SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WAINOCO OIL CORPORATION
(Name of Registrant as Specified in Its Charter)
WAINOCO OIL CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: /1/
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(4) Proposed maximum aggregate value of transaction:
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
1200 Smith Street, Suite 2100
Houston, Texas 77002-4367
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 18, 1995
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Wainoco Oil Corporation (the "Company") to be held in the Granger A Room of the
Doubletree Hotel at Allen Center, 400 Dallas, Houston, Texas, on Thursday, May
18, 1995 at 9:00 a.m., Houston time. Our shareholders will be asked to vote on
the following proposals:
1. The election of a Board of Directors (six members) to serve until
the next Annual Meeting of Shareholders or until their successors
have been elected or appointed.
2. Ratification of the appointment of Arthur Andersen LLP, independent
certified public accountants, as the Company's auditors for the
ensuing year.
Your Board strongly urges you to vote FOR the proposals. The enclosed Proxy
Statement includes information relating to these proposals. Additional purposes
of the meeting are to receive the reports of officers (without taking any
action thereon) and to transact such other business as may properly come before
the meeting or any adjournment(s) thereof.
All shareholders of record as of the close of business on March 21, 1995 are
entitled to notice of and to vote at the meeting. At least a majority of the
outstanding shares of the Company is required to be present at the meeting or
represented by proxy to constitute a quorum.
The Board of Directors and management sincerely desire your presence at the
meeting. Even if you expect to attend the meeting, you are requested to sign,
date and return the accompanying proxy. If you attend the meeting after having
returned the accompanying proxy, you may revoke your proxy, if you wish, and
vote in person.
Thank you for your support.
JAMES R. GIBBS
President and
Chief Executive Officer
March 28, 1995
Houston, Texas
<PAGE>
WAINOCO OIL CORPORATION
1200 Smith Street, Suite 2100
Houston, Texas 77002-4367
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished by the Board of Directors of Wainoco Oil
Corporation (the "Company") in connection with the solicitation of proxies for
use at the Annual Meeting of Shareholders to be held May 18, 1995, and at any
adjournment thereof. The shares represented by the form of proxy enclosed
herewith will be voted in accordance with the specifications noted thereon. If
no choice is specified, said shares will be voted in favor of the proposals set
forth in the notice attached hereto. The form of proxy also confers
discretionary authority with respect to amendments or variations to matters
identified in the notice of meeting and any other matters which may properly
come before the meeting. This Proxy Statement and the enclosed proxy form are
first being sent to shareholders on or about March 28, 1995.
A shareholder who has given a proxy may revoke it as to any motion on which
a vote has not already been taken by signing a proxy bearing a later date or by
a written notice delivered to the Secretary of the Company in care of Harris
Trust and Savings Bank, 311 West Monroe, Chicago, Illinois 60606 ("Harris") or
at the offices of the Company, 1200 Smith Street, Suite 2100, Houston, Texas
77002-4367, at any time up to the meeting or any adjournment thereof, or by
delivering it to the Chairman of the meeting on the day of the meeting or any
adjournment thereof.
The cost of solicitation of these proxies will be paid by the Company,
including reimbursement paid to brokerage firms and other custodians, nominees
and fiduciaries for reasonable costs incurred in forwarding the proxy material
to and solicitation of proxies from the beneficial record owners of shares. In
addition to such solicitation and the solicitation made hereby, certain
directors, officers and employees of the Company may solicit proxies by fax,
telex, telephone and personal interview.
VOTING SECURITIES
All shareholders of record as of the close of business on March 21, 1995 are
entitled to notice of and to vote at the meeting. Provided that a complete and
executed form of proxy shall have been delivered to Harris prior to the
meeting, any person may attend and vote that number of shares for which he
holds a proxy. On March 21, 1995, the Company had 27,250,842 shares of common
stock, without par value ("Common Stock"), outstanding excluding Common Stock
held by the Company. The Common Stock is the only class of voting securities of
the Company. The presence in person or by proxy of the holders of a majority of
the issued and outstanding Common Stock, excluding Common Stock held by the
Company, is necessary to constitute a quorum at this meeting. In the absence of
a quorum at the meeting, the meeting may be adjourned from time to time without
notice other than announcement at the meeting until a quorum shall be formed.
