<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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
Wiser Oil Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Wiser Oil Company
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF WISER APPEARS HERE]
WISER
THE WISER OIL COMPANY
8115 Preston Road, Suite 400
Dallas, Texas 75225
April 11, 1997
Dear Stockholder:
Your Board of Directors joins me in extending an invitation to attend the
1997 Annual Meeting of Stockholders which will be held on Monday, May 19, 1997
at 4:00 p.m., at the Park City Club, 5956 Sherry Lane, 17th Floor, Dallas, Texas
75225. The meeting will start promptly at 4:00 p.m.
We sincerely hope you will be able to attend and participate in the
meeting. We will report on the Company's progress and respond to questions you
may have about the Company's business. There will also be important items which
are required to be acted upon by stockholders.
Whether or not you plan to attend, it is important that your shares be
represented and voted at the meeting, and, therefore, we urge you to complete,
sign, date and return the enclosed proxy card in the envelope provided for this
purpose.
Sincerely yours,
ANDREW J. SHOUP, JR.
President and
Chief Executive Officer
<PAGE>
THE WISER OIL COMPANY
DALLAS, TEXAS
NOTICE OF ANNUAL MEETING TO BE HELD MAY 19, 1997
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of The Wiser Oil Company (the "Company") will be held at the Park City
Club, 5956 Sherry Lane, 17th Floor, Dallas, Texas, on May 19, 1997, at 4:00
p.m., Central Daylight Savings Time, for the purpose of considering and acting
upon the following:
(1) Election of Directors: The election of two Directors each to serve for
a three-year term expiring in 2000;
(2) To approve amendments to the 1991 Stock Incentive Plan to increase the
number of shares of the Company's common stock, par value $3.00 per
share, that may be offered pursuant to the Stock Incentive Plan from
600,000 to 1,200,000 shares, and to make certain other changes; and
(3) Other business: Such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 28, 1997,
will be entitled to notice of, and to vote at, the Annual Meeting.
The Annual Report to Stockholders for the year ended December 31, 1996, in
which financial statements of the Company are included, was mailed with this
Proxy Statement to each stockholder of record at the close of business on March
28, 1997.
You are urged to sign, date and return the enclosed proxy as promptly as
possible, whether or not you plan to attend the Annual Meeting in person. If
you attend the Annual Meeting, you may revoke your proxy and vote your shares in
person.
By Order of the Board of Directors,
Lawrence J. Finn
Assistant Secretary
Dallas, Texas
April 11, 1997
1
<PAGE>
THE WISER OIL COMPANY
8115 PRESTON ROAD, SUITE 400
DALLAS, TEXAS 75225
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1997
GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors (the "Board
of Directors") of The Wiser Oil Company (the "Company") in connection with its
Annual Meeting of Stockholders (the "Annual Meeting") to be held on Monday, May
19, 1997, and any adjournment thereof. The approximate date on which this Proxy
Statement and the enclosed proxy are first being sent to stockholders is April
11, 1997.
If the accompanying proxy is duly executed and returned, the shares of
Common Stock of the Company represented thereby will be voted in accordance with
the Board of Directors' recommendations herein set forth and, where a
specification is made by the stockholder as provided therein, will be voted in
accordance with such specification. A proxy may be revoked by the person
executing it at any time before it has been exercised, but the revocation of the
proxy will not be effective until notice thereof has been given to Lawrence J.
Finn, Assistant Secretary of the Company. If a stockholder attends the Annual
Meeting, the stockholder may revoke the proxy and vote in person.
As of March 28, 1997, 8,948,840 shares of Common Stock of the Company were
outstanding. Such Common Stock constitutes the only class of voting securities
of the Company. Only stockholders of record as of the close of business on
March 28, 1997, are entitled to receive notice of, and to vote at, the Annual
Meeting. Such holders are entitled to one vote for each share so held.
Holders of Common Stock of the Company do not have cumulative voting rights
with respect to the election of Directors.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of eight Directors, of which
two are to be elected at the Annual Meeting to serve for three-year terms. The
Board of Directors has nominated Howard G. Hamilton and C. Frayer Kimball, III
for election to the Board to serve until the Annual Meeting in 2000, and until
their successors are duly elected and qualified. Each is a current member of
the Board whose term ends at the meeting.
Unless authority to do so is withheld, it is intended that the proxies
solicited by the Board of Directors will be voted for the nominees named. If
any of the nominees become unable to serve or for good cause will not serve, the
persons named as proxies in the accompanying proxy intend to vote for such
substitute nominees as the Board may propose, unless the Board adopts a
resolution reducing the number of Directors.
Set forth below is certain information as of March 1, 1997, concerning the
two nominees for election at the Annual Meeting and the six Directors of the
Company whose terms will continue after the meeting, including information with
respect to the principal occupation or employment of each nominee or Director
during the past five years. Except as otherwise shown, each of the nominees and
Directors has held the positions shown for at least the past five years.
2
<PAGE>
Two Directors retired from the Board during 1996. John C. Wright retired
in July 1996, and Ronald A. Lenser retired in May 1996. In February 1997, the
Board adopted a resolution, in accordance with the Company's Certificate of
Incorporation, decreasing to eight the number of Directors comprising the full
Board of Directors.
NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERM EXPIRING IN 2000
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE OTHER DIRECTORSHIPS
---- ----- --- -------------------
<S> <C> <C> <C>
Howard G. Hamilton 1974 64 Owner and operator of Palm Pavilion, a
recreational facility in Clearwater,
Florida.
C. Frayer Kimball, III 1972 62 Owner and Vice President of Petroleum Engineers, Inc., Lafayette, Louisiana, a
consulting engineering firm; Owner and Vice President of Triumph Energy, Inc., a
producer of oil and gas.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1998
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE AND OTHER DIRECTORSHIPS
---- ----- --- -----------------------
<S> <C> <C> <C>
A. W. Schenck, III 1986 53 Executive Vice President of Retail Banking Division, Great Western Financial Corp
since July 1995; Director of Consumer Bankers Association since October 1993. Held
various executive positions with PNC Bank Corp. 1989-July 1995.
Jon L. Mosle, Jr. 1994 67 Independent Consultant, Investor since 1992; Director of Private Capital of Ameritrust
Texas, N.A., a trust company, from 1984 to 1992; currently serves as Director of
Aquila Gas Pipeline Corporation, Southwest Securities, Inc., and Trust Company of
Texas.
</TABLE>
3
<PAGE>
DIRECTORS WHOSE TERMS EXPIRE IN 1999
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE AND OTHER DIRECTORSHIPS
- ---- -------- --- -----------------------
<S> <C> <C> <C>
John W. Cushing, III 1986 63 President of Petroleum Services, Inc., a geologic consulting firm; President of
Hydrocarbon Well Logging, Inc., a well service and engineering company, Parkersburg,
West Virginia.
P. D. Neuenschwander 1964 71 Independent oil and gas consultant in Wyoming.
Andrew J. Shoup, Jr. 1991 61 President and Director of the Company since July 1, 1991; Consultant to Pacific
Enterprises Oil Company (USA), an oil and gas exploration and production company,
September 1990-June 1991; President and Chief Operating Officer of Pacific Enterprises
Oil Company (USA), January 1989-September 1990; Chairman and Chief Executive Officer
of Sabine Corporation, an oil and gas exploration and production company, June 1986-
January 1989.
Lorne H. Larson 1995 61 President and Chief Executive Officer of ProGas Limited, a Calgary, Alberta, Canada-
based company involved in natural gas marketing, since January 1986; Director of Rigel
Energy Corporation since April 1993 and Director of The General Accident Assurance
Company of Canada since April 1994. As an officer of ProGas Limited, Mr. Larson has
extensive experience in the Canadian oil and gas industry, which represents an
important focus area for the Company.
</TABLE>
REQUIRED AFFIRMATIVE VOTE AND VOTING PROCEDURES
The holders of a majority of the outstanding shares of Common Stock,
present in person or represented by proxy, are necessary to constitute a quorum
at the Annual Meeting. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum. In accordance with the
Company's bylaws and Delaware law, the nominees who receive a plurality of the
votes cast by stockholders present or represented by proxy at the Annual
Meeting, up to the number of Directors to be elected, will be elected as
Directors of the Company. Thus, any abstentions or non-votes will have no effect
on the election of Directors.
For information regarding the vote required to approve and ratify the
Company's 1991 Stock Incentive Plan, as amended, see "Proposal to Approve and
Ratify the 1991 Stock Incentive Plan, as Amended-General".
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Audit Committee and a Compensation Committee,
but does not have a Nominating Committee. The Audit Committee consists of
Messrs. Larson, Cushing, and Mosle. The Audit Committee reviews the reports and
recommendations of the Company's independent auditors as well as the scope of
their review and their compensation, and also meets with representatives of
management as appropriate. During 1996, the Audit Committee held two meetings.
The Compensation Committee consists of Messrs. Mosle, Kimball, Hamilton and
Schenck. The Compensation Committee reviews and recommends to the Board of
Directors the remuneration of the executive officers of the Company and
administers the Company's 1991 Stock Incentive Plan, 1991 Non-Employee
Directors' Stock Option Plan and Equity Compensation Plan for Non-Employee
Directors. See "Report of Compensation Committee" contained herein. During 1996,
the Compensation Committee held three meetings.
The Board of Directors held four meetings in 1996. Six of the eight
Directors, Messrs. Shoup, Neuenschwander, Cushing, Hamilton, Mosle, and Larson,
attended all meetings of the Board and Committees of which they are members
during the period they served on such. None of the Directors attended less than
75% of such meetings.
4
<PAGE>
EXECUTIVE OFFICERS
The following is a list of the names and ages of all the executive officers
of the Company, indicating all positions and offices with the Company held by
each such person and each such person's principal occupation or employment
during the past five years. None of the persons listed has served or is serving
as an officer as a result of any arrangement or understanding between him and
any other person pursuant to which he was selected as an officer.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES HELD AND PRINCIPAL
NAME AGE OCCUPATION OR EMPLOYMENT DURING PAST FIVE YEARS
---- --- -----------------------------------------------
<S> <C> <C>
Andrew J. Shoup, Jr. 61 President and Director of the Company since
July 1, 1991; Consultant to Pacific Enterprises
Oil Company (USA), an oil and gas exploration
and production company, September 1990-June
1991; President and Chief Operating Officer of
Pacific Enterprises Oil Company (USA), January
1989-September 1990; Chairman and Chief
Executive Officer of Sabine Corporation, an oil
and gas exploration and production company,
June 1986-January 1989.
A. Wayne Ritter 56 Vice President, Acquisitions and Production of
the Company since August 16, 1993; Vice
President in Charge of Acquisitions of the
Company, September 1991 - August 1993; Manager
of Production - Fort Worth Division of Snyder
Oil Corporation, an oil and gas exploration and
production company, September 1990 - September
1991; Manager of Business Development, Marsh
Operating Company, an oil and gas exploration
and production company, prior thereto.
Kent E. Johnson 59 Vice President of Exploration of the Company
since September 27, 1996; Regional Director of
Gulf Coast Exploration of Enserch Exploration,
an oil and gas exploration and production
company, June 1995 - August 1996; Vice
President, Exploration Development of DALEN
Resources, an oil and gas exploration and
production company, March 1994 - June 1995;
Vice President, Exploration/Land of PG&E
Resources, an oil and gas exploration and
production company, May 1989 - March 1994.
Lawrence J. Finn 52 Vice President, Finance and Chief Financial
Officer of the Company since November 1, 1993;
President of CWF Energy, Inc., August 1990 -
October 1993; Vice President, Finance and Chief
Financial Officer of Verado Energy, Inc., March
1988 - August 1990.
Allan J. Simus 62 President of The Wiser Oil Company of Canada
since August 1, 1994; President and General
Manager of LL&E Canada, Ltd., 1988 - July 1994;
President of Del Norte Resources Ltd., 1987-
1988; Executive Vice President and Director of
Onyx Petroleum Exploration Company Ltd., 1983 -
1986; General Manager of Sabine Canada Ltd.,
1974 - 1982.
</TABLE>
SECTION 16(A) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "Commission") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Such persons are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file. In 1996, one
statement of changes in beneficial ownership was filed late by Howard G.
Hamilton, a Director of the Company, relating to one transaction. In making
this disclosure, the Company has relied solely on written representations of its
Directors and executive officers and copies of the reports that they have filed
with the Commission.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company in 1994, 1995 and 1996 to its President and Chief Executive
Officer and each other executive officer of the Company whose aggregate salary
and bonus exceeded $100,000 in 1996 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------- ----------------------
AWARDS
----------------------
NAME AND PRINCIPAL NUMBER OF SECURITIES ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) UNDERLYING OPTIONS (#) COMPENSATION ($)
----------------- ---- ----------------------------- ------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Andrew J. Shoup, Jr. 1996 $265,000 $106,000 40,000 $ 8,652(1)
President and Chief 1995 265,000 49,000 0 8,589
Executive Officer 1994 255,000 0 70,000 8,100
A. Wayne Ritter 1996 163,000 48,900 30,000 5,303(1)
Vice President, 1995 155,000 29,000 0 5,046
Acquisitions and 1994 145,000 0 30,000 4,638
Production
Lawrence J. Finn 1996 142,000 35,500 20,000 4,361(1)
Vice President, Finance 1995 135,000 25,000 0 4,338
and Chief Financial Officer 1994 125,000 0 30,000 3,461
Allan J. Simus 1996 145,000 43,500 30,000 12,669(3)
President of 1995 135,000 25,000 0 12,489
The Wiser Oil Company 1994 56,250 0 10,000 3,002
of Canada(2)
</TABLE>
(1) Represents (a) matching contributions by the Company in 1996 to the
accounts of Mr. Shoup $7,950, Mr. Ritter $4,853, and Mr. Finn $4,073
under the Company's Savings Plan and (b) the dollar value of life
insurance premiums paid by the Company in 1996 for the benefit of Mr.
