<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-b(e)(2)
[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)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $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:
---------------------------------------------------------------------------
[ ] 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:
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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>
[WAINOCO LOGO APPEARS HERE]
10000 MEMORIAL DRIVE, SUITE 600
HOUSTON, TEXAS 77024-3411
----------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1996
----------------------------------------------
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 Grand Salon East
Room of the Omni Houston Hotel, Four Riverway, Houston, Texas, on Thursday, May
16, 1996 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 22, 1996 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 27, 1996
Houston, Texas
<PAGE>
WAINOCO OIL CORPORATION
10000 MEMORIAL DRIVE, SUITE 600
HOUSTON, TEXAS 77024-3411
----------------------------------------------
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 16, 1996, 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 27, 1996.
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, 10000 Memorial Drive, Suite 600, Houston, Texas 77024-
3411, 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 22, 1996 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 22, 1996, the Company had 27,256,002 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.
<PAGE>
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.
2
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 1, 1996, 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
OF BENEFICIAL PERCENTAGE OF SHARES
NAME OWNERSHIP OF COMMON STOCK/(1)/
---- ------------------ --------------------
<S> <C> <C>
Ingalls & Snyder LLC 4,557,601/(2)/ 16.6
61 Broadway
New York, NY 10006
The Guardian Life Insurance Company of America 1,540,000/(3)/ 5.7
201 Park Avenue South
New York, NY 10003
ICM Asset Management, Inc. 1,438,700/(4)/ 5.3
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) Ingalls & Snyder has filed a Schedule 13G dated September 6, 1995 and
amendments dated December 8, 1995 and January 7, 1996 with the Commission.
Based on the most recent amendment, Ingalls & Snyder has sole voting power
on 386,043 of the above shares and sole dispositive power on 4,557,601
shares. Includes 168,685 shares assuming conversion of the Company's
convertible securities owned by Ingalls & Snyder.
(3) The Guardian Life Insurance Company of America and related entities have
filed a Schedule 13G dated February 14, 1996 with the Commission which
stated that they have sole voting and sole dispositive power on 876,000 of
the above shares and shared voting and shared dispositive power on 664,000
of the above shares.
(4) ICM Asset Management, Inc. has filed a Schedule 13G dated February 10, 1996
with the Commission which states that it has sole voting power on 941,800
of the above shares and sole dispositive power on 1,438,700 shares.
3
<PAGE>
COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1996, 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
OF BENEFICIAL PERCENTAGE OF SHARES
NAME OWNERSHIP OF COMMON STOCK/(1)/
- ---- ----------------- --------------------
<S> <C> <C>
James R. Gibbs /(2)/...................................... 419,790/(3)/ 1.54
Douglas Y. Bech /(2)/..................................... 10,500 *
Paul B. Loyd, Jr. /(2)/................................... 500 *
James S. Palmer /(2)/..................................... 41,123/(4)/ *
Derek A. Price /(2)/...................................... 5,500/(5)/ *
Carl W. Schafer /(2)/..................................... 5,500 *
S. Clark Johnson.......................................... 140,500/(6)/ *
Julie H. Edwards.......................................... 76,500/(7)/ *
Robert D. Jones........................................... 87,200/(8)/ *
George E. Aldrich......................................... 88,650/(9)/ *
Directors and executive officers as a group (11 persons).. 892,433 3.27
</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, 1996,
27,256,002 shares of Common Stock were outstanding.
(2) Director.
(3) Includes 370,880 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 419,790 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 29,694 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) Five thousand of such shares are held by a private corporation of which Mr.
Price is the sole shareholder.
(6) Includes 115,500 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 140,500 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.
4
<PAGE>
(7) Includes 69,500 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 76,500 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.
(8) Includes 87,200 shares with respect to which Mr. Jones 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.
(9) Includes 79,120 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 88,650 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 (51) 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 (50) 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.
5
<PAGE>
Mr. Paul B. Loyd, Jr. (49) 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 (67) 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 Chairman of the Board of Telus
Corporation, a telecommunications company. Mr. Palmer is also a member of the
Board of Directors of Amerada Hess Canada Ltd., an oil and gas company; Bank of
Canada; Chancellor Energy Resources Inc.; Crown Life Insurance Company; Fleet
Aerospace Corporation; 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; and Westcoast Energy Inc., a pipeline and
transmission company. Mr. Palmer was elected a director of the Company in 1975.
