<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
Pennzoil-Quaker State Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(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>
[LOGO]
------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1999
------------------------
DEAR SHAREHOLDER: March 31, 1999
You are cordially invited to attend the first annual meeting of shareholders
of Pennzoil-Quaker State Company to be held at the Crystal Ballroom at The Rice,
909 Texas Avenue, Houston, Texas on Thursday, May 6, 1999 at 11:00 a.m. The
Crystal Ballroom at The Rice is accessible to the disabled. For those of you who
cannot be present at the annual meeting, we urge you to participate by
completing and returning the enclosed proxy card or by calling the toll-free
number on the proxy card.
Pennzoil-Quaker State Company is the result of the consolidation and
separation on December 30, 1998 of the marketing, manufacturing and fast oil
change businesses of Pennzoil Company and the subsequent acquisition of Quaker
State Corporation in a merger transaction. Pennzoil-Quaker State Company is a
premier worldwide automotive aftermarket products and consumer car care company
and trades on the New York Stock Exchange under the symbol PZL.
This booklet includes the notice of the meeting and the proxy statement,
which contains information about the business to be conducted at the meeting. It
is important that your shares be represented at the meeting, whether or not you
are able to attend in person. Accordingly, please mark, sign, date and mail
promptly the enclosed proxy in the envelope provided, or vote your shares by
calling the toll-free telephone number printed on the proxy card as soon as
possible.
On behalf of the Board of Directors, thank you for your continued support.
<TABLE>
<CAPTION>
<S> <C>
[LOGO] [LOGO]
James J. Postl James L. Pate
PRESIDENT AND CHAIRMAN OF THE BOARD
CHIEF OPERATING OFFICER AND CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS..................................................... 1
PROXY STATEMENT.............................................................................. 2
I. Election of Directors............................................................. 3
Nominees.......................................................................... 3
Directors with Terms Expiring in 2000 and 2001.................................... 4
Board Organization and Meetings................................................... 5
Director Remuneration............................................................. 6
Certain Transactions.............................................................. 6
Security Ownership of Directors and Officers...................................... 7
Compliance with Section 16(a) of the Exchange Act................................. 7
Executive Compensation............................................................ 8
Compensation Committee Interlocks and Insider Participation....................... 12
Report of Compensation Committee on Executive Compensation........................ 12
Performance Graph................................................................. 14
II. Approval of Appointment of Independent Public Accountants......................... 14
III. Other Business.................................................................... 14
Additional Information...................................................................... 14
Security Ownership of Certain Shareholders........................................ 14
Shareholder Proposals for 2000 Meeting............................................ 14
Advance Written Notice Required for Shareholder Nominations and Proposals......... 14
</TABLE>
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 6, 1999
TO THE SHAREHOLDERS OF March 31, 1999
PENNZOIL-QUAKER STATE COMPANY:
The annual meeting of shareholders of Pennzoil-Quaker State Company will be
held at the Crystal Ballroom at The Rice, 909 Texas Avenue, Houston, Texas, on
Thursday, May 6, 1999 at 11:00 a.m., Houston time, for the following purposes:
1. To elect three directors.
2. To approve the appointment of Arthur Andersen LLP as independent public
accountants for 1999.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 19, 1999 as
the record date for determining shareholders entitled to notice of and to vote
at the meeting. A list of shareholders entitled to vote at the meeting will be
available for inspection by any shareholder for any purpose germane to the
meeting during the meeting and during regular business hours beginning ten days
before the date of the meeting at the office of the Corporate Secretary of the
Company at the address below.
You are cordially invited to attend the meeting in person. Even if you plan
to attend the meeting, please sign, date and return the enclosed proxy, or vote
by calling the toll-free telephone number printed on the proxy card, as soon as
possible.
By Order of the Board of Directors
Linda F. Condit
VICE PRESIDENT AND
CORPORATE SECRETARY
P. O. Box 2967
Houston, Texas 77252-2967
700 Milam
Houston, Texas 77002-2805
1
<PAGE>
[LOGO]
P.O. Box 2967 - Houston, Texas 77252-2967
713/546-4000
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being mailed to
shareholders beginning on or about March 31, 1999. They are furnished in
connection with the solicitation by the Board of Directors of Pennzoil-Quaker
State Company (the "Company") of proxies from the holders of the Company's
common stock ("Common Stock") for use at the annual meeting of shareholders to
be held at the time and place and for the purposes set forth in the accompanying
notice. In addition to the solicitation of proxies by mail, proxies may be
solicited by telephone, telegram or personal interview by regular employees of
the Company. The Company has retained Morrow & Co., Inc. to solicit proxies at a
fee estimated not to exceed $7,500 plus reasonable expenses. The Company will
pay all costs of soliciting proxies. The Company will also reimburse brokers or
other persons holding stock in their names or in the names of their nominees for
their reasonable expenses in forwarding proxy materials to beneficial owners of
such stock.
All duly executed proxies received prior to or at the meeting will be voted
in accordance with the choices specified thereon. As to any matter for which no
choice has been specified in a duly executed proxy, the shares represented
thereby will be voted FOR the election as directors of the nominees listed
herein, FOR approval of the appointment of Arthur Andersen LLP as the Company's
independent public accountants and in the discretion of the persons named in the
proxy in connection with any other business that may properly come before the
annual meeting. A shareholder giving a proxy may revoke it at any time before it
is voted at the annual meeting by filing with the Corporate Secretary an
instrument revoking the proxy, by delivering a duly executed proxy bearing a
later date (including a telephone vote) or by appearing at the annual meeting
and voting in person.
As of March 19, 1999, the record date for determining shareholders entitled
to vote at the annual meeting, the Company had outstanding and entitled to vote
76,991,502 shares of Common Stock. Each share entitles the holder to one vote on
each matter submitted to a vote of shareholders. The requirement for a quorum at
the annual meeting is the presence in person or by proxy of holders of a
majority of the outstanding shares of Common Stock. Information regarding the
vote required for approval of other particular matters is set forth in the
discussion of those matters appearing elsewhere in this Proxy Statement.
The Annual Report to Shareholders, which includes financial statements of
the Company for the year ended December 31, 1998, has been mailed to all
shareholders. The Annual Report is not a part of the proxy solicitation
materials.