Shoup $702, Mr. Ritter $450, and Mr. Finn $288.
(2) Mr. Simus's date of hire was August 1, 1994. Mr. Simus is not directly
employed by the Company. All amounts reported as salary were earned by
him as President of The Wiser Oil Company of Canada, the subsidiary
through which the Company conducts its Canadian operations. All
amounts are in U.S. dollars using a .75 (Canadian to U.S.) conversion
rate.
(3) Mr. Simus's other compensation is as follows: $8,822 is the Company's
contribution to his Defined Contribution Pension Plan ("DCPP") and
$3,847 is the dollar value of life insurance premiums paid by the
Company in 1996 on two life insurance policies for his benefit.
Mr. Johnson was elected Vice President of Exploration of the Company in
September 1996. His current annual salary is $160,000.
6
<PAGE>
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options during 1996 to the Named Executive Officers.
INDIVIDUAL GRANTS (1)
---------------------
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS GRANT
SECURITIES GRANTED TO DATE
UNDERLYING EMPLOYEES EXERCISE OR PRESENT
OPTIONS IN FISCAL BASE PRICE EXPIRATION VALUE ($)
NAME GRANTED YEAR ($/SH) DATE (2)
---------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Andrew J. Shoup, Jr. 25,000 31.7% $11.250 02/19/2006 $119,000
100,000 14.875 10/10/2006 690,000
80,000 14.875 10/10/2006 552,000
A. Wayne Ritter 12,500 23.9% 11.250 02/19/2006 59,500
57,500 14.875 10/10/2006 396,750
85,000 14.875 10/10/2006 586,500
Lawrence J. Finn 10,000 9.3% 11.250 02/19/2006 47,600
34,000 14.875 10/10/2006 234,600
16,000 14.875 10/10/2006 110,400
Allan J. Simus 10,000 13.9% 11.250 02/19/2006 47,600
60,000 14.875 10/10/2006 414,000
20,000 14.875 10/10/2006 138,000
</TABLE>
(1) All options granted to Named Executive Officers during fiscal year 1996
were granted under the Company's 1991 Stock Incentive Plan. Options
granted on February 20, 1996 become exercisable in cumulative annual
increments of twenty-five percent commencing on the first anniversary of
the grant. Options granted on October 11, 1996 become fully exercisable on
April 10, 1997. All options have ten-year terms and were granted with an
exercise price equal to the fair market value of the Company's Common Stock
on the date of grant. The third option listed for each Named Executive
Officer in the table is subject to stockholder approval of the 1991 Stock
Incentive Plan, as amended, at the Annual Meeting. See "Proposal to
Approve and Ratify the 1991 Stock Incentive Plan, as Amended".
(2) These amounts represent the value of the grants based upon the Black-
Scholes option pricing model. The valuation assumes exercise at the end of
a ten-year option term and the following data:
<TABLE>
<CAPTION>
Grant Date
----------------------
<S> <C> <C>
02/20/96 10/11/96
Risk free interest rate 6.34% 6.86%
Dividend yield 1.07% 0.81%
Volatility (three year weekly close) 21.16% 21.38%
</TABLE>
7
<PAGE>
The following table provides information, with respect to each Named
Executive Officer, concerning unexercised options held as of the end of the
fiscal year ending December 31, 1996. No Named Executive Officer exercised any
options during 1996.
9<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Andrew J. Shoup, Jr. 57,500 242,500 $260,313 $1,261,875
A. Wayne Ritter 27,000 173,000 84,875 840,438
Lawrence J. Finn 21,000 79,000 76,500 403,500
Allan J. Simus 4,000 96,000 11,500 492,250
</TABLE>
(1) The closing price for the Company's Common Stock as reported by the New
York Stock Exchange on December 31, 1996 was $19.75. Value is calculated
on the basis of the difference between $19.75 and the option price of an
"in-the-money" option multiplied by the number of shares of Common Stock
underlying the option.
PENSION BENEFITS
Only employees working in the United States are covered by the following
plan.
Each Named Executive Officer, other than Mr. Simus, is covered by the
Company's Retirement Income Plan (the "Qualified Plan"), a non-contributory
defined benefit pension plan under which retirement benefits are provided to
substantially all non-union employees of the Company. The Qualified Plan
provides a monthly benefit upon retirement equal to 2 percent of the employee's
monthly earnings (computed generally on the basis of the participant's average
monthly earnings for the 60 highest paid consecutive months during the 120
consecutive months immediately preceding the employee's retirement date) for
each year of credited service up to 25 years, plus 1 percent of the employee's
average monthly earnings (as so computed) for each year of credited service in
excess of 25 years. Offset against such amount is an amount equal to 0.5
percent of the lesser of the participant's final average earnings per month or
1/12th of covered compensation (as such terms are used in the calculation of
social security benefits) multiplied by years of credited service to a maximum
of 35 years. If it would result in a greater payment of monthly benefits than
the above calculation, an employee who was a participant in the plan as of
December 31, 1988 would receive his monthly retirement income as calculated
under the terms of the plan as it existed on such date, using average monthly
earnings and credited service as of such date. Pension benefits are calculated
on the basis of basic monthly compensation, excluding bonuses and all other
forms of special or extra compensation. The Qualified Plan provides for normal
retirement at 62 years of age but allows for early retirement beginning at age
55, in which case the extent to which benefits are reduced is based on when the
participant elects to receive benefits commencing on or after age 55 and prior
to age 62. No reduction is made in the benefit if it commences on or after the
attainment of age 62.
Certain executives of the Company also participate in a supplemental
retirement plan. The Wiser Oil Company Retirement Restoration Plan (the
"Restoration Plan") and the proposed Wiser Oil Company Retirement Restoration
Trust were approved by the Board of Directors in November 1994.
The Restoration Plan is a nonqualified deferred compensation plan. The
Restoration Plan participants are the Chief Executive Officer and any other
employee (i) who is a participant in the Qualified Plan, (ii) whose annual
salary is at least $150,000, and (iii) who has been designated by the Chief
Executive Officer to participate in the Plan. For 1996, Mr. Shoup and Mr.
Ritter were the only Named Executive Officers who were participants in the
Restoration Plan.
8
<PAGE>
In order to comply with the qualification requirements of the Internal
Revenue Code, the maximum annual retirement benefit that may be accrued and that
the Company can fund, and the maximum compensation that may be used in
determining future benefit accruals, under the Qualified Plan are subject to
certain limitations. The Restoration Plan provides for the payment of benefits
equal to the amount by which (i) the value of the benefits that would have been
payable to a participant under the Qualified Plan if such benefits were not
limited by such maximum compensation and maximum benefit limitations exceed (ii)
the value of the benefits actually payable under the Qualified Plan.
Benefits normally are paid concurrently with the payment of benefits under
the Qualified Plan. However, if a participant's employment terminates (other
than by reason of death, retirement or disability) within two years following a
Change of Control (as defined in the Plan), the value of such participant's
Restoration Plan benefits will be distributed to such participant in a single
lump sum within 60 days following such termination of employment.
Restoration Plan benefits are payable from the general assets of the
Company or from a so-called rabbi trust (the assets of which remain available to
the general creditors of the Company in the event of the Company's insolvency)
established by the Company. The rabbi trust is funded at the discretion of the
Company and may be revoked by the Company prior to a Change of Control. Upon a
Change of Control, the rabbi trust becomes irrevocable and the Company is
required to contribute to the trust an amount sufficient to cover the
Restoration Plan benefits that have accrued as of the date of the Change of
Control. To date, the Company has elected not to form a trust.
The following table presents estimated combined annual retirement benefits
payable under the Qualified Plan and the Restoration Plan upon retirement at age
65 for the average annual compensation and for the years of credited service
indicated and assumes no election of any available survivor option. The
estimated benefits shown are in addition to Social Security benefits. The full
years of credited service as of December 31, 1996 for the Named Executive
Officers were as follows: Mr. Shoup, 5 years; Mr. Ritter, 5 years; and Mr. Finn,
3 years. Mr. Finn is not currently a participant in the Restoration Plan.
ANNUAL RETIREMENT BENEFITS FOR YEARS OF CREDITED SERVICE
<TABLE>
<CAPTION>
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $18,535 $27,802 $ 37,070 $ 46,337 $ 50,604 $ 54,872
125,000 23,535 35,302 47,070 58,837 64,354 69,872
150,000 28,535 42,802 57,070 71,337 78,104 84,872
175,000 33,535 50,302 67,070 83,837 91,854 99,872
200,000 38,535 57,802 77,070 96,337 105,604 114,872
225,000 43,535 65,302 87,070 108,837 119,354 129,872
250,000 48,535 72,802 97,070 121,337 133,104 144,872
275,000 53,535 80,302 107,070 133,837 146,854 159,872
300,000 58,535 87,802 117,070 146,337 160,604 174,872
325,000 63,535 95,302 127,070 158,837 174,354 189,872
</TABLE>
Canadian employees do not participate in the Qualified Plan or the
Restoration Plan and, therefore, Mr. Simus is not a participant. The Wiser Oil
Company of Canada does not maintain a defined-benefit pension plan.
DIRECTORS' COMPENSATION
For 1996, Directors who are not employees of the Company or a subsidiary
received an annual fee (the "Annual Retainer") of $6,000, which was paid in
January 1997, and a fee of $500 for each meeting of the Board or a Committee
attended. On February 25, 1997, the Board approved an increase in the Annual
Retainer payable to non-employee Directors to $12,000, which will be payable in
quarterly installments of $3,000 each, and an increase in the meeting fee to
$1,000 for each meeting attended, beginning in 1997. The Board also authorized
an additional annual fee of $1,000 payable to each Chairman of a Committee of
the Board. Directors who are employees of the Company or a subsidiary do not
receive a retainer or fee for serving on the Board or Committees, for attending
meetings of the Board or Committees or for serving as Chairman of a Committee.
In 1996, the Company adopted an Equity Compensation Plan for Non-Employee
Directors of the Company (the "Equity Plan"), which allows non-employee
Directors to make irrevocable elections prior to the beginning of each plan year
to receive their Annual Retainers (i) all in cash, (ii) all in Phantom Shares or
(iii) 50% in cash and 50% in Phantom Shares, and to defer payment of taxes on
the equity portion to a subsequent date. A "Phantom Share" is an unsecured,
unfunded and nontransferable right to receive from the Company one share of
Common Stock, which right will automatically be exercised upon the earlier to
occur of (i) the termination of the holder's service as a Director for any
reason or (ii) a "Change in Control" of the Company, as defined in the Equity
Plan. Non-employee Directors have no right to convert Phantom Shares into
Common Stock prior to such time.
9
<PAGE>
The number of Phantom Shares that may be acquired by a non-employee Director on
any Annual Retainer payment date is determined by dividing the amount of the
Annual Retainer, or portion thereof, that the Director has elected to receive in
Phantom Shares by the fair market value of a share of Common Stock on the
payment date of the Annual Retainer, rounded downward to the nearest whole
number. Phantom Shares are fully vested upon issuance. Holders of Phantom
Shares receive payments of cash or other property equivalent to dividends paid
on outstanding shares of Common Stock, but have no voting or other rights of
stockholders with respect to the Phantom Shares. A maximum of 25,000 shares of
Common Stock may be issued upon the conversion of Phantom Shares under the
Equity Plan. In 1996, Mr. Mosle and Mr. Larson each elected to receive all of
his $6,000 Annual Retainer in Phantom Shares and were each credited with 290
Phantom Shares under the Equity Plan.
The 1991 Non-Employee Directors' Stock Option Plan (the "Directors' Plan")
is intended to enhance the mutuality of interests between the Directors and
stockholders of the Company and to assist the Company in attracting and
retaining able Directors. Under the Directors' Plan, as in effect for 1996 and
prior years, on the first business day following each Annual Meeting of
Stockholders, each Director who is not an employee of the Company or a
subsidiary was granted a nonstatutory stock option to purchase 750 shares of
Common Stock at an option price equal to the fair market value of the Common
Stock on the date the option was granted. The options become exercisable six
months from the date of grant and expire five years from the date of grant.
Options which had not yet become exercisable were forfeited if the grantee
ceased to be a Director for reasons other than death. Subject to certain
limitations, unexpired vested options generally could be exercised for two years
following death of a Director, for 90 days following resignation or removal for
cause and for one year following any other termination of service as a Director.