Mr. Derek A. Price (63) is Chairman 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 (60) 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 Roadway Express, Inc., a transportation
company; the PaineWebber and Guardian Groups of Mutual Funds, registered
investment companies; Electronic Clearing House, Inc., an electronic financial
transactions processing company; Evans Systems, Inc., a fuel distribution,
convenience store and diversified company; Nutraceutix Inc., a biotechnology
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 1995, during which each
incumbent director of the Company 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 1995.
6
<PAGE>
Compensation Committee: The Compensation Committee is comprised of
three outside directors, currently Messrs. Bech, Loyd 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 three times during 1995.
Safety and Environmental Committee: The Safety and Environmental
Committee is comprised of three members of the Board of Directors, currently
Messrs. Palmer, 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 met
once during 1995.
Executive Committee: The Executive Committee is comprised of Mr. Gibbs
and two outside directors, currently Messrs. Palmer and Bech. 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 1995.
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 did not meet during 1995.
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 1995, directors' fees aggregated $157,000. Directors' fees are
presently $1,666.67 per month and $1,500.00 for each Board meeting attended,
plus $1,250.00 for any committee meeting attended. Additionally, committee
chairmen receive a fee of $2,000 per year and outside directors are eligible to
participate in the Company's Directors' Stock Grant Plan which is described on
page 13.
No member of the Board of Directors was paid any remuneration in 1995
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. In addition to the six directors elected by shareholders, Mr. William
Scheerer, II serves as Director Emeritus at the request of the Board. Mr.
Scheerer served as a director of the Company from 1975 through 1994. As
compensation for his services, Mr. Scheerer is paid $1,000 for each board
meeting attended plus reimbursement for related travel expenses. 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.
7
<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, 1996. 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, 1995 was approved by the
shareholders at the last Annual Meeting on May 18, 1995.
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 and
office held by each officer.
Mr. James R. Gibbs (51) 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 (37) 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 (50) 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 (46) 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.
8
<PAGE>
Mr. George E. Aldrich (49) joined the Company in June 1982 and was
appointed Vice President-Controller in May 1983. Due to a corporate
reorganization, Mr. Aldrich's position with the Company is being eliminated as
of late March 1996.
Mr. Gerald B. Faudel (46) 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.
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. In 1995, no awards were made due to a net loss for the year.
9
<PAGE>
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 $300,000 was equal to his 1991 salary and less
than his 1990 salary and incentive award. Mr. Gibbs' compensation, both salary
and incentive award, was significantly increased in 1993 and 1994 in recognition
of the improvement of the Company's performance and increased complexity. His
1995 salary was increased slightly in recognition of the strong operational
performance of 1994 and additional tasks of winding down the U.S. oil and gas
operations. As is reflected in the Summary Compensation Table, Mr. Gibbs also
participated in the Company's savings plans.
Compensation Committee Members:
Douglas Y. Bech
Paul B. Loyd, Jr.
Carl W. Schafer
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation
earned by the Company's Chief Executive Officer and the four most highly
compensated officers other than the Chief Executive Officer for services
rendered in all capacities to the Company and its subsidiaries in the years 1993
through 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- ------------------------ ----------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
COMPEN- STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS SATION AWARDS SARS PAYOUTS COMPENSATION/(1)/
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Gibbs 1995 415,000 0 0 0 244,200 0 77,970/(2)/
President and Chief 1994 395,000 197,500 0 96,708 40,000 0 77,975
Executive Officer 1993 375,000 122,000 0 0 75,000 0 48,395
S. Clark Johnson 1995 255,000 0 0 0 72,500 0 42,386/(3)/
Senior Vice President 1994 242,000 84,700 0 0 25,000 0 38,885
Refining Operations 1993 230,000 70,000 0 0 25,000 0 67,653
Julie H. Edwards 1995 195,000 0 0 0 62,500 0 24,150/(4)/
Senior Vice President-Finance 1994 170,666 58,100 0 0 0 0 20,995
& Chief Financial Officer 1993 158,000 31,000 0 0 29,000 0 19,639
Robert D. Jones 1995 175,900 0 0 0 58,000 0 15,802/(5)/
Senior Vice President- 1994 153,452 38,140 0 0 0 0 15,570
Canadian Oil & Gas Ops. 1993 129,677 40,000 0 0 45,000 0 11,180
George E. Aldrich 1995 160,000 0 0 0 25,800 0 25,265/(6)/
Vice President-Controller 1994 158,000 47,400 0 44,076 18,000 0 28,200
1993 150,000 29,500 0 0 14,900 0 18,414
</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 $16,164 of Company contribution to
his retirement/savings plan account, $55,500 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$6,306 of life insurance premiums paid by the Company.