2
<PAGE>
I. ELECTION OF DIRECTORS
Three directors are to be elected. Messrs. Alfonso Fanjul, Forrest R.
Haselton and Berdon Lawrence will be nominated, and the persons named in the
proxy will vote in favor of such nominees unless authority to vote in the
election of directors, or for particular directors, is withheld. All three
nominees are currently directors of the Company. The term of office for all
directors to be elected will be a three-year term expiring on the date of the
annual meeting in 2002 (or until their respective successors are duly elected
and qualified).
The persons named in the proxy may act with discretionary authority if any
nominee should become unavailable for election. In accordance with the Company's
By-laws, the three directors will be elected by a plurality of the votes cast.
NOMINEES -- The following summaries set forth information concerning the
three nominees for election as directors at the meeting, including each
nominee's age, position with the Company, if any, and business experience during
the past five years.
<TABLE>
<CAPTION>
NAME, AGE AND BUSINESS EXPERIENCE
--------------------------------------------------------------
<S> <C>
ALFONSO FANJUL has been Chairman of the Board and Chief
[PHOTO] Executive Officer of Florida Crystals Corporation (sugar) for
more than the past five years. He is also Chairman of the
Board, President and Chief Executive Officer of Central Romana
Corporation, Ltd. (sugar, cattle, real estate and resorts). He
has served as a director of the Company since December 1998
and is on the Compensation Committee of the Board. Mr. Fanjul
served as a director of Pennzoil Company from 1984 to 1998. He
is 61 years of age and lives in Palm Beach, Florida.
FORREST R. HASELTON served as President -- Retail of the Sears
[PHOTO] Merchandise Group, a division of Sears Roebuck and Company,
until his retirement in 1993. He has served as a director of
the Company since December 1998 and is on the Compensation
Committee of the Board. Mr. Haselton served as a director of
Quaker State Corporation from 1995 to 1998. Mr. Haselton is 60
years of age and lives in Vero Beach, Florida.
BERDON LAWRENCE has been President of Hollywood Marine, Inc.,
[PHOTO] a Gulf Coast operator of tank barges and tow boats handling
petrochemical and petroleum products, for more than the past
five years. He has served as a director of the Company since
December 1998 and is on the Executive Committee of the Board.
Mr. Lawrence served as a director of Pennzoil Company from
1990 to 1998. Mr. Lawrence is 56 years of age and lives in
Houston.
</TABLE>
3
<PAGE>
DIRECTORS WITH TERMS EXPIRING IN 2000 AND 2001 -- The following summaries
set forth information concerning the eight directors of the Company whose
present terms of office will continue until 2000 or 2001, including each
director's age, position with the Company, if any, and business experience
during the past five years.
<TABLE>
<CAPTION>
NAME, AGE AND BUSINESS EXPERIENCE
--------------------------------------------------------------
<S> <C>
HOWARD H. BAKER, JR. has been a partner with the law firm of
[PHOTO] Baker, Donelson, Bearman & Caldwell since 1988. From 1987 to
1988, he was Chief of Staff to the President of the United
States. Mr. Baker also served three terms as a member of the
United States Senate and was Senate Majority Leader from 1981
to 1985 and Minority Leader from 1977 to 1981. He has served
as a director of the Company since December 1998 and is a
member of the Executive Committee of the Board. He served as a
director of Pennzoil Company from 1991 to 1998. Mr. Baker is a
regent of the Smithsonian Institution. He is 73 years of age
and lives in Huntsville, Tennessee. Mr. Baker's current term
as a director of the Company expires in 2000.
W. L. LYONS BROWN, JR. served as Chairman of the Board of
[PHOTO] Brown-Forman Corporation, a producer and marketer of
diversified consumer products, until his retirement in 1995.
He was also Chief Executive Officer of Brown-Forman Corpo-
ration from 1975 until 1993. He has served as a director of
the Company since December 1998 and is a member of the Audit
Committee of the Board. He served as a director of Pennzoil
Company from 1991 to 1998. Mr. Brown is also a director of
Westvaco Corporation and an advisory director of Bessemer
Holdings. He is 62 years of age and lives in Prospect,
Kentucky. Mr. Brown's current term as a director of the
Company expires in 2001.
ERNEST H. COCKRELL has been engaged for more than the past
[PHOTO] five years in oil and gas exploration and production. He has
served as a director of the Company since December 1998 and is
Chairman of the Compensation Committee and a member of the
Audit Committee of the Board. He served as a director of
Pennzoil Company from 1978 to 1998. Mr. Cockrell is also a
director of Denali Incorporated, Southwest Bancorporation of
Texas, Inc. and Southwest Bank of Texas. He is 53 years of age
and lives in Houston. Mr. Cockrell's current term as a
director of the Company expires in 2001.
L. DAVID MYATT has been President of LDM Investments, L.L.C.,
[PHOTO] an investment management company, since 1996. From 1994 to
1995, he was Chief Executive Officer of Quaker State's Motor
Oil Division. Mr. Myatt was President of two lubricant
companies, Specialty Oil Company, Inc. and Westland Oil
Company, Inc., from 1977 to 1994. These companies were
acquired by Quaker State in 1994. He has served as a director
of the Company since December 1998 and is a member of the
Executive Committee of the Board. He served as Vice Chairman
and a director of Quaker State Corporation from 1994 to 1998.
He is 53 years of age and lives in Shreveport, Louisiana. Mr.
Myatt's current term as a director of the Company expires in
2001.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND BUSINESS EXPERIENCE
--------------------------------------------------------------
JAMES L. PATE was named Chairman of the Board and Chief
[PHOTO] Executive Officer of the Company in December 1998. He has
served as Chairman of the Board of PennzEnergy Company
(formerly Pennzoil Company) since 1994, was Chief Executive
Officer from 1990 to 1998 and was President from 1990 until
1997. Mr. Pate has served as a director of the Company since
December 1998 and is Chairman of the Executive Committee of
the Board. He has served as a director of PennzEnergy Company
since 1989 and is also a director of Bowater Incorporated. He
is 63 years of age and lives in Houston. Mr. Pate's current
term as a director of the Company expires in 2000.
<S> <C>
JAMES J. POSTL was named President and Chief Operating Officer
[PHOTO] of the Company in December 1998. He served as President of
Pennzoil Products Company from October 1998 to December 1998,
President of Nabisco Biscuit Company from 1995 to early 1998
and President of Nabisco International from 1994 to 1995.