The total number of shares which may be issued under the Directors' Plan is
limited to 65,000 shares of Common Stock. Pursuant to the terms of the
Directors' Plan, on May 21, 1996, an option to purchase 750 shares of Common
Stock at an exercise price of $13.38 per share was granted to each person then
serving as a non-employee Director.
On February 25, 1997, the Board of Directors amended the Directors' Plan
(i) to increase the number of shares covered by annual option grants, beginning
in 1997, from 750 to 1,500 shares, (ii) to provide for the grant of an option to
purchase 5,000 shares of Common Stock to each new non-employee Director on the
date of his or her first election to the Board, (iii) to provide for the grant,
on the date of the 1997 Annual Meeting, to each current non-employee director of
an option to purchase a number of shares of Common Stock equal to 5,000 minus
the number of shares covered by all options previously granted to the Director
under the Directors' Plan, and (iv) to provide that new options granted under
the Directors' Plan will expire ten years after the date of grant, rather than
five. The Board also amended the provisions of the Director's Plan relating to
the exercise of options following termination of service to provide that, upon
termination of service as a Director for any reason other than removal for
cause, all outstanding options previously granted to the non-employee Director
under the Directors' Plan will become immediately exercisable in full and will
remain exercisable until the earlier to occur of the original expiration date of
the option or three years from the date of termination, provided that if a
Director voluntarily retires or resigns the post-termination exercise period may
not exceed the duration of such Director's period of service as a Director. The
provision relating to removal for cause was not amended and continues to provide
that, upon such a removal, all unvested options will terminate and all unexpired
vested options will be exercisable for a period of 90 days after removal.
John C. Wright retired as an executive officer of the Company on July 1,
1991. Under his deferred compensation contract with the Company, in addition to
the Qualified Plan benefits described above, Mr. Wright is entitled to receive
annually $17,000, payable quarterly for a ten-year period beginning on July 1,
1991. Pursuant to the contract, the Company is obligated to continue to make
such payments in the event of the death or disability of Mr. Wright. Mr. Wright
was a Director of the Company from 1960 until his retirement from the Board in
July 1996.
Upon Mr. Wright's retirement as an executive officer, the Company entered
into a Retirement and Consulting Agreement with Mr. Wright. That agreement
provides for the following retirement benefits to Mr. Wright: (i) an additional
$5,000 per year in compensation payable quarterly until July 1, 2001, under
terms similar to those of the above-stated deferred compensation contract; (ii)
an agreement that the Company will continue to provide health care coverage for
Mr. Wright and his spouse by paying health care premiums until Mr. Wright's
spouse attains age 65 which has transpired, therefore health care coverage is no
longer required by the Company and (iii) a grant of a nonstatutory stock option
under the 1991 Stock Incentive Plan which has subsequently expired. The
agreement also provided that Mr. Wright be employed as an independent consultant
to the Company for a period of one year commencing on July 2, 1991. This
consulting arrangement was extended for an additional one-year period beginning
on July 2, 1992. As compensation for such services, Mr. Wright received an
annual retainer of $75,000 payable in monthly installments during the two years
covered by such consulting agreement. Mr. Wright has been and will continue to
be provided with office space, part-time secretarial assistance and other
facilities and service in Sistersville, West Virginia until July 1999.
10
<PAGE>
EMPLOYMENT AGREEMENTS
On July 1, 1991, the Company entered into an employment agreement with
Andrew J. Shoup, Jr. The employment agreement, as amended with respect to 1996
and subsequent years, provides that Mr. Shoup will act as President and Chief
Executive Officer of the Company through the close of business July 1, 1997
unless extended by subsequent agreement for an annual salary of not less than
$200,000 per year. In addition to such annual salary, which may be increased
from time to time by the Board, Mr. Shoup is entitled to be paid "additional
incentive compensation" in such an amount, and based on the accomplishment of
such performance objectives by the Company, as may be determined by the
Compensation Committee for each year. Mr. Shoup was also awarded 5,000
restricted shares and granted nonstatutory options to purchase 10,000 shares of
Common Stock, vesting over a four-year period beginning June 30, 1994, under the
Company's 1991 Stock Incentive Plan upon execution of the employment agreement.
The agreement also provides that Mr. Shoup will be covered by such other
employee benefit plans as are applicable to executive employees of the Company.
A. Wayne Ritter entered into an employment agreement with the Company
effective January 24, 1994. The employment agreement, which was amended
effective March 22, 1996, provides that Mr. Ritter will act as Vice President,
Acquisitions and Production of the Company through the close of business March
1, 1998 unless extended by subsequent agreement for an annual salary not less
than his current salary level. The agreement also provides that Mr. Ritter will
be covered by such employee benefit plans as are applicable to executive
employees of the Company.
Kent E. Johnson entered into an employment agreement with the Company
effective September 30, 1996. The employment agreement provides that Mr.
Johnson will act as Vice President of Exploration of the Company through the
close of business September 29, 1998 unless extended by subsequent agreement for
an annual salary not less than his current salary level. The agreement also
provides that Mr. Johnson will be covered by such employee benefit plans as are
applicable to executive employees of the Company.
Lawrence J. Finn entered into an employment agreement with the Company
effective November 1, 1993. The employment agreement, which was amended
effective March 22, 1996, provides that Mr. Finn will act as Vice President,
Finance and Chief Financial Officer of the Company through the close of business
March 1, 1998 unless extended by subsequent agreement for an annual salary not
less than his current salary level. The agreement also provides that Mr. Finn
will be covered by such employee benefit plans as are applicable to executive
employees of the Company.
Allan J. Simus entered into an employment agreement with The Wiser Oil
Company of Canada effective August 1, 1994. The employment agreement, which was
amended effective March 22, 1996, provides that Mr. Simus will act as President
of The Wiser Oil Company of Canada through the close of business March 1, 1998
unless extended by subsequent agreement for an annual salary not less than his
current salary level. Mr. Simus participates in the Registered Retirement
Savings Plan ("RRSP") provided by The Wiser Oil Company of Canada. This plan is
comparable to The Wiser Oil Company's 401-K Plan. The Wiser Oil Company of
Canada makes contributions to Mr. Simus's Defined Contribution Pension Plan
("DCPP").
During the term of the employment agreements the employment of Messrs.
Shoup, Ritter, Johnson, Finn and Simus can be terminated by the Company only for
illness, disability or death, or for cause. Upon any termination of an
employment agreement, each officer is bound by the terms of his agreement with
respect to the guarding of certain confidential information of the Company and
its subsidiary and an agreement not to solicit employees of the Company and its
subsidiary.
The employment agreements with Messrs. Shoup, Ritter, Johnson, Finn and
Simus provide that if employment is terminated by the Company or the employee
for any reason other than illness, disability or death within 12 months of a
"Change in Control" of the Company, the employee will be paid an amount equal to
one year's base salary at the time of his termination plus the value of one
year's worth of benefits provided to him as an employee during the one year
preceding his termination. A "Change in Control" generally means the occurrence
of any of the following events: (i) an acquisition by any person of 25% of the
voting power of the Company's Common Stock, (ii) a tender offer to buy
securities of at least 50% of the voting stock or the purchase of any such
shares pursuant to a tender offer, (iii) an agreement or plan is approved by
stockholders providing for the Company to be merged, consolidated or otherwise
combined with another company wherein the former stockholders of the Company
will own less than the majority of the voting power of the surviving
corporation, (iv) the approval by stockholders of a liquidation of all or
substantially all the assets of the Company or a distribution to stockholders of
30% in value of the Company's assets or (v) if at any time less than 60% of the
members of the Board are individuals who either were Directors on the effective
date of the employment agreement or individuals whose election or nomination for
election was approved by a vote of at least two-thirds of the Directors still in
office who were Directors on the effective date of such agreement or who were so
approved. The employment agreement with Mr. Simus contains similar provisions
relating to a Change in Control of the Company or The Wiser Oil Company of
Canada.
11
<PAGE>
On February 25, 1997, the Board of Directors authorized the Company to
enter into an amendment to each of the foregoing employment agreements (i) to
increase, effective April 1, 1997, the amount payable upon termination of
employment within 12 months of a "Change in Control," as described in the
preceding paragraph, to three years' base salary at the time of termination and
add a "Gross-Up Payment" for purposes of making an employee whole in the event
excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended
(including penalties or interest thereon), is imposed with respect to any
payment or distribution made by the Company to or for the benefit of the
employee under the employment agreement or otherwise, and (ii) to extend the
term of all such agreements to March 31, 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation for the executive officers of the Company is administered by
the Compensation Committee of the Board of Directors, which consisted of four
independent directors during 1996. Mr. Mosle is Chairman of the Committee. The
Committee oversees all compensation arrangements attributable to the executive
officers.
The following is the Compensation Committee's report on 1996 executive
compensation practices for the executive officers of the Company.
EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation package consists of a base salary,
annual incentive bonuses, and stock options.
The Company is committed to providing competitive annual cash compensation
to its management. Base salaries are positioned near the median of competitive
practices to enhance retention and attraction of skilled and talented
management.
Annual incentive bonuses as a percent of salary are paid based upon an
evaluation of performance using criteria set at the beginning of each year.
Objectives for the bonus plan provide incentives focusing management on
achievement of shorter-term goals that serve as milestones for the ultimate
attainment of the Company's strategic goals, providing appropriate rewards for
accomplishment of such goals, and reinforcing a pay-for-performance philosophy
by linking a portion of management pay to well-defined annual performance
objectives that are consistent with the Company's strategic plans and value
creation imperatives.
A long-term equity incentive award is provided to management in the form of
stock options or restricted stock. The value of the grants is linked to the
achievement of sustained value creation and consistent operating efficiencies.
An important objective of the long-term equity incentive is to provide
management with opportunities to acquire and retain Company stock. The Company
encourages stock ownership to ensure that top management's interests are closely
aligned with the interests of existing shareholders.
RELATIONSHIP OF COMPENSATION TO PERFORMANCE UNDER COMPENSATION PLANS
The Company is focused on a growth strategy concentrating on risk-managed
exploration, strategic acquisitions of proved reserves, and aggressive
utilization of its assets. The Company's executive pay strategy is designed to
support this business direction through competitive base salaries, annual
incentive bonuses, and stock option awards with comparable incremental vesting
requirements, thereby creating a substantial focus on value creation for
shareholders.
The Company's base salary objective is to position all members of
management near their target midpoints over time. Target midpoints are
positioned to approximate the median of competitive practices. In February
1996, the Committee reviewed and approved base salary increases for certain
executive officers that were implemented in March 1996. The Committee reviewed
industry standards, increases in cost of living and the Company's goal to
approximate the median of competitive practices with respect to base salaries.
The Company's policy is to pay executive officers a base salary with performance
rewarded by a cash incentive bonus and stock option or restricted stock awards
after a review of all indices of performance and the Chief Executive Officer's
evaluation of individual performance contributions during the year.
Annual incentive bonuses for 1996 were awarded by the Committee to the
executive officers on February 24, 1997. Bonuses are awarded based on both the
overall performance results of the Company relative to expectations and on
individual overall contributions to 1996 results. Operating cash flow, reserve
replacement and increases in reserve values are primary performance measures
providing the basis for determination of the size of incentive awards. Each
year the Committee proposes threshold, target and distinguished performance
goals for each measure. The process is designed to obtain achievement of
performance goals based on measures for awards to be earned. Performance
measures and goals are re-evaluated annually, and in making an award, the
Committee may reflect other relevant performance results as identified in the
following paragraph.
12
<PAGE>
Due to the effects of uncontrollable factors in the oil and gas industry,
such as oil and gas prices, an evaluation of Company performance based on only
one or two measures may not provide a complete picture of overall Company
performance. As a consequence, the Committee annually looks at other important
indicators of performance, such as reserve growth, lease operating expenses,
finding costs, administrative expenses, and returns to shareholders. Based on
the results of these assessments and an evaluation by the Committee of
individual executive performance, the Committee may adjust awards to reflect
individual performance.
Long-term incentives are an essential component of the Company's pay
package for the top executives most accountable for the Company's strategic
direction. At this time, stock options are the Company's primary long-term
incentive reward vehicle. To reflect pay strategy objectives and competitive
practices, the Committee has approved stock option grant ranges for use in
determining awards. The grant ranges assume that stock options will be awarded
annually, with an option price equal to the market value on the date of grant,
and with incremental vesting restrictions.
In addition to external considerations such as competitive practices, the
Committee considers a number of factors in determining stock option awards,
including Company success in achieving annual and strategic goals, assessment of
executive contributions to the Company, the level of the executive's commitment
to owning Company stock, and the expected future role and contribution of the
executive to the overall success of the Company.
1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
On February 19, 1996, the Committee determined that Mr. Shoup's salary be
continued at its current level of $265,000 per annum. The Committee considered
industry standards and the Company's goal to approximate the median of
competitive practices with respect to base salaries. The Company's policy is to
pay executive officers a base salary increased primarily as a matter of cost of
living, with performance rewarded by incentive bonus and stock option or
restricted stock awards after a review of all indices of performance, including
the Company's substantial progress to date in becoming more active in
exploration, acquisition and development activities, the Company's performance
relative to expectations, and a desired pay target designed to reflect
competitive practices.
