SCHEDULE 14A
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)
- ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] $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:
- ---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: /1/
- ---------------------------------------------------------------------------
(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:
- ---------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- ---------------------------------------------------------------------------
(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
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 24, 1997
------------------------------------------
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 Dorset Room of the
Omni Houston Hotel, Four Riverway, Houston, Texas, on Thursday, April 24, 1997
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, 1997 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 26, 1997
Houston, Texas
<PAGE>
WAINOCO OIL CORPORATION
10000 Memorial Drive, Suite 600
Houston, Texas 77024-3411
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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 April 24, 1997, 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 26, 1997.
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 21, 1997 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, 1997, the Company had 27,258,502 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. 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.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 1, 1997, the beneficial ownership
of the Company's Common Stock , 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, excluding Common Stock held by the Company:
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percentage of Shares
Name and Address Ownership of Common Stock/(1)/
- --------------------------------------------- ------------------- --------------------
<S> <C> <C>
Ingalls & Snyder LLC 5,710,047 /(2)/ 20.8
61 Broadway
New York, NY 10006
Kornitzer Capital Management, Inc. 4,241,548 /(3)/ 14.4
P.O. Box 918
Shawnee Mission, KS 66201
ICM Asset Management, Inc. 1,801,950 /(4)/ 6.6
601 W. Main Ave., Suite 600
Spokane, WA 99201
The Guardian Life Insurance Company of America 1,540,000 /(5)/ 5.6
201 Park Avenue South
New York, NY 10003
</TABLE>
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(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, January 7 and June 6, 1996 and January
29, 1997 with the Commission. Based on the most recent amendment, Ingalls &
Snyder has sole voting power on 533,443 of the above shares and sole
dispositive power on 5,710,047 shares. Includes 214,057 shares assuming
conversion of the Company's convertible securities owned by Ingalls &
Snyder.
(3) Kornitzer Capital Management, Inc. has filed a Schedule 13G dated March 29,
1996 and an amendment dated February 10, 1997 with the Commission. Based on
the amendment, Kornitzer Capital has shared voting and shared dispositive
power on 4,241,548 shares. Includes 2,125,148 shares assuming conversion of
the Company's convertible securities owned by Kornitzer Capital.
(4) ICM Asset Management, Inc. has filed a Schedule 13G dated February 10, 1996
and an amendment dated February 10, 1997 with the Commission. Based on the
amendment, ICM has sole voting power on 1,349,400 of the above shares and
sole dispositive power on 1,801,950 shares.
(5) The Guardian Life Insurance Company of America and related entities have
filed a Schedule 13G dated February 14, 1996 with the Commission which
states 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.
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<PAGE>
COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1997, 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). . . . . . . . . . . . . . . . . . . . . 528,010 /(3)/ 1.94
Douglas Y. Bech (2) . . . . . . . . . . . . . . . . . . . . 11,000 *
Paul B. Loyd, Jr. (2) . . . . . . . . . . . . . . . . . . . 1,000 *
James S. Palmer (2) . . . . . . . . . . . . . . . . . . . . 41,623 /(4)/ *
Derek A. Price (2). . . . . . . . . . . . . . . . . . . . . 6,000 /(5)/ *
Carl W. Schafer (2) . . . . . . . . . . . . . . . . . . . . 6,000 *
S. Clark Johnson. . . . . . . . . . . . . . . . . . . . . . 194,750 /(6)/ *
Julie H. Edwards. . . . . . . . . . . . . . . . . . . . . . 124,750 /(7)/ *
Robert D. Jones . . . . . . . . . . . . . . . . . . . . . . 135,600 /(8)/ *
Joel M. Mann. . . . . . . . . . . . . . . . . . . . . . . . 92,580 /(9)/ *
Directors and executive officers as a group (11 persons). . 1,141,313 4.04
</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, 1997, 27,258,502
shares of Common Stock were outstanding.
(2) Director.
(3) Includes 479,100 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 528,010 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 30,194 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) Five thousand of such shares are held by a private corporation of which Mr.
Price is the sole shareholder.
(6) Includes 169,750 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 194,750 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 117,750 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 124,750 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 135,600 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 92,580 shares with respect to which Mr. Mann 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.
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 (52) 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 (51) has been a partner in the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P. of Houston, Texas since October 1994. Since
August 1994, he has also been a managing director of Raintree Capital Company,
L.L.C., a merchant banking firm. 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
JetFax, Inc., a multifunctional peripheral office equipment company. He was
appointed a director of the Company in May 1993.
