<PAGE> 1
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
HUNTWAY REFINING COMPANY
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(Name of Registrant as Specified in Its Charter)
HUNTWAY REFINING COMPANY
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(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:
- --------------------------------------------------------------------------------
(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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[HUNTWAY REFINING COMPANY LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 10, 2000
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To the stockholders of Huntway Refining Company:
The annual meeting of stockholders of Huntway Refining Company will be held on
Wednesday, May 10, 2000 at 10:00 a.m. local time at our principal executive
offices located at 25129 The Old Road, Suite 322, Newhall, California 91381, for
the following purposes:
1. To elect two directors to serve until the 2003 annual meeting.
2. To transact such other business as may properly be brought before the
meeting.
The annual meeting may be postponed or adjourned from time to time without any
notice other than announcement at the meeting, and any and all business for
which notice is hereby given may be transacted at any such postponed or
adjourned meeting.
The Board of Directors has fixed the close of business on April 3, 2000 as the
record date for determination of stockholders entitled to notice of and to vote
at the meeting.
A list of stockholders entitled to vote at the annual meeting will be available
for examination by any stockholder, for any purpose germane to the meeting,
during ordinary business hours at our principal executive offices located at
25129 The Old Road, Suite 322, Newhall, California 91381, during the ten days
preceding the meeting.
Please complete and sign the enclosed proxy, which is solicited by the Board of
Directors, and promptly return it in the accompanying envelope.
By Order of the Board of Directors
EARL G. FLEISHER
Chief Financial Officer and Secretary
Newhall, California
April 10, 2000
<PAGE> 3
[HUNTWAY REFINING COMPANY LOGO]
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PROXY STATEMENT
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This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Huntway Refining Company (the "Company") of proxies for
use at our annual meeting of stockholders to be held on Wednesday, May 10, 2000
and at any postponement or adjournment thereof. All shares of Common Stock
entitled to vote at the annual meeting which are represented by properly
executed proxies will, unless such proxies have been revoked, be voted in
accordance with the instructions given in such proxies or, if no contrary
instructions are given therein, will be voted in the election of directors as
described below under "Election of Directors" and as to any other matters that
may properly be presented to the meeting will be voted as described below under
"Other Matters." Any stockholder who has given a proxy with respect to any
matter may revoke it at any time prior to the closing of the polls as to that
matter at the annual meeting by delivering to the Secretary of our company a
notice of revocation or a duly executed proxy bearing a later date or by
attending the annual meeting and voting in person.
On April 3, 2000, the record date for the annual meeting, 15,004,771 shares of
Common Stock were issued and outstanding. The Common Stock is traded on the New
York Stock Exchange.
Under our By-laws, attendance at the meeting in person or by proxy by the
holders of a majority of the shares of Common Stock entitled to vote at the
meeting is required in order to establish a quorum.
Pursuant to Delaware law, shares entitled to cast votes on a matter at the
meeting which are the subject of an ABSTAIN on that matter will be treated for
all purposes relevant to that matter as being present at the meeting and
entitled to vote, and thus will have the same effect as a vote of such shares
against that matter. Shares entitled to cast votes on a matter at the meeting
which are the subject of a broker non-vote on that matter will be treated for
quorum purposes relevant to that matter as being present at the meeting and
entitled to vote but will not be so treated in determining whether a majority or
other required percentage of the "shares present and entitled to vote" on that
matter has been obtained.
Proxy Statements and proxy cards are being mailed to stockholders on or about
April 10, 2000. The mailing address of our principal executive offices is 25129
The Old Road, Suite 322, Newhall, California 91381.
The Company is the successor to Huntway Partners, L.P., a Delaware limited
partnership (the "Predecessor LP") as a result of the June 1998 conversion of
the Predecessor LP to corporate form (the "Conversion"). In this Proxy
Statement, the term "the Company" or the like refers to the Predecessor LP prior
to the Conversion and refers to Huntway Refining Company after the Conversion.