(3) Mr. Johnson's Other Compensation includes $16,164 of Company contribution
to his retirement/savings plan account, $22,764 of Company contribution to
his retirement/savings plan account through a deferred compensation program
and $3,458 of life insurance premiums paid by the Company. Mr. Johnson
also has
11
<PAGE>
an employment agreement with the Company (see "Employment Agreement").
(4) Ms. Edwards' Other Compensation includes $16,164 of Company contribution to
her retirement/savings plan account, $6,186 of Company contribution to her
retirement/savings plan account through a deferred compensation program and
$1,800 of life insurance premiums paid by the Company.
(5) Mr. Jones' Other Compensation includes $14,187 of Company contribution to
his retirement/savings plan account and $1,615 of life insurance premiums
paid by the Company.
(6) Mr. Aldrich's Other Compensation includes $16,164 of Company contribution
to his retirement/savings plan account, $6,888 of Company contribution to
his retirement/savings plan account through a deferred compensation program
and $2,213 of life insurance premiums paid by the Company.
STOCK OPTIONS
The Company currently maintains two stock option plans in which employees
are eligible to participate, pursuant to which options to purchase shares of
Common Stock are outstanding or available for future grants. The purpose of the
stock option plans is to advance the best interest of the Company by providing
those persons who have substantial responsibility for the management and growth
of the Company with additional incentive by increasing their proprietary
interest in the success of the Company.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM/(2)/
GRANTED/(1)/ EMPLOYEES PRICE EXPIRATION -----------------------
NAME (#) IN 1995 ($/SH) DATE 5% 10%
- ---- ----------- ---------- -------- ---------- ------- -------
James R. Gibbs..... 154,200 20.1 4.50 2/20/00 191,712 423,633
90,000 11.7 2.875 11/12/00 71,488 157,969
S. Clark Johnson... 42,500 5.5 4.50 2/20/00 52,839 116,760
30,000 3.9 2.875 11/12/00 23,829 52,656
Julie H. Edwards... 32,500 4.2 4.50 2/20/00 40,406 89,287
30,000 3.9 2.875 11/12/00 23,829 52,656
Robert D. Jones.... 28,000 3.6 4.50 2/20/00 34,811 76,924
30,000 3.9 2.875 11/12/00 23,829 52,656
George E. Aldrich.. 25,800 3.4 4.50 2/20/00 32,076 70,880
</TABLE>
- -----------------
(1) 62,000 of Mr. Gibbs' and 8,000 of Mr. Aldrich's options were 100%
exercisable on their grant date (2/21/95). All other options listed in the
above table are exercisable according to the following schedule: first year
- 20%, second year - 40%, third year- 70%, fourth anniversary and
thereafter until expiration - 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.
12
<PAGE>
AGGREGATE OPTION EXERCISES IN 1995
AND OPTION VALUES AT DECEMBER 31, 1995
<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, 1995 DEC. 31, 1995 ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE/(1)/
- ------------------- ------------ -------- ------------------------- ------------------------------
<S> <C> <C> <C> <C>
James R. Gibbs..... 0 0 339,840/158,360 6,750/33,750
S. Clark Johnson... 0 0 92,000/80,500 2,250/9,000
Julie H. Edwards... 0 0 54,300/63,200 2,250/9,000
Robert D. Jones.... 0 0 68,100/65,900 2,250/9,000
George E. Aldrich.. 0 0 73,460/16,340 0/0
</TABLE>
(1) The market value of the Company's Common Stock on December 29, 1995 was
$3.25 based on the closing sale price on December 29, 1995.
DIRECTORS' STOCK GRANT PLAN
In 1995, the Board of Directors established a stock grant plan for non-
employee directors. The purpose of the stock grant plan is to advance the best
interest of the Company by increasing the non-employee directors' proprietary
interest in the success of the Company. Further, the stock grant plan allows
for additional compensation to the non-employee directors without incurring cash
expenses to the Company.
