terms of the options. In the event of a change in control of
the Company as defined in the Plan, the options will immediately become
fully vested and exercisable in full.
(b) These options were granted on August 23, 1999, vest at the rate of
one-third each year commencing on the first anniversary of the grant date,
and have a term of five years from the date of vesting. The Compensation
Committee retains discretion, subject to plan limits, to modify the terms
of the options. In the event of a change in control of the Company as
defined in the Plan, the options will immediately become fully vested and
exercisable in full.
(c) The exercise price per share is equal to the closing price of the common
stock on the New York Stock Exchange composite tape on the day before the
date of grant.
(d) The estimated grant date value of shares in footnotes (a) and (b) is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the
value of the options include the following:
- An interest rate of 6.59% for footnote (a) and 6.51% for footnote (b),
which represents the interest rate on a U. S. Treasury security with a
maturity date corresponding to the option term.
- Volatility of 50% for footnote (a) and 50% for footnote (b) calculated
using daily stock prices for the 120-day period prior to the grant
date.
8
<PAGE>
No other adjustments were made to the model for non-transferability or
risk of forfeiture. The ultimate values of the options will depend on the
future market price of the common stock, which cannot be forecast with
reasonable accuracy. The actual value, if any, an optionee will realize
upon exercise of an option will depend on the excess of the market value
of the common stock over the exercise price on the date the option is
exercised.
The following table sets forth, for each named executive officer,
information concerning the exercise of stock options during 1999, and the value
of unexercised stock options as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money
Shares Options at Fiscal Year End Options at Fiscal Year End
Acquired on Value --------------------------- -------------------------------
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable (a)
----------- -------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Sheffield...... - $ - 320,000 120,000 $ - $ 140,625
Mr. Fagerstone..... - - 138,332 46,666 - 54,688
Mr. Withrow........ - - 106,334 46,666 - 54,688
Mr. Dove........... - - 100,334 46,666 - 54,688
Mr. Smith.......... - - 111,905 46,666 - 54,688
</TABLE>
(a) Amounts were calculated by multiplying the number of unexercised options
by $8.9375, which was the closing sale price of the common stock on
December 31, 1999, and subtracting the aggregate exercise price.
Retirement Plan. The Company provides a non-qualified deferred
compensation retirement plan for officers and key employees of the Company. Each
participant is allowed to contribute up to 25% of base salary. The Company
provides a matching contribution of 100% of the participant's contribution
limited to the first 10% of the officer's base salary (or 8% of the key
employee's base salary). The Company matching contribution vests immediately.
Employee Investment Partnerships. From 1987 through 1991, Parker &
Parsley formed employee partnership programs in which Mr. Sheffield
participated. In 1992 and 1993 Mr. Sheffield and Mr. Withrow participated in a
Direct Investment Partnership formed to invest in all wells drilled by Parker &
Parsley during those years (except in certain circumstances where its
participation would impose additional costs to Parker & Parsley). As of December
31, 1999, the aggregate contributions that have been made to the employee
partnerships and the Direct Investment Partnerships by Mr. Sheffield and Mr.
Withrow and the aggregate distributions that have been received by them from
those partnerships were as follows: Mr. Sheffield contributed $734,955 and
received $1,145,680 ($79,555 of which was received during 1999); and Mr. Withrow
contributed $142,625 and received $151,437 ($13,206 of which was received during
1999).
Severance Agreements. On August 8, 1997, the Company entered into
severance agreements with its officers. Salaries and bonuses are set by the
Compensation Committee independent of these agreements, and the Compensation
Committee can increase or reduce base salaries at its discretion.
Either the Company or the officer may terminate the officer's
employment under the severance agreement at any time. The Company must pay the
officer an amount equal to one year's base salary if the officer's employment is
terminated because of death, disability, or normal retirement. The Company must
pay the officer an amount equal to one year's base salary and continue health
insurance for the officer's family for one year if the Company terminates the
officer's employment without cause or if the officer terminates employment for
good reason, which is when reductions in the officer's base annual salary exceed
specified limits or when the officer's responsibilities have been significantly
reduced. If within one year after a change in control of the Company, the
Company terminates the officer without cause, or if the officer terminates
employment for good reason, the Company must pay the officer an amount equal to
2.99 times the sum of the officer's base salary plus target bonus for the year
and continue health insurance for the officer's family for one year. If the
officer terminates employment with the Company without reason between six months
and one year after a change in control, or at any time within one year after a
change in control if the officer is required to move, then the Company must pay
the officer one year's base salary and continue health insurance for the
officer's family for one year. Officers are also entitled to additional payments
for certain tax liabilities that may apply to severance payments following a
change in control.
9
<PAGE>
Indemnification Agreements. The Company has entered into indemnification
agreements with each of its directors and officers, including the named
executive officers. Those agreements require the Company to indemnify the
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law and to advance expenses in connection with certain claims
against directors and officers. The Company expects to enter into similar
agreements with persons selected to be directors and officers in the future.