The business and affairs of the Predecessor LP were managed by a managing
general partner, which was a partnership, and the business and affairs of the
managing general partner were managed by its general partner, a corporation. The
corporation established an operating committee (the "Predecessor LP Operating
Committee") to consult with its sole director with respect to the management of
the managing partner and the Predecessor LP.
<PAGE> 4
ELECTION OF DIRECTORS
The Board of Directors consists of three classes of directors elected to serve
staggered three-year terms of office. The class to be elected at the 2000 annual
meeting consists of two directors to hold office until the 2003 annual meeting
or until their successors have been elected and qualified.
Except to the extent that stockholders indicate otherwise on their proxies
solicited by our Board of Directors, the holders of such proxies intend to vote
such proxies for the election as directors of the persons named as nominees in
the following table; provided that if any of the nominees for election shall be
unable or shall fail to act as such by virtue of an unexpected occurrence, such
proxies will be voted for such other person or persons as shall be determined by
the holders of such proxies in their discretion or, so long as such action does
not conflict with the provisions of our Certificate of Incorporation relating to
the relative sizes of classes of directors, the Board of Directors may, in its
discretion, reduce the number of directors to be elected.
NOMINEES FOR ELECTION AT THE 2000 ANNUAL MEETING:
For Three-Year Terms Expiring in 2003:
J.C. McFarland, age 53. Consultant since 1997. Chairman and
Chief Executive Officer of McFarland Energy, Inc., an
exploration and production company, from prior to 1994 to
1997. Director of the Company since the Conversion. Member of
the Audit and Compensation Committees.
Brian D. Hogan, age 55. Since February 1, 2000, Of Counsel to
the law firm of Kirkland & Ellis, which firm has served as
counsel to our company for a number of years. Partner,
Kirkland & Ellis, from 1975 to January 31, 2000.
DIRECTORS WHOSE TERMS EXPIRE IN 2001:
Warren J. Nelson, age 49. President and Chief Executive
Officer of the Company since March 1, 2000. Executive Vice
President and Chief Financial Officer of the Company since
prior to 1994 and until March 1, 2000. Director of the Company
since the Conversion.
Juan Y. Forster, age 63. President and Chief Executive Officer
of the Company since prior to 1994 and until March 1, 2000.
Director of the Company since the Conversion. Member of the
Predecessor LP Operating Committee from 1988 to the
Conversion.
DIRECTORS WHOSE TERMS EXPIRE IN 2002:
Harris Kaplan, age 49. President of Eastgate Management
Corporation, an offshore and domestic money management firm,
since 1996. Member of management team of Nabors Industries, an
oil service company, from prior to 1994 to 1996. Director of
the Company since the Conversion. Member of the Audit
Committee and the Compensation Committee.
Richard Spencer, age 47. Manager of Westcliff Management, LLC,
a money management firm, since prior to 1994. Director of the
Company since the Conversion. Member of the Audit Committee
and the Compensation Committee.
In connection with a refinancing by the Predecessor LP in 1997, the Predecessor
LP agreed to use its best efforts to nominate and cause to be elected as a
director of the Company at all times after the Conversion one individual
selected by B III Capital Partners, L.P. ("B III") and one individual selected
by Lighthouse Investors, L.L.C. ("Lighthouse"). This agreement will expire with
respect to B III or Lighthouse when such person no longer owns Senior
Subordinated Secured Convertible
2
<PAGE> 5
Notes with a principal amount of at least $3.5 million or shares of Common Stock
issued on conversion of such Notes with a principal amount of at least $3.5
million or a combination of the two. The individuals currently selected by B III
and Lighthouse are Messrs. Kaplan and Spencer, respectively.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met nine times during 1999.
Our Board of Directors has an Audit Committee and a Compensation Committee. The
Company does not have a Nominating Committee.