Shareholders of the Company have the right to cumulate votes in the
election of directors; i.e., each shareholder has the right to vote the
number of shares owned for as many persons as there are directors to be
elected, or to cumulate votes by giving one candidate as many votes as the
number of such directors multiplied by the number of shares held shall
equal, or by distributing such votes on the same principle among any number
of such candidates. The persons named in the proxy solicited hereby shall
have discretionary authority to cumulate votes for directors, except for
those directors for which a shareholder has withheld authority on the
proxy. The bylaws of the Company require that in order for any shareholder
to cumulate his votes, he must give the Secretary of the Company written
notice of his intent to cumulate not less than 48 hours before the meeting
of shareholders at which directors will be elected. In the event that any
shareholder has properly given notice of his intent to cumulate his votes,
the bylaws of the Company also provide that all shareholders shall then
have the right to cumulate their votes, if they so desire, without
providing written notice to the Company's Secretary. On all other matters,
shareholders are entitled to one vote per share.
In the absence of cumulative voting, directors shall be elected by a
plurality of the votes cast by shareholders entitled to vote in the election at
a meeting at which a quorum is present. In conformity with Wyoming law and the
bylaws of the Company, action regarding the ratification of the appointment of
auditors will be approved if the votes cast in favor exceed the votes cast
opposing such proposal. Although Wyoming law, the charter and the bylaws of the
Company are silent on the matter, shares abstaining from voting or not voted on
a matter will not be treated as votes cast.
ANNUAL REPORT
The annual report to shareholders, including consolidated financial
statements, accompanies this Proxy Statement. Such annual report does not form
any part of the proxy solicitation materials.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 1, 1995, the beneficial
ownership of the Company's Common Stock, excluding Common Stock held by the
Company, with respect to each person known by the Company to be the beneficial
owner of more than five percent of the Company's outstanding voting securities:
<TABLE>
<CAPTION>
Amount
and Nature Percentage
of Beneficial of Shares of
Name Ownership Common Stock(/l/)
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<S> <C> <C>
Lindner Fund, Inc. 2,684,286 (/2/) 9.7
c/o Ryback Management Corporation
7711 Carondelet Avenue, Suite 700
St. Louis, Missouri 63105
ICM Asset Management, Inc. 1,566,450 (/3/) 5.7
601 W. Main Ave., Suite 917
Spokane, WA 99201
</TABLE>
(1) Represents percentage of outstanding shares plus shares issuable upon
conversion of all convertible securities of the Company owned by such
shareholder, assuming convertible securities owned by all other
shareholders are not converted.
(2) Lindner Fund, Inc. ("Lindner") and Ryback Management Corporation
("Ryback") have jointly filed a Schedule 13G dated January 25, 1995 with
the Securities and Exchange Commission (the "Commission") which states
that Lindner and Ryback both have shared voting and shared dispositive
power over all such shares, and sole voting and sole dispositive power
over no shares. Includes 354,286 shares assuming conversion of the
Company's convertible securities owned by Ryback.
(3) ICM Asset Management, Inc. has filed a Schedule 13G dated February 14,
1995 with the Commission which states that it has sole voting on 39,850 of
the above shares and shared voting power on 584,800 shares and shared
dispositive power on 1,566,450 shares.
<PAGE>
COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1995, the amount of Common
Stock beneficially owned by: (i) each director of the Company, (ii) the Chief
Executive Officer and the four most highly compensated officers other than the
Chief Executive Officer; and (iii) all directors and executive officers as a
group:
<TABLE>
<CAPTION>
Amount
and Nature Percentage
of Beneficial of Shares of
Name Ownership Common Stock(/1/)
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<S> <C> <C>
James R. Gibbs (2). . . . . . . . . . . 370,750 (/3/) 1.36
Douglas Y. Bech (2) . . . . . . . . . . 10,000 *
Paul B. Loyd, Jr. (2) . . . . . . . . . 0 *
James S. Palmer (2) . . . . . . . . . . 40,623 (/4/) *
Derek A. Price (2). . . . . . . . . . . 5,000 (/5/) *
Carl W. Schafer (2) . . . . . . . . . . 5,000 *
S. Clark Johnson. . . . . . . . . . . . 96,000 (/6/) *
Joseph G. Butera. . . . . . . . . . . . 81,500 (/7/) *
Julie H. Edwards. . . . . . . . . . . . 55,300 (/8/) *
George E. Aldrich . . . . . . . . . . . 82,990 (/9/) *
Directors and executive officers
as a group (12 persons). . . . . . . 851,143 3.06
</TABLE>
* Less than 1%
(1) Represents percentage of outstanding shares plus (i) shares issuable upon
conversion of all convertible securities of the Company owned by such
shareholder, assuming convertible securities owned by all other
shareholders are not converted, plus (ii) shares issuable upon exercise of
all stock options owned by the individual listed that are currently
exercisable or that will become exercisable within 60 days of the date for
which beneficial ownership is provided in the table, assuming stock
options owned by all other shareholders are not exercised. As of March 1,
1995, 27,250,842 shares of Common Stock were outstanding.