Under the Directors' Stock Grant Plan, automatic grants of a fixed number
of share (currently 500 shares per non-employee director) are made on certain
predetermined dates (currently approximately every 15 months) out of the
Treasury shares owned by the Company. In 1995, each of five non-employee
directors received 500 shares of common stock. As of March 1, 1996, 57,500
share of common stock remain in the Company's Treasury.
RETIREMENT PLAN
During 1995, 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, 1995 are as follows: Mr. Gibbs, $32,573; Ms. Edwards, $4,202 and
Mr. Aldrich, $16,665.
EMPLOYMENT AGREEMENTS
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.
13
<PAGE>
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.
Additionally, in April 1995, the Company entered into employment agreements with
each of the five named executive officers. These agreements provide that in the
event of a change of control of the Company, the executive will remain in his or
her position as of the date of the agreement with commensurate duties for a
period of three years from the change of control. Each agreement provides that
the executive officer will receive at least the same level of base compensation
and other benefits as were being received by such executive officer immediately
prior to the change of control. In addition, the agreements each provide for
payment of annual performance bonuses determined by percentages of the base
salary (50% for Mr. Gibbs, 35% for Ms. Edwards and Messrs. Johnson and Jones,
and 30% for Mr. Aldrich) in effect during the three year term. In the event of
termination of the executive officer for any reason other than cause during the
three year term of employment, the Company is required to continue to pay the
executive officer the stated compensation, including the value of unexercised
in-the-money stock options, either periodically or in a lump sum, as provided by
the terms of the agreements. Mr. Aldrich's employment agreement will terminate
upon his departure from the Company in late March 1996. In connection
therewith, the Company has agreed to pay him $730,000.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN OF
THE COMPANY, PEER GROUP INDEX AND BROAD MARKET INDEX
<TABLE>
<CAPTION>
WAINOCO OIL CO. INDUSTRY INDEX BROAD MARKET
--------------- -------------- ------------
<S> <C> <C> <C>
1990 100 100 100
1991 65.45 104.41 129.41
1992 52.73 99.14 135.5
1993 56.36 118.12 153.85
1994 69.09 123.79 150.86
1995 47.27 136.14 195.61
</TABLE>
Assumes $100 invested December 31, 1990 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.
14
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee are Messrs. Bech, Loyd and Schafer.
No member of the Compensation Committee of the Board of Directors of the Company
was, during 1995, 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 1995, 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, 1995, 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 28, 1996 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
Secretary
March 27, 1996
Houston, Texas
15
<PAGE>
PROXY
WAINOCO OIL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) JAMES R. GIBBS and JULIE H. EDWARDS, or
either of them, lawful attorneys and proxies of the undersigned with full power
of substitution, for and in the name, place and stead of the undersigned to
attend the Annual Meeting of Shareholders of Wainoco Oil Corporation to be held
in the Grand Salon East Room of the Omni Houston Hotel, Four Riverway, Houston,
Texas, on Thursday, May 16, 1996 at 9:00 a.m., Houston time, and any
adjournment(s) thereof, with all powers the undersigned would possess if
personally present and to vote the number of votes the undersigned would be
entitled to vote if personally present.
Please Date and Sign on Reverse Side.
<PAGE>
WAINOCO OIL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
FOR ALL
1. WITH RESPECT TO THE ELECTION OF DIRECTORS-- FOR WITHHELD EXCEPT
Nominees: James R. Gibbs; Douglas Y. Bech; / / / / / /
Paul B. Loyd, Jr.; James S. Palmer;
Derek A. Price; and Carl W. Schafer.
FOR ALL
2. Proposal to ratify the appointment of FOR WITHHELD EXCEPT
Arthur Andersen LLP as auditors for / / / / / /
the year ending December 31, 1996.
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
In their discretion, said attorneys and proxies are authorized to vote upon
such other business as may properly come before the meeting.
This Proxy when properly executed will be voted in accordance with the instruc-
tions given hereof, but IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES OF THE BOARD OF DIRECTORS AND FOR THE PROPOSAL
SET FORTH IN (2).
Dated: _________________________________________________________, 1996
Signature(s) ___________________________________________________________________
________________________________________________________________________________
(Please sign as your name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. If the appoin-
tor is a corporation, this instrument must be under the corporate seal or under
the hand of an officer or attorney so authorized.)
Shareholders are Urged to Complete, Sign and Return this Proxy Promptly.