Each indemnification agreement also provides that, upon a potential change in
control of the Company and if the indemnified director or officer so requests,
the Company will create a trust for the benefit of the indemnified director or
officer in an amount sufficient to satisfy payment of all liabilities and suits
against which the Company has indemnified the director or officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Robert L. Stillwell is a member of the Compensation Committee and
is a partner of Baker & Botts, L.L.P., which provided limited legal services to
the Company during 1999. The dollar amount of fees that the Company paid to
Baker & Botts, L.L.P. during the most recent fiscal year of that law firm did
not exceed 5% of that firm's gross revenues. Mr. Stillwell does not serve on the
sub-committee of the Compensation Committee that administers the Company's
Long-Term Incentive Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
submits the following report with respect to the executive compensation program
of the Company.
Compensation Principles and Philosophy
The overriding responsibility of the Committee is to maintain the
Company's executive compensation program so that it attracts and retains a
capable and highly motivated senior management team and aligns the compensation
of the Company's executives with the Company's strategic business plan to
increase stockholder value. During 1999, the Committee retained an executive
compensation consulting firm ("Hewitt Associates") to assist and advise it in
its efforts to establish and administer fair and competitive compensation and
incentive policies. These policies emphasize variable compensation, structure
the annual bonus and long-term incentive awards to be a significant portion of
an executive's total compensation and result in total compensation that is
reflective of Company performance. Stock awards will continue to be emphasized
as part of each executive's compensation package to align stockholder and
executive interests. Other critical elements of the Company's compensation and
incentive policies provide for:
o Base salaries at or slightly above median levels compared to
industry survey information and peer group proxy analysis.
o Annual bonuses that are based on both individual and Company
performance.
o Long-term incentive award levels that are above median.
o Significant stock ownership by management.
To support the commitment to significant stock ownership, the Company's
current stock ownership guidelines are as follows:
o Non-employee directors - stock value equal to at least three times
each director's annual retainer fee.
o Chairman of the Board and Chief Executive Officer - stock value
equal to at least five times base salary.
In determining compliance with these guidelines, the Committee
considers its expectations of the long term value of the Company's stock and the
current trading levels. Mr. Sheffield and all Directors are in compliance with
the ownership guidelines.
10
<PAGE>
The Omnibus Budget Reconciliation Act of 1993 ("OBRA93") placed
restrictions on the deductibility of executive compensation paid by public
companies. Under the restrictions that began to apply in 1994, the Company is
not able to deduct compensation paid to any of the named executive officers in
excess of $1,000,000 unless the compensation meets the definition of
"performance based compensation" in the legislation. Non-deductibility could
result in additional tax costs to the Company. While the Committee cannot assess
with certainty how the Company's compensation program will ultimately be
affected by OBRA93, the Committee generally tries to preserve the deductibility
of all executive compensation if it can do so without interfering with the
Company's ability to attract and retain capable and highly motivated senior
management. However, in order to induce certain executive officers of the
Company to relocate to the Company's principal executive offices in Irving,
Texas, after the merger of Parker & Parsley and Mesa in 1997, the Company made
certain relocation reimbursement payments to such officers, which payments were
not wholly deductible by the Company because of the compensation limits of
OBRA93.
Elements of Compensation
The elements of the compensation program the Committee administers for
executive officers, including the Chief Executive Officer, consist of base
salaries, annual bonuses, awards made under the Company's Long- Term Incentive
Plan (the "Plan"), contributions to the Company's 401(k) retirement plan,
contributions to the Company's deferred compensation retirement plan, and
miscellaneous perquisites. Base salaries, annual bonuses and long-term
incentives are discussed separately below; however, the Committee considers the
aggregate remuneration of executives when evaluating the executive compensation
program.
Base Salaries. An executive's base salary is viewed as a fixed
component of total compensation that should be competitive with companies of
similar size and business to the Company. The Committee has targeted base
salaries at or slightly above the median level for companies of similar size and
business to the Company. The Committee evaluates the base salaries of the
Company's executive officers on the basis of competitive base salary survey data
provided by its consultant and consideration of each officer's duties and
responsibilities. The Committee views the named executives below the CEO level
as a team with diverse duties but with similar authority and responsibility.
Hewitt Associates provides base salary survey data on the majority of the
Company's peer group companies, a group of independent exploration and
production companies with similar asset, revenue and capital investment profiles
as the Company. While the peer group provided by Hewitt Associates includes some
of the members of the Dow Jones Oil-Secondary Index (the "DJ Oil-Secondary
Group") reflected in the performance graph set forth under "Company Performance"
below, it does not include all of the companies in that peer group and includes
other companies with which the Company competes. The Committee determines the
base salary for all named executives, including Mr. Sheffield, using the same
methodology.
Due to adverse economic conditions the oil and gas industry experienced
during 1998, and the desire to reduce the Company's 1999 cost structure during a
year of expected low commodity prices, Mr. Sheffield reduced his 1999 base
salary by 20% to $480,000, and the other named executive officers' base salaries
were reduced by 10%. For 1999, Mr. Sheffield's and the other named executives'
base salaries were significantly less than the 50th percentile, even though the
Company normally targets the 50th percentile level for base salary. Effective
January 1, 2000, the 1999 salary reduction program expired and base salaries
were restored to the 1998 levels. Mr. Sheffield's base salary was restored to
$600,000. For 2000, Hewitt Associates determined that merely returning the named
executive officer's salary to the 1998 level resulted in base salaries below the
Company's targeted 50th percentile level. Effective January 1, 2000, Mr.