(2) Director.
(3) Includes 321,840 shares with respect to which Mr. Gibbs has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in
the table. Of the 370,750 shares that Mr. Gibbs is deemed to beneficially
own, Mr. Gibbs has sole voting and sole dispositive power with respect to
48,910 shares.
(4) Includes 29,194 shares held by a private corporation of which Mr. Palmer
is the sole shareholder and 11,429 shares assuming conversion of the
Company's convertible securities owned by Mr. Palmer.
(5) Such shares are held by a private corporation of which Mr. Price is the
sole shareholder.
(6) Includes 71,000 shares with respect to which Mr. Johnson has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in
the table. Of the 96,000 shares that Mr. Johnson is deemed to beneficially
own, Mr. Johnson has sole voting power and sole dispositive power with
respect to 25,000 shares.
<PAGE>
(7) Includes 61,500 shares with respect to which Mr. Butera has the right to
acquire beneficial ownership under one of the Company's stock option
plans within 60 days of the date for which beneficial ownership is
provided in the table. Of the 81,500 shares that Mr. Butera is deemed to
beneficially own, Mr. Butera has sole voting and sole dispositive power
with respect to 20,000 shares. Mr. Butera's employment with the Company
was terminated effective February 28, 1995.
(8) Includes 48,300 shares with respect to which Ms. Edwards has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in
the table. Of the 55,300 shares that Ms. Edwards is deemed to beneficially
own, Ms. Edwards has sole voting power and sole dispositive power with
respect to 7,000 shares.
(9) Includes 73,460 shares with respect to which Mr. Aldrich has the right to
acquire beneficial ownership under one of the Company's stock option plans
within 60 days of the date for which beneficial ownership is provided in
the table. Of the 82,990 shares that Mr. Aldrich is deemed to beneficially
own, Mr. Aldrich has sole voting and sole dispositive power with respect
to 9,530 shares.
PROPOSAL 1:
ELECTION OF DIRECTORS
A Board of Directors is to be elected, with each director to hold office
until the next Annual Meeting of Shareholders and until his successor shall be
elected or appointed. The persons whose names are set forth as proxies in the
enclosed form of proxy will vote all shares over which they have control "FOR"
the election of the Board of Directors' nominees, unless otherwise directed.
Such persons may, in their sole discretion, cumulate the votes of shares for
which they hold proxies and allocate such votes in any manner they see fit,
unless otherwise directed. Although the Board of Directors of the Company does
not contemplate that any of the nominees will be unable to serve, if such a
situation should arise prior to the meeting, the appointed proxies will use
their discretionary authority pursuant to the proxy and vote in accordance with
their best judgment.
Nominees
All of the persons listed below are members of the present Board of
Directors and have consented in writing to be named in this Proxy Statement and
to serve as a director, if elected.
Mr. James R. Gibbs (50) joined the Company in February 1982 and has been
President and Chief Operating Officer since January 1987. He assumed the
additional position of Chief Executive Officer on April 1, 1992. Mr. Gibbs is
a member of the Board of Directors of Smith International, Inc., an oil field
service company; an advisory director of Frost National Bank, N.A.; and a
director of Wright Killen & Co., a process engineering consulting firm. Mr.
Gibbs was elected a director of the Company in 1985.
Mr. Douglas Y. Bech (49) has been a partner in the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P. of Houston, Texas since October 1994. From May
1993 to July 1994, Mr. Bech was a partner of Gardere & Wynne, L.L.P. of
Houston, Texas. From 1977 until May 1993, Mr. Bech was a partner of Andrews &
Kurth L.L.P. Mr. Bech is a member of the Board of Directors of Pride Refining,
Inc., the general partner of Pride Companies, L.P., a refining, products
pipeline and crude gathering company; and DI Industries, Inc., a U.S. and
international onshore contract drilling company. He was appointed a director
of the Company in May 1993.
<PAGE>
Mr. Paul B. Loyd, Jr. (48) has been Chairman and Chief Executive Officer of
Reading & Bates Corporation, an offshore contract drilling company, since June
1991 and has been a director of Reading & Bates since April 1991. Mr. Loyd
controls one of the five general partners of BCL, a major shareholder of
Reading & Bates, and has been President of Loyd & Associates, Inc., a financial
consulting firm, since 1989. Mr. Loyd was Chief Executive Officer and a
director of Chiles-Alexander International, Inc. from 1987 to 1989, President
and a director of Griffin-Alexander Drilling Company from 1984 to 1987, and
prior to that, a director and Chief Financial Officer of Houston Offshore
International, all of which are companies in the offshore drilling industry.