Prior to that time, he held various management positions with
PepsiCo, Inc. and Procter & Gamble Company. Mr. Postl has
served as a director of the Company since December 1998 and is
a member of the Executive Committee of the Board. He is 53
years of age and lives in Houston. Mr. Postl's current term as
a director of the Company expires in 2001.
GERALD B. SMITH has been Chairman and Chief Executive Officer
[PHOTO] of Smith, Graham & Co. Asset Managers L.P., a fixed income
investment management firm, for more than the past five years.
He has served as a director of the Company since December 1998
and is a member of the Executive Committee of the Board. Mr.
Smith served as a director of Pennzoil Company from 1997 to
1998. He is a member of the management board of Rorento N.V.
and a member of the Audit Committee of Northern Borders
Partners, L.P. He is 48 years of age and lives in Houston. His
current term as a director of the Company expires in 2000.
LORNE R. WAXLAX served as Executive Vice President of the
[PHOTO] Gillette Company until his retirement in 1993. Mr. Waxlax is a
director of BJ's Wholesale Club, Inc., Clean Harbors, Inc.,
HomeBase, Inc., Hon Industries, Inc. and The Iams Company. He
has served as a director of the Company since December 1998
and is Chairman of the Audit Committee of the Board. He served
as a director of Quaker State Corporation from 1995 to 1998.
Mr. Waxlax is 65 years of age and lives in Vero Beach,
Florida. His current term as a director of the Company expires
in 2000.
</TABLE>
BOARD ORGANIZATION AND MEETINGS -- The members of the Audit Committee and
the Compensation Committee of the Board of Directors, all of whom are identified
in the above summaries, are not employees of the Company. The Audit Committee
recommends the appointment of independent public accountants to conduct audits
of the Company's financial statements, reviews with the independent accountants
the plan and results of the auditing engagement, approves other professional
services provided by the independent accountants and evaluates the independence
of the accountants. The Audit Committee also reviews the scope and results of
procedures for internal auditing of the Company and the adequacy of the
Company's system of internal accounting controls. The Compensation Committee
approves, or in some
5
<PAGE>
cases recommends to the Board, remuneration arrangements and compensation plans
involving the Company's directors, executive officers and certain other
employees whose compensation exceeds specified levels. The Compensation
Committee also acts on the granting of stock options and conditional stock units
under the Company's stock option plans and conditional stock award programs. The
Board does not have a standing nominating committee.
The Board of Directors of the Company was constituted in its current form on
December 30, 1998. The Audit and Compensation Committees were also formed on
December 30, 1998. During 1998, the Board of Directors of the Company met or
acted by consent in lieu of a meeting on 13 occasions. During 1998, all members
of the Board of Directors attended at least 75% of the total of all Board
meetings.
DIRECTOR REMUNERATION -- Each director, other than a regularly employed
officer of the Company, receives a director's fee of $30,000 per annum for
service on the Board of Directors and a committee fee of $2,000 per committee
per annum for service on the Audit, Executive and Compensation Committees. Each
such director also receives an additional fee of $1,000 for each Board,
Executive Committee or other committee meeting attended. All directors are
reimbursed for their travel and other expenses involved in attendance at Board
and committee meetings.
CERTAIN TRANSACTIONS -- M & O Properties, LP, a limited partnership of which
Mr. Myatt owns 70%, leases warehouse space located in Wichita Falls, Texas to a
subsidiary of the Company. The lease runs until May 31, 2006 with the subsidiary
of the Company paying the insurance and property taxes on the property. The rent
paid during 1998 amounted to $103,500. The Company believes that the rates
negotiated under this lease are competitive. Double M Properties, a partnership
of which Mr. Myatt owns 50%, also leases warehouse and office space to a
subsidiary of the Company at various locations in Louisiana, Mississippi and
Arkansas. The rent paid during 1998 amounted to $317,100. The subsidiary of the
Company also paid property taxes on the leased property. The Double M Properties
leases expire in 2004. The Company believes that the rates negotiated under
these leases are competitive.
6
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS -- The following table sets
forth the shares of Common Stock of the Company beneficially owned directly or
indirectly as of March 19, 1999 (i) by the Company's nominees for director,
other directors, chief executive officer and five other most highly compensated
executive officers and (ii) by all the foregoing and other current executive
officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
(1)
--------------------- PERCENTAGE
NAME DIRECT OTHER OF CLASS
- ------------------------------------------------------------------------------- ---------- --------- ---------------
<S> <C> <C> <C>
David P. Alderson II........................................................... 95,658 -- *
Howard H. Baker, Jr............................................................ 5,000 -- *
Clyde W. Beahm................................................................. 69,815 -- *
W. L. Lyons Brown, Jr.......................................................... 6,500 3,321 *
Ernest H. Cockrell............................................................. 409,066 10,000 *
Alfonso Fanjul................................................................. 200 30,500 *
C. Frederick Fetterolf......................................................... 7,919 -- *
Forrest R. Haselton............................................................ 6,189 -- *
Berdon Lawrence................................................................ 15,000 -- *
L. David Myatt................................................................. 1,144,581 -- 1.5%
James L. Pate.................................................................. 450,857 -- *
James J. Postl................................................................. 10,000 -- *
William M. Robb................................................................ 83,538 -- *
James W. Shaddix............................................................... 102,748 -- *
Gerald B. Smith................................................................ 2,000 -- *
Lorne R. Waxlax................................................................ 27,865 -- *
All the above and all other current executive
officers as a group (19 persons).............................................. 2,510,724 43,821 3.3%
</TABLE>
- ------------
(1) Pursuant to regulations of the Securities and Exchange Commission (the
"SEC"), securities must be listed as beneficially owned by a person who
directly or indirectly holds or shares the power to vote or dispose of the
securities, whether or not the person has any economic interest in the
securities. In addition, a person is deemed a beneficial owner if he has the
right to acquire beneficial ownership within 60 days, including upon
exercise of a stock option or conversion of a convertible security. Shares
of Common Stock listed under the "Direct" column include those owned by the
individuals and members of their immediate families, or held by any of them
in family trusts. Securities owned by certain family members are included in
the foregoing table even where the possession or sharing of voting or
dispositive power is not acknowledged. The "Direct" column also includes
shares subject to stock options exercisable within 60 days (80,800 for Mr.