Sheffield's base salary was increased to $638,000, which Hewitt has identified
as the 50th percentile level. The other named executive officers' base salaries
were also restored to the 1998 levels and increased to approximately the 50th
percentile level.
Annual Bonuses. Each year the Committee sets a target bonus for each
executive based on the range of the peer group's bonus targets. To maintain
internal equity, the level of responsibility, scope and complexity of the
executive's position are considered. Awards may vary from 50% to 150% of target.
For 2000, the Committee reduced the target bonus opportunity for each named
executive by 5%. Mr. Sheffield's new target bonus will be slightly below the
50th percentile, and the target bonus for the other named executives will be at
approximately the 50th percentile.
For 1999, the Committee awarded Mr. Sheffield and the other named
executives a cash bonus of 75% of target. In addition to the annual bonus award,
the Committee approved the forgiveness of a $113,204 Company loan to Mr. Dove.
As part of his initial hiring package, Mr. Dove received a restricted stock
award which vested in August, 1997 due to the merger of Parker & Parsley and
MESA. The Company funded the tax liability on the vested stock through a loan
11
<PAGE>
because the United States Securities and Exchange Commission ("SEC") rules
prevented Mr. Dove from selling the stock without incurring substantial
penalties. In February 1999 the Committee forgave the loan when it determined
the current value of the award was less than the tax liability triggered by the
merger. In awarding 1999 bonuses, the Committee reviewed the following criteria
that are important to the success of the Company's business plan.
- Growth of Cash Flow per Share - Operating Cost per BOE
- Debt/Book - Reserve Replacement
- Growth of Net Value per Share - Finding & Development Cost per BOE
- Production Growth - Debt/BOE
In determining the named executive officers' annual bonus awards, the
Committee also evaluated the Company's stock performance in relation to its peer
group. The Committee did not employ a formula, specific targets or predetermined
weighting of the above financial or operational performance criteria. The
Committee also evaluates Company performance in light of oil and gas industry
fundamentals and assesses how effectively management adapts to changing industry
conditions and opportunities during the year. The Committee observes and
evaluates the individual performance of executive officers through the year and
discusses the performance of these key executives with Mr. Sheffield.
Long-term Incentives. A significant portion of the named executive
officers' total compensation is comprised of long-term incentive awards, which
are intended to align executive management's interests in long- term growth and
success more closely with the interests of the Company's stockholders. The
Committee has determined that annual stock option awards should be the primary
method to award long-term incentives. To provide an averaging effect for the
stock option exercise prices, the Committee has elected to make semiannual stock
option awards of approximately 50% of annual grant levels.
The number of options granted to Mr. Sheffield in 1999 was determined
by a comparison of option grants made to the CEO's of peer group companies. The
other named executive officers were reviewed as a team. The level of options
awarded to each named executive was determined by comparing awards granted to
peer company executives holding similar positions, and their individual award
levels were averaged to determine the actual grants. The award levels were not
influenced by the stock holdings of the executives. The Company has historically
held to the philosophy of awarding long-term incentives that are above market
averages. Hewitt Associates concluded the 1999 stock option awards for the
Company's named executive officers, including Mr. Sheffield, are now below the
50th percentile among the survey group. For 1999, Mr. Sheffield was awarded
90,000 stock options, which, according to Hewitt Associates, placed Mr.
Sheffield below the 50th percentile for long-term incentive awards for chief
executive officers among the survey group.
In December 1998, the Company received information that an investment
fund group had acquired beneficial ownership of more than 20% of the common
stock. Pursuant to the provisions of the Plan, if a third party acquires 20% or
more of the common stock, certain change in control provisions are triggered. In
December 1998, the Committee determined that a change in control had occurred
under the provisions of the Plan, effective September 30, 1998. Consequently,
all stock option awards granted under the Plan from inception in August 1997
through September 30, 1998, were immediately vested, and the restrictions on
restricted stock awards were removed. The Plan has been amended to increase the
third party ownership to 40% to trigger the change in control provisions.
In summary, the Company believes a significant portion of executive
compensation should be variable and performance-based so that an executive's
total compensation is linked to the performance of the individual, the Company
and its stock price. The majority of the named executive officers' total
compensation is variable, at-risk compensation. This structure allows the
Company to administer overall compensation that rises or falls based on the
Company's performance and to maintain a balance between the Company's short-term
and long-term objectives.
Compensation Committee of
the Board of Directors
Charles E, Ramsey, Jr., Chairman
James R. Baroffio
Robert L. Stillwell
12
<PAGE>
COMPANY PERFORMANCE
The following graph and chart compare the Company's cumulative total
stockholder return on common stock during the period from December 31, 1994 to
December 31, 1999, with cumulative total stockholder return during the same
period for the DJ Oil-Secondary Group and the Standard & Poor's 500 Index. The
Company's cumulative total stockholder return for the period from December 31,
1994 to December 31, 1999 consists of Parker & Parsley's operating results prior
to August 8, 1997 and the Company's operating results beginning August 8, 1997.