He was appointed a director of the Company in August 1994.
Mr. James S. Palmer (66) has been a partner in the law firm of Burnet,
Duckworth & Palmer of Calgary, Alberta, Canada since 1956. Burnet, Duckworth &
Palmer has been retained by the Company as its counsel regarding certain
Canadian legal matters. Mr. Palmer is a member of the Board of Directors of
Amerada Hess Canada Ltd., an oil and gas company; Crown Life Insurance
Company; Hillcrest Resources, Ltd., an oil and gas company; Poco Petroleums
Ltd., an oil and gas company; Remington Resources Ltd., an oil and gas company;
Sceptre Resources Limited, an oil and gas company; Tombill Mines Limited, a
diversified Canadian public holding company; Westcoast Energy Inc., a pipeline
and transmission company; and Winfield Energy Ltd., an oil and gas company.
Mr. Palmer was elected a director of the Company in 1975.
Mr. Derek A. Price (62) is President of The J.W. McConnell Family
Foundation, a charitable foundation. Prior to April 1991, Mr. Price was
Chairman of the Board of Directors and Chief Executive Officer of Starlaw
Holdings Limited, a private investment company with holdings principally in the
areas of financial services, real estate and manufacturing. Mr. Price was
elected a director of the Company in 1987.
Mr. Carl W. Schafer (59) has been the President of the Atlantic Foundation,
a charitable foundation which mainly supports oceanographic research, since
1990. From 1987 until 1990, Mr. Schafer was a principal of the investment
management firm of Rockefeller & Co., Inc. Mr. Schafer presently serves on the
Board of Directors of the Kidder, Peabody Group of Mutual Funds, a registered
investment company; Electronic Clearing House, Inc., an electronic financial
transactions processing company; Evans Systems, Inc., a fuel distribution,
convenience store and diversified company; Bio Techniques Laboratories, Inc.,
an agricultural biotechnology company; International Agritech Resources, Inc.,
a publishing and consulting firm in the biotechnology industry; Ardic
Exploration & Development, an oil and gas company; and Hidden Lake Gold Mines,
Ltd. Mr. Schafer was elected a director of the Company in 1984.
The Board of Directors and Its Committees
The Board of Directors met four times in 1994, during which each incumbent
director of the Company (except Mr. Price) attended 75 percent or more of the
aggregate number of meetings of the Board of Directors and meetings held by
committees of the Board on which he served. The Board of Directors has standing
audit, compensation, safety and environmental, executive and nominating
committees that are composed of directors of the Company.
Audit Committee: The Audit Committee is comprised of three outside
directors, currently Messrs. Loyd, Price and Schafer. The Audit Committee's
functions include recommendations concerning the engagement of independent
public accountants, reviewing with the independent public accountants the plan
and results of the audit engagement, approving professional services provided
by the independent public accountants, reviewing the independence of the
independent public accountants, considering the range of audit and non-audit
fees and reviewing the adequacy of the Company's internal accounting controls.
The Audit Committee met twice during 1994.
Compensation Committee: The Compensation Committee is comprised of three
outside directors, currently Messrs. Bech, Palmer and Schafer. The Compensation
Committee's functions include the approval of officers' salaries and
administration of all of the Company's employee benefit plans. The Compensation
Committee met twice during 1994.
Safety and Environmental Committee: The Safety and Environmental Committee
is comprised of three members of the Board of Directors, currently Messrs.
Bech, Gibbs and Price. The Safety and Environmental Committee's functions
include the adoption and review of the Company's safety, health and
environmental policies and programs. The Safety and Environmental Committee
was formed but did not meet during 1994.
Executive Committee: The Executive Committee is comprised of Mr. Gibbs and
two outside directors, currently Messrs. Palmer and Price. The Executive
Committee functions in the place of the Board of Directors between regular
meetings of the Board and has all the power and authority of the Board of
Directors, except for certain matters that may not be delegated under the
Company's bylaws. The Executive Committee did not meet during 1994.
Nominating Committee: The Nominating Committee is comprised of three members
of the Board of Directors, currently Messrs. Gibbs, Palmer and Schafer. The
purpose of the committee is to review possible candidates for the Board of
Directors and recommend nomination of appropriate candidates by the Board. The
Nominating Committee met telephonically once during 1994.