The Audit Committee reviews and, as it deems appropriate, recommends to the
Board internal accounting and financial controls for our company and accounting
principles and auditing practices and procedures to be employed in the
preparation and review of our financial statements. The Committee also makes
recommendations to the Board concerning the engagement of independent public
accountants to audit our annual financial statements and the scope of such
audits. The Committee currently consists of Messrs. McFarland (Chairman of the
Committee), Kaplan and Spencer. During 1999, the Committee met two times.
The Compensation Committee reviews and, as it deems appropriate, recommends to
the Board policies, practices and procedures relating to the compensation of
managerial employees and the establishment and administration of employee
benefit plans. The Committee determines the compensation of executive officers
and administers the Huntway Refining Company 1998 Stock Incentive Plan. The
Committee currently consists of Messrs. Spencer (Chairman of the Committee),
Kaplan and McFarland. During 1999, the Committee met three times.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999 and prior to our 1999 annual meeting of stockholders, Messrs. Justin
S. Huscher and Spencer were the members of the Compensation Committee.
Thereafter during 1999, Messrs. Spencer, Kaplan and McFarland were the members
of the Compensation Committee.
EXECUTIVE OFFICERS
All of our officers are elected each year by the Board of Directors at its
annual meeting in May. In addition to Warren J. Nelson, information with respect
to whom is set forth above, our executive officers include the following, each
of whom has held his current position with our company since prior to 1994,
unless otherwise indicated:
Lucian A. Nawrocki, age 54. Executive Vice President, Asphalt Sales
Terrance L. Stringer, age 58. Executive Vice President
William G. Darnell, age 63. Vice President and General Manager/Benicia
Earl G. Fleisher, age 49. Chief Financial Officer since March 1, 2000
COMPENSATION
BOARD COMPENSATION
We do not pay our directors any fee or additional compensation for service as
such, except as described below in the case of non-employee directors. We do
reimburse Board members for out-of-pocket costs associated with attending
meetings (such as travel, food and lodging).
We have compensated certain non-employee directors for service on the Board by
granting them options under the Huntway Refining Company 1998 Stock Incentive
Plan. During 1999, we granted
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<PAGE> 6
to each of Mr. Kaplan and Mr. McFarland an option under such Plan to purchase
150,000 shares of Common Stock at an exercise price equal to the market price on
the date of grant. The options have a term of ten years. One-half of each such
option was vested and exercisable upon grant and the remaining one-half will
vest and become exercisable in October 2000. We may further compensate Mr.
Kaplan and Mr. McFarland for services on the Board, and may compensate other
existing or future non-employee directors for such service, by granting them
options under such Plan. The nature and amount of any such options have not yet
been determined.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership (as such term is used in Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of Common Stock as of April 3, 2000 by
(a) the persons known by us to have then been the beneficial owners of more than
5% of the outstanding shares of Common Stock, (b) each director, and nominee for
director, of our company, (c) each of the executive officers of our company
listed in the Summary Compensation Table below and (d) all directors, nominees
and executive officers of our company as a group. The address of each person set
forth below is c/o Huntway Refining Company, 25129 The Old Road, Suite 322,
Newhall, California 91381 unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER
OF SHARES(1) PERCENT
-------------- -------
<S> <C> <C>
Lighthouse Investors, LLC................................... 7,955,469(2) 35.6
200 Seventh Avenue, Suite 105
Santa Cruz, CA 95062
First Chicago Equity Corporation............................ 5,320,518(3) 35.5
One First National Plaza
Chicago, IL 60670
DDJ Capital Management, LLC................................. 5,333,333(4) 26.2
141 Linden Street, Suite S-4
Wellesley, MA 02181
Andre Danesh................................................ 3,226,227(5) 20.0
Allied Financial Corp.