On February 24, 1997, the Committee awarded Mr. Shoup an annual incentive
bonus for 1996 of $106,000. In considering this award, the Committee reviewed
specific operational factors such as operating cash flow, reserve replacement
and increases in reserve values. The Committee also considered other important
performance considerations such as finding costs, lifting costs, administrative
expenses and returns to shareholders.
IMPACT OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1993 (OBRA)
The passage of OBRA has created a limitation on the deductibility of
executive officer pay in excess of $1 million for any individual. The Committee
does not foresee current compensation arrangements generating non-performance-
based pay that exceeds this level, and it therefore has no immediate plans to
modify the Company's compensation arrangements, except as described herein. See
"Proposal to Approve and Ratify the 1991 Stock Incentive Plan, as Amended".
By the Compensation Committee:
Jon L. Mosle, Jr., Chairman
Howard G. Hamilton
C. Frayer Kimball, III
A. W. Schenck, III
13
<PAGE>
The following graph compares yearly percentage change in the cumulative
total return on the Company's Common Stock during the five fiscal years ended
December 31, 1996, with the cumulative total return of the broad market index,
which was an index of companies on the S&P 500 Index, and an index of peer
companies selected by the Company.
STOCK PERFORMANCE GRAPH
GRAPH APPEARS HERE
DECEMBER 31
<TABLE>
<CAPTION>
COMPANY 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
The Wiser Oil Company 100 104.59 136.41 113.90 98.78 163.96
Peer Group 100 102.09 94.41 90.14 105.74 149.55
Broad Market 100 107.64 118.50 120.06 165.18 203.11
</TABLE>
Companies in the peer group are as follows: American Exploration Company,
Tom Brown, Inc., Equity Oil Company, Forest Oil Corporation, Plains Resources,
Incorporated, Presidio Oil Company, Swift Energy Company and XCL Ltd., formerly
Exploration Company of Louisiana, Inc. Presidio Oil Company was acquired by a
third party in December 1996. The Stock Performance Graph and calculations were
provided to the Company by Media General Financial Services. The graph and
calculations assume $100 invested at the closing sale price on December 31,
1991, and reinvestment of dividends.
14
<PAGE>
PROPOSAL TO APPROVE AND RATIFY
THE 1991 STOCK INCENTIVE PLAN, AS AMENDED
GENERAL
The 1991 Stock Incentive Plan, as amended (the "Plan"), was originally
adopted by the Board of Directors of the Company in 1991 and approved by
stockholders at the 1991 Annual Meeting of stockholders. The Board recently
amended the Plan, subject to stockholder approval at the 1997 Annual Meeting, to
(i) increase from 600,000 to 1,200,000 the aggregate number of shares of Common
Stock that may be issued or delivered pursuant to options granted under the Plan
or as restricted shares awarded under the Plan, and (ii) make certain changes to
the Plan to preserve for federal income tax purposes the deductibility of
compensation paid under the Plan in the form of stock options (collectively, the
"Plan Amendments"). The affirmative vote of the holders of a majority of the
shares of Common Stock present or represented and entitled to vote at the
Annual Meeting is required to approve the proposal to approve and ratify the
Plan as amended. Although both abstentions and broker non-votes are counted for
purposes of determining the presence of a quorum at the Annual Meeting, shares
representing broker non-votes will not be considered entitled to vote on the
proposal to approve and ratify the Plan as amended. Therefore, abstentions will
have the same effect as votes against the proposal, while broker non-votes will
not be counted and will have no effect on the outcome of the vote on the
proposal. If the Plan as amended is not approved by the requisite stockholder
vote, the Plan shall continue in force without giving effect to the Plan
Amendments.
The purposes of the Plan are to encourage eligible employees of the Company
and its subsidiaries to increase their efforts to make the Company and each
subsidiary more successful, to provide an additional inducement for such
employees to remain with the Company or a subsidiary, to reward such employees
by providing an opportunity to acquire shares of Common Stock on favorable terms
and to provide a means through which the Company may attract able persons to
enter the employ of the Company or one of its subsidiaries. The eligible
employees are those employees of the Company or any subsidiary who share
responsibility for the management, growth or protection of the business of the
Company or any subsidiary. As of March 1, 1997, outstanding options and
restricted shares granted or awarded under the Plan were held by 15 such
employees.
THE PLAN AMENDMENTS
INCREASE IN NUMBER OF SHARES AVAILABLE UNDER THE PLAN. As of March 1,
1997, the Plan had no Shares of Common Stock available for grants of options or
awards of restricted shares. The purpose of increasing the number of shares of
Common Stock available under the Plan by 600,000 shares in the aggregate is to
permit the continued use of a long-term equity component in the Company's
compensation program. If the Plan as amended is approved and ratified by
stockholders, the employees of the Company and its subsidiaries eligible to
participate therein, including the Company's executive officers, could receive
more benefits under the Plan than are currently available to them.
LIMITATION ON NUMBER OF SHARES COVERED BY PLAN GRANTS; ADMINISTRATION BY
OUTSIDE DIRECTORS. Pursuant to Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), the amount of compensation payments to certain
highly compensated officers deductible from income for federal income tax
purposes is limited to $1 million per person per year. Compensation recognized
by employees in connection with shares of Common Stock issued or delivered
pursuant to options granted under the Plan may, however, continue to be exempt
from the $1 million limitation if certain requirements are satisfied, including
the requirements that (i) the Plan state the maximum number of shares for which
options may be granted during a specified period to any employee and (ii) the
Plan be administered by a committee comprised solely of two or more "outside
directors" within the meaning of the regulations promulgated under the Code.
Currently, the Plan does not limit the total number of shares of Common
Stock for which options may be granted to a person under the Plan. In addition,
the Plan is administered by a committee of "non-employee directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), who are not necessarily "outside directors" within the meaning
of Section 162(m) and regulations promulgated under the Code. In order to
ensure the deductibility of compensation recognized by employees with respect to
grants of options under the Plan, the Board of Directors of the Company has
proposed to amend the Plan to (i) limit to 225,000 the total number of shares of
Common Stock that may be made subject to grants of options under the Plan to any
one person during any calendar year, and (ii) provide for administration of the
Plan by a committee comprised solely of outside directors who are also non-
employee directors.
15
<PAGE>
DESCRIPTION OF THE PLAN
The material features of the Plan, without giving effect to the Plan
Amendments, are described below:
GENERAL. The Plan provides for (i) the grant of incentive stock options
under Section 422 of the Code, (ii) the grant of nonstatutory stock options and
(iii) restricted share awards. The Plan provides that an aggregate of 600,000
shares of Common Stock may be issued or delivered upon exercise of stock options
or pursuant to restricted share awards and that no stock options may be granted
and no restricted shares may be awarded subsequent to June 30, 2001. Authorized
but unissued or reacquired shares may be issued or delivered pursuant to the
Plan.
In the event that any outstanding stock option is cancelled by mutual
consent or terminates or expires for any reason without having been exercised in
full, the shares of Common Stock not purchased under the stock option are again
available for purposes of the Plan. If any shares of Common Stock are forfeited
to the Company pursuant to the restrictions applicable to restricted shares
awarded under the Plan, the number of shares so forfeited are again available
for purposes of the Plan. The Plan also contains antidilution provisions which
provide in certain events for proportionate adjustments in the number of shares
of Common Stock subject to, and the exercise prices of, outstanding options and
the number of shares of Common Stock which may be offered under the Plan.
ADMINISTRATION. The Plan is administered by the Compensation Committee of
the Board of Directors (see "Election of Directors--Board of Directors and its
Committees" above). None of the members of the Compensation Committee is
eligible to participate in the Plan and each member is a "non-employee director"
within the meaning of Rule 16b-3 adopted under the Exchange Act.
Subject to the provisions of the Plan, the Compensation Committee has full
and final authority, in its discretion, to grant incentive stock options or
nonstatutory stock options and to make restricted share awards under the Plan
and to determine the employees to whom each grant or award is made and the
number of shares covered thereby. In determining the eligibility of any
employee, as well as in determining the number of shares covered by each grant
or award, the Compensation Committee considers the position and responsibilities
of the employee being considered, the nature and value to the Company or a
subsidiary of his or her services, his or her present and/or potential
contribution to the success of the Company or a subsidiary and such other
factors as the Compensation Committee may deem relevant.
The Compensation Committee also has the power to interpret the Plan and to
prescribe such rules, regulations and procedures in connection with the
operation of the Plan as it deems necessary and advisable in its administration
of the Plan.
TERMS OF STOCK OPTIONS. The option price for each stock option may not be
less than 100% of the fair market value (as defined) of the Common Stock on the
date of grant of the stock option except that in the case of an incentive stock
option granted to an employee who owns more than 10% of the total combined
voting power of all classes of stock of the Company or any subsidiary (a "Ten
Percent Employee"), the option price may not be less than 110% of such fair
market value. As of March 3, 1997, the closing sales price of a share of Common
Stock of the Company as reported on the New York Stock Exchange ("NYSE") was
$18.75.
No stock option is exercisable during the first six months of its term
except that this limitation does not apply if the optionee dies during the six-
month period after grant or upon the occurrence of one or more of the events
described under "Additional Rights in Certain Events" below. No stock option
may be exercised after the expiration of ten years from the date of grant (five
years in the case of an incentive stock option granted to a Ten Percent
Employee). An exercisable stock option may be exercised in whole or in part.
Otherwise, stock options may be exercised at such time, in such amounts and
subject to such restrictions as are determined in its discretion by the
Compensation Committee.
The option price for each stock option is payable in full in cash at the
time of exercise; however, in lieu of cash the person exercising the stock
option may, if authorized by the Compensation Committee at the time of grant in
the case of an incentive stock option or at any time in the case of a
nonstatutory stock option, pay the option price in whole or in part by
delivering to the Company shares of Common Stock having a fair market value on
the date of exercise of the stock option equal to the option price for the
shares being purchased, except that any portion of the option price representing
a fraction of a share must be paid in cash and no shares of Common Stock which
have been held less than one year may be delivered in payment of the option
price.
16
<PAGE>
The aggregate fair market value (determined as of the time the incentive
stock options are granted) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by an employee during
any calendar year may not exceed $100,000. If the date on which any incentive
stock options may first be exercised would be accelerated pursuant to any
provision of the Plan or any stock option agreement, or amendment thereto, and
the acceleration of such exercise date would result in a violation of this
$100,000 restriction, then, notwithstanding any such provision, but subject to
the authorization provided for in the following sentence, the exercise date of
such incentive stock options will be accelerated only to the extent, if any,
that does not result in a violation of the $100,000 restriction, and in such
event the exercise date of the incentive stock options with the lowest option
price would be accelerated first. The Compensation Committee may, in its
discretion, authorize the acceleration of the exercise date of one or more
incentive stock options even if such acceleration would violate the $100,000
restriction and one or more incentive stock options would be converted in whole
or in part to nonstatutory stock options.
Options granted under the Plan terminate upon termination of the optionee's
employment, except that the vested portion of options may continue to be
exercisable during a specified grace period following termination of employment
in certain circumstances.
No stock option granted under the Plan is transferable other than by will
or by the laws of descent and distribution, and a stock option may be exercised
during an optionee's lifetime only by the optionee.
RESTRICTED SHARES. Restricted share awards are subject to such
restrictions (including restrictions on the right of the awardee to sell,
assign, transfer or encumber the shares awarded while such shares are subject to
restrictions) as the Compensation Committee may impose thereon and are subject
to forfeiture to the extent events (which may, in the discretion of the
Compensation Committee, include termination of employment and/or performance-
based events) specified by the Compensation Committee occur prior to the time
the restrictions lapse.
Each restricted share award must be confirmed by a restricted share
agreement between the Company and the awardee, which sets forth the number of
restricted shares awarded, the restrictions imposed thereon, the duration of
such restrictions, the events the occurrence of which would cause a forfeiture
of the restricted shares and such other terms and conditions as the Compensation
Committee in its discretion deems appropriate. If restricted shares are awarded
to an officer or director as defined for purposes of Rule 16b-3 under the
Exchange Act or any successor rule, the restricted share agreement will provide
that the restricted shares subject to such agreement may not be sold, assigned,
transferred or encumbered until six months have elapsed from the date of the
restricted share award unless one or more events described under "Additional
Rights in Certain Events" below occurs.
Following a restricted share award and prior to the lapse of the applicable
restrictions, share certificates representing the restricted shares are held by
the Company in escrow. Upon the lapse of the applicable restrictions (and not
before such time), the share certificates representing the restricted shares are
delivered to the awardee. From the date a restricted share award is effective,
however, the awardee is a shareholder with respect to the restricted shares,
including the right to vote the restricted shares and to receive all dividends
and other distributions paid with respect to the restricted shares, subject only
to the succeeding paragraph and the restrictions imposed by the Compensation
Committee.
If a dividend or other distribution is declared upon the Common Stock
payable in shares of Common Stock, the shares of Common Stock distributed with
respect to any restricted shares held in escrow will also be held by the Company
in escrow and be subject to the same restrictions as are applicable to the
restricted shares. If the outstanding shares of Common Stock are changed into
or exchangeable for a different number or kind of shares of stock or other
securities of the Company or another company, whether through reorganization,
reclassification, recapitalization, stock split-up, combination of shares,
merger or consolidation or otherwise, such stock or other securities into which
any restricted shares held in escrow are changed or for which any restricted
shares held in escrow may be exchanged will also be held by the Company in
escrow and be subject to the same restrictions as are applicable to the
restricted shares.