Alderson, 61,765 for Mr. Beahm, 389,700 for Mr. Pate, 71,720 for Mr. Robb,
82,390 for Mr. Shaddix, and 747,264 for all the above and all other current
executive officers as a group). Shares shown under the "Other" column
include ownership through corporations or subsidiaries of corporations in
which the named individual is controlling shareholder or charitable
foundations in which the named individual is an officer, director or
trustee.
* Less than 1%.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT -- Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the
Company's directors and executive officers to file with the SEC and the New York
Stock Exchange initial reports of ownership and reports of changes in ownership
of Common Stock. Based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, the Company believes that all its directors and executive officers
during 1998 complied on a timely basis with all applicable filing requirements
under Section 16(a) of the Exchange Act.
7
<PAGE>
EXECUTIVE COMPENSATION -- Set forth below is information regarding the
compensation of the Company's Chief Executive Officer (the "CEO") and the other
five most highly compensated executive officers of the Company (together with
the CEO, the "named officers"). Until December 30, 1998, the named officers were
all officers of Pennzoil Company, the Company's former parent company, except
for Mr. Postl. All compensation set forth below was paid by Pennzoil Company.
The named officers have held their current positions with the Company since
December 30, 1998, when the Common Stock of the Company was distributed to
shareholders of Pennzoil Company (the "Spin-Off").
SUMMARY COMPENSATION TABLE. The summary compensation table set forth below
contains information regarding the compensation of each of the named officers
for services rendered in all capacities during 1996, 1997 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
AWARDS
ANNUAL COMPENSATION -----------------------
---------------------------------- SECURITIES
OTHER UNDERLYING ALL
ANNUAL RESTRICTED OPTIONS/ PAYOUTS OTHER
COMPEN- STOCK SARS ---------- COMPEN-
NAME AND SATION AWARDS (SHARES) LTIP SATION
PRINCIPAL POSITION YEAR SALARY BONUS (1) (2) (3) PAYOUTS (4)
- -------------------------------- --------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James L. Pate 1998 $ 807,200 $ 0 $ 157,700 $ 409,200 26,500 $ 0 $ 130,600
Chairman of the Board and 1997 761,200 757,300 183,000 358,800 30,000 368,100 98,900
Chief Executive Officer 1996 708,500 739,500 190,900 401,400 100,000 0 52,900
David P. Alderson II 1998 $ 300,700 $ 0 $ 83,100 $ 80,800 5,200 $ 0 $ 45,200
Group Vice President, 1997 284,600 315,600 61,200 62,200 5,200 78,000 31,000
Chief Financial Officer and 1996 265,000 200,000 61,600 80,300 18,500 0 19,000
Treasurer
Clyde W. Beahm 1998 $ 283,200 $ 0 $ 66,100 $ 66,800 4,500 $ 0 $ 34,400
Executive Vice President-- 1997 263,800 172,900 61,200 56,500 4,300 72,900 24,600
Lubricants and Consumer 1996 234,600 125,000 62,200 73,900 18,300 0 16,300
Products
James J. Postl 1998 $ 96,200 $ 296,800 $ 0 $ 0 0 $ 0 $ 700
President and Chief 1997 -- -- -- -- -- -- --
Operating Officer 1996 -- -- -- -- -- -- --
William M. Robb 1998 $ 284,700 $ 0 $ 67,600 $ 66,800 4,000 $ 0 $ 34,200
Group Vice President-- 1997 273,500 159,500 62,600 56,500 4,000 74,600 25,000
Base Oil and Specialty Products 1996 264,200 115,000 61,600 71,800 15,000 0 18,800
James W. Shaddix 1998 $ 300,700 $ 0 $ 95,900 $ 80,800 5,200 $ 0 $ 45,300
General Counsel 1997 284,600 315,600 61,200 62,200 5,200 78,000 31,100
1996 266,400 200,000 61,600 80,300 18,500 0 19,100
</TABLE>
- ------------
(1) Amounts shown for 1998 include aircraft usage costs of $69,800 for Mr. Pate;
a perquisite allowance of $59,400 for Messrs. Pate, Alderson and Shaddix and
$42,400 for Mr. Beahm and Mr. Robb; and excess medical coverage of $23,700
for Messrs. Pate, Alderson, Beahm and Shaddix and $25,200 for Mr. Robb.
Amounts shown for 1997 include aircraft usage costs of $98,900 for Mr. Pate;
a perquisite allowance of $59,400 for Mr. Pate and $42,400 for Messrs.
Alderson, Beahm, Robb and Shaddix; and excess medical coverage of $18,800
for Messrs. Pate, Alderson, Beahm and Shaddix and $20,200 for Mr. Robb.
Amounts shown for 1996 include aircraft usage charges of $108,800 for Mr.
Pate; a perquisite allowance of $59,400 for Mr. Pate and $42,400 for Messrs.
Alderson, Beahm, Robb and Shaddix; and excess medical coverage of $19,200
for Messrs. Pate, Alderson, Robb and Shaddix and $19,800 for Mr. Beahm.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
8
<PAGE>
(2) Amounts shown under Restricted Stock Awards are the aggregate market values
on January 1 of the year indicated of shares of Common Stock underlying
common stock units awarded on such date under the Company's Conditional
Stock Award Programs. Each common stock unit became vested as a result of
the Spin-Off and will be distributed in the form of a share of Common Stock
at the end of the original five-year vesting period. In the interim,
participants receive dividend equivalents on their common stock units as
though they were shares of Common Stock.
(3) All options were granted in tandem with stock appreciation rights, but there
is currently in effect a moratorium on the exercise of any such stock
appreciation rights.
(4) Amounts shown under All Other Compensation include (i) amounts contributed
or accrued for 1998 under the Company's Savings and Investment Plan and
related supplemental agreements ($126,000 for Mr. Pate, $43,500 for Mr.
Alderson, $32,800 for Mr. Beahm, $32,600 for Mr. Robb and $43,600 for Mr.