1583 Beacon Street
Brookline, MA 02146
Contrarian Capital Advisors, L.L.C.......................... 2,790,935(6) 16.6
411 West Putnam Avenue, Suite 225
Greenwich, CT 06830
Juan Y. Forster............................................. 1,000,250(7) 6.4
Harris Kaplan............................................... 75,000(8) .5
J.C. McFarland.............................................. 157,000(9) 1.0
Warren J. Nelson............................................ 776,400(10) 4.9
Richard Spencer............................................. 7,950,882(2) 35.6
Brian D. Hogan.............................................. -- 0
William G. Darnell.......................................... 257,030(11) 1.7
Lucian A. Nawrocki.......................................... 314,754(12) 2.1
Terrance L. Stringer........................................ 302,000(13) 2.0
All directors, nominees and executive officers as a group (9
persons).................................................. 10,833,316(14) 44.1
</TABLE>
- -------------------------
(1) Except as otherwise indicated, beneficial ownership means the sole power to
vote and dispose of shares.
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<PAGE> 7
(2) Includes shares beneficially owned by other persons who, together with
Lighthouse Investors, LLC, have filed a statement with the Securities and
Exchange Commission (the "SEC") pursuant to Section 13(d) of the Exchange
Act identifying themselves as a group. Such persons include Richard
Spencer. Also includes 7,333,333 shares which Lighthouse Investors, LLC has
the right to acquire within 60 days through conversion of Senior
Subordinated Secured Convertible Notes of our company. According to the
statement filed with the SEC, the power to vote and dispose of 7,805,600 of
the shares is shared.
(3) Includes shares beneficially owned by other persons who, together with
First Chicago Equity Corporation, have filed a statement with the SEC
pursuant to Section 13(d) of the Exchange Act identifying themselves as a
group. According to the statement filed with the SEC, the power to vote and
dispose of all such shares is shared.
(4) Consists of shares which B III Capital Partners, L.P. has the right to
acquire within 60 days through conversion of Senior Subordinated Secured
Convertible Notes of our company.
(5) Includes 1,146,059 shares which Mr. Danesh has the right to acquire within
60 days through exercise of outstanding options.
(6) Includes 1,833,333 shares which Contrarian Capital Fund I, L.P., Contrarian
Capital Fund, II, L.P. and persons for which Contrarian Capital Advisors,
L.L.C. acts as agent or provides direction have the right to acquire within
60 days through conversion of Senior Subordinated Secured Convertible Notes
of our company.
(7) Includes 560,250 shares which Mr. Forster has the right to acquire within
60 days through exercise of options outstanding under the 1996 Huntway
Employee Incentive Option Plan of the Predecessor LP.
(8) Includes 75,000 shares which Mr. Kaplan has the right to acquire within 60
days through exercise of options outstanding under the 1998 Huntway
Employee Incentive Option Plan.
(9) Includes 100,000 shares which Mr. McFarland has the right to acquire within
60 days through exercise of options outstanding under the 1998 Huntway
Employee Incentive Option Plan.
(10) Includes 615,000 shares which Mr. Nelson has the right to acquire within
60 days through exercise of options outstanding under the 1996 Huntway
Employee Incentive Option Plan of the Predecessor LP and 100,000 shares
which Mr. Nelson has the right to acquire within 60 days through exercise
of options outstanding under the 1998 Huntway Employee Incentive Option
Plan.
(11) Includes 192,500 shares which Mr. Darnell has the right to acquire within
60 days through exercise of options outstanding under the 1996 Huntway
Employee Incentive Option Plan of the Predecessor LP.
(12) Includes 272,500 shares which Mr. Nawrocki has the right to acquire within
60 days through exercise of options outstanding under the 1996 Huntway
Employee Incentive Option Plan of the Predecessor LP.
(13) Includes 295,000 shares which Mr. Stringer has the right to acquire within
60 days through exercise of options outstanding under the 1996 Huntway
Employee Incentive Option Plan of the Predecessor LP.
(14) Includes 9,543,583 shares which directors, nominees and executive officers
have the right to acquire within 60 days.