17
<PAGE>
ADDITIONAL RIGHTS IN CERTAIN EVENTS. The Plan provides for acceleration of
the exercisability and extension of the expiration date of stock options, and
for lapse of the restrictions on restricted share awards, upon the occurrence of
one or more events described in Section 9 of the Plan ("Section 9 Events").
Such an event is deemed to have occurred when (i) the Company acquires actual
knowledge that any person (other than the Company, a subsidiary or any employee
benefit plan sponsored by the Company) has acquired beneficial ownership,
directly or indirectly, of securities representing 25% or more of the voting
power of the Company, (ii) a tender offer is made to acquire securities
representing 50% or more of the voting power of the Company or voting shares are
first purchased pursuant to any other tender offer, (iii) at any time less than
60% of the members of the Board of Directors are persons who were either
directors on the effective date of the Plan or individuals whose election or
nomination for election was approved by a vote of at least two-thirds of the
directors then still in office who were directors on the effective date of the
Plan or who were so approved, (iv) the stockholders of the Company approve any
agreement or plan (a "Reorganization Agreement") providing for the Company to be
merged, consolidated or otherwise combined with, or for all or substantially all
its assets or stock to be acquired by, another corporation, as a consequence of
which the former stockholders of the Company will thereafter own less than a
majority of the voting power of the surviving or acquiring corporation or the
parent thereof or (v) the stockholders of the Company approve any liquidation of
all or substantially all the assets of the Company or any distribution to
security holders of assets of the Company having a value equal to 30% or more of
the total value of all the assets of the Company.
Unless the stock option agreement or an amendment thereto otherwise
provides, but subject to the $100,000 restriction described above for incentive
stock options, notwithstanding any other provision contained in the Plan, upon
the occurrence of any Section 9 Event (i) all outstanding stock options become
immediately and fully exercisable whether or not otherwise exercisable by their
terms and (ii) all stock options held by a grantee whose employment with the
Company or a subsidiary terminates within one year of any Section 9 Event for
any reason other than voluntary termination with the consent of the Company or a
subsidiary, retirement under any retirement plan of the Company or a subsidiary
or death are exercisable for a period of three months from the date of such
termination of employment, but in no event after the expiration date of the
stock option.
Unless the restricted share agreement otherwise provides, notwithstanding
any other provision contained in the Plan, upon the occurrence of any Section 9
Event prior to the scheduled lapse of all restrictions applicable to restricted
share awards under the Plan, all such restrictions lapse regardless of the
scheduled lapse of such restrictions.
POSSIBLE ANTI-TAKEOVER EFFECT. The provisions of the Plan providing for
the acceleration of the exercise date of outstanding stock options upon the
occurrence of any Section 9 Event, the extension of the period during which
outstanding stock options may be exercised upon termination of employment
following a Section 9 Event and the lapse of restrictions applicable to
restricted share awards upon the occurrence of a Section 9 Event may be
considered as having an anti-takeover effect.
GRANTS AND AWARDS TABLE
All options set forth in the following table are nonstatutory options
granted to the Named Executive Officers and specified groups in fiscal years
1991, 1992, 1993, 1994 and 1996. All such options were granted with terms of
ten years from the date of grant and exercise prices equal to the fair market
value of the Common Stock on the date of grant. No options were granted in
fiscal year 1995.
OPTIONS GRANTED UNDER
THE 1991 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
GRANT NUMBER OF PER SHARE
NAME DATE SHARES EXERCISE PRICE
- --- ----- ------ --------------
<S> <C> <C> <C>
Andrew J. Shoup, Jr. 07/01/1991 15,000 $15.19
07/01/1992 10,000 15.75
02/15/1994 70,000 18.13
02/20/1996 25,000 11.25
10/11/1996(1) 100,000 14.88
A. Wayne Ritter 01/27/1992 5,000 14.00
11/17/1992 10,000 15.06
02/15/1994 30,000 18.13
02/20/1996 12,500 11.25
10/11/1996(1) 57,500 14.88
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
GRANT NUMBER OF PER SHARE
NAME DATE SHARES EXERCISE PRICE
- --- ----- ------ --------------
<S> <C> <C> <C>
Lawrence J. Finn 11/01/1993 10,000 18.88
11/15/1994 30,000 15.00
02/20/1996 10,000 11.25
10/11/1996(1) 34,000 14.88
Allan J. Simus 08/16/1994 10,000 16.88
02/20/1996 10,000 11.25
10/11/1996(1) 60,000 14.88
All Current Executive Officers as
a Group(2) 1991 15,000 15.19
1992 25,000 14.94
1993 10,000 18.88
1994 140,000 17.03
1996(1) 349,000 14.26
All Employees Who Are Not
Executive Officers as a Group(2) 1992 6,000 15.06
1994 12,500 18.13
1996 32,000 11.25
</TABLE>
(1) Not included are option grants of 80,000, 85,000, 16,000 and 20,000 shares
to Mr. Shoup, Mr. Ritter, Mr. Finn and Mr. Simus, respectively, (261,000
shares to all current executive officers as a group) with exercise prices
of $14.88 per share made as of October 11, 1996, which are subject to
stockholder approval of the Plan as amended by the Plan Amendments.
(2) For the indicated groups, reflects all options granted to group members
during the years specified and the average exercise prices of such options.
On July 1, 1991, Mr. Shoup was awarded 5,000 restricted shares under the
Plan, which have fully vested.
In addition, in February 1997, nonstatutory options were granted to
Messrs. Shoup, Ritter, Finn, Johnson and Simus covering 40,000 shares, 30,000
shares, 20,000 shares, 7,500 shares and 30,000 shares, respectively. These
options have ten-year terms and exercise prices of $19.69, which is equal to the
fair market value of the Common Stock on the date of grant. All such options are
subject to stockholder approval at the Annual Meeting of the Plan as amended by
the Plan Amendments.
MISCELLANEOUS. The Board of Directors may alter or amend the Plan at any
time except that, without approval of the stockholders of the Company, no
alteration or amendment may (i) increase the total number of shares which may be
issued or delivered under the Plan, (ii) make any changes in the class of
employees eligible to be granted incentive stock options under the Plan or (iii)
be made if stockholder approval of the amendment is at the time required for
stock options or restricted shares under the Plan to qualify for the exemption
from Section 16(b) of the Exchange Act provided by Rule 16b-3 or by the rules of
the NYSE or any stock exchange on which the Common Stock may then be listed. In
addition, no alteration or amendment of the Plan may, without the written
consent of the holder of a stock option or restricted shares theretofore granted
or awarded under the Plan, adversely affect the rights of such holder with
respect thereto.
The Board of Directors may also terminate the Plan at any time, but
termination of the Plan would not terminate any outstanding stock options
granted under the Plan or cause a revocation or forfeiture of any restricted
share award under the Plan.
If an employee who has been granted stock options or awarded restricted
shares under the Plan engages in the operation or management of a business,
whether as owner, partner, officer, director, employee or otherwise and whether
during or after termination of employment, which is in competition with the
Company or any of its subsidiaries, the Compensation Committee may in its
discretion immediately terminate all stock options held by such person (except
when the exercise period of a stock option has been extended because one or more
of the events described under "Additional Rights in Certain Events" above has
occurred) and declare forfeited all restricted shares held by such person as to
which the restrictions have not yet lapsed.
19
<PAGE>
The Plan contains no provision prohibiting the grant of stock options by
the Compensation Committee upon the condition that outstanding stock options
granted at a higher option price be surrendered for cancellation. Certain
outstanding stock options granted under the Plan may from time to time have
option prices in excess of the market price per share of the Common Stock. It
is possible, therefore, that the Compensation Committee may grant stock options
under the Plan exercisable at the fair market value of a share of Common Stock
on the date of grant upon the condition that outstanding stock options with a
higher option price granted under the Plan be surrendered for cancellation.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary is based upon an analysis of the Code as currently in
effect, existing laws, judicial decisions, administrative rulings, regulations
and proposed regulations, all of which are subject to change. Moreover, the
following is only a summary of federal income tax consequences, and the federal
income tax consequences to employees may be either more or less favorable than
those described below depending on their particular circumstances.
INCENTIVE STOCK OPTIONS. No income will be recognized by an optionee for
federal income tax purposes upon the grant or exercise of an incentive stock
option; provided, however, that to the extent an incentive stock option is
exercised more than three months (or twelve months in the event of disability)
from the date of termination of employment for any reason other than death, such
incentive stock option will be taxed in the same manner described below for a
nonqualified stock option (rather than in the manner described herein for an
incentive stock option). The basis of shares transferred to an optionee
pursuant to the exercise of an incentive stock option is the price paid for the
shares. If the optionee holds the shares for at least one year after transfer
of the shares to the optionee and two years after the grant of the option, the
optionee will recognize capital gain or loss upon sale of the shares received
upon the exercise equal to the difference between the amount realized on the
sale and the basis of the stock. Generally, if the shares are not held for that
period, the optionee will recognize ordinary income upon disposition in an
amount equal to the excess of the fair market value of the shares on the date of
exercise over the option price of such shares, or if less (and if the
disposition is a transaction in which loss, if any, will be recognized), the
gain on disposition. Any additional gain or loss realized by the optionee upon
such disposition will be a capital gain or loss.
The excess of the fair market value of shares received upon the exercise of
an incentive stock option over the option price for the shares is an item of
adjustment for the optionee for purposes of the alternative minimum tax.
The Company is not entitled to a deduction upon the exercise of an
incentive stock option by an optionee. If the optionee disposes of the shares
receive pursuant to such exercise prior to the expiration of one year following
transfer of the shares to the optionee or two years after grant of the option,
however, the Company may, subject to the deduction limitation described below,
deduct an amount equal to the ordinary income recognized by the optionee upon
disposition of the shares at the time such income is recognized by the optionee.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under an incentive stock option, the resulting tax
consequences will depend upon whether the already owned shares of Common Stock
are "statutory option stock", and, if so, whether such statutory option stock
has been held by the optionee for the applicable holding period referred to in
Section 424(c)(3)(A) of the Code. In general, "statutory option stock" (as
defined in Section 424(c)(3)(B) of the Code) is any stock acquired through the
exercise of an incentive stock option, a qualified stock option, an option
granted pursuant to an employee stock purchase plan or a restricted shares
option, but not through the exercise of a nonqualified stock option. If the
stock is statutory option stock with respect to which the applicable holding
period has been satisfied, no income will be recognized by the optionee upon the
transfer of such stock in payment of the exercise price of an incentive stock
option. If the stock is not statutory option stock, no income will be
recognized by the optionee upon the transfer of the stock unless the stock is
not substantially vested within the meaning of the regulations under Section 83
of the Code (in which event it appears that the optionee will recognize ordinary
income upon the transfer equal to the amount by which the fair market value of
the transferred shares exceeds their basis). If the stock used to pay the
exercise price of an incentive stock option is statutory option stock with
respect to which the applicable holding period has not been satisfied, the
transfer of such stock will be a disqualifying disposition described in Section
421(b) of the Code which will result in the recognition of ordinary income by
the optionee in an amount equal to the excess of the fair market value of the
statutory option stock at the time the incentive stock option covering such
stock was exercised over the option price of such stock. Under the present
provisions of the Code, it is not clear whether all shares received upon the
exercise of an incentive stock option with already owned shares will be
statutory option stock or how the optionee's basis will be allocated among such
shares.
20
<PAGE>
NONQUALIFIED STOCK OPTIONS. No income will be recognized by an optionee
for federal income tax purposes upon the grant of a nonqualified stock option.
Upon exercise of a nonqualified stock option, the optionee will recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares on the date of exercise over the amount paid for such shares. Income
recognized upon the exercise of nonqualified stock options will be considered
compensation subject to withholding at the time the income is recognized, and,
therefore, the Company must make the necessary arrangements with the optionee to
ensure that the amount of the tax required to be withheld is available of
payment. Nonqualified stock options are designed to provide the Company with a
deduction equal to the amount of ordinary income recognized by the optionee at
the time of such recognition by the optionee, subject to the deduction
limitations described below.
The basis of shares transferred to an optionee pursuant to exercise of a
nonqualified stock option is the price paid for such shares plus an amount equal
to any income recognized by the optionee as a result of the exercise of the
option. If an optionee thereafter sells shares acquired upon exercise of a
nonqualified stock option, any amount realized over the basis of the shares will
constitute capital gain to the optionee for federal income tax purposes.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under a nonqualified stock option, the number of
shares received pursuant to the option which is equal to the number of shares
delivered in payment of the exercise price will be considered received in a
nontaxable exchange, and the fair market value of the remaining shares received
by the optionee upon such exercise will be taxable to the optionee as ordinary
income. If the already owned shares of Common Stock are not "statutory option
stock" or are statutory option stock with respect to which the applicable
holding period referred to in Section 424(c)(3)(A) of the Code has been
satisfied, the shares received pursuant to the exercise of the nonqualified
stock option will not be statutory option stock and the optionee's basis in the
number of shares delivered in payment of the exercise price will be equal to the
basis of the shares delivered in payment. The basis of the remaining shares
received upon such exercise will be equal to the fair market value of such
shares. However, if the already owned shares of Common Stock are statutory
option stock with respect to which the applicable holding period has not been
satisfied, it is not presently clear whether such exercise will be considered a
disqualifying disposition of the statutory option stock, whether the shares
received upon such exercise will be statutory option stock or how the optionee's
basis will be allocated among the shares received.