Shaddix) and (ii) amounts paid by the Company in 1998 for certain premiums
on term life insurance ($4,600 for Mr. Pate, $700 for Mr. Postl, $1,700 for
Mr. Alderson, $1,600 for Mr. Beahm, $1,600 for Mr. Robb and $1,700 for Mr.
Shaddix.)
OPTION/SAR GRANTS. Shown below is further information on grants of stock
options during 1998 to the named officers reflected in the Summary Compensation
Table on pages 8-9.
OPTION/SAR GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL
OPTIONS/SARS OPTIONS/SARS
GRANTED IN GRANTED TO EXERCISE
1998 EMPLOYEES PRICE (PER EXPIRATION GRANT DATE
(SHARES) (1) IN 1998 SHARE) (2) DATE VALUE (3)
------------- --------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
James L. Pate................................. 26,500 3.6% $ 31.4374 3/31/2008 $ 354,700
David P. Alderson, II......................... 5,200 0.7% $ 31.4374 3/31/2008 $ 69,600
Clyde W. Beahm................................ 4,500 0.6% $ 31.4374 3/31/2008 $ 60,200
James J. Postl................................ -- -- -- -- --
William M. Robb............................... 4,000 0.5% $ 31.4374 3/31/2008 $ 53,500
James W. Shaddix.............................. 5,200 0.7% $ 31.4374 3/31/2008 $ 69,600
</TABLE>
- ------------
(1) The named officers were granted the above number of options to acquire
common stock of Pennzoil Company on March 31, 1998. On December 30, 1998, in
connection with the Spin-Off, the named officers received the same number of
options to acquire Common Stock of the Company. All such options were
granted in tandem with stock appreciation rights, but there is currently in
effect a moratorium on the exercise of any such stock appreciation rights.
(2) After the Spin-Off, the original option exercise price ($64.6563) was
allocated between the options to purchase common stock of Pennzoil Company
and the options to purchase the Company's Common Stock based on a three-day
average of trading prices of Pennzoil Company common stock and the Company's
Common Stock immediately after the Spin-Off. As a result of this allocation,
the option exercise price in the table above for the Company's Common Stock
awarded on March 31, 1998 is 48.6224% of the original option exercise price
for the options to purchase common stock of Pennzoil Company.
(3) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, that may be realized will
depend on the excess of the underlying stock price over the exercise price
on the date the option is exercised, so that there is no assurance that the
value realized will be at or near the value estimated by the Black-Scholes
model. The estimated values under the model are based on the following
assumptions: expected volatility based on a three-year historical volatility
of month-end Common Stock prices (28.9%), a risk-free rate of return based
on a 10-year zero-coupon U.S. Treasury rate at the time of grant (5.8%), the
prior dividend rate on the Common Stock ($1 per year), an option exercise
period of 10 years (with the exercise occurring at the end of such period)
and no adjustment for the risk of forfeiture over the three-year vesting
period.
9
<PAGE>
OPTION EXERCISES AND 1998 YEAR-END OPTION/SAR HOLDINGS. Shown below is
information with respect to unexercised options to purchase Common Stock granted
in 1998 and prior years to the named officers and held by them at December 31,
1998. None of the named officers exercised options or tandem stock appreciation
rights in 1998.
YEAR-END 1998 OPTION/SAR HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS HELD AT "IN-THE-MONEY" OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998 (1)
---------------------------------- --------------------------------------
EXERCISABLE UNEXERCISABLE (2) EXERCISABLE UNEXERCISABLE (2)
----------- --------------------- --------------- ---------------------
<S> <C> <C> <C> <C>
James L. Pate....................................... 389,700 0 0 0
David P. Alderson II................................ 80,800 0 0 0
Clyde W. Beahm...................................... 61,765 0 0 0
James J. Postl...................................... -- -- -- --
William M. Robb..................................... 71,720 0 0 0
James W. Shaddix.................................... 82,390 0 0 0
</TABLE>
- ------------
(1) The excess, if any, of the market value of Common Stock at December 31, 1998
($14.75) over the option exercise price.
(2) All of these options become immediately exercisable upon a change in control
of the Company.
RETIREMENT PLAN AND SUPPLEMENTAL AGREEMENTS. The Company has a
tax-qualified retirement plan applicable to salaried employees generally. The
retirement plan generally provides for annual retirement benefits approximating
between 1.1% and 1.6% of a calculated career average compensation multiplied by
the number of years of service. For purposes of the retirement plan, career
average compensation approximates the lesser of an employee's final five-year
average compensation and his 1997 annual compensation. The annual benefits under
the retirement plan are net of certain offsets based on social security benefits
and reflect limitations mandated by the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), on the maximum amounts payable. The Company has
agreements with Messrs. Pate, Alderson, Beahm, Postl, Robb and Shaddix to
supplement their benefits under the tax-qualified retirement plan if and to the
extent the aforesaid limitations on annual benefits and compensation mandated by
ERISA reduce the retirement benefits otherwise payable under such plan. The
Company also has a deferred compensation agreement with Mr. Pate designed to
bring his total annual retirement benefits from all sources, including social
security and benefits from prior employers, to 57% of his annual salary at
retirement. In addition, the deferred compensation agreement provides for
continuation of medical expense reimbursement plan coverage for the participant,
his spouse and dependents. Benefits under Mr. Pate's deferred compensation
agreement will commence upon termination of employment for any reason. Based on
salaries as of December 31, 1998, estimated annual benefits payable upon
retirement at normal retirement age (65) from all sources would be $468,300 for
Mr. Pate, $196,300 for Mr. Alderson, $75,400 for Mr. Beahm, $95,400 for Mr.
Postl, $124,500 for Mr. Robb and $186,700 for Mr. Shaddix.
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS. The Company
maintains an Executive Severance Plan for selected employees providing for
severance benefits upon a termination of employment for reasons other than cause
within two years after a change in control of the Company. Benefits are payable
only if each of the following events occur: (a) a change in control of the
Company, (b) a designation by the Board of Directors and the Compensation
Committee that the employee is likely to be adversely affected by the change in
control and (c) a subsequent termination of employment within two years for
reasons other than cause. Benefits are prorated if the employee is within three
years of normal retirement age (65) at termination of employment. Participants
in the plan include Messrs. Pate, Alderson, Beahm, Postl, Robb and Shaddix. Such
severance benefits generally include a payment of up to three times a
participant's annual salary and incentive bonus and continuation of life
insurance and medical coverage for one year following termination of employment.