Pursuant to the Company's bylaws, nominations for candidates for election to
the Board of Directors may be made by any shareholder entitled to vote at a
meeting of shareholders called for the election of directors. Nominations made
by a shareholder must be made by giving notice of such in writing to the
Secretary of the Company before the later to occur of (i) 60 days prior to the
date of the meeting of shareholders called for the election of directors or
(ii) ten days after the Board first publishes the date of such meeting. Such
notice shall include all information concerning each nominee as would be
required to be included in a proxy statement soliciting proxies for the
election of such nominee under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). Such notice shall also include a signed consent of each
nominee to hold office until the next Annual Meeting of Shareholders or until
his successor shall be elected or appointed.
Compensation of Directors
During 1994, directors' fees aggregated $136,250. Directors' fees are
presently $1,666.67 per month and $1,250.00 for each Board meeting attended,
plus $500.00 for any committee meeting attended. No member of the Board of
Directors was paid any remuneration in 1994 for his service as a director of
the Company other than pursuant to the standard compensation arrangement for
directors. Directors who are officers of the Company do not receive any
compensation for their services as a director. The Company reimburses its
directors for travel expenses incurred in attending Board meetings. Burnet,
Duckworth & Palmer, a law firm of which Mr. Palmer is a partner, is retained by
the Company as its counsel for certain Canadian legal matters. Akin, Gump,
Strauss, Hauer & Feld, L.L.P., a law firm of which Mr. Bech is a partner, is
retained by the Company as its counsel for certain U.S. legal matters.
<PAGE>
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors recommends the ratification of the appointment of
Arthur Andersen LLP as independent auditors for the Company for the year ending
December 31, 1995. This firm has served in such capacity since 1974 and is
familiar with the Company's affairs and financial procedures. Their appointment
as auditors for the year ended December 31, 1994 was approved by the
shareholders at the last Annual Meeting on May 10, 1994.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they desire
to do so and to respond to appropriate questions from those attending the
meeting.
OTHER BUSINESS
The Board of Directors of the Company knows of no matters expected to be
presented at the Annual Meeting other than those described above; however, if
other matters are properly presented to the meeting for action, it is intended
that the persons named in the accompanying form of proxy, and acting
thereunder, will vote in accordance with their best judgment on such matters.
EXECUTIVE AND OTHER OFFICERS
Set forth below are the executive officers of the Company along with the age
(as of March 31, 1995) and office held by each officer.
Mr. James R. Gibbs (50) is President and Chief Executive Officer.
Information about Mr. Gibbs is included on page five with the information on
nominees for the Board.
Ms. Julie H. Edwards (36) joined the Company in March 1991 as Vice
President-Secretary & Treasurer. She was promoted to Senior Vice
President-Finance & Chief Financial Officer in August 1994. From 1985 to
February 1991, she was employed by Smith Barney, Harris Upham & Co. Inc. in the
Corporate Finance Department. Prior to 1985, she was employed by Amerada Hess
Corporation and American Ultramar, Ltd., which are oil companies, as a
geologist.
Mr. S. Clark Johnson (49) is Senior Vice President-Refining Operations and
serves as president of the refining subsidiaries of the Company. He has over 25
years of experience in refining and marketing. Prior to joining the Company,
Mr. Johnson served as Senior Vice President-Marketing, Supply & Terminals at
Kerr-McGee Refining Corporation since 1990. In 1989, Mr. Johnson served as
President of Coastal Mart, Inc., a retail subsidiary of Coastal Corporation.
Previously, Mr. Johnson was with Tenneco Oil Company for 20 years where he held
numerous positions, including Vice President-Retail Marketing from 1987 to
1988.
Mr. Robert D. Jones (45) joined the Company as Vice President in April 1991.
He was promoted to Senior Vice President, Canadian Oil & Gas Operations in
August 1993. He has over 19 years experience in oil and gas exploration
throughout western Canada including employment with Imperial Oil Ltd.; Mobil
Oil Canada, Ltd.; Home Oil Company Limited; and Coseka Resources Ltd., an oil
and gas company, where he served as Vice President-Exploration.
Mr. George E. Aldrich (48) joined the Company in June 1982 and was appointed
Vice President-Controller in May 1983.
Mr. Gerald B. Faudel (45) was appointed to a newly-created position, Vice
President-Safety and Environmental Affairs, in November 1993. Mr. Faudel has
been employed by Frontier since October 1989 as Director of Safety,
Environmental and External Affairs. Prior to October 1989, Mr. Faudel was
employed with Tosco Corporation's Avon Refinery as Manager of Hazardous Waste
and Wastewater Programs.