RESTRICTED SHARES. If the restrictions on an award of restricted shares
under the Plan are of a nature that such shares are both subject to a
substantial risk of forfeiture and are not freely transferable within the
meaning of Section 83 of the Code, the recipient of such award will not
recognize income for federal income tax purposes at the time of the award unless
such recipient affirmatively elects to include the fair market value of the
shares of the restricted shares on the date of the award, less any amount paid
therefor, in gross income for the year of the award pursuant to Section 83(b) of
the Code. In the absence of such an election, the recipient will be required to
include in income for federal income tax purposes in the year in which occurs
the date the shares either become freely transferable or are no longer subject
to a substantial risk of forfeiture within the meaning of Section 83 of the
Code, the fair market value of the restricted shares on such date, less any
amount paid therefor. The Company will be entitled to a deduction at the time
of income recognition to the recipient in an amount equal to the amount the
recipient is required to include in income with respect to the shares, subject
to the deduction limitations described below.
If the restrictions on an award of restricted shares under the Plan are not
of a nature that such shares are both subject to a substantial risk of
forfeiture and not freely transferable, within the meaning of Section 83 of the
Code, the recipient of such an award will recognize ordinary income for federal
income tax purposes at the time of the award in an amount equal to the fair
market value of the restricted shares on the date of the award, less any amount
paid therefor. The Company will be entitled to a deduction at such time in an
amount the recipient is required to include in income with respect to the
shares, subject to the deduction limitations described below.
LIMITATION ON THE COMPANY'S COMPENSATION DEDUCTION. Section 162(m) of the
Code limits the deduction which the Company may take for otherwise deductible
compensation payable to certain executive officers of the Company to the extent
that compensation paid to such officers for such year exceeds $1 million, unless
such compensation is performance-based, is approved by the Company's
stockholders and meets certain other criteria. Compensation attributable to a
stock option is deemed to satisfy the requirements for performance-based
compensation if (i) the grant is made by a compensation committee composed of
two or more outside directors; (ii) the plan states the maximum number of shares
with respect to which options may be granted during a specified period to any
employee; and (iii) under the terms of the option, the amount of compensation
the employee could receive is based solely on an increase in the value of the
stock after the date of the option grant. The Plan Amendments will enable
options granted under the Plan (other than nonstatutory stock options granted at
less than fair market value on the date of grant) to qualify as performance-
based compensation for purposes of Section 162(m) of the Code.
21
<PAGE>
OTHER TAX MATTERS. The exercise by an optionee of a stock option or the
lapse of restrictions on restricted shares following the occurrence of a Section
9 Event, in certain circumstances, may result in (i) a 20% federal excise tax
(in addition to federal income tax) to the optionee or the awardee on all or a
portion of the Common Stock resulting from the exercise of the stock option or
the lapse of restrictions on restricted shares and (ii) the loss of a
compensation deduction which would otherwise be allowable to the Company or one
of its subsidiaries as explained above.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND RATIFICATION
---
OF THE 1991 STOCK INCENTIVE PLAN, AS AMENDED. Proxies solicited by the Board of
Directors will be voted in favor of approval of the Plan, as amended by the Plan
Amendments, unless stockholders specify otherwise.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The only shareholder known to the Company to own beneficially more than 5%
of the Company's Common Stock outstanding as of March 1, 1997 was:
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percent of Class
---------------- ------------------ ----------------
<S> <C> <C>
Dimensional Fund Advisors Inc. 457,475(1) 5.11%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
(1) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 457,475 shares of
the Company's Common Stock as of December 31, 1996, all of which shares
are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, for all of which Dimensional serves
as investment manager. Dimensional disclaims beneficial ownership of
all such shares. Dimensional and its officers have sole voting and
investment power with respect to all such shares. The foregoing
information was obtained from Dimensional and from a Schedule 13G dated
February 5, 1997 and filed by Dimensional with the Commission.
The following table sets forth as of March 1, 1997, unless otherwise
indicated, the beneficial ownership of Common Stock of the Company by each
Director of the Company, including the current nominees, each Named Executive
Officer listed in the Summary Compensation Table included elsewhere in this
Proxy Statement and all Directors and executive officers as a group.
Under the proxy rules of the Commission, a person who directly or
indirectly has or shares voting power and/or investment power with respect to a
security is considered a beneficial owner of the security. Voting power
includes the power to vote or direct the voting of shares and investment power
includes the power to dispose or direct the disposition of shares. Shares as to
which voting power and/or investment power may be acquired within 60 days are
also considered as beneficially owned under the proxy rules.
The numbers of shares indicated as being beneficially owned by the persons
and group listed in the following table are based on information furnished to
the Company by the Directors and executive officers. Unless otherwise indicated
in the footnotes below, each individual and the members of the group have sole
voting and investment power with respect to the shares indicated as being owned
by them.
22
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned
------------------
Number of Percent
Name Shares of Class
---- ------ --------
<S> <C> <C>
DIRECTORS
John W. Cushing, III 7,181 (1)(2) *
P. D. Neuenschwander 34,410 (1)(2) *
Andrew J. Shoup, Jr. 101,250 (3) 1.12
Howard G. Hamilton 53,186 (1)(2) *
C. Frayer Kimball, III 15,333 (1)(2) *
A. W. Schenck, III 6,190 (2) *
Jon L. Mosle, Jr. 11,200 (1)(4) *
Lorne H. Larson 1,750 (5) *
NAMED EXECUTIVE OFFICERS (EXCLUDING
ANY DIRECTOR NAMED ABOVE)
AND GROUP
A. Wayne Ritter 41,625 (6) *
Kent E. Johnson 1,000 *
Lawrence J. Finn 31,500 (7) *
Allan J. Simus 10,500 (8) *
All Directors and executive officers
as a group (12 persons, including
those named above) 315,125 (1)(9) 3.45%
</TABLE>
___________________________
* Less than 1%
(1) Includes shares owned by spouses and children (Mr. Cushing, 665
shares; Mr. Neuenschwander, 600 shares; Mr. Hamilton, 42,500 shares;
Mr. Kimball, 455 shares; Mr. Mosle, 5,000; and all Directors and
executive officers as a group, 49,220 shares), as to which, in each
case, the Directors and executive officers disclaim beneficial
ownership.
(2) Includes in each case 3,750 shares covered by presently exercisable
stock options under the 1991 Non-Employee Directors' Stock Option
Plan.
(3) Includes 81,250 shares covered by presently exercisable stock options
under the 1991 Stock Incentive Plan.
(4) Includes 1,500 shares covered by presently exercisable stock options
under the 1991 Non-Employee Directors' Stock Option Plan.
(5) Includes 750 shares covered by presently exercisable stock options
under the 1991 Non-Employee Directors' Stock Option Plan.
(6) Includes 38,625 shares covered by presently exercisable stock options
under the 1991 Stock Incentive Plan.
(7) Includes 23,500 shares covered by presently exercisable stock options
under the 1991 Stock Incentive Plan.
(8) Includes 6,500 shares covered by presently exercisable stock options
under the 1991 Stock Incentive Plan.
23
<PAGE>
(9) Includes 170,875 shares covered by presently exercisable stock options
held by Directors and officers in the group.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen & Co. as independent
auditors to audit the books and accounts of the Company for the year ending
December 31, 1997. Representatives of Arthur Andersen & Co. are expected to be
present at the Annual Meeting with an opportunity to make a statement and
respond to appropriate questions addressed to them.
EXPENSES OF SOLICITATION
The costs and expenses of preparing and mailing this proxy material will be
borne by the Company. In addition to the solicitation of proxies by mail, the
officers and regular employees of the Company (who will receive no special
compensation therefor) may solicit proxies by telephone, telegraph or personal
interview. The Company will request brokerage houses and other nominees or
fiduciaries to forward copies of its proxy material to beneficial owners of
stock held in their names, and the Company will reimburse them for reasonable
out-of-pocket expenses incurred in doing so.
STOCKHOLDERS' PROPOSALS
In order for stockholder proposals to be included in the Company's Proxy
Statement for the next Annual Meeting of Stockholders, tentatively scheduled to
be held on May 18, 1998, they must be received at the principal executive
offices of The Wiser Oil Company, 8115 Preston Road, Suite 400, Dallas, Texas
75225, no later than close of business on December 12, 1997.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Annual Meeting and does not know of any matter which anyone else proposes to
present for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting, the persons named in the accompanying
proxy, or their duly constituted substitutes acting at the Annual Meeting, will
be deemed to be authorized to vote or otherwise act thereon in accordance with
their judgment.
By Order of the Board of Directors
Lawrence J. Finn,
Assistant Secretary
Dallas, Texas
April 11, 1997
A COPY OF THE COMPANY'S FORM 10-K ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS
AVAILABLE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS SOLICITED HEREBY
UPON WRITTEN REQUEST DIRECTED TO JOYCE M. MOORE, THE WISER OIL COMPANY,
8115 PRESTON ROAD, SUITE 400, DALLAS, TEXAS 75225.
24
<PAGE>
THE WISER OIL COMPANY
1991 STOCK INCENTIVE PLAN AS AMENDED AUGUST 16, 1994
AND OCTOBER 11, 1996
The purposes of the 1991 Stock Incentive Plan (the "Plan") are to
encourage eligible employees of The Wiser Oil Company (the "Company") and its
Subsidiaries to increase their efforts to make the Company and each Subsidiary
more successful, to provide an additional inducement for such employees to
remain with the Company or a Subsidiary, to reward such employees by providing
an opportunity to acquire shares of the Common Stock, $3.00 par value, of the
Company (the "Common Stock") on favorable terms and to provide a means through
which the Company may attract able persons to enter the employ of the Company or
one of its Subsidiaries. For the purposes of the Plan, the term "Subsidiary"
means any corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing at least fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
SECTION 1
ADMINISTRATION
The Plan shall be administered by a Committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board") and consisting
of not less than two members of the Board, who, at the time of their appointment
to the Committee and at all times during their service as members of the
Committee, are (a) "non-employee directors" as then defined under Rule 16b-3
----------------------------
under the Securities Exchange Act of 1934, as amended (the "1934 Act") or any
successor rule, and (b) beginning immediately after the first meeting of the
------------------------------------------------------------
stockholders of the Company at which directors are elected that occurs after
- ----------------------------------------------------------------------------
December 31, 1996, "outside directors" within the meaning of Section 162(m) of
- ------------------------------------------------------------------------------
the Internal Revenue Code of 1986, as amended.
- ---------------------------------------------
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan.
The Committee shall keep records of action taken at its meetings. A
majority of the Committee shall constitute a quorum at any meeting and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts
<PAGE>
approved in writing by a majority of the Committee, shall be the acts of the
Committee.
SECTION 2
ELIGIBILITY
Those employees of the Company or any Subsidiary who share
responsibility for the management, growth or protection of the business of the
Company or any Subsidiary shall be eligible to be granted stock options and to
receive restricted share awards as described herein.
Subject to the provisions of the Plan, the Committee shall have full
and final authority, in its discretion, to grant stock options and to award
restricted shares as described herein and to determine the employees to whom any
such grant or award shall be made and the number of shares to be covered
thereby. In determining the eligibility of any employee, as well as in
determining the number of shares covered by each grant of a stock option or
award of restricted shares the Committee shall consider the position and the
responsibilities of the employee being considered, the nature and value to the
Company or a Subsidiary of his or her services, his or her present and/or
potential contribution to the success of the Company or a Subsidiary and such
other factors as the Committee may deem relevant.
SECTION 3
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment and substitution as contemplated by Section 8,
--------------------------------------------------------------------
the aggregate number of shares of Common Stock which may be issued or delivered
- -------------------------------------------------------------------------------
and as to which grants of stock options or awards of restricted shares may be
- -----------------------------------------------------------------------------
made under the Plan is 1,200,000 shares, and the total number of shares for
- ---------------------------------------------------------------------------
which stock options may be granted under the Plan to any one person during any
- ------------------------------------------------------------------------------
calendar year shall not exceed 225,000. If any stock option granted under the
- --------------------------------------
Plan is cancelled by mutual consent or terminates or expires for any reason
without having been exercised, the number of shares subject thereto shall again
be available for purposes of the Plan. If any shares of the Common Stock are
forfeited to the Company pursuant to the restrictions applicable to restricted
shares awarded under the Plan, the number of shares so forfeited shall again be
available for purposes of the Plan. The shares which may be issued or delivered
under the Plan may be either authorized but unissued shares or shares previously
issued and thereafter acquired by the Company or partly each, as shall be
determined from time to time by the Board.
<PAGE>
SECTION 4
GRANT OF STOCK OPTIONS AND AWARDS
OF RESTRICTED SHARES
The Committee shall have authority, in its discretion, (a) to grant
"incentive stock options" pursuant to Section 422 of the Internal Revenue Code
of 1986 (the "Code"), to grant "nonstatutory stock option" (i.e., stock options
which do not qualify under Section 422 or 423 of the Code) or to grant both
types of stock options (but not in tandem) and (b) to award restricted shares.