10
<PAGE>
Many of the Company's executive compensation programs were established
before provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
imposed punitive taxes upon, in some cases, virtually all of the payments or
benefits that retiring or departing executive officers receive from the Company.
If the Company's executive compensation arrangements were settled upon a change
in control of the Company, such punitive excise taxes would be imposed in every
case. The Company has designed its programs with a view to providing these
payments and benefits taking into account prevailing tax rates, and the
imposition of substantial unanticipated taxes upon the employees is inconsistent
with that planning.
To prevent benefits provided to the Company's executive officers under its
various compensation arrangements from being unfairly reduced by reason of
excise taxes imposed on such benefits under the Code, the Company has entered
into Tax Protection Agreements with all of its executive officers. Such Tax
Protection Agreements provide that, if there is a change in control of the
Company and if any payment or distribution to or for the benefit of an eligible
executive employee would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by such employee with respect
to such excise tax, such employee will be entitled to receive an additional
payment that, taking into account all taxes imposed in the payment, would place
the employee in the same position with respect to taxes on the Company's
compensation or benefits had such excise taxes not been imposed.
The Company also has agreements with Messrs. Pate, Alderson, Beahm, Postl,
Robb and Shaddix that provide for the acceleration of benefits in the event of
the occurrence, as determined by the Board of Directors, of a change in control
of the Company that has a reasonable likelihood of causing the forfeiture of
benefits that such persons otherwise would have earned by depriving them of the
opportunity to fulfill applicable service and age prerequisites. The agreements
provide that the covered persons will receive, in the event of such a change in
control but without regard to any termination of employment, cash payments equal
to the appreciated value of all unvested, nonqualified stock options. The
agreements also provide, in the event of termination of employment of a covered
employee within six months following such a change in control, (a) for cash
payments generally equal to the unvested amounts under the Company's Savings and
Investment Plan (as well as the agreements providing for reimbursement of
benefits that would be payable under such Plan except for limitations imposed by
ERISA) forfeitable on the date of termination of employment, (b) for
continuation of life insurance and, in certain instances, medical expense
coverage for one year, (c) for cash payments equal to the discounted value of
benefits otherwise payable under the deferred compensation agreements referred
to above under "--Retirement Plan and Supplemental Agreements," based on an
assumed continuation of employment until age 65 and actuarially determined life
expectancies, (d) in certain instances, for cash payments in settlement of
long-term medical benefits otherwise payable and (e) for cash payments equal to
the discounted value of benefits otherwise payable under a supplemental
disability plan and a salary continuation plan. Other agreements provide for
certain executive officers that, upon any termination of employment (other than
termination for cause or voluntary termination prior to a change in control),
the executive officer will receive (i) in certain instances, continued executive
medical coverage to age 55 without any increase in cost, and thereafter retiree
medical coverage at no greater cost than currently applicable to retirees with
more than 20 years of service and (ii) supplemental retirement benefits payable
at age 55 equal to the benefit such executive officer would have earned had
current cash compensation continued to age 55. Deferred compensation agreements
and certain supplemental benefit agreements under which payments are currently
being made have been supplemented by the Company to provide, upon a change in
control of the Company, for the cash-out of retirement, spousal and medical
benefits. In addition, the Company's conditional stock award programs provide
for acceleration of benefits upon a change in control. Furthermore, benefits
under the Company's Long-Term Incentive Plans will be paid out immediately as if
such plans had reached the end of their terms and the target goals had been
achieved. The dollar amounts that would be payable under the agreements and plan
described in this and the preceding paragraph and the other plans providing
11
<PAGE>
payments triggered by a change in control, exclusive of amounts attributable to
benefits already vested, would be (as of December 31, 1998) $3,649,100 for Mr.
Pate, $1,433,600 for Mr. Alderson, $1,251,600 for Mr. Beahm, $2,500,000 for Mr.
Postl, $1,139,700 for Mr. Robb and $1,433,600 for Mr. Shaddix. In addition, a
change in control would result in the accelerated payment of benefits already
earned and vested over a period of years in the amounts of $4,303,600 for Mr.
Pate, $469,000 for Mr. Alderson, $395,900 for Mr. Beahm, $287,400 for Mr. Robb
and $461,300 for Mr. Shaddix.
EMPLOYMENT AGREEMENT WITH MR. POSTL. The Company has entered into an
employment agreement with Mr. Postl that establishes his base salary and
provides for his participation in the Company's annual performance incentive
plan, tax-qualified retirement and savings plans and other executive benefit
programs and practices generally applicable to the Company's executives. The
employment agreement provides for certain benefits in the event of termination
of Mr. Postl's employment with the Company prior to the end of the employment
period.
OTHER MATTERS. In 1998, the Board of Directors formally adopted and
confirmed a policy relating to the use of Company facilities. In certain
circumstances, the policy requires use by officers of Company facilities in
order to increase the time available for performance of Company business and for
reasons of security and other corporate purposes. Under applicable federal
income tax regulations, the Company imputes income to employees of the Company
for federal income tax purposes with respect to their use of Company facilities
when and to the extent required by the regulations. When the policies and
procedures adopted by the Board have been duly observed, it is contemplated that
the Company protect employees against liability for any tax, including penalties
and interest, asserted by the Internal Revenue Service in an amount exceeding
the tax on the amount of income imputed by the Company as described above. To
date, no amounts have been paid or requested to reimburse employees for such a
tax.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION -- The members
of the Compensation Committee of the Board are Messrs. Cockrell, Fanjul and
Haselton, all of whom are non-employee directors.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION --
OVERVIEW. The Company was a wholly owned subsidiary of Pennzoil Company
until December 30, 1998. As such, all actions taken with respect to 1998
compensation were taken by the Compensation Committee of the Board of Directors
of Pennzoil Company. The current members of the Compensation Committee of the
Company have served on the Committee since December 30, 1998.
1998 COMPENSATION PHILOSOPHY. The Company's executive compensation program
is designed to help the Company attract, motivate and retain the executive
talent that the Company needs in order to maximize its return to shareholders.
To this end, the Company's executive compensation program provides appropriate
compensation levels and incentive pay that varies based on corporate, business
unit and individual performance.