Mr. Paul B. Loyd, Jr. (50) 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.
5
<PAGE>
Mr. James S. Palmer (68) is Chairman of the law firm of Burnet, Duckworth &
Palmer of Calgary, Alberta, Canada, where he has been a partner 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 (64) 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 (61) 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; and Nutraceutix Inc., a biotechnology company. 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 1996, during which each incumbent
director of the Company, other than Messrs. Loyd and Palmer, 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 1996.
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 1996.
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 1996.
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 1996.
6
<PAGE>
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 1996.
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 1996, directors' fees aggregated $148,000. 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 1996 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, 1997. 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, 1996 was approved by the
shareholders at the last Annual Meeting on May 16, 1996.
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 (52) 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 (38) 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 (51) 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 (47) 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 20 years of 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. Joel M. Mann (46) was promoted to the position of Vice
President-Controller in April 1996. Mr. Mann has been employed by the Company
since 1980, having served as controller of the Company's Canadian division since
that time. He has over 20 years of experience in oil and gas. Prior to joining
Wainoco, Mr. Mann was employed with Brascan Resources Limited for four years,
primarily as chief accountant.
8
<PAGE>
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 in 1993 and 1994.
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 and 1996, no awards were made due to net losses for the
years.
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.
9
<PAGE>
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 $300,000 was equal to his 1991 salary and less
than his 1990 salary and incentive award. Mr. Gibbs' compensation, both salary
and incentive award, was significantly increased in 1993 and 1994 in recognition
of the improvement of the Company's increased complexity and good performance.
His 1995 salary was increased slightly in recognition of the strong operational
performance of 1994 and additional tasks of winding down the U.S. oil and gas
operations. He received no increase in 1996 due to the Company's net loss in
1995. As is reflected in the Summary Compensation Table, Mr. Gibbs also
participated in the Company's savings plans.
Compensation Committee Members:
Douglas Y. Bech
Paul B. Loyd, Jr.
Carl W. Schafer
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth information regarding compensation earned by
the Company's Chief Executive Officer and the four most highly compensated
officers other than the Chief Executive Officer for services rendered in all
capacities to the Company and its subsidiaries in the years 1994 through 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
----------------------------- ------------------------ -------
Other Securities
Annual Restricted Underlying
Compen- Stock Options/ LTIP All Other
Name and Salary Bonus sation Awards SARS Payouts Compensation/(1)/
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Gibbs 1996 415,000 0 0 0 125,000 0 54,389 /(2)/
President and Chief 1995 415,000 0 0 0 244,200 0 77,970
Executive Officer 1994 395,000 197,500 0 96,708 40,000 0 77,975
S. Clark Johnson 1996 255,000 0 0 0 68,000 0 32,025 /(3)/
Senior Vice President- 1995 255,000 0 0 0 72,500 0 42,386
Refining Operations 1994 242,000 84,700 0 0 25,000 0 38,885
Julie H. Edwards 1996 195,000 0 0 0 94,000 0 20,635 /(4)/
Senior Vice President-Finance 1995 195,000 0 0 0 62,500 0 24,150
& Chief Financial Officer 1994 170,666 58,100 0 0 0 0 20,995
Robert D. Jones /(7)/ 1996 183,900 0 0 0 99,000 0 17,278 /(5)/
Senior Vice President- 1995 175,900 0 0 0 58,000 0 15,802
Canadian Oil & Gas Ops. 1994 153,452 53,500 0 0 0 0 15,570
Joel M. Mann /(7)/ 1996 131,900 0 0 0 60,300 0 10,617 /(6)/
Vice President-Controller 1995 111,300 0 0 0 37,500 0 10,706
1994 104,800 24,900 0 0 19,500 0 9,569
</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 $16,119 of Company contribution to
his retirement/savings plan account, $31,801 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$6,469 of life insurance premiums paid by the Company.
(3) Mr. Johnson's Other Compensation includes $16,119 of Company contribution to
his retirement/savings plan account, $12,600 of Company contribution to his
retirement/savings plan account through a deferred compensation program and
$3,306 of life insurance premiums paid by the Company. Mr. Johnson also has
an employment agreement with
11
<PAGE>
the Company (see "Employment Agreement").