Notwithstanding any other provision contained in the Plan or in any
stock option agreement or an amendment thereto, but subject to the possible
exercise of the Committee's discretion contemplated in the last sentence of this
Section 4, the aggregate fair market value, determined as provided in Section
5(G) on the date of grant of incentive stock options, of the shares with respect
to which such incentive stock options are exercisable for the first time by an
employee during any calendar year under all plans of the corporation employing
such employee, any parent or subsidiary corporation of such corporation and any
predecessor corporation of any such corporation shall not exceed $100,000. If
the date on which one or more incentive stock options could first be exercised
would be accelerated pursuant to any provision of the Plan or any stock option
agreement or an amendment thereto, and the acceleration of such exercise date
would result in a violation of the $100,000 restriction set forth in the
preceding sentence, then, notwithstanding any such provision, but subject to the
provisions of the next succeeding sentence, the exercise date of such incentive
stock options shall be accelerated only to the extent, if any, that does not
result in a violation of such restriction and, in such event, the exercise date
of the incentive stock options with the lowest option prices shall be
accelerated first. The Committee may, in its discretion, authorize the
acceleration of the exercise date of one or more incentive stock options even if
such acceleration would violate the $100,000 restriction set forth in the first
sentence of this paragraph and even if one or more such incentive stock options
are converted in whole or in part to nonstatutory stock options.
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<PAGE>
SECTION 5
TERMS AND CONDITIONS OF STOCK OPTIONS
Stock options granted under the Plan shall be subject to the following
terms and conditions:
(A) The purchase price at which each stock option may be
exercised (the "option price") shall be such price as the Committee,
in its discretion, shall determine but shall not be less than one
hundred percent (100%) of the fair market value per share of the
Common Stock covered by the stock option on the date of grant, except
that in the case of an incentive stock option granted to an employee
who, immediately prior to such grant, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Subsidiary (a "Ten Percent Employee"), the
option price shall not be less than one hundred ten percent (110%) of
such fair market value on the date of grant. For purposes of this
Section 5(A), the fair market value of the Common Stock shall be
determined as provided in Section 5(G). For purposes of this Section
5(A), an individual (i) shall be considered as owning not only shares
of stock owned individually but also all shares of stock that are at
the time owned, directly or indirectly, by or for the spouse,
ancestors, lineal descendants and brothers and sisters (whether by the
whole or half blood) of such individual and (ii) shall be considered
as owning proportionately any shares owned, directly or indirectly, by
or for any corporation, partnership, estate or trust in which such
individual is a stockholder, partner or beneficiary.
(B) The option price for each stock option shall be paid in
full upon exercise and shall be payable in cash in United States
dollars (including check, bank draft or money order), which may
include cash forwarded through a broker or other agent-sponsored
exercise or financing program; provided, however, that in lieu of such
cash the person exercising the stock option may (if authorized by the
Committee at the time of grant in the case of an incentive
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<PAGE>
stock option, or at any time in the case of a nonstatutory stock
option) pay the option price in whole or in part by delivering to the
Company shares of the Common Stock having a fair market value on the
date of exercise of the stock option, determined as provided in
Section 5(G), equal to the option price for the shares being
purchased; except that (i) any portion of the option price
representing a fraction of a share shall in any event be paid in cash
and (ii) no shares of the Common Stock which have been held for less
than one year may be delivered in payment of the option price of a
stock option. If the person exercising a stock option participates in
a broker or other agent-sponsored exercise or financing program, the
Company will cooperate with all reasonable procedures of the broker or
other agent to permit participation by the person exercising the stock
option in the exercise or financing program. Notwithstanding any
procedure of the broker or other agent-sponsored exercise or financing
program, if the option price is paid in cash, the exercise of the
stock option shall not be deemed to occur and no shares of the Common
Stock will be issued or delivered until the Company has received full
payment in cash (including check, bank draft or money order) for the
option price from the broker or other agent. The date of exercise of
a stock option shall be determined under procedures established by the
Committee, and as of the date of exercise the person exercising the
stock option shall be considered for all purposes to be the owner of
the shares with respect to which the stock option has been exercised.
Payment of the option price with shares shall not increase the number
of shares of the Common Stock which may be issued or delivered under
the Plan as provided in Section 3.
(C) No stock option shall be exercisable by a grantee during
the first six months of its term except that this limitation shall not
apply following the death of a grantee during employment (as provided
in Section 5(E)) or if Section 9 becomes applicable. Subject to the
terms of Section 5(E) providing for earlier termination of a stock
option, no stock option shall be exercisable after the expiration of
ten years (five years in the case of any incentive stock option
granted to a Ten Percent Employee) from the date of grant. A stock
5
<PAGE>
option to the extent exercisable at any time may be exercised in whole
or in part.
(D) No stock option shall be transferable by the grantee
otherwise than by Will, or if the grantee dies intestate, by the laws
of descent and distribution of the state of domicile of the grantee at
the time of death. All stock options shall be exercisable during the
lifetime of the grantee only by the grantee.
(E) Unless the Committee, in its discretion, shall otherwise
determine but subject to the provisions of Section 4 in the case of
incentive stock options:
(i) If the employment of a grantee who is not disabled
within the meaning of Section 422(c)(6) of the Code (a "Disabled
Grantee") is voluntarily terminated with the consent of the
Company or a Subsidiary or a grantee retires under any retirement
plan of the Company or a Subsidiary, any then outstanding
incentive stock option held by such grantee shall be exercisable
by the grantee (but only to the extent exercisable by the grantee
immediately prior to the termination of employment) at any time
prior to the expiration date of such incentive stock option or
within three months after the date of termination of employment,
whichever is the shorter period;
(ii) If the employment of a grantee who is not a Disabled
Grantee is voluntarily terminated with the consent of the company
or a Subsidiary or a grantee retires under any retirement plan of
the Company or a Subsidiary, any then outstanding nonstatutory
stock option held by such grantee shall be exercisable by the
grantee (but only to the extent exercisable by the grantee
immediately prior to the termination of employment) at any time
prior to the expiration date of such nonstatutory stock option or
within
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<PAGE>
one year after the date of termination of employment, whichever
is the shorter period;
(iii) If the employment of a grantee who is a Disabled
Grantee is voluntarily terminated with the consent of the Company
or a Subsidiary, subject to the six-month restriction of Section
5(C), any then outstanding stock option held by such grantee
shall be exercisable in full (whether or not so exercisable by
the grantee immediately prior to the termination of employment)
by the grantee at any time prior to the expiration date of such
stock option or within one year after the date of termination of
employment, whichever is the shorter period;
(iv) Following the death of a grantee during employment,
any outstanding stock option held by the grantee at the time of
death shall be exercisable in full (whether or not so exercisable
by the grantee immediately prior to the death of the grantee) by
the person entitled to do so under the Will of the grantee, or,
if the grantee shall fail to make testamentary disposition of the
stock option or shall die intestate, by the legal representative
of the grantee at any time prior to the expiration date of such
stock option or within one year after the date of death,
whichever is the shorter period;
(v) Following the death of a grantee after termination of
employment during a period when a stock option is exercisable,
any outstanding stock option held by the grantee at the time of
death shall be exercisable by such person entitled to do so under
the Will of the grantee or by such legal representative (but only
to the extent the stock option was exercisable by the grantee
immediately prior to the death of the grantee) at any time prior
to the expiration date of such stock option or within one year
after the
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<PAGE>
date of death, whichever is the shorter period; and
(vi) Unless the exercise period of a stock option
following termination of employment has been extended as provided
in Section 9(C), if the employment of a grantee terminates for
any reason other than voluntary termination with the consent of
the Company or a Subsidiary, retirement under any retirement plan
of the Company or a Subsidiary or death, all outstanding stock
options held by the grantee at the time of such termination of
employment shall automatically terminate.
Whether termination of employment is a voluntary termination with the
consent of the Company or a Subsidiary and whether a grantee is a Disabled
Grantee shall be determined in each case, in its discretion, by the Committee
and any such determination by the Committee shall be final and binding.
If a grantee of a stock option engages in the operation or management
of a business (whether as owner, partner, officer, director, employee or
otherwise and whether during or after termination of employment) which is in
competition with the Company or any of its Subsidiaries, the Committee may
immediately terminate all outstanding stock options held by the grantee;
provided, however, that this sentence shall not apply if the exercise period of
a stock option following termination of employment has been extended as provided
in Section 9(C). Whether a grantee has engaged in the operation or management
of a business which is in competition with the Company or any of its
Subsidiaries shall also be determined, in its discretion, by the Committee, and
any such determination by the Committee shall be final and binding.
(F) All stock options shall be confirmed by a written agreement or an
amendment thereto in a form prescribed by the Committee, in its discretion.
Each agreement or amendment thereto shall be executed on behalf of the Company
by the Chief Executive Officer (if other than the President), the President or
any Vice President and by the grantee.
(G) Fair market value of the Common Stock shall be the mean between
the following prices, as applicable, for the date as of which fair market value
is to be determined as quoted in The Wall Street Journal (or in such other
-----------------------
reliable publication as
8
<PAGE>
the Committee, in its discretion, may determine to rely upon): (a) if the
Common Stock is listed on the New York Stock Exchange, the highest and lowest
sales prices per share of the Common Stock as quoted in the NYSE-Composite
Transactions listing for such date, (b) if the Common Stock is not listed on
such exchange, the highest and lowest sales prices per share of Common Stock for
such date on (or on any composite index including) the principal United States
securities exchange registered under the 1934 Act on which the Common Stock is
listed or (c) if the Common Stock is not listed on any such exchange, the
highest and lowest sales prices per share of the Common Stock for such date on
the National Association of Securities Dealers Automated Quotations System or
any successor system then in use ("NASDAQ"). If there are no such sale price
quotations for the date as of which fair market value is to be determined but
there are such sale price quotations within a reasonable period both before and
after such date, then fair market value shall be determined by taking a weighted
average of the means between the highest and lowest sales prices per share of
the Common Stock as so quoted on the nearest date before and the nearest date
after the date as of which fair market value is to be determined. The average
should be weighted inversely by the respective numbers of trading days between
the selling dates and the date as of which fair market value is to be
determined. If there are no such sale price quotations on or within a
reasonable period both before and after the date as of which fair market value
is to be determined, then fair market value of the Common Stock shall be the
mean between the bona fide bid and asked prices per share of Common Stock as so
quoted for such date on NASDAQ, or if none, the weighted average of the means
between such bona fide bid and asked prices on the nearest trading date before
and the nearest trading date after the date as of which fair market value is to
be determined, if both such dates are within a reasonable period. The average
is to be determined in the manner described above in this Section 5(G). If the
fair market value of the Common Stock cannot be determined on the basis
previously set forth in this Section 5(G) on the date as of which fair market
value is to be determined, the Committee shall in good faith determine the fair
market value of the Common Stock on such date. Fair market value shall be
determined without regard to any restriction other than a restriction which, by
its terms, will never lapse.
Subject to the foregoing provisions of this Section and the other
provisions of the Plan, any stock option granted under the Plan may be exercised
at such times and in such amounts and be subject to such restrictions and other
terms and conditions, if any, as shall be determined, in its discretion, by the
Committee and set forth in the agreement referred to in Section 5(F) or an
amendment thereto.
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<PAGE>
SECTION 6
TERMS AND CONDITIONS OF
RESTRICTED SHARE AWARDS
Restricted share awards shall be evidenced by a written agreement in a
form prescribed by the Committee, in its discretion, which shall set forth the
number of shares of the Common Stock awarded, the restrictions imposed thereon
(including, without limitation, restrictions on the right of the grantee to
sell, assign, transfer or encumber such shares while such shares are subject to
other restrictions imposed under this Section 6), the duration of such
restrictions, events (which may, in the discretion of the Committee, include
performance-based events) the occurrence of which would cause a forfeiture of
the restricted shares and such other terms and conditions as the Committee in
its discretion deems appropriate. If restricted shares are awarded to an
officer or director as defined for purposes of Rule 16b-3 under the 1934 Act or
any successor rule, the restricted share agreement shall provide that the
restricted shares subject to such agreement may not be sold, assigned,
transferred or encumbered until at least six months have elapsed from the date
of the restricted share award unless Section 9 becomes applicable. Restricted
share awards shall be effective only upon execution of the applicable restricted
share agreement on behalf of the Company by the Chief Executive Officer (if
other than the President), the President or any Vice President, and by the
awardee.
Following a restricted share award and prior to the lapse or
termination of the applicable restrictions, the share certificates representing
the restricted shares shall be held by the Company in escrow. Upon the lapse or
termination of the applicable restrictions (and not before such time), the share
certificates representing the restricted shares shall be delivered to the
awardee. From the date a restricted share award is effective, the grantee shall
be a stockholder with respect to all the shares represented by the share
certificates for the restricted shares and shall have all the rights of a
stockholder with respect to the restricted shares, including the right to vote
the restricted shares and to receive all dividends and other distributions paid
with respect to the restricted shares, subject only to the succeeding paragraph
and the restrictions imposed by the Committee.