Base salary, annual incentives, long-term incentives and executive benefits
are the elements of compensation provided to the Company's executives. The
Compensation Committee's philosophy is to place more emphasis on variable
performance-based incentive pay and less emphasis on base salary because the
primary compensation program objective is to reward executives for maximizing
long-term returns to shareholders.
BASE SALARY PROGRAM. Pennzoil Company's base salary program was based on a
philosophy of providing salaries that are equivalent with the market median for
companies of comparable size (as measured by revenues). In aggregate, Pennzoil
Company's executive salaries were, and the Company's executive salaries will be,
consistent with this philosophy. Base salary levels were and will be also based
on each individual employee's performance over time and each individual's role.
Consequently, employees with higher levels of sustained performance over time
and/or employees assuming greater responsibilities are paid correspondingly
higher salaries. Executive salaries will be reviewed annually based on a variety
of factors, including individual performance, company performance, general
levels of market salary increases
12
<PAGE>
and the Company's overall financial results. Individual performance assessment
is subjective; the Compensation Committee will consider earnings levels,
progress in implementing strategic initiatives and effectiveness in business
development efforts in establishing base salary increases for executives. No
specific performance formula or weighting of these or other factors has been
used in determining base salary levels. For the period January 1 to December 30,
Mr. Pate's salary as CEO of Pennzoil Company was increased from $775,000 to
$821,500 based on median market salaries for comparable companies and on the
performance indicators described above as determined by the Compensation
Committee of Pennzoil Company.
ANNUAL INCENTIVE PLAN. Pennzoil Company's annual incentive plan was
intended to (1) reward key employees based on company, business unit and
individual performance, (2) motivate key employees and (3) provide appropriate
cash compensation opportunities to plan participants. Under the plan, target
award opportunities, which are based at the market 55th percentile, vary by
individual position and are expressed as a percent of base salary. The amount
that a particular executive may earn is directly dependent on the individual's
position, responsibility and ability to impact the Company's financial success.
For 1998, the annual incentive plan was structured so that Pennzoil Company
had to achieve a minimum level of net income in order for incentives to be paid
under the plan. Because this performance threshold was not achieved in 1998, no
annual incentive awards were paid to corporate officers under this plan. No
annual incentive was paid to Mr. Pate because the net income threshold was not
achieved.
LONG-TERM INCENTIVE PLANS. Pennzoil Company had, and the Company has,
several types of long-term incentive awards intended to achieve various
objectives. Stock options are the primary long-term incentive award to be used
by the Company and are granted at 100% of fair market value at the date of
grant. Stock options are intended to award executives for appreciation in the
market value of the Company's Common Stock. Conditional stock grants are also
used and are made to increase executive share ownership levels and reward
executives for maintaining and enhancing the Company's total shareholder return.
In March 1998, the Mr. Pate received stock options for 26,500 shares of
common stock and 6,125 shares of conditional stock of Pennzoil Company. Mr. Pate
did not earn a payment under the Pennzoil Company's long-term performance plan
because threshold performance was not achieved. The total value of the stock
option and conditional stock awards provided to Mr. Pate in March 1998 by
Pennzoil Company placed Mr. Pate's total long-term incentives below the market
50th percentile.
OTHER PLANS AND BENEFITS. The Company's executive officers participate in
several other compensation plans and benefit programs. These programs provide
benefits generally related to salary levels and length of service (as in the
case of retirement plan benefits, savings plan benefits, disability benefits and
death benefit coverage) or are independent of salary levels (such as the
perquisite allowances and medical coverage). There is no specific
performance-based relationship between benefits under these plans and corporate
performance (except that savings plan contributions are invested in Common
Stock).
SECTION 162(M). The Company's incentive plans provide for stock option
grants, annual incentive plan awards and long-term performance plan awards, each
of which can be qualified as performance-based compensation under Section 162(m)
of the Code. Whether one or more awards made under these incentive plans are
qualified as performance-based components is in the discretion of the Company
and the Compensation Committee. Currently, some of the awards under the
incentive plans are not qualified under Section 162(m), and the Compensation
Committee may determine to grant awards in the future that are not so qualified.
This report is furnished by the Compensation Committee of the Board of
Directors.
Ernest H. Cockrell, Chair
Alfonso Fanjul
Forrest R. Haselton
March 10, 1999
13
<PAGE>
PERFORMANCE GRAPH -- The Common Stock of the Company began trading "regular
way" on the New York Stock Exchange on December 31, 1998. The closing sales
price for the Common Stock on December 31, 1998 was $14.75.
II. APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
approved and recommends the appointment of Arthur Andersen LLP as independent
public accountants to conduct an audit of the Company's financial statements for
the year 1999. This firm acted as independent public accountants to Pennzoil
Company for many years.
Representatives of Arthur Andersen LLP will attend the annual meeting, will
respond to questions by shareholders and will be able to make a statement
regarding the Company's financial statements.
The Board of Directors recommends that shareholders approve the appointment
of Arthur Andersen LLP as the Company's independent public accountants. In
accordance with the Company's By-laws, approval of the appointment of
independent public accountants will require the affirmative vote of a majority
of the shares of Common Stock voted at the meeting. Accordingly, abstentions and
broker non-votes applicable to shares present at the meeting will not be
included in the tabulation of votes cast on this matter.
III. OTHER BUSINESS
Management does not intend to bring any business before the meeting other
than the matters referred to in the accompanying notice. If, however, any other
matters properly come before the meeting, the persons named in the accompanying
proxy will vote pursuant to the discretionary authority granted in the proxy in
accordance with their best judgment on such matters. The discretionary authority
includes matters that the Board of Directors does not know are to be presented
at the meeting by others.
ADDITIONAL INFORMATION
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS -- The following table sets forth
information as to persons known to possess voting or dispositive power over more
than 5% of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS OF NUMBER OF PERCENTAGE
CLASS BENEFICIAL OWNER SHARES OF CLASS
- ----------------- -------------------------------------- ---------- -----------
<S> <C> <C> <C>
Common Stock Capital Research and 8,068,580 10.4%
Management Company
333 South Hope Street
Los Angeles, California 90071
</TABLE>
The information in the foregoing table regarding Capital Research and
Management Company ("Capital Research") is based on a filing made with the SEC
reflecting ownership of Common Stock as of February 28, 1999. The filing states
that the shares of Common Stock were acquired in the ordinary course of business
and not for the purpose of influencing control of the Company. The filing
indicates sole dispositive power for 8,068,580 shares of Common Stock by Capital
Research.