After the merger of Parker & Parsley and Mesa in 1997, the Company began using
the DJ Oil-Secondary to compare its performance because several members of the
Company's peer group use that index to simplify the evaluation of company
performance and because the DJ Oil-Secondary is more readily available to the
public for comparison purposes. The graph and chart show the value, at December
31 in each of 1995, 1996, 1997, 1998 and 1999 of $100 invested at December 31,
1994, and assume the reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
AMONG PIONEER NATURAL RESOURCES COMPANY, THE STANDARD & POOR'S 500 INDEX
AND THE DOW JONES OIL - SECONDARY INDEX
Pioneer
Natural Dow Jones Standard
Measurement Resources Oil & Poor's
(Fiscal Year Covered) Company Secondary 500
--------------------- -------- --------- --------
1994 100 100 100
1995 108 116 138
1996 181 143 169
1997 143 152 226
1998 43 111 290
1999 44 125 351
* $100 invested on December 31, 1994 in stock or index.
Including reinvestment of dividends.
Fiscal year ending December 31.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of common stock as of April 3, 2000, by (a) each person who
is known by the Company to own beneficially more than 5% of the outstanding
shares of common stock, (b) each director and nominee for director of the
Company, (c) each executive officer of the Company, and (d) all directors and
executive officers as a group.
Number of Percentage
Name of Person or Identity of Group Shares Of Class (1)
----------------------------------- ---------- ------------
Southeastern Asset Management, Inc. (2)............ 26,593,532 26.6%
Longleaf Partners Fund
O. Mason Hawkins
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
The Prudential Insurance Company of America (3).... 9,775,877 9.8%
751 Broad Street
Newark, New Jersey 07102-3777
Richard E. Rainwater (4) (5)....................... 5,553,654 5.6%
777 Main Street, Suite 2700
Fort Worth, Texas 76102
Scott D. Sheffield (5), (6)........................ 854,679 *
Timothy L. Dove (5), (7)........................... 207,295 *
Dennis E. Fagerstone (5)........................... 238,895 *
13
<PAGE>
Danny L. Kellum (5), (8)........................... 110,536 *
Mark L. Withrow (5), (9)........................... 231,643 *
James R. Baroffio (5).............................. 50,937 *
R. Hartwell Gardner (5)............................ 46,075 *
James L. Houghton (5), (10)........................ 53,933 *
Jerry P. Jones (5)................................. 55,736 *
Charles E. Ramsey, Jr. (5)......................... 57,779 *
Robert L. Stillwell (5), (11)...................... 46,833 *
All directors and executive officers as a group
(12 persons) (12) 8,391,537 8.4%
- --------------------
* Does not exceed 1%.
(1) Based on 99,838,298 shares of common stock consisting of 96,269,736
outstanding shares of common stock and 3,568,562 outstanding exchangeable
shares that are exchangeable for the same number of shares of common
stock.
(2) The Schedule 13G/A filed with the SEC on February 9, 2000, which is a
joint statement on Schedule 13G/A filed by Southeastern Asset Management,
Inc. ("Southeastern"), Longleaf Partners Fund ("Longleaf") and O. Mason
Hawkins ("Hawkins"), states that the statement is being filed by
Southeastern as a registered investment adviser, and that all of the
securities covered by the statement are owned legally by Southeastern's
investment advisory clients and none are owned directly or indirectly by
Southeastern. The Schedule 13G/A further states that the statement is also
being filed by Hawkins, Chairman of the Board and C.E.O. of Southeastern,
in the event he could be deemed to be a controlling person of that firm as
the result of his official positions with or ownership of its voting
securities. The existence of such control is expressly disclaimed. Hawkins
does not own directly or indirectly any securities covered by the Schedule
13G/A for his own account.
(3) The Schedule 13G/A filed with the SEC on January 31, 2000 states that The
Prudential Insurance Company of America may have direct or indirect voting
and/or investment discretion over 9,775,877 shares or 9.8% of the
outstanding common stock which are held for the benefit of its clients by
its separate accounts, externally managed accounts, registered investment
companies, subsidiaries and/or other affiliates.
(4) Includes 109,324 shares owned directly by Rainwater, Inc., of which Mr.
Rainwater is the sole shareholder, and 244,950 shares (of which Mr.
Rainwater disclaims beneficial ownership) owned by Mr. Rainwater's spouse.
(5) Includes the following number of shares subject to stock options that were
exercisable at or within 60 days after April 3, 2000: Mr. Rainwater,
38,147; Mr. Sheffield, 500,350; Mr. Dove, 176,000; Mr. Fagerstone,
207,988; Mr. Kellum, 98,000; Mr. Withrow, 170,000; Mr. Baroffio, 40,184;
Mr. Gardner, 40,184; Mr. Houghton, 40,693; Mr. Jones, 40,184; Mr. Ramsey,
40,693; and Mr. Stillwell, 40,184.
(6) Includes 100 shares held by a minor child of Mr. Sheffield and 24,845
shares held in Mr. Sheffield's 401(k) account.
(7) Includes 370 shares held in Mr. Dove's 401(k) account.