If a dividend or other distribution shall be declared upon the Common
Stock payable in shares of the Common Stock, the shares of the Common Stock
distributed with respect to any restricted shares held in escrow shall also be
held by the Company in escrow and be subject to the same restrictions as are
applicable to the restricted shares. If the outstanding shares of the Common
Stock shall be changed into or exchangeable for a different number or kind of
shares of stock or other securities of the Company or another corporation,
whether through reorganization, reclassification, recapitalization, stock
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<PAGE>
split-up, combination of shares, merger or consolidation or otherwise, such
stock or other securities into which any restricted shares held in escrow are
changed or for which any restricted shares held in escrow may be exchanged shall
also be held by the Company in escrow and be subject to the same restrictions as
are applicable to the restricted shares. Owners of any restricted shares held
in escrow shall be treated in the same manner as owners of shares of the Common
Stock not held in escrow with respect to fractional shares resulting from any
dividend or other distribution with respect to restricted shares or from any
change in or exchange of restricted shares, and any cash or other property paid
in lieu of a fractional share shall be subject to the restrictions similar to
those applicable to the restricted shares except as otherwise determined by the
Committee in its discretion.
If an awardee of restricted shares engages in the operation or
management of a business (whether as owner, partner, officer, director, employee
or otherwise and whether during or after termination of employment) which is in
competition with the Company or any of its Subsidiaries, the Committee may
immediately declare forfeited all restricted shares held by the awardee as to
which the restrictions have not yet lapsed. Whether an awardee has engaged in
the operation or management of a business which is in competition with the
Company or any of its Subsidiaries shall also be determined, in its discretion,
by the Committee, and any such determination by the Committee shall be final and
binding.
SECTION 7
ISSUANCE OF SHARES
The obligation of the Company to issue or deliver shares of the Common
Stock under the Plan shall be subject to (i) the effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to such
shares, if deemed necessary or appropriate by counsel for the Company, (ii) the
condition that the shares shall have been listed (or authorized for listing upon
official notice of issuance) upon each stock exchange, if any, on which the
shares of Common Stock may then be listed and (iii) all other applicable laws,
regulations, rules and orders which may then be in effect.
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SECTION 8
ADJUSTMENT AND SUBSTITUTION OF SHARES
If a dividend or other distribution shall be declared upon the Common
Stock payable in shares of the Common Stock, the number of shares of the Common
Stock then subject to any outstanding stock options and the number of shares of
the Common Stock which may be issued or delivered under the Plan but are not
then subject to outstanding stock options shall be adjusted by adding thereto
the number of shares of the Common Stock which would have been distributable
thereon if such shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend or distribution.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation or otherwise, then there shall be substituted
for each share of the Common Stock subject to any then outstanding stock option
and for each share of the Common Stock which may be issued or delivered under
the Plan but which is not then subject to any outstanding stock option, the
number and kind of shares of stock or other securities into which each
outstanding share of the Common Stock shall be so changed or for which each such
share shall be exchangeable.
In case of any adjustment or substitution as provided for in this
Section 8, the aggregate option price for all shares subject to each then
outstanding stock option prior to such adjustment or substitution shall be the
aggregate option price for all shares of stock or other securities (including
any fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares. Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 8 shall
require the Company to issue or deliver or sell a fraction of a share or other
security. Accordingly, all fractional shares or other securities which result
from any such adjustment or substitution shall be eliminated and not carried
forward to any subsequent adjustment or substitution.
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If any such adjustment or substitution provided for in this Section 8
requires the approval of stockholders in order to enable the Company to grant
incentive stock options, then no such adjustment or substitution shall be made
without the required stockholder approval. Notwithstanding the foregoing, in
the case of incentive stock options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal of
such stock option within the meaning of Section 424 of the Code, the Committee
may determine that such adjustment or substitution not be made but rather shall
use reasonable efforts to effect such other adjustment of each then outstanding
stock option as the Committee, in its discretion, shall deem equitable and which
will not result in any disqualification, modification, extension or renewal
(within the meaning of Section 424 of the Code) of such incentive stock option.
SECTION 9
ADDITIONAL RIGHTS IN CERTAIN EVENTS
(A) Definitions.
For purposes of this Section 9, the following terms shall have the
following meaning:
(1) The term "Person" shall be used as that term is used in Section
13(d) and 14(d) of the 1934 Act.
(2) "Beneficial Ownership" shall be determined as provided in Rule
13d-3 under the 1934 Act as in effect on the effective date of the Plan.
(3) "Voting Shares" shall mean all securities of a company entitling
the holders thereof to vote in an annual election of Directors (without
consideration of the rights of any class of stock other than the Common Stock to
elect Directors by a separate class vote); and a specified percentage of "Voting
Power" of a company shall mean such number of the Voting Shares as shall enable
the holders thereof to cast such percentage of all the votes which could be cast
in an annual election of directors (without consideration of the rights of any
class of stock other than the Common Stock to elect Directors by a separate
class vote).
(4) "Tender Offer" shall mean a tender offer or exchange offer to
acquire securities of the Company (other than such an offer made by the Company
or any Subsidiary), whether or not such offer is approved or opposed by the
Board.
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(5) "Section 9 Event" shall mean the date upon which any of the
following events occurs:
(a) The Company acquires actual knowledge that any Person other
than the Company, a Subsidiary or any employee benefit plan(s)
sponsored by the Company has acquired the Beneficial Ownership,
directly or indirectly, of securities of the Company entitling such
Person to 25% or more of the Voting Power of the Company;
(b)(i) A Tender Offer is made to acquire securities of the
Company entitling the holders thereof to 50% or more of the Voting
Power of the Company; or (ii) Voting Shares are first purchased
pursuant to any other Tender Offer;
(c) At any time less than 60% of the members of the Board of
Directors shall be individuals who were either (i) Directors on the
effective date of the Plan or (ii) individuals whose election, or
nomination for election, was approved by a vote (including a vote
approving a merger or other agreement providing the membership of such
individuals on the Board of Directors) of at least two-thirds of the
Directors then still in office who were Directors on the effective
date of the Plan or who were so approved;
(d) The stockholders of the Company shall approve an agreement or
plan (a "Reorganization Agreement") providing for the Company to be
merged, consolidated or otherwise combined with, or for all or
substantially all its assets or stock to be acquired by, another
corporation, as a consequence of which the former stockholders of the
Company will own, immediately after such merger, consolidation,
combination or acquisition, less than a majority of the Voting Power
of such surviving or acquiring corporation or the parent thereof; or
(e) The stockholders of the Company shall approve any
liquidation of all or substantially all of the assets of the Company
or any distribution to security holders of assets of the Company
having a value equal to 30% or more or the total value of all the
assets of the Company.
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(B) Acceleration of the Exercise Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock
options, unless the agreement referred to in Section 5(F), or an amendment
thereto, shall otherwise provide, notwithstanding any other provision contained
in the Plan, in case any Section 9 Event occurs all outstanding stock options
shall become immediately and fully exercisable whether or not otherwise
exercisable by their terms.
(C) Extension of the Expiration Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock
options, unless the agreement referred to in Section 5(F), or an amendment
thereto, shall otherwise provide, notwithstanding any other provision contained
in the Plan, all stock options held by a grantee whose employment with the
Company or a Subsidiary terminates within one year of any Section 9 Event for
any reason other than voluntary termination with the consent of the Company or a
Subsidiary, retirement under any retirement plan of the Company or a Subsidiary
or death shall be exercisable for a period of three months from the date of such
termination of employment, but in no event after the expiration date of the
stock option.
(D) Lapse of Restrictions on Restricted Share Awards.
Unless the agreement referred to in Section 6, or an amendment
thereto, shall otherwise provide, notwithstanding any other provision contained
in the Plan, if any Section 9 Event occurs prior to the scheduled lapse of all
restrictions applicable to restricted share awards under the Plan, all such
restrictions shall lapse upon the occurrence of any such Section 9 Event
regardless of the scheduled lapse of such restrictions.
SECTION 10
EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER
Neither the adoption of the Plan nor any action of the Board or the
Committee pursuant to the Plan shall be deemed to give any employee any right to
be granted a stock option or to be awarded restricted shares under the Plan.
Nothing in the Plan, in any stock option granted under the Plan, in any
restricted share award under the Plan or in any agreement providing for any of
the foregoing or amendment thereto shall confer any right to any employee to
continue in the employ of the Company or any Subsidiary or interfere in any way
with the rights of the Company or any Subsidiary to terminate the employment of
any employee at any time or adjust the compensation of any employee at any time.
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SECTION 11
AMENDMENT OR TERMINATION
The right to amend the Plan at any time and from time to time and the
right to terminate the Plan are hereby specifically reserved to the Board;
provided always that no such termination shall terminate any outstanding stock
options granted under the Plan or cause a revocation or a forfeiture of any
restricted share award under the Plan; and provided further that no such
amendment of the Plan shall, without stockholder approval (a) increase the total
number of shares which may be issued or delivered under the Plan, (b) make any
changes in the class of employees eligible to receive incentive stock options or
(c) be made if stockholder approval of the amendment is at the time required for
stock options or restricted shares under the Plan to qualify for the exemption
from Section 16(b) of the 1934 Act provided by Rule 16b-3 or by the rules of the
NASDAQ National Market System or any stock exchange on which the Common Stock
may then be listed. No amendment or termination of the Plan shall, without the
written consent of the holder of a stock option or restricted shares theretofore
granted or awarded under the Plan, adversely affect the rights of such holder
with respect thereto.
SECTION 12
EFFECTIVE DATE AND DURATION OF PLAN
The effective date and date of adoption of the Plan shall be July 1,
1991, the date of adoption of the Plan by the Board, provided that such adoption
of the Plan by the Board is approved by the affirmative vote of the holders of
at least a majority of the outstanding shares of voting stock of the Company
represented in person or by proxy at a meeting of such holders duly called,
convened and held on or prior to June 30, 1992. No stock option granted under
the Plan may be exercised until after such approval and any restricted shares
awarded under the Plan shall be forfeited to the Company on June 30, 1992 if
such approval has not been obtained on or prior to that date. No stock option
may be granted and no restricted shares may be awarded under the Plan subsequent
to June 30, 2001.
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THE WISER OIL COMPANY
Annual Meeting of Stockholders This Proxy is Solicited
To Be Held May 19, 1997 on Behalf of the Board of Directors
The undersigned stockholder of The Wiser Oil Company (the "Company") hereby
constitutes and appoints A. Wayne Ritter, Lawrence J. Finn and Mark A. Kirk, and
each of them acting individually, as the attorneys and proxies of the
undersigned, with full power of substitution, to attend the Annual Meeting of
Stockholders of the Company to be held Monday, May 19, 1997, at 4:00 p.m., at
the Park City Club, 5956 Sherry Lane, 17th Floor, Dallas, Texas, and any
adjournment thereof, and if then personally present to vote thereat all the
shares of common stock of the Company held of record by the undersigned on March
28, 1997 as follows, and in the discretion of the proxies on all other matters
properly coming before the meeting or any adjournment thereof.
In the election of Directors for a term of three years expiring in 2000:
(1) ( ) FOR all nominees listed ( ) WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
to the contrary below) listed below
Howard G. Hamilton, C. Frayer Kimball, III
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S)
WRITE THE NAME(S) OF SUCH NOMINEE(S) ON THE LINE PROVIDED
BELOW:
- --------------------------------------------------------------------------------
(2) ( ) FOR ( ) AGAINST ( ) ABSTAIN
To approve amendments to the Company's 1991 Stock Incentive Plan to
increase the number of shares of the Company's common stock, par value
$3.00 per share, that may be offered pursuant to the Plan from 600,000 to
1,200,000 shares, and to make certain other changes. As described in the
Company's proxy statement.
To transact such other business as may properly come before the meeting.
Please complete, date and sign this Proxy Card on the reverse side and return it
promptly in the enclosed business reply envelope.
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED HEREIN, OR,
IF NO DIRECTION IS GIVEN, FOR THE ELECTION OF THE NOMINEES PROPOSED BY THE BOARD
OF DIRECTORS AND FOR THE OTHER PROPOSALS SET FORTH HEREON. ALL MATTERS SET FORTH
HEREON ARE BEING PROPOSED BY THE COMPANY. A VOTE FOR THE ELECTION OF THE
NOMINEES LISTED ON THE REVERSE SIDE INCLUDES DISCRETIONARY AUTHORITY TO VOTE FOR
A SUBSTITUTE IF ANY OF THE NOMINEES LISTED BECOMES UNABLE TO SERVE OR FOR GOOD
CAUSE WILL NOT SERVE. THE PROXIES WILL VOTE IN THEIR SOLE DISCRETION UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
The undersigned hereby revokes all previous proxies for such Annual
Meeting, hereby acknowledges receipt of the Notice of such Annual Meeting and
the Proxy Statement furnished therewith, and hereby ratifies all that the said
attorneys and proxies may do by virtue hereof.
Date________________________, 1997
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Please sign exactly as name(s) appear(s) hereon. When
signing as attorney, executor, administrator, trustee,
guardian, or other fiduciary, please give your full title
as such. For joint accounts, each joint owner should sign.
If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