SHAREHOLDER PROPOSALS FOR 2000 MEETING -- In order to be included in the
Company's proxy materials for its 2000 annual meeting of shareholders, eligible
shareholder proposals must be received by the Company on or before November 30,
1999 (directed to the Corporate Secretary of the Company at the address
indicated on the first page of this Proxy Statement).
ADVANCE WRITTEN NOTICE REQUIRED FOR SHAREHOLDER NOMINATIONS AND PROPOSALS --
The By-laws of the Company require timely advance written notice of shareholder
nominations of director candidates and of
14
<PAGE>
any other proposals to be presented at an annual meeting of shareholders. In the
case of director nominations by shareholders, the By-laws require that not less
than 90 days' nor more than 120 days' advance written notice be delivered to the
Company's Corporate Secretary (at the address indicated on the first page of
this Proxy Statement). The advance written notice must set forth for each person
whom the shareholder proposes to nominate for election or re-election as a
director (a) the name, age, business address and residence address of such
person, (b) the principal occupation or employment of such person, (c) the
number of shares of each class of capital stock of the Company beneficially
owned by such person, (d) any other information relating to such person that
would be required to be disclosed in connection with the solicitation of proxies
under the Exchange Act and (e) the written consent of such person to having his
or her name placed in nomination at the meeting and to serve as a director if
elected. The shareholder giving the notice must also include the name and
address, as they appear on the Company's books, of such shareholder and the
number of shares of each class of voting stock of the Company that are then
beneficially owned by such shareholder.
In the case of other proposals by shareholders at an annual meeting, the
By-laws require that not less than 90 days' nor more than 120 days' advance
written notice be delivered to the Company's Corporate Secretary (at the address
indicated on the first page of this Proxy Statement) and set forth (a) a
description of each proposal intended to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the name
and address, as they appear on the Company's books, of the shareholder proposing
such business (c) the number of shares of each class of capital stock of the
Company that are beneficially owned by the shareholder on the date of such
notice and (d) any arrangement, understanding or material interest of the
shareholder in connection with such proposal.
In order for shareholder nominations of director candidates or other
shareholder proposals for the Company's 2000 annual meeting of shareholders to
be timely submitted, they must be received by the Company on or after January 7,
2000 and on or before February 6, 2000. A copy of the By-laws of the Company
setting forth the requirements for the nomination by shareholders of candidates
for the Board of Directors and the requirements for proposals by shareholders
may be obtained from the Company's Corporate Secretary at the address indicated
on the first page of this Proxy Statement.
By Order of the Board of Directors
James L. Pate
CHAIRMAN OF THE BOARD
March 31, 1999
15
<PAGE>
PENNZOIL-QUAKER STATE
C O M P A N Y
PROXY
Proxy Solicited on Behalf of the Board of Directors
Annual Meeting of Shareholders to be held Thursday, May 6, 1999
The undersigned hereby appoints David P. Alderson II, Linda F. Condit and
Michael J. Maratea, jointly and severally, proxies with full power of
substitution and resubstitution and with discretionary authority, to
represent and to vote, in accordance with the instructions set forth below,
all shares of Common Stock which the undersigned is entitled to vote at the
1999 annual meeting of shareholders of Pennzoil-Quaker State Company, and any
adjournment or postponement thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE DIRECTOR NOMINEES LISTED ON THE
REVERSE (ITEM 1), FOR APPROVAL OF AUDITORS (ITEM 2), AND ACCORDING TO THE
DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
Please mark this proxy as indicated on the reverse side to vote on any item.
If you wish to vote in accordance with the Board of Directors'
recommendations, please sign the reverse side; no boxes need to be checked.
CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE
TRIANGLE FOLD AND DETACH HERE TRIANGLE
PENNZOIL-QUAKER STATE
C O M P A N Y
1999 Annual Meeting of Shareholders
May 6, 1999
The Crystal Ballroom
The Rice
909 Texas Avenue
Houston, Texas 77002
Registration and seating of shareholders begins at 10:40 a.m.
Meeting begins at 11:00 a.m.
Cameras and recording devices will not be allowed in the meeting.
<PAGE>
Please mark
your votes as X
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
- --------------------------------------------------------------
To vote for all items AS RECOMMENDED BY THE BOARD OF DIRECTORS,
mark this box, sign, date and return this Proxy. (No additional
vote necessary.)
- --------------------------------------------------------------
1. ELECTION OF DIRECTORS: Nominees are 01 Alfonso Fanjul,
02 Forrest R. Haselton and 03 Berdon Lawrence. TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
ABOVE.
FOR all nominees (except as WITHHOLD authority to vote
marked to the contrary above) for all nominees
FOR AGAINST ABSTAIN
2. APPROVAL OF AUDITORS: To approve Arthur
Andersen LLP as independent public accounts. / / / / / /
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by duly authorized officer. If a partnership, please sign in partnership name
by authorized person.
SIGNATURE
--------------------------------------------------
TITLE Date , 1999
----------------------------- ---------------
SIGNATURE
--------------------------------------------------
TITLE Date , 1999
----------------------------- ---------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
VOTE BY TELEPHONE
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
You will be asked to enter a Control Number which is located in the box in the
lower right hand corner of this form.
- --------------------------------------------------------------------------------
OPTION #1: To vote as the Board of Directors recommends on ALL proposals,
press 1.
- --------------------------------------------------------------------------------
When asked, please confirm your vote by pressing 1.
- --------------------------------------------------------------------------------
OPTION #2: If you choose to vote on each proposal separately, press 0. You
will hear these instructions:
- --------------------------------------------------------------------------------
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9; to WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen
to the instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When asked, please confirm your vote by pressing 1.
- --------------------------------------------------------------------------------
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF YOU VOTED BY PHONE.
- --------------------------------------------------------------------------------
------------------------
------------------------
CONTROL NUMBER
CALL * * TOLL FREE * * ON A TOUCH-TONE TELEPHONE FOR TELEPHONE VOTING
1-888-215-8323 - ANYTIME
There is NO CHARGE to you for this call.