(8) Includes 516 shares held in Mr. Kellum's 401(k) account.
(9) Includes 17,266 shares held in Mr. Withrow's 401(k) account.
(10) Includes 9,666 shares held by two trusts of which Mr. Houghton is a
trustee and over which shares he has sole voting and investment power,
2,000 shares held in Mr. Houghton's investment retirement account, and 479
shares held by a corporation that is in Mr. Houghton's control.
(11) Includes 758 shares held by Mr. Stillwell's wife.
(12) Includes 1,685,107 shares of common stock subject to stock options that
were exercisable at or within 60 days after April 3, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The executive officers and directors of the Company are required to
file reports with the SEC, and with the various Canadian provincial securities
commissions (the "Canadian Commissions"), disclosing the amount and nature of
their beneficial ownership in common stock, as well as changes in that
ownership. Pursuant to applicable Canadian policies, the executive officers and
directors of the Company are exempted from filing reports with the Canadian
Commissions, provided that they timely file all reports required to be filed
with the SEC.
Based solely on its review of reports and written representations that
the Company has received, the Company believes that all required reports were
filed on time for 1999.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, through its wholly-owned subsidiaries, has in the past
sponsored certain affiliated partnerships, including 22 public and 22 private
drilling partnerships and three public income partnerships, all of which were
formed primarily for the purpose of drilling and completing wells or acquiring
producing properties. In accordance with the terms of the partnership agreements
and the related tax partnership agreements of the affiliated partnerships, the
Company participated in the activities of the sponsored partnerships on a
promoted basis. In 1992, the Company discontinued sponsoring public and private
oil and gas development drilling and income partnerships.
During each of 1994, 1993 and 1992, the Company formed a Direct
Investment Partnership for the purpose of permitting selected key employees to
invest directly, on an unpromoted basis, in wells that the Company drills. The
partners in the Direct Investment Partnerships formed in 1994, 1993 and 1992 pay
and receive approximately .337%, 1.5375% and 1.865%, respectively, of the costs
and revenues attributable to the Company's interest in the wells in which each
such Direct Investment Partnership participates. The Company discontinued the
formation of Direct Investment Partnerships in 1995.
The Company, through a wholly-owned subsidiary, serves as operator of
properties in which it and its affiliated partnerships have an interest.
Accordingly, the Company receives producing well overhead, drilling well
overhead and other fees related to the operation of the properties. The
affiliated partnerships also reimburse the Company for their allocated share of
general and administrative charges.
Effective January 1, 1999, the Company entered into an agreement with
Rainwater, Inc., the former general partner of DNR that Mr. Rainwater wholly
owns, modifying certain terms of a prior agreement between DNR and Mesa, which
was assumed by the Company upon consummation of the merger between Parker &
Parsley and Mesa. Pursuant to the terms of this agreement, as modified, the
Company will pay Rainwater, Inc. $300,000 per year and reimburse Rainwater, Inc.
for certain expenses in consideration of the provision of certain consulting and
financial analysis services to the Company by Rainwater, Inc. and its
representatives.
On June 29, 1999, the Company completed the sale of certain United
States oil and gas producing properties, gas plants and other assets primarily
located in the Gulf Coast, Mid Continent and Permian Basin to Prize Energy Corp.
("Prize"). The sale of these assets was initiated through an auction process.
The Board of Directors of Prize includes Mr. Philip P. Smith, its
Chief Executive Officer, Mr. Kenneth A. Hersh, and Mr. Lon C. Kile, its
President and Chief Operating Officer. Mr. Hersh, through his association with
Natural Gas Partners V, L.P., owned or controlled approximately 88% of Prize.
Messrs. Smith and Kile owned or controlled approximately 10.5% and .5% of Prize
respectively. Because Mr. Smith and Mr. Hersh were members of the Board of
Directors of the Company and Mr. Kile was an Executive Vice President of the
Company prior to initiating the auction process, supervision of the sale process
was placed under the direction of a special independent committee (comprised of
outside directors unrelated to Prize) of the Company's Board of Directors. The
independent committee reviewed and considered all offers presented to the
Company for the purchase of the assets acquired by Prize. The Prize offer was
approved by the special independent committee as being the best offer presented.
Following approval of the Prize offer by the special independent committee,
Messrs. Smith, Hersh and Kile resigned their positions with the Company.
In accordance with the terms of the Prize purchase and sale agreement,
the Company received net sales proceeds of $245.0 million, comprised of $215.0
million of cash and 2,307.693 shares of six percent convertible preferred stock
having a liquidation preference and fair value of $30.0 million. As a result of
Prize merging with Vista Energy Resources, Inc., the Company's investment in
Prize's six percent convertible preferred stock was exchanged for 4,018,161
shares of Prize Series A convertible preferred stock ("Prize Series A
Preferred"). The Prize Series A Preferred provides for six percent annual
dividend payments, payable quarterly in additional equity shares of Prize
through 2001. Subsequent to 2001, Prize has the option of paying the quarterly
dividends on the Prize Series A Preferred in equity shares or cash. Each share
of the Prize Series A Preferred may, at the option of the Company, be converted
into one share of Prize common stock, subject to certain anti-dilution
adjustments.