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<PAGE> 8
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for each of our named
executive officers serving at the end of 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#) ($)
- --------------------------- ---- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Juan Y. Forster(1)................. 1999 $316,969 $102,454 -- 20,495(2)
President and 1998 306,250 306,000 180,000 19,487
Chief Executive Officer 1997 297,330 75,000 -- 13,497
Warren J. Nelson(1)................ 1999 214,245 75,000 -- 17,365(3)
Executive Vice President 1998 207,000 207,000 180,000 17,510
and Chief Financial Officer 1997 187,000 100,000 -- 10,798
Terrance L. Stringer............... 1999 199,321 64,414 -- 19,055(4)
Executive Vice President of 1998 192,581 192,000 110,000 19,146
Supply, Planning and Distribution 1997 186,972 62,000 -- 12,488
Lucian A. Nawrocki................. 1999 159,694 51,615 -- 17,663(5)
Executive Vice President 1998 154,294 154,000 110,000 17,086
1997 149,800 51,000 -- 10,504
William G. Darnell................. 1999 130,596 42,210 -- 14,385(6)
Vice President and 1998 126,180 126,000 90,000 14,017
General Manager, Benicia 1997 117,180 45,000 -- 8,185
</TABLE>
- ---------------
(1) Mr. Forster retired as President and Chief Executive Officer on March 1,
2000; he was thereupon succeeded in such offices by Warren J. Nelson.
(2) Consists of $16,000 of Company contributions for 1999 to our Profit Sharing
and Money Purchase Plans and $4,495 for term life insurance paid for by our
company during the year.
(3) Consists of $16,000 of Company contributions for 1999 to our Profit Sharing
and Money Purchase Plans and $1,365 for term life insurance paid for by our
company during the year.
(4) Consists of $16,000 of Company contributions for 1999 to our Profit Sharing
and Money Purchase Plans and $3,055 for term life insurance paid for by our
company during the year.
(5) Consists of $15,970 of Company contributions for 1999 to our Profit Sharing
and Money Purchase Plans and $1,693 for term life insurance paid for by our
company during the year.
(6) Consists of $13,060 of Company contributions for 1999 to our Profit Sharing
and Money Purchase Plans and $1,325 for term life insurance paid for by our
company during the year.
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<PAGE> 9
OPTION/SAR GRANTS DURING YEAR
No option or stock appreciation rights were granted to the executive officers
named in the Summary Compensation Table during 1999.
OPTION/SAR EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to exercises of options
during 1999 by the executive officers named in the Summary Compensation Table
and the values of unexercised options held by them as of December 31, 1999. No
stock appreciation rights were exercised during 1999 by such executive officers
or held by them as of December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN 1999 AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
SHARES YEAR-END(#) AT YEAR-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Juan Y. Forster....... 0 $0 560,250 180,000 $385,172 $0
Warren J. Nelson...... 0 0 615,000 180,000 422,813 0
Terrance L.
Stringer............ 0 0 295,000 110,000 202,813 0
Lucian A. Nawrocki.... 0 0 272,500 110,000 187,344 0
William G. Darnell.... 0 0 192,500 90,000 132,344 0
</TABLE>
PLANS AND ARRANGEMENTS
Profit Sharing Plan
Under our profit sharing plan, we may elect from time to time to make
contributions to the plan for the accounts of eligible covered employees. In
addition, each such employee may, within the limits applicable to tax-qualified
plans, elect to have up to 15% of his or her compensation (excluding bonus and
commission) contributed to his or her account by the Company on a pre-tax basis
and we match such contribution up to 2% of such compensation. Account balances
are invested in one or more third party investment funds selected by the
employees from among those available under the plan. Contributions elected by
employees vest immediately. Company discretionary and matching contributions
vest beginning after three years of credited service under the plan, on a
cumulative basis of 20% per year of credited service in excess of two. Vested
contributions (after any earnings or losses from the investment thereof) are
distributed in a lump sum or installments following termination of employment,
but vested account balances may under certain circumstances be withdrawn or
borrowed earlier.