Mr. Grant F. Rice (42) joined the Company in April 1978 and was appointed
Vice President in February 1995. He will be responsible for investor services,
as well as oversee certain contract matters of the Company. Previously, Mr.
Rice has served since 1984 as Vice President-Land of the Company's U.S. oil and
gas subsidiary.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
All members of the Compensation Committee are independent, non-employee
directors. The Committee regularly reviews and, with any changes it believes
appropriate, approves the Company's executive compensation program. An
independent compensation consultant employed by KPMG Peat Marwick and formerly
employed by Towers Perrin has been retained by the Committee and has advised
the Committee on all compensation matters since 1988. The Company's executive
compensation program is structured to help the Company achieve its business
objectives by:
- setting levels of compensation designed to attract and retain key
executives;
- providing incentive compensation that varies directly with both Company
performance and individual contribution to that performance; and
- linking compensation to financial targets which affect short and long term
share price performance.
Compensation Program Components
The particular elements of the compensation program for executive officers
are further explained below.
Base Salary. Base pay levels are largely determined through comparisons with
a peer group of companies of similar size, activity and complexity to the
Company as determined by KPMG Peat Marwick and which companies are included in
the Peer Group Index in the graph on page 14. The relative stock price
performance of the Company compared to the peer group is one factor used in
determining compensation. In addition, salaries are based on the Company's
recent performance and on individual performance contributions within a
competitive salary range for each position that is established through job
evaluation and market comparisons. Base pay levels for the executive officers
are generally in the middle of a competitive range of salaries.
Annual Incentive Compensation. The Company's officers and certain other
employees are eligible to participate in an annual incentive compensation plan
with awards based primarily on the attainment of certain earnings, cash flow
and reserve replacement goals established by the Company's annual budget, which
is approved by the Board of Directors. The objective of this incentive plan is
to deliver competitive levels of compensation for the attainment of financial
targets that the Committee believes are important determinants of share price
over time. In 1992, although the Company met its budget objective, no awards
were made due to a net loss for the year. In 1993, the Company both exceeded
its budget earnings and cash flow objectives and was profitable. In 1994, the
Company again exceeded its budget cash flow, although earnings were negatively
impacted by a year-end charge related to the U.S. oil and gas properties which
were being disposed of. Accordingly, awards were made to many employees. The
specific amount paid to each employee was determined at the discretion of the
Compensation Committee, generally as a percentage of base salary determined by
relative ability to influence the results of the Company and individual
performance.
Stock Option Program. The Committee strongly believes that by providing
those persons who have substantial responsibility for the management and growth
of the Company with an opportunity to increase their ownership of the Company
stock, the best interests of the shareholders and executives will be closely
aligned. Therefore, executives and managers are eligible to receive stock
options from time to time at the discretion of the Compensation Committee,
giving them the right to purchase shares of Common Stock at a specified price
in the future. The number of stock options granted to executive officers is
based on such officer's ability to influence the Company's performance as
determined by the Compensation Committee.
CEO Compensation
In accordance with the discussion above of the Company's philosophy for
executive compensation, a significant portion of the compensation for the Chief
Executive Officer is based upon the Company's performance. Mr. Gibbs, who has
served as Chief Executive Officer since April 1992 joined the Company in 1982
and has served in a number of executive positions. Up to one third of Mr.
Gibbs' total compensation is tied to the performance of the Company. Although
Mr. Gibbs assumed the additional responsibilities of Chief Executive Officer
during 1992, his 1992 annual salary of $300,000 was equal to his 1991 salary
and less than his 1990 salary and incentive award. Mr. Gibbs' compensation,
both salary and incentive award, was significantly increased in 1993 and 1994
in recognition of the improvement of the Company's performance and increased
complexity. As is reflected in the Summary Compensation Table, Mr. Gibbs also
participated in the Company's savings plans.