The Company has entered into an agreement with Prize to sell effective
March 31, 2000, 1,380,446 shares of the Prize Series A Preferred back to Prize
for $18,636,021. Pioneer and Prize have also agreed to convert the remaining
shares of the Prize Series A Preferred to 2,637,715 shares of Prize common
15
<PAGE>
stock. If these transactions are completed as planned, the Company's ownership
of outstanding Prize common and preferred voting shares would decline from 27.4%
to 19.9% and Mr. Sheffield and Mr. Withrow will resign from the Prize Board of
Directors.
In February 1999, the Company, after approval from the Compensation
Committee, forgave an August, 1997 loan to Mr. Dove in the amount of $113,204,
which funded the tax liability resulting from vesting of his restricted stock in
August 1997 in the merger of Parker & Parsley and MESA.
STOCKHOLDER PROPOSALS
Any stockholder of the Company who desires to submit a proposal for
action at the Company's annual meeting of stockholders for 2001 and wishes to
have such proposal (a "Rule 14a-8 Proposal") included in the Company's proxy
materials, must submit such Rule 14a-8 Proposal to the Company at its principal
executive offices no later than December 11, 2000, unless the Company notifies
the stockholders otherwise. Only those Rule 14a-8 Proposals that are timely
received by the Company and proper for stockholder action (and otherwise proper)
will be included in the Company's proxy materials.
Any stockholder of the Company who desires to submit a proposal for
action at the annual meeting of stockholders in 2001, but does not wish to have
such proposal (a "Non-Rule 14a-8 Proposal") included in the Company's proxy
materials, must submit such Non-Rule 14a-8 Proposal to the Company at its
principal executive offices no later than February 24, 2001, unless the Company
notifies the stockholders otherwise. If a Non-Rule 14a-8 Proposal is not
received by the Company on or before February 24, 2001, then the Company intends
to exercise its discretionary voting authority with respect to such Non-Rule
14a-8 Proposal. "Discretionary voting authority" is the ability to vote proxies
that stockholders have executed and returned to the Company, on matters not
specifically reflected in the Company's proxy materials, and on which
stockholders have not had an opportunity to vote by proxy.
Written requests for inclusion of any stockholder proposal should be
addressed to Corporate Secretary, Pioneer Natural Resources Company, 1400
Williams Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039. The
Company suggests that any such proposal be sent by certified mail, return
receipt requested.
The Board of Directors will consider any nominee recommended by
stockholders for election at the annual meeting of stockholders to be held in
2001 if that nomination is submitted in writing, not later than January 10,
2001, to Corporate Secretary, Pioneer Natural Resources Company, 1400 Williams
Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039. Each submission
must include a statement of the qualifications of the nominee, a notarized
consent signed by the nominee evidencing a willingness to serve as a director,
if elected, and a commitment by the nominee to meet personally with members of
the Board of Directors.
SOLICITATION OF PROXIES
Solicitation of Proxies may be made by mail, personal interview,
telephone or telegraph by officers, directors and regular employees of the
Company. The Company may also request banking institutions, brokerage firms,
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the common stock that those companies or persons hold of
record, and the Company will reimburse the forwarding expenses. In addition, the
Company has retained D.F. King & Co., Inc. to assist in solicitation for a fee
estimated not to exceed $7,500. The Company will bear all costs of solicitation.
STOCKHOLDER LIST
In accordance with the Delaware General Corporation Law, the Company
will maintain at its corporate offices in Irving, Texas, a list of the
stockholders entitled to vote at the Annual Meeting. The list will be open to
the examination of any stockholder, for purposes germane to the Annual Meeting,
during ordinary business hours for 10 days before the Annual Meeting.
16
<PAGE>
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1999, is being mailed to stockholders concurrently with this Proxy
Statement and does not form part of the proxy solicitation material.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, as filed with the SEC, will be sent to any stockholder
without charge upon written request addressed to Investor Relations, Pioneer
Natural Resources Company, 1400 Williams Square West, 5205 North O'Connor
Boulevard, Irving, Texas 75039. The Annual Report on Form 10-K is also available
at the SEC's web site in its EDGAR database (www.sec.gov).
INTERNET VOTING
For shares of stock that are registered in your name, you have the
opportunity to vote through the Internet using a program provided by the
Company's transfer agent, Continental Stock Transfer & Trust Company. Votes
submitted electronically through the Internet under this program must be
received by 5:00 p.m., New York time, on Wednesday, May 17, 2000. The giving of
such a proxy will not affect your right to vote in person should you decide to
attend the Annual Meeting. The Company has been advised by counsel that the
Internet voting procedures that have been made available through Continental are
consistent with the requirements of applicable law.
To vote through the Internet, please access Continental Stock Transfer
& Trust Company on the World Wide Web at www.continentalstock.com. Select
"ContinentaLink Proxy Voting" on the screen. At the next screen, you will need
to enter the Company Number, Proxy Number and Account Number that are printed on
your personalized proxy card.
The Internet voting procedures are designed to authenticate
stockholder identities, to allow stockholders to give their voting instructions,
and to confirm that stockholders' instructions have been recorded properly.