Money Purchase Plan
We have a defined contribution pension plan for all of our eligible covered
employees. Under the plan, we contribute annually for the account of each
eligible employee an amount equal to 4% of such employee's compensation
(excluding bonus and commission). Contributions for the account of the employee
are invested in one or more third party investment funds selected by the
employee. Contributions vest beginning after two years of credited service under
the plan, on a cumulative basis resulting in full vesting after seven years of
such service. Vested contributions (after any earnings or losses from the
investment thereof) are distributed in an annuity, a lump sum or installments
following termination of employment.
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<PAGE> 10
Nelson Employment Agreement
We have negotiated the terms of an employment agreement with Mr. Nelson in
connection with his assuming the positions of President and CEO of our company,
which agreement is expected to have a three year term. We have not yet executed
an employment agreement containing the terms outlined below, and as a result the
described terms could change even though such is not expected. The agreement is
expected to provide that in the event of a change in control of our company and
termination of employment, Mr. Nelson will be entitled to among other things a
payment equal to three times his then current base pay and target performance
bonus (which bonus is 50% of base pay) and to the continuation of certain health
and other benefits for a period of three years, subject to certain limitations.
The agreement is also expected to provide that in the event Mr. Nelson is
terminated for any reason other than cause that he will be entitled to among
other things a payment equal to one times his then current base pay and target
performance bonus and to the continuation of certain health and other benefits
for a period of one year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
All members of the Compensation Committee are non-employee directors. The
Committee regularly reviews and, with any changes it believes appropriate,
approves of our executive compensation program. An independent compensation
consultant has been retained by the Committee and has advised the Committee on
all compensation matters since 1999. Our executive compensation program is
structured to help us achieve our business objectives by:
- - setting levels of compensation designed to attract and retain key executives;
- - providing incentive compensation that varies directly with both our
performance and individual contribution to performance; and
- - linking incentive compensation to shareholder objectives.
Compensation Program Components
The particular elements of the compensation program for executive officers are
further explained below:
Base Salary. Base pay levels are largely determined through comparisons with a
peer group of companies of similar size, activity and complexity. Salaries are
also based on individual performance contributions within a competitive salary
range for each position that is established through job evaluation and market
comparisons.
Annual Incentive Compensation. Our executive officers are eligible to
participate in an annual incentive compensation plan with awards based primarily
on the attainment of goals regarding net operating profit after tax as defined
less a capital charge. The capital charge is computed using an assumed return on
equity (shares outstanding times beginning of the year stock price) and an
after-tax cost of debt. This approach provides incentive compensation only after
an after tax cost of debt and an assumed return on equity has been subtracted
from operating earnings as defined. The financial goals are established and
approved by the Board of Directors. The objective of this incentive plan is to
deliver competitive levels of compensation for the attainment of financial
targets that the Committee believes are important determinants of share price
over time.
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<PAGE> 11
In 1995, no awards were made due to a net loss. In 1996 and 1997, awards were
based on financial performance as defined by EBIDA (earnings before interest,
depreciation and amortization). In 1998 and 1999, awards were based on financial
performance as defined by EBITDA (earnings before interest, income taxes and
depreciation and amortization). In 1999, incentive awards declined as these
earnings fell below the earnings projected in the business plan.
Stock Option Program. The Committee strongly believes that by providing those
persons who have substantial responsibility for the management and growth of our
company with an opportunity to increase their ownership of Common Stock, the
interests of the shareholders and executives will be closely aligned. Therefore
the executive officers are eligible to receive stock options from time to time
at the discretion of the Committee, giving them the right to purchase shares of
Common Stock at a specified price in the future. The number of shares of stock
options granted to executive officers is based on their ability to influence our
performance as determined by the Committee.