Compensation Committee Members:
James S. Palmer
Douglas Y. Bech
Carl W. Schafer
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth information regarding compensation earned by
the Company's Chief Executive Officer and the four most highly compensated
officers other than the Chief Executive Officer for services rendered in all
capacities to the Company and its subsidiaries in the years 1992 through 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------
Annual Compensation Awards
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Other
Annual Restricted
Compen- Stock Options/ LTIP All Other
Name and Salary Bonus sation Awards SARS Payouts Compensation(/1/)
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Gibbs 1994 395,000 197,500 0 96,708 40,000 0 77,975 (/2/)
President and Chief 1993 375,000 122,000 0 0 75,000 0 48,395
Executive Officer 1992 300,000 0 0 0 87,000 0 8,728
Joseph G. Butera 1994 210,000 0 0 102,500 0 0 42,418 (/3/)
Senior Vice President 1993 200,000 30,000 0 0 25,000 0 25,165
Manager of United
States 1992 193,000 0 0 0 8,200 0 8,728
Exploration and
Production
S. Clark Johnson 1994 242,000 84,700 0 0 25,000 0 38,885 (/4/)
Senior Vice President 1993 230,000 70,000 0 0 25,000 0 67,653
Refining Operations 1992 135,000 0 0 0 50,000 0 1,688
Julie H. Edwards 1994 170,666 58,100 0 0 0 0 20,995 (/5/)
Senior Vice President
-Finance & Chief 1993 158,000 31,000 0 0 29,000 0 19,639
Financial Officer 1992 140,667 0 0 0 0 0 8,376
George E. Aldrich 1994 158,000 47,400 0 44,076 18,000 0 28,200 (/6/)
Vice President
-Controller 1993 150,000 29,500 0 0 14,900 0 18,414
1992 145,000 0 0 0 22,000 0 8,728
</TABLE>
(1) Includes amounts contributed under the Company's retirement/savings
plans, deferred compensation plan and premiums paid by the Company for
individual life insurance. Detail is given in the following five
notes.
(2) Mr. Gibbs' Other Compensation includes $16,182 of Company contribution
to his retirement/savings plan account, $55,644 of Company
contribution to his retirement/savings plan account through a deferred
compensation program and $6,149 of life insurance premiums paid by the
Company.
(3) Mr. Butera's Other Compensation includes $16,182 of Company
contribution to his retirement/savings plan account, $23,100 of
Company contribution to his retirement/savings plan account through a
deferred compensation program and $3,136 of life insurance premiums
paid by the Company.
(4) Mr. Johnson's Other Compensation includes $16,182 of Company
contribution to his retirement/savings plan account, $19,440 of
Company contribution to his retirement/savings plan account through a
deferred compensation program and $3,263 of life insurance premiums
paid by the Company. Mr. Johnson also has an employment agreement
with the Company (see "Employment Agreement").
(5) Ms. Edwards' Other Compensation includes $16,182 of Company
contribution to her retirement/savings plan account, $3,100 of Company
contribution to her retirement/savings plan account through a deferred
compensation program and $1,713 of life insurance premiums paid by the
Company.
(6) Mr. Aldrich's Other Compensation includes $16,182 of Company
contribution to his retirement/savings plan account, $9,790 of Company
contribution to his retirement/savings plan account through a deferred
compensation program and $2,228 of life insurance premiums paid by the
Company.
Stock Options
The Company currently maintains two stock option plans in which
employees are eligible to participate, pursuant to which options to
purchase shares of Common Stock are outstanding or available for future
grants. The purpose of the stock option plans is to advance the best
interest of the Company by providing those persons who have substantial
responsibility for the management and growth of the Company with additional
incentive by increasing their proprietary interest in the success of the
Company.
OPTION GRANTS IN 1994
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<CAPTION>
Individual Grants
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Percent of Potential Realizable
Total Value at Assumed
Number of Options Annual Rates of Stock
Options Granted to Exercise Price Appreciation for
Granted(/1/) Employees Price Expiration Option Term(/2/)
Name (#) in 1994 ($/sh) Date 5% 10%
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<S> <C> <C> <C> <C> <C> <C>
James R. Gibbs. . . . 40,000 17.9 $4.875 2/21/99 $53,875 $119,049
Joseph G. Butera. . . 0 0.0 - - - -
S. Clark Johnson. . . 25,000 11.2 4.875 2/21/99 33,672 74,406
Julie H. Edwards. . . 0 0.0 - - - -
George E. Aldrich . . 18,000 8.1 4.875 2/21/99 24,244 53,572
</TABLE>
(1) Mr. Gibbs' and Mr. Aldrich's options were 100% exercisable on their grant
date (2/22/94). Mr. Johnson's options are exercisable according to the
following schedule: 2/22/94-2/21/95 - 20%, 2/22/95-2/21/96 - 40%,
2/22/96-2/21/97 - 70%, 2/22/97 and thereafter - 100%.
(2) Based on five year original option term and annual compounding from date
of original option grant at 5% and 10%, respectively. The values
reflected in these columns reflect growth rate assumptions prescribed by
the Commission. Actual gains, if any, on stock option exercises and
Common Stock holdings are dependent on the Common Stock's performance and
overall market conditions. There can be no assurance that the amounts
reflected in this table will be achieved.