Stockholders voting through the Internet should remember that the stockholder
must bear costs associated with electronic access, such as usage charges from
Internet access providers and telephone companies.
******
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN, AND
RETURN THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE OR TO VOTE
THROUGH THE INTERNET.
By Order of the Board of Directors
Mark L. Withrow
Secretary
Irving, Texas
April 10, 2000
17
<PAGE>
Information Statement for Holders of Exchangeable Shares
of
Pioneer Natural Resources Canada Inc.
The enclosed Proxy Statement and related materials pertaining to
Pioneer Natural Resources Company ("Pioneer") have been provided to all holders
of Exchangeable Shares of Pioneer Natural Resources Canada Inc. ("Pioneer
Canada") for the purposes of Pioneer's annual meeting of stockholders (the
"Annual Meeting") to be held on May 18, 2000 at 9:00 a.m. (Dallas, Texas time),
in the Miro Room at the Wyndham Anatole Hotel, Dallas, Texas 75207. As a holder
of Exchangeable Shares, you are entitled to dividend and other rights designed
to be equivalent to the attributes of the Common Stock of Pioneer, including the
right, through a Voting and Exchange Trust Agreement (the "Voting Agreement"),
to attend and to vote at the Annual Meeting. Given the attributes of the
Exchangeable Shares, you will not receive a Notice, Information Circular or
Proxy for an annual meeting of shareholders of Pioneer Canada, nor will a
meeting of holders of Exchangeable Shares be held.
Exercise of Voting Rights
Pursuant to the Voting Agreement, Montreal Trust Company of Canada
(the "Trustee") holds one share of special preferred voting stock of Pioneer
(the "Voting Share") for the benefit of the holders (other than Pioneer and its
subsidiaries) of the Exchangeable Shares. The Voting Share carries a number of
votes, exercisable at any meeting at which Pioneer stockholders are entitled to
vote (including the Annual Meeting), equal to the number of outstanding
Exchangeable Shares (other than shares held by Pioneer and its subsidiaries).
You are entitled to instruct the Trustee to exercise one of the votes attached
to the Voting Share for each Exchangeable Share you hold, or to grant to
Pioneer's management a proxy to exercise such votes in accordance with the
enclosed Proxy Statement. Alternatively, you may instruct the Trustee to grant
to you or your designee a proxy to attend the Annual Meeting and personally
exercise your voting rights. For this purpose, the Trustee has furnished (or
caused Pioneer to furnish) the enclosed Proxy Statement and certain related
materials to you as a holder of Exchangeable Shares.
To instruct the Trustee as to how you want to exercise your voting
rights, you must complete, sign, date and return the enclosed form of direction
(the "Direction") to the Trustee by no later than 12:00 p.m. noon (Calgary time)
on May 16, 2000 (the "Due Time"). If the Trustee does not receive your fully
completed Direction by the Due Time, your voting rights will not be exercised.
You may revoke or amend your instructions to the Trustee (as indicated in your
Direction) at any time up to and including the Due Time by delivering to the
Trustee a written notice of revocation or by completing, signing and delivering
to the Trustee a new Direction bearing a later date. You may also revoke or
amend your instructions in person at the Annual Meeting prior to 9:00 a.m.
(Dallas, Texas time) on May 18, 2000, by submitting a written amendment or
revocation of your instructions and presenting satisfactory identification to
the Trustee's representatives at the Annual Meeting. In either case, your
instructions of the later date will be binding on the Trustee.
General
Pioneer Canada and certain of the insiders thereof have been exempted
from certain disclosure and insider trading obligations prescribed by otherwise
applicable Canadian securities legislation pursuant to discretionary orders
granted by each of the provincial securities commissions in Canada. Pursuant to
such orders, Pioneer Canada is not required to prepare and file annual proxy and
related documentation, quarterly reports, certain material change reports or an
annual information form, provided that Pioneer prepares and files United States
continuous disclosure documentation in Canada which is equivalent to such
disclosure and which is set forth in the Multijurisdictional Disclosure System
adopted by the Canadian Securities Administrators.
# # #
Please complete, sign and date the enclosed Direction and return it to
the Trustee in the enclosed envelope by no later than 12:00 p.m. noon (Calgary
time) on May 16, 2000.
18
<PAGE>
DIRECTION GIVEN BY HOLDERS OF EXCHANGEABLE
SHARES OF PIONEER NATURAL RESOURCES CANADA INC.
FOR THE MAY 18, 2000 ANNUAL MEETING OF STOCKHOLDERS OF
PIONEER NATURAL RESOURCES COMPANY
The undersigned acknowledges receipt of the Notice and Proxy Statement in
connection with the annual meeting (the "Meeting") of stockholders of Pioneer
Natural Resources Company to be held on May 18, 2000 at 9:00 a.m. (Dallas, Texas
time) at the Wyndham Anatole Hotel, Dallas, Texas 75207. The undersigned hereby
instructs and directs Montreal Trust Company of Canada (the "Trustee"), pursuant
to the provisions of the Voting and Exchange Trust Agreement dated December 18,
1997 among Pioneer, Pioneer Natural Resources Canada Inc. ("Pioneer Canada") and
the Trustee, as follows:
* * * *
(Please note: If no direction is made and you sign below the Trustee is hereby
authorized and directed to vote for items 1 and 2 listed under Alternative A
below, and as to any other matters that may properly come before the Meeting in
its discretion.)