CEO Compensation. In accordance with the discussion above of our philosophy for
executive compensation, the compensation for the Chief Executive Officer is
based primarily upon our financial performance and peer group compensation. In
1999, 1998, 1997 and 1996 the bonus awards paid to the Chief Executive Officer
were entirely based on the financial performance of our company.
Compensation Committee
Richard Spencer -- Chairman
Harris Kaplan
J.C. McFarland
9
<PAGE> 12
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
HUNTWAY REFINING COMPANY COMMON STOCK, S&P 500 INDEX AND
RUSSELL 2000 INDEX
HUNTWAY PERFORMANCE CHART
<TABLE>
<CAPTION>
HUNTWAY COMMON STOCK S&P 500 INDEX RUSSELL 2000 INDEX
-------------------- ------------- ------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 43.80 134.11 126.21
1996 81.30 161.29 144.84
1997 262.50 211.30 174.56
1998 168.80 267.65 168.54
1999 112.50 318.87 198.35
</TABLE>
The foregoing comparison of total return (change in year-end unit or stock price
plus, when applicable, reinvested dividends) assumes that $100 was invested on
January 1, 1995 in the limited partnership units of the Predecessor Partnership,
in the Standard & Poor's ("S&P") 500 Index, a broad equity market index that
includes companies whose equity securities are listed on the New York Stock
Exchange, and in the Russell 2000 Index, a broad index of companies with small
market capitalizations (an arithmetic average of $526 million at December 31,
1999). At December 31, 1999, our market capitalization was $17.8 million.
CERTAIN TRANSACTIONS
We entered into an agreement with Mr. Forster on February 23, 2000. Such
agreement provides for among other things the retention of Mr. Forster as an
independent consultant until February 28, 2002, and thereunder Mr. Forster has
agreed to render certain consulting services until such date, in each case
subject to certain exceptions. As full and complete compensation for any and all
services which Mr. Forster may render during such term, we will pay him a
consulting fee at the rate of $15,000 per month of services performed. Mr.
Forster will also be provided health insurance and life insurance coverage
equivalent to his company-provided coverage on his termination date as
contemplated by this agreement, subject to changes in coverage generally
applicable to our employees, during such term.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of reports of ownership, reports of changes of
ownership and written representations under Section 16(a) of the Exchange Act
which were furnished to the Company during or with respect to 1999 by persons
who were, at any time during 1999, directors or officers of our company or
beneficial owners of more than 10% of the outstanding shares of Common Stock,
all reports required by such Section during 1999 were filed on a timely basis.
10
<PAGE> 13
ANNUAL REPORT ON FORM 10-K
Our Annual Report on Form 10-K for the year ended December 31, 1999 (without
exhibits) is included with this proxy statement. Stockholders are referred to
the report for financial and other information about our company.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in proxy material for
our annual meeting of stockholders in May 2001 must be received at our principal
executive offices no later than December 13, 2000.
ADVANCE NOTICE REQUIREMENT FOR ANY NOMINATION OR MATTER TO BE RAISED BY A
STOCKHOLDER
Any nomination for election to our Board of Directors at any meeting of
stockholders, or proposal of business to be transacted at any meeting of
stockholders, that is not included in our proxy statement and form of proxy
relating to the meeting but that a stockholder wishes to make at the meeting may
be made only if it may properly be made by the stockholder at the meeting and
only if the stockholder delivers a notice to the Secretary of our company at our
principal executive offices on a timely basis. For an annual meeting, the notice
must be so delivered not less than 45 days before the date on which we first
mailed our proxy materials for the prior year annual meeting (unless the date of
the meeting is changed by more than 30 days from the prior year, in which event
such notice must be so delivered a reasonable time before we mail our proxy
materials for the annual meeting). For a special meeting, the notice must be so
delivered not later than the close of business on the 10th day following the
earlier of the day on which notice of the date of the meeting was mailed or
public announcement of the date of the meeting was made. The notice must set
forth the related information required by Article II, Section 11 of our bylaws.