<PAGE>
AGGREGATE OPTION EXERCISES IN 1994
AND OPTION VALUES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-the-Money Options at
Exercise Realized Options at Dec. 31, 1994 Dec. 31, 1994 ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable(/1/)
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<S> <C> <C> <C> <C>
James R. Gibbs. . 0 0 290,800/25,200 68,650/12,600
Joseph G. Butera. 0 0 54,000/15,000 5,000/7,500
S. Clark Johnson. 0 0 50,000/50,000 51,875/24,375
Julie H. Edwards. 0 0 31,600/23,400 6,550/9,825
George E. Aldrich 0 0 67,800/4,200 13,225/2,100
</TABLE>
(1) The market value of the Company's Common Stock on December 30, 1994
was $4.75 based on the closing sale price on December 30, 1994.
Retirement Plan
During 1994, officers of the Company participated in the pension plan of
Wainoco Oil & Gas Company (the "Pension Plan") on the same basis as other
eligible employees. The Pension Plan, which was terminated effective
December 31, 1994, was designed to qualify under Section 401(a) of the
Internal Revenue Service Code of 1986, as amended (the "Code"). All
benefit accruals ceased as of December 31, 1994. The annual accrued
benefits under the Pension Plan as of December 31, 1994 are as follows: Mr.
Gibbs, $32,573; Mr. Butera, $9,393; Ms. Edwards, $4,202 and Mr. Aldrich,
$16,665.
Employment Agreement
When Mr. Johnson joined the Company in May 1992, he and the Company
entered into an employment agreement which provides that, in event of his
termination without just cause, Mr. Johnson is entitled to severance
compensation of two times his base salary during the first two years after
commencement of his employment and an amount equal to his base salary
during the next three years of his employment by the Company. His base
salary was initially set at $225,000 per year subject to change on an
annual basis as may be agreed to between Mr. Johnson and the Company. In
addition, the employment agreement provided an award of 50,000 stock
options when Mr. Johnson joined the Company. In the event of termination
without just cause, these options, plus any other options which may have
been granted to Mr. Johnson by that time, are entitled to accelerated
vesting rights. In the event of termination for just cause, the terms of
Mr. Johnson's employment agreement cease to be binding on the Company.
Comparison of 5 Year Cumulative Total Return of
the Company, Peer Group Index and Broad Market Index
[Graph Appears Here]
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<CAPTION>
COMPANY 1989 1990 1991 1993 1993 1994
<S> <C> <C> <C> <C> <C> <C>
WAINOCO OIL CO 100 62.50 40.91 32.95 35.23 43.18
INDUSTRY INDEX 100 86.49 90.30 85.74 102.16 107.06
BROAD MARKET 100 95.92 124.02 129.96 147.56 144.69
</TABLE>
Assumes $100 invested December 31, 1989 in the Company's Common Stock, the
3-digit SIC code Index of Crude Petroleum and Natural Gas Companies
(approximately 210 companies) as published by Media General Financial
Services, Inc. and the New York Stock Exchange Market Index.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee are Messrs. Palmer, Bech and
Schafer. No member of the Compensation Committee of the Board of Directors
of the Company was, during 1994, an officer or employee of the Company or
any of its subsidiaries, or was formerly an officer of the Company or any
of its subsidiaries or had any relationships requiring disclosure by the
Company under item 404 of Regulation S-K.
During 1994, no executive officer of the Company served as (i) a member
of the Compensation Committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers
served on the Compensation Committee of the Board of Directors, (ii) a
director of another entity, one of whose executive officers served on the
Compensation Committee of the Company, or (iii) a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served as a
director of the Company.
SECTION 16 FILINGS DISCLOSURE
Section 16(a) of the 1934 Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the
Commission and the New York Stock Exchange initial reports of ownership and
reports of changes in ownership of Common Stock of the Company. Officers,
directors and greater than ten-percent shareholders are required by
Commission regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the Company's
copies of such reports furnished to the Company and written representations
that no other reports were required, during the fiscal year ended December
31, 1994, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were complied
with.
SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the next Annual Meeting of
Shareholders must be in writing and received at the Company's principal
executive offices by the Secretary no later than November 27, 1995 in order
to be included in the next year's proxy statement.
MISCELLANEOUS
All information contained in this Proxy Statement relating to the
occupations, affiliations and securities holdings of directors and officers
of the Company and their relationship and transactions with the Company is
based upon information received from directors and officers. All
information relating to any beneficial owners of more than 5% of the
Company's Common Stock is based upon information contained in reports filed
by such owner with the Commission.
By Order of the Board of Directors,
JULIE H. EDWARDS
Senior Vice President-Finance &
Chief Financial Officer
March 28, 1995
Houston, Texas