* * * *
(Please select one of A, B or C, and sign and date on the reverse
side)
A. [ ] Exercise or cause to be exercised, whether by proxy given by the
Trustee to a representative of Pioneer or otherwise, the
undersigned's voting rights at the Meeting, or any postponement
or adjournment thereof, as follows:
1. To elect Jerry P. Jones and Charles E. Ramsey, Jr., as Class III
Directors of Pioneer. If any such nominees should be unavailable,
the Trustee may vote for substitute nominee(s) at its discretion:
[ ] FOR all nominees listed above [ ] TO WITHHOLD authority to
(except as marked to the vote for all nominees
contrary) listed above
[ ] WITHHOLD AUTHORITY for the following nominee(s) only:
----------------------------------------------------
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the
Meeting or any postponement or adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. [ ] Deliver a proxy card to the undersigned at the Meeting, with
respect to all Exchangeable Shares of Pioneer Canada held of record
by the undersigned on the record date for the Meeting (and not
subsequently disposed of) so that the undersigned may exercise
personally the undersigned's voting rights at the Meeting, or any
postponement or adjournment thereof.
C. [ ] Deliver a proxy card to _________________________________________ at
_______________________________________________, as the designee of
the undersigned to attend and act for and on behalf of the
undersigned at the Meeting with respect to all Exchangeable Shares
of Pioneer Canada held of record by the undersigned on the record
date for the Meeting (and not subsequently disposed of) with all the
powers that the undersigned would possess if personally present and
acting thereat including the power to exercise the undersigned's
voting rights at the Meeting, or any postponement or
adjournment thereof.
19
<PAGE>
* * * *
Please sign exactly as your name appears on your Exchangeable Share
certificate(s) and return this form in the enclosed envelope. When signing as
executor, administrator, attorney, trustee, guardian or custodian, or for a
corporation, please give the full title as such. If the Exchangeable Shares are
held in a joint account, each joint owner must sign.
Signature:_______________________________ Date:_________________________
Print Name:______________________________
Signature:_______________________________ Date:_________________________
Print Name:______________________________
20
<PAGE>
PROXY BY MAIL Please mark your votes like this [ X ]
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
The Board of Directors recommends a vote FOR Items 1 and 2.
ITEM 1 - ELECTION OF DIRECTORS
Nominees: WITHHELD
FOR FOR ALL
01 Jerry P. Jones [ ] [ ]
02 Charles E. Ramsey, Jr.
WITHHELD FOR: (Write that nominee's name in the space provided below).
- ------------------------------------------------
ITEM 2 - RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
IF YOU WISH TO VOTE ELECTRONICALLY PLEASE READ THE INSTRUCTIONS BELOW
COMPANY NUMBER:
PROXY NUMBER:
ACCOUNT NUMBER:
Signature________________________ Signature________________________ Date______
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
VOTE BY INTERNET
PIONEER NATURAL RESOURCES COMPANY
o You can now vote your shares electronically through the Internet.
o This eliminates the need to return the proxy card.
o Your electronic vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed, dated and returned the proxy
card.
TO VOTE YOUR PROXY BY MAIL
Mark, sign and date your proxy card above, detach it and return it in the
postage-paid envelope provided.
TO VOTE YOUR PROXY BY INTERNET
www.continentalstock.com
21
<PAGE>
Have your proxy card in hand when you access the above website. You will be
prompted to enter the company number, proxy number and account number to create
an electronic ballot. Follow the prompts to vote your shares.
PLEASE DO NOT RETURN THE ABOVE CARD IF VOTED
ELECTRONICALLY
SECURITY CODE:
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PIONEER NATURAL RESOURCES COMPANY
The undersigned hereby appoints Scott D. Sheffield and Mark L. Withrow as
proxies, with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of stock of Pioneer Natural Resources Company standing in the
name of the undersigned with all powers which the undersigned would possess if
present at the Annual Meeting of Stockholders of the Company to be held May 18,
2000 or any adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
- - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
Access to Pioneer shareholder account information and other
shareholder services are now available on the Internet!
Visit Continental Stock Transfer's website at
www.continentalstock.com
for their new Internet Shareholder Service -
ContinentaLink
Through this new service, shareholders can select a Personal Identification
Number or "PIN" to secure, visit the website listed above. From the home page,
shareholders can change addresses, receive electronic forms, and view account
transaction history and dividend history.
To access this new service, visit the website listed above. From the home page,
select ContinentaLink Full Service. From there, you can either Test Drive the
service (choose "Test Drive" button) or you can Sign-Up (choose "Sign-Up"
button). If you choose to sign-up, enter your taxpayer identification number or
social security number as your ID Number. Your personal Security Code can be
found on the reverse side of this card in the bottom left corner. Enter any four
alphanumeric characters you would like to use for your PIN. Re-enter the same
PIN in the PIN Verification field. Your PIN will be activated overnight, and you
will be able to access your shareholder records the following day.
22
<PAGE>