(4) Ms. Edwards' Other Compensation includes $16,119 of Company contribution to
her retirement/savings plan account, $2,700 of Company contribution to her
retirement/savings plan account through a deferred compensation program and
$1,816 of life insurance premiums paid by the Company.
(5) Mr. Jones' Other Compensation includes $15,762 of Company contribution to
his retirement/savings plan account and $1,516 of life insurance premiums
paid by the Company.
(6) Mr. Mann's Other Compensation includes $10,040 of Company contribution to
his retirement/savings plan account and $577 of life insurance premiums paid
by the Company.
(7) Mr. Jones and Mr. Mann are Canadians who work in the Company's Calgary
office. Accordingly, their compensation is paid in Canadian currency, while
information in this table is converted to U.S. currency at the exchange
rates in effect as of December 31 of each year reported.
Stock Options
The Company currently maintains two stock option plans in which employees are
eligible to participate, pursuant to which options to purchase shares of Common
Stock are outstanding or available for future grants. The purpose of the stock
option plans is to advance the best interest of the Company by providing those
persons who have substantial responsibility for the management and growth of the
Company with additional incentive by increasing their proprietary interest in
the success of the Company.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Individual Grants
- ---------------------------------------------------------------------------
Potential Realizable
Percent of Value at Assumed
Total Annual Rates of Stock
Number of Options Price Appreciation for
Options Granted to Exercise Option Term/(2)/
Granted/(1)/ Employees Price Expiration ----------------------
Name (#) in 1996 ($/sh) Date 5% 10%
- ---- ----------- ---------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
James R. Gibbs. . . . 125,000 12.5 3.625 4/30/01 125,190 276,637
S. Clark Johnson. . . 18,000 1.8 3.625 4/30/01 18,027 39,836
50,000 5.0 3.375 11/19/01 46,623 103,024
Julie H. Edwards. . . 44,000 4.4 3.625 4/30/01 44,067 97,376
50,000 5.0 3.375 11/19/01 46,623 103,024
Robert D. Jones . . . 49,000 4.9 3.625 4/30/01 49,075 108,442
50,000 5.0 3.375 11/19/01 46,623 103,024
Joel M. Mann. . . . . 20,300 2.0 3.625 4/30/01 20,331 44,926
40,000 4.0 3.375 11/19/01 37,298 82,419
</TABLE>
- ------------
(1) The options which expire on 4/30/01 were 100% exercisable on their grant
date (5/1/96). All other options listed in the above table are exercisable
according to the following schedule: first year - 20%, second year - 40%,
third year - 70%, third 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 1996
AND OPTION VALUES AT DECEMBER 31, 1996
<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, 1996 Dec. 31, 1996 ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable/(1)/
- ---- ----------- -------- ------------------------- ------------------------------
<S> <C> <C> <C> <C>
James R. Gibbs. . . . 0 0 424,880/90,320 9,000/13,500
S. Clark Johnson. . . 0 0 149,500/91,000 3,000/4,500
Julie H. Edwards. . . 0 0 108,000/77,500 3,000/4,500
Robert D. Jones . . . 0 0 127,200/74,800 3,000/4,500
Joel M. Mann. . . . . 0 0 89,160/50,840 2,000/3,000
</TABLE>
- -----------
(1) The market value of the Company's Common Stock on December 31, 1996 was
$3.125 based on the closing sale price on December 31, 1996.
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 and again in 1996, each of five
non-employee directors received 500 shares of common stock. As of March 1,
1997, 55,000 shares of common stock remain in the Company's Treasury.
Retirement Plan
Prior to December 31, 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. During 1996, all plan assets were distributed to
the participants.
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.
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
13
<PAGE>
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
Mr. Gibbs, Ms. Edwards, Mr. Johnson and Mr. Jones. A similar agreement was
entered into with Mr. Mann upon his being promoted to the position of Vice
President-Controller in April 1996. 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. Mann) 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.
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>
1991 100 100 100
1992 80.56 94.95 104.70
1993 86.11 113.13 118.88
1994 105.56 118.56 116.57
1995 72.22 130.39 151.15
1996 69.44 173.38 182.08
</TABLE>
Assumes $100 invested December 31, 1991 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 1996, 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 1996 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, 1996, 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 26, 1997 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 26, 1997
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 Dorset Room of the Omni Houston Hotel, Four Riverway, Houston, Texas, on
Thursday, April 24, 1997 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, 1997.
(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: _________________________________________________________, 1997
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.