Such information generally consists of the information relating to any nominee
that would be required to be disclosed in our proxy statement for that meeting
if the nominee were proposed by us or, as to other matters, a brief description
of the matter, the reason for the proposal and any material interest of the
proposing stockholder (or beneficial owner) in the matter and information
regarding the proposing stockholder (or beneficial owner) and such stockholder's
(or beneficial owner's) beneficial ownership of shares of our company.
DISCRETIONARY VOTING OF 2001 PROXIES
The persons named in proxies solicited by our Board of Directors in connection
with our 2001 annual meeting of stockholders will have discretionary authority
to vote such proxies with respect to any matter properly presented by a
stockholder at the meeting that is not specifically set forth in the notice of
the meeting if the Company does not have notice of such matter on or before
February 26, 2001 (unless the date of the meeting is changed by more than 30
days from May 10, in which event such persons will have such discretionary
authority if we do not have notice of such matter a reasonable time before we
mail our proxy materials for the meeting).
PROXY SOLICITATION
Proxies will be solicited by mail. Proxies may also be solicited by directors,
officers and a small number of regular employees of our company personally or by
mail, telephone or telegraph, but such persons will not be specially compensated
for such services. Brokerage houses, custodians, nominees and fiduciaries will
be requested to forward the soliciting material to the beneficial owners of
stock held of record by such persons, and we will reimburse them for their
expenses in doing so.
The entire cost of solicitation will be borne by our company.
11
<PAGE> 14
OTHER MATTERS
Deloitte & Touche LLP, who served as auditors for the year ended December 31,
1999, have been selected by the Board, upon recommendation of the Audit
Committee, to audit the consolidated financial statements of our company for the
year ending December 31, 2000. It is expected that one or more representatives
of Deloitte & Touche LLP will attend the annual meeting, with the opportunity to
make a statement if they should so desire, and will be available to respond to
appropriate questions.
The management does not intend to present, and does not have any reason to
believe that others will present, any item of business at the annual meeting
other than those specifically set forth in the notice of the meeting. However,
if other matters are properly presented for a vote, the proxies will be voted
for such matters in accordance with the judgment of the persons acting under the
proxies.
By Order of the Board of Directors
EARL G. FLEISHER
Chief Financial Officer and Secretary
Newhall, California
April 10, 2000
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<PAGE> 15
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
HUNTWAY REFINING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, MAY 10, 2000
Warren J. Nelson and Earl G. Fleisher (each with full power of substitution)
are hereby authorized to vote all the shares of Common Stock which the
undersigned would be entitled to vote if personally present at the annual
meeting of stockholders of Huntway Refining Company to be held on Wednesday, May
10, 2000, and at any postponement or adjournment thereof, as directed on the
reverse side and as follows. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
AS DIRECTED ON THE REVERSE SIDE, BUT IF NO DIRECTION IS GIVEN, THE SHARES WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NAMED NOMINEES.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
[SEE REVERSE] (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) [SEE REVERSE]
SIDE SIDE
<PAGE> 16
<TABLE>
<CAPTION>
DETACH HERE
- ------------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
<S> <C>
1. Election of Directors 2. In their discretion, upon such other business as may properly be
brought before the meeting.
NOMINEES: (01)J.C. McFarland and (02)Brian D. Hogan
FOR WITHHELD
BOTH [ ] [ ] FROM BOTH
NOMINEES NOMINEES
[ ]
---------------------------------------------
For both nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
The undersigned acknowledges receipt of the Notice of Annual
Meeting of Stockholders and of the Proxy Statement.
IMPORTANT: Please sign exactly as your name or names appear
to the left. Joint owners should each sign personally. If you
sign as agent or in any other representative capacity, please
state the capacity in which you sign.
Signature: Date: Signature: Date:
----------------------------- -------------- --------------------------------------- ----------
</TABLE>
